shuttle for that over year. we could have two of them and i and i hear so i'm concerned about the priority. i we overtime and i proceeded, mr. chairman. i know we will have a lot of time to discuss it. thank you.

>> senator nelson. >> senator hutchison i think that is a good point. space is a very unforgiving kind of environment, and nasa has always run the programs being built by contractors, not contractors running the programs with oversight by nasa. that is a new way of doing business dr. holdren. needless to say, there are some people who question the wisdom of that, but the fact is that, if it doesn't work or if it gets extended way out, then we don't have a backup system safe for our partners, the russians. but they have a limited

capability of getting stuff up and back with the size of the soyuz. i want to get into-- i want to get into the normal decision-making process, because normally what happens is nasa sends to the office of management and budget by november their budgets, their suggested budget, and normally omb then send it, their iterations, back to nasa for nasa's commentary, but that didn't happen this year. instead, the pass back from omb came right at the time of the announcement of the president. and as you go, the president had to go down to the kenneday space center ensign change some things because of the mistakes that were made in the rollout, which unfairly characterized the

president as an opponent of human spaceflight, which the senator knows him to be an avid proponent. so, dr. holdren i want to ask you, when omb came back, did oab consult you in the final determinations of the nasa budget? when i say you, i am talking about your organization. >> the answer to that in brief is yes, absolutely, but let me answer the question in a little more detail. as you know senator nelson this was not an ordinary year. it was the year in which a determination was made after receipt of the augustine report that really fundamental changes in the priorities and the structure of nasa's's human spaceflight program we are going

to be necessary and of necessity, the process of figuring out what those would be had to be integrated with the fy2011 budget process. and that is the way it was done. there have been a number of suggestions, including one that we heard in one of the opening statements, that neither i nor the nasa administrator was involved in this process. i can assure you that the president's decision in this manner was not hasty, and it was not lacking in input from a wide range of well-informed advisers. >> let me interrupt you because i am down unlimited time here. dr. holdren, when did the nasa administrator, when was he consulted in the period of two weeks before the rollout of the budget? >> senator, i do not want to get into the internal pre-decisional deliberations and have-- how they took place in detail.

you and i both know that i can do that. >> okay, but let me ask you this. let me ask you this. were any of the center directors and nasa consulted? >> senator nelson, may i answer the question because if it is possible, because i think i know the answer better than dr. holdren in this particular case because-- i became the nasa administrator in july. beginning in august, there was a very smart young man who is sitting behind you on your right, who was my brain, my strategic brain by the name of tom clements and then he will tell you beginning in august, we had periodic, a series of strategic planning meetings among the senior leadership of nasa which included the associate administrators and everything in nasa. this went on for a number of months, and during that period of time, because i am a marine,

and i include the space shuttle where you know we do disaster training, we discussed every potential outcome of the budget and i spent probably a month where i asked everybody to list the worst-case scenario, which was you know, what happens if everything goes away and we get nothing and we have to start from scratch. we knew that would not be good, but we determined that we in nassau, because we know how to do thing, we could recover from map. senator directors, senior leadership of nasa have been involved in the deliberations that led to our submission of our budget proposal since august. as dr. holdren has said, because augustine, the results from the augustine committee were delayed from when we thought they would come, and we all found ourselves very late in the process and

doing things and as i have said, do most of you when i've come to talk to you, i accept the blame. i am six months behind, conservatively, where i would have than in a normal budget process. we would have had discussions with members and their staff back in the fall. we couldn't do that because augustine came out and we went back to the drawing board again and continued to discuss. i provided lots of input to the president over a period of time. as i have said before, it is my budget. it is my plan, and i am here to defend it as i think it is the right thing for us to do. >> i would like to say one more thing with my permission. the president heard from a lot of people in this process. he heard from me. he heard from administrator bolden and senator nelson he heard from you. that doesn't mean that he took everybody's advice.

but he did hear it and he waited , and then as presidents must he arrived at a position that balance all of the relevant considerations and in my own view, it is out of that process he got to the rest of the most balanced program for nasa, including its human spaceflight dimension that the country can afford. >> thank you senator nelson. senator vitter. >> thank you mr. chairman. mr. bolden, as you know a lot of our concerns are about the capability of the commercial sector to do what we are asking them to do on-time, on budget but essentially all our eggs in that basket. it was reported to me that in the conference call with mr. armstrong, and captain cernan last week i think he referred to the call itself, for a couple of hours. you told them that you would

quote, do whatever it would take ," mack to make commercial work including quote, bailing them out, even if that would mean a bigger bailout ben chrysler and gm blasco what did you mean by that? >> i'm not sure i said that senator. i'm not sure what-- who was in the room but as i have always said i will do everything in my power to facilitate the success of the commercial entities in access to orbit. i have to have that. the defense has to have it and our intelligence community has to have it work of the budget today does not allow me to continue to build and operate in lower orbit if i want to go explore. the contingency that i continue-- i am a. i have to look at the possibility that the commercial sector may have difficulty, and we will do everything in my

power to facilitate their success. that is what i meant when i said anything. >> mr. bolden what i have read is a lot more specific and different than what you just said. did you say, did you use the sort of language i used? >> i don't remember using the sort of language you used. i don't remember that. this was just days ago. >> it had quite an impact on other folks in the conversation, and it raises my concerns at least. >> senator,. >> people talk about conversations i have had and i am involved in the conversation and i've tell you what i said. i am not sure who else was in the room. i know who was in the room with me and i'd know who was on the line with jean and neal. >> okay. >> i'm talking about direct participants who were taking notes, but anyway.

as we sit here, do you think the timetable and the budget for that commercial program, do you personally think that is likely to stay on timetable and on budget? >> i think we are going to stay pretty much on timetable. if we go exactly the way that the schedule is laid out right now, it will be the first time in the history of any endeavor involving faith that everybody has made it on time. i expect they will have technical difficulties and we will help them through them. they have already had technical difficulties as we do, and we work through them. >> in light of the continuation of o'ryan, why is it that nasa is taking actions which would constrain the funding of the program by a shift thing the termination liability onto the program which is not the norm? i understand that is occurring in this case. that is not the norm and there has been no decision by congress

in terms of funding. >> senator termination liability is a factor that is in the contract of every supplier that nasa uses. it always has been. i just reminded them to read their contracts. >> did you send a letter to the hubble contractors, to the webb telescope contractors? did you send a letter to then. >> we didn't have to send a letter to the hubble contractors because they delivered without any problems and in terms of james www.we continue to be constantly exercising oversight over them because i think it's all of you know it has been a fiscal challenge for us and it remains a fiscal challenge. >> but are the termination liabilities being shifted onto the program? it is my understanding that they are, which is not normal procedure. it is my understanding that this is the case because of the administration as opposed to other.

>> the responsibility for termination liability lies with the company and that is contractual. that is not something that we change. i can't change it because it is in the contract. now, where the money lies. >> what other contractors did you send this letter to? >> we had it sent to the prime contractors of the constellation program. >> what other program contractors did you send it to? >> we didn't have to send it to anybody because we didn't have any programs that send something to us saying that they were concerned about termination liability. >> that their other programs and government that are going to the same thing right now for the same reason. >> the risk decision lies with the company and if it is a publicly traded company it lies with the board of directors, and in that particular case they have to decide whether they are going to put the money in the bank or whether they are going to spend it on people and things.

it is a risk decision that they have to make. normally, when things are going along well, companies don't worry about it because they assume they are going to be no problems but that is a risk that the company decides, the level of risk they are going to take and i think if you talk to any business they will tell you the same thing. >> mr. chairman if i could have one final question for mr. holder in. you talked about the budget constraints, which are certainly clear and obvious. but, the bottom line is still that this budget is an extra $6 billion over five years, and it is not going primarily to exploration. maybe 1 billion is and that is mostly research within that program, so it is a major increase going elsewhere. so isn't it true that, with those significantly increased resources, certainly other things could have been done to focus more immediately on

existing programs and human spaceflight? >> it is always true that one can make different choices about allocation. we think we made the best choices about allocation available to us under the circumstances. the decision to invest more in research and development, in game-changing technologies common technologies that can ultimately take us faster and farther as opposed to continuing to invest in existing programs which were already way over budget and behind schedule was a very conscious decision, to invest in what abari's been the sources of u.s. leadership. the source of u.s. leadership has always been advanced technology and the augustine committee's report in our own conclusion was that nasa had been under investing in advanced technologies will ultimately need to continue to lead, to go faster and farther in space. we couldn't continue to invest and neal program at the levels that it was requiring and invest

in these other possibilities. >> senator if i may add one thing and i suggest you ask norm when he comes in on the panel because he will tell you, it was a matter of taking $6 billion in spreading it over five years for investments in technology development, aeronautics, science and commercial or take a nap 6 million-dollar chunk and putting it in one year for the constellation program. not knowing how you would get to the next year, and norm augustine will tell you that. his recommendation was okay let's take $3 billion and that was one of the options that they offered. the fiscal times dictated to me, my fiscal responsibility to the president was to advise him that it would need much smarter to take $6 billion in instead of putting it in one year of trying to catch constellation up and then wondering where i was going to get the $6 billion the next

year, let's spread it over five years, let's get a grip on our technology development, let's restore some prominence to science and aeronautics, and people are happy. you can't find anybody and scientists always argue about priorities but it is fine to-- hard to find somebody in the community who will not tell you this is an incredible budget for them. you can't find a university president who will not tell you this is a great budget for them because they now-- i just came from mit at harvard. >> i don't want her and talk to you but you are going to have to learn time limits. keeping it reef. otherwise you eat up senators time and they don't like that, and then they don't go for what you want. [laughter] >> yes, sir.

>> general bolted after the last shuttle flight it will be the last one? >> that is our whole. >> assuming that is what happens what will be the next nasa mission to lower earth orbit? >> the next nasa mission to lower earth orbit will be the next soyuz that launches carrying a crew to the international space station and a six-month anchorman. >> what will be the next nasa mission that is powered with a nasa rocket? >> i am not trying to be cute, the next nasa mission will be flown on a commercial rocket just as the shuttle is. you know, it will be a commercial rocket that we least instead of. >> which rocket? >> the first one will be spacex. it will be falcon nine. and then lay to them is-- 20 levin early 2012 will be-- and

then there will be a sequence of demonstration flights that will allow us to take them to the point where they work on contract. right now everything is there a dime. i gave them $250 million apiece and they have to demonstrate. >> are those rockets taking us to the international space station in 2011? >> no, no sir. the first time we will have a commercial rocket take us to the international space international station with a crew will probably about 2015. >> okay. five years from now, your estimation is the commercial rocket will be available to take us to low earth orbit? >> yes, sir. >> is that why are you saying the 2015 or the president articulated 2015? >> it had no connection with that. >> why are we waiting until 2015? >> we are not waiting. i asked the president to challenge me and i asked the

president to give me a deadline of no later than 2015. originally it was in 2015. if i have to wait until 2015 to make a decision that prolongs the amount of time before i can start building. if i could give it to them tomorrow i would. i can't. i can't give him a recommendation on the architecture, because i am not smart enough. >> what about that aries rockets? >> do you aries is a great rocca but i'm not sure that is the most cost-effective. i'm not sure that we have the technology that we can sustain the technology that is going into areas right now. i'm not sure we want to use solid rocket boosters. because i am trying to find a rocket that dod, the intelligence community and nasa can use and that may not need a solid rocket motor. that maybe loctite locked hydrogen. >> how much money ever spent on the aries rockets so far?

