the number keeping moving, perhaps. they don't have the money. we need to get the economy growing again and control spending here in washington. so we are going to bring a bill forward next week otherwise known as the cut cap and balance bill to provide a balanced approach so that we can

demonstrate that we are getting things done under control in the that the people who put us here can gain some confidence that we are going to begin to live like they do around their kitchen tables and in their businesses, stop spending money we don't have come and begin to manage this debt and deficit down to balance, and we hope that our space friends on the of their side of the ogle can join us in that balanced approach. >> the speaker and leader just said they reemphasized with the first half of this year has been all about. when you look there's no greater contrast when you could choose sides. the president did produce a budget. it didn't even get one vote, not one democratic vote. the house produced a budget, to get out of the house and moved forward and talk about real serious issues. more than 6 trillion kutz, talked about job creation and energy policy for america.

we will continue to lead. the speaker and the leader sat in room after room and meeting5 after meeting trying to put america back onto a path to actually pay off their debt and? imagine a future of growth.s cok we just walked out of a very strong conference that next week they can lead. we welcome every democrat to join withll us. whether they can do it on their own they will. >> this is an opportunity we can >> join together to write a path that is different than what we have seen in the future. a past that can build jobs, build a stronger america and not leave this debt to the next generation. >> for months now the president has been asking to raise the debt ceiling $2.4 trillion to get us through the next election. this perspective we are talkinga

$20,000 in additional debt per american family. cedric so every american family in america is being asked to shoulder another $20,000. we believe that it's very i do want to point out to mr. richmond that the congressional salary is $175,000. there must be game changer $350r of the astros and the texas rangers. we want to congratulate our frien. i wa to tell you how proud i am of the republican team. we have a lot of new members, they played really hard, they practiced very hard but

sometimes it just isn't to be m on they have to be put on the table. and as we propose short termmy i solutions with decreasing spending in a responsible way. matt term solutions that will cap the amount of spending coming out of washington and longer-term solutions that will. embrace a balanced budgetat glag amendment the american people ecoort, and thereby get the job creation and get this economy back on track. it's a great opportunity for this congress and for america.de >> mr. speaker, does this mean you think the a white house will becoming forward with agreement? >> i don't want to preclude any chance is coming to an agreement. but, we've been unwilling to pum a real plan on the table, andn y without serious spending cuts,o without real reform on the entitlement programs, this problem is notur going to betheh solved.e the rollall

>> mr. speaker, there are reports emerging that a plan combining senator mcconnell's plan, possible commission and other elements are comingd a grt together to possible resolution. is that what you are prepared to embrace and put forward as agirf possible resolution to the debty ceiling crisis? >> i am not prepared at this point to pick winners or loserse senator mcconnell pointed out that his plan was being put ong he table as a last effort. we are far from the time for a last-ditch effort.le at >> mr. speaker -- >> my understanding is the increase would be contingent on the transition of the balanced budget amendment. as you know the balanced budgetd amendment doesn't have the vote to pass the senate.ed >> i don't know that. >> you expect they won't get any more traction than it has. ri i remain hopeful.i yield ba f i always remain hopeful.ton: rea >> the democrats in theimin parp remained raising the debt ceiling the super majority they

are not going to vote for a leg. ith seems like it's been on the rise of the house. the taxes in the debt ceiling of the super majority is there any wiggle room on that or is that minori >> listened,ty the cut cap and balance bill the house will votr on next week is aow solid plan e moving forward. let's get through that vote and then we will make decisions about what will come after it. >> he met with j powell on the policy center and leave out a very detailed description of what would happen on august 3rd if the debt ceiling is raised buy then.nfinished siness many members of the caucus have said it needs to be reused. has this changed their mind? >> that i don't know, but i thought they had a very good conference this morning. there was a lot of very solidor information provided to the members and the analysisa recor provided by the bipartisana sufb bylicy center, frankly closely

