>> china, as you know, is a major investor in the oil sector. in sudan. and we have urged them to play a very important role on issues with president bashir and others on southern kordofan, on

resolving the issues on oil. china understands that they have important investments in both the north and the south because they will industry which they are heavily invested is in both the north and south. they are picking up rapidly the relations in the south and stability becomes very important to them. so we look to them to play a very important role in this regard. i met yesterday with the deputy prime minister from russia, because although they are not heavily invested, they are arms suppliers to sudan. they are members of the p5, and how they play their role with us in the security council is extremely important. so, giving them as well as our western european friends on the same wavelength becomes very important so that the messages that various parties are receiving in cartoons are consistent. >> you mention specifically

china. this may be simply an amateur reflection, but a good number of americans have observed that throughout all of the provinces of darfur, the charges of genocide him whatever, religious groups it comes to many of us in our offices in the training, the thought that kept coming to was china realize that some very that things were happening, but looking first. does the desire to get the oil out, hell or high water, so dominate the situation that despite diplomatic overtures by ourselves or others, the chinese were not particularly forthcoming. what is likely to change in the current situation? >> i think two things. one, the emergence of south sudan as an independent country which is 75% of the oil. so if oil is one of their interests, then having that on a positive relationship with the

south sudan but also stability and no confrontations over oil. no turning off the pipeline or turn off the oil pumping, which each side might do in a confrontation. and that also means they have to balance the relationships between khartoum and juba. they are not inclined to trade one for another. but they do realize that they need to good relations with both. and that gives them a stake in seeing some of these conflicts resolved and not having instability or conflict between the two. we talk about that a lot together. >> last year we spent approximately $1.5 billion, including half a billion dollars for peacekeeping in the sudan situation generally. what is your estimate of whether these sums are likely to be larger, or will it be a request by the administration for more

than one an and a half a billion the coming year? can you give us any benchmarks of our whole budgetary situation as you recall, is tense elsewhere but sudan is important. what would you predict in this area? >> well, i realize that we have one of the largest combination of peacekeeping operations in sudan than anyplace in the world. we have the combined force in darfur, and we have a new mission in south sudan which is not so much -- partly peacekeeping but it's a lot of assistance to grading of viable government and system in the south. and now have the special force in abyei. without which we would not have been able to get a sudanese armed forces to withdraw. i don't see any major additional activities. the government of sudan has said we don't want a continuation of

the u.n. in the north, but there is a role and not a heavy role in helping monitor the border that is under discussion, but it's not another big mission, et cetera. i don't see any major new mission requirements, but i can't say the ones we have will diminish in the near future. until some of these big issues are resolved. >> thank you very much. >> thank you, mr. chairman. i will be brief. my impression when i was in khartoum, as far as their view of darfur, was there pretty much content to fight a surrogate war because it is far enough removed from khartoum where they didn't feel any real pressure to do so, but human interesting comment a second ago, talking about their the gm -- watching what's going on there. because of this proximity

geographically, if the north continues the alleged or apparent atrocities that we've had some evidence of from others, that changes the paradigm a lot and runs a greater risk of a new war in the north, does it not? >> that's exactly the risk, and it's exactly the want that the government needs to avoid. they don't want war in the north. they complain about what they think is an attempt to create a new, as they say, a new cba between the southern part of sudan and the rest of it. but the fact is that if they don't address those basic political issues, in southern kordofan, including i'll come in darfur, et cetera, they will have problems, serious problems in southern kordofan and darfur, armed problems. so yeah, these are linked. they are linked in the sense that the government in khartoum, they have said as much, needs to

think to look at a new constitution they need and what kind of a new political set of relationships they need. but they haven't indicated just exactly where they're coming out and they are being challenged forcefully to make those decisions, and hopefully not make them with just a military response. >> the north which is interested in self-preservation, first and foremost in terms of the government, runs the risk if they continue in the southern kordofan, first with removed from state-sponsored terrorism because they continued that, they'll be a violation, plus the run risk of an expansion of hostilities against them, is that not correct? >> that is really a very major risk. >> hopefully a motivating factor for the folks there can be done better with ngos in darfur? i know there was a lot of manipulation of entrants in and out of? >> it is still not fully satisfactory. they have better access than

they had before, but it's not perfect. we still run into some problems with ngos. and it's one of those conditions, as we said, frowning at darfur-based political process because it reflects a lack of openness and movement so we continue to work on those all the time. >> the numbers you mention, the conditions are right yet for a darfur agreement. the main condition is khartoum is not rigidly applied in doing that come is that greg? >> i think our team is not yet ready to create an atmosphere of real freedom inside darfur so you can have a real political process there. we've had occasions in the past where people speak up and then they are rested. they just released some political prisoners yesterday that there are more. so people have to be, feel that if they speak out, some kind of domestic political process, they're not going to be harassed

or jailed or something. and that's something you don't just do overnight. you prove it by creating an atmosphere that people can watch it and see it happen. we don't have that yet. they have to live the state of emergency. they said they will. we'll see. but until you have that environment, it's hard to say you can have a really effective darfur base political process. >> they are somewhat masters of their own destiny if you just wake up and realize that. >> they are. they are. they have a lot of opportunity to create an environment that is very different. >> as i sit in my opening remarks, thank you very, thank you very much for service and thanks for being here today. >> senator udall. >> thank you, senator kerry, and i also want to thank you, ambassador lyman, for your service. south of sudan, where the critical issue is education.

and as your very, very a where, it's one of the least educated countries in the world with with the highest rates of illiteracy. i'm wondering, are there any plans to increase the amount of u.s. volunteers to go to south sudan? would it help or relations and strengthen our relationship with them by encouraging young americans to volunteer to help teach the next generation? >> senator, i'm glad you raised that because you're exactly right, it's one of the highest illiteracy rates and it's going to be a major drag on development. we do have a lot of ngos and a lot of church related activity, including sudanese churches which are provided the bulk of health and education services right now. we have had some discussion of whether we can bring the peace corps to south sudan.

you have to be sure that the living conditions are possible among other things there. so we will look at that and other ways for ngos and young people to volunteer because i think there's a real opportunity. one of the areas is that teachers who are coming back to south sudan from the north have been teaching in arabic, and so english-language training is going to be very important, even for teachers who are trained as teachers but need not to operate in the south were arabic is not going to be the major language. so there are a lot of opportunities of the kind you mentioned, and will pursue them and i will let you know what happens there. >> you mentioned the peace corps. are you doing an evaluation to see if the conditions are ripe to have the peace corps there? >> there's been some discussions of it and i'll check with the peace corps what their next plans is. we have to wait until the south

is independent, but i'll check with the peace corps and to see what the current thinking was. one of our peace corps officials was, in fact, at the ceremony in juba, so there's been some discussion back and forth and i'll check on what the status is. >> you mentioned the lack of education being a drag on development. one of the other issues is this issue of sustainability and land use, and those guys, the use of natural resources. and i'm wondering what we're doing as a country to ensure the sustainability development practices are put in place so that there will be cropland fair, viable for future generations? >> we have been fortunate, and i appreciate the congressional support on this, we've been able

to draw on the bureau and the department, reconstruction and stability, to provide a lot of the surge capacity to deal with sudan. one of the things that they have been doing is providing expert teams that goes out to all the states in the south and look at what are the issues out in those areas. land is an important issue. land ownership, land management, et cetera. especially as hundreds of thousands of people who had left the south are coming back. local corruption questions are important. and that information is leading us and the u.n. to structure our programs to reach out to the state and county level and urged the government to deal with those issues out there because those are resources of not only injustice but instability. so issues of land, issues of

access opportunities, et cetera, these are important issues. and we're getting a handle on them and we're trying to build up the capacity of the government to deal with them. >> and then also i think infrastructure is currently lacking in south sudan. and if the south sudan is going to achieve some economic freedom, then you will need to be able to bring goods to market. what needs to be done to improve transportation and great infrastructure needed so that farmers can sell their crops outside the country? >> when you fly over south sudan you don't see hardly any roads. where usaid is building a major road down to the uganda border and a couple of the road, but we're hoping other donors will come and more heavy on infrastructure. we will do a lot in agriculture and health and education, but

we're hoping the world bank will come in heavily, the chinese, and others. because exactly right, we're going to do a lot in agriculture but if there are no roads for people to market their commodities, they won't have the right result. we will look to other donors to do more in infrastructure area. >> thank you very much. thank you for your service again, and i see senator coons is here so i will yield my time. >> thank you, senator udall. senator lugar, i would also like to thank chairman kerry as well as a deliver for the leadership. i join my colleagues in thanking ambassador lyman and all the dedicated people who help make south sudan achieved independence. less than a year ago it looked unlikely independence day would ever come for south sudan, and it not only came, it came on time after a peaceful and free and fair referendum. and while we also but this doesn't of south sudan as the

