we were going to be acting in reaction to those who were innovating in this particular area that this was indeed the way forward, and in those early days of the transition sitting in that office in chicago, i'm talking to him in november and early december into the beginning of the administration, placing particular emphasis on not only stimulating the economy, but starting to make those investments necessary forward in the direction. obviously, we have used executive tools. if you look at the work of the epa, department of energy, but also trying to move forward, trying to push forward on a big energy bill, getting part of the way there, but, you know, not all of the way there, not crossing the finish line, but we have been able to make advancements in terms of efficiency, fuel efficiency, also job training, and the

beginning set of efforts to try to send signals to the market that this is a direction important for the country and an area that the government working in concert with state and local governments would be focusing in the months and years to come. .. >> i guess one the things i've learned if you start to put your money down on when you think congress will act, you will lose your money. i remember working on some pieces of legislation, this will

be easy. literally all the years later, we were still trying to get it through. that's all the difficult to judge. i think certainly the country, and i hope we'll talk about this later, we'll be talking about it a little bit offstage. the country has started to move and the thinking of the country has moved in a very different direction than it was a decade ago. but at the same time, there are many concerns about moving this kind of legislation forward from those who oppose it. and also i think the country taking in and absorbing big pieces of legislation that we've already passed like the health care bill. that will affect the environment and how we proceed forward on energy legislation. at the same time, the president feels that it's critical that we move forward. and whether or not it's through legislation, which would set a big comprehensive framework for companies, for the private sector, for investors, and for

the rest of the world to see. and that would be important and obviously that's a priority. that's why we tried to move it in the first two years. there's still other ways we can advance this energy agenda. again going back to the new foundation. >> there's a question that you've been asked a million times. any second thoughts on health reform as opposed to the climate and energy? >> no, i was on the campaign for the period from the primaries until election day. and i have obviously many colleagues who were on the campaign for the full two year period. one the things that we heard consistently, whether it was families, individuals, private sector was that we had to deal with the issue of health care. both when looking at the fiscal state of the nation and this issue around cost. when you are looking at trying

to -- or taking the appropriate steps forward necessary to create certainty for the business sector and also to help the business sector create and compete globally, and also the issues of family security. all of that hinged around dealing with the issue of health care and it ties directly into the issue of jobs. health care is one the fastest growing areas for job creation as we are in a period where we are anxious and eager to create more jobs. we believe that's integral to the overall picture. that's why we were trying to push health care and energy at the same time. we felt it was a walk and talk, walk and chew gum. >> right. the center of your work has been policy over the year. you've had very broad political experience too. you were this a national campaign. you've seen senatorial politics. it seems this political campaign, which is just coming to an end is all about deficits and about jobs. >> uh-huh. >> as you think about american politics in the largest sense, how do environmental and energy

concerns play into the two pressing issues of the moment. is there space to make an energy environment climate pitch when people are talking all about deficits and jobs? >> well, i think the big problem. again, i keep returning to the new foundation of the idea, and the idea of investment in the critical areas. when we disaggregate them, that's when we have done great damage. when we haven't looked over the horizon to see where are jobs going to be created? where are the big innovations going to take place? where should we be putting our r&d dollars, what signals should we be sending to the markets and investors. that's what we have created the big problem for ourselves. it's clear that energy is going to play a big role in the kinds of jobs that we are able to create. i know you will be hearing from my colleague john holdren. i know just talking to john, as he's recently been out to china and trip a india, and talking to

other colleagues who have been traveling globally. when we sit down and talking to finance ministers and science and technology ministers, there's no debate globally about the importance of this issue. it's when we return home, that we are still, you know, pushing and shoving and trying to convince people that the nation has to move in this direction. so if we are indeed serious about job creation, then we have to focus on this as an important marketplace. and we have to do all of the things that are necessary to ensure that we are ready. that includes r&d, and also includes an investment education which is one the reasons we focus so heavily on science, technology, engineering, and math. making sure our students are ready. making sure those that are ready in the workplace are getting the necessary credentials and training so they are ready for these kinds of jobs. it's critical. it's integral, it's all

intertwined. >> you've given me one opening i couldn't resist. you also mentioned the question. the opening is the new foundation speech. which was a great speech by president obama. he had a whole speech that was called the new foundations. a little band of us that remembered jimmy carter was hoping that president obama would have slightly some different configuration. but the idea is an important one. you mention the different between the international and domestic. internationally, there's no doubt about the importance of investment to energy and climate and technologies. i have an article coming out next month about chinese-u.s. interest. the chinese can say we're going to spend on this in the next ten years. everybody knows. people who have seen past american efforts knows there's a start-stop phenomenon. now can the use get past the stop-start pattern we've had for

years? >> uh-huh. i think in part it goes back to the conversation about legislation. it heavens -- helps create the framework and says to those in r&d. this is where we are going. start to provide some level of certainty as the legislation and blanks get filled in after the legislation have been signed into law. that's an important way. i think it's also critical that we continue to engage with and learn from the private sector. what the private sector needs to move forward. where they believe the best investments can be made. i mean one the things that the government has done exceedingly well and arpa and the different that have been set up is the put money and the private sector can take and run with and take to market and, you know, profits and jobs and, you know, are

created. so being in concert, being engaged with the private sector around that doing what government can do well, but also at the same time, recognizing that there are things that the private sector has to do, does well, and letting the private sector move forward with that. also the investments in job training and education so we have work force that's ready to move into the energy economy. >> there's a concerted initiative the administration has put out recently. i want to ask you for a few minutes. this is the partnership for sustainable communities. as you said, there's lots of latitude or opportunities in the executive realms on the legislative barriers appeared here and there. this is interesting both in it's policy and sort of the structural approach. could you say more about how you came up with the idea and why you think it's significant? >> sure. well the partnership for sustainable communities is a partnership that includes the department of housing in urban development, the environmental

protection agency and the department of transportation. the three -- the two secretaries and the administrator, lisa, sean, and ray were doing work. one the things they were realizing is they just listened to the conversation. we aren't -- the federal government aren't set up properly to think holistically, and comprehensively about the work that localities and communities are doing and to be responsive to their needs as they try to think holistically and presencively about housing, transportation, and the environment and how those three pieces come together to make communities more vibrant, more viable, more economically competitive. so the idea is to come back and through the work that we do at the white house and coordination and particular that this came out of the urban policy office in the domestic policy counsel to try to create an environment

that we were being more supportive of that work. so thinking about proposals that we are getting from localities, from states, communities, and having those three entities work together, think about how they could fund them and support them together so we are responding to people out of our silos. not just thinking transportation, housing, environment, but thinking about how those three things have come together. we've just started to announce a series of grants that are going out, almost half a billion over 400 million dollars worth of grants. based on money already at the two departments and the agency to fund projects that think about how all of those pieces come together. we think that's a much smarter way to fund and also will help us think about ways that we are lowering policy barriers and regulatory barriers so we are

being most responsive. >> on the environmental aspect of that man, energy ways and land planning and the rest. >> sure. absolutely. we started out with a pilot around the field. and a pilot looking at five different cities. denver, culver, boston, a couple of other cities, and focusing on how we can take the contaminated areas and focus on the housing, and also think about the transportation and economic business investments in those areas. and then not only how those different components will grow and kind of spring out of the grants and investments that are being made. mind you the federal dollars here are important, but not huge. what we are also trying to do is to leverage private sector in these areas. but also see what sprouts out of it. we are funding go proposals we

believe. also what do we need to change? how do we need to dial things up or down? what levers do we need to turn on and off so we can go and build off of the pilots and do it in other areas. i can give you other examples in los angeles, in iowa, some in tribal communities as well as as we are thinking about light rail. we are thinking about multimobile transportation. doing all of this based on the six livability principals that focus on housing, transportation, how to leverage our investment, how to be more economically competitive, et cetera, et cetera. >> is your experience this is being received in the local and state level with the same reaction? how's it being received? >> it's -- it's been fabulous actually. very, very refreshing. and we, for example, when you look at -- get kind of wonky

talk. >> you are entitled. >> my dad use to work for the military and have all of the acronyms. my mom and i would go what? we had about $600 million in the second ground we can put out the door. we received applications of $23 million worth of grant funding. there's a huge, huge response and those applying for the different kinds of grant available are from every state, literally every state in the union and it crosses geographic lines obviously and political lines. because again we're thinking about how to better use transportation. how to lower transportation cost. how to create greater efficiencies. how to create communities where businesses have access to markets that they didn't have access to because we are thinking about how to layer housing on top of that and how to layer transportation on top of that. so it's a job creator, not only in the building of the systems,

but also people that have access to businesses and to athenties that are important to them. and then also it's how do you want to live your life? i lived in capitol hill, it would take a few minutes or hours. i spent years in my car. people are thinking i'd rather be spending the time with my family. in addition to all of the other benefits that we see out of this. there's a great, great response to it across the ideological and political lines. >> i have one more question. then we'll call on you for your questions. everyone comes in sees they are going to brake the barriers between the departments. what gives you faith that will

be different from all of the partially successful attempts in the pass? >> one because it comes from the top. the president is really insistent and focused on it as we are thinking and planning. two, if you are a gardener, we are not just pulling at the leaves and green. we are working to get at the roots. we're working with the office of management and budget and thinking about what kind of guidance we are putting out to agencies. as they with doing their budgets and working together, they are thinking about the issues and putting it in their plans. and also because we have and maybe other people -- other administrations have said this as well. but i really mean it. we've got cabinet secretaries and senior level officials who really a) they've done this on the ground. they get the problems. but they also really want to and work very, very well together. if you have spent time with ray

and lisa and sean, you know they enjoy actually interacting and thinking creatively about how all of the pieces can work together. i think, you know, as personnel as policy. so those people working together. also as we are putting together the framework internally within the executive branch. we're doing it so that we can move these ideas out? >> great, thank you. i think somebody is here. >> i'm brad johnson. even as we climate disaster or the hurricane or cyclones, things don't make sense. republicans are saying they want to investigate climate scientist for their fraud or hoax. what do you think is a greater threat to the future of this

nation, the impacts of unchecked global warming solution or the republican parties that solved on scientific thoughts. >> well, id say -- well, i'll say this. >> i know it's a hard question. >> most people remember the day because of the executive order he signed on stem cells. he also signed a presidential memory man dumb -- memorandum on scientific integrity. we have to operate on data. i can tell you the broad framework, we are always focused on what's the data, what's the information? i think the american public through what they are reading, the impact that they see as a result of the shift in the climate are also moving in a different direction and pushing in a different direction. i think the political debate is starting to shift.

it isn't completely where we'd want it to be. as i said, when my colleagues travel globally, they come back very frustrated we're having ground hogs day on some of these issues. i think it's shifting. i think the american public is insisting that it shift and our economy is demanding that it shift. even if you for whatever reason don't believe the science, you got to believe the economic impairtive around moving to a clean energy economy. i think we're moving. and i think our focus on science and data is one that we are continuing to push and certainly under girds what we are trying to do on capitol hill. >> just to clarify. is there any don't believe the science camp? >> within our administration? >> yeah. >> no. >> so yes, over here. >> yes, hi good morning. >> good morning. >> i'm steven jordan, i run a

business center. we work with corporate citizens across the country. one the frustrations that a lot of companies that we work with feel political space and political jurisdictions were designed in the 19th century, 17th century, and the economic footprint has changed, the environmental might be across multiple jurisdictions, like you were talking about in north virginia and d.c., you know, like a booz allen or northrop or capitol one or marriott, they feel like the whole area is one thing when you are dealing with it. yet they -- or like in pennsylvania, they feel like they have to deal with multiple, multiple, local jurisdictions. is there a -- apparently this is a big issue, particularly in the environmental configurations with water, electricity, or

whatever. >> uh-huh. >> is there some way through the sustainable community initiative where we can start figuring out ways to bring some of the political municipalities together? >> yup. why i mean some of these things just seem to transcend some of the historical, political boundaries. and i'm just curious if that is something that maybe we could work on together? >> yup. absolutely. that's a great yes. and definitely something that we are not only thinking about, but again trying to adjust those levels and encourage and incent the kind of breaking down of the political silos that you talked about it. this a couple of ways, certainly for the sustainability of the community. as we are trying to be responsive to localities, we are also trying to change the way that we do business to encourage the kind of change that you talk about. and it'll -- it's difficult. you know, change is hard. big change is harder. but the breaking down of those