>> on the constellation program we have spent about $9 billion over the last five or six years, and none of it, not a dime of it has been wasted. >> are you going to be able to use the money we have spent as opposed to continuing the rockets and development? >> i'm going to continue to use the product came about from that $9 billion expenditure. some rovers that have been developed as a part of the program that now i don't need to put permanent habitats on them and, robots that we worked with general motors and a space agreement that we call a dexterous robot that can throw a baseball. >> my time is limited so i want to get back to the rocket issue. if we a party invested billions of dollars in this heavy lift technology? >> no, sir. >> how much have we invested in the aries rocket? >> the only rocket that we have invested insofar has been aries one because the investment and aries one, it reduces the amount

of money you have to pay for the aries five rocket. >> how much is involved in that? >> let me, i will have to bring it back to you for the record because i can break out the 9 billion among the different components of the constellation program. >> say that again. >> i can't for you right now at this table break out the different components, the amount we have spent on the different components of the constellation program. >> is that something you it's a bit for us? >> yes, sir. we will get that for the record. >> let me quickly because my time is short ask you about termination. are you telling vendors right now that you are terminating the constellation program? >> no, i am not. they know the 2011 budget, the president's 20 levin budget proposal the language is very explicit. calls for termination of the constellation program. >> you understand the lava land right now. >> i abide by the lava lamp right now and we are not terminating anything.

i can't do that lawfully. >> that is my time mr. chairman. thank you. >> thanks mr. chairman. i want to follow up on what senator lemieux was asking on commercial spaceflight because this is new information to me. nasa is going to be paying for initial flights in late 2011 by spacex on was the two vehicles you are saying? falcon nine and mentor is to? >> falcon nine in taurus who are the first to commercial vehicles. >> what does nasa pay for? >> right now nasa pays $250 million to spacex and orbital as part of the act agreement. that was to give them seed money so that they could go off and develop commercial capability. that is why, that is all. >> but they are going to want something in late 2011?

>> that will be the first flight that they will fly for me. falcon nine will actually launch the end of this month or early june but that is not for me. that is in my databank. >> what will they fly for you in late 2011? >> it is a demonstration to demonstrate that they can get the vehicle to lower earth orbit when it separates the dragon module they have to fly, navigate themselves to the international space station, get to a point where they can stop and i can take it and reverse its of a of a number of demonstration flights they have to fly so i've. >> that will be the first demonstration flight that they will be doing in late 2011? >> let me go back and get it for the record because there are a series of flights they have to fly and i want to make sure i'm giving you accurate information because each flight has for a different purpose. it is an incremental

progression. >> how many flights are they going to be flying before 2015 which is when you send them up to the station? >> let me get that for the records there because i don't want to give you-- and it is the same for orbital. each has a certain number of flights they fly and under the program that i paid for with the $250 million, and then they go into a resupply but that is the contract. so, for that they make money every time they deliver something into orbit. i will give you the data on the specific flights. >> i think for the chairman and for me and i think the whole committee the more specific you are on this because obviously people have a lot of questions about how we going to stand up this new capacity and i want to make sure will be. >> manned flights in late 2011 by spacex? >> no. it is cargo only. we have got a long way to go.

we have a long way to go and when i say a long way to go, they have got to demonstrate their ability to get cargo into orbit safely. >> and an unmanned vehicle. >> there are several flights. >> when is your year marker for when they will have a man space flight before it goes to the station? >> my target is for them to fly their feast-- first crew flight in 2015. >> the curt first crew flight. the first one will go to the space station in 2015? okay. i am struck by the augustine report and i am a fan of norm augustine. i've known him for some years and i just think he is a really solid american but i am troubled about, it feels like we are losing control. it feels like we are losing leadership in the man space arena. and yet i gather from his data,

he says there is not another way for us to continue human spaceflight on the budget he believes we are willing to do. is this strictly a dollars and cents issue than? >> senator, everything is a dollar and cents issue, and you know you buy it by the pound. if we want to explore beyond lower authority, we have to revamp the responsibility for day-to-day operations. i have to free myself of the 2 billion-dollar annual infrastructure cost. it is there. if i don't fly a single shuttle mission i paid-- i've got to be able to free myself of that so i can go beyond lower earth orbit and that is the importance of the commercial entities and providing transportation. >> my time is about up. is there any other way for us to continue an aggressive human

space flight program with the budgetary dollars you are talking about other than the one you have prescribed? >> senator we will continue an aggressive human spaceflight program because i just selected a group of astronauts this past year and i have a number of them who i'm trained to fly on the international space station right now through 2015 and we are getting ready to make subsequent crew assignments to flight three 20/20 so we do not intend to stop going to space. senator, we have got a lot of work to be done on the international space station. >> the russians are going to card is is back-and-forth. >> senator the russians have been carting us back and forth for years. >> i understand that. i am asking you.blank, is there another way for us to be able to continue and it rests of human spaceflight program other than the one you webb outlined here within the budget? see the program of record

constellation will not enable me to do what i told you i want to do. >> thanks chairman. >> thank you senator brownback. i have one short question. i think senator nelson has a question and senator hutchison. >> i've got about 20 more, but i really don't want to make the astronauts and mr. augustine keep waiting, so i am really so sorry because this is so important. >> i no, i know. i am going to ask one short question. this is all to me actually very interesting, and of putting together of this was very difficult. there was a lot of kind kind of combativeness and suspicion. you heard some of the comments, the secret society formation of a plan, which norm augustine i guess he can talk about. how we join that group.

but in my mind, frankly there is a sense of not eating settled or comfortable with where we have been going. and, part of that is based upon the history of the mystery and the mysticism and the culture and the romance in a sense of 1962 and thereafter. america needs to catch up in the world. we are behind in virtually everything we do, telecommunications to science technology, engineering and math, so let me take science, technology engineering and math and ask one question. ..

while the rest of the technology and i assume what other cable channels. what fascinating powerful statement a younger generation waiting to be inspired by their own which wastes reaching out to be inspired by products that happen to be there so you have something called an education budget, and you are putting less than 1% of nasa's budget into what i call education which i look upon as future generations we in to participate in ventures. can you respond? >> they are indirect and direct

ways to contribute. nasa has 3,121st robotics teams we sponsor. more than any other federal agencies and any other company in the world. if you don't know about the first robotics i recommend you go. i went to the international championships. it inspires kids. we have something on the international space station right now called this year's coverage as round balls produced at the mit that up until now for about i want to say since 2006 have been flying around inside the space station programs by college students doing research with the summer of innovation a program that we are rolling out and we just rolled out the first award monday in boston with the farepak track. we are going to extend the opportunity to middle school students to program a skier or set spheres that will fly around the international space station. to me that is inspirational. i don't care what anybody says.

the kid doesn't have to become an astronaut. >> mr. chairman, the president and i as well as administrator bolden agree about the priority we have to give to science technology engineering and math education. the president ruled out last november educate enough eight initiative based on partnerships including the discovery channel, the discovery channel and time warner cable combining to offer to our softer 70 feet to after-school program and free of commercials every day on cable channels on the country over half a billion dollars pledged in money and kind support from industry and nations to help us improve education in the country. administrator bolden, this week as part of the national laboratory day that is all about improving the science and engineering labs available in every middle school and high school in this country johanns dee dee de nasa as part of an engagement at the nsf, department of energy and

department of education. we are doing a lot in that domain. the president is absolutely ecstatic about what we are getting done and we couldn't agree with you more but the things are all related. nasa's success, nsf success is linked to the success of the education programs we promote to the white house and department of education and it's all coming together. >> senator nelson. >> thank you, mr. chairman. dr. bolden, did you have discussions with the department of defense upon the effect of the cancellation solid rocket motor program? >> musette i think dr. bolden. >> we had partners in the defense and i have to say in all honesty the department of defense is still looking at it. those initial conversations communicated there would be an

impact but it didn't appear to be in on manageable impact. and those considerations are going on and i understand even as we speak. but i continue to believe those -- >> those considerations are going on as you speak about what a surprise you that there is a complete record in front of the senate armed services committee by general shelton to become chilton, one of the generals charged with the strategic defense of the country as well as the other general, general cartwright the vice-chairman of the joint chiefs who has his portfolio of the strategic defense that in fact the dod was absolutely shocked that nasa suddenly came up with this program but to cancel the testing on the solid rocket motor since nasa has 70% of the industrial base of the solid

rocket motors of which the remainder the defense department is absolutely reliant upon. does that surprise you? >> first of all, senator, the dod is a big place and we didn't talk to everybody. we are aware there is going to be an impact. the dod obviously has an interest in this domain. i think the dod is probably capable of supporting its interest in the domain of the wait might mean higher costs per unit in acquiring the solids the need. i am not saying there is no issue and i am not surprised a variety of analysis exist in the department but i believe there will be a solution to that issue going forward. >> dr. holdren, did you have a discussion with administrator bolden within the week before the budget was rolled out to let him know what the final

president's proposal was going to be? >> you say within the week. we certainly have it within two weeks. it was well within the last weekend as we did. >> so, general, you knew what the president's proposal was going to be even though you were in israel? >> i actually found out -- i think i found out before i went to israel. i was in israel the week before the rollout and i came back that thursday night but we had already met on the budget the week before. >> all right. general, can you tell me is there a discussion going on within the nasa as you are considering adding one more shuttle flight to the manifest? >> the discussion has gone all the way up. i expressed -- i have told people that there is a potential i would like to fly with the

launch on the missions and would be for logistics reasons and have nothing to do with jobs or anything else. it's just if i have a spare supplies i can get on the international space station i would like to take every opportunity to do that. it is not an easy decisions though because i would have no want on the vehicle to back it up and that isn't trivial the decision to do that. >> but you do have the plans that what the worst happen on assets so that the crew could take safe refuge in the isf? >> senator, we have contingency plans to include what happens to the crew if they can't get to the isf because everybody -- one of the things i hate is a pretty assumes you get to the international space station. that is a long way away. if you have a problem as you remember when part of the back end of the order comes off you don't get to the isf so that is

one of the reasons i am the -- i don't want that to happen and it is not a trivial decision. >> what would be the cost of continued aeries testing? >> i will get you the numbers but it is in the neighborhood of 1 billion to 1.6 billion the variegation comes because if you're testing and aeries vehicle and the plan is that it will more into the aeries five the news spread the cost across the vehicles. volume doing is applying the aeries one test so i can keep people working it goes to 1.6 billion because there's nothing else to help it absorb the cost so it all goes to aeries and that is why in the discussions i have said as much as i am a tester i cannot ask any more to allow me to test a aeries vehicle if there is something else i can use to get

the same test of an oelwein in his vehicle done. >> speaking of zero ryan, and i know you want me to quit my questioning -- speaking of orion, why do we want a half-baked o'ryan the? >> what we want is an incrementally developed model that can take people beyond the lower orbit. but i don't want to do in any module is settle on the design and configuration in 2010 when i know the first time i'm going to send a human beyond the low earth orbit at the earliest is 2020. so if i settle on a vehicle today, flight in 2013 and the crew has to live with the same vehicle and configuration for seven more years they will fly on the vehicle 7-years-old one.

