>> at this point i don't think that's appropriate. but changing the bankruptcy reform law for the future, you know, for future loans, i think that would be entirely appropriate. in fact, i think that would be therapeutic, would make for a better system. >> let me press that a little bit because the problem seems to be, and we have folks calling our offices every day in oregon

describing how difficult it is to deal with the servicers. to create a little bit of countervailing incentive for the servicers to close the deal. at this point want to mention that there seem to be a number of perverse incentives for the servicers. i just did a tour of oregon in four different cities where i did a presentation with homeowners who have been affected and i heard the same stories we have been hearing in our office, which is i call the bank and tell them where the decrease in income, they said hey, you're preapproved, stop making your payments for three months. really they were calling the service or, if you will, and not always a bank. it turned out that the service of charged a huge amount of peace once they reduced their payment or stopped making their payments. fees at the servicers wouldn't otherwise would have had access to. then it was a recent article also noted that servicers make a tremendous amount of money when they put on substitute property

insurance, charging sometimes up to 10 times what the homeowner would normally pay and the sorcerer gets a huge feedback hidden to the homeowner in that regard. so servicers have an incentive to get families into trouble, almost. i'm not sure that's been thoroughly explored. it's a new element to me. i hadn't come to think this is part of the challenge with the servicers, but any comment on that would be helpful, but also that's why i felt lifeline bankruptcy power, even on existing loans, would be helpful, creates a countervailing incentive to close the deal and help address these problems. >> welcome this is what i would suggest. fdic chairwoman sheila bair has recently proposed the establishment of a fund, paid by the mortgage servicers, mortgage companies on the same, designed in the same way of the db fund. so if you're a homeowner who has

been wronged by this process, you can go before this commission and air your grievances, determine that you have been wronged and the fund will pay you at the. i think this would be an appropriate way at getting the attention of the servicers and the mortgage companies, and it would provide as you said at the beginning of your comment the catalyst for getting them to work on this process in a more effective and prudent way. so that would be my approach. as opposed to, there are potentially significant unintended consequences from going back, rewriting bankruptcy law on existing mortgages that you really have to think that went through. in deep crisis i was sympathetic to that argument, particularly when the private-label securities market was at the

heart of the problem. but increasingly that's no longer the problem. the loans on the books of the bank, fannie mae, freddie mac and the fha. i don't think that would be the way i would go. >> i would ask everybody else to weigh in, except my time has expired. so thank you very much. >> thank you, senator. senator begich. >> thank you, mr. chairman. i want to follow-up -- can i just say senator begich was here earlier. i apologize, i do rush out and make a quick call. thank you, mr. chairman. let me come if i can, follow-up on a couple of things. mr. edwards i agree with you with regard to state and bankruptcy that we shouldn't go down that path. we need the talk right now. from what i understand talking to multiple people who deal in the business of muni bond, state funds, it's having an effect on the market. i know states are probably feeling that even though they

won't say that the rates have been adjusted upwards but there's is nothing calculated in to what we might do or not do, so even the notion of talking about it i think is not very healthy for we need to get through. so i want to say i agree with you in that regard that we should be going down that path. i would be interested in each one ago quick comments on that, obviously mr. edwards you've already made a comment. in each one of you would quickly comment on the idea of the state walking down that path of declaring bankruptcy, which again i think would be a huge mistake. >> senator, i can say that we have discussed, we have basically, governors are pretty united in opposition to that legislation. nobody is asking for it. nobody wants it, and we agree with you that the mere conversation around it is forcing the risk premium to be built into the bonds. so we are very strongly opposed

to it. >> i know they call it sometimes headline risk. go ahead. >> i second the views of mr. edwards. i agree we shouldn't talk about bailouts. however, there are some areas where there's a close connection between federal and state funding. unemployment insurance where the federal government is in by the design of the system before the state so now. and one thing this administration has already done, funding for me a are a. one additional step taken to help the long-term sustainability of these programs, and served in relief both state and federal budget is to mandate higher wage base. the wage base -- >> i do want to get into the program specifically narrow in on the fact that states could declare bankruptcy.

>> so -- >> in other words, i understand the program. you're right, there are relationships. >> the inherent -- the states can essentially land, will borrow from the government once the trust funds run out. so there's a typical system we see it in small ways. the states know they can -- >> i understand. >> this is more concrete, concrete or steps are taken for the ability of borrow later on. the same thing happens then at the broader level. state budget. the possibility to possibly be built out probably leads to pay as you go in situations where you should be building up funds. many states the opposite. taxes are low in good times and then have to rise in bad times. so talking about bailouts encourage that.

>> dr. zandi? >> yeah, i don't think that's a good idea. i think the bankruptcy -- i think the states have all the tools they need and that this would be an error. >> i appreciate that. i just want to put that out there because i think we create a problem by going down the path of discussion when renault governors are not asking for it. no one is asking for it really. and it's a very bad thing. let me go into to other areas but for someone to give a thought. i, like senator sessions, and a giveaway i was elected a mayor of city that are locked into a $259 budget with a $33 million hole in it. we had to resolve it. we had a three-pronged attack. one with spending, one was revenue, one is also investment, water, sewer, roads, so forth. and i have turned down when i was mayor, i turned down the

federal resources when offered because we didn't have the money. so you can do it. and also sustainability of those resources. and i guess i want to, senator sessions brought up a good point and you're right, there's this addiction. it is up to the governors, and i would say mayors who have actually a larger amount of the debt out there than states do in the sense of what's out there, but they just have to say no. it's about leadership. for them to say well, maybe i will get 10% from the fed, there's many times i just had no. what we did we change our policy. we never used one time resources for ongoing expenses, and that was -- i had to tell the local city council which was hard for them to get off the gravy train. what we did it we created stability. governors, mayors, mayors, i'm biased. i'm not a governor, never have

been, we have to do it. because otherwise we will get yelled at at the grocery store. we don't have a choice. there's no one higher than us. i guess part of it is this gap of sometimes leadership just to say no, even when your constituents may think it's a wise thing. but getting of these one time monies to me are the white -- the right way, we is one time i took an assault a problem and hope it all works out next year is very dangerous. what they want to mention to make sure her do it because i heard the same statistic. the pension issue, our state had to deal with it. we are more sound than ever before. but it's really when you figure out 4% are whatever the percentage is, a small percentage of the overall budget, and i want to echo and makes record what what you said. states are managing their way kind of threw it painfully, but should there be a more consistent rules of the game how

they do this? each state does it carefully, and you're right, very convoluted especially to the bond market. understand how stable -- can you give thoughts on that? i'm not suggesting more regulation i'm just trying to figure how do you get uniformity here when financial markets can respond the right way when crediting and scoring states for the bonds of all cities. >> the problem is the pension things are pretty much considered to be legal contrac contracts. spent hours is vested in a prostitution. >> you right. but sometimes it includes issues of all kinds were examples the call is not in the contracts we have a lot of flexibility there. or maybe the age isn't in it. and other components of it. so i think they're working, as i say, 30 states in the last five years and where 10 now, and they have moved some sort of the small incremental to biggers.

the basic problem though is they still have defined benefit to defined contribution, although somewhat utah are beginning to move to release hybrid types. >> that's what we have done. >> i think the rating agencies are able to look at the liabilities they are, the of bonds, and make informed decisions. i don't know that uniformity is really necessary. i'm pretty confident that there is serious focus on this right now. >> i will end on this because my time has expired but i know there's always headlines about the crisis of states year but really what you're stating, i want to make sure i'm hearing you right, the majority of these is starting to do with this because they recognize the ongoing cost is not millions of billions come is a fair statement? >> i think it is. i think states should be given some credit. they cut spending by $75 billion over the last two years.

that's not from what i would argue cbo's or inflated baseline. that's again factual. that's pretty tough stuff, and i think they understand they've got a lot more to do but i think they're prepared to do it. >> thank you. thank you, mr. chairman. i know my time is up. >> i thank senator. senator cardin. >> thank you, mr. chairman. let me thank you for the series of hearings that was held on the national deficit. and i want to thank this panel. mr. sceppach, i want to follow up on senator begich is point because we talked about state. i don't think we've talked enough about the risk factors of the miserable and county governments. and if you're a governor, i think your proprietary interest to avoid a problem with a county or municipality within your state. and today our state government has limited capacity as to how

they can respond. they have to take care of their own budgets so they are not as well-prepared as perhaps they would need to be to avoid a consequence in the state and would have impact not just on that town or on the county, but could have impact on the entire state. in fact, could have impact well beyond the borders of one state. so i just want to get your assessment as to how much attention the governors are paying to the problems of the invisible and county governmen governments, as they are obviously in a little more difficult position. >> i hate to say this to the senator your they are in survival to themselves for some extent of focusing on their own problems. there are some states like pennsylvania who actually have laws that could necessary require but allowed them to help municipalities, but a lot of states don't have that.