followed a lot of information that's been developed by the joint committee on the joint s foi think the information wasg very helpful to the members.s.] >> speaker boehner, if you have a vote next week moved to the floor in the senate do you get the sense your members might be more open to something like mcconnell with the spending cuts? >> i'm not going to answer a lot of speculative questions and i don't need to repeat my often set mantra, but maybe i should. if & botts word can these every day with the christmas. >> house republic republic leaders of the conference this morning we are opening phone lines again to get your thoughts on the stalemate over the debt and deficit. (202)585-3885 for republicans, democrats, 202-737-0001

independent, independent phone co. we will show you democratic leaders after the caucus meeting this morning. that news briefing coming up in just two minutes. david is a staff writer with roll call covering capitol hill for a number of years. house leaders have spoken the president has made his case in a news conference and saying in a news conference he's looking for 24 to 36 hours for something from some sort of proposal from capitol hill. what's going to happen this weekend in that regard? >> one thing i feel pretty assured of come and that is that the president is not going to get from congress the kind of plan that he wants, which is as he repeated today would include a number of tax increases on individuals earning i guess a million dollars and of and other, the elimination of other tax breaks. republicans are simply not going to vote for any plan that

includes tax increases on individuals and corporations. i think that ultimately they might be willing to go along with the fact elimination of specialized tax breaks for individual industries, but in terms of the kind of approach the president wants right now, it's not going to happen. the votes simply aren't there, not in the house and not in the senate. >> what can you tell us about what may be happening on the senate side with senator mcconnell introduced his so called what's been called plan b and then there's talk about the gang of six from the group of six senators discussing a possible solution to this. what do you here? >> i know that there's consideration of both avenues. senator mcconnell, the gop leader introduced this as a sort of break because in his viewment default cannot be an option for two reasons. it could be calamitous anderk number two, republicans with shared ownership for the economy

with the president and that'sy d not something that he wantss going into 2012 when the republicans are poised to take over the senate if everything goes well not to mention how the presidential race could go. but aside from the politics, democrats did not dismiss it out of hand. harry reid said he would take a lookc at it and the senate majority leader, so i think that it's got possibilities.tleman f the gang of six, i don't have much faith in terms of theirfres ideas being adopted because for months they have been working on a so-called grand bargain which would include a member of spending cuts but also that the elimination of several tax breaks and possibly other tax increases that will never in my view me get through the house ot representatives that alone gettt hrough the senate. i think what they're trying toah do is a very balanced policyo at approach come and you have gotts conservative and the liberals

involved in that, so these are very serious negotiations from a policy perspective i just don't think they have much political legs to get anywhere. >> on the house side of the yepublican leaders insisted in almost every briefing that ine s fact the your taking a vote on it next week this balanced. budget amendment a proposed. why is that part of the discussion now? >> welcome it's been a part of what republicans have wanted for quite some time, as these debt talks ramped up the past several weeks. there's a group of conservatives in the house and the senate. republicans that have signedmr. this cut cap and balance bill pledge in order to get theircorh vote for raising the debt ceiling they would prefer not to make, period, they want serious what they would call serious spending cuts, spending caps with teeth to prevent spending from going out faster than the

inflation and a balanced budgeta amendment to the constitutionw and what they're asking isation congress pass the salt andd rep distended to the states for ratification. i dothn'e t thinkhous that the d budget amendment can pass the senate. i don'topted and think the prel sign it even if it somehow miraculously did pass the senate, so therefore i can see why they are pushing for it if i put myself in their shoested fr committee on the whole? if not the chair will put them engross. the question is on the adoption of the amendments. those in favor say aye. those opposed, no. the ayes have. it the amendments are adopted. the question is on engrossment and third reading of the bill. those in favor say aye. those opposed, no. the ayes have it. third reading. the clerk: bill making appropriations for energy and water development and related agencies for the fiscal year ening september 30, 2012, and