i don't want the o'ryan that will go to the moon and mars and an asteroid i don't want the final configuration internally made until as close as possible to the flight. >> then why have a half-baked one? why not rely on the soyuz? >> no senator, i need to have my people, american industry continue to work on spacecraft otherwise we lose the challenge. also it's important for the national pride and other things we have an american-built vehicle that is talked to the international space station and i can do that with the foundational vehicle that will be the basis for what will take beyond the low earth orbit. >> we have reached the point now we have only time for senator warner to lescol plea just one question. to externals and dr. augustine

waiting we have not treated them fairly on the other hand we had just one and a half rounds of questions. the subject is that interesting and controversy also i don't apologize for that. senator warner. >> thank you and let me say this as a nice break from derivatives and high-frequency trading and other things we've been dealing with on the floor and also follow up quickly realizing my time is short you mentioned the educational foundation. i do think there is interesting opportunities to leverage. i think that the prize foundation and the kind of energy that generated. ayaan stand i missed some of the earlier what conversations, will the because of this great possibilities and opportunities as the facility in virginia but

one thing i am interested in assuming for a moment that commercialization moves forward and part of the challenge of nasa will be to ensure as i think earlier questions pointed out the safety of the commercial missions up to the isf. have you thought through how you set the standards particularly in the commercial context and is there some analogy we could draw from that working with the faa on cutting the safety standards amount commercial aircraft that we could perhaps you to place again? >> senator, we thought it through very seriously and continue to think it through and i have a group right now that is going to report to me on something i call insight and oversight. senator rockefeller talked about we can't continue to do things

the way we do. we have too many boards and panels and oversight committees in nasa and i have asked our folks to find a way we can get back to something reasonable. we don't need all the oversight committees that we have. that is costly and consumes time to read a great example of the type of oversight i would like to have is the relationship with russians. they do a flight before every flight to the two flight readiness review just like we do with the shuttle. i have people from space operations at moscow that the flight readiness review. they are a member of the team when the russians have their dynamic reentries in the last couple of years while we were not a part of the engineering investigation we got all of the data on the mishaps and learned what had happened and we learned what they did to correct so i will use that as a model. the disadvantage to commercial

is they don't have the experience that soyuz has. we have 90 successful missions on soyuz so that makes me a lot more comfortable with them than an upstart company and commercial development. but i will make them successful because i will establish standards and they are looking at them now to make sure we are not being unreasonable. as we thought about it a lot. >> i will point out the previous experience nasa langley with commercial litigation there may be less informed -- >> the next generation air transport system we were talking about human spaceflight but that is incredible. the langley, the ames research center, we are intimately involved in trying to make aviation, general aviation and commercial aviation flights safer and more efficient for every one around the world, and next-gen -- >> lessons there could be implemented -- sprick of other questions for the record. >> you can submit this for the record, great. i want to thank you gentlemen.

this is an interesting panel that's taken a long time but that's because i think that there is uncertainty and as i have questions about nasa i always have and still do what we are working our way towards something and there are conflicting points of view. some people just simply want it this way and others on it that way and some are trying to find a third way and i guess i am in that category. in any event, i thank you, dr. holdren, for being here and also to you, general, for being here. thank you both. we will now be in recess for 30 seconds. [laughter]

[inaudible conversations] >> the panel will be seated. the press will finish their obligations. [laughter] i want to welcome was -- i want order in this hearing room. and j.j., you will enforce it. somebody turned the lights back on it would be helpful, too. or maybe not. maybe we can keep going better. i want to welcome mr. neil armstrong, commander of apollo 11, captain eugene cernan,

commander of apollo 17 and norman augustine, who i've known for many years and is the chairman of the review of the u.s. space flight plan committee. we will start with you, mr. armstrong. pull that up and pushed the button. millo. >> how about that? >> that's good. >> mr. chairman, members of the committee i want to express my sincere appreciation for being invited to present the views on nasa's new plan for human space flight. new non-classified national program concepts are typically accompanied by substantial review and debate in a number of

venues. the process is occasionally frustrating but it is assured that all of the major issues, performance, cost, funding, seat tecum schedule and so forth will be examined in some detail prior to a public proposal. after the tragic loss of columbia and the crew and the completion of the accident investigation, the chairman of the columbia accident investigation board noted that nasa needed a long-term strategic guiding vision. president bush after reflection proposed such a vision. finish the international space station, return to the mellon, establish a permanent presence there in the venture onward what words mars. as the committee well knows the vision was analyzed, debated and

nearly two years. you then concluded nearly unanimously it was the appropriate policy for the country and. three years later, after a change in the congressional control, the policy was once again approved although still not adequately funded. with regard to president obama's 2010 plan, i have yet to find a person in nasa, the defense department, the air force, the national academies, industry or academia that had any knowledge of the plan prior to its announcement. but rumors that either the nasa administrator or the president of science and technology adviser were knowledgeable about the plan. lack of review normally guarantees there will be overlooked requirements and unwelcome consequences.

for this plan and would that is worrisome. america has invested substantially for more than half a century to acquire a position of leadership in space. but for any organization prosecute to the for the team to maintain the leadership position requires steadfast determination and continued investment in the future. that investment must be made wisely. i believe that so far our national investment in his basic and sharing of that knowledge gained with the rest of the world has been made wisely and served us very well. america is respected for its contributions it has made and learning to sail on this new ocean. it is a leadership that we have acquired through our investment

and is simply allowed to pave the way. other nations will surely step in where we have faltered. i do not believe it would be in our best interest. i am very concerned the new plan has understand that will prohibit us from access to the low earth orbit on the mullen rocket space craft until the private aerospace industry is to qualify their hardware development as read it for human occupancy. i support the encouragement of the newcomers towards the goal of lower-cost access to space but haven't the rockets more than 50 years ago i am not confident. the most experienced rocket engineers with whom i have spoken believe it will require many years and substantial investment to reach the necessary level of safety and

reliability. if the experts are correct, the united states will be limited to buy passage to the international space station from russia and will be prohibited from traveling to other destinations in low earth orbit such as the hubble telescope or any of the frequently mentioned destinations out on the space frontier. as i examine the plan as stated during the announcement in the subsequent explanations, i find the number of assertions which are at best demanded careful analysis and at the worst do not deserve any analysis i do believe if the nationalspace plan is subject to the normal review process of this congress the aerospace industry and the reliable experts that we know in the military and the aerospace community america will be well

served. thank you what mr. chairman. >> thank you, mr. armstrong, very much. captain cernan? >> thank you, mr. chairman. i also want to again thank you for inviting me to express my personal views. the administration's 2011 budget as it pertains to america's role in the future of the human space exploration. one month ago neil armstrong, jim lovell and i released a paper concerning the administration's proposed space budget. we spent a great deal of time writing and refining over and over again the document choosing our words very carefully. words like devastating, fly to mediocrity and third rate stature. primarily because we did not want to be misunderstood war

ended we want to be misinterpreted. we particularly wanted to avoid any political overtones because cents the beginning days of nasa, its support has come from the traditionally by partisan politics and transcended our political differences. we've recently heard a lot of verbiage about the exploration of space landing on an asteroid, circling mars and someday maybe even landing on a red planet. the talk about a decision yet to come about building a large booster which might ultimately someday almost take us to the far reaches of the universe. there are however no details, no specific challenge and no commitment as to where or specifically when this exploration might come to pass.

and when one examines in detail the 2011 budget, know where kanaby found 1 penny allocated to the sort of space exploration. there had been worth about transformative technology heavy lift, research, robotic precursor missions and these are all worthwhile endeavors yet know where do we find any mention of human space exploration and know where we find a commitment in dollars to support this national endeavor. the general and i have come to the unanimous conclusion the budget proposal presents no challenges, no focus and is in fact a blueprint for a mission to know where. we find several billions of dollars allocated to developing commercial cunaxa us to lower

the earth orbit based on the assumptions and claims by those competing for this elusive contract who say they can achieve the goal in a little more than three years and they can do it for something less than $5 billion. based upon my personal experience and what i believe is possible i think it might take as much as a decade, a full decade and maybe two or three times as much cost as they predict. although i strongly to support the goals and ideals of the commercial access to space the folks who proposed such a limited architecture do not yet know what they don't know. there is a myriad of technical challenges in future to be overcome. safety consideration which cannot be overlooked or compromised as well as a business plan as investors they will have to satisfy. all of this will lead to unplanned delays that will cost

american taxpayers billions of unallocated dollars and lengthen the gap from shall return to the day that we can once again access lower orbit leaving us hostage as a nation to form power for indeterminate time in the future. this may be a sensitive point because i'm going to mention something about a year friend i ultimately have respect for, charlie bolden because we did at a briefing last week and it was in that briefing charlie expressed some concern over the potential to the commercial sector to be successful in any reasonable length of time. he indicated we might have to subsidize them until they are successful. and i can say with authority because i wrote this down and i put the words wow right next to

it because charlie said it may be a bailout like gm and chrysler as a matter of fact it may be the largest bailout in history. the united states spent half a century, mr. chairman, learning what we didn't know, trying to answer the questions we were not smart enough to ask the time to read developing technology that was needed to meet the challenge and get the job done. we came from alan shepard's flight of 1961 to the space shuttle in the international space station today. by the way with a side trip for two to the moon along the way. the evolution of the process was not without cost. not just in dollars but in the lives of our friends and colleagues. it took courage, eckert, dedication and self sacrifice of thousands of americans out there who allowed us to come this far

this quickly and although we pay dearly for our mistakes in this testimony all to their commitment and american ingenuity that everyone who went to the moon came home. ..

every agency that has any ownership it and any technical budget or benefit that might be derived from human space exploration. in addition, the best engineers, many of them who were yours over the years and management experts and america's aerospace community and their knowledge and expertise to a review of the proposed constellation architecture before it ever became a program worthy of consideration. appropriately as has been said already, under the law, both houses of congress, overwhelmingly with bipartisan support approved and agreed that constellation should go forward. it is unknown how much time is put into the existing budget proposal for 2011, or by whom

this proposal was generated but it is common knowledge that few if any of those government agencies referred to above were asked to participate, nor significant help with the dod or management expertise that exist throughout nasa today. this leads to one conclusion-- want to the conclusion that this proposal was most likely formulated in haste with any office of management and budget, and/or the omb. with little or with no input by his own admission in previous testimony, the nasa administrator, or i know for a fact by a nasa center directors for senior nasa management. if that were the case, originators were quite likely promoting their own agenda rather than that of nasa and

america's commitment to human space exploration. the space program has never been an entitlement. it is an investment in the future, and investment technology, jobs and world respected leadership and as importantly the inspiration and education of our youth. mr. chairman, u.s. how much of the budget goes into education. that goes into paperwork in the spin-off information. the inspiration for our youth came with neal armstrong walking upon the moon. it is a freebie that comes from space exploration. the best of the brightest mance at nasa and throughout the multitude of the private contractors large and small did not join the team to design windmills. but to live their dreams of once again taking us where no man has gone before. in closing, mr. chairman i would like to say a man-- america's human spaceflight from eisenhower to kennedy to the

present day. the challenges and accomplishments of the past where those of a nation. never head of a political party, nor of any individual agenda. those flags which fly today in those valleys on the moon are not blue flags and they are not red flags. they are american flags. if we abdicate our leadership in space today not only is human spaceflight and space exploration at risk, but i personally believe the future of this country and thus the future of our children and grandchildren as well. now is the time for wiser heads in congress of the united states to prevail. now is the time to overrule this administration's pledge to mediocrity. now the is the time to be bold, innovative and wise and how we invest in the future of america. i want to thank you mr. chairman for allowing me to share with

you my passion, and that quite simply is the future of our country. >> thank you are. mr. augustine. >> mr. chairman and senator hutchinson and members of the committee, i would like to thank you for permitting me to speak and represent my colleagues on the human spaceflight plans program. eye of the statement i would like to submit for the record. i should probably begin by saying it would be very difficult to gather a group of friendship in the two gentlemen beside me and the two that appear before us. i think we all surely something in common and that is that we want a strong human spaceflight exploration program for our nation. one might say why. our panel try to answer that. we said that certainly the science to be derived is not

unimportant. the same could be said of the economic impact, new products and certainly engineering achievements have been in a very significant indeed. while all of these things are important, it is the view of our committee, taken by themselves are not sufficient to justify the cost of the human exploration program. one has to justify that program, one can justify it based upon intangibles and the fact that they are intangible makes them no less significant in our review. the human spaceflight program lays the path for humans to move into outer space. as far-- it inspires young people. we have seen that in so many science engineers today who were inspired by the two gentlemen next to me and others like them. more importantly is what the american people can accomplish with their system of government, our system of free enterprise.