political lines to see areas as metropolitan or region is critical. exactly for the reasons that you discuss. that's one the thing that is we are encouraging in the partnership and the way that people think about coming together and funding and, in fact, they are not only local planning grants that are being given out, but regional planning grants that are being given out through the partnership through the reason that you describe. there are other kinds of initiatives that we are going that are cousins of the partnership. recognizing, as elizabeth mentioned, i went to college in capitol hill. the triangle area is well known as being an area that thinks of itself as chapel hill. what assets do they bring to the table? how do they leverage the assets for the betterment of the entire region. raleigh thinking about raleigh

and durham thinking about durham. where you can blend move across lines. i say this as an virginian. i'm not going across the bridge. we're not asking you to go to siberia. as people have to think about the regions in a very holistic way. that's a way that we are thinking about policy and that's something that we are incentivizing through the grant making. it's also something that local region recognize. they can get a bigger bang for their buck if they are building off of all of the assets within the region that are within the political lines. >> thanks. we have two minutes now. we have time for one more question please. it's you. >> allen greenburgh. department of transportation. with the failure of cabinet trade and the one element that seems to be really important, that is now missing is how one puts an incentive on people individually to reduce their

carbon emissions. i'm wondering if there's an effort to try to figure out how to construct that. and the transportation field, i can think of two ideas as probably some others in other fields. for instance, we allow people, employs to provide parking benefits as -- that occurs in most cases. only a very small portion of employs provide transit. this is an idea called parking cash out which would say if you provide the parking benefit, you have to offer an equivalent benefit in lieu of that. a second idea, and again, this is about getting the individual user to see the cost. and the second idea is insurance people pay a fixed fee for insurance if they pay per mile per insurance, you'd have an awful lot less driving. brookings did a study. 8% reduction in driving. that's the length between your risk. when you are driving you don't

phase risk. i'm wondering whether these are two specific ideas. more broadly, whether there's some effort to try to figure out how to put incentives on the consumers and transportation, et cetera outside of this framework that is cap-and-trade framework that unfortunately has been deemed politically dead. thank you. >> no, thank you. and we've absolutely been thinking about this at every level. as we think local communities have been as well and we are thinking about the federal government being a model employs. how we are interacting with our own work force. as we think about livable communities, so, you know, more sidewalks, more light rail, we are giving grants around trolley cars and streetcars, how do you better connect the forms of transportation in a community. all of these things to try to insent the better use of clean

sources of transportation by consumers. and also again being in communication with the business community. because i think the business community is also thinking about what it can do as an employ for the benefit -- not only for the benefit of its employees, but many being great global partners and thinking about ways we can address the big climate issues as we face our country. also with the federal government trying to be a model employer and to the specific kinds of initiatives that you talk about in offering, you know, the smart card and offering ways that people can easily use light rail and other forms of transportation to get to work. so we have to think at every single level as we also try to figure out what are going to be the big incentives that we put in place. also the kind of assurance that we want to put in place so the market will respond accordingly. but it taking everything. i think, hopefully, since you work for the department of

transportation, you know we are always looking for good ideas from everyone around the administration and actively seeking those ideas. i hope you shared those with ray as well. >> there are lots more questions. we've reached the end of our time. please join me thanking melonie for a wonderful presentation. >> thank you. >> tomorrow is veterans' day. join us for live coverage of the vice president biden as he lays the flowers on the unknown tombs. that starts at 7 p.m. -- 7 a.m. eastern live on c-span. >> marcy captor is calling on the leadership to postpone until november. this could give nancy pelosi more time to gather the voices.

they wrote a letter to colleagues, quote, fulling the loss of our majority, we should fully understand the loss of our historic losses before we we again the process of rebuilding. if we do not learn from our loss, we will remain in the minority until we do learn. their letter continues we are not endorsing or proposing any leadership candidate, but we are seeking more time for a thoughtful discussion with everyone in the room. that's from politico. the inspector general from the homeland security, clark kent, from part of the george w. bush's administration. he joined us on "washington journal." >> clark kent is the director of the homeland security program. >> guest: my pleasure, libby. >> host: back in 2003, and 2004, we wanted to get your insights into the recent decisionsdy the government to

tighten up security on cargo security. talk about it. >> right. well a number of steps have been taken. they are all prudent. they all take a lot of sense. since the plot unfolded, cargo, air cargo has been banned from flights in the united states to yemen and the ban has been expanded to somali. in addition, there's now a ban of all high risk cargo on passenger flights. most people didn't realize before the plot, about 20% of air cargo flies on passenger flights. now cargo deemed to be high risk, we can talk about what that means is banned. there are greater scrutiny generally on air cargo and all flights. finally, this is a ban on toner and printer cartridges, given the size of toner cartridges. >> host: and the plot that we

are referring to happened last month. i'm reading here from the "washington post." : informant. a second bomb was intercepted and a fedex facility in dubai. britain responded by banning cargo from yemen and somalia. technology that scans large amounts of cargo is costly. why? guest: because time is really critical. the speed of air cargo is critical to the flowing of commerce. much of it is pelletized, packed together very tightly. there is good news that technology is out there that's been developed that holds a promise of being able to scan the cargo efficiently. but i have been concerned for a number of years that air cargo is what i call the soft >> and so, if there's any good

news out of this plot other than obvious the obvious that it was spoiled, it is i hope we can move this technology from the lab into the field. >> host: how much of air cargo is talked about when you were in the administration? >> guest: well, very little actually. we seem to fight the last war. we don't close the security gaps until the gaps are exploited. you know, back in 2003 and 2004 was concerned about it because i ewe at the time there was little scrutiny on air cargo on all flightings -- flights with just cargo. the passenger flights were flying on a plane in the bell belly of which was cargo not with standing to any inspection at all. in 2007 through the bush administration which was concerned about the impact on trade and feasibility of

scanning cargo efficiently, the congress thinks passes a law requiring 100% scanning of all cargo by this year, august of 2010. tsa they met that for domestic cargo, but there's still some years away from scanning all cargo on passenger planes bound for the united states from abroad. planes here within the united states and abroad, that's the greatest concern. as i say, i hope there's greater urgency now to scan this international cargo for the united states effectively. >> host: that gap many security may be surprising to our viewers and cargo was not addressed as you mentioned until just recently. one of the things you also talked about is new rules about the size of toner or ink cartridges al from the

"washington post" recently and extended air cargo and limited the size to less than 16 ounces, toner or ink cartridges that travel in checked baggage. this is because of the incident was a bomb disguised as ink. >> guest: that's right. all these issues make -- measures make sense, but terrorists are very smart and adaptive and they learn. in the future they won't hide a bomb in toner cartridges of any size really, and i'm concerned about the notion of focusing on high risk cargo. we'll take a minute to explain what that means. it means there's scrutiny of cargo from yemen and somalia places attached to terrorism and cargo from unknown shippers,

people in companies that don't retunely not united states. that makes since, but what happens in the future is terrorists are shipping packages from iceland and norway, countries we don't associate with terrorism and use known shippers, shippers we have a relationship with, penetrate into those companies, and so what we need to do at the core of intelligence is an issue pointed out in this instance, we foiled this plot because of good intelligence, but the nature of intelligence is it's imperfect. we rarely have the presis intelligence -- precise intelligence to foil these plots. we have the technology that holds the promise of doing that. we need to speed the development of it. >> host: how much does that slow down ships in business? >> guest: that's the question. we can't afford that at any time and not at this time of economic disstress here in the united

states and around the world. our economy is largely dependent on international trade. the previous segment focused on that largely. as i said, i'm confident the country who put a man on the moon in ten years and developed atomic weapons, we have unsurpassed technology in the country. it's a failure of imagination. the 9/11 commission said in its report 9/11 was not prevented because of a failure of message nation. we had never been attacked in that fashion, and subconsciously, we thought that was impossible. we always fight the last war and wait until a gap is exploited and then close it. i'm worried about the next gap and like wise requires 1 00% scans of maritime cargo. i'm worried about mass transit

plots and it's a huge treasure target that will be exploited. we need to get ahead of the terrorists and not be behind them. >> host: clarkervine, the direct of the of the aspen's substitute homeland, and you can call in tell us your questions. let's go to denver, colorado, a republican caller. >> caller: good morning, how are you guys? >> guest: very well, thank you. >> caller: good. my question is there's a transportation administration, a union organization; is that correct? >> guest: it's not correct. right now the tsa director a superb addition is considering

this issue of collective bargaining right now making a recommendation to the secretary that's approved by the white house whatever the decision is in that regard, but it's not the case presently that tsa is subject to collective bargaining. >> caller: okay, in the previous comment commenting on your previous program that you accolade that -- >> host: chester? >> caller: yeah, i'm here. >> host: what's your comment? >> caller: i guess is tsa going overseas? >> guest: well, the tsa is not overseas. they all work here in the yielt, and the issue of collective bargaining is not decided and is under consideration now. >> host: how much power does tsa have to implement new rules and decisions? how far up does that come from when we as passengers go through

scans? >> guest: well, they're decided on in the top levels and in consultation with the white house and national security counsel. it's a rigorous process, understandably so. >> host: let's talk about body scanners. how do you feel about them? >> guest, well it's a huge advance over metal detectors, a technology use since the 70s, and it's outdated, and as we've seen, these detectors are unable to detect the kinds of really expertly concealed explosive devices of greatest concern to us now. because body imagers can see through clothing can spot these. it's a huge advance, and i was a proponent in 2004 when we knew the technology, but didn't field

it rapidly, it's us being reactive after the fact. like i said, they're not perfect technology. it's an anomaly detector, somebody has to look at the screen, notice something unusual on the body and up vest gait it to -- investigate it. i think the next generation of technology we need and it's under development now is an automative explosive technology to determine automatically with no human intervention what is at issue is in fact an explosive and if so how much, and what kind. that's next. >> host: john, democrat in ohio. hi, john. >> caller: yeah, good morning. >> guest: good morning. >> caller: thank you for taking my call this morning. i just want to make a comment about the security issue in this country. one of the things i think we need to do as americans --

i'm from africa and have been in this country for more than 20 years. i think what we need to do is compromise some of our freedom for our system because when you have enemies that are after you, you have to take up the question. we worship god, and he give us, you know, instructions on how to live, and he's our protecter, but there are things that we have to do. we have to lock our door even though we pray into god that our home, you know, the holy spirit guides our home, but at nighttime, we can't forget to lock our doors. when you get on a plane, you are flying 10,000 feet above. when something happens, there is no survivors. we need to come to grips and compromise some of our freedom and so that everybody can get on

our planes. >> host: john is saying there's a balance between personal freedom and protection. where does that boundary lie? there's concerns about body scanners that have been said it's an invasion of privacy and don't feel comfortable. >> guest: john raises a very, very important issue, it's fundamental balance of liberty and privacy. it poses a very, very small deem niewtion in pricey. there's technology to ensure the image is not viewed by someone at the check point. they are a moved from the check point, and further there's an outline of the body, there's no viewing of genitalia and the images are not stored. i think we diminished that threat to privacy. the larger issue is that. we americans have to give up some of our liberties to increase our security to what extent. the question is to what extent?

taking off shoes, until we have technology, to me, that's a small intrusion for a huge potential gain of security. the other end of the spectrum, i think it was a "usa today" story where the security agency was getting a record of all of our telephone calls, not just those from people into the united states who are noun or suspected terrorists which the government should have access to, but of all calls, to me, there's a huge invasion of privacy. to me that adds more hay on to the hay stack that is always intelligence. there's always a balancing act, and it's a critical issue. >> host: pam, an independent caller from florida. >> caller: yes, mr. ervin, i am shocked either what is your complete ignorance or your outright misrepresentation of what you're saying here on this

screen, and i would submit, sir, that what you are saying is nothing more than to go ahead and gain support for a vast security network that benefits only those supplying the security and adds to safety to us. you bring up the screening that hurt the commerce. well, sir, you're worried about pack # packages in planes. >> i thought the caller was making the point that the security was overblown and the security threat is exage rated -- exage rated. we hear fewer of the voices. he's making the opposite point i see at the end concerned about

the borders. there's no question there's a potential terror threat posed by the illegal immigration, and that said the homeland security department has made progress over the year and controlling the bodder patrol agents, and there's some advances to create a virtual fence, but it's troubled, and technologyically we don't have that enforced yet and experts are doing something about that going forward, but i think the illegal immigration issue is very, very limited in terms of the security threat. most coming to our country are seeking work and not to do us harm, but how do we distinguish those seeking work and those posing a threat, and that's what the grapple with every day. >> host: he's also a member of the wartime contracting commission on iraq and

afghanistan, and his experience include serving and was an associate directer of policy in the white house office of national service under ptz george h bush and attorney general and worked as the assistant secretary of state. back to the calls. florida, republican, good morning. >> caller: good morning. >> host: hi. >> caller: the argument is pro and con, however, i have to look at the overall cost of security, and the president is saying we're going to have a security force equally funded to the military, and that's a tremendous cost to us on our freedoms, however, a-- awhile ago we had six people murdered last week alone on the

border, and in the long term it's going to be more of a trick than it is air cargo and technology to take care of those things. this is a political issue in which we don't have the will to close those borders. >> well, another caller talking about illegal immigration and closing the border. this has a huge emotional impact here in the country, but as i say in my judgment to the terror immigration it's little indeed. there's lots to worry, but i don't think illegal immigration is the top concern in that regard. >> host: as we look at the united states movement to tighten air cargo security, you mentioned other things to be on the radar sixteen, and some -- screen, and some are coming down the pipe, but give us a sense of your vision say ten years in the future. what does security look like, how is it different, and

anticipate rather than just react? >> guest: that's a terrific question, and there's a number of things we need to do now. first thing is we need to figure out what the terror vulnerabilities are not exploited and close them now. on maritime cargo we need to double our efforts to develop technology that can efficiently and economically scan cargo. there's a pilot under way in the part of hong kong that shows cargo can be scanned efficiently at the cost of $20 per cargo container, and the shippers bear that cost because if there were to be a successful attack with a weapon of mass destruction that would shut down international commerce for years at a huge, huge cost. we need to look at that pie lot, we need to redouble our efforts

and look at that technology and employee it around the world. with mass transit, i talked about that earlier. after every scare, we do the right things. you see in washington and new york greater armed police presence, bomb sniffing dogs and bomb technology. those measures are rached back after the threat passes. they are very, very costly going to one of the caller's points, and these are tight times, and cities and states are strapped more than the federal government. i'm a republican, a conservative, i don't call for greater spending, but when we have threats, the department of homeland security is a fraction of that around $40 billion around 500 billion. we need to secure the homeland against these threats.