>> anything's possible. right now the problem ise speaka stalemate i like in this bill t a negotiation and over a piece of property or a house imaginerk have a cellar that doesn't l and a by year that doesn't want to buy and somehowe they are supposed to negotiate i deal to buyth and sell the hous it wouldn't go so well and i think that is how f are right now and what you need to look for is for the idea that desalting would be so calamitous it creates energy to agree to something and that could include the president backingem down from his demand that there is a balanced approach that includes tax increases on peopl making over a million dollars and corporations and things of that nature that could include republicans backing down froman the new taxes stance, but that's one thing that won't happen but they could agree to end tax

breaks for certain industries cc and they could agree to ahave smaller amount of discretionary cuts to make it easier for democrats to be part of theted t deal. people are going to have to give somewhere maybe they just go with the mcconnell plan because wey don't ant to default because that would allow the president to raise the debt ceiling without cutting spending at all. so you come as a source who is qte of watched these told me yesterday this could be a crisis hasn't set in yet and considering how to vote rightinn now haven't been here in the midst of a crisis and don'txt understand what they are dealine with, so if that's the case,thal then you need to look for the crisis to sit in and that might start to spur people looking at different options. >> david ducker with local, thank you for the update.ay t we will open phone lines. here is modesto on the democratic line. go ahead. shopaller: yeah, what i don't understand about all this is being an american and coming

from a long line of americans, i thought the democrats and the republicans were supposed to fight for the american people. f and it seems like the democrats are fighting for us, and, everything that is put on theall table that the republicans asked for they reject as soon as democrats put it on the table, and i don't understand why if they are fighting for us why ara they fighting against us because they are not losing money.cent congress is not losing money. republicans are not losing money, the cash their paychecksp while the rest of us start and i don't understand why they canuse get away with that in this country, how they can call our president a lawyer and get away with itiv and then profess to be for the people of the unitedons. states. >> let's hear the republicanicar view. paul in rochester new york. fort >> caller: hauer you doing? yes, i was watching back and forth on c-span's since i'm onct disability, but i turned down an

amendment to eliminate funds fo oney. ficiency and renewable energy, which is important getting our economy back together right now. and even republicans, have to say, 168 of them voted against it, which i just don't unable understand. and if we give obama this money, all he's going to do, and i totally disagree with the last caller, that we are against americans, we are for you. we just don't want to spend ally our money and obama is going to sit there and handed out to the companies we don't even know can create energy, and it's like he's a scientist. nd he hasn't ran a single business. >> paul and rochester new york keeping an eye on the u.s. out there finishing work on the energy and water spending bill for 20 tawes. eat.stein texas next up.emerginr robert, hi there. yesn this fin're you doing? the republicans and democrats both have good ideas. as a teacher, one of the ways

that we magnify or improved the students cognitive ability is through a collaboration role playing and working together to do problem-solving, and it's to ost amazing that we have alltan this intelligence in washington and can't collaborate compromise pd work together for the american people. >> if you would see this and hae a groupnse. of students can whau say the problemr is?upports few would you resolve it?governr >> caller: first we have to establish the rules. the goal is to make the countryl solvent and beauford in a global sort of way. we are not just competing against america we are competins against thepe world, and thison

political posturing is so short-sighted we are forsakingpo the future of our children for the sake of winning an election. >> robert in palestine, texas, appreciate your input. here's what we are going to do.o we are going to take a few moree minutes of phone calls.pore: e we shared the republican has asa leadership after the caucus th. morning. we will show you the democrats, the democratic leaders from capitol hill later on at about 1:00 eastern we are going to take you to the national governors' association. miey are meeting in salt lakeut city utah. a few more phone calls. anito is on the democrats' line. good morning. >> caller: good morning.tes houf my congressman, steve pearce,y c has said that he's not going tol vote to raise the debt ceiling, and i'm very concerned about that. so i went to sec.gov to see who

donated to his campaign and he had several financial institutions. so i started calling the those and asked them whether they want him to vote for the ceiling increase or not and they said they want him to vote for it and i think it reveals what to do the same thing. >> so you went to the site and saw how much he got, some of the contributions from you said pax, financial institutions and registered your opinion? >> caller: i did. >> have you called the congressman or e-mail a congressman pierce's office? >> every day. >> thanks for your input. to michigan we go. we are going to go to grant perry, texas, and this is the republican line. go ahead. >> caller: the president has said for years to introduce tax reform.