all this comes for a little less than a dime a day per citizen which would seem to be a very great bargain. one could save a great deal could be done with robots and that is certainly true, but there are certain things robots can't do. one thing would be for example to make the first repair to the hubble telescope program. i can imagine a robot that could have done that. similarly there are the intangibles. does anyone remember the name of the first robot that stepped on them and? launching a rocket to the top of everest is quite different-- but that is what makes the human spaceflight program so important to so many others. i was asked to make a few brief comments on some of the conclusions from a study i shared 20 years ago on the

space-- space program as a whole. some of the conclusions perhaps relate to the issues today. i would cite just five. the first was at that time, 20 years ago, we concluded that nasa was being asked to accomplish grand goals and has been given resources that didn't match those goals, and that was a very dangerous thing to do, particularly in space. the second was reflecting our skepticism of the reliability calculations that were being done. we said it was very likely we would lose another shuttle. sadly, that proved to be the case. we said that the heavy lifting was the most important project the human spaceflight program because it really is the gateway to outer space. if one thinks about it, the u.s. has not had an astronaut go more than 300 miles from here since my colleague here left it some years ago.

rethought this drug technology program was being starved, but we didn't have a strong technology program 20 years ago and we said one of the consequences will be that future decision-makers will have very few options. finally we said we needed our space program, balance in terms of human spaceflight, robotics and science and so forth. the recent review of the human spaceflight program that i had the privilege of sharing, we had 10 members on our committee. our findings were unanimous as reflected in the 150 some page report that you probably have had a chance to read. the first question is, why not just continue the constellation program? that is certainly the easy, logical answer. one could do that, but there are some problems with that and let me cite just two. when the constellation program was begun, what was now five years ago, four years from the

time we did our study, nasa assumed the budget profile after some 20 years and in talking to the people their brand asset that time, they really believed i think that they had good reason to accept that budget profile. be that as it may they receive each year only two-thirds of that amount. in other words it was a one third reduction every year. the consequence coupled with technical problems-- problems is during the four years that they aries one program has been going for example, it slipped somewhere between three and five years of schedule depending on who's numbers one chooses to accept. in addition we were concerned about the goal of the program which was focused on going back to them and rather than something more aggressive like to eventually going to mars or interesting intermediate stops. talking to people, many people, particularly young people, we

found that what we said 20 years ago we wouldn't be going back to them and, most of their response was they did that 60 years ago where they will have done it 60 years ago. that led us to be very concerned that our nation would not be able to maintain the financial support for a program that would require continuous support from five administrations, nine congresses and 18 budget cycles. let me turn to the president forum very briefly as it was modified in his remarks at cape kennedy a few weeks ago. that program very closely approximates one of our options, option 5b, and i should emphasize that we were asked to provide options, not to provide recommendation so that we could try to at least remain somewhat dual-- neutral in this discussion and we are trying very hard to do that. the president's program in our

view, at least as reflected in option 5b, they do differ somewhat. we consider to be a viable program and we raised it very highly in our overall assessment. we offer two very important caveats. the first is a vital part of that option is this funding profile. not just the next five years but throughout the entire program. the second was the decision truly be made on the schedule that they have been planned. i am sorry to report to you that as best as we tried, could find no interesting cuban space exploration program for some of money substantially below the enhanced budget level we have described which simply stated is it adds about $3 billion a year to the current national budget, and that has to be inflated appropriately. the most important request i would make to this committee on

behalf of my colleagues on the human spaceflight committee was that whatever program is approved, that it's goals match the budget. otherwise i think we will all be back here 10 years from now having this same discussion. and that certainly remains the hope of myself than they committee i had the privilege of serving on, that american have a strong human spaceflight program reflecting the title of our report, which was the human spaceflight program worthy of a great nation. thank you very much. >> thank you mr. augustine very much. i'm going to ask the first question. captain cernan you indicated we were potentially headed on a journey to nowhere. and i guess i have in all honesty, to respond by saying that i am not a huge, but i am a

substantial skeptic of human spaceflight. we are of approximately the same generation, but that is where i am. i cannot support going into space in and of itself. i agree with the president that we need a measured, nationally globally relevant and sustainable human spaceflight program, not one solely bound by place and time into space. but my mind is not closed, because i'm not an expert. i want to understand the value of human spaceflight. but i bring one other dimension to it. i want to understand human spaceflight. i am asking, not all three of

you, but many of you, that it not just be a matter of spaceflight, but that it also relate to the human condition, not only in the world but also in our own country. i think nasa was conceived brilliantly with the idea of simply doing something that is has never been done before. and we have done it now a number of times. and i don't mean to say by that that we should stop doing it. but i do think we have to stop doing things exactly the same way. nasa for a number of years has received a lot of criticism over how it is run it, manages programs. the various analyst have worried about over expenditures and things of that sort.

so, i want to understand the value of human spaceflight. so, i want one of you to tell me how nasa's human spaceflight program advance the agency's overall mission today and in the future, and i also want you to explain how human spaceflight, in that it is in a context of other priorities for nasa, helps the human condition sufficiently to its budget in america? speak you are asking for a lot. i will do my best and i will

certainly let my colleagues here help me if they would like. if you want to talk about technology, if you want-- technology which you have in your hands today, the technology around the world, the technology of communications themselves, the technology that i have in my iphone today is technology that was given birth to 30, 40, 50 years ago. i skipped over my comments about technology that we are talking about in a proposal. exploration drive technology and innovation, not the reverse. a group of the smartest young men and women in the world, scientists and technicians and save develop technology. for what? there has to be a purpose just like there has to be a purpose in life.

they have to know what they are trying to accomplish, what the goal is, what the problems are and then develop the technology that gets the job done. going to the moon, the technology that we develop to go to them and-- walk into our hospitals today. walk in our classrooms today. did that benefit-- is at a benefit to us humans on this earth today? i like to think it is. you can go deeper than that but let me get a little bit more philosophical. curiosity is the essence of human existence. who are we? where are we? where do we come from? where are we going? is there life on mars? are we-- what did mars look like a billion years ago? i don't know. i don't know what goes around the corner but i want to find out. it is within our, within our

hearts and souls and desire to find out and acknowledge discovery of what it is all about. yes we have been there but we haven't been everywhere. there is a bottom to the ocean. you can walk the top of the highest mountain on this planet and you can walk in the depths of the deepest ocean but you are still on earth. and there is a difference between the frontier of space to seek knowledge. is there life on mars? i know there have to be other reasons to go there and that alone isn't enough but that is one of the driving things. it is our destiny i believe to explore the unknown and to finance the questions and god knows for every answer we get we will come up with a dozen more questions. it has been that way all along. we have got more questions about the men now than we did before we left, before we went there. so, i have probably not been as

expressive as you would like me to be that the benefits to humans on this planet, whether it is communications, satellites, weather satellites, predicted storms, you can go on and on and on. those things were given birth to when kennedy said we are going to go to the moon. he was asking us to do the impossible. he was asking us to do what most people didn't think that the done and we didn't have the technology to do it. that technology is obsolete today in one sense but american industry, american ingenuity has built upon that so that we have today what we have in our cars, in our airplanes in our transportation, every walk of life. i will turn it over to neal. >> i have overrun my time. i thank you for your question. it was very helpful. >> senator hutchison. >> mr. chairman, i would just

add to what captain cernan said and say that, is it an improvement of our life on earth that we can put a satellite guided missile into a window from 3-mile south and instead of killing 500 civilians, you kill the enemy that you were seeking? is that an improvement, because that is what has happened because we explored in space. let me talk about the future. dr. samuel king, the nobel laureate from mit talks about but we can do in the space station in the future to study cosmic rays, which are most intense in space, not on earth. potentially as a future source of energy production. we are not talking about just going into space to go into space. i think that is a valid question and i think you have asked passed a ballot question.

if that were all we were doing, i wouldn't be pushing this. i am pushing it because, if we continue our priorities in space , we will be the ones that can capture the cosmic rays and have the energy, renewable energy sources that will keep us from having to drill for oil and gas and go to the renewable energy of the future. that is why we are doing this. it is the future and we want to do it. rather than having others do it, so that we harness it. i want to ask the question, because i want to go to something that doctor cernan said in his testimony that he didn't use, because there were so many others. so many other things that you did say. and that is, talking about putting all of the money into private contractors, but having nasa take this to that, whether

being a nasa project or private contractors. he said that we assume that the school says that these private contractors that are not yet tested in a little more than three years for less than $5 billion can put people into low earth orbit in a new vehicle. it assumes they can design, build and develop a spacecraft in booster architecture along with the infrastructure required. this includes redesigning the requirements of mission control, developing the support and training simulators, writing technical manuals for onboard procedures. developing the synergy between the tracking network and the uniqueness of a newly designed space vehicle. these are just a few of the developments and support requirements to put a new manned system into space. basically what you went on to say here is that you predict that it will be 10 years, not

three, for the private sector to do this at a cost which possibly could mean bailing out the companies because we couldn't really do all of that under $5 billion. my question is, do you think that money ought to be spent with nasa redoing their plan, so that they are in control, but not just with blinders on as it seems that general bolden was saying. within my budget i can do this. how about being more creative in your budget? how about not doing just consolation, but a new configuration of consolation. how about an oryan that isn't just a return vehicle but one that can take people into space -- space as well. put our money not into termination contracts at $2.5 billion, not into programs

that would try to help people who are going to lose their jobs, not into renting space on soyuz but developing our own techniques so that we will gain these advantages would that be what you are proposing captain cernan in your statement? >> well, referring to, think you asked the first about all the infrastructure that is needed to support the commercial sector, which is one of the reasons why the costs would go way up at the time. there was a report that said it would take probably 10 to $12 billion to support the commercial sector and it does not count infrastructure. the simulators, the mission reconfiguration in mission control, the air and rescue has to come down. the procedures, everything that you have to develop.

a lot of people think that we played handball, put on a spacesuit and jumped in a spacecraft and went to the moon. we went years and years helping at nasa, martin and rockwell, helping design, develop and test-- we were out there 24/7, six, eight whatever number years it took to get the spacecraft developed properly unsafe and we had confidence in. how and when is that going to be prepared for and what is the commercial sector-- how are we going to handle it? how are we going to pay for it? is it going to be a nasa program or a program that nasa pays for that we let someone else run? are they going to respond to our regulatory requirements on safety? these are things that i don't think have been addressed properly. i don't think that they have been looked at.

i think what you asked is where i would go in and my opinion is probably not worth much these days, but i am concerned in the near term about the gap. in the long term i concerned about exploration, because that is my bag, exploration. going where no man has been before and doing what others have been done before or were afraid to do. that is exploration but in the near term, we need to, and i know how you feel about shuttle extension. i don't know anything about the capabilities of finance. i think we have to stretch the shuttle out and close the gap at the front and. i think we have to have something that closes the gap on the backend. i don't believe in commercial space. i believe in something that $9 billion already called aries one and orien. get it up and get it running and instead of a potential gap of a

decade we might not get down to three, four or five years. i don't know but at least we will tell the rest of the world that we are not going to stay slaves to what they say we can do or not do in space. we will have our own access even if there is a gap of a few years. we are going to get there from here. get that done senator and while we are in the process of doing it, if you want to redesign consolation long-term exploration objectives, and build a new booster, or whatever it takes, that is the time to do it. >> thank you mr. chairman. i want to try to question, and it is a good question. i want to thank you for your personal attention that you have given to consider eating right

here the whole time. i am profoundly grateful for that. my answer to your question, why space, is because we as americans are by nature explorers. we have always had a frontier. when this nation was developed, we had visionary leaders like thomas jefferson, who paid initially about $2000 for lewis and clark to go westward. bad trip ended up costing an extraordinary sum of $36,000, but it was fulfilling our destiny as a people which is by nature, we are explorers and adventurers.

and if we ever give up that characteristic, then we are going to be a second-rate nation. that frontier is no longer westward. that frontier is upward. and as jane talked about, we are inquisitive, we are curious. look what the hubble space telescope is now opened the new distance of knowledge paring back in time to the beginning of the universe and once we get the james webb telescope up there we may be able to go right back to the origin of the universe. is that valuable to us and an inquisitive people as citizens of planet earth? i think it is. that is my answer to the question. now, may i ask a question of dr. augustine?

dr. augustine, it goes without saying, thank you for your steady hand throughout the years you have heard the strong opinion expressed by two american heroes and the committee that you headed contained representatives across the entire spectrum of government and aerospace, and it included military as well, and it included some astronauts. now, can you describe how this administration's plan, and you can say how it has been amended as the president amended it at the kenneday space center, can you describe how it compares with the option that you laid out in your report?