>> host: does that need to come from the federal government? is there a role private sector has to play in developing technologies and market them to other private industries or -- >> guest: yes, slotly. -- absolutely. i'm glad you asked. part of the good news is as i said there's a lot of technology innovation in the country, and the innovators are small companies, but it's difficult for small companies to breakthrough the washington bureaucracy and they hold the promise to being able to protect ourselves and economic and efficient manner as possible. >> host: william, democratic caller from north carolina. good morning. >> caller: good morning. >> host: welcome to the program. >> guest: i just -- well, in security, we need to bring our jobs back where people can go to work. we have a lot of people out, and they don't have jobs because the factories are moving to mexico and china or whatever, we need

to bring them back to where our people can work and unemployment would go down. >> host: do you have any questions about security, cargo security and terrorist threats? >> caller: yeah, well, another thing too i know it's expensive to have more security, but the personnel that's in charge of the planes and checking people in and out, they need to check it more closely and be more careful about what they have with them. >> host: we come back to the expense, but it's important to do the investigation. >> guest: that's right, and it's important who does the screening that the personnel is well-trained and compensated and well-motivated. i have called screeners at airports the last line of defense generally before another group of would-be terrorist

board an airplane. there's checking at the gate, occasionally, but not routinely. if something is missed at the check point, in all likelihood that gun or knife or explosive gets on the airplane, and not every airplane has an air mar shall to foil the plot. we have to work on personnel that they are compensated and vammed for the role that they play. >> host: a comment on twitter. talking about technology is find, but security should not start in other countries. >> guest: that's right. the tweeter makes the point that aviation is a system, and the system as a whole is only as strong as its weakest link. there are limits to what the united states can impose on other countries, certainly, a poorer countries like yemen for example, and pakistan, don't have the money to buy the

sophisticated scanning devices and we can't mandate the measures. the ultimate hook is the united states can deny entry to foreign airliners, but that's cutting off our nose despite our face. we have to work in partnership with international countries to the exploited tent -- extent possible and harmonize technologies, and when countries don't have the resources, i think it's undumb bent on the united states to help them do that. >> host: will in texas, independent line. hi, will. >> caller: hi. you made a couple comments. number one, you want to get out ahead of the terrorists. you want to secure areas that they vice haven't yet breeched, you know the common person out there is just saying, hay, our border is just ready and ripe for some sort of breach. now, you mentioned you don't

feel like the border is a threat. can you help maybe educate us as to why we should not be worried about the border? >> guest: sure. the overwhelming evidence shows as i said those seeking to enter the united states illegally come here searching for work, not to carry out terrorist attacks. there is no instances where people penetrated our border linked to a tar roar -- terror plot. sometimes they come from countries of concern, but they have not been linked to terrorist plots. that's not to say it can't happen, but we need to get ahead of the plots before being exploited, but the overwhelming weight of the evidence is saying it's economic. i'm all for further increasing the deployment of border patrol agents. the number is higher than it was in the bush administration

during my time there. the bush administration increased it. the obama administration has done more. we need technology, more cameras and sensors that works. the fbi net program has been a failure. it was an effort to develop this virtual fence. we need to technology to complement manpower along the border, but there's a number of vulnerables, and i'm more concerns about the maritime and mass tran silt as a rule nermts -- as a rule -- >> host: let's go back to twitter. what is tsa employees worth? can you give an hourly wage? let's go to a important line of defense in protecting people, but how much training should be involved and should they be paid well? >> guest: i think so. anyone who defends the united states -- i mean, there's no more critical

function than our defense. that is the first # job of government, and sense the tsa officers are counterterrorism officials, i think they should be paid well indeed. what they get paid is minimum wage. i'm for dramatically increasing their paid. that said, i want to hold tsa screener's feet to the fire and they need to be held accountable for their actions. i've seen investigations that show if you know what you're doing, it's easy to sneak guns and bombs past the work force. the key is several fold. one is training, furthermore it's holing screeners and managers accountable for their performance. the key part of it is the personnel. to be fair to them, it is mind-numbing work literally to stand there for hours and to look at -- there's a limit to what the human brain can process, and so

i'm for helping them in every way possible to understand that they are valued, and part of that, obviously, relates to compensation. >> host: and so increase -- >> guest: that's right. >> host: the tweeter wants an exact number, but you're saying boost it. >> guest: yes. i don't have a number, but it needs to be higher. i'm o potioned -- opposed to collective bargaining because i think they are critical counterterrorism agents and no one in the country should be subjected to the benefits of bargaining because the defense of the country dependses on them being deployed at will. >> host: our guest is with the aspen institute, director of the homeland security program and director general back in 2003 and four in its early years. >> guest: that's right. >> host: let's go to jirs, on

our republican line. good morning. >> caller: good morning. my question is basically on what would be the cause and effect. we know what the effect is of the what's happening now, that our borders are really dangerous and we're going through a lot of change with what's happening in the world. that's the effect, but i know you called yourself a republican. i've never denied being a republican for all these years for the lack of things of what's happened. but we're discussing business and what's happening we have a lot of problems. the cause, here we are in the united states with a lack of work and no government really wants to challenge us in a

war-like manner but we are a challenge in a commercial manner and economic manner, and we know what's going on in the border, trying to get drugs across, okay, what is the actual cause of our problems with other countries in this world because we're really going through a lot of changes. can you answer that question? >> guest: well, that's a rather large question. i'll try to answer it this way, the one i'm here to talk about, mainly terrorism. i think part of our problem is we don't understand well what it is that motivates someone to engage in terror acts. we have to get into the psyche of the young people who pervert the peace of islam. i'm a member of the homeland security advisory counsel, a

form of government officials and private thinkers to help advice our homeland security manners, and we have to look at the issue how to counter radicalism that becomes violent? what mote vases terrorists, and how do we get ahead of the curve? it's a question the united states government grapples with every day. host: georgia, democrats' line. hi there. caller: what i will say is that america really needs to look at our policies towards other countries. it is the reason that other countries do hate us. i'm a diehard american, i have been in the military and i fight for my country. but we need to look at the way we have been engaged we do not need to be all supportive of israel, and i look to the palestinian people, and america

needs to be the roughly their maybe people would stop attacking us because we need to be more fair and stop picking partners with our policies but be fair and balanced. guest: the caller raises an interesting question ended t -- and it has been a source of debate among counter-terrorism experts. do they hate us because of our values, or because of specific policies, in this conflict or the other? chances are that the answer is elite both -- really both. it is rarely ever the case that there is one answer to a complicated question to the administration is trying very, very hard to solve the israeli- palestinian question, for example, to encourage the indians and pakistanis to salt the conflict between them with regard to kashmir. as i say, the issue of what really motivates terrorists is a very complex one.

we are grappling with it and doing what we can, but it is difficult. host: california, republican caller. caller: good morning. i will tell you my take on all of this. the biggest threat we of got in this country is the labor unions. i will tell you why . they drove this country into the ditch. they drove all the jobs out of here. tell me, what union as the terrorists belong to? host: can you direct your question to our guest related to security issues, border security? caller: that's what i'm talking about. everything you do and in this country costs so much money did why does it cost so much money? because of unions. if you don't give them what they about- they don't care

security. guest: well, i am generally a fan of unions. i'm opposed to collective bargaining for security. i will leave it at that. host: there was a discussion about where the spot packages were destined to. were they destined to the plan itself, or someplace else? talk about cargo jets as a method of transport for bombs versus as a destructive device themselves. guest: that is an interesting question. we don't really know where the target was. the consensus seems to be that the packages in question were not intended ultimately to be to the synagogues in chicago. the names were up medieval figures that will prominence in the psyche of islamic -- that hold prominence in the psyche of islamic fighters. those are additional reasons to think that synagogues or not the target. it appears that the targets were passenger planes.

about 20% of air cargo goes on passenger planes. passenger planes carry 300, 400, i wonder people -- 500 people. that would be an attack approaching the scale of 9/11. cochairs were out with a report saying that we have this homegrown terrorist threat now, and the threat of terrorism is metastasizing, and we are likely to see more small-scale attacks, but unlikely to see catastrophic attack. i generally agree with that, but i don't agree with the notion that we will not see catastrophic tax. i think we will see both. it remains the case that al qaeda, and they are active in yemen, behind this particular plot, is determined not just to carry out small attacks, which are very easy to do, and we have seen evidence of that, but also

to do large-scale attacks on the scale of or exceeding the scale of 9/11. as we approach the anniversary, i am particularly scared of another large scale attack. i think there is a role for the average american to play. largely the work of county tourism is the work of a -- largely the work of counterterrorism is the work of a government officials. there are tens of thousands of law enforcement personnel around the country. we have 300 million citizens. citizens understand better than anybody what is normal in their communities and what is abnormal. what is an anomaly. this campaign that started in new york and has been nationalized by secretary of all to know, if you see something, say something, -- has been nationalized by secretary napolitano, if you see something, says on the, is very important. it can help us foiled plots and has done so in a number of instances.

host: warren, democrats' line. caller: good morning, c-span. i love your show. you have a great guest today. all sorts of a philosophical things about the place we live, and it is a sad state in today's america work you sacrifice everything and go against being a free country. i think what we really need to wrestle with is who we want to be we really want our daughters to be scanned and have our privacy violated? are we going to throw away everything we want our country to be so that we feel a little bit safer? host: warren, it sounds like this is an emotional issue for you. caller: it is really disgusting. i believe in god. i'm not afraid of dying. i am not sure why we are willing to spend all this money and give

up everything in terms of freedom and said all of these weapons to israel and saudi arabia and pakistan, the number one weapons proliferate and the world. what you expect? guest: let me leave the weapons issue aside. warren raises the liberty versus security issue. i believe security can be compatible with liberty. it is very important that we not divest ourselves totally or even largely of liberties in pursuit of that security. it is important that they be harmonized. i hearken back to the telegram in the cold war that george kennan offered when we were focused on communism, that the one thing ultimately that would order us is that in to defeat our enemies we become like them. we have got to come as security

and a pretty good there is a way to do that, and a good example -- we have got to harmonize security and liberty. there is a way to do that, and a good example is taking off the shoes. host: you talk about americans being the eyes and ears of the community. where is the boundary between that and racial profiling? we had at the issue with juan williams making the comments on fox news saying he was uncomfortable when he saw muslims on an airplane how to -- when he saw muzzle on an airpla -- muslims on an airplane. guest: i am glad you raised that issue, libby. this can very easily slip into racial or ethnic profiling. this is quite suspicious behavior, as opposed to suspicious people -- there is behavior we ought to focus on.