he is nowhere near it. now he says with everything with him is an emergency. the democrats did not even pass a budget last year, and i wonder how our multi eight millionaire that called earlier felt about tax, not only republicans or democrats wanted to tax code because then they couldn't play favorites with anybody. >> next up is kelly, independent line calling from chattanooga tennessee. go ahead. >> caller: yes, sir. since i was a small kid just starting into watching these shows like this, i would hear republicans say we can't straighten out the budget because a democrat has been in and it takes eight years to straighten out a four years. this has been the rhetoric since i grown-up.

now we voted for reagan twice. i'm not so positive that his economic plan was the best, but we were not starving to death. >> did you vote for president obama the last time arnove? >> caller: malae did not give it actually i wanted hillary clinton to make it but i told my roommate i don't want to see her make it and i will tell you why. she will get blamed for this huge blowup that bush, jr. put us in six months into the war became a local radio and said that if every taxpaying american, not the ones that say the little people pay taxes that we are arguing about today. i said, you know, it baliles my blood that these eletes tests have so many people that make less than $250,000 a year who don't feel like they ought to be taxed huge leap they are not. people are filthy rich right now and we are starving to death down here. i said they will get out of it

in here we are, six months into the war and it was probably $25,000 that i couldn't borrow if i gave my teeth. but here we are in this huge deficit. my parents were born in the depression and lived through it. >> we appreciate your input and one to get as many voices as we can in the conversation and to a couple more calls. let's hear from sandy in georgia. >> caller: hi. first of all we don't need another law, we don't need another constitutional amendment to the budget. >> you're talking about the balanced budget amendment? >> caller: yes. second, democrat republican, independent, no matter what you are, common sense tells you to tax the rich even more. there are very few rich people in the united states of america. the average income person has always gotten its government out

of trouble. i don't mind paying my taxes, but i but actually need i guarantee from congress that they are going to do the right thing. they haven't done the right thing in the last 30 years. so it's hard for me to believe that if i pay more taxes they are going to do the right thing now. and as far as entitlement goes, i paid for social security since we pay a premium, we deductibles it's ridiculous that grown men and women cannot forgo politics long enough to help out the common person. arkansas. carroll won the independent line. >> caller: i'm sorry, it's actually coral. >> my apologies. >> caller: that's fine. it's hard to hear over the phone. i'm retired military avert just

a year now, and you know, i'm out here trying to make my way, you know, working. i work a steady job and all that other good stuff, but i truly believe that the economy is the true strength of any country, not necessarily its military, but all i feel as though our government tends to reward corporations before hand trying to create jobs enticing them to do that. i think what they really should do is reward corporations for creating long-term jobs with loopholes and what not after the fact, after they did it come after they lived up to their end of the bargain. you know, these big oil companies, insurance companies, pharmaceuticals, defense spending, wall street banks, they are getting great big everything else, and i don't see the job creation. you know, unemployment is obviously out of control now

even from what the reporting, it's not to mention the fact that, you know, they are only counting the people that are actively seeking employment and not the people that have given up all hope. it's like the voters in this country don't even seem to count any more. if you had cathy mcmorris rogers mention reform in the way we spend money on, you know, to paraphrase. we need reform and the election campaigns. you know, where are these candidates getting their money? and how much do they get? because those are the people that seem to be represented. it's like the voters aren't represented any more. >> thanks for the views. one more call police and from washington on the democrats' line. >> caller: hi, how're you doing. i am calling about the fact that under this present plan that they are working on that the republican party said that they are not going to accept any