54th in the nation in africa, i remain concerned as i know many colleagues do that the path forward particularly the north-south border and in darfur, and that's why senators isakson, turbine, work and i will soon introduce a resolution welcoming independence and congratulate the people in south dakota government of government of both sudan and south sudan to peacefully resolve the many outstanding issues, including vinyl status of abyei, citizenship and the current as you detailed very troubling conflict in south court upon. the recent violence in the and southern kordofan and a displacement of many people remind us of the very real human toll of conflict. and that's why both an adjective meaning, deny seats in my view must continue their sustained efforts to urge peaceful resolution to the difficult ongoing challenges of south sudan will face in order to become a stable, peaceful nation. i know, you've already discussed the current situation in abyei, but i would be interested in which he believed to be the outlook for a final agreement or

referendum, and i be interested in what became of the president's plan again i met and we discuss a settlement to become what became of his proposal on abyei that i don't have the backing of the international committee spent thank you, senator. what happened is, as you know, what it was to develop a proposal backed by the to presence on abyei. and our timetable got derailed by the military takeover of abyei. and even though the government said we can have a political solution while we are occupying it, nobody felt that was a situation that was tenable. so we were diverted basically and lost weeks in working through a way for the withdrawal of sudanese troops, and introducing peacekeepers. it's going, this feeling now is we've got to get this peacekeepers there, the sudanese troops out and begin to get

displays which is is about 1000 people back in. and then they'll be a better atmosphere for bringing a final solution, ideas to the table. and, unfortunately, what that does is delay this for weeks, and maybe a couple of months. i'm very bothered by that but i understand the logic of it. and impacts on the other negotiation, resolving the oil issues, et cetera. but on the advice of both of the people working on this, people are close to it and i talk to people on both sides, and others involved is, we need to make sure that abyei is demilitarized and that people feel safe, and then we can do with this issue. so it's been delayed, and i'm bothered by it and that's what i said earlier i think we ought to have a very firm timetable for addressing it because otherwise it just lingers as a source of

conflict. >> you mentioned a peacekeeping mission. if i understand correctly there's three distinct peacekeeping missions across a very wide area, and i'm concerned about coordination, sustainability, the quality of the troops and some of the peacekeeping mission. what sort of work is being done to coordinate around supply lines, logistics, the quality and sustainability of the troops engaged? and for how long do you think they might continue operations or continue to be necessary? >> this is an issue our colleagues in usaid have been concerned with as well. your three missions right now. there is talk of creating a special envoy who will work on some of these issues from the u.n. it hasn't been vandalized but it's one way, have someone who is dealing all of it, but i think right now we're going to

have to rely on the leadership in the u.n. on the ground to do this. the peacekeeping operation going into abyei response to point you just me, that is the effectiveness of the u.n. operation to the peacekeeping operation that was in abyei was not effective. if it had been might not have had the crisis we had. so we turned to a country we knew would put in peacekeepers who would carry out the mandate vigorously, and that's the ethiopians. but it took us a long time to work that out. and i think they are going to be there at least months, and maybe longer until we get a resolution. the nation in the south is a big mission. it's going to be there for a while. if we can get darfur, that would be wonderful but that's going to take some time. i can't honestly put a timetable on when these nations within.

but i think this issue of ordination is very much on the mind of the u.n. and our u.s. u.n. people. as they work through more i will get back with one of their ideas on. >> last i know you've already addressed in response to senator lugar some concerns about china and the role but i'd be interested whether you could elaborate on where you see the interests of the states and china overlapping with regard to south sudan and other examples of china playing a constructive role, what advice would you have for us if we're going to have a hearing on the role of china, in africa in next few months and i concerned about better understanding what constructive role they might be able to play or be asked to play in south sudan? >> well, i think, you know, china is going to be, is already a vigorous player in africa. they've got commercial as well as political interests, all of them correspond and overlap with

are sometimes. we're in competition. incident i think it took a long time before we got on the same page on darfur. longtime. but now as i mentioned earlier, now the south sudan is independent, they have a stake in resolving the oil issues and stability, and having a good relationship with both. i expect them to develop a fairly substantial presence in south sudan. i'm hoping he'll contribute to the infrastructure areas, as well as other training. we look to them, and we have discussed this together with the chinese, in their context with president bashir and others, to press hard for the points we were just discussing earlier, about resolving issues like southern kordofan. the chinese and the russians stood with us in the p5 and in the security u.n. council to

urge the north to keep the u.n. presence in southern kordofan and blue nile. so i think we're getting closer with them in terms of both shared interest there, and i think that's an opportunity for us to see them making an even bigger contribution. >> thank you very much, ambassador. thank you for your service. thank you, mr. chairman. >> mr. ambassador, our relationship right now with the north, with sudan, is both caught up and controlled by, as you know, a number of overlapping laws that have been passed over the course of 10 years. but obviously as of last saturday, the map has been completely redrawn. in looking at the map, i see that you are currently able to do certain kinds of work in darfur, south court upon, and blue nile.

but you're not allowed to do a long the rest of the border. but the relations between sudan and south sudan are not limited to those areas now, and particularly there's this cuteness of delivery i think on our part. most of the south and the north, to south sudan and the north. so my question is, as you know, our staff has been working on trying to figure out how we might adjust some of these laws which i think personally is important to do for a lot of different reasons, not the least of which i think we are constrained in our ability deliver to the north unless we do. so, would you comment on whether or not you think that it will be helpful, for instance, for you to have the legal authority to work on a piece in time zone that stretches across the entire

border, rather than certain sections carved out the way it is no? >> there's a lot of attraction to that idea, senator, because the border area is where very large portion of the population on both sides lives. and often number of flashpoints there. there's some disputed border area. there's going to be questioned for crossing borders of mutual development, et cetera. and i think it's an area where we can make a significant contribution. if we have the ability to work with ever we thought, that would help alleviate those pressures and real humanitarian needs. i think it would be wise. >> can you share with as a kind of a sense of the projects you think might facilitate a more lasting peace is? >> i think, you know, part of the tension that arises is in the migration from north to south. access to water, access, et cetera. what we talk to in some cases

is, can you get joint development zones that transit north and south, that would make people comfortable, that both, everybody is developing equally from that kind of development. you would also ease some of the migration pressures if you could develop better some of the water above the line. we saw, we see that in abyei and southern kordofan. so those things would help alleviate some of the tension, that i think equally important, you'll cooperation because you really want on the border cooperation between the governors on each side. and a lot of them, the governors, are very interested in perhaps programs that facilitate that as well as conflict resolution could be useful. >> what about legal authority to work in area act food security, or democracy project?