if someone is keeping som -- is leaving something behind in effort of fashion, multiple layers of clothing on a hot day, looking intently at places we know are likely to be terror targets, photograph and then hingatedly -- photograp them repeatedly, that is all behavior, as opposed to looks or what someone religious practices are. host: john, independent caller in north carolina. caller: a, how are you? host: welcome. caller: i have a couple of comments. i was wondering about the naked body scanners. i think he is a workers should have to post their naked body images -- tsa workers should have opposed their naked body images on line so that everybody can see them.

we cannot secure our borders if we have military bases in 130 countries about the world. how can we maintain those? we cannot secure our own borders. we are the world dictator and we try to spread democracy everywhere. guest: he called some naked scanners. i think every reasonable measure has been taken to minimize the danger to privacy, and because they can spot anomalies, they are, as i say, a huge advance over metal detectors, and it is critical we deploy them all over the country. host: there is discussion about people who don't feel comfortable with that, the alternative. guest: the alternative is a physical pat down to it to me that is much more intrusive --

the alternative is it physical pack down. to me that is much more intrusive. host: philip, republican. caller: hello, mr. ervin. i have a quick comment about individual freedom. i just wonder at what point does intrusions stop? i understand that as attacks escalate, security measures would have to be enhanced. i am a little bit worried. i remember a quotation from thomas jefferson that said if our country ever falls victim to germany, it would be -- victim to tyranny, it would be in the disguise of a foreign enemy. we have to shift the focus from security -- i think it is so vital that we focus on the ideological reasons why these people are attacking us, so that we don't have to be scared and have our freedoms a bridge --

abridged and we can maybe some date for a dialogue with these people. guest: i think he makes an essentially good point, that we need to get ahead of the narrative and figure out what motivates terrorists and do what we can address that. unfortunately, we don't have the electorate to do just that. we have got to identify and close security gaps. these are defensive measures, in addition to offensive measures, killing and capturing as many terrorists as we can. we need to do all this simultaneously. it is a complicated rule and there is a lot to do and we have to do it all at once. thank you. >> booktv, in one of his live

presentations, "decision points" as we discusses the decisions in the administration and personal live. live from miami-dade college on c-span2. >> this year student cam video documentary competition is in full swing. make a five to eight minute video on the theme, washington, d.c. through my lens. upload your video to c-span before the deadline of january 20th for your chance to win the grand prize of $5,000. for all of the rules and how to upload your video, go online to studentcam.org. >> we know take you to a senate hearing on retirement savings and security. we'll hear about the status plan of the pensions plans. tom harkin of iowa chairs the health, labor, and pensions committee. from october 7th, this is just under two hours.

[inaudible conversations] [inaudible conversations] >> committee on health, education, labor, and attentions will you please come to order. i want to welcome everyone on the hearing to retirement security. what's happening to retirement on america today and in the future. this is an issue that's of critical importance to every american family. a recent survey found that 92% of adults, age 42 to 75 believe there's a retirement crisis in america. are they right? is there a retirement crisis? let's consider the following statistics. that we'll hear more about here in the hearing today. over a quarter of the retired do not have a required savings.

none. one out of four. over half of the baby boomers who will turn 65 are at risk of not having sufficient retirement resources to pay for basic retirement expenditures, food, fuel, housing, clothing, and that type of thing, and i'm sure health care costs. we've learned from the testimony that we will hear from the research institute that the gap between what people need for retirement and what they have is $6.6 trillion. i think those numbers make it perfectly clear that the system is failing many americans and that the three-legged stool of retirement, private pension, personal savings, and social security, those three legs have gotten pretty wobbly. it used to be workers could rely on the defined benefit pension. those plans are the best way to

ensure that workers have a secure retirement that workers can count on for the duration of their lives. unfortunately, the benefit pension is endangerrered. the number of employs offering fallen over the last decade. now less than 1/4 of defined benefit pension. if any retirement at all, have a 401(k). those plans do not provide real retirement security. they leave workers exposed to the risk that the investments will perform poorly. we have to look at what's happened in the last few years. billions of dollars of retirement savings have just evaporated. lots of people saw the chance they had the retirement vanishing over night. 401(k)s also do not provide workers with lifetime incomes

like the pension plans. that means that workers and their families are forced to bare the risk that they will outlive their retirement savings. plus in these troubled economic times, families are facing challenges, saving for retirement is just not an option for many people. wages have been stagnant for years. people are working harder and longer than ever before. they still cannot seem to meet the cost for education, transportation, and housing, let alone setting aside some money for their old age. so for many americans, the only retirement security, the only solid plan they have is social security. that's under siege. they want to cut the benefits, raise the age, everyone should work longer. retirement is a luxury.

clearly these people do not swing a hammer for a living, or string high power lines, or work in our cornfields, or oil rigs, or lay bricks, drive trucks. for americans who work in their physically demanded jobs, working longer simply is not an option. a lifetime of hard works takes it's toll. at some point, a person can't do it anymore. we'll hear about that in our hearing this morning. we're facing a future that no one other than the rich will have an opportunity for a safe and security retirement. people that work hard for their entire lives will found themselves teetering, unable to pay the basic cost of livings. it's going to have drastic consequences. it's time for our nation to face the retirement crisis head on. that's why as head of the chairman of the health, education, labor, and pensions

we will hold hearings. i plan to hold hearings from a number of different angles. i look forward to working with my colleagues on comprehensive reforms to help workers save and ensure they have a source of retirement income that they cannot outlive. fortunately, retirement issues have always been an area that we can reach across the aisle and work together. i thank you all for being here today to discuss the important issue. i will go to my good friend who is been heavily involved in this from his days in the house, to here in the senate. and i'm going to be one of our lead persons and our hearings going into next year to all of the aspects of retirement security. with that i yield to my good friend, senator sauders. >> thank you very much, mr. chairman. and thank you for stepping up to the plate and getting involved in an issue that is a concern to

tens and tens of millions of americans. but an issue that we do not discuss enough. i'm glad we are going to jump on the hearings of this issue. i don't have to tell you. but all over the country, there's a feeling of deep anxiety. something is happening in our country. and people are not quite sure what it is. what they do know is that in this great country of ours, the middle class today is disappearing. there may not be phds, but they know that. they are worried the kids are going to have a lower standard of living in all of the decreases of productivity. we understand that the manufacturing base which has supplied so many good jobs for working people have been avis rated in recent yeared. they understand that medium class family went down. they understand that we have the

highest rate of poverty in the industrialized world. virtually all of the income has gone to the people on top. today we have the top 1% earning 23.5% in america. top 1% earning more than the bottom 50%. top 1% owning more wealth than the bottom 90%. that disparity is growing wider. it's the widest in industrialized world. in the midst of all of that as you've just indicated, often from billionaire type operators, they were going after the one area where people have had security for the last 75 years. the truth of the matter is that social security has been the most successful federal program

in our history during all economic times whether we are in prosperity, or in severe recession, social security has paid out every nickel owed to every eligible american. we take that for granted. during the last wall street collapse when people were losing their 401, people losing the pensions, not one american did not receive 100 cents on the dollar of what he or she was owed in social security benefits. that's a pretty good record. and while all of us must be concerned about the $13.4 trillion national debt that we have, and the very large federal deficit, it is imperative that we be honest about the causes of that national debt. i get tired of people saying we

got to privatize social security, we have to cut back on social security benefits, we have to raise the retirement age, because we have a $13 trillion national debt. well you know what? social security has not added one penny to the national debt. quite the contrary. you want to know why we have a national debt? we are fighting two wars which we forget to funds. we've given hundreds of billions of dollar in tax breaks to the top 1%. no one worried about that. bailout of wall street, unfunded. social security has a $2.6 trillion surplus. hasn't added a nickel to our national debt. so if there are people who for ideological reasons, people who don't like government, people who want wall street and workers to invest in wall street for their retirement programs, that's fine. that's a good ideological position. not mine. but let's get the facts right.

and the facts are that social security is not responsible in any way for our deficit or our national debt. let's also understand that social security can pay out every nickel owed to every eligible american for the next 29 years. and we've got a lot of problems in this country. we got 25% of our kids are on food stamps. we got an infrastructure which is collapsing, we got two wars, the national debt, worried about health care. we've got a lot of problems out there. but you know what, social security happens not to be one the major ones. is it an issue that we should address? so that our grandchildren and great grandchildren will have the benefits? yes. but for 29 years, 29 years, every beneficiary in the country will get 100 cents on the dollar that they are owed. let's address it. i have some ideas. i think you have some ideas. let us not go forward either in

privatization, let's not go forward in raising the retirement age to 70. as you've just indicated, a lot of these billionaire guys on wall street who think raising the retirement age to 70 they are not all laying bricks, they are not out plowing snow in vermont, they are not out lifting patients in a nursing home, they are not out doing the physical labor. to ask american workers to be working to the age of 68, 69, or 70 is reprehensible. it's not what the country is about. it is wrong. not only wrong to the working people, you know what else it does, it tells the young people who want to get in to the labor market, you can't get in. meanwhile, unemployment for our young people is very, very high. social security, the reason that there's so much opposition to social security for some of these billionaire guys is we have social security has worked. it has done exactly what it supposed to. not only for the elderly, but

for the disabled, for widows, and orphans. and this senator is not going to allow some wall street people who will help destroy the economy move forward privatization or raising the retirement age. thank you, mr. chairman. >> thank you, senator sauders. and we welcome back, we have two panels. our first is we have phyllis borzi, assistant secretary at the department of labor which oversees retirement and health plans to approximately 150 million americans. previously, she was a research professor at george washington university, and of counsel with the washington, d.c. law firm of donahue and donahue affecting employee benefit plans. mrs. borzi will give us a sense of the problems and aimed at improving retirement security. mrs. borzi, welcome back.

you've been before us before. welcome back. your statement will be made a part of record in it's entirety. please proceed if you so desire. oh the mike. >> no one ever accused me of not being heard. so sorry. good morning, chairman harkin, senator sauders. thank you so much for inviteing me to discuss how the labor is working to make sure that americans have a secure and safe retirement. i'm phyllis borzi, the assistant secretary of labor for the employee benefits of security. ebs is responsible for the regulation and enforcement of title one of ai race -- arisa. we see health plans and similar welfare benefit plans and these

plans provide benefits to approximately 150 million americans and along, of course, social security and individual savings, provide workers and their families with income during their retirement. as you said both senators, senator sanders and chairman harkin, mr. americans are working -- worried today they may not have saved enough for a secure retirement. with fewer offering to find benefit and dramatic increase in the offering of 401(k) type plans, the risk of repairing and investing have shifted on to the shoulders of the american workers. in the administration 2011 budget and the departments regulatory agenda, initiatives are included to improve the transparency and adequacy of these 401(k) type plans which workers are relying on more and more. we are also working to preserve benefit plans which provide workers with a steady stream of

income and retirement. one the departments highest priorities has been to improve the transparency of 401(k) fees. to help workers and planned sponsors make sure they are getting the services at a fair price. senator harkin, in particular, i want to thank you for your long leadership in this area. we're in the final stages of a rule that will ensure that workers have access to the information that they need to make informed investment decisions. for the first time, participates will receive core investment information in a format that enables them to easily compare fees and performance of their plan investment options. we've also published a interim rule that will help plan fiduciary requests and the information they need about service providers. this rule will help plan fiduciaries to assess the responsibleness as well as weather potential conflicts of

interest exist with respect to investment services. we believe this rule will particularly benefit small and medium-sized employs who sometimes electric the staffing and the leverage to obtain this information from the service providers. we're also taking steps to make sure that unbiased investment advice is more accessible to workers. through unbiased investment advice, we can help workers avoid common investment mistakes while also providing strong protections against recommends about investments tainted by conflicts of interest. but not only do we need to support americans in saving for retirement, we need to make sure that good options are available for them more managing their savings to lost a lifetime. the department is looking at proposals for workers who want access to these products. we also want to improve plan

reporting reliability. the arisa required financial report perform a critical function in ensuring that value and the accounts properly reflect the benefits. unfortunately, many of the reports that are filed contain the substandard reports, prepared by auditor with little to no experience. the department is seeking correction to allow the secretary to define standards for plan auditor, as well as to provide accountability for accountants and other responsibilities for the financial report. we also devote significant enforcement resources to protect workers employ benefit plans. for fiscal year 2009, our enforcement program achieved monetary results of $1.3 billion

and closed 287 criminal cases. ebs led to conviction of 121 individuals. lastly, the department believes it's important that workers have access to information and education. they need to make sound decisions for retirement. to that end, ebs has established a dedicated savings matters retirement savings education campaign. this campaign uses publications, online tools, videos, public service announcements and outreach to provide information to workers and employers. they help workers understand the importance of savings as well as their rights under arisa. most of the materials are available both in english and spanish. together the regulatory initiatives, education and outreach will help provide the tools that workers need to retire with confidence. so thank you, again, for this opportunity to testify at this

important hearing. private sector retirement plans together with social security and individual savings are important components of assuring a defined -- dignified retirement. but more clearly needs to be done to strengthen the private sector retirement system. chairman harkin, i know your committee is starting the process of thinking about how the goals can best be met over the long term. we look forward to working with you and other members of the committee to achieve this goal. thank you so much. >> mrs. borzi, thank you very much for your leadership on this issue. and the department of labor under secretary solise. i know you are looking at this and the rules. i want to cover two things with you. first of all, on the transparency, 401(k) fee disclosures have been a top priority to me, and senator sanders have been a long time involved in making sure people

know exactly what they are getting into on the fees. you pointed out in your testimony, and your written testimony, as a footnote, just what the differences can be. and small percentage changes in the fees. i'll read what you have here. a difference of just one percentage point, 1.5% as compared to .5. the average person, .5, 1.5, no big deal. especially if the 1.5 has nice ornaments. that looks good. i'll take that. however, 1.5% compared to .5% over 35 years dramatically effects overall returns. if a workers with an account balance of $25,000 averages a 7% return the worker will have $227,000 at retirement with the lower fee.