>> i would be happy to do that senator nelson. we had a possibility of up to 3000 options based on the parameters we looked at. we know that five main options and subsets under several and you mentioned this option the 5b is pretty close to the one that was proposed. there are two possible differences. there are two potentially significant differences. one is that our options went ahead with the development of the launch vehicle right away rather than wait up to five years. and together is that we had a funding profile that added $3 billion a year and inflated beyond that with the aerospace inflator so our funding profile was substantially greater than the one that we were offered

last year because we couldn't find a good answer from the omb profile. there are advantages. it gives you time to use more dance technology. it helps with the early budget pressures when you are trying to keep the space station going. i assessed at the same time that you pay the price and being able to pursue the program and i think the biggest risk is 15 years comes or whatever it is, that you don't restart in that would be a tragedy in my opinion. that is the biggest risk. the option we looked at, 5b as i said, in assuming that the president's program is fully funded, i haven't seen the out-year funding or any details so i can testify to that. soyuz is fully funded.

it was a rather exciting program but rather than wait 15 to 20 years and then land on the moon, after a few years, every few years thereafter, it accomplish an objective that you could point to, even-- with an asteroid. you could go to conduct refueling observations and do maintenance. you can navigate mars. you can orbit mars. you can land on one of mars moons and from their control robots operating on mars, which overcomes the huge problem of robotic exploration on mars that takes up to 40 minutes to get a signal back and forth from here to mars. it offers exciting advantages

and at rings mean to other aspects that are similar to ours. we didn't say to shut down the shuttle, and the only way you can avoid the gap, and keep the shuttle going, the gap was created five years ago. that is a fait accompli and if you want to avoid the gap the only way i know and of course by the gap we refer to depending on the russians in lower orbit. our view is it would be a seven-year gap and not a five-year gap so we'd better get used to that idea of. but, to continue to operate the shuttle, you can avoid much of the gap but then you-- to develop whatever has been replaced in some version of consolation. in our deliberations that kept coming back to how much money you have available. you get all of these trade-offs that are hard to make.

if you start a heavy lift launch vehicle now, it is that much less you would have to improve the orion. one thing that solves the problem is the $3 billion a year and i don't know how difficult that is. >> i want to make one final statement-- i am sorry. >> i understand. >> what senator nelson indicated was exploration. i agree. that is the nature of what americans have always been. what i think it's also worth considering and why i asked in my question to the captain how human spaceflight continues with the tradition of humankind on this earth.

it added another dimension to it. there are various forms of exploration. one is doing the undoable in the physical exploration sense, lewis and clark. you two gentlemen, what you did has caught the world and the world's heart stopped. but you know what also stopped, in 1878 i think, when sir isaac newton came to open a new medical university called johns hopkins. and he said that in the 2000 years previous to that date, there have been no advances in medicine at all.

during the civil war diseases were thought to come from outside of the body which is why compresses were constantly being applied to wounds, but not necessarily disease that comes from inside the body which we now know to be different. he did something and johns hopkins did something. in those days there was no federal funding for research of any sort. this was 125 years ago. there is no federal funding for medical research at all. there were no requirements. harvard had medical, stanford had a medical school. you even had to have a high school diploma to get into a medical school, much less a college degree. so they took ewan taught you nothing.

what johns hopkins did, when sir isaac newton said, you follow the truth wherever it takes you, and there can be no compromise on that. you do what you have to do to follow the truth in science, in medicine. and as a result of that literally, the medical education and begin a has been revolutionized. and we all understand that now. now that is also-- it is not spaceflight budget is doing the end to a vote, taking unknowable, challenging with no federal resources of their private foundations, this idea of helping medical research.

you could read about all of this and it took called the great influenza epidemic of 1918 by john barry. it tells you all about it. so i just wanted to say in parting not to rebut anything that has been said, that exploration is a broad word. the american search for newness finds many outlets, most of them quite glorious, but not all of them. i thank you. >> senator brownback. >> thank you very much mr. chairman. this is the kind of hearings we ought to have all the time. why not do what captain cernan suggests here, let's face out the shuttle and use that money to fund and move forward with

consolation. we spend what, $9 billion on consolation thus far? this is one thing that drives me nuts, that we stop space programs all the time. we put five lien on it and the administration goes somewhere else. at drives all folks crazy but you noted correctly, consolation was underfunded by a third in this, but why not go the route that captain cernan said and the way to move forward with consolation? >> that is very good question and it is a question we addressed early on. i have met britain more articles than i would like to admit over my career about don't change programs, don't start and stop them. if you are going to start them finish them unless there is a compelling reason to stop but in this case we think there is a compelling reason. yes, it also is very tragic to

have to write off $9 billion are part of it but it is a cost and it does contribute significantly i think to the building of a heavy lift launch vehicle sometime in the future so part of the money is recoverable. the real issue i think comes down to the fact that when the program was started, really the aries one that is at issue here and i say that because the constellation program as you know senator has four parts. it has aries one, the orion capsule, the lander and the habitat on the moon. the latter two weren't able to be started because-- so really it only had two parts of the money has gone into. one part is the orion which eyes i understand the president's program, most of that will continue on so it is really aries one. aries one was set up by nasa in 2005 with two primary missions.

one primary mission was to support the international space station, to carry astronauts there. the second was to, really three. the second was to be a part of the space exploration program 15 years from now and the third was to provide technology to build a heavy lift version of aries. the problem is it immediately slipped what our committee believe is five years. by the time it is developed, at least on the plan that was being developed, the international space station is going to be back in the ocean, and if you add five years to the life of the international space station, by the time to aries gets developed it will have maybe two years to support international space station and then subsequent to that he will have a 15 year hiatus on-- you will

either be the most expensive way in the world to put people into lower earth orbit or after that it will be useful again from the exploration program but there is this long downtime, so the program made since when it started. today it is not a bad program. the issue is not can we do it but should we do it, at least in the forum that was laid out. >> you don't believe we should do it? >> our committee and the options we looked at, i try hard not to choose sides but it was one of the least attractive that was laid out. >> i am taken by captain cernan's comments, which is we don't think we have a plan now. we have got a lot of ideas floating around but we don't have a plan. we are working off of a plan. i agree with the lower earth

orbit that we have to have the commercial sector. but i want a plan to go on and this seems to put that off for five years. but you say the budgetary numbers are such that even if you took them, the shuttle money, you can't get there with a plan that we were on and so you are just better off going to something else. >> it our conclusion with a budget that was presented to us, there was really no way, particularly with nasa's high cost, and you and i talked about this, to conduct a human exploration program that would be meaningful and safe at all. >> i hope this is the beginning of the discussion mr. chairman, that we have got some good thoughts laid out here but i hope this now leads into getting elbow grease and honest digging into how we move forward on these things.

i thank you or your service. mr. cernan, mr. armstrong you are great american heroes and i really appreciate you wanting to come back and fight for the exploration that you started and gave us such an inspiration for. and you don't give up on that inspiration. that to me is worth a huge amount, even if you can't measure it. it is that intangible exploration that is worth a lot of money for us to do and for future generations. >> senator hutchison. >> yes, i wanted to say that i have heard budgets as the reason stated for why we can't keep the shuttle flying and close that gap. if we are talking about putting $6 billion into the private sector companies, some of which

are not developed yet or tested, and then we talked about having to, if they don't make their budget, having to bail them out because you have already put $6 billion in. i would rather talk about what is the best plan and then try to determine the priorities so that you stay within the budget, but not become wedded to only one way of doing it. but determined what is the right plan to get us where i think all of our goals are, and that is to be able to use the space station and to explore and to assure that we are getting the scientific product that we have borrowed invested $100 billion in. if we let the space station be

in jeopardy of even being useful by not having the backup system that we control, i don't know that that is good budgeting either. so i have a problem with what i'm hearing and the lack of creativity and what we do within that budget that i saw, especially in the first panel. i would like to ask mr. armstrong, on the safety issue, and in your written statement you talk about the taxi service that we will be buying from the russians and soyuz as being perhaps not necessarily the safety standards that we would have on our own shuttle. would you talk about the safety issue? >> thank you.

the prime recommendation of the colombia accident investigation board, with respect to new vehicles in the future was that safety be considered the prime consideration. who can argue with safety? that, safety, you can't put all the money into safety. safety has to be balanced with program requirements and others, and an acceptable level of safety. that is what you are really searching for. we have pretty good confidence on the shuttle right now. we have had a number of safe flights now, ever since the

colombia and it seems to be operating well. nonetheless, it is a 40-year-old technology, but i do believe that it could continue to be operated safely, as we have in the last few years and have pretty good confidence level on that. the aries one was projected by my outside safety experts to be the safest vehicle that we could project in the future and it was perhaps two or more times better than all its competitors including the shuttle launch aries five and all the expendable combinations. they did not make a comparison with the commercial entries, because they really did not have enough data on those configured

to reject inaccurate safety value for them. >> let me ask you this. taking the soyuz and the capability that we have to judge its safety over the long-term, you know, they are using the same technology, probably 40 years old that the shuttle probably is, but our capability to discern the safety of the soyuz and the new commercial vehicle, do you think that's safety would be at a disadvantage with the shuttle as compared to the new spacecraft that we don't really have tested yet as the soyuz? do you have any concerns about the safety of the soyuz or ability to judge the safety of the soyuz for a seven or 10 year period is what mr. augustine and

captain cernan have suggested would be the real timeframe for the gap? >> it is very difficult to project that answer and tell the vehicles have gotten into a flight environment. and are more carefully configured and described in detail. i think that the soyuz, it is clearly a very safe vehicle to return to earth on. i think the shuttle would continue to be safe for some years. and we could depend on that. it might take a little extra care but i think it is certainly doable. i think the key here on the aries is that it was designed with the recommendation of the

ca i.v., that is safety first, it was designed with that in mind. the commercial vehicles, i just did not know what safety considerations they have in their design but i'm certainly hopeful that they are good. but i just don't know. >> in your testimony, you also comment on the o'briant white which has the capability to bring people back off the space station did not go up and it is certainly not going to have the capability to go to other destinations in lower orbit is being may be an expensive project with limited usefulness. do you think that that is the best use of our budget constraints, to have a orien lightswitch has that limited capability as opposed to putting the same money into an orien all the way that would be able to do