>> well, i think, you know, on food security, i think sudan, government of sudan is going to face a lot of very difficult and economic challenges. they're losing a lot of the oil income. i think may be senator isakson mentioned or maybe it was you, senator lugar, that the oil doesn't last that long anyway. the norwegians predict a sharp decline for both. so the adjustment of the, the economic adjustment will be great. and food production is one of sudan's great potential if they would invest. now, i think that our readiness and willingness to do so should, however, reflect the political relationship and their fulfillment of major issues like cpa and southern kordofan. but i think opening that possibility of is important for the people in sudan, and it will be important for everyone

because of the trade. >> provide you with leverage in negotiations because i think it would be important in terms of demonstrating something we've tried to say over and over again, which is it's the interest of the united states to seek to viable successful states. without that, there's not going to be stability in either one. and that we don't want to sudan, sudan, to be in deep economic trouble in the that we want south sudan to be. so yes, i think it sends an important message to say that if you're moving in this direction coming back into the international community, we are very serious about the people of your country not going into economic turmoil. >> let's assume that you get an agreement ultimately sort of a

grand bargain that addresses abyei and the other critical issues, including the enforcement of debt, we do not need -- would you not need some kind of legal change. for redress in order to be able to address the issue of debt relief? >> there are very clear restrictions, as you know in the legislation on that. debt relief is an extraordinarily important issue for the government of sudan because under the agreement they have with the south, they have taken on the full burden of that $38 billion of debt. on the conditions that the international committee would eventually afford them debt relief and the south will support them of that politically. i think as we move forward, the

president will need an understanding with congress about those restrictions. right now it's in a technical mode, that is the bank, world bank is in what they have to do which is to gather all the details knowledge of loans and reconcile the records of the creditors. but after that it will start to move into serious -- >> we need -- >> i think it's going to be important spent just a couple of quick other questions. how would you say, how would you say sounds sudan, the government is doing right now in terms of prioritizing its own governance agenda, development agenda? >> i think it's really still very early stages. we are working and usaid is going to sponsor a conference here in september in which not a pledging conference, a conference for them to come and present exactly that, what are their priorities, and how candy

public sector help. but i think they are at early stages. they have really been focused so heavily on becoming independent. they are really moving from being a liberation army to being a government. they have to engage in a new constitution. they have an integral constitution but they need to develop a constitution that brings much, much more popular participation in the process. so i would say they are at early stage from a lot of those things and will need a lot of encouragement and help. >> you mentioned the question of the army, and its own transition. i guess they've got a force about 140,000 soldiers, but they've incorporated within that ranks, a number of different armed groups. so my question is, i mean, i don't think that sustainable for the long term, both politically and otherwise, so what should their priority be for security

reform, and how could we have an impact, or should we have an impact with respect to that? >> one of the ways in which they deal with some of these militia is to bring them and incorporate them into the army which means the army gets bigger. and it's probably getting bigger before it gets smaller. >> we will buy them out in colloquial terms. >> but also it's a great many members of the armed forces are illiterate and not trained for anything else. so just rushing into a demobilization process is not going to be good because people will be out there was no way to make a living, other than to join another militia. so what the government has talked about and we think is the right way to go is a program which develops the skills within this voluntary, build a much more professional ministry of defense and oversight, and then engages in a program of

reduction and demobilization where people go out with skills to be able to make a living. and so we are now working with others on this, issue of security sector reform, and this is exactly the questions we're working on them with. >> final question, some people have -- well, up until now i think we have provided nonlethal support, so military assistance -- some military assistance, support of transformation of their security sector. there are some, i don't want to say it's a huge debate but there are some have suggested that now that they're an independent nation, it may be time to consider the provision of legal support including air training, et cetera, give any counsel with respect to? >> we have not made any decision. we are focused heavily on the issues you first raise.

how to develop this into a better organize and more professional national military force. so we have made no decisions. we do so, or are contemplating and i want to come back to the congress and discuss that before make a decision. >> we will welcome you back. we are going to stay actively engaged and try to provide some transparency to the transition process, and hopefully that can be -- i can be helpful in assisting you with the process, and we will do it in consultation with you, ambassador. so again, i just want to thank you personally. i need to run to another thing. senator lugar, do you have more? >> ambassador, -- >> i just want to thank you again for the tremendous work and for working so closely with the committee and we look forward to continuing that.

thank you. >> thank you, senator. we're very grateful for the interest you have taken on this. >> let me just carry forward a question that may have been raised about the lack of a constitution, and you've tried to fill in some of the gaps. barring constitution there is at least military force and its expanding as you suggested. taking in militia and so forth. and so, for the ordinary observer they would say essentially the government right now is the army or the military force. is this true in the sense, or their generals who are leading this, agenda who is at the top of it? in other words, trying to describe what the executive authority is in the country, do

we simply look at in terms of a military hiring? >> well, they do have -- the president signed on independence day ceremony. it's supposed to be an interim constitution, supposed to last -- it doesn't have a terminal date which is one of the sources of great controversy. but the pledge is to have a much more broad-based process for developing a permanent constitution. this constitution that david just signed centralizes power quite a bit. it's one of the sources of controversy when it was developed. and many other leaders in the government are former generals who led the liberation struggle, including the president and a number of others. and have a long history of having fun. but there are others who are what we call technocrats, people

who come with skills in those areas. but i think this is the transition from growing heavily, as they understand that have on their military leaders to fill these positions, and some of them are extraordinarily good. to building a broad-based government that makes it clear separation between the government and the military. and that's going to be part of what the security sector reform and constitutional reform should do. >> is there a basis for optimism that as we observe this process unfolding, at the end of the day, but at the end of time, say three or four years from now, we could observe that essentially this government looks much like those governments involved in the so-called arab spring? and by that i mean essentially a strong man or woman as the case

may be, and somebody not prepared to give up authority and surrounded by a military that is subservient to that leader? and if so, then what would be the debate in our country as to what we have supported or helped produce in this case? >> i think the challenge, i think we have to really stay very close to these issues with the government in south sudan. guess it's very tempting when you are the overwhelming political as well as military force in the country to just run it as a quasi-one party state, and not see any challenges to u.s. as something to push back on. and that's a challenge. and we have in the eyes there,

and other organizations that we want to work with them closely to not let them go down that path. they talk about it. they're very conscious of it. they are aware that this is going to be a big challenge for them, but i think we have to keep those issues in our dialogue. it's political openness. its fairness to allow new political forces to develop. it's human rights culture, and i think that has to be on our agenda all the time. >> we just touched upon oil and agriculture. let me carry this a little bit further. one of the points often made about recent egyptian experience was not just simply the young people in tahrir square, but the fact that their work with millions of people throughout the country who lacked very much food this year with the price of wheat having doubled and egypt depend on us, the united states,

465% of their wheat. the amount of so-called subsidies, money flashed out in the countryside was inadequate. and, therefore, a lot of the revolt really came from people who are hungry. here we are dealing with sudan that we hope will develop an agricultural situation. that could be true in the north and the south, but there's only a limited evidence at least of this best part. and furthermore as an a-wedge and have suggested, you mentioned this, the oil may run out so the basic element of the money for this state, even if they did it right constitutionally, how are people going to make a living in south sudan? are the prospects entirely agriculture development, or is there any potential industry of any sort? >> the food problem is true of both the north and the south. food prices have been rising.

there's been a weakening of currency of the sudanese pound which is to raise the price of imported food. the south which is dependent on food coming from the north as well as from the south, is also faced very high price on food. in my view a very serious situation that both countries have to really deal with. and the investments in sudan, northern part, have not kept pace with food. in the south, you just don't have a lot of organized production because of displacement of the war. when you fly over it again you look for farms. you don't see very many. agriculture should absorb opportunities for most people, but there are mining opportunities. there is some tourism opportunities because they discovered a huge amount of wildlife along the nile in south, so there's that potential because you have to develop all

the infrastructure for it. but i think in the south, agriculture is going to be very critical. and it's going to make people more self-sufficient and reliable. it's going to cut down the need for food imports, which they now rely on heavily. and and/or, as i say, mineral, other mining and other opportunities. industry maybe if the infrastructure and proves. if they join the east african union which they are talking about, it does open up the opportunity for a bigger trading area, but i think their ability to profit from that is going to depend on developing more infrastructure and capacity. >> this is maybe a step for another hearing at some point, but -- >> let me just say thank you very much. i have to get on the trail. >> okay. >> i will conclude in just a moment. >> anytime. >> essentially one of the

dilemmas and development of agriculture in many african countries, leaving sudan out of it altogether has been a discriminate between the united states and european friends on so-called genetically modified seed or procedures. and if so, there's a debate in brussels. the dilemma here obviously the gates foundation, pointed out if you are looking for the kind of yield increases that has made agriculture a very different situation in the united states, i've seen on our own farm, my dad getting for your 50 bushels per acre of corn whereas we're not getting 170. so in my lifetime a fourfold increase on the same plant, but only because we a doctor procedures that are in dispute, internationally. -- adopt procedures. look at the international involvement in sudan, i am

hopeful that somehow humane streak will come over us, all of us, europeans as well as the united states, because otherwise the possibility of getting the kind of yields that are going to be required to support that population are pretty distant. and this is likely to lead to more conflict. leaving aside all the other reasons for conflict, the most essential reason people may fight is before they starve. so not putting to grant a note on my finery -- my final question, i'm hopeful that our people are gifted in this particular skill, and that would be true really of assistants were giving to all african countries presently. >> well, you hit an issue that i have strong brother issue but i think that debate has not been

fair for africa. and the author of the bottom billion wrote an article not long ago making the same point that you did, and which i agree with dirk is that their opportunities in this technology for africans that may be vital and essential, and they ought to thhave the opportunity to develp those. so i happen to feel that way, too. i will have to check with those to see with the government is. but our usaid administrator told me that in his visit to southern sudan that technology that we could introduce today would have a dramatic effect on the yield in southern sudan. he's very optimistic that we can do that, and he's very focused on it. i hope you get a chance to talk to him as he came back enthusiastic. also, the minister of agriculture in south sudan is terrific, and she's heavily

focus on these opportunities. >> this is great news, both with rosh hashanah as well as the new secretary of agriculture in sudan are on the right track. for the benefit of the people of the country as well as some degree of peace. based on that situation. i joined a gym once again and thank you so much for your comment today. it's been a very important hearing and you've given very important and encouraging testimony to us. >> thank you. it's a great privilege always to be before you send of the group spent i will conclude by saying the hearing is adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