$163,000 with the higher fee, assuming no other contributions. everything else has remained static. i hope and trust that we are soon going to have mandatory regulation and rules that say that any fee has to disclose this. >> absolutely. >> up front. so that a person will know whatever plan they pick, how it compares to the other plans. >> absolutely. the participate disclosure regulation that i alluded to in my testimony will be out very shortly. it's in the form of a charge. participates can look along the line and compare every single one the investment options that are offered on fees and expenses. you are absolutely right, mr. chairman, most people don't understand the impact that fees have on their returns. you know, they look at a return and say, hey, that's pretty good. and they understand that the return can be dramatically

reduced once the fees are subtracted. in a defined benefit plan, the fees are paid by the employs. but in a defined contribution plan and 401(k) plan, they are passed through to individuals. and it makes a dramatic difference in their bottom line. >> the other thing that i wanted to cover with you, i'm i'm -- ie become more aware over the last couple of years, especially in the downturn of the economy, how many people are borrowing on the 401(k)s? and the more i've looked into it, they are deleting them, taking the loans or withdrawals, do you have any sense of how many people are borrowing? and then, as i said, if they borrow and if they don't pay it back within a certain period of time, they get penalized. it seems to me this is growing. this is a growing concern. i don't have a handle on exactly how many people are borrowing.

and not paying their loans back. >> yeah, you know, i don't know those numbers off of the top of my head, mr. chairman. we'll be happy to look into them and try to get you the numbers. i share your concern. i never thought -- i worked on the house side as a congressional staffer for 16 years. and when this provision that allowed loans from 401(k) plans was being considered, certainly the members of the labor committee that i worked for were very, very concerned about it. but the provision was put in because the argument on the other side is people wouldn't save unless they knew they had access to the money. but that really illustrated the difficulty that we have with 401(k) plans. they are not really structured to be retirement plans. senator sanders, you eluded to that. they are savings plans. and that's a good function. we need to have people save. but people can get their money

prior to retirement. and all that does is reduce their ultimate retirement security. so i'll be happy to try to get those numbers for you, mr. chairman. >> human nature being what it is, health expenses, something happens to the family, the downturn of the economy, borrow the money. if you do that, they get penalized. i don't know exactly what the penalties are, if they don't pay it back in time. but i need to -- we need to get a better handle on how much this is, and how big it's growing. >> we'll try to get those numbers for you, mr. chairman. >> i appreciate it. thanks mrs. borzi. mr. chairman. >> thank you very much, mr. chairman, and mrs. borzi. you in your statements say and i quote 27% of workers report that industry virtually no savings or investments or less than $1,000 in savings and, 54% of workers report the total value of the household savings is less than

25,000. that's what you say. i want you to speculate with me for a moment, if we were to raise the retirement age in social security to 70, and you were living in an economic period right now, and you had somebody who was out building roads in the state of vermont, or that's his job. he's a construction worker. what happens, first of all, how many employers are going to hire a 68-year-old construction worker as opposed to a 25-year-old construction worker? and second of all, second of all, if that construction worker or if that nurse, or anyone else who is 68 or 69 years of age waiting for social security is unable to get social security, what happens to that person who has virtually no savings right now, is 68, 69, has a number of

health problems, and can't get social security? how are they going to survive? >> i wish i could give you a good answer. i know that there are many, many hundreds of thousands, if not millions of americans that are exactly in the situation that your saying. the age discrimination issues were one the sets of issues that i worked on. it's very difficult, extremely difficult for older workers. it's not just the 68-year-old worker, it's people like one of my brothers who is in his early 50s. >> absolutely. >> he can't get a job. >> i absolutely agree with you. but the idea that there are people out there, leader of the republican party, in the house of representatives, and many others, suggesting no problem. 67, 68, go out.

you know, go out and work on construction. what world are they living in? what world? and then if this person has no income coming in from social security security, what happens to that person? you know, it is -- you know, it is an idea that, i guess it's okay for wall street billionaires to come up with. it's not real world. it must be opposed. i want to ask you another question. pete peterson, who made billions of dollars on wall street has pledged to spend $1 billion on a campaign to cut social security and medicare, according to "forbes" magazine. among other things he funded a movie claiming there's not a surplus in the social security trust fund and it contains a bunch of worthless i.o.u.s. just worthless i.o.u.s. what do you think? >> well, senator, it's what i

say to my -- the children of my friends who tell me that social security won't be there for them. and what i say is the one thing that i know, and it doesn't have anything to do with the fact that i work for the obama administration or i former worked for the congress. the one thing that i know is social security will always be there for people. and our task is to make sure that over the long run, it remains there for everybody. >> isn't it true that these i.o.u.s are backed up by the faith and credit of the united states government? >> that's true. >> if the united states government doesn't maintain that faith and credit, social security with the least of the problems that we have to worry about. we'll be looking at an international financial collapse. >> i think that's absolutely correct. >> all right. now i'm going to ask you a hard question. i know what your answer is going to be. but it's going to be a hard question as -- on april 16th,

2008, a gentleman running for president of the united states, i won't give you his name, he said, and i quote, what i have proposed is that we raise the cap on the payroll tax because right now millionaires and billionaires don't have to pay beyond what was then $97,000, today it's $106,000. the same gentleman, he did win the election in 2008 continued, quote, now most firefighters and teachers, they are not making over $100,000 a year. in fact, only 6% of the population does. i've also said i'd be willing to look at exempting people who are making slightly above that. the alternatives like raising the retirement age, or cutting benefits, or raising the payroll tax on everybody, including people making less $97,000, those are not good policy options. and it really was barack obama

who said that. in case you didn't know that. what do you think? >> this is a hard question. >> i know. in other words what the president said to me, when he was campaigning, is in fact while social security is not in crisis right now and can pay out every nickel owed for the next 29 years, we want to make it stronger. what the president proposed during his campaign is to get rid of the cap, maybe start higher than 106,000. i think that makes sense. do you want to comment on that? >> well, the only thing that i can say is that if i were to comment, it would be well beyond my area of expertise. but i do think that over the years, as a citizen taxpayer myself, i know other the years a lot of ideas have been moted. it seems to me that we ought to examine that one very carefully. >> good.

thank you very much. thank you, mr. chairman. >> will, i can't help but remark on that. we often talk about the middle class in america. and i think we got a little confused to who is the middle class in america. >> uh-huh. >> at $250,000 a year income, that's the top 2%. income earners. 98% of the american people make less than $250,000 a year. and 150,000, that's 5%. in other words, 95% of the american people who are out there working make less than $150,000 a year. i think we forgetten that the people in the middle class are making $35, 40, $65,000. that's the bulk of where americans are today. we forget about that. and they are right to be concerned about a lot of thingens. i think the fairness about what senator sanders just said, the fairness of this, if you are an

american making $40,000 a year, you pay on social security on your payroll tax on every dollar that you make. >> uh-huh. >> if you are a person making $400,000 a year, you only pay on social security on 25% of what you make. >> right. >> 1/4. >> where's the fair ness -- fairness in that? i can understand the middle class is upset. i mean the people making $30, $40, $55,000 a year. i can see why they are upset. that's just -- i didn't mean to get into that. you brought it up. so there you go. [laughter] >> it's just grossly unfair. but i have one other issue that i want to cover briefly. as you know the amount of money in the ira dwarfs the money of the 401. people roll over the money into

an ira when they transfer. we know that's not always the best decision. i'm concerned some employers are trying to cut cost. or in some cases, services providers, maybe trying to earn a higher fee by encouraging rollovers. is the department looking at rollovers? and in particular the communications to workers from employers and service providers regarding rollovers? >> mr. chairman, we are looking at it. we have a legal problem though in that once the money is rolled out of the arisa covered plan, it's not clear to me how to reach the money in the ira. we certainly can look at all of the behavior around the rollover decision, the information people are given, making sure it's accurate, making sure that there aren't conflict of interest associated with it. and so we are looking into this, yes. >> do you plan to take steps to implement the recommendations?

>> i'm sure we will be doing whatever we can to meet what the i. g. has suggested. >> well, again, disclosing any conflicts. >> exactly. exactly. this question of disclosure is really important. >> uh-huh. well, i reallyn't -- i really want to work with you and the respect on the whole issue of the rollovers into the iras and how they are being promoted and the fees that are being taken and how people are being enticed to do that. >> uh-huh. >> that's one area. the other area is the whole area of borrowing. it seems to be growing, maybe even expotentially on this. we need good data and how much people are defaulting on the loans. unavailable to pay them back. >> we will get you whatever data we have, mr. chairman. >> i appreciate that very much. do you have any follow up questions at all?

>> just very briefly. you said something about my comment. we can go on all day here. just very briefly, as you know, mrs. borzi, social security not only covers the elderly, but it also is a very important part of the lives of the people in our country with disabilities. >> absolutely. what happens to the 8 million people currently receiving social security who have disabilities on the 4.5 million widows and widowers and 4.3 million kids who are receiving social security if we make cuts in social security? in other words, my point is there are a lot of -- as senator harkin has said, people are hurting all over the country. it is so easy for people up here, you know, who have money

or take campaign contributions from millionaires and billionaires. we have to cut the programs. what happens if you are a widow trying to raise two kids, your sole income is social security? >> we need to protect those people. >> we sure do. thank you very much, mrs. mor write. >> thank you. >> thank you. we look forward to your information. >> we move to the next panel. dr. vanderhei. then we have mr. ross eisenbray,

president of the economic policy institute. prior to that, mr. eisenbray worked as a staff attorney in the u.s. house of representatives, a committee council isn't the u.s. senate, and in the occupational safety and health administration. we will talk about how the system is failing workers and social security. finally, we will hear from shareen miller, a home care worker from falls church, virginia. who will give us a first hand account of the challenges that workers face in trying to prepare for retirement. and for all of you, your statements -- well, your written statements will be made a part of the record in your entirety. i can ask if you can sum is up in the clock says five minutes. five, six, seven minutes. i won't get too excited. once it's over seven, i'll get nervous. somewhere in that range to sum it up. mr. vanderhei, i've read your

testimony. >> thank you. good morning. i'm jack vanderhei. we have been conducting original research on retirement and health benefits for the past 22 years. with do not lobby obvious -- >> secondly the deficits, third, the importance of social security, and fourth, americans retirement confidence. first, a quick look at the numbers will tell you where the nation is today when it comes to americans participation retirement plan. among all of the 154 million americans who worked in 2009, almost half, just over 49% worked for an employer or union that sponsored retirement plan

in almost 40% participated in a plan for full time, full year, wage and salary workers between 21 and 64, 54% of these workers participated in a retirement plan. obviously, the likelihood of a worker participating in employment base retirement plan goes up sharply with employer size. for workers with fewer than 10, less than 15%, compared to 53% of those working with an employer with 1,000 or more employees. looking at the more than 78 million workers who did not work for an employ sponsored plan in 2009, 12% are self-imemployed. of the remaining workers who are not offering the benefits, almost 10% were under the age of 21 and about 5% were age 65 or older. almost half, 48% were not full time workers. 27% had annual earn ins of less

than 10,000 and more than half, 57% worked for employs with less than 100 employees. what these numbers show is the structure reasons why many americans do not have employment-based retirement benefits. they don't work full time. they work in small firms. or they are low income. measuring the retirement is an important complex topic. they provided this measurement in the late 1990s. the baby boomers in 2010, between 44 and 47% of the households were projected to be at risk of not having adequate retirement income for basic retirement expenses, plus uninsured health care. even though the number is large, the good news is that 11 to 12 percentage points lower than what we found in 2003. who's most at risk? my oral testimony shows lower

income households are much measure likely to be at risk. the 2010 baseline at risk ratings range from 76% from the lower income to only 20% at the highest income households. figure two in my testimony shows the average retirement by age, family, status, and gender for baby bombers indigene -- and gen xers. estimated to be approximately $40,000 per individual. if you were to eliminate, that would increase to approximately 89,000. in aggregate terms, that would be an increase from 4.6 to 8.5 trillion. the importance of social security retirement benefits for low income workers is showing in figure 1 in my testimony. 91% of the lowest income households would be at risk of inadequate retirement income if they had no social security

retirement benefits. that's compared to 76% with the current social security benefits. perhaps surprisingly, the other three higher income also benefit from social security to the extent that 24 to 26% of households in those groups are saved from at risk status because of the social security retirement benefits. not surprisingly, these trends have been clearly reflected, excuse me, in the annual retirement confidence survey. only 16% of workers in the 2010 rcs say they are confident they have enough to live comfortably in the retirement years. the percentage of workers who reported they and their spouse had saved for retirement now stands at 69%. in addition to the lack of improvement and percentage savings, the workers who have no money in savings and investments

has increased over the past year. as you mention among rcs workers providing the type of information, 54% report that the total value of their household savings and investments, excluding the value of the primary home and any defined benefit plans is less than $25,000. the propensity to guess may help explain the amounts that the workers say they need appeared to be rather low. 29% of workers say they need to save less than $250,000 for comfortable retirement. another 17 mentioned the goal of $250,000 and $500,000. thank you for the opportunity to testify. i welcome the opportunity to work with the committee in the future. >> thank you very much, mr. van vanderhei.