revenue enhancements. the fact is i worked 50 years, a retired federal income and i make $780 a month and they are asking for me to pay for the reduction in the deficit, and it's just absolutely in same to say that i am sitting here making $780 a month and should have to pay for the reduction of our deficit while those that are making over $250,000 a year are paying less now that they did in 1950. >> is that you're only source of income? >> no, it's not, but luckily, you know, after 50 years i worked mostly in social services and never made a real major salary because of that because i was in service to my community and found it was necessary to do that. but i have been able to put a

little bit into investment, and still, my total income with my wife working is just barely $30,000 a year. >> we appreciate you joining the conversation this morning all of the callers. i remind you, too, the conversation continues on line. we posed the question earlier from the washington journal program, began the day discussing the debt and deficit discussions if you want to go to facebook.com/c-span you can weigh in there. coming at 1:00 eastern the ticket to the national governors' association. ahead of that we will also show you some of the ben bernanke, the fed chair's comment from the capitol hill banking committee. but we do want to bring you comments from this morning after the senate -- excuse me the house democratic caucus meeting house leaders, democratic leaders to speak to reporters. here's what they had to say. >> just wait for the rest of the leadership to arrive.

we will precede. i will speak, mr. zero will fall and we will go down the line of leadership. thank you for being with us this morning. first and foremost i'm sure you are all aware of by now democrats led by richmond carried the bill yesterday against the republicans. we think this is for shuttling things that are going to come in the future. we had a caucus in which we hope on the leadership participating with the president, our caucus focused on the continued support for our president, and the fact she has been the leader at the table, continuing to want to meet, continuing to want to work out a solution. the caucus stands behind them because we know that in those

meetings she is out there protecting the core values of not only this caucus but of the american people as it relates to medicare and social security and medicaid which is an important to the caucus. we continue to encourage other leadership to be there and seek the best possible deal in the fairest american way. failing that, our caucus believes that there should be in lieu of the events taking place and unfolding economically around us, a clean vote on the debt ceiling that continued to stay and work on what this caucus believes is the most fundamental thing facing america and that is job creation. we have not seen a single piece of legislation from our opponents on either side as it relates to jobs. making it in america.

that is what we will continue to support. with that, let me turn over to the vice chair. [laughter] >> thank you mr. chairman. let me give a shout out to a different team. in a few short days, the women's soccer team for our country will once again make us very proud. win or lose, but they have proven is that we are moving forward and we are doing this together. here in washington, d.c., we could take a few lessons from the women's soccer team because win or lose, we do this together as a team.

you could have heard the knowledge, the perspective the values that they are bringing over and over again to this discussion most currently this morning. we stand with the president of the united states in the hope that we could have a grand bargain, that take us well into the future with deficit reduction. i remind you it was only a week ago we were hopeful this could happen in a bipartisan way. thursday we left the meeting, last week we left the meeting with some spirit of

cooperation that we could work on a grand bargain for great deficit reductions so we could move on to job creation. friday we were working on that. saturday the republicans walked away from that. and since then we've been trying to find out if that's still possible and if not, what is possible. but whatever is possible, it is not possible for us to reduce the deficit and create jobs on the backs of america's working families. so we continue to say to the president, congratulations. we're proud of the work you're doing and we're glad it does not reduce benefits for medicare and social security beneficiaris. it doesn't mean we're not open to initiatives that will strengthen those medicare and social security, that will cut costs and keep them sole haven't for a -- solvent for a longer period of time but we're not reducing the deficit on backs and give tax cuts to

the wealthy on the backs of our social security, welfare and medicare recipients. when i came to the table 2 days ago i brought with me the priorities expressed to me by a large number of students to came to my office the other day. they said we know the deficit is not good for our future. we all stand ready to help reduce it. i think everybody should participate in that. we want to, we hope you won't diminish the prospects we have for college education. we want you to know how important medicare and medicaid are to our families, that enabled them to allow us to go to college by taking some of the fear out of health care costs for them and of course, if you're young and in college or newly graduated, jobs, jobs, jobs are important to you. so don't do anything that impeeds the economic growth.