>> this is the members room here

at the library of congress. a private room for senators and house members. they can also the personal records healthier at the library. just come in the congressional collections are there? you will find answers about this unique library in c-span's original documentary, the library of congress, hearing this monday night. we will tour the iconic jefferson building including the great hall in the reading them. we will show treasures found in the rare books and special collection including the original thomas jefferson library and presidential papers from george washington to calvin coolidge. and learn how to live it is using technologies to discover hidden secrets in their collection and to preserve its holding for future generations. join us for the library of congress this monday night at 8 p.m. on c-span. about that question, the library holds the personal records of over 900 current and former members of congress. >> now a discussion about small

businesses and the u.s. economy. participants at this u.s. chamber of commerce summit talked about job creation, the factors influencing hiring in the role of government in creating the right conditions for economic growth. this is about 40 minutes. >> good afternoon. it's a great privilege for me to follow tom in talking about the perspective of small business as we approach this job summit. i think that sign behind me, dream big, is about as appropriate of one as we can think of as we begin to discuss these great optimists, and they truly are the great optimists in america. because what we will talk about today and what tom has talked about, what our survey has shown, is that there is a lot of uncertainty out there. there are a lot of people that believe that u.s. economy is on the wrong track here there are a lot of people think that there are policies that come out of

washington and other places that are the wrong way to go. but the one thing that you hear from the people up here today and the one thing that we heard as we did a listening session, listen, multiple listing sessions all over the country, and in every state was that when you talk to small businesses, when you talk to the people that are really living the american dream, that they are optimistic about their future and about their companies. and so it's a pleasure for me to moderate this band and talk a little bit about what we found as we worked through a poll that is the second quarterly poll that we've done here at the chamber. and so what i will do is first introduced three panelists that will have up on stage with me, and then begin a discussion about it. first elected introduce dan mehan. he is the pride and seal of the missouri chamber of commerce produces the state's largest business association, representing 3000 employers in

over 425,000 employees. dan has been a great advocate on behalf of the business committee in the show me state. he has been very successful in pushing pro-business, pro-free enterprise solutions in jefferson city, and all over the state of missouri. next we have jessica johnson and jessica comes to us from the bronx, new york. jessica is the co-owner of johnson security bureau, a family owned security company, again, in the bronx of new york. and jessica story is a little bit different. she will talk about the challenges that face her business, but jessica has been successful in the last year in actually doubling the size of her business in terms of contracts and revenue. jessica is a graduate of the goldman sachs 10,000 small businesses institute, and believes very strongly in mentoring and then mentor to in terms of access to capital and a great understanding of that.

and, finally, the panelist who is going to follow me is carol haney. carol is vice president president for public affairs and policy at harris interactive. carol manages qualitative and quantitative research in the public sector as well as providing thought leadership in the social media and research space. harris interactive is one of the largest market research firms, and carol is going to kick off our panel by giving a short presentation on the results of our poll. as i said, the second poll that we did over the last two quarters, in that poll we surveyed 1400 small businesses around the country to check on their polls. compared to the first quarter, i'll give you a top line on this. there is a high degree of uncertainty. there is a strong belief that the american economy is on the wrong track, but to the point

that i made when i began this conversation, these are optimists to their core. and i think carol will allow for some real interesting observations. and so with that, carol. >> hello, everyone. and carol haney from harris interactive and i'm going to walk and follow the recent results from the small business survey. we just completed fielding the second quarter at the end of june, so this is a data hot off the press. we did this study on behalf of the national chamber of commerce. this survey is quarterly, it's an online survey gathering opinions about the political empowerment and how it relates to small business. we also gather behavioral data about hiring, decision-making, and to the hiring process, and business forecasting.

we exclusively surveyed small business owners and executives. we interviewed a little over 1400 respondents who fell into this category. sample sizes national represents a both chamber of commerce members and non-chamber of commerce members. we interviewed across industries and commerce areas in the united states. businesses where the annual income is 259 or less are considered small businesses. -- 25 million or less. let's look at opinions about the current business environment. we measured on three different levels. the u.s. economy, the respondents local economy, and the respondents own business. for example, we asked respondents whether u.s. economy was basically headed in the right direction, toward pretty seriously off on the wrong track. 84% of respondents indicated the u.s. economy is on the wrong

tracks. slightly more optimistic about their own local economies, 54% say their local economy is on the wrong track. oh, three-point decrease from last quarter. on the positive side, as you might expect over 60% say their own businesses are on the right track. the sentiment of the wrong track is dominated by economic uncertainty. economic uncertainty is ranked as the most important challenge facing small business owners, with 49% ranking economic uncertainty as one of their top three choices. in decreasing order they also feel challenged by the national debt, the new health care law, and the impact of regulation. the number of challenges that respondents had to choose from were 14, economic and political challenges, and note that there's some seasonality and the reporting of these rankings.

for example, in the first quarter the category of high taxes was higher up on the list as one of the more important challenge is however economic uncertainty remained at the same level for both quarters. next to get details on that uncertainty we asked opinions onto measurement points. uncertainty about the future, and threats to the business. when asked which issues in washington make a few most answered about the futures of their business, 46% say the federal debt and deficit is causing uncertainty, and 35% say regulation is causing the most uncertainty. in terms of threat to business when choosing from regulations, taxation and litigation, 43% of all respondents think that regulation is the greatest threat to their businesses. followed by 35% who think taxes pose the greatest threat to the business, with 18% saying their greatest threat didn't fall into these categories.

when asked if their own business, businesses best days are ahead or behind them, 39% say the best days are ahead of them. 38% were unsure, and this is a drop of over 10 percentage points from last quarter. when asked about america's best days, only 20% you leave that america's best days are ahead of us. when thinking about what small businesses across america need right now, fewer than 15% say they believe washington should offer a helping hand. the vast majority say washington should get out of the way. 79%. when respondents were asked which of two actions from washington would help the small businesses more, 85% say they would rather washington provide more certainty than offer more

assistance. no surprise, hiring is at a standstill with 64% of all respondents not hiring over the next year, and only 19% are planning to hire. from a choice of seven factors, respondents said that economic uncertainty was the greatest obstacle to hiring more employees. 55% of respondents chose for their top two, lack of sales followed with 34% of respondents think it was their greatest obstacle. on the upside, only 12% said they would lose employees over the next year, and this is a market improvement from the 29% of respondents who said they lost employees last year. when total, american boroughs uprising 4.5 million -- billion dollars per day to cover the budget shortfall, 80% of small

business owners say debt and deficit potentially pose a threat to the business either immediately or in a long-term. conversely, 19% do not consider the current debt situation of risk, either now or later. nearly four out of five small business owners believe federal government regulations are at least somewhat unreasonable. ..