some of the things that really the president said were his goal and which i think are quite exciting, doing an orbit around mars or some of the other destinations besides the space station. >> no, i do not think it would be a good use of that segment of the funds in the budget. i think that because it would be quite an expensive vehicle to design and test, and it would be quite late if ford would be ready. it wouldn't be able to service the space station for very long after was finally completed and second the configurations probably not very good for some of the most serious emergencies like a medical emergency where you have to have instantaneous departure from the space station

and return to earth because the configuration of an orien type vehicle has poor aerodynamic performance and consequently can't change its destination and arrived quickly at some point. it is going to come down in the ocean or on land and wherever it is going to come down, if it is an immediate emergency, departure. >> may i? senator we are to have under contract to soyuz up there for rescue but the capability to serve albert, so the redundancy or the reason for an orien blight puzzles me plus the fact the soyuz lands on land, parachute, retro rockets and so forth in our own landing facility, now we are going to have a ballistic, maybe slightly

lift capability spacecraft very much like apollo and it is going to have to land in the notion. now we have got to regenerate the recovery forces. it is not just the cost of-- that vehicle which has to hazmat has men in it before you can put come and i use the term generically, before you can put men are human senate to bring them home safely, you have got to rate it to start with and then you have got to have the recovery forces "standing by" somewhere within read somewhere that is going to have to recover the spacecraft, a cost nobody seems to recognize art knowledge. there is a lot of hidden, underlying costs in developing a spacecraft that is going to come as you said earlier, have the capability of the one we really need. if i may, we talk about budgets and cost of everything, and i want to remind the american people out there, and maybe then even some people in congress,

that it cost a little more than a half a penny of every tax dollar that you and i send to the federal government to pay for space. shuttle station, hubble, opportunity and spirit on mars, a little more than half a penny. i don't think the american people know that. i'm not sure if we can put a little box in the 1040 and say would you give a penny to nasa, that we wouldn't be able to afford almost everything we want to do. >> well, i think that people would believe that the investment that we have made has improved the quality of life and health, mris that people can get now, the magnetic resonance imaging has transformed health care. there are so many things that space exploration, the preparation for it has given us

in quality of life, i just want to make sure that we don't lose that advantage in the capability to manufacture those products in america for the quality of life in america and the world. we do have a vote, so i will close my part and thank you all very very much for coming. being so direct especially, because we had to speak out and try to come together in a better plan than has been put forward so far, and i think general bolton is going to try to work with us, to see if we can come to a plan that everyone can feel is the right approach for america and for our future. both economically and for the scientific productivity that we hope to encourage our children to pursue. thank you mr. chairman.

>> mr. augustine, did your commission determined that aries would be safer than the existing shuttle, and if i recall, was it via factor of 10? >> i must confess, i find myself a little bit in this situation, until you build this-- our committee is very skeptical of the reliability of safety models. most of the failures we had were not even in the models, so i would be reluctant to make a comparison. as gene pointed out the areas was designed for specifically liability which should bode well but, by the same token, and i would like to say this about the

commercial launch vehicles if i might senator although it wasn't your question. i think there are two things that have not come up in this conversation. one is that nasa, in a plan that has been put forth, would have a responsibility to oversee the safety and reliability for the commercial launchers. in other words, that part of it is nasa's responsibility to oversee and general bolton understands that. ..

is just about the same elapsed time as it will be for the time they left until we return to the moon under the plan previously in place so it's an interesting

perspective. disappointing. mr. armstrong, duke made the case in your prepared statement and by the way we will insert in the record jim lovell's statement as part of the record. but we ought to go back to the moon. i want you to tell us why you think returning to the surface of the mellon is important as opposed to a lunar fly by and going to the points as we ultimately have the destination to go to mars. >> thank you. i do believe that there is value returning to the moon we know a

thousand times more about the moon than before apollo but there is still so much of it that is undiscovered and um ventured upon. there may be of valuable minerals or other materials in the lunar surface that can be used at such time as permanent settlements will be made. it's worthwhile knowing about those things. so i do think there is value in giving to the surface. nevertheless there is also value in using the moon has location from which you do other activities within the migration points or other positions of the lunar distance that can be reached easily by communication

and allows the mission control to continue to be involved in efficiency and safety of the operation and we can learn in the lunar regions many of the things that are still on known or not developed in the clearance state of knowledge about interplanetary space travel particularly things like radiation protection and so on where we have the possibility to get out of trouble when we get in because we are so close to home back to earth. that's a possibility that we will not have once we find ourselves months away from earth. i think there is great value and continuing to include the moon as an integral part of the space

exploration program as we go forward. >> okay and i will just close by saying mr. augustine said the delivery did this on the panel and they pointed out that one of the things you have to sustain the support from the american people and what the chairman of the augustine commission wanted to do was to get excitement returned and there was a legitimate question raised. can you get them by going back to the moon? and perhaps you can if we know what our goal is. now the president has stated that goal. now let's see if we can achieve it. >> thank you very much. the meeting is adjourned.

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now a hearing on how businesses use consumer credit information for purposes other than lending money. laws gutierez of illinois chairs the subcommittee on financial and institutions and consumer credit. this is three hours. [inaudible conversations] [inaudible] thanks to all the witnesses appearing before the subcommittee today. today's hearing will examine the

impact the use of credit reports and information have on consumers outside of the traditional use for lending and credit purposes. we will examine the use of credit based insurance was and whether a person has default and whether or not a consumer's credit information should be used to determine their employability. we will be limited opening statements to ten minutes per side but with objection the record will be open. opening statements will be made it part of the record. we may have members that wish to attend the duenas on the subcommittee as they join as i will offer unanimous consent for each to sit with the committee and for them to ask questions when the time allows. for i yield myself five minutes for opening statements. this morning's hearing is about the use of credit information in areas such as insurance, underwriting and employment purposes. we will hear about important yet

complex and often opaque process these concerning credit insurance and insurance scores in the first panel and in the second panel we will hear about the equally important to a vast number of consumers little known or understood use of credit information for hiring and even firing decisions and the effect medical debt has on one's consumer report even after you paid the medical debt off. when legislators and regulators attempt to fully grasp an issue such as credit based insurance scores they see a complex system latent with ever-changing computer applications and models. but it is precisely the complexity that should make the hearings in congress still further into an issue that affects every single american who owns or rents a house. a car has insurance, has a job orders looking for a job or is likely to incur medical debt. to most consumers know that

their car or homeowner's insurance rates may go up due to their credit scores? do they know if one of the medical bills goes to a collection agency and they pay in full it will still affect their credit report for up to seven years with extra people realize that even in the tough economic times preemployment consumer credit checks are increasingly widespread? trapping many people in the cycle of debt that makes it harder for them to pay off their debt and for them to get the job that would allow them to pay off the debt? i wonder when you go to state farm or allstate or geico to get insurance the eckert is core and if eckert is worse negative they are going to charge more for your insurance to this and you a note in the mail telling you that you're going to pay more for the insurance? these are all very important questions the american public needs and indeed the current

system facilitates the denial of employment to those that have bad debt. even results the denial of employment. the vicious cycle and has a good crestor can't get a job. and i wonder who is most likely to be effected especially in the economic times. extend unemployment compensation? what about the national debt? why have a way we could settle and limit competition. how about letting somebody get a job and in prove who they are without mysterious numbers coming out of a black box somebody nobody knows about it. that is a committee in this hearing. sick and so for this year's credit reports, eckert this course and impact on consumers we will look at reports, studies about the predictive nature of insurance court and traditional scores among other things. but as we do so we also need to look the basic guiding principles of equity, fairness and transparency. some have contended there is no

disparity of minorities injured scores some will say even if there is a disparate impact on some groups the system still doesn't need to be changed. the question of how productive the credit based insurance score is on an injured likelihood of blame is important as it is the predictive value of the traditional press corps used for granted. but as long as they're continues to be disparity in the outcomes of the current system for racial and ethnic groups and a long glass and geographical line i believe the system needs strenuous oversight and fundamental change. how to correct the disparity in the system with its disproportionately negative impact on minorities and low-income groups while maintaining the credit information as a risk management tool is a talent we should take on. for example on issues like use of credit information for developing insurance pricing and the inclusion of medical debt collection determining the risk i have doubts as to whether

there are the uses of date. the equal employment opportunity commission, the federal reserve, the brookings institution, federal trade commission and texas department of insurance have all found racial disparities between african-american latinos and points and chris cord success to and we will see this as a wide-ranging implications beyond simply obtaining consumer credit. depending on decisions such as determining their insurance rates or even something as vital as whether or not to hire someone that is based on something that is shown to possess a degree of bye yes that is difficult to say at least. but i welcome that estimate is one of those who believe the system works and of those who believe the system needs to be changed to work in a more equitable fair and transparent faction. in the same spirit of transparency, i am making it clear at the outset i side with the latter. i don't think you need any sort of score to predict that from my point of view.

in order to persuade the committee from moving forward on the legislation that was strongly limited what we believe to be fair practices the industry witnesses before us must prove to me not only are the questions to colin colin but the their fair and equitable to americans. the ranking member mr. hensarling is recognized. >> for as much time as you need. how much time do you want? >> for and have for calling this hearing. as we know last week we were greeted with more bad economic news in the nation and as on an employment ticked up again to 9.9%. again on a plan of remains mired at a generational negative since the president asked for and congress passed the stimulus bill approximately 3 million of

our fellow countrymen have lost their job. countless stories of hardship and countless stories of suffering and we know that the number in plan a rate hovers around 17 to 18% of the country. any historical standard we should already be out of this recession. we should have robust gdp growth and robust employment growth but unfortunately we do not. i believe as do many that the reckless spending, the enormous debt and deficit that has been brought upon us by this congress, by this administration, the serial bailouts, the government takeover and legislation passed but ultimately restrict access to credit have contributed to the fact we are still mired almost double digit unemployment i believe the administration and congress are holding back our economic recovery. an economy that wants to recover.

the economies work on reverse gravity. what goes down must come up. egypt is recovery has been the most tepid languishing recovery in the modern economics era. i didn't even mention the impact of the high-cost health care bill or the national energy tax. as i talk to small business people in the fifth congressional district of texas and investors and i talk to bankers and fortune 500 ceos i hear the same message over and over and that is all i am not willing to expand my business and create more jobs today. i don't know what the health care costs are going to be for my employees or with the energy cost might be associated with cap and trade. i don't know what my tax bill is brenda diaz tax relief expires eight years and and i don't know how my nation is when to pay for all of this debt. more taxes, more inflation. given the backdrop i would hope

any legislation the subcommittee were full committee considers that we would consider jobs to be job number one for our committees. yet i feel we are considering three more policy ideas that will further harm job creation in america by restricting access to credit. all of the ideas before us are either going to prohibit accurate data from the pantry credit flail or prohibit the use of accurate data that may be in a credit file. to many of us this is the distinct odor of government censorship even the risk of the orwellian thought control. the bottom line is the kurdish files will the road risk-based pricing of the products which in turn is going to lead to less available credit, more extensive credit to at a time again when our nation is meijer and almost

double digit on employment. now should curtis course be used in insurance underwriting are they predicted? i have seen a number of studies that claim they are but most importantly i suppose those who are using them find them to be predictive and i believe they have an incentive to get their right otherwise they would ultimately lose money and have to fold up their shopping. those who get it wrong ultimately go out of business. maybe one entrance company feels that those who wear blue ties are riskier than those who don't. i don't know. i don't know if that is predicted. tautological but maybe it is. one company may decide to use it and another one might choose not to use it. information about this charge medical bills, you know there is a lot of setbacks one can have in their life that ultimately impact their credit to force, unemployment, medical bill.