so i think that they are not focusing on that issue a lot, although personally i think as i look at it to some extent relative to the states, it is a bigger problem. but again i think there are some that go into fall, my sense is they will be fairly small. that again, you look historically and there has not been a lot of defaults in this particular area. so particularly if we begin to get positive revenue growth, i think they will be able to work through this as well. >> i think that's a pretty direct, honest answer and i appreciate that. we are all in a mode right now of survival, and that's true at the national level also. but i would just like to remind my colleagues of the concept of federalism that the federal government has responsibility as relates to the states working with the states are but i also

believe that a municipalities and counties which are creatures of our state, the state has responsibility to work with our municipal governments. they have no other place to go. a lot of governors, a national level we are clearly going to be providing less resources to our state, no question. at the state level you will be providing less resources to the county. the counties will be providing less help to the municipalities. principalities don't have anywhere else to go. so i think we all need to understand as we look for this credible plan to do with our national debt. that it's the same people who live in municipalities, counties, states, the federal government, and that it doesn't do a person in baltimore city any good if the plan is credible at the national level that dumps its problems on taxpayers in baltimore city. and the people in baltimore city have no chance of survival under the policies taken by the federal government and the state

government. so i would like to lay was that our chairman has use, and i think this is worth repeating, chairman say we need a credible plan. it doesn't have to be a radical change overnight. we need a credible plan that gets us to the numbers that, mr. edwards, you were referring to. you want to get to those numbers. so i think we need to be mindful that we don't want to see our people of our nation harmed because we've taken care of our own problem at the national level, but we have dumped everything off on the states and the states have dumped it off on local governments. dr. zandi, i want to get back to the mortgage issue, because it is still a huge problem in our community, and all communities, your exchange with senator merkley. do we have a structure in place that could implement the policy that you are suggesting? that is, do we have a credible way being able to determine whether a potential person who

was subject to foreclosure quickly could determine whether they are entitled to some form of help? >> no. i don't think that a mechanism in place that is appropriate. and is helpful enough. in some states, they have been more aggressive than others. i think the state of connecticut, new york, new jersey puts in processes with third parties involved to try to facilitate this, but it's not something that is being done nationwide or in parts of the country where the foreclosure problem is particularly acute. it's not coast-to-coast but in some place it is very acute. so no, i don't think that we've addressed that adequately enough. >> so, if we were just to put in a moratorium without having a process in place, is that really

going to help the situation or not? >> no. i'm not advocating we have a moratorium. i'm abdicating we have through the regular process requires some changes anyway the mortgage services conduct their business. so one point of contact, no dual tracking, third party review, a fund established to compensate homeowners that are shown to be wrong to in the process. i think if you do those things, and i don't think it would be -- it will be difficult to do this legislatively, but i think that would be helpful and make a difference in facilitating foreclosure modification process. i think we are at a point now where we've got some tools. we just have to make them better. we need to work through this process as fast as we can. we need to get to the other side of this so the housing market can begin to function properly and house prices start to rise.

>> i agree. if -- we're still a very difficult position on these issues. there's uncertainty in the market place also which is not helping. the further we can clarify this, i agree with you. i think we have enough tools out there, just the to make sure they are used, that the regulators do their jobs. thank you, mr. chairman. >> i deferred my question time because we were late because of the prayer breakfast this morning to members being here. so i can ask questions as we went along but i want to come back to some of the fundamental questions i wanted to ask. as i see it in terms of the work of this committee, one of the most important things we can do is contribute to getting on a more sustainable course. how serious a threat do you delete it is to our long-term economic strength to having

deficits of 10% of gdp this year and being on a course to a debt that would be 233% of gdp, according to cbo, if we stay on the current trendline? dr. zandi, how big a threat do you see that to our long-term economic security? >> it's legal. i mean, if you don't make changes to change those forecasts any substantive way, our nations economy, our living standards will be diminished for generations to come. so i think absolutely positively has to change. >> that's about as clear as it can be. lethal is a pretty strong, and, frankly, i agree with you. i believe that. and so then the question becomes a matter of timing. i personally believe, and the commissions, all of the

bipartisan commission has come to roughly the same conclusion. that is, don't make big changes right now, but put in place a plan that makes big changes over this decade. in the case of the fiscal commission, we reached a determination we needed to reduce the deficit for trillion dollars over that period of time. 4 trillion. that's real money. what do you say with respect to timing and size of the changes that are required? >> i think the fiscal commission laid out a very good road map for you. there's to commissions, and both roughly came to the same place and laid out roughly the same path. and i think that we should move in the direction that they laid out for us. so the deficit, the gdp was calling nine, 10% this fiscal year. if we can get that down to two

to 3% of gdp by the end of the decade, to do that in a way that everyone believes we're going to do that, and we don't have to do it in one year. we can do it over that period. we don't have to begin now. we shouldn't. we should start that process when the economy is moving forward in a clear, definitive way. my benchmark for that would be a fall on unemployment rate. as soon as the unemployment rate moves south, i think at that point we can conclude we're off and running and we need to did we focus and start imposing real fiscal discipline and austerity. before that point in time i think it would be, we will probably make her way through but it would be i think i risk that we should not take. and so, therefore, in 2011 i think we have done what you need to do. i think we're in good shape. i would not change fiscal policy for calendar year 2011. but beginning in 2012 after the end of the decade i think at that point we need to the very,

very disciplined with respect to reducing the deficits, get it down to 2% of gdp. >> so and dollar term, was it the package will be required to? >> if you meet sort of the numbers i gave you earlier, 2.5% of gdp, $375 billion a year in today's dollars. so to get that down to zero, zero in five to seven years, that's $50 billion a year in today's dollar. that's roughly what you need to do. and be very clearly done. >> it has to be credible that it's going to be done. >> and i think as many elements of credibility. harken back to the commission -- >> we're talking just in terms of dollar terms of the total package, you are very close to the $4 trillion number that the commission came up with.

>> exactly. >> dr. sceppach? >> the only point i would make is let's face it, 95% of our problem is health care costs. we can't know what to do with social security when we get the political will. so i think the structure of the package is also very, very important. again, you can cut domestic discretionary and generation savings there but i suspect you are not going to get the impact on financial markets if it's a package of domestic discretionary. it seems to me it's got to be health care, and that's a problem because i don't think we know how to do that. we've got some our experiment station, but i think it's 90% of the problem is health care. >> all those roads lead to health care, but what the commission concluded, and i think correctly so, everything has got to be on the table. you've got to do revenue. you've got to do domestic discretionary spinning on both defense and nondefense side. i would say testimony before the

commission on some of the things that are happening at the department of defense was startling. in terms of cost. you've got to do the entitlements. obviously, the biggest entitlement, the place where we have the biggest unreliability is the health care cost. i do want to reopen health care debate but i would say this to my colleagues. i was deeply involved in that effort. however, imperfect it is. we took every idea, virtually every idea for reducing health care expenditure that analysts gave us from whatever perspective. so the best analysts -- senator gregg and i wrote a letter to cbo and asked them what are the things that we could do that would give us the biggest bang for the buck at reducing health care expenditure. cdo came back and told us number one, you've got to change the tax treatment of health care.