>> 85% of business owners say they are somewhat or very worried about the impact of these three on their business. drilling down into the impact of these obstacles to hiring more employees on a agree/disagree scale, 79% of respondents at least somewhat agreed to the statement that taxation and regulation from washington makes it harder for their businesses to hire more employees. three-quarters of all respondents thought the recent health care law makes it harder to hire more employees. to recap, economic uncertainty is the headliner in this survey. this pessimistic view of the u.s. economy negatively effects the small business outlook. most small businesses, almost

08%, are -- 80%, are planning to not hire new employees in the next year. the top three obstacles for future hiring include economic uncertainty, lack of sales and uncertainty on plans from washington. although not the top obstacle, almost 80% agree that regulation and legislation makes it harder to hire employees, and 75% also see the recent health care law as an obstacle as well. 79% believe washington should get out of the way of small businesses instead of offering a helping hand. thank you very much. i look forward to the upcoming panel discussion. [applause] >> well, thank you, carol. one of the things that, that we talk about a lot and, um, dan,

maybe you can shed a little bit of light on this is, number one, what do you see when you talk to your members in missouri, and then maybe a little bit about the issues of access to capital. we've seen recent citings from the fdic that talk about number of loans over the last year decreasing to small businesses by about somewhere in the neighborhood of 8 and 9%. and so nationally this is something that i think continues to be an overhang for small businesses to overcome but would love to have your perspective on that. >> first of all, when i arrived here, i met carol, and i said, you know, i read your poll, i read the data a few days ago when i got it, and this is a layup. this is exactly what we're seeing in missouri with our members. every now and then you come out, and you're ahead of the curve, whatever issue you might be talking about. we were hearing the word uncertainty, i'm going to say,

this the last two years, 18 months, but i think that uncertainty has evolved into something that is more of a lack of confidence because you see problems recurring and nothing, no success, no resolution of these issues. look at the budget, the deficit, etc. so i think there's just a lack of confidence in the system out there, and that uncertainty is saying what are they going to do to me next. it's come up here. tom alluded to it as well. for small business it's get out of my pox and get out of my way -- my pocket and get out of my way, i know what i'm going to do here. with the question of financing, though, there has become an uncertainty, the same kind of fear of stepping out remains to be debated. but if -- it's inverted right now. if you don't really need money, t there for you. but if you really might need

money to make that next step, the paperwork, the time, what you have to put up as collateral has all become that much more difficult to attain. and it seems like the new discoveries out there, the things that we depend on from an entrepreneurial perspective, you've got to have that, that business plan that is off the charts. it's going to be a success, it's going to follow the hockey stick curve, and you better be able to verify it or else the financing is just not there. even in venture capital we have members seeing the same thing. so it's dry and at a time when we don't need that. i think perhaps maybe resolution of the debt ceiling issue or some sort of progress moving ahead might help. but when you look at our members and just like your businesses or your household, you have a budget. we haven't had one as a nation in two years, and that breeds that lack of confidence and that ill feeling towards the political process whether you,

they have an r or d behind their name. >> jessica, you have an interesting story in terms of how you got into the business. you inherited a challenging situation and inherited a business. why don't you talk a little bit about the situation that you found yourself in and how you've been able to be successful. >> i guess the one word that would describe the situation when i came into our family's business is, definitely, uncertainty. my brother and i lost our father after he battled cancer for a few months back in 2008, and we thought that we would have several months to work with him to learn the inner workings of the business and to get the business back on track. we had no idea of what the situation, what dire situation johnson security was in. we were losing clients, we had clients who were in significant arrears, we were losing employees. we had some employees that were so strapped for cash that they would work full time for us while they were yet working full time for other employers.

so how do o you manage someone that's working 80-plus hours a week? we also had found that our building was falling into disrepair and that clients and potential clients were taking longer to award contracts. so we had fallingen into quite a rut which was not familiar territory for our business. next year we'll celebrate our 50th year in business, and we've had different cycles. and we had our greatest revenues in 2005, so to to be stuck in 28 with only 16 employees and less than $300,000 in revenues, it was a very dire time. and i needed help. so i reached out, i reached out to our local chamber, to the sba, to the small business development centers and was fortunate enough to come across the 10,000 small businesses initiative which was under the direction of goldman sachs. we worked with one of the local community colleges that provided us with business counseling services, business support

services and be networking opportunities with other small business owners. it also showed us some alternative routes to financing and helped us to stabilize our operations until we can reach the point where we are now. you mentioned that we've doubled our employee base and doubled the number of contracts. well, actually we've just added an additional 20 jobs over the last months, so we've seen meteoric increases in the business as a result of the 10,000 small businesses. and just putting the passion and some of the things our father wasn't able to do when he was ill back into place in our business. >> that's can exciting. carol, we talked about the issues and where different things rank, and one of the things that i was surprised -- not surprised, but i think that small businesses, the debate in washington over this debt,

deficit and where we go as a country has really extremely moved that issue up with regard to how important that is to small businesses who are typically going to spend their time saying where do i go get customers, how do i increase my revenue, how do i keep my customers happy, and yet we now have regulation debt and deficit ranking ahead of lack of sales and revenue. to me, i think that's a remarkable thing. and so if you could comment on that. >> absolutely. you know, i think it's the uncertainty, the economic uncertainty that we are seeing almost 50%, taking that as the top concern because it encapsulates all of those items. you know, one of the things that you were talking about was lack of credit. lack of credit is in the top ten. we reported only on the presentation the top five, but lack of credit is within the top ten, and it is definitely something that small businesses

are concerned aboutment -- about. but i think that's also, that lack of credit coupled with all of the other things, debt and deficit, that's all getting ranked up together with economic uncertainty. >> i think, also, if you -- everybody wamps when there's -- watches when there's a fight in a hockey game, right? is you may not see the passing that goes on before the goal, but when they drop the gloves, everybody's going to watch that. every week we have a couple rounds of renewal calls, and i get the reports in packets like this that has answers on a verbatim question. and bill was asking for real stories of what's going on out there. and this one sums it all up. it had a lot of the themes in carol's survey. didn't have the growth of your company, i wish, but here's from a box company that employs about 150 people in st. louis. we need things now. if government leaders continue

their self-centered power ways and don't come together soon, we won't have to worry about life as we know it. i keep hearing businesses are making record profits, keeping the money and not hiring people. media and others on the national scene and/or other power seekers continue to vilify the group that makes jobs and gets the results for the economy. this needs to stop. it hurts many things, drives wedges in the relationships with our employees which in turn turn affects service and quality. all of this adds to an unrightful mass dissatisfaction in the workplace. i only know business people that are losing everything and closing their doors or, at best, they're fighting to survive as we are. we have been battling hard ever since 2008. we went through a lot of pain and restructuring to get back to a livable bottom line. then, unfortunately, business seems to have gotten worse in last october and falling off again in may.

enough of this. time to get back to work, thanks for your efforts. at the end he shows a little bit of optimism, but he also identifies that what's going on in the media, they're looking for that, the conflict that they can report on, and that only exacerbates, i think, some of these trends that you're seeing of uncertainty, dissatisfaction. and, yes, i was handed a protest letter when i walked inside the door here on jeffrey immelt. let's get real. the people that are producing jobs don't want to hear about who said what at the press conference today. they want results, and that's why this side show in washington is really sort of getting to them right now. >> well, let's follow that just for a moment and talk about the states because the states have typically always been laboratories for the types of innovation that is necessary. sometimes it's not the washington solution, sometimes it's in the states. from where you sit and you can, you know, have it be just

missouri specific or take a look at some other states where you see things that government's doing that is helpful to the small businessman. >> one thing that we're doing in missouri, we've done some pretty good things legislatively with tort reform, work comp reform, some really reasonable economic development incentives. one thing we're doing, and it matches up with one of the phrases behind me that says dream big. we're trying to locate an international air cargo hub in st. louis, missouri. our airport lost our hub with american airlines pulling out. we've got a brand new runway that goes unused. we've got space, we've got a facility vacated by boeing which can fit two 747 freighters on the north side of the runway. the infrastructure better than chicago, things like that that we've really pulled together as a state and as a city and a region that if this thing's successful, it'll be good for the airport, it'll be great for st. louis, it'll be great for

missouri, but it'll be great for the midwest. and, you know, we lost that 100 years ago or so when we didn't do that for the railroads, and chicago got it. we don't want to miss this opportunity now, and it's a rare occasion in missouri where we have a history of shooting ourselves in the foot and reloading -- [laughter] of people trying to come together. we'll know in about six weeks whether this worked or not, but it's the thing when we got into it and i sold our board on it which was very, very easy to do, it's been a heavy financial contribution and time commitment, but it's a thing we should fail trying to do. but it's that dream big and show some vision like true leaders can, look down the field and see where that opportunity is. if we are an air cargo hub with china, brazil will come and others. and that cluster around that development, it'll be wonderful for the future. if you look at the map, we're right in the middle of the country, and what i try to tell

the missouri senate, missouri house and missouri governor is nobody can take that location away from you. thrive as logistics and distribution center. we should be that for the entire continent, not just the midwest. so it's been a rare coming together of business, labor, both parties, city, county, state, even the federal government. we had great support from our bipartisan congressional delegation. it's those kinds of things that just don't happen too often and, hopefully, we'll be able to drive that home. >> that's great. jessica, as you look forward and you look at your business and, certainly, you have been able to come into a challenging situation, do very well in it. but as you look at the implementation of a number of these big legislative issues whether it be in the financial services realm or health care and the other challenges that exist, where do you see the biggest challenges, and then where do you see your growth?