mr. eisenbray, continue. >> thank you. i'm ross eisenbray. we're a founding member of two groups, strength in social security and retirement usa that together represent 50 million people that share a common view that strengthening retirement requires strengthening social security. the goal that the higher retirement age would undermine and the retirement usa just this month happens to be in the middle of wake up washington month to do exactly what you are doing and try to let policymakers and the american public realize better what a crisis we're actually in in retirement savings. the three-legged stool supporting retire many has actually always been wobbly for most americans. it's had one long sturdy leg, which is social security, and

two shorter legs. employer-provided plans and savings. social security covers 97%, and provide more than half of retirement income for 55% of seniors, and a quarter of seniors get more than 90% of their income from social security. the second leg, personal savings, as you've just heard, it's not very substantial. it's been shrinking has middle class incomes has been squeezed. the housing markets collapse has only added to those. and the third leg, employer provided pensions have never covered much more than half of employs. never. but the quality of coverage has declined steadily over the last 30 years with traditional defined benefit pension plans disappearing and 401(k) plans replacing them. 401(k) has not proved to be adequate substitute, or even more hybrid cash balance plans.

the reasons are well known. and phyllis borzi, and you both have mentioned some of them. they don't provide lifetime benefits and retirees can outlive their assets. employees, rather than professionals, manage their own assets. they tend to do badly. they take too much risk, too little risk. they tend to diversity and put their investment in their employer stock. even after enron, we see this. :

and as a result 80% of the tax benefits, the incentives for participating in for awake-- 401(k) plans go to the top 20% of earners, increasing the kind of income inequality that to you and senator sanders have been talking about. the result is a nation woefully unprepared for retirement, and i have different, slightly different figures but they are about the same magnitude as you just heard from mr. vanderhei. the retirement income deficit for households 32 to 64 is $6.6 trillion, and the federal budget deficit of course is about $1.2 trillion, to give you a reminder about the magnitude of this. so, the 401(k) i think is at the

heart of this problem. it has had serious negative consequences. it has increased inequality and allowed upper income families to shelter more and more of their income from taxation without increasing overall retirement savings at a cost, which you ought to try to calculate, which is somewhere i think between one and $2 trillion over the last 30 years. what have we bought for that? its creation precipitated the loss of the traditional pension by providing employers a way to shift investment risks to employees as well as part of the cost of contributions. but other congressional actions have also harmed the defined benefit pension plan. before 1986, and some of these were well-intentioned and some of them were actually i think wise changes, but they still lead to a decline in pension

plans. the pension plans were a handy tax shelter for employers because earnings contributed to a plan on tax and employers routinely overfunded plans, but in 1986 congress put limits on overfunding-- congress put limits on overfunding as a way to cut the federal budget deficit and then made it harder for employers to recapture excess assets which they were doing by putting on large excise taxes. congress tightened funding rules to make the pinch hardest and we do this again a few years ago, to pinch hardest at the very times employers can least afford to increase their contributions, during recessions and business downturns, whereas 401(k) plans are always funded at 100% by the contributions that the employer makes, and employers can actually cut back to spend their

contributions unless they have a collective bargaining agreement. an important thing to make sure employees got a pension, made pensions more expensive. all of these things, and others, which i can talk about, contributed to the decline that the results of course is this huge shift, where 40% used to have a defined benefit plan and now less than 20%. so, on page 4 of my testimony you will see what the center for retirement research predicts. the share of americans at risk of being unable to maintain their living standards in retirement increases over time, each succeeding generation with less security going forward. gen x'ers, god save them, 71% will be at risk of not having an adequate retirement income. so my message is the one that you have already announced

yourself. the most important thing i can say is that cutting social security benefits in this context would be disastrous. it would be pulling the rug out from millions of people. each year of raising the retirement age is a 6.5% cut in benefits that are already very modest. the average retiree has only $14,000 a year in social security benefits, which is less than the minimum wage. the programs 75 year funding gap is less than 2% of payroll. it should be and can be close with revenue increases from upper income owners. more and more income is escaping taxation while the average worker, as you said, pay social security tax on 100% of his or her wages. polls show that this is the solution that americans want. 83% of americans in a rockefeller foundation poll said that they would like to see

taxes raised on the upper income people who are not paying on their full share right now. a good policy actually, happens to be good politics. thank you. >> thank you very much. now we will turn to ms. miller. ms. miller, i heard her testimony last night and it is very profound. please proceed. >> i would like to thank the chairman harkin and senator sanders and the rest of this committee for inviting me to speak today on this important issue. again my name is shareen miller and i am a mother of two and brown grandma of one. i am a personal care person in virginia and a member of the seiu local five. i started working when i was 17 years old. you name it, i have done it. i have pumped gas, managed a convenience store, i have cooked pizzas, worked in a nursing home. i am used to living hand to

mouth, doing what i have to do to pay the bills. like most americans i am worried about my retirement. i have worked hard all my life, but i have no pension. i have not been able to save enough money in social security alone won't be enough to sustain me. as a personal care physician i've make $12 an hour. i receive no health care benefits, no retirement benefitr vacation time. i care for a client, morris, in their mid-20s with spastic cerebral palsy. personal-care is not babysitting. my job includes dating marissa, cooking for marissa, beating her, helping her use the bathroom, assisting her with schoolwork for college and anything else she cannot do by yourself. i would like to say that i am her hands because she cannot use her own. i love marissa. this is the most rewarding job i have ever had.

the services i provide, she would not be able to live a full and productive life. i cannot do personal care forever. can-- but i have to lift her into the bed. i have to lift her into the tub and if we want to go somewhere i have to lift her into the car. it becomes harder each year. i think about the day when i permanently damaged my back or knees trying to lift her. after all, how many of you can imagine your grandmother carrying a person around? other career options will not be very attractive and there are not a lot of open doors for 65-year-olds with a high school education. so i have no planned retirement date. i will keep on working until my body gives out. continuing working isn't an option, what do i have to fall back on for retirement? $12 an hour doesn't leave much room for savings. my entire pace that is to pay my

mortgage, keep the electricity on, putting gas in my car and buying groceries. i have approximately $20,000 left in a 401(k) from a previous job, and it is half of what it was before the market crashed in 2008. i am no expert in investing, but i do know that our retirement does not keep up with the ups and downs of all straight. thankfully i know social security will be there for me. if i retire at the full retirement age i will receive at least $17,000 a year, and it will not be subject to the swings of the market, but that is still not enough. i make approximately $35,000 a year, and i'm barely making ends meet. if there is an emergency like necessary dental or car repairs, i have to borrow from my 401(k). i have no idea how i can live off of $17,000 a year, and that

is if my back holds up her another 20 years. if the retirement age is raised to 70, as some are proposing, i would lose another 5% of my pay if i chose to retire at the current retirement rate. we need to ask to strengthen social security, cutting social security or raising the retirement age is not an option. what we need to do more, members of this committee and other lawmaker in washington needs to commit to finding solutions that allow americans who spend their lifetime of hard work driving their bodies to the limit to retire with dignity. they should be able to pay their bills and spend time with her grandchildren. i hope we can meet this challenge. thank you again for letting me share my story. >> thank you ms. miller for putting it in concrete, human terms. a lot of times, i mean not disparaging our whispers that are here, and they do incredibly

important work in informing us as to what is happening but i think too often we just don't get down to the real people and what is happening out there. as i said, we keep talking about around here, about tax breaks for 250 above or 1 million above as if that is the middle class of america. you are the middle class of america. most americans are making what you make, 35, 40, 45, $50,000 a year. that is middle-class america and they are being squeezed like they have never been squeezed before. and on top of that, they are losing their retirement. and so is it any surprise that the middle class of america is pretty upset? it doesn't come as any surprise to me. but thank you very much for being here and telling us your story. and i have a couple of questions for you to map but i wanted to

ask mr. vanderhei, in the old days many people got their defined benefit pensions through their employers. they didn't have to sign-up or choose what plan. it was just automatic. now, retirement has gotten a lot more confiscated. workers with 401(k)s need to do research and figure out how much they need to set aside for retirement. that is their own choice, their own decision. my figures are what i've been informed is less than half of the workers do the calculations and only one third are getting professional advice. you note in your written testimony that when workers understand how much they need for a secure retirement, they generally increase their savings in that regard there have been proposals including one from senator bingaman to require 401(k) account balances to show a participant projected income stream in retirement, not just the account balance. do you think giving workers that kind of information would number

one and courage retirement savings, and what if that were paired with an estimate of how much a person would need in retirement? in other words here is how much you would need in retirement and here is what your income stream would be. do you think that might increase -- encourage people to set aside a little bit more if they were able to? >> senator harkin that is an excellent question and i'm afraid my answer is going to be more complicated than a simple yes or no if you don't mind. this is something we have studied for many years at the research institute. we have a 2006 issue brief just trying to estimate what people actually do need to have a comfortable retirement. the problem i would see of trying to do something that is just a boilerplate regulation for legislation is that there are so many complications in trying to figure out what is an adequate retirement target. it depends on whether or not you

have any sort of annuity. it depends on whether you have any sort of long-term care. it depends on a number of different things, and just to quickly, quickly quickly emphasize one thing, is that you can do all the simulation modeling that you want and come out with here is the average value. you have to keep in mind that if you shoot for a target that is based on averages, you are in essence telling people one chance out of two you are not going to have sufficient money either because you live too long or because you had catastrophic health care costs are or what have you. so if someone were trying to approach something like that, my professional opinion would be you can't just have a number. you absolutely have to have a range of numbers to try to guide them along to their particular comfort level and you have to reflect their particular characteristics. i personally think it might be a

bit misleading, more than a bit misleading to just come out with any rule of thumb and try to apply it across the board. >> that is really hard for people, for the average person, to sift through all of those numbers, sift through all of that and say here is what i need. look, i have a lot of-- we make good money. we are in the upper ranges there, so we think about her retirement and went to a retirement counselor and she gave us all of these things that i don't even understand. i said well, what do you think? what do you think is best for us? well here is what a thing. okay fine, we will do that. i have to believe that is what most people do. they can't understand all this gobbledygook. the average out there, they tend to take whatever is presented to them. or is suggested to them.