but at the same time or they predict if? if they are productive if we don't allow that information and ultimately small businesses many of which are organized as sole proprietorships -- >> [inaudible] >> in that case, mr. chairman michael -- [inaudible] >> i am going to ask unanimous consent miss gilroy be allowed to sit in this hearing and grand two minutes for an opening statement. hearing no objection, so ordered. >> thank you, mr. chairman and for your leadership in this important issue. and i thank the witnesses for their time here today. i'm interested in what you have to say particularly about medical debt and the impact it has on the credit scores for millions of americans and their ability to get an affordable home loan or a car loan after they've paid their medical debt. and i ask for unanimous consent to enter into the record a

letter written to me from my constituents, julie mueller of columbus ohio. she's a responsible young adults, college student. she pays her credit cards on time, she purchases health insurance and checked with them before she was going to have an expensive procedure to see if it would be covered. she was assured it was and that was her understanding until the bill can and her insurance company denied coverage she ended up in a yearlong dispute on that. eventually resolved but it destroyed her credit score and now she's worried about her ability after college to buy a car, to buy a house, and i worry it might even affect her ability to get a job. i introduced a medical debt relief act to help hard-working americans like julia to play by the rules, pay the medical debt, yet our find chris course adversely affected for years to

come. today we are taking an important step in the right direction to do with this important issue. i want to tell julia when she writes to me that, quote, fiscally responsible and i would like to be treated that way. but that is what we are aiming to do here today. thank you, mr. chairman. i yield back my time. spec the gentlelady yields back the time. mr. garret. okay, mr. price is recognized. >> the last two years have taught anything it is that risk is unavoidable and ever present. for the economy to work businesses must people to price products for risk that they incur. risk-based product to the comprizing is important when you try to determine the reliability of the injured and exposure of job creators. a credit based insurance laws have proven to be the most productive factor in determining the likelihood of a consumer filing a claim. the risk model enables insurance

to more accurately underwrite and price for the risk and when this is, well everyone wins. democrats want you to believe everyone shouldn't be judged by past actions. however it is the americans' right to pull yourself up by working hard and making responsible decisions to read and what makes the risk-based pricing insurance score is important could be ability for people to improve their scores and lower their rates by paying their bills on time and taking responsibility for their financial decisions. so ask yourself what would happen if there was no risk pricing? everyone would get the sampras re was alleged insurer has to pay to cover a claim. this would result in significant and dramatic increases in rates to virtually all americans, less credit available, more expensive credit and more job destruction. this is clearly not the most wise ave. i look forward to the testimony and hopefully our response in wisdom and i yield back.

362 >> thank you. ai thank the witnesses for appearing to read mr. chairman i am concerned about the credit based insurance scores especially as they relate to employment. it's very difficult to be poor. it's very expensive to be poor in poor neighborhoods goods cost more. important neighborhoods you find that unemployment is obviously higher for any number of reasons. it's very difficult to be poor. and when you are poor and you needed job and it's difficult to get a job because of credit scores it seems the compound. i injury concerned about how we approach credit scoring with reference to the employing people is especially people who

are poor. i look forward to hearing from the witness is and i look forward to solutions that poor people won't find they are being insidiously discriminated against. thank you. i yield back the balance of my time i ask unanimous consent mr. manzullo be allowed to sit on the subcommittee and hearing no objection to recognize him for a minute and a half. >> thank you mr. chairman. there is a distinction between people who incur medical debt to those who go out and charge a vacation and consumer items. i practiced law for 22 years and have been through a thousand bankruptcy's and in several of those cases the people put in the bankruptcy either exhausted insurance or had no insurance and the filed bankruptcy not because they wanted to, not because they did anything intentionally but simply because

they couldn't stay off of their medical bills. i talked to two colleagues of mine in rockford illinois specialist in bankruptcy. if then threw 30,000 bankruptcies together and one has a record for credit card debt, $140,000. mr. chairman those for all medical expenses. and we have to draw a distinction between people who because of their spendthrift outrageous on credit or the conduct go out and buy things they need just because they want that and people who are caught up especially today without insurance or lack of insurance or many times very high deductibles, co-payments etc. and i am a sponsor of this bill because it is the right thing to do especially with so many credit card companies the case my wife and i have done a simple 150 donner coach put on the way it took us four years and it

wasn't until the fair reporting act they finally backed off on it and so credit card companies reporting companies i'm sorry, credit reporting companies do a job and i understand what they are doing. but for people who are the unfortunate -- >> [inaudible] >> they shouldn't have to suffer the consequences. >> my friend, mr. watt is recognized. specs before, mr. chairman. i may not even take a minute. i just want to applaud your continuing effort to shed some light in this area, an area that a number of us thought looking at doing the last term of congress and found some very disturbing things like credit scores or determine your automobile insurance rates.

and i never could quite figured out why somebodies credit had anything to do with their driving record or how somebody's credit had anything to do with the insurance rates they pay on the homeowners' insurance. there's a lot of disconnected and we need more information about this so that we can make some good judgments and possibly do some legislation in this area and i think that is why this hearing is so important and i applaud the chairman for the hearing. thank you. >> ai thank the gentleman. mr. garret of new jersey is recognized. >> thank the members of the panel that are here. credit information has obviously become an essentials and valuable tool in allowing various market participants to more accurately price for the

risk and one of the areas examined today is how the information is used by insurance companies determining the premiums they charge for their clients. there's been numerous reports as studies and by using consumer based insurance determining premium rates insurance companies are basically more able to accurately price and the rates to sycophant plea decreased for a broad majority of the holders. credit scores are just one of a number of different points that insurers consider in determining premiums. if we were to limit -- more people would pay higher premiums and less people would be able to purchase insurance. neither of these are good thing. so in the week of the recent financial crisis instead of looking for ways to decrease credit availability and accurate

pricing of risk i believe congress should be considering policies to help expand credit for consumers and small businesses and lower the cost of credit and insurance premiums for the majority of americans with the current unemployment rate around 10% we really work on initiatives to expand economic opportunities for all americans. no place for the government to micromanage the nation's small-business is and for frisking be accurate price of risk and with that i yield back the balance of my time. >> okay. and last for the site we have congressman maloney. >> thank you mr. chairman. first i want to welcome mr. wilson from lexus nexus headquartered in the district i represent and i'm proud to represent this country -- this company that is valuable to the country and the number of consumer complaints related to the credit scores has been going up and i look forward to the testimony of others on how we can better move forward in a way

that is fair to consumers and fair to business. thank you. >> we have two panels this morning. so stop the covers will focus on insurance information for underwriting and the second donner creating information and areas as employment. the first panel consists of three witnesses, the honorable michael mcgraff on behalf of the national association of insurance commissioners and i welcome you here from illinois. during a great job in the state of illinois and happy to have him here. then we have mr. david snyder vice president and associate general counsel public policy american insurance association and the third witness is mr. price of georgia. >> thank you mr. sherman. mr. wilson as a constituent and i want to welcome him to our panel today.

mr. willson served as to the eckert analytics for the group at lexus nexus risk solutions joint equifax in 1983 and early experience included the walls us marketing analysts and field operations manager for electric and gas and telephone utility customers. then served as manager of strategic planning and research before moving to equifax in the development. he worked extensively on the flight of introduction of the first credit scoring models as a wealth of knowledge in this area. the current roll with nexis and lexis he continues to support insurance risk scoring models and manages the team of statisticians and modelers and he holds a b.a. in marketing and brand university down in georgia and m.b.a. from mercer university and other great institution in georgia. we want to welcome mr. wilson. you are welcome here. >> we are going to start with the gentleman from illinois,.

you have five minutes. when you see it turning yellow you have one benet. one minute last quite a while. when it is read five seconds later we hope he will wrap up. you are recognized for five minutes. >> thank you may to become mr. gutierez the director of insurance of illinois and serve as chairman of the property and casualty committee for the national association of insurance commissioners. today i offer the views of my fellow regulators on behalf. thank you for your intention to the use of credit information and personal lines of insurance. h.r. 5633 sponsored by the chairman last year coincided with our own effort to scrutinize the use of insurance scores. as regulators we do not fashion

public policy those decisions are made by congress and state legislatures. states view the insurance scores from different perspectives. they have band the use of credit information and others impose rate bands or prohibit use on a renewal or allowed only if credit information would reduce premiums. still others require only that credit not be the sole basis for an insurer decision. and illinois on like most states our law requires only that insurers consider extraordinary events and does not even recognize military deployment as an extraordinary event. in the illinois an older gentleman from a small town road that he had paid cash for everything his whole life, car, farm land, his hand written note explained he bought car insurance before the law required never a fancy meals or bought pricey clothes. he even added he'd been married 47 years to the same woman but

confronted a greater. illinois law we should be improved we applaud this committee's desire to move past the rhetoric of interested parties towards the fully informed approach. to this an end we held public hearings and 20093 interested parties, insurers, actress and insurance vendors argue that injured scores allow for more accurate underwriting and ratings. consumer representatives argue that credit based insurance scores had a disparate impact on the members close to the to protecting clauses and premised upon irrelevant if not inaccurate information. we heard in great length about the studies that support both positions. and our own state insurers sell homeowner insurance in urban neighborhoods where homeowners were previously stretched to find affordable coverage. insurers argue that credit based

insurance scores have facilitated the market change. studies also indicate individuals of racial and ethnic minority heritage or over represented in low credit score categories and credit based insurance scores discriminate on the basis of the heritage. our national focus has turned. rather than engage in the circular debate we've undertaken the two-pronged strategy to assist the policymakers. first we are developing a standardized static or detailed interrogatories for the personal lines although companies. the data will target the impact of different factors upon rates paid by consumers. gender, marital status, eckert discourse among others. the data will enable congress and the states to measure the consumer and market impact of one states law versus another. second, we are difficult and a model to bring insurance score

vendors with an insurance regulators oversight. one panel indicated in written testimony the vendors are already subject to state regulator oversight on which we largely agree. however the same vendors argue the opposite before the naic and we tend to eliminate ambiguity. as digital information expands access to consumers details insurance regulators remain vigilant protecting consumers against potentially abusive underwriting and trading practices. we are watchful for underwriting rating formulas that may constitute a proxy for the race gender or other protected characteristics. insurance must function as insurance. for the naic we appreciate the chance to assist the subcommittee and pledged continued support of your efforts with the two-pronged approach state regulators intend to offer reliable fact based information for the congress and the states.