and economists from almost every philosophical perspective said that is the case. because you're encouraging overutilization. number two, they told us you've got to change the payment methodology. you've got to quit paying for procedures, and you've got to move to paying for health care outcomes. third of they told us, you've got to put in place some ongoing mechanism to get the ideas that work in terms of bringing down costs, getting them implemented. and so we put in place this whole new institution to try new things. and if they work, to implement them nationally. i'm sorry, did you want to add a point to that? >> the only point i mentioned, this is not a position of the organization, but having spent a fair amount of time on this, i

think one thing you want to look at is, because we now have all player data systems in a bunch of states which means we have a much better sense of what is driving the cost of health care. and it has to be done for everybody. one of the things i'm concerned about if you cut medicare or medicaid it just gets shifted. i almost think it's got to be done state by state now. one thing that may be worth looking at is you provide some incentives to states if, in fact, that they begin to reduce the rate of increase in health care costs for everybody in the state. because i think it's got to be addressed across the board. some states they want to regulate. others may want to do transparency, but i think it's an approach that maybe worth looking in. >> all right. senator portman has joined us. welcome. why don't you take your time. and let me indicate that dr. zandi needs to leave your

right about noon, so why don't you proceed, senator portman. >> thank you, mr. chairman. i appreciate. thank you for allowing me to come and speak. i have figured out how to be a three hearings at once again. i want to come by in speak briefly and hear from you. i love the fact we're talking about health care, and i think ray, you just mentioned 95% figure. i'm not sure that's accurate, but you should know at this very table last week dr. elmendorf said health care is a number one fiscal concern has, and that's not a surprise because it is and it does drive the cost of medicare, medicaid of course. i have a more sort of fundamental question for you about the impact of current deficits on economic growth there's all sorts of data out there about the future impact of the enormous debts that we are building up and to cbo projections are sobering, to say

the least. but what's the impact today? we don't talk about enough i think and maybe you can correct me on this, but i believe that we are crowding out private investment. i believe with $1.5 trillion in debt this year, projected and the debt that is on track to double in the next 10 years, that we are impacting our ability to get out from under difficult economic conditions. i just wanted you to comment on the. i have heard people say with a $1.5 trillion deficit, building on the 1.3, 1.4 the last couple of years that there's maybe a point or point and a half off a gdp. do you agree with that? and if you take to the next level for me, in terms of its impact on the economy which would be impact on jobs. what does that mean in terms of job growth in this country as we are struggling to deal with his

high unemployment number even as the economy is beginning to grow? so i would start with a dr. zandi if it's okay, and work down the panel. >> i don't think the current budget deficit is crowding out private investment. i don't see evidence of that. the 10 year treasury yield is 3.5%. be aa corporate borrowing, yield our incredibly low. even junk corporate bond yields are very low by historical standards your i don't think cost of financing is an issue for companies. in fact, i think the large budget deficit is helpful in that it is supporting demand and, for example, a tax cut deal that you came to at the end of last year, i think has a very important provision that will cost money, but will be very important to supporting investment in 2011, and that is expensive at any investment.

and i think that's a very underappreciated aspect of that deal that will provide a lot of investment and will add a lot of jobs. businesses will go out and buy an airplane and have to fill it or buy a piece of issued and they have to install it and they have to demand it. so i think those are inappropriate very good policy. having said all that, i think i would entirely agree we need to reduce these budget deficits. moving forward, when the economy is cleared off and running, and i think we are very close. if everything sticks to my script, by next year we should be at a measurably better place and fiscal austerity that i think is important, should begin at that point and we should engage in the kind of discipline necessary to ensure that we do not crowd out private investment because we will if the federal government does not pullback quickly once the economy is moving forward. ..

if job growth is a before hand we need to be ready. mobility bonuses can take up jobs in other regions. we need to spend and invest in areas that allow us to grow and get out of the current situation to achieve sustainability of the unemployment base. >> i agree with mark. faster you can enact the changes, the better.

even if they're going to affect for a year-and-a-half. the extent you put together a package now and do it is very positive. >> i agree with mark that the best way to think about crowding out is interest rates. the more interest rates go up, investments go to the private sector but you can also think you don't see that now but for federal spending, the real resources and the private sector you can think about this way. if the department of defense procurement budget is going up or the structure is rising your taking high skilled and talented people producing stuff for the private sector for private markets and they're producing in the government sector. suspending crowds are resources even if there is a separate mechanism from interest rates. going back to the previous question, when we need to make

these cuts, we shouldn't think about this in terms of one giant reform. we obviously have to do incremental stuff overtime. this year we cut defense and the next year we raise the social security retirement age and on and on and don't envy the job of members over the next few years. will be very painful to cut every year. there is no more getting elected with all kinds of goodies. that is all going away. >> as the past election showed, some people got shellacked and a lot of that was because we spent too much. it is harder to cut that is to spend -- >> it is a very important point because frankly, one thing senator sessions and i absolutely agree on is the need to put in place a credible plan

as soon as possible where we may have differents in timing and the makeup of the plan. we don't have a difference on the essential need to put in place a plan that is serious and credible. the place where i might differ from what i just heard you say is i think you need to have a plan that takes a series of votes now that makes these changes over time. i don't want to see us in a situation where we do a little bit here and then we hope somehow all there will be a little more done because my experience around here is you had better act like the window of opportunity and put in place a multiple year plan that has real discipline associated with it. this operating year by year, one of the things that gets us in

trouble. >> i partly agree with that. you can think about mechanisms you can put in place to force changes. proposing the idea that you put a cap on public debt with gdp forcing constant annual changes under that limit. i propose the idea in my testimony of putting a cap on the growth -- total annual, pick a number between 3% to 4%. make sure outlays don't rise more than that which would be like the 1990s like the overall budget and that would force change to focus on discipline every year. >> we need to shutdown because we promised witnesses they would be out by noon. we are in little beyond that. i want to think this panel. just outstanding. we very much appreciate your

taking the time and energy to present to us this morning. thank you. [inaudible conversations] >> the whole environment of politics has come a part. it has become polluted and destroyed and violent. >> documentary producer on hubert humphrey. the part of the possible. >> the reason for the documentary was to show another side of this because everyone remember but -- remembers when the nuns and's boots with no

mind of his own and people don't understand the pressures he was under which runs through into 68. >> q&a sunday night at 8:00 on c-span. >> this weekend on booktv on begich, afterwards with michael reagan and his father's legacy. it is the 100th anniversary of ronald reagan's versus. and ron reagan's account of this father's life and the lambert of the history and purpose of futures market. find a complete schedule at booktv.org including in-depth. and get our scheduled e-mails. sign up for our booktv alerts. >> the iraq u.s. forces commander and u.s. ambassador to iraq with the assessment on the transition to civilian control and senate armed services committee hearing thursday. he appeared before the committee

to answer questions about a 2008 agreement between the u.s. and iraq that calls for all u.s. troops to withdraw from the region by the end of the year. is hearing is two hours and 20 minutes. >> good morning, everybody. welcome to our witnesses, u.s. ambassador to iraq james jeffrey. general lloyd austin, commander of u.s. forces iraq. before we begin by want to extend a warm welcome to the newest members of the armed services committee. senator jean shifting, senator richard blumenthal on the majority side, senator robb

portman, senator kelly on the minority side. we also welcome back senator john korenisn't who is rejoining the committee after a brief hiatus. this committee has a tradition of bipartisanship. it is a long tradition. it is based on our common desire to provide our men and women in uniform and their families the support that they need and the support that they deserve. that gold makes the work of this committee truly rewarding. senator reid, senator chester and i recently returned from visiting iraq. one of my main impressions was that the team of ambassador jeffrey and general austin is providing the strong leadership needed to manage the critical

transition. over the coming here, leading up to the december of 2011 deadline for withdrawal of all u.s. military forces from iraq. a deadline that was set by president bush and prime minister maliki in the november of 2008 security agreement that they entered into. unbelievably two gentlemen are the right team to lead that transition. on behalf of the committee let me thank you both for your service and for the service of the men and women with whom you serve. last december after a eight months of discussions among iraq's's political leaders those leaders agreed to form a national unity government. the agreement was only partial. iraq still awaits the nomination by prime minister maliki for the

cabinet position of minister of defense, minister of the interior and minister of national security as well as the resolution of issues relating to the powers of the national council on higher priority to be headed by former prime minister allow. the pressure on the iraqi government to fill in those large gaps must continue. during our trip to iraq we were told plans are on track for the drawdown of u.s. forces and the shift in responsibility for are many programs from the defense department to the state department. including training of the iraqi police. to carry out these responsibilities the u.s. embassy in baghdad anticipates that it will have some 20,000 personnel under its authority

including two embassy offices, three police training centers and five offices of security cooperation locations. this will mean thousands of state department contract to provide perimeter movement security as u.s. military forces the part. whether this transition is successful will depend in no small part on whether the state department has provided resources that it needs to take on and sustain those responsibilities. congress will need to do its part to insure the state department has what its needs to do all it can to help secure the hard-fought gains in iraq that have come at great sacrifice to american lives. significant security challenges remain in iraq. security incidents in 2010 were down from 2009 levels. that terrorist groups including al qaeda in iraq will have the capacity to carry out

high-profile attacks that killed dozens and wounded hundreds of iraqis. iran remains a highly negative influence providing support to extremist groups. and other security challenges. the instability arising from the unsettled situation in kirkuk and the boundary dispute in the north. u.s. forces in iraq has worked closely with the government of iraq and kurdish security forces to reduce tensions and facilitate the integration of these forces. our goal is to leave behind an iraq that is stable. during our trip we heard that in general the iraq security forces have made major progress and a capable of dealing with internal security threats to the iraqi people and our leading those operations. however, we also heard it will

be sometime before the iraq security forces can provide for iraq's external defense. u.s. forces iraq trading and advisory mission is focused on training the trainer programs as the training mission is transferred to the iraq ministry of defense. u.s. forces in iraq continues to work with iraq's ministries of defense and interior with the goal of building their minimum essential capabilities. iraq will continue to need support in building its capabilities to meet in turtle and the external threats for years to come. i am concerned however by the latest report from the special inspector general for iraq reconstruction which finds that the development of iraqi security forces is at risk from shortfalls in logistics' capacity, corruption within the ministry of defense, and the

failure to plan appropriately for the maintenance and sustainment of restructure and equipment. the special report cites a report by the dod office of inspector general which warns of problems with iraq's development of capability to achieve and sustain minimum material readiness levels for the iraq security forces saying that this, quote, could result in a downward spiral of operational readiness that would put iraq's security and stability at risk. general austin, getting your professional military opinion on whether you agree with those assessments. one major question is what security relationship the united states and iraq will have once the 2008 security agreement expires in december.