>> the biggest challenges are just in finding the time, resources and talent to manage the regulation that applies to your business or industry. so when security, it's -- there's an appreciable amount of regulation regarding licenses for firms, for equipment as well as for guards. so learning what those regulations were and then making sure that we were compliant, that was one set of challenges. another large area of regulation that challenges us all the time is unemployment insurance and that system. and i'm sure anybody that has employees, and in our business our service is our employees, we spend a lot of time and resources dealing with unemployment issues. one particular area where we've seen increased regulation and had to deal with it and been successful in dealing with it is with osha under the department of labor. much of our growth has come in

construction jobs, and in new york a requirement on any construction job is that someone have a minimum 10-hour osha construction safety training. now, as a security provider i wouldn't think about that because that's just not in my field, but it's a requirement if i read the documents that i have. so we're forced to decide, well, do we bear the burden of the cost for osha training, and when we look at most of our candidates for jobs, they've been unemployed. they can barely keep their cell phones on, let alone $100 to take a class. they don't have the money, so do we bear that cost, or do we have to screen for an increased number of people to make sure we have the number of people that have that training so that we can send them to a job site so we can compete for those contracts that are now starting to flow through? so those are just a couple of examples of the regulatory challenges we face, but what's most important as a small business owner is understand what the regulations that are applicable to your firm and

industry are and finding the time and resources. because outside of payroll, the majority of my time and resources are spent on insurance, which is required, on unemployment and on accountants to make sure that we are compliant with the tax codes. so it's a necessary evil, but just making sure that you deal with it is important. >> well, thank you. it is certainly, as the survey showed, regulation, there are some, certainly, important, good regulation, but the pretty strong sentiment among the people that we continue to talk to suggests that there's too much of it. um, what are the things that you've seen among larger businesses is increased productivity, better earnings, you know, pretty strong stock market generally, and a lot of

those gains have not come from increasing the number of workers. and, carol, i kind of direct this to you but then open it up. is there a worry when we ask these small business owners and they say we are not planning to hire 64% of them say we're not planning to hire any additional people. aren't they, and i don't try and mean this to be super leading, but are they saying because of -- we are going to grind out increased productivity because we are taking the same approach that the larger guys are? >> 64% are saying that they're not going to hire, um, new workers, and in addition to that, um, 15% are letting workers go. so really we're talking about nearly 80% of small businesses that won't be doing any hiring this upcoming year or do not have it within their plans.

so that is, um, really significant, and they're going to have to squeeze, obviously, out of their current employee base. >> we see that as well, that there's a reorganization. you do hear some stories like this. it's congratulations to you and your success. you do hear some people that are growing, but in general there's just a pullback, a cautiousness out there that for reasons that we've already cited the people that would be hiring aren't getting around that obstacle. i guess it's more reorganization and re, you know, rethinking your structure right now and trying to make the best of it. we've seen an uptick of firms merging, things like that. so it's a combination of that. they're on the sidelines still. >> there was a point where we were a lot more conservative about hiring, where we were offering employees overtime instead of taking the risk of

finding new employees. but what we found was we couldn't continue to afford to do that, and that just made more sense for us to hire new employees and can say, well, if we have to pay unemployment, what is that going to cost as opposed to burning out our employees, not giving the service that we want to give or potentially losing a client because we don't have the manpower to service their needs. >> people doing more with less, trying to get by to that next level. >> energy prices. we haven't really talked about energy prices. and so, and i saw between q1 and q2 it did decrease this terms -- in terms of its importance. and i think most of us would say, well, there's a softening in the price of oil, softening in gas prices, but how susceptible are small businesses and, carol and the other two of you, how susceptible are small businesses to those increases?

>> according to our data, small businesses still report it within the top ten. so even though it has decreased in importance, it is still within the top ten of the, um, largest challenges facing small businesses today. um, i would also say that, um, that there's a seasonality that comes with, um, energy prices and how it affects businesses. so since this is a quarterly study, we'll look at that across four quarters, and we'd get a better idea of where it would fall if it would fall, right now i think it is number eight, right with a lack of credit. so it might go up given the next two quarters. >> st. louis, missouri, hosts four headquarters of coal companies, peabody being the largest, arch coal, patriot, i'm

blanking on the fourth. they located there because right across the mississippi river are some of the largest coal deposits in the country. it has a high sulfur content which led to problems with the clean air act, and now we get most of our coal from the river basin in wyoming. i can't get around taking a shot here. we're sitting -- my former boss, senator kit bond, used to call the u.s. the sabia of -- saudi arabia of coal, but we've made it so unbelievably, ridiculously competitive to be able to use that resource to feel what we do. over 50% of our electricity comes from coal today. that's not going to change that much. we're all for alternative energy and exploring that, but back to how employers view this, missouri's heavy in automotive, heavy in defense, heavy in agribusiness. a lot of those use those to power their factories and processing centers. when we have our one nuclear

plant, they built two pads, one for the current one, one for the next nuclear plant which we've been debating in the missouri capitol for three years now. and here's what it comes down to, especially in the acute times that we've been through. those employers are looking at their energy costs next quarter in the they're locked into a long future contract. but if there are energy spikes at an aluminum smelter or pick your manufacturer, you're going to take it. you're not going to like the results. if you're looking at a stock price, that's going to hurt you there. so we've got an unwelcome brawl between members, the utility companies and some who want to build this nuclear facility, which building a nuclear facility for any state in the union right now would be a construction job boom. for years. um, so the providers and then

the industrial consumers wed with consumer groups that are fighting this, and we can't figure our way out of that. so there's a great debate on energy policy, but this area truly requires some looking into the future and saying what's best, in this case for missouri, in 5, 10, 25 years and not just what your fuel costs are going to be to run your smelter in three years. so this is a great question. um, i'm not so sure that it hits a smaller employer depending upon the nature of what you do, but you really get a cross-section of fire fights that those of us in our business don't like to see our brothers shooting at each other too often. >> because the majority of our employees are in the field, the increase of fuel prices doesn't impact our bottom line as much as it may other small businesses. where it does have an impact is in our employees being able to get back and forth to work. we did have a number of employees, maybe two or three

over the past quarter, who have resigned because they simply could not afford to make the trek between their home and the project site. um, fortunately for us, though, with the increase in fuel prices that means that there's generally an increase in demand for security for public utilities and other energy providers. so we have been bid withing on additional projects -- bidding on additional projects with the local utilities, so hopefully that'll lead to additional jobs, and the people that left might come back and say, hey, it's close enough to home, and now i can better deal with the energy costs. >> looking at both sides of the opportunity and the downside. >> we have to. i mean, as you mentioned as the data point where there's a lot of uncertainty around what's going on at the national level, we as small business other thans are more optimistic about what's going on with our businesses and what's going on on the local front, so we have to take a look both what it means as a business, for our employees, as family members and for our

communities. >> well, that's a great segway because i think we are just about out of time. so we've got media here, we've got opinion leaders, we've got representatives of government. and so i guess i'd kind of close it out by asking the three of you to, you know, what is it that you want them to hear from the perspective of small business, the perspective of representing small business, and from the perspective of anything that we haven't talked about relating to small business, um, why don't you guy cans just throw it out there. go ahead, jessica. >> well, there is a great amount of uncertainty, and as a small business owner, as the data says, in term of regulation it would be helpful if our politicians can figure out a way to stay out of our way. we know what it is that we do, and we know how to do it well, and we can create the jobs that are going to impact the nation as well as our local communities, so help us by just simply moving out the way please and thank you. [laughter] >> i've got to follow that?