as the data called the model development concludes we will deliver the results to this committee and, worse. thank you for your attention and i look forward to questions. >> thank you. mr. snyder, recognized for five minutes. >> good morning. german gutierez, ranking member hensarling mr. price and members of the subcommittee my name is dave snyder vice president isasi general counsel for the american insurance association. in the midst of the financial turmoil and its related chaos the u.s. property and casualty insurance sector is stable, secure and strong. there are good reasons for this. the united states never lost sight of fundamental shared goals. reduce risk where possible accurately assess and assume the remaining risk and provide effective coverage to the american people. as a result although and homeowners insurance markets are by every measure financially sound, competitive and affordable. claims are being paid daily by

the companies. the market is competitive by any measure and insurance is taking less of a bite of the household incomes than in the past. this is good for the economy because the maximize competition forces prices down to the lower seasonal levels people have money to spend on other things. insurance scoring has played a major role in creating deposit for all concerned. by empowering effective risk assessment pricing majority of the population pays less. insurance is more available and more people can receive reasonably priced coverage instead of being relegated to the high risk pools because insurers have a cost-effective tool to assess price for risk giving them the certainty they need to provide coverage to nearly everyone. you asked us to address issues related to the insurance scoring. in summary it is race and income blind and has repeatedly has been proven to be an accurate predictor of risk indeed one of the most accurate. the states effectively regulated insurance commissioners have full access to all of the

information they desire. in response to the request for recommendations we suggest all states adopt the national conference of insurance legislator model law. second they should make sure they capture and analyze all of the credit complaints they can and communicate with insurance companies about them individually and in the trend is. we know for example from the director's testimony that the rate of complaints under the existing system for the credit based insurance scores is about one complaint out of every 1.5 million policies issued to renew. in addition we need to work together more effectively on financial literacy to help the american people understand how insurance is reduced by insurance companies to provide them with coverage. there is one other recommendation we did not emphasize in the written statement that is to make it more possible to innovate on a pilot basis for example to introduce more direct measures of driving performance such as ability to assess risk based not

only on mileage but how when and where they're driven. one other factor in the strength of the personal lines of the insurance market is that we have collectively reduced risk. thanks to the leadership and that of the safety groups, insurance industry and the state's far fewer americans are injured and killed on the highways than would ever have been expected. using fertility rates of 1964 last year alone we have collectively saved 120,000 lives and prevented millions of injuries. this has created a solid foundation of a healthy auto insurance system we have today. now the insurance industry is focused on building safety as never before. for advocacy of small tecum smoke detectors and codes requiring sprinkler lawyers eminent testing centers with wind turbines, powerful enough to test the structural integrity of buildings. we hope to see the pattern of positive change similar to that which we helps bring about all

those c2 with your cooperation and assistance. thank you for inviting me to speak with you today and i would be pleased to answer any questions you may have. >> good morning. my name is john wilson, director of analytics for the insurance group at lexus nexus risk solutions. lexus nexus provides technology and information that helps businesses, government agencies and other organizations reduce fraud and mitigate risk. in the entrance to the services group will provide a variety of products and services to support the insurance industry including credit based insurance scores. in my remarks today i will focus specifically on how the insurance is to twist and regulated. credit based insurance was have long been used by insurance underwriters and actress to accurately to the credit the as as homeowners policies. insurance scores provide objectives effective and consistent tools that insurers

use with other information such as dredging history and prior claims to better predict the likelihood of the future plans and cost of the claims. deriding the score follows as straightforward process. a carrier compiles historical policy experience including earned premiums and incurred losses by a population of risks. lexus nexus works with a credit bureau to mask the policy experience to the historical consumer credit from the particular point in time to which the policy performance data pertains. then using regression techniques we identify the credit variables that taken together provide the best representation of the observed loss ratio performance. most credit variables can be grouped into one of five primary areas. one of how long you've had the account established. to cut the number and type of account to hold. three, indications of recent activities including inquiries and new account openings. for, the degree of utilization on the accounts and number five,

payment history. the relative weight of each of these areas can vary depending on the line of business being modeled. but for any specific model the insurance regulator is given access to the individual variable description and point assignments. entrance scores do not consider factors such as race, religion, national origin, miracle status, age, sexual orientation, address, income, occupation disability or education. also inquiries made to account review or promotional insurance purposes are not yet used in calculating entrance scores. we also exclude medical collections through. it's important to note what alexis lexis provides insurance course we are not an insurance company. we are not involved in insurance rates sitting determinations' or decisions with respect to groups of individuals of individual consumers. lexus nexus is not a consumer credit bureau and we don't make credit decisions. our role was to supply information to the insurance carriers to assist them making underwriting decisions.

the credit based scoring process is currently regulated at multiple levels. lexus nexus is considered a consumer reporting agency under the federal fair eckert reporting act and state analogues. as required by that lexus nexus provides consumers upon request with all access to the information and a consumer final at the time of the request. we also set a process by which any consumer may order a copy of their insurance or via the choice trust website. additionally because insurance is regulated lexus nexus must have models to the state statutes regulations and guidelines relative to insurance scoring. most states have adopted a regulation based on the model on insurance soaring default by the national insurance legislators. pursuant to the state requirement a third-party vendor like lexus nexus must file its model for the review of the state insurance department. in many states carriers are required to include lexus nexus ogle file and materials in the rate filings.

other states the carrier may be allowed to reference the lexus nexus model once it has been filed. finally the insurer must gain approval of the rate filing that may include insurance scoring component. as a result lexus nexus works on an ongoing basis with state department of insurance to explain the models and create state approved scoring solutions for insurance customers. in addition lexus nexus provides web sites to the consumer disclosure of that insurance scores and process is more readily accessible to the consumers and other interested individuals. in conclusion credit based insurance laws provide an objective effective consistent tool that insurers use with other information to better predict the likelihood of the future claims and cost of those claims. there are existing federal and state regulator approval process these that provide comprehensive oversight by individuals the department of insurance over the entrance scores, insurance or developers and use of insurance

scores. lexus nexus works cooperatively with commissioners and staff in seeking approval for the scoring models. so i appreciate the opportunity to provide the committee with information on insurance scoring and i had to address any questions you may have. >> thank you very much. welcome to all of you here. i know there is a lot of questions. there's quite a number of members that have shown up this morning. let me just a couple of minutes and then allow people to ask questions. and then make some general comments. that is to say that if someone has cancer and they become very ill and they don't have health insurance, they're likely to suffer great economic, and that is going to affect their credit score. so that me ask you if someone becomes ill, is it more likely they are going to try quickly to get into an accident,

dr. erotically -- drive erotically because as we know the chris or will be effective. in to the questions please left to right. mr. mcraith? >> mr. chairman first let me say also in reply to congresswoman kilroy's's concerned about medical expenses, we are where to third of all personal bankruptcies are based on medical cost. three-quarters of those people who file final even though they have health insurance. it's a significant problem. different states have adopted different approaches to dealing with an extraordinary life event like medical expenses. as you've described. and allowing -- >> if we use the deteriorated credit scores it is more likely i am going to cause the insurance company additional liability? >> right, and to answer that

question i don't know the answer to that and i am not sure that anyone has explained directly that the nexus between credit score and driving. >> mr. snyder? >> am i more likely to survive cancer and have debt, is my house more likely to not have a fire? >> mr. sherman, the answer to that is no and that's why we supported language in the national insurance legislators model that removes collection accounts with the medical industry code. that is what was done first. in the past summer the national insurance legislators heightened that even more with our support this removes the consideration of the negative factors resulting -- >> just for the record so we are clear to all of the members of the committee you're coming here representing who? just so we have it for the

record. you are representing the american insurance? >> yes, sir. >> thank you. mr. wilson, you provide them the information so what do you think? >> we haven't tried to study the specific question that you asked and we also agree that medical collections should not be used in this course. >> but they are used in this course? >> they are not. >> and the reports they are. in the credit report they are. if someone fails to pay medical bill it has a derogatory impact on my credit report which is kind of a derogatory impact on my credit score. >> i'm not going to -- >> you can't. it's not that you're not. really it shows up. in other words, mr. wilson, if someone has difficulty paying a hospital bill and it goes to a collection agency does that show up on the individual's credit

report? >> it will show -- stila gindin as a derogatory effect on eckert is work. >> it is not used in our scores. >> but it is used in the credit report. >> it's on the credit report. >> thank you. and it is there on the credit reports. so, it's okay. everybody has witness is here. i don't think mr. wilson is to upset at me asking him the questions. and so what we are trying to get at here is how is it that people who have an accident, who has an illness in the end are not deprived of insurance even though they had no way of dealing with this and maybe doesn't have anything to deal debate could do with them. so let me ask you if i am employed and become unemployed

and, you know, i can't pay my bill because i've become unemployed does that mean i more likely to have an accident or fire in my house? mr. wilson? >> again, the scoring models that do look at dealing with payments which would potentially be a result of having lost a job show that those delinquencies or insect indicative of greater risk claim filing. sprick therefore i would be more on health care insurance? i'm sorry, therefore i would pay more on the home insurance? >> you could, yes. >> i would. >> not every carrier uses the credit scoring is -- >> thank you. >> mr. chairman, if i might to provide a further response to that of the extraordinary life circumstances language added to the national insurance legislator model specifically excludes the use of loss of

employment for a period of three months or more as it results from the one to recriminations suggest that is a factor we are trying to work with consistent with your question. >> mr. jimenez could -- unanimous consent for ten more seconds. >> if medical expenses are not considered then there would be no reason to have an extraordinary life exception to read also the end quote model has been adopted in different states and different variations as i said the state of illinois' only requires the company consider such an event. >> thank you. >> this is a remarkably important topic and i think there is a lot of misinformation that is coming into the debate and a lot of hyperbole that

occurs and i'm hopeful throughout the question period we will be able to sort out some of that. mr. wilson, you mentioned in your testimony that the main variables, the primary areas where the credit variables are looked at are the length of time of an account, number and type of credit account, indication of recent activity, degree of utilization and payment practices. and in the next statement that he made this is a quote, insurance scores do not consider factors such as race, religion, national origin and gender, marital status, age 06 orientation to address some income, occupation. given that, why do you think there is always this misinformation out there about what goes into a crevice or? >> i do think some of the comments introductory to this are accurate. not every consumer has a clear understanding of all of the

details of credit reports, credit scoring on how these things are used in making decisions about them so i do think we have tried to be all there making information available to the consumers. we've difficult training programs for continuing education credit for agents and insurance agents because they're often the first line of answering questions about these things. >> but providing information, providing the score you're not an insurance company? you're not a credit bureau, don't provide credit, you provide information. >> right. sprick there's a lot of information that goes into the rationale for why a consumer might be excluded from gaining credit. i would be interested in the opinion of the panel if we as a congress determined that we ought to exclude certain things

from being considered is it possible that what actually harm consumers as opposed to helping them? mr. willson? mr. snyder? >> mr. price, the ftc estimated 59% of the people pay less as a result of credit scores. frankly in the testimony given by companies in the states the numbers are much higher for many companies. so we would envision first of all a very negative effect on the fast majority of policyholders directly. second, it would deprive the market a critical tool that has allowed the market to evolves much more towards objective underwriting individually tailored to each risk which is given the company's confidence to write virtually everybody under the old system that was sort of past and feel you were either very good, normal or relegated to the high cost risk plans. now because of the toll that is

capable of individuals accurate and objective risk assessment insurance companies are pretty much able to write anyone who comes to them which has resulted in the shrinkage to the historic lows of the high risk pools so there are a number that would come some directly to the majority of policyholders and then indirectly to the market as a whole resulting in less competition and potentially less availability of insurance. >> and higher cost. it was available the entire cost. mr. mcraith to you agree? >> we should always be concerned about unintended consequences and certainly the pricing of one risk in a company pool affect the pricing of another risk in the sample. however, we should not accept as gospel that 60% of people benefit from the use of credit based insurance scores because we don't know what the baseline is. >> do you dispute that number? >> what i am saying is what i

described earlier our effort was the data to collect inflation from insurance companies. one is to get behind the rhetoric to reduce a certain percentage of consumers benefit from the use of the credit insurance scores. we don't know when we hear the word benefit what is the starting point. we don't know what the baseline is and that is what we intend to find all and we will report back. >> mr. wilson, do you have a comment? >> and the remaining seconds, congress relied -- what factors to the congress lie on the mahlon lending uses of credit information while amending the fair credit reporting act of 96 and backend 03? mr. snyder? >> congress continued ability of insurers to use credit information for insurance underwriting and that has long been the case and congress continued to the