so, how do you get it in a form so that they really do understand? if you don't have, here is what your income stream can be and here is how much you need. based upon where you are now, assuming, if you are disabled now here's what you need and if you don't become disabled here is what you need, to project what you need and here's your income stream. then people will have a pretty good idea of that, won't they? >> if one were to simplify the target to a place where one could do ready comparisons between the projected annuity value coming from a defined contribution plan, plus their social security, plus their additional savings, plus if they had a defined benefit or a cash balance situation, and combine all that information together, again, one could come up with a relatively easy comparison. my extreme caution would be, if

you are going to develop that target based on nothing but average life expectancy, average investment experience, average health care costs in retirement, you are in essence dooming them to a 50% chance of running out of money in retirement. so, if you are going to proceed down that road, one needs to be conservative in those assumptions. one needs to realize life expectancy is going to be relevant only for 50% of the population. one needs to get a target that they will be able to focus on and have some degree of certainty that would be sufficient for them. >> i am trying to get a better handle on this, and also this whole shift to the 401(k), but the other thing i wanted to ask you is-- well, i will pursue

that later because i wanted to ask-- my time is out. i have a lot of questions for ross and ms. miller but i will turn to senator sanders and we will go back and forth. >> thank you mr. chairman and thank you all for your excellent testimony. mr. eisenbrey let me briefly run through some economic history over the last couple of years. a couple of years ago as a result of the greed and illegal behavior on wall street, this country has been pledged into a horrendous recession. congress in its wisdom against my boat decided to bail out wall street to the tune of $700 billion. number two cup, despite growing income and wealth inequality in america, what we have done in recent years of lower taxes for the very rich. warren buffett the chairman also comment he is one of the richest people in the world-- and right

now we have some of our colleagues who want to give $700 billion in tax breaks to the top 2% and want to repeat-- repeal the estate tax which provides a trillion dollars of tax breaks for the top 3%. now in the midst of all that, we have folks like pete peterson of the peterson foundation and you say in your remarks, you say in the quote, the peterson foundation and a host of other are mostly well-off experts have managed to convince much of the media and many washington policymakers that the way to save social security benefits is to cut them end of quote. would you want to comment on a billionaire who made his money at wall street, now suggesting spending a huge sum of money to convince the american people that the way to save social security is to cut benefits? >> yes. there is so much to say about

that. >> and so little time. >> the average person, the secretary, warren buffett secretary, it if she is making a good income, might be paying 35% on her salary, whereas someone like pete peterson with hundreds of millions, billions of dollars in capital investments is paying 15% on his capital gains and dividends. and, when confronted with the possibility of helping out the deficit by supporting ending the carried interest exemption, which taxes private equity managers at a capital gains rate instead of that ordinary income rates, chose to oppose the repeal of that exemption. so, his concern about the federal deficit is a very narrow

one and it seems to be focused on people who have very little and what they can contribute to closing the deficit. as i think you said earlier, social security does not contribute to the deficit. the law prohibits social security from borrowing, so if we did nothing and the trust fund actually were depleted as predicted in 2037 hour 2039, it would even then not contribute to the deficit. the benefits would be. >> why are our good friends on wall street so entrusted to see social security privatized or dismantled? dismantle? >> they have aris opposed social security since its inception in part of it is that there weren't social security, people would have to say through 401(k) like instruments, which give them a fee. it is a business choice for them and they would like to see their

business expanded. >> expanded. >> thank you very much. ms. miller. thank you very much for being here today and i want you to know as harkin indicated you are speaking the experiences of many millions of people who sadly enough, don't have their experiences really reflected here on capitol hill. there are those, as i think you have heard, suggest that you should be perhaps working to the age of 70 and many of those guys sit behind a desk and make whole lot of money. they think it is a great idea that you work to the age of 70 and that people who are involved in construction, people who are on their feet every day, people doing physically demanding work as you are should work until the age of 70. what do you think? >> well, i will have to. if my body doesn't give out, you know i will be fine. but that is a hope. i am lifting a 100-pound person you know in and out of bathtubs and it is very hard work.

they can work until they are 70 because they sit behind a desk, as you said. they are not out physically doing labor and if i was sitting behind a desk i would have no problem and working until my 80. my mother-in-law's 80. >> in the state senate you would be one of the younger members. >> that would be great. my grandson would have something to be really proud of, wouldn't he? my mother-in-law's 80 and i was saying, i wish when i turn 80, i want to be as sound of mind and body or she is. she is very lucky, but if i continue working like this, i will never make it to 70. >> let me ask you this also. let's just assam one is 68 years old, doing your type of work. the truth of the matter is many employers would prefer somebody who is 25 years of age who will work for a lower wage, right? what happens if you are 68 in

somebody says i am sorry i can hire you any more. will there be a whole lot of job opportunities for 68-year-old? >> there aren't even good opportunities out for 43-year-old like myself. when i came back into the job market after 10 years in the construction field, i was a bookkeeper. i was making good money. i thought i was high on the hog and was making over double what i'm making now. but i went to find a job and i was semi-skill. i can duplicate being in all of that. i couldn't find a job. that is what they wanted. they wanted young kids and i was in my 40s already. >> they want young people often in physical demanding jobs because younger people are stronger. >> they are. >> also younger people will work for lower wages than older workers so i'm not sure mr. chairman what world people are living in when they think hey 68, 69 you can go out and get a job. you don't need social security. >> is really really quite uncomfortable to me. thank you very much ms. miller.

>> senator sanders to follow-up on that i was reading mr. eisenberry-- eisenbrey's testimony and on page 6 he said that the peterson foundation and a host of well-off experts have managed to convince much of the washington policymakers at the way to save social security benefits is to cut them. despite what we have heard from your former colleague, allen simpson, the average social security recipient isn't living in a gated community. there you go. i think that puts her finger on it. i like allen simpson. he is a fine man, but i know a lot of retired senators, senators who have left here and been defeated or voluntarily retired and that is who they associate with. people live in gated communities. bare upper income. they are not associating with ms. miller and the families that

make 40 and 50 and $60,000 a year. they are associating with people like us, making $200,000 more year. that is who they associate with. i know all these elderly people and they have got the condo in miami and then they have got someplace else up north for the summer and they have got a gated community. that is who allen simpson is thinking about. but that is not the bulk of americans out there. that is a thin veneer at the top the average benefit as you pointed out is about $14,000 for social security. i doubt that anybody is going to be living in a gated community. so again we have to get back to just who we are talking about here, who are we talking about? who are we talking about? mr. eisenbrey you say also unfortunately we are or deleting the foundation of our retirement

system taking into account the increase in the normal retirement age from 65 to 67 which we are doing right now, based upon the 1982 or 81, 83 bill. as well as medicare deductions and income tax benefits. the net replacement rate for the average earner retiring at 65 is already scheduled to drop from 39% to 28% in two decades, so the replacement rate of of 65 was 39. you say by raising the average age to 67 the replacement rate will drop to 28. what will it drop to, don't find it here, what will it drop to if you raise it to 70? do you know or mr. vanderhei, do either one of you know that? >> it is another 13%-- know, to 70 is a 19.5% additional cut in benefits, so i can't, i will give you the-- the calculation

of what that would do to the average replacement rate, but you can see that it is a substantial cut. each year that you raise the retirement age is an additional 6.5% cut in benefits. >> so i would say, just offhand, thinking out loud, 39 to 228, 11%, if you went to 70 from 67, that is three more years rather than two years. you have got to have a replacement rate down in the teens someplace. mr. vanderhei, and my very off on that? >> would certainly be the high teens. >> you would be somewhere less than 20%, so we would have gone from a 39% replacement rate to somewhere down in the teens. now, for someone who has been in the upper income brackets, not a big deal. you can absorb that. but how does someone who is

earning 35, 40, $45,000 a year, how did do they absorb that replacement rate? their standard of living is really going to fall, really going to fall. is that right, mr. eisenbrey? >> that is right and i think the figures that mr. vanderhei gave you on how close people are to poverty, this would push millions of people into poverty. we have done a fairly good job as a nation of you know taking care of elderly poverty. it used to be very high before social security but it's-- if benefits are cut there is no question that more and more people will be pushed into dire circumstances. >> both you and dr. vanderhei have talked about the decline of the defined benefit plan system, the rise of 401(k)s. here's a book i've read. i keep referring it to people, the great risk shift by jacob

hafner and there are a whole section in there about this issue, but going from defined benefit plans to defined contribution-- conservation plans but what i can't seem to get my hands on a is, when did this take place and why? why don't more employers want to offer defined benefit pension plans anymore? when did this take place and why? mr. vanderhei and then mr. eisenbrey, give me some context here. >> you have to go the up way back to 1974 with the enactment of the rousseau to get the full story and keep in mind that in november of 1981, proposed regulations were released that allowed 401(k) plans to basically develop the way they have. you had many things happened since 1974, which have made defined-benefit plans less and less attractive for employers,

due to certain constraints on funding flexibility, and one of the problems that happened in the mid-1980s was, because of the deficit, there was a problem when they were trying to-- there was a huge underfunding for pbgc and they wanted to make sure underfunded defined benefit plans would be increasing the minimum funding standard. the problem is, if minimum funding standards go up for that portion of the defined-benefit population, that means more contributions, more tax deductions, more revenue losses, so a decision was made, and believe in 86 or 87, that to counter the revenue loss for increasing minimum funding standards for underfunded plans, there would be a temporary holiday, deductible

contributions for overfunded plans roughly defined as any plan that had more than 50% more assets than they needed to cover their liabilities. i do believe the thought was, you give plans a holiday of one, two, three, five, seven years and when the funding ratio came back down to 10080% eventually, that employers would start making their deductible contributions to these overfunded defined-benefit plans. unfortunately, if you talk to many many pension consultants, when that day finally came when the pension holiday window had evaporated, surprise, employers have found other things to do with the money they were making us for his contributions to defined-benefit plan. they had rethought from the h.r. perspective, from a strategy perspective, whether or not they really wanted to continue to pre-fund for defined-benefit plans to that extent. the problem is, and i worked on some of the the modeling with pb

vg with the pens model they knew sooner or later you would get the perfect storm which we ran into. when discount rates go down extremely low, historical lows, you saw what happened to the stock market. you saw what happened with respect to bankruptcies and basically when all these things happen together and the ability to pre-fund for those days was severely constrained, that you now have a number of people who used to think sponsoring defined-benefit plans made sense in a financial situation where the volatility of what-- the absolute minimum contribution you have to make every year to teach the-- make this tax qualified can jump around severely. there was a lot of attempt to deal with this in 2006. i think some of these are still being worked out, but to be perfectly honest with you, think the volatility not only in cash contributions but also in the way these things are accounted for through fasb has scared away

a large number of employers and if they did and just outright terminate the plan, the thing that they have been doing and i am sure you are well aware if they have been freezing accrualw employees, and maybe in some cases also existing employees. >> that is a pretty good rundown. mr. eisenbrey do you have anything to add to that? >> i think that is all true and there are many other causes. the decline of unionization, unions as you know are much more likely to have a defined unionized workforce, more likely to have a defined benefit pension plan. there was a huge wave of terminations in the 80's touring the merger and acquisition craze, when employers leveraged buyouts, corporate raiders could seize another company's pension plan, could take it over in a hostile takeover and then raise

the plan. that went on and for a long time before congress intervenes to stop it. bankruptcy law allows employers to terminate their pension plana collective bargaining agreement. that is a contribution. you know, the terrible industrial decline that manufacturing companies were the most likely to have pension plans, in the steel industry lost its plans. right now, the auto industry as a part of the bailout of the auto industry agreed to put into place for new employees defined contribution plans, existing, the older employees have their plans. the deregulation in the late 70s of this transportation industry was a huge contributor,

because it allowed start up companies about legacy costs to compete against the older carriers, who had these obligations. and they could be low-cost competitors. and then finally, when health benefit promises were forced onto balance sheets, where companies didn't have to report them as a liability in the past, but when those rules changed in company suddenly had to report these huge retiree benefit obligations, that was one of the things that employers realize that they had to do with their money and it made them want to take money out of their pension plan and put it into the retiree obligations. so, there are just a host of causes for this. >> i will think more about that. senator sanders.