>> yes. >> um, i just say back off. these ideas that are being dangerously considered, i'll throw out a few things that might get a little tough out there, but card shack was the first threat. the health care bill, we still don't know what that's going to do. some of the regs in nlrb and some of these other things that are hang are really scaring your job producers. tom said it earlier. we're going to go where the talent is. the employers are going to migrate to where they can find it. and the one thing we haven't touched on today is education. one -- 33% plus of the kids going to the university of missouri or the university of maryland or virginia or pick the school are going to need remedial math or remedial reading. that's unacceptable. junior colleges, it's up to almost half. so when you have to pay for that

education twice, that's a built-in inefficiency. and when the kids in korea or ireland or singapore are cleaning our clocks, their ability in basic math and science, we've got a big problem. when boeing doesn't know where to go when their 2500 engineers are going to hit retirement age in the next three years, in st. louis they build the f-18. you don't want to contract things like that. they don't know where they're going to get those employees. so the education system goes hand in hand with the things we're talking about here. you know, and that needs a proactive reform. we just need to stop the destructive deform that sometimes is going on here. >> for the 21% of, um, small business employers who can hire, that is true in the top 14, lack of education and lack of finding talent came in number 12. however, for the 79% who are not

hiring this upcoming year, i think it really is that the headliners are in our data, economic uncertainty, lack of sales and uncertainty on plans from washington. needing to know for sure. >> well, great. thank you very much. again, we could probably take this and have this conversation much longer, but we do have the rest of the panel. there is, the key findings are at each of your desks. i hope that you'll take them, take a look at them. we intend to continue to do this on a quarterly basis, so we will be back next quarter. please join me in thanking the panel for being up here. i think these guys did a great job. [applause] and with that, we'll probably take a 10-15 minute break and be back with the panel that bruce josten will lead. thank you. [inaudible conversations]

.. s that led to the april of 1861 attack on fort sumter and live in two weeks the first major of the civil war the battle of bull run with 48 hours of civil war programming. the civil war every weekend on

american history tv on c-span 3. >> two subcommittee heard from government regulators about how businesses collect and use personal information online. witnesses include fcc chairman julius genachowski. assistant commerce secretary for communications loren strickland. this is two-1/2 hours. >> the subcommittee will come to order. today cellphone hacking scandal in great britain consumer privacy as part of the national consciousness. we have a unique opportunity to make a real difference in the

lives of millions of americans and the look forward to welcome chairman walton and members of the committees on both challenges. privacy laws are stricter than in the u.s.. how could have gone so far out of hand? whether american consumers are as vulnerable as celebrities in london. i hope chairman genachowski will address this issue as we continue to gather facts. this morning we began an important and some say long overdue debate. how do we have congress and americans balance the need -- >> madam chair, is the microphone on? >> it is. you need to get used to a female chairman. >> how we balance the need to remain innovative with the need

to remain privacy. information on sophisticated ways. sometimes the collection and use of this information is extremely beneficial and at times it is not. i am somewhat skeptical of both industry and government. i don't believe industry is doing enough to protect american consumers while government tends to overreach regulations. that is why this debate must be delivered and thoughtful but it is time for this to take place. even though it's there's billions of uses worldwide and if the top $200 billion for the first time the internet remains a work in progress. in 25 years the internet has spurred transforming innovation. it has become part of our daily lives. it has unlimited potential as

the world dramatically witnessed in the arab spring but the internet has brought out more cultural changes as well. think about it. if a total stranger knocks on your door and ask for your name, birthday and relationships status in number of children and educational background and social security numbers would you give that information of really? probably not. we will lead to all-out information online bit by bit. this information is collated by computers for principal profiles using online behavior a marketing and advertising. this data mining's pays the freight for all information we get for free on the internet. does the come at too great an extent that consumer privacy? this cuts to the heart of the issue. application providers increase variety of tools available to control privacy settings and the lack of a basic understanding of how companies use this

information. consumers harbor concerned about the privacy, it is un proven and unclear whether, relating to the -- these concerns in a way that encourages continued innovation and expansion of electronic commerce. as congress takes a closer look at online privacy issues industry has stepped up efforts relating to collection and use of consumer information. these industrywide efforts, transparency to increase consumer comfort of how they use their information as well as development of new profiles to personalize browsing experience and control how much they want to share. i would like to share a few of my own. greater transparency is needed to empower consumers. it is unclear whether government regulations are really needed

providing consumers with more transparency is the first step of protecting an american. they should be notified if there is a material change in privacy policy. sensitive information should be greater in place when it comes to health records. we should take a long look at how children are treated on line and we need to examine privacy laws. do we need a single regulator? i support this content. what part should it play in the development? the department of commerce have extensive reports concerning online privacy. this little proof of substantive harm. surge as we're seeing in data protection. as we move ahead with our hearing that look forward to

robust discussion with all of this including industry and consumer groups. we can make innovation and privacy a shared priority to be the eighth wonder of the world. i would like to recognize mr. betterfield from commerce manufacturing and trade for five minutes. >> was my understanding this side would be allowed 20 minutes to make open statements and i can deal with those? that will be fine. let me join the internet privacy and look forward to the testimony from three witnesses as we look at an important issue. i look forward to learning how to better equip these agencies to protect americans from online

privacy. it is vitally important that americans have reasonable protection for personal information held by the industry. this includes specific websites the user has visited, how long they spend on the web site. whether they purchased something, what they purchased and what they looked at when they were there. they can even record their keystrokes. information is collected without their consent. when a website install on a user's computer, internet activity. the term quote he does not sound invasive but the recent investigation found visiting the 50 most popular web sites in 2,000 cookies being installed

without notification or consent on the test computer. what is worse is the top 50 web sites directed at children placed more files from visitors computers at general audience web site. the wall street journal found children's website placed a foot 4,100 cookies and tracking mechanisms on their test computer without notice or consent. even more concerning is the data gathering industry has developed ways to mary online date with offline data like warranty cards and property records and voter registration and driver's licenses to build superfiles. some companies are using these superfiles to differentiate which products they will offer potential customers. life-insurance clearinghouse website test a system that would recommend different policies

based on the personal information in the file. this is called boxing and i would argue it is nothing more than a high-tech form of economic and social discrimination. in addition having all of this data in one place put americans at risk of more traditional contact cards like identity theft and fraud. it is clear businesses need to collect some information for their operational needs. beyond that it is well past the time to put in place some clear and comprehensive rules to let consumers know and exercise some control over what they get gatherers can collect, how they can collect and what to do with it once they have it. madam chairman i hope you will work with me to craft legislation that will safeguard americans's personal information so they can use the infinite potential of the internet in the safest and most secure way

possible. i yield back the balance of my time. >> the chair recognizes mr. walden of the subcommittee on communication and technology for five minutes. >> i want to welcome our witnesses. as consumers are increasingly living their lives on the internet and even more on their smart phones concern is growing over electronic communications privacy. the energy and commerce committee has taken an active role investigating online privacy in the last few congresses. mr. barton has sought out information from companies about internet advertising and consumers online information. members of the committee have reached out to google about privacy concerns arising from google bose and their collection of data from personal wi-fi networks which i know the fcc is investigating. chairman capt. and myself along with our democratic colleagues sent letters to several mobile operating system providers such

as apple asking hard questions about the location based services they provide and about the privacy protection attached to those services. in communications and technology and commerce manufacturing and trade subcommittee had a number of hearings in recent years. we are having this hearing because we want americans to have adequate information regarding their internet use. it is collected, used and shared and to make sure their privacy is protected. we must balance that need with the recognition that regulatory overreach could curb the ability of a entrepreneur is to invest and create jobs in new technologies. it is not clear what legislation if any is necessary but this hearing will shed light on this question. as we move forward one thing stands out in my mind. today's regime is competitively nor technologically neutral. section 222 gives the federal communications commission broad authority to implement privacy protection for consumers of wire

line and wireless telephone services and specifically called out location based services for regulation but applies that regulation only to carriers and not providers of device operating systems or applications. other parts of the communications act give the commission authority over cable operators and satellite television providers under a prior consent framework. there are few if any communications privacy regulations governing web based companies even those who can access surge query's and online conversations, web browser and operating system is. why should wireless provider transmit data to and from a smart phone be subject to federal oversight but not an operator with access to the same data? if we move forward with legislation how do we create a fair playing field? do we regulate companies up or deregulate video companies down? do we create a unified regime and the fcc or have both

agencies administer equivalent regimes over companies or devices? i look forward to hearing from our witnesses on the steps they're taking an electronic communication privacy while recommendations they have for us examine these issues. one more thing. although we are here to talk about internet privacy i want to echo the concerns about what happened in the united kingdom. i will be interested to hear from the chairman genachowski if things like this happened in the united states whether it falls within the fcc's purview and what the fcc and other agencies typically do about it. with that i appreciate the opportunity to share those comments and yield the balance of my time to the vice-chairman from nebraska, mr. kerri. >> this is a necessary hearing and i thank our panel. it is a power house panel. thank you for coming here. we should have an office you are up here so much anymore.