it is unclear whether the maliki government will seek any continuing u.s. presence after december given the terms of the security agreement that provides that all of our troops will be removed by december. iraq needs to engage with the united states sooner rather than later if such a request is forthcoming. the government of iraq needs to understand the days of american taxpayers bearing cost of developing iraq's security forces are ending. iraq has significant oil revenue which will continue to increase. according to the latest quarterly report, from the special inspector general for iraq reconstruction, iraq's efforts to attract foreign investment continues to bear fruit. development of iraq's will commitments is making, quote, better than expected practice. we should work with the

government of iraq to make available the equipment and training it needs for security but iraq should not expect american taxpayers to bear the costs of its security needs. finally, and important issue for the government of iraq remains security of christian and other religious minorities. we all met with leaders of communities with targeted killings, kidnappings another intimidation by violent extremist forces. these communities live in fear. in large numbers of christians have fled the country or uprooted to safer regions in northern iraq. leaders of iraq explain with pride if iraq was home to the earliest christian communities. iraqi christians do not want to leave their country in order to feel safe. iraq had a long tradition of

religious tolerance. we urge the government of iraq to act with great urgency to provide security necessary to preserve these ancient christian and other religious minority communities and to protect those religious minorities. ambassador jeffrey and general austin, we know from conversations in iraq and hear that you will keep the safety of the various religious minority communities in iraq as one of your top priorities in your discussions with the government of iraq. we look forward to hearing from our witnesses this morning and thank you both for your service as well as those with whom you serve. senator mccain. >> thank you and let me join you in taking this opportunity to welcome six new members of the committee. i am confident the work of this

body will be enriched and enhanced by their contributions and i join you in stating to them that our work has been bipartisan and it has been an honor for me to serve with you as chairman of this committee. our bipartisanship is not devoid of passion when we occasionally disagree on an issue. i want to thank harvesting worst witnesses for joining us today. i have had the honor of knowing ambassador jeffrey and general austin for many years. two great servants of our country and on behalf of this committee we thank you for your service and please convey to brave men and when you lead military and civilian deep gratitude for their service which is felt by the american people and their representatives. i am happy to have the chance to focus on iraq. it would have been unthinkable two years ago to say we would reach a point which most americans and some people in

washington would be increasingly forgetting about iraq. that point has largely come and as much as it reflects the dividends of success especially success of the surge, we disregard iraq at great peril. it is true that many critical indicators in iraq are encouraging al qaeda and iraq remains significantly weakened. despite many large scale--especially against iraq's christian communities. overall levels of violence have been relatively low. study compared to recent years. iraq is increasingly bringing its vast oil and gas resources on line. the country had a successful democratic election last year despite a painfully drawn out period of political wrangling, a new government is mostly formed in baghdad. as demonstrations take place for democracy across the middle east i don't think you will see those

kinds of demonstrations in iraq because the iraqi people did have a chance to express their political will. and yet despite iraq's progress there remain serious questions whether it will endure and what role of our nation can play and should play has iraq's partner to reinforce success. the fact is 2,011 will be one of the most consequential years for iraq and our partnership that will largely shaped whether the country continues to emerge as an increasingly secure, self sustaining democratic partner of the united states or whether iraq tragically stumbles, sliding back into civil conflict and violence and authoritarian rule. these choices will be made by iraqis. make no mistake. after sacrificing hundreds of billions of american taxpayer dollars and nearly 4,500 american lives the united states has an enormous stake in iraq's

success. we have enduring national interest relating to iraq to be defended but still maintain a significant capacity to influence events for better or worse and if iraq's progress should unravel the moment of opportunity is squandered. no one should think the american people will be forgiving in holding their leaders accountable for that. the security agreement signed by the bush administration and affirmed by the current administration states all u.s. troops will leave iraq by the end of this year. this means we are approaching a decisive transition and i will be blunt, i have real concerns about whether the proposed civilian led mission that will take the lead once our troops are gone is sufficient to support iraqi needs and u.s. interests not because our civilians are not capable professionals. they certainly are but because the huge and unprecedented

challenges they face. we are asking the state department to take on a mission of the u.s. military at a scale never contemplated before a mid still fragile security conditions. many tasks performed by u.s. troops will transition at great cost to civilians and contractors. some such tasks will cease to be performed at all. many relationships with key iraqi leaders across the country will be hard to maintain for security reasons and vital military programs from intelligence fusion to peacekeeping activities performed along the still tense kurdish boundaries will be scaled back or effectively ended. no one should interpret my comments today as lack of support for iraq and continued u.s. involvement. to the contrary. failure is not an option in iraq and we must be prepared to bear the cost to ensure success

including cost of civilian operations in development programs and which will be substantial however this transition plays out. congress cannot shortchange this mission now. we need a more forward-looking strategy. the new iraqi administration will govern the country for the next four years. what does it need to accomplish by the end of that time to said iraq further down a path of lasting success? how can our two government aligned our resources in a common plan that consistently advances our shared goal? emergence of an iraq that secures itself and governs itself to generate its own wealth and sustain its own development with less and less u.s. assistance and having established the optimal ends we seek as well as u.s. presence and programs required to achieve them how can we build bipartisan support in congress to sustain a

robust commitment to iraq, especially commitment for what will increasingly be a civilian led mission? these are questions we are considering today and in months ahead and i look forward to discussing these issues with our witnesses. i would like to point out there is a place in iraq inhabited by iranian refugees that has been under the protection of american troops. i am concerned about the welfare and well-being and security of these people. i hope we can address this issue in a way that would reassure them of america and iraqi government's commitment to their security. thank you, mr. chairman. >> thank you, senator mccain and we share your concern about the group you mentioned at the end of your comments. by agreement we are going to call on general austin furst.

your suggestion that general lost and begin and ambassador jeffrey follow. >> chairman thune 18, senator mccain and distinguished members, thank you for the opportunity to testify with ambassador jeffrey this morning. i am fortunate to be part with ambassador jeffrey in one of the most professional diplomatic teams i have ever seen. would like to spend a few minutes to give you my assessment on the current security environment. the capabilities of the iraqi security forces and outlining what u.s. forces in iraq is focused on for the remainder of the year. security environment in iraq has been steadily improving over the past few years. most notably in the delay in

government formation from march to december of 2010. it was a encouraging that while iraq was being secured by a caretaker government iraqi security forces remained a political and performed admirably. they provided the iraqi leader's with the time and space that was necessary for peaceful dialogue and compromise to occur. the commendable work afforded the iraqi security forces is paying off. today iraq has the most inclusive government in nation's history. in a security environment that is the best it has been since 2003. security incidents in 2010 were 25% lower than in the previous year and that has continued falling government formation. security environment continues to improve, and iraq stability will remain in 2012. extremist groups like al qaeda

will continue to target the government of iraq with security forces and iraqi civilians in order to garcia media attention and attempt to demonstrate the government cannot provide security for the iraqi people. he targeted u.s. personnel. the iraqi security forces have good capability to confront extremist groups and provide internal security, they will have gaps in external defense capabilities in 2012. iraq will not defend its sovereignty for some time. and capabilities like sustainment, with more complex training. and we continue to receive

moderate equipment to conduct training on that equipment to conduct unit level training. u.s. forces in iraq and iraqi security forces have recently begun the collective trading initiative that allows entire battalions to go through intensive training cycle. that provides the collective training necessary for their units to operate and has been made possible by the much improved security environment. ..