they're wishes were so clear but we saw at the table was an attempt by the republicans to increase the cost to students by over $30 billion without taking red cent of sacrifice from the wealthiest people in our country, from corporations sending jobs overseas, tax subsidies for big oil. so again, our caucus focused on our priorities which are based on our values. we support our president for the grand bargain. we hope that that can still happen and we, know that it will happen, whatever happens, we will not be reducing benefits to medicare and social security recipients. with that, i'm pleased to yield to the leader in charge of making america in terms of jobs creation, our distinguished leader steny hoyer. >> thank you very much,

madam leader. >> it was crowded over there. >> time is short. the stakes are very high. and the american people expect us to do what has been referred to by mr. becerra. i don't have the faintest idea who on the american women's soccer team is a republican or a democrat. they are of diverse races. i'm sure nationalities and religions. but they are united in an effort to win for america. that's what this congress and this president need to do, be united in gaining a win for america. what does that mean? it means in the first instance not walking out of the room, not washing their hands and saying we are going to proceed in a unilateral fashion. we are going to present a

bill we know can't pass the united states senate and that the president of the united states would not sign. it is too late to continue to play partisan games. we need to come together. that is why the leadership of this party has supported our president in saying that we need a comprehensive response to the debt, deficit that confronts us and that we need to insure that america does not default on its obligations. americans do not expect our great country, for the first time in history, to default on its debt. therefore i have told mr. boehner, that our party stands ready to insure that we do not default on our debts, number one. and i believe that almost every member of our party,

if not every member of our party would vote on a clean extension to make that happen. then we are also committed to making sure that our economy grows. and that we adopt a comprehensive plan that will insure the creation of those jobs and we'll make it in america. that we will grow our economy so that we give the jobs to those people who are looking for jobs, need jobs, for themselves and their familis. this is a serious challenge that confronts us. the president of the united states has been meeting regularly for, now four days to work with our republican colleagues to make that happen. america expects that of us. and as we see our soccer team united, let us hope that the congress of the united states can come together in a bipartisan

fashion to confront the growth of our economy, the assurance that america does not default, and addressing of our long-term deficit and debt challenges. thank you very much. now i will yield to mr. clyburn, assistant leader. >> thank you very much, mr. whip, madam leader, mr. chair and vice-chair and ranking member van hollen. i'm going to add my voice to those here not only on behalf of the country and, making sure that we do not default. i think there's a thought that i am not aware of where it originated, i first heard enunsy eighted by then vice president hubert humphrey, when he said that our nation

is judged by how well we protect those who are living in the twilight of their years, our seniors. and how we treat those who are in the dawning of their lives, our children. and i think that what democrats have done in these negotiations is to make sure that as we solidify this country, as a nation, that we also protect those men and women who have given so much to bring us to where we are and make sure that they have some dignity as they live out their lives with the assistance of medicare,

medicaid, as well as their children and grandchildren who must have opportunities to have a good life in this great country of ours. that's been the hallmark of our negotiations and i'm very proud of the fact that we stayed to the table, as we still are, trying to seek resolution from a very important matter but doing it in such a way that our children and grandchildren would be proud, and we do justice to the legacy of those who brought us to this point. with that i yield to ranking member van hollen. >> thank you. and thank you, mr. clyburn and to my colleagues. thank you for your leadership. i think in the last several days we've seen some good news and some bad news. the good news is that a wake-up call has been sent to those people who were