two words or two principles regarding privacy policy. one is balance and the next is transparency. there is no doubt that if there is one drawback or inhibition about ecommerce it is the consumer's fear over violation of privacy. we know when we do a transaction on line that we have to provide information to the entity we are doing business with or engaging in commerce. what we don't expect unless it is transparent and open to make our decision is the use of that data. it has to be easy for the consumer and the company but also something that everyone knows up front. what we can't have and what

degrades confidence is what has occurred with google buzz, a trusted company that now has obtained personal information. we have no idea what it can be used for or will be used for or when major companies or entities have to obtain personal information. all of these things should be clear. they're not transparent. there is no balance involved in those and that is what we need to deal with. >> i thank the chair and the vice chair and recognize the ranking member of the communications and technology subcommittee, this-hooper for five minutes. >> this marks the first joint subcommittee hearing of the 112th congress, internet privacy and by welcome it and welcome the witnesses -- distinguished witnesses we will hear from.

government agencies testifying today have taken steps on internet privacy but we need a unified approach that leverages the expertise of both public and private sectors. the ftc has conducted a series of round tables exploring privacy issues and exposed a framework for approaching these issues. the fcc brings years of experience managing communications, privacy issues and wiretap legislation in the late 1960s. the m p r i a has played a significant role in establishing the department of commerce's task force's report on commercial data privacy and innovation in the internet economy. that is a real mouthful. should be an acronym for that. personal privacy is i believe a

closely held american value. i think it is in our dna. we don't want the government to know. we don't want companies to know. we hold it very close. to date information is shared more freely and faster than ever before especially by the young regeneration. we need in our country a comprehensive approach to privacy and it may be appropriate to start by updating the rule protecting children on line. children on the internet share photos and e-mail addresses and phone numbers with friends and family. there are advancements in smart phone technology which enable parents to monitor the location of their children and based on a town hall meeting i had on the issue, parents need a lot of education on this. they have a sense of what is

going on but don't know what to do with it or how to. the children's online privacy protection act enacted more than ten years ago. never really anticipated these advancements. whether dealing with children, teens or adults leaders will transparency needs to be the cohen of the realm. needs to be the central focus of ours. consumers should know what personal information is being collected, how it is being used and who has access to the data. companies should be required to disclose if they buy or sell consumer information or if they track the whereabouts of consumers even after they left the company's web site. both the public and private sectors have a lot of work to do to educate consumers and businesses and inshore the collection of data is done in the transparent manner.

it is important that we don't overlook pro-active steps being taken by industry to enhance user privacy. according to facebook almost 35% of their three hundred fifty million users customize their privacy settings using options provided by the company. similarly millions of users of the popular web browser mozilla firebox install add ons to prevent advertising from collecting their information and reputation.com is developing tools to help consumers and businesses protect their online privacy but it is spotty. there is anything that ties this together, that is why we are here today. with the right balance we can protect privacy without inhibiting job creation and the development of new innovative data driven apps services.

there is such a demand for that and we don't want to stand in the way of it. our government agencies have a difficult task ahead of them. each of our agency witnesses and survive an expert view on the issue of internet privacy and i look forward to hearing what you have to say. i would like to know what each agency thinks their role should be. what their hand is in this and how we can leverage a wide range of online privacy tool developed by the private sector because it is both and how we increase coordination between government agencies and industry? at this point, madam chair, it has been mentioned today, i would like to call on the chairman of the full committee to use the jurisdiction of this committee to probe the whole issue of privacy, hacking and

burgeoning out of this scandal of news corp.. it sits with the subject matter that we are here in the joint hearing today for. this is one of the most powerful committees in the congress. we have the jurisdiction and i think it needs to be exercised. i welcome the panel and i thank you for the testimony you are going to give and look forward to hearing it. >> the chair is pleased to recognize the chairman of the committee, mr. upton 43 minutes. >> i am excited about the hearing. this is at the forefront of protecting privacy of americans for many years and that mission continues today. when i became chairman of this committee six weeks ago i guarantee our focus would be on jobs, the economy and preservation of individual freedom.

i ask everyone to look at the mid-year report released last week. there's a good deal about hundred of thousands of jobs this committee worked to protect and create. we begin a very thorough analysis of what has become an essential freedom for all americans. the internet has changed our lives in so many ways. our freedom and like that elsewhere in the world to use the internet for information, commercial purposes, consumer needs and health care is unrivaled. anyone who has access to a computer or even a blackberry has access to the entire world. that freedom also brings some serious challenges. privacy is chief among them. so i commend these subcommittees for holding this meeting. as you begin the effort it is appropriate to hear first from our witnesses and i welcome them. i want to get the issue right. it is not and should not be partisan in any way and i don't

believe it is. if it means this emt subcommittee's oversight need to hold multiple hearings so be it. we need to hear from everyone with a stake in internet privacy before we contemplate legislation. i yield the balance of my time to be gentlelady from tennessee ms. blackburn. >> to add a couple points to the discussion, who we welcome and appreciate your being here, we should bear in mind online advertising sales, online ad revenue totaled 30 one billion dollars last year and that represented 40% of global online sales. that spending sustained much of our free press and free content on line. that is something we should be mindful of but as we look at regulation in a space that is growing by leaps and bounds

creating jobs and providing consumers with a dynamic platform for free content and innovative services the european-style do not track technology would short circuit much of this innovation and it did not stop the situation in the u.k.. i think what we have to do is be mindful of moving forward with any thing where there is an ill-defined standard without respect to the cost that would be placed on private innovators and the industry that is experiencing growth. we need to be cautious, head land well measured in our approach to this issue and i yield back my time. >> we recognize mr. stern's for one minute. >> having had some experience developing privacy with jim matheson from utah, this age of

1548 consumer protection act of 2011 and having been to these hearings one thing that came out is what you said when you talked about consumers want transparency and basic understanding of how their information is used. that came out time and time again. when we look at this important issue and i listen to stakeholders i find stakeholders' by and large would like to know if there's one agency that has jurisdiction. where to go to, how to comply and if we are not careful and have this jurisdiction that moved between two or three government agencies can make more difficult so one thing we had today is a hearing to talk about jurisdiction and i hope in the end we won't have competing jurisdiction. we will have one central agency with this jurisdiction. >> the chair recognizes ranking

member of the full committee, mr. waxman for five minute. >> i want to thank our chairs for holding this hearing today. as the wall street journal pointed out firms are stepping away internet users's anonymity and, quote, gaining the ability to decide whether or not to be a good customer before you tell them a single thing about yourself. the collection used and dissemination of consumer information provides many benefits to consumers, businesses and the marketplace but they raise legitimate concern about whether consumers have adequate control over personal information that is shared. sophisticated business models and rapidly evolve in technology allow vast amounts of data to be collected, aggregated, analyzed and sold in ways that were not

manageable ten years ago. many of these business practices conflict with consumers expectations of privacy. i understand the republican majority is wary as any piece of legislation called new regulation. we heard repeated calls for a self regulation. the problem is self regulation isn't working. this week stanford researcher jonathan mayer reported tracking the trackers that eight members of the self-regulatory group network advertising seemed to out right violate their own privacy policy. that is 13% of 64 companies investigated. in addition, n a i is one self regulated efforts so that consumers left not knowing where to turn. furthermore even