>> to a civilian-led effort in iraq. we are dedicated to partnering with our embassy teammates in preparing for this important transition. the key to a successful transition is the need to fully resource the embassy to perform their task and responsibilities. we're developing the office of security corporation which will fall under the embassy, and the osc will provide oversight over all security cooperation in iraq, and it will assume responsibility for the near $13 billion worth of foreign military sales programs that we currently have with the iraqis. it will also coordinate international military education and training. and this office will work hard and be dedicated to closing the capability gaps within the iraqi security forces. clearly, there is much work to do, but i am encouraged by the progress iraq has made over the last few i years, and i'm confident iraq can achieve its full potential if it stays on

the path that it's currently on. i'd like to close my remarks by recognizing the great men and women that are srving in iraq -- serving in iraq and their families who are supporting them. while our soldiers, sailors, airmen, marines, coast guardsmen and civilians are serving overseas, our families are serving here at home, and certainly we would not be where we are today without the sacrifices of so many. and without the unwavering support from here at home. mr. chairman, minutes of the armed services committee, thank you once again for this opportunity to appear this morning with ambassador jeffrey, and and i stand ready to answer any questions that you may have. >> thank you so much, general austin. am bass sor jeffrey. ambassador jeffrey. >> chairman re vin -- levin, thank you, senator mccain. let me thank you for inviting us to appear before you to discuss the issues associated with the united states' transition from a

military-led to a civilian-led presence in iraq. we face a critical moment now in iraq where we'll either step up to the plate, finish the job and build upon the sacrifices made, or we will risk core u.s. national security interests, be penny wise and pound foolish and cede the field to al-qaeda and to other dangerous regional influences. we have, thus, an historic opportunity and a critical window to help iraq emerge as a strategic partner and a force for stability and moderation in a troubled renal. we cannot afford to let the gains we have sacrificed so much for slip away. the president has clearly articulated our vision for partnership with iraq. there are we seek an iraq that is sovereign, stable and self-reliant with a goth that is just -- government that is just, representative and accountable, that denies support and safe haven to terrorists, is able to assume its rightful place in the community of nations and

contributes to the peace and security of the region. the u.s. military have performed admirably, but they cannot stay in iraq forever. the department of state is ready to take the lead, but we need the support and resources to finish the job. we need to have platforms to carry out key transitional missions for the next 3-5 years. these include work throughout the country, especially in ceer areas such -- key areas such as kirkuk and mosul where a small number of americans can have a disproportionate impact in producing long-term solutions. our missions include helping iraqis to professionalize their police, a critical component. as general austin said, provide security assistance to help the iraqis finish the job against al-qaeda and other terrorist groups and develop a core conventional defense capability. to not finish the job creates

risks of both a resurgence of al-qaeda and the empowering of problematic regional players. al-qaeda is still capable of devastating attacks that threaten iraq and beyond. furthermore, gutting our presence in iraq would also provide iran increased stability to spur anxieties in the region. along with iraqis, the u.s. has paid a dear price in this war. over 4900 deaths, over 3300 wounded and be hundreds of embassy casualties as well. as president -- vice president bide withen stated during his recent visit, it is vital we leave behind an iraq that is wore think of the sacrifices so many have made. while work is expensive due to the security situation, a robust civilian presence represents a significant reduction in expenditures. between 2010 and 2011, for

example, the u.s. military withdrawal reduced the bill for taxpayers by about $15 billion while the increase in states' budget was just 2.5 budget. and while the -- billion. and while the overall u.s. costs will continue to decrease dramatically. moreover, u.s. development assistance to iraq is not open open-ended. due to the devastating oil infrastructure, it will be a number of years before welcome will have meaningful new oil revenue for its own budget. in getting this military-to-civilian transition in iraq also will demonstrate more generally that we can transition security successes in war zones into long-term stability including for afghanistan. in closing, i would like to thank the department of defense, central command and, above all, general austin and his troops for the support they are giving us in this mission.

i would also like to express my admiration and be humility in the face of the commitment and sacrifice we see every day in iraq on the part of our civilian staffs, military members and our iraqi partners as they risk their lives for a cause which they believe in, the iraq i've just finished describing. i thank you again for the opportunity to appear before you today. we will be happy to answer any questions the committee may have and look forward to working hand in hand with you and oh congressional colleagues -- other congressional colleagues. we'd like to submit our joint written statement for the record. >> they will be made part of the record. senators portman and ayacht are with us. we welcome you warmly, we're delighted that you're with the committee. as our other new members on the democratic side. we welcome your statement, ambassadors, to what the goals of the obama administration are in iraq, and i think maybe all

of us or most of us surely share that goal here. you talked about stability and security and self-reliance of an iraqi state, an iraqi government, and that surely has been the goal. one of the threats to that success, to that achievement of that goal and to the stability and security of iraq is the failure of the political leaders of iraq to reach conclusions on some critical issues. this has always been a problem, we've always expressed the importance of the political leaders coming together. now, some of the current political issues that are unresolved include the following: agreement to create a national council for higher policies with real executive power headed by former prime minister allawi. there's an agreement that the council be created, but there's

no agreement yet on what their powers are. i think i misspoke. there's an agreement that such a council be be created, but there's no treatment yet on what -- agreement yet on what the powers of that council will be. the positions of ministers of defense, interior, national security are still unfilled. there is no agreement yet on oil policies, the division of oil revenues. these are huge issues that remain unresolved, and i believe threaten the goals and objectives that were and, hopefully, the iraqis have for themselves. can you comment on this matter? is it important that the leaders of iraq get on with the decisions in those areas, ambassador? >> thank you, mr. chairman. >> and we're going to have a seven-minute round, by the way. i usually announce how long the round of questions had been. >> it is vitally important that they finish the job of forming the government.

they've taken most of the steps necessary, but you've outlined several of the remaining issues that we've been pressing them on, but more importantly, they've been pressing themselves on. we have seen some progress in the last several weeks on the national council, and the two sides have, basically, agreed to everything but the modality of how to select allawi. we think this could be resolved in the next few days. i was in contact with president barzani of the kurdistan regional government this morning and the embassy with other people trying to take the temperature of where we are on these steps. there are also some names that are floating on compromise candidates for both of those ministries that you mentioned, and again, we are encouraged by with what we've heard over the past several days, but the proof is in the pudding, and we have to see if they will finish the job. it is very important that they

finish the job and get on with the business of government. on the oil account, two positive developments. as with everything else in iraq, it moves forward in relatively small steps, senator, but it does move forward. the kurds and the other coalition parties agreed on a 19-point plan on most of the 19-point plan that includes giving priority to a hydrocarbons law and a revenue-sharing law. this is vital. meanwhile, the central government prime minister maliki personally and the kurdistan regional government have agreed on an interim step of allowing up to 150,000 barrels of oil from the kurdistan regional government to flow out through the turkish pipeline. this is a very significant development, and it gives us hope they'll continue down that path, sir. >> thank you. general austin, is the withdrawal of our forces by the end of this year as agreed to by president bush and prime

minister maliki on track? >> thank you, senator. it is, indeed, on track. we just recently completed our planning process that will govern the rest, the remainder of our activities from now until the end of december. and we've issued operations order 1101 which, again, prescribes the major activities that we'll be conducting focused on strengthening the iraqi security forces, reposturing our forces and, also, transitioning responsibilities to the embassy, the government of iraq and central command. we continue to synchronize that plan, and we're also synchronizing the activities of the embassy along with our activities as we, as we go about

executing the plan. >> thank you. is there any indication, and i'll ask this of both of you, that iraq is going to request that any elements of our military forces remain beyond december? >> we have received no such p senator. we are working with the iraqis on the security elements of our post-2011 presence which will include a large osci element for security cooperation and the police training which will be a major program. both of these are under the framework of the strategic framework agreement which was the second agreement signed in 2008. it does not have a deadline, and it calls for a broad cooperation across the spectrum of bilateral relations including specifically security. so we're working with the iraqis now on just exactly what the components of that would be, sir. >> do you expect any requests

beyond that from the iraqi government? >> we haven't yet, sir, and i can't say what they'll say in the future. >> we don't have any indication that there's such a request is going to be forthcoming as of this time? >> as of this time, there's no specific request on the table, and they will want to see how we will meet their training and equipping these with the program that we set up. >> and, senator, i echo the ambassador's comments. we haven't received any requests, and again, i think it covered the entire gamut there, so i would not add anything to that. >> another threat to the stability and the security and the self-reliance of iraq is iran. can you tell us, am was door, in your -- ambassador, in your view whether or not iranian behavior in iraq represents a threat to their stability and to their

successful transition to their own total sovereignty? and what, also, is the susceptibility of that government to iranian influence or to their destabilizing efforts? >> senator, as the president has said many times, we are concerned with iranian behavior in the region and in pursuit of nuclear weapons. >> does that include iraq? >> in iraq spskically, sir -- specifically, sir, we, first of all, have to note that as a neighbor of iraq's, as a country that had suffered devastating losses from an invasion by iraq in 1980, iran obviously has legitimate interests just like turkey does in iraq, just like jordan, kuwait and saudi arabia do. there is significant trade, there is a tremendous amount of religious pilgrimage and be such into iraq. nonetheless, what concerns us about iran and iraq begins with