>> mr. chairman, we are not going to go into great length on this issue but i hope at some point we can discuss the growing income inequality in america and what that means not only from a moral sense but from an economic sense as well. mr. eisenbrey you write in your statement that 55% of all income gains over the last 30 years have gone to the top 1%. 55% of all income gains over the last 30 years have gone to the top 1% or the bottom 90% have only received 16%, i.e. the people on top become much wealthier, middle-class less. we can talk about that from a moral point of view, an economic point of view but let's talk about it a little bit from a social social security point of view. how has the growing income inequality in our country impacted the solvency of social security?

nester eisenbrey? >> simply, as more and more income has shifted to higher income people income above the cap, but the taxable wage base, dean social security is getting smaller and smaller share of gdp, and i think going forward, the trustees suggest and social security actuary says that, if we just returned to where we were in 1983 and tax 90% of income, right now we are at about 84% i think of income is being tax. if we returned, going forward, we would close about a third of the gap for social security funding.

so, this is an enormous problem and that would be going forward, but we have lost in the past 20 years or so, we have lost a lot of money that should have been raised on that tremendous income growth of very wealthy people. >> well that takes us to another point that you make in your statement. you say quote, most americans don't realize that someone with a salary of 300,000 or even 30 million a year pays no more and social security taxes than someone earning roughly $107,000. end of quote. what is the implication of that toward me can sure social security is solvent for the next 75 years? what do you suggest we might want to do about that? >> well, my institute, the economic policy institute, recommends that we take the cap off entirely for employers so that high income people-- the

way we do now for medicare, that people pay, the employer pays the tax on the entire income, the entire salary that is paid to higher income people and then for, on the employee side that we raise the cap. we don't take it off entirely, but that we raise the cap, perhaps to restore it to the level that it was in 1983, where 90% of income would be captured. and that by itself would nearly close, close more than three-quarters of the entire remaining gap in social security funding for the next 75 years. >> in other words a fairly modest changes in social security would be solvent for perhaps the the next 70 or 75 years? >> that is right. >> just want to follow-up on that. i have to understand. he said if we return to 1983 at 90% of the income you close

about one third of the gap and i just heard you say something about closing 75% of the gap. >> i'm proposing something more radical from the point of view of wealthy americans than just returning to where we were in 1983. at that point, we did not tax-- employers were not required to pay the tax on the entire salary that they paid to an employee. you know, now it is capped at $106,800. i'm suggesting that employers pay on the entire salary,. >> that would be if the employee does not match that. >> right, the employee would only contribute 2.2% up to let's say 140,000. i'm not sure what the calculation would you now, but it would be a higher figure than it is. >> social security has always been equal employee, employer,

right, and contributions? >> the tax rate would be the sixth .2% would be the same for employer and employee but employers i'm suggesting should pay more. >> how would that affect the self-employed? >> they would have to pay more to be. >> mr. chairman, getting back to mr. eisenbrey. mr. eisenbrey your testimony, you say that quote 45% of older workers leicester were employed in physically demanding jobs, jobs with difficult working conditions, and that quote. how difficult would it be for these workers to work until they are 70 years of age wax isn't it a little at absurd to be suggesting people who are doing physically demanding work a would they have jobs at 68 or 69 and would anybody hire them and second of all, what happens to them in terms of their health if they are working until 69? >> you have talked about some of these shows where it is almost inconceivable that somebody, that large numbers of people,

construction workers, carpenters, ironworkers and so forth. it is very hard to think of them working that long, but there are other jobs like cashiers, standing on her feet all day long for 40 years and now we are saying for another x number of years-- people are actually not retiring at the full retirement age. they do tend to retire earlier already because of health concerns. if we raise the retirement age even farther, it doesn't mean that they will be able to work any longer. just means their income will be reduced by the early retirement penalty that much more. >> okay. thank you mr. chairman. >> mr. vanderhei, there is one issue that was brought up that i would like to delve into a little bit more. we have all learned that collective bargaining is one of the most effective means for

workers to negotiate with employers for better pay and benefits. do you have any data that would tell us what percentage of unionized workers have access to employer-provided retirement plans, both defined contribution and defined benefit plans, and how does that compare to workers that don't have help from the union? do you have any data on that? >> i don't have that with me. i can certainly look as soon as i get back to the office and get back to you without. >> you might have access to that kind of information? >> there are collective bargaining codes in a very old form, 5500 series, that i might be able to put back together in a way that is going to be useful for you. >> i would like to know what percentage of unionized workers have access to employer-provided retirement plans, both defined contributions and defined benefits, compare that to workers that aren't involved in collective bargaining. >> correct.

again, mr. eisenbrey, you know again, we talked about savings, but as ms. miller says that 12 bucks an hour it is pretty hard to save. family, kids, housing, fuel, food, everything else. so, what is it? we talk about saving more and people should save more. what is the effect on our economy as a whole because of our lower savings rate? we have a low savings rate in this country. what is the effect on the economy, and how would you help people in that 35, 40, 50, 60,000 to save more? so what is the effect on the economy of the low savings rate and if we think that savings is a good bang, how do we promote more savings among that group of

income earners? >> you now, a i rate of national savings is generally a good thing. it leads to greater investment if the money is saved and put to productive use by industry, and i think this is a curious time, because we actually don't, don't need a lot of savings this year and next. what we are lacking right now is actually consumption but generally speaking, it is a good thing, the buildup of pension funds, you know, lead to tremendous investment in the economy. it isn't always of course, isn't always invested in the united states but that is a whole other problem. but, to help people save, i

think somebody mentioned, senator sanders i think mention human nature, earlier. is hard to get able to save. it is hard to get people to think 40 years into the future and plan for their retirement. i think. >> especially if i may, is especially have people save when they can barely pay their bills today. they have to figure out how to fill up the gas tank to get to work and by the way you also have to say for 40 years timeline. it is easier to talk about savings if you are making enough money to save. >> the government recognizes how hard it is to get people to do that and provides incentives. unfortunately the incentives are going to the people who need incentives the least, people for whom it is easiest to save so that somebody who makes 25 or $30,000 a year gets much less. even if they are paying income taxes and are making a contribution, a 1000-dollar contribution, to a retirement

plan. the government is providing them less than a third what it provides the same 1000-dollar contribution by somebody who is making $200,000 a a year and paying at a 35% tax rate. this is crazy. i would turn these completely upside down. i'm actually in favor of a mandatory retirement system with subsidies from the federal government and i have mentioned that-- the guaranteed retirement account is i think an excellent way to solve this problem going forward. but short of that, others have suggested changing the tax deductibility of 401(k)s, turning it into a tax credit, making it a refundable tax credit so that the government is helping the people who need help the most to save and you know, not just helping wealthy people move their savings from a

savings account to a tax favored savings account. >> mr. chairman? if i could just eat two or little bit here. and i want to get back to the social security retirement age because one of the argument that some people use it as well you know the mac and people are living longer. what is the problem? let me quote, cousin got me attention i think it deserves but let me quote from a "washington post" article from september 22, 2008. quote, for the first time since the spanish influenza of 1918, life expectancy is falling for a significant number of american women. in nearly 1000 counties, that together are home to about 12% of the nation's women, life expectancy is now shorter than it was in the early 1980s and quote "washington post."

mr. eisenbrey your remarks that over the past quarter-century, life expectancy at age 65 has increased by one year for lower income and. 25 year period, that is not much of a gain. compared to five years for upper income. in other words being poor is a deficit, isn't it, in some respects? >> it certainly isn't an age longevity. >> what we are talking about now feel that all of these things together, is saying to people who are working-class people, who are already working really hard, who are not seeing any significant increase in life expectancy, if they are women they may actually be seeing a decrease. guess what? you are going to have to work to 70 before you get your social security. what does that mean? >> is actually true. this is one of the i think, the

most compelling to most people, compelling reasons to raise the retirement age, that you know everyone is living longer. therefore, they will be in retirement longer and will get a bigger benefit. but, this is not an across-the-board phenomenon as you suggest. it is and just in some counties. i think the evidence is, and there is a report that i can supply to you, by a researcher who has found that lower income women and especially in the lowest income decile are living less long. their longevity is actually decreasing, so they are not benefiting from the overall situation of americans who most of us are living. >> the likelihood is that if we raise the retirement age, many of these women would never get a

nickel from social security. they would be dead. >> welcome if they make it to 62, they will be able to retire but their benefits will be reduced that much more. they will be punished. >> but this is an important way we don't talk about. we always lump everybody together but what you are saying and what the "washington post" indicates, many lower income women, their longevity, their life expectancy is actually declining and for working-class and lower income than, the gains are minimal for upper income people who have axes to be really get health care, they are doing just fine. >> the other thing and i just asked my staff to get it, we talk about life expectancy. the life expectancy starts at birth. life expectancy in the united states has increased substantially since 1900. because we have immunizations, vaccinations, babies not dying at earth any longer so the life expectancy has increased because

of public health. public health in america. but, if you in 1900 reach the age of 40, you lived just about as long as if you reach the age of 40 today. a little bit longer, not very much. not in life expectancy. so a lot of people say well when we enacted social security and put the retirement age of 65 five life expectancy was only like 68 but today it is what, 70 something? so we should raise that up so it will be comparable to what it was in the 30s. that is missing the point. the life expectancy may have been that, but if you were a working person, if you made it to age 30 or something like that, you could expect to live just about as long as you live today. so, it wasn't that people were retiring and then dying. it is just that people didn't

live as long because of the low life expectancy because of childhood deaths. >> part of the phenomenon that you have just mentioned is also the people are living longer in their working years. they are working life has been expanded so that the ratio of worklife to retirement life hasn't increased at the same rate as life expectancy-- longevity after 65. >> that is right, so raising, if you raise the retirement age actually what you are doing is you are going backwards from where we started in the 1930s. you are actually going backwards in terms of how many retirement years he would be covered i social security. i submit that and now i can prove it with data but i just don't have in front of me. ms. miller let me ask a question. there's a lot of talk around here about we are going to tack -- he tax bills around here and that kind of thing. a lot of talk about raising the

estate tax exemption, four states up to $5 million per person, $10 million per couple and low bring, lowering the tax rate. how much would that benefit you? >> as you have seen my face, it pretty much loses me very fast. i am still thinking i'm going to die early because i'm low income. i am sorry. in layman's terms please? >> in other words, you don't have $5 million in the bank or 10 million you will be leaving your kids, right? for the record. that was a laugh? >> my children make the same amount per hour as i do, and they are 23 and 24. my son and my daughter-in-law both make $12 an hour.

they are not in the workforce for 40 years, or 20 years. i get very confused when you guys talk about all of these numbers, so admittedly i feel dense at the moment, because i will never have that kind of money to leave my children. when my income went down, when the start market crash, when i lost my last job, i lost my life insurance policy too. so i don't know how i'm ever going to leave him anything. if nothing i may be just a burden on my children. >> mr. chairman ms. miller just raise an interesting point that we haven't really discussed. we have talked about folks raising the retirement age to 70 and i'm on a little bit of a johnny one note today but that is an issue on my mind. i wonder and any of the panelists can comment on that, it would seem to me that if you raise the retirement age, people were not getting social

security, they might in fact be a burden as phyllis said on their kids. i mean, we are already saying that in today's society. wouldn't we expect perhaps more of that? if we raise the retirement age? mr. vanderhei? >> well, can't give you an exact number on that, but basically that is something that we try to get at in the testimony. we try to look at what would happen in essence if you eliminated social security benefits. we could very easily go back for you and, instead of doing the current status quo versus nothing, do these kinds of comparisons for you and show you exactly the percentage of the population that would be at risk and aura not have any other financial resources, if that is how you want to define being a burden. we could very easily go back and simulate that for you. >> and i would appreciate that and the like to see the statistics but common sense might suggest that already

hard-pressed middle class might have even more of a burden trying to take care of parents who are not getting social security when they might need it. with common sense suggest that? >> absolutely. >> okay. >> thank you all very much. this has been very enlightening and as i said, this is the first of our hearings. we are going to have a whole series of hearings because i think the retirement system and america's putting a lot of people at risk for kho there is, as i hear, there is a crisis out there in our retirement system that people have to know this and we have to take some action to shore it up. mr. vanderhei, you have some information you are going to get to us on the collective bargaining balance that i asked and mr. eisenbrey you are going to give me some information on, if you raise the retirement age to 70, with the replacement

rate, how far that would fall. mr. vanderhei if you have that data too. what would happen to that replacement rate on that? and ms. miller i would like to say, you are the face of america. you are the face of working americans. middle america, and you are, and if nothing else, it seems to me you and the many millions of americans out there who are making 20, dirty, 40, 50, $60,000, we have got to shore up the retirement system for them and the best retirement system and the most secure one that we have the social security, because that is backed by the full faith and credit of the united states government. i tell you a lot of times when young people asked me a social security going to be there when i retire, i asked him a question, let me ask you this. when you are my age, will the united states of america exist?

do you believe that are not believe that? they believe that. if the united states exists your social security will exist because it is backed by the full faith and credit of the united states and know what the retirement system can say that. >> mr. chairman of packages conclude my remarks by saying i think as we have heard this morning and i think most americans know there are been award going on against the middle class of this country and that is why the middle class is disappearing and i think these attacks on social security are part of that same effort by wall street and some other special interest now who apparently are extremely unhappy that we have a federal program that has worked enormously successfully for the last 75 years and they want to destroy it. and i think our job is to make sure that they do not succeed in that goal. thank you very much richard chairman. thank you all panelists. >> the committee will stand adjourned. thank you all very much.