the support we have seen over the years of armed militias who have attacked us and who have attacked the iraqi government. this culminated in a series of battles where prime minister maliki took them on in 2008 first in basra and then sadr city in baghdad. we are watching that closely, we're seeing continued signs that iran has not given up its support for these groups, and this is very troubling to us. in terms of the susceptibility of the government, the iraqi government like any government pays attention to its important neighbors, but we are absolutely convinced that this is a government that is nationalist in orientation and is fully aware of the threats to it sovereignty and will take the necessary step thes to protect it. >> just to complete that, they may be concerned about their neighbors, but specifically is there a problem that iran creates for iraq with their current behavior? >> there is no -- with iraq the

government has to face many be pressing and long-term problems, some of which you've described. >> is iran a problem? >> they're well aware of the potential for trouble, senator. >> thank you very much. senator gillibrand, we're delighted that you are here. when we made that comment before, i don't believe that you were present, so it's great to have you here. senator mccain. >> i thank you, mr. chairman. as is well known, i'm deeply concerned about this issue of complete u.s. withdrawal. austin, i think -- general austin, i think that we would agree the battle of fallujah was one kind of counterinsurgency that could even be compared to the battle of wei, house to house, kind of high casualty,

high-spencety conflict. -- high-intensity conflict. we fast forward to the battle of sadr city which made extensive use of technological abilities we've developed over the intervening time. in the absence of the united states, would the iraqis have the kind of capability that was vital in winning the battle of sadr city? >> senator, certainly not. they would have to develop that type of capability over time. the capability that i believe that you're referring to is the capability to employ, acquire targets and employ precision fires that limit collateral damage. >> in the words of general petraeus, we made 'em take a knee, right? >> absolutely, senator. >> and without the u.s. presence there, it would take a long time before the iraqis would have the ability to replicate that. >> it would --

>> capability. >> it will take some time for them to develop that. >> the iraqis are interested in having an air force for obvious reasons. are they going to be able to build an air force without u.s. presence there? >> they do have a number of options to both acquire equipment from and ask for training from orr nations. -- other nations. but, certainly -- >> so they would have to acquire equipment and then get trainers from other nations. >> they would. >> would you agree, ambassador jeffrey, that the highest priority of the iranian government during this year is to prevent any change to the security agreement with iraq so as to insure that no u.s. troops will remain in iraq by january 1, 2012? >> senator, i can't assess with full act as iran's intentions --

>> my question is would you agree that it's the iranian government's highest priority? >> i would say it is a significant priority of the iranians to not have u.s. forces on its doorstep. >> in be -- um, how concerned are you, ambassador jeffrey, about the violence against u.s. civilian officials that might entail or occur after our withdrawal? >> senator, my highest priority as ambassador is the security and safety of my personnel. my people on a given week are the subject of sometimes one, two or three attacks between indirect fire and, typically, ieds. we had an ied against one of our columns two days ago. so it's a very big concern of ours. nonetheless, it is a concern we

have livedded with since we started operating there in 2003. >> al-sadr resided in iran for a period of time, then came back, went back to iran, and now i understand he's back again. is that correct? >> the latest i heard is he is back in iran, sir, but it's very hard to keep track of his going back and forth. >> and his followers are a key element in the formation of the maliki government. >> his followers or his party played a role back in the october period when the maliki government was first forming. but at the end of the day, senator, they received 660,000 votes out of more than 12 million cast. they have only 39 seats in the coalition which is roughly 300 seats, and their role -- which is relatively minor in the government -- reflects their

voting power. >> but it also played a key role in the formation of the government when they swung by maliki, it then enabled maliki to form the government. i'm very concerned about sadr, his activities, his followers and his close ties with iran as well as talibanny and others. i mean, i'll just be very blunt, i'm deeply concerned about that. i'm also concerned, ambassador and general, the government of iraq has already released a lot of individuals who had been te taped by the -- detained by the u.s. military. and we hear reports that prime minister has released many more as part of the political negotiations to form be a new government -- form a new government especially with the sadrists. do you have concern about that, general austin? >> senator, i am always concerned if -- >> i mean, it's happening? these detainees are being

released? >> there are a number of detainees that are routinely reelited because of lack of evidence or because they may have served their sentence. >> do you believe some of those have been released because of the influence of sadr? >> i have no proof to confirm that, sir. >> is it your opinion? >> uh, without proof i would be, i would be hesitant to provide an opinion on that. >> okay. as you know in the kurdish-arab, kurdish-iraqi areas like mosul and kirkuk there is a significant u.s., quote, peace-keeping presence. what is your degree of concern about the removal of that presence? as far as igniting some conflicts between the two parties? >> with our presence up there --

our presence up there has provided a means to build confidence and enable the arab and kurd elements to work together there. and the troops have done a magnificent job of working well together. the tensions, there are some -- in some areas tensions still remain, and i think ha as we remove -- that as we remove those combined security locations, i think that has to be carefully managed. at the end of the day, the issues that are present there, though, need to be resolved politically, and that may take, may take some time. >> i hope, ambassador, you'll make some representations to the iraqi government concerning the situation in camp bash avenue, and i want to thank both of you for your service, and may i urge you to continue to make a case

for continued united states assistance as the iraqi government goes through a very difficult and challenging transition. there are enormous pressures for cutting spending that are going to be and be probably increase here in the congress. we're going to have to convince a lot of people of the importance of sustaining and assisting a free and independent iraq as it makes this transition. i thank you for your service to this country. thank you, mr. chairman. >> can thank you, senator mccain. senator reed. >> thank you very much, mr. chairman. thank you, gentlemen, for your service and the service of your colleagues. as senator levin indicated, we were there just a few days ago to firsthand witness the progress, but also the challenges. and i want to underscore something that senator mccain said which is absolutely critical, and that is the need

to generate bipartisan support for increasingly civilian-led effort. as the mission migrates under or department of defense and the dod budget to the civilian side, the state department, as it looks more like foreign aid than supporting troops in the field, the reality which senator mccain pointed out in this environment is going to be very, very difficult to sustain. and as he also pointed out, i think quite perceptively, if we don't sustain this effort, then we have invested a lot of blood and lives and material in an effort that could be frustrated. that would be, that would be a tragedy. as you pointed, ambassador jeffrey, one of those charlie wilson moments where, goodness gracious, what were we thinking? so, again, i think it was a central point, and it was very well said by senator mccain,

and i wanted to emphasize it. let me just -- i want -- i think it's important to get a kind of perspective. you suggested, ambassador -- you didn't suggest, you pointed out that the rough course of our operations this year, for example, in afghanistan -- in iraq is what? military-civilian efforts combined. do you have an idea? >> on the civilian side, sir, it's roughly two-plus billion. that includes the assistance program which is roughly half a billion dollars, and we're beginning to get some of the monies for the police training program. it's a complicated accounting. and then the operations budget is $1.87 billion, so if you add it all up, it's somewhere over $2 billion. for the military side, i'd have to defer to general austin. >> general austin, what's your with rough estimate of your operating numbers this year? >> in fy-10, senator, it was 73

billion. >> 73 billion. so you've got roughly $74 billion we're committing an yulely. when the transition is completed, what's the number that you need, mr. ambassador? >> we haven't quite finalized that for fy-12, senator. what i can say is the building blocks would be where we are now. we would like to take over the training and equipping program as a state department, the mf program. right now that's 1.5 billion. we would ask for less, but it would be a significant percentage of the 1.5 billion. the police training program is approximately a billion dollars a year, and the operations in the field taking over some of the security missions and the logistical missions but particularly security missions that the military has been doing, perimeter security and be

movement security on the order of half a billion or more a year. so if you add all that up, you would get a figure that i would rather not add up, but it would be about twice what we are doing now. >> can you add it up? you're better at math than i am. >> if i had to add it up, it would be over five billion, senator. >> so we're going, essentially, from 74, $78 billion down to $5 billion? >> there would be some dod costs associated with the osci, senator. we don't quite know how much that would be because they would be doing the security and, obviously, some of the payment of those. but, clearly, we're looking at a 90%, roughly, reduction. >> we're looking at a 90% reduction which is good news, but the reality is unless we're prepared to fund your efforts at the tune of $5-$6 billion a year, then you're going to have a difficult time sustaining the progress that we've made, is that fair? >> i'm not going to sustain the progress that we've made at

least in supporting the iraqi government. >> unless you have that money. that's right. what percentage is that of the state department's budget? >> uh, it's between 5 and 7% of the state department's foreign assistance budget, the monies that we would have for the fmf and for the usaid, roughly half a billion dollars for esf and then the police training. for the dc and p, that is if you strip out salaries for our people, the basic operating budget, it's pretty big. somewhere with between almost as high as 30% in the statistics i've seen. >> so we're looking in some categories 30% of the budget. so this is not a nominal figure in state, this is a huge amount of money. >> this would be, taken together, this would be probably the single biggest program in the state department in fy-12,

senator. >> and, again, let me reiterate. i think we all understand when pilgrims migrate from -- programs migrate from department of defense, keep the troops in the field, support -- rightfully so -- over to foreign aid, that's a category that's a lot harder sale, bluntly. and we've got to make that sale. i think that's the message i heard on both sides. let me interject another issue which is i saw competition on the dod side between assets for iraq and be assets for afghanistan. and be at the same time you're trying to do this in iraq, your colleagues are trying to do the same thing in afghanistan. pull military forces out, stand up afghani forces, turn this over to a civilian mission. so what's your view -- this is going to be a competition not only for money, for your effort, but also money for afghanistan's efforts which means that we have the same dilemma there, is that

an accurate assessment? >> basically, it is, senator. there is one difference. in a year i'll be operating without the u.s. military, my colleagues in afghanistan will not be operating without the u.s. military. >> okay. just another point. when we were there, the department of defense and state had identified over a thousand tasks that have to be transitioned or accommodated. and some of them are, have, you know, clear sort of dod fingerprints. kill, you know, clearing travel routes, protecting personal -- orrs are tasks that are sort of subassumed in the cerp funding, the local activities, etc. i must say, i think when you look closely at all these functions and the kind of support you're getting indirectly, you know, sort of the, you know, the positive spillover benefits from the

military presence, that that number of six billion plus that you've suggested is probably an underestimate. do you have a reaction to that, mr. ambassador? >> as i said, we try not to talk specific figures at this point, but in the order of magnitude of double what we're doing now is what we'll be looking for in fy-12. the, the support and activities that the military are doing, it's very hard to put a figure on to that and how much of that would transfer to us because it's apples and oranges, and we have to pay the salaries of our psds, combat salaries are in the dod base. but the -- we get extraordinary support, billions of dollars of support, from the military every year from everything from c-ram identification of incoming rockets to logistical support,

there's no doubt about it. >> thank you. my time is expired. again, gentlemen, thank you for your extraordinary service, thank you. >> thank you very much, senator. what are pscs for the record? >> personal security details. >> these are private security contractors? is that what -- >> yes, sir, but -- >> just want to fill in what the acronym is. >> exactly. but they could be military, or they could be contractor security. >> thank you very much. senator graham. >> thank you both for your service. i think senator reed brought up some very good points. the nation needs to understand what's about to occur here. if you bring all the troops home -- we all would like that to happen as soon as possible -- you still have a country that is in a very early stage of development in terms of democracy. would both of you agree with that? that iraq is an infant democracy at best? >> yes, sir. >> i would drop the at best. i think they're a solid infant, senator. >> okay. we're going to say they're in the solid infant category.

[laughter] now, just like with any other infant, you need to provide some assistance and nurturing to make sure they grow up strong and healthy. and that's the challenge forward, is that correct? take it from an infancy to a mature democracy? >> the iraqis appreciate our assistance, i mean, there's an issue of sovereignty here -- >> i know. i'm not saying we're going to do it for them, we're going to help them. >> we are -- >> do they want our help? >> yes, sir, it is in the strategic framework agreement specifically, political support. we, of course, support them in election monitoring and in setting up elections and in many other ways and in a lot of -- >> does the general population want us to continue to be their partner in some fashion? >> the general population wants us to be their partner. >> does the military want us to help train their air force, general austin? >> they do, senator graham. >> okay. so we've got an iraqi navy to develop too.

they want us to help them in that regard? >> they do. >> so we're not staying in a place where we're not wanted. is that a fair statement? whatever staying is. >> that's a fair statement, senator, but there are -- most polls say that the iraqi population in general would like to see the military presence to be withdrawn. >> i understand that. now, that gets back to the what is pen wise and pound foolish -- penny wise and pound foolish from the iraqi/american point of view. to carry out your mission in 2012 without u.s. military security being provided, we're or basically creating a small state department army, is that correct? >> uh, i would have a problem with two words, senator, creating and army, and i'll explain it. right now we have some 2700 security contractors and many hundreds of state department security personnel.

that figure will go up significantly, but by an order of magnitude, but we already have -- the point i'm trying to make is we already have a large number of security personnel operating in iraq under -- >> is it enough to do the job? >> if we get the money to have the additional security, it's enough to do the job. >> well, let's talk about that additional security. will it include mraps? >> it will, senator. >> okay. will it include helicopters? >> it'll include a large number of helicopters, senator. >> with okay. will these helicopters be armed? >> they will not be armed, senator. >> but you're going to have a helicopter fleet, you're going to have an mrap fleet, and if something happens, do you have enough capacity to shoot your way out of it, or are you going to have to rely on the iraqi security forces if you're up in kirkuk or mosul and something bad happens? >> currently, senator, both the u.s. military and my own convoys move with iraqi security support

in the cities. we -- >> how many -- >> -- will continue. >> how dependent are you today on american military security for your movements? >> essentially, all movements outside of baghdad, that is all prt movements between the embassy and cent come are conducted by with usfi forces. that, of course, will change when the forces go. >> okay. of so if all movements in iraq to do your state department and other agency jobs require u.s. forces/iraq to provide security and next year they're gone, who fills that vacuum? >> first of all, when -- >> well, let many ask this question -- let me ask this question. would it be wise from an iraqi/u.s. point of view that that vacuum not be completely -- that we not create a complete

vacuum? would it make sense financially, security wise to have a military foot print left behind if iraqis request to continue to provide security for u.s. state department officials and others? >> always happy to have u.s. military security -- >> general austin? thank you. from a professional military point of view, what lies ahead in many iraq is the holding -- in iraq is the holding and building. do you believe it makes sense given the security requirements that lie ahead for our state department officials and others to get out and about of iraq that it would be wise to have a american military contingent in 2012 in iraq? >> senator, the iraqi security forces have the ability to control the internal security of

the country currently. as you know, they are leading the effort to do that now. and they do need continued work on logistics and intelligence capabilities, and -- >> with do you feel comfortable with the iraqi security forces as they exist be january the 1st, 2012, to protect the thousands of americans and other people in iraq trying to provide assistance to that country? can they do the job? are you comfortable with them being able to provide that security? >> i think that adequate security will be provided, provided the ambassador is adequately resourced to mitigate -- >> is it your opinion we do not need from a military point of view any troops in iraq in 2012? >> senator, what we're, what we're focused on now is abiding by the agreement that --

>> i know. but you're advising congress. you're somebody we respect, you've been on the ground a lot. please put on the table what you see as reasonably necessary or an insurance policy for lack of a better word, if you can construct the perfect scenario, what would you have that scenario be regarding military involvement in iraq in 2012 and beyond? >> uh, senator, i would prefer to avoid speculating on what we would be able to do and what we could provide because i think the iraqis would have the make a request, and then we would as a matter of policy, our government would have to -- >> my time is up, but i totally understand what you're saying. if such a request were made by the iraqi government that we would love to have some military assistance here to help us with the boundary disputes, to train our air force, to help us

develop percent security for your -- better security for your people and ours, if such a request were made, would you be favorably disposed to say, yes? >> if that is the policy of the american government -- >> to, i'm talking about you. would you recommend to us to say yes? >> senate, again, that's beyond my pay grade to make that recommendation lt -- recommendation, sir. >> okay, thank you. >> can thank you very much, senator graham. senator akaka. >> thank you very much, mr. chairman. i want to welcome ambassador jeffrey and general austin to our hearing today and thank you for your testimonies today. and your continued efforts to insure that iraq becomes a stable, self-sufficient and democratic nation.

and be i also would like to recognize the outstanding men and women you both lead in iraq, and we appreciate their sacrifice and hard work. ambassador jeffrey, in our transition we're looking at many ways of bringing that about, and in particular the provincial reconstruction teams have been in place since november 2005. throughout iraq and have worked towards building up provincial and be local economies. my question to you is can you discuss the current status of the e reconstruction teams as they hand over their mission to our consulate office?

>> yes, sir. we've gone from a total including outlier posts of roughly 30 down to 16 right now. these are co-located with the exception of irville with the u.s. military. as we discussed, they're embedded in the u.s. military units. their combined civil l yang/military teams focusing on developmental assistance, rule of law and the like. they have been extremely effective in partnering with the u.s. military on the delivery of aid be it cerp or our own quick reaction funds and so forth. what we are going to do is transform -- if we get permission in the funding -- four of those in mosul, kirkuk and basra into, in two cases, consulates, you erbil.

this requires, of course, the iraqis to improve the branch offices. they have improved the two consulates. we also will keep the baghdad prt in corporation running out of the embassy. so we'll have five, and then we're looking at ways in various other areas such asty y'all la and other --ty allah and other areas that are important to conduct fly-ins to leverage the presence of either the police trainers or the osci to develop, if you will, lily pads that i can physically get security in so that i can move and have contact with the governmental folks so that we maintain some of the tremendous contacts and some of the tremendous programs that west virginia had in places -- that we've had in places where we continue to have a significant presence. >> thank you. we'd like to continue the

oversight there this october of 2010 -- there in october of 2010. the state department had over 1,000 employees and be -- 2,700 contractors in iraq. reports indicate that they plan to have and hire 7,000 more security contractors. ambassador jeffrey, how will you insure that these contracts are fulfilled in an appropriate manner avoiding the types of problems that surfaced under the blackwater security efforts? >> senator, we currently have 2700 security contractors. we'll go up in our embassy to 5500, and then our police training program, they'll require some security as well, let's say the better part of a thousand more.

and then osci working through dod will also have security contractors as well. we are very, very concerned about that given the blackwater incident in 2007 in downtown baghdad. the state department under undersecretary pat kennedy who's still on the job and still watches us closely did a report outlining all of the problems that led to that tragic event, and we have taken various precautions and various modifications and reforms as have the iraqis. all of these security companies have to be registered with two iraqi ministries. they're under iraqi law. we, in addition, have a variety of new procedures, ttps as we call them or sops that require, for example, a commissioned or full-time state department security employee to ride in every convoy. we have cameras on the vehicles to record everything that goes on. we have blue force trackers to monitor where they are. we have done special training

and rules of engagement in culture awareness. we have iraqi security forces traveling with us and coordinating with us, and i'm happy to report in thousands of moves in baghdad and in the north in erbil where we've done that since 2007, we have not had a serious incident. >> thank you. general austin, the u.s. government's reasons in iraq will change, without question, significantly as we draw closer to the end of 2011. and we rece ploy the re-- redeploy the remaining military troops. what are the future plans for the bases and the facilities? is any equipment going to be handed over to the state department, given to iraq or brought back to the united states? >> thank you, senator.

actually, we'll do some of all of that. we will transfer and have transferred equipment to the state department to help in their future endeavors, and as they identify additional requirements, we'll work with do -- with the leadership this dod to make sure we transition or transfer equipment as expeditiously as possible. we're also transitioning or transferring equipment to the iraqi security forces. as we've drawn down from the much larger footprint that we had that was over 100,000 to the footprint we have today, we have 77 bases that we're operating out of today, when we transition, by the way, in september from combat operations to operation new dawn we're at somewhere around 92 bases. so, as you can see, we've

continued to shrink our footprint somewhat. and in that process we have continued to transfer equipment to both the iraqis and, again, identified equipment that should be transferred to the embassy based upon their request. so it's some of all of that, senator. >> thank you very much, mr. chairman. >> thank you very much, senator akaka. senator wicker. >> thank you, mr. chairman. general austin, i want to take another stab at senator graham's line of questioning. i realize that you are a military man, that you take orders and you don't speak for yourself. you are under the command of the president of the united states as our commander in chief. we appreciate that, and you're going to implement the policies that you're directed to implement. but i assure you it's all right for you to come before congress

and give opinions as to your best judgment. and i think that's what senator graham was unable to get from you in his line of questioning. the military troops are going to be gone after january 1st, 2012. we're going to have a number of american personnel there who will still be in harm's way. so my question is, in your judgment based upon your expertise, will our american personnel in iraq be as secure without u.s. troops as they would have been if troops remained present? >> thank you, senator. and i think ambassador jeffrey would agree with me when i say this, but, you know, because of i am who i am, i always believe that it can be done better with the united states military.

but, you know, as you pointed out earlier, we are right now focused on achievement anding the objective ofs -- achievement and the objectives of the treatment that exist between our country and iraq, and that's where we focus -- >> i understand there are other considerations, and part of that is what the people of iraq wanted, what the government wants that they've put in place. could you quantify on a scale of 1-10 with 10 being the security of our american personnel if troops remained, what will be your comfort level about their security without those troops there? >> sir, i would like to avoid trying to, trying to quantify

any kind of assessment such as that without -- >> but, clearly, your opinion is that our personnel would be less safe than if we had troops there. i think that is your judgment, and you're going to implement a different policy, but that is your judgment, is that not correct, general? >> senator, i, i think that, again, because of who i am i always belief that the military -- believe that the military, our military adds much value to any situation, so i think that ambassador jeffrey and his team if adequately resourced can provide for the security of the folks that they'll have working there. it can be done better with our help, for sure, because, you know, again, we have a long history of doing these types of things. >> thank you. then, mr. ambassador, let me ask

you this. i want to make sure that we get your testimony complete. with regard to contract security personnel, your answer to senator akaka was one group of 2700 security personnel, another group of 5500, and then you mentioned others, but i didn't get numbers there. >> thank you. if i could take a moment, because i think this is an important point. we have operated with our own security contract security in iraq under extraordinarily, far worse conditions than we are now when i was there last time in 2004-2005. it was total rock and roll. we were in basra, we were in hilla, and we were or in kirkuk operating on our own.

we took casualties, but we did the mission. we are continuing to operate in baghdad and in erbil with our security personnel. they keep our people safe, baghdad is one of the areas where we've seen more attacks than most other areas, and we're prepared to do this throughout the country. because the military security for the places where we'll still be locating around the country has been withdrawn, we have to increase our security forces, both perimeter security around the consulates and eobs and movement security, the psds. so, therefore, we're going from be, as i said, the current level which is 2700 security contractors and roughly 300 state department security personnel to -- and support personnel to some 5500 contractors and allmenting somewhat the number -- augmenting somewhat the number of state department personnel who will be supervising them. in addition, the police training program will bring with it some

additional security personnel -- >> how many will that besome. >> i would, i would say the better part of a thousand, senator, but we need to get back to you -- >> we have 5500, then a thousand, then there's osi. >> osci which is military support element you should the embassy that will be -- under the embassy that will be providing security assistance, training and equipping and these fms cases, they will require security as well, but i don't have a number on that. >> okay. um, you mentioned, um, what the population of iraq want with regard to continued u.s. presence. i know at a time there was extensive public opinion polling going on of the iraqi people. mr. ambassador, is that still the case? >> there is a good number of different polls that come out all the time done by various

international agencies, private companies, iraqis themselves, sir. >> and are you privy to that information? >> we see a lot of it, that's right. >> okay. and based on that, the information you have is that a substantial majority of the iraqi people would like the united states to continue with the security presence there absent the military, is that correct? >> they want an overall relationship with the united states -- i wouldn't say a substantial majority, but it's much higher wanting a relationship with us than the percent of the population that want to have an american force presence. that, typically, is quite low, between 7-20% other than in the kurdish areas where it's up about 50% or higher sometimes. >> okay. but with regard to the situation that we intend to have after january the 1st, is there

majority support for that? >> i would have to check the polls, senator. it's a tricky question. it was a tricky question when -- >> they get tricky even done inside the united states. >> i know, but tricky, frankly, in the middle east where i've spent much of my career, they were tricky inside turkey where, essentially -- in all of these countries there is a nervousness about countries having too close relations with anybody. i mean, including iran which does not farewell in any poll in iraq. or the sunni-arab countries or turkey. they're nervous about relations with anybody because all of these cups have had a long -- countries have had a long history of being exploited by neighbors, colonialization and such in the case of iraq. so the general reaction of the population is to be wary. but nonetheless, as we judge these things -- judge these things, taking that in mind we would say that there is a

general positive feeling on the part of the population towards relations with the united states in general. and the program will have after 2012. >> thank you. and thank you both for your service. >> thank you, senator wicker. senator ben nelson. >> thank you, mr. chairman. and let me add my appreciation for your service and the men and women in uniform who serve as well as the civilians who serve the interests at the present time. you know, i find the discussion about good, better or best in terms of security there in iraq as to how we provide it and which will work best with, but the presence, the amount of our presence and the quality and the nature of our presence is an iraqi decision more than it is ours. so having said that, in discussion about good, better and best security for them, isn't the question,