deluded enough to think that if the united states defaults on its debt it would not have very serious con consequences for our economy and our jobs. there for a while people were saying secretary geithner is cooking the books, he is making this stuff up, it's not real. is standard & poor's making it up? is moody's making it up? is the u.s. chamber of commerce making it up? defaulting on our debt, not paying america's bills for the first time in its history would have devastating consequences for the economy. it is absolutely irresponsible for our people to continue to take the position that it's okay for the united states to not pay its bills. the bad news was unfortunately what we just heard from the republican caucus, because i heard the speaker say two things that were in conflict. on the one hand he said he still wants to get a big

agreement, a big agreement to try and address the deficit in this country and other issues. that's what we want. that's what the president of the united states wants. but what the speaker of the house said in the same breath was you can't close loopholes in the corporate, corporate loopholes in the tax code. that you can't get rid of the loopholes that reward companies for shipping jobs overseas. that you can't ask the oil, oil and gas companies to no longer take taxpayer subsidies. that's what he said. every bipartisan group that looked at this issue, simpson-bowles, domenici-rivlin, every other group said you needed a balanced approach if you want to get something done. that's what the president of the united states wants to do. so in the same breath say you want to get a big

comprehensive plan through and at the same time your objective is to protect special interest tax loopholes in the tax code and the folks at very high-end of the income scale is i believe irresponsible. what is their answer that they're going to bring to the floor of the house? their plan to end the medicare guaranty. say to seniors, you can no longer participate in medicare and you have to go into the private insurance market where you have higher costs and eat more and more. slash medicaid. that is their proposal. i'm going to end with this point. ronald reagan, ronald reagan, was a strong conservative but ronald reagan said that there were important times for compromise for the good of the country. debt ceiling was raised 17 times when ronald reagan was president. and as alan simpson, former senator simpson said, when push came to shove, reagan agreed 11 times to package that included revenue, for the good of the country, for the good of compromise.

and unfortunately that's what we're not seeing now. again on the one hand, let's get a big bargain. and on the other hand, setting conditions that make it impossible because the number one priority is not reducing the deficit. the number one priority has been protecting the special interests here in washington. threat's change that. >> we have two minutes left before we have to go vote. so we apologize but we have -- >> what is reaction to the -- [inaudible] back up plan if you guys can't come to a grand agreement, is this viable way to avoid -- >> we'll find out more about it i guess we'll be able to respond. >> you don't know the details of this plan? >> no. >> madam leader, cut, cap and balance. >> it is outrageous. in other words -- [inaudible] tell you what, we'll talk about that later. i want to see what it is because we just heard about it. but it is, as bad as their balance, so-called, wasn't a balanced budget amendment.

it was trojan horse to bring in the ryan plan again, which, this is even worse from what i've heard. i have to go see it. that was just announced by the, what we know of it, and what was introduced by the republican senators before, this is even worse. thank you. >> thank you. >> house democratic leaders following their caucus meeting this morning. we want to remind you that we'll show you all of these events in our prime time tonight on c-span. if you want to see them ahead of that you find them on our video library at c-span.org. you're looking at live picture from salt lake city, utah, the site of the national governors association meeting. we'll take you there live in 15 minutes at 1:00 eastern with governor christine gregoire of washington and leading a discussion on higher education as our mga coverage gets underway for the weekend. that is one p.m. eastern here on c-span2.

i want to you remind you that coverage will continue later today at 5:00. if it will be here on c-span2. lots of coverage on the weekend on c-span as well. before more coverage on nga we take you to ben bernanke who testified twice on capitol hill, semiannual monetary policy report. his comments on the debt and deficit negotiations. the debt chair weighed in on the need to raise the debt ceiling. here is part of his testimony before the senate banking committee. >> i don't see any easy solutions obviously. i certainly would have recommended them if i saw them. the federal reserve, senator corker, alluded activism. i think what we're trying to do is to fulfill our mandate which is provide as much support as we can for the recovery. on the fiscal side, i recognize there is some real tensions because there would be scope for, you know,

targeted programs to help some of the issues that we have and in housing and other where, otherwise but i understand also the concerns on both sides of the aisle about the long-term fiscal stability of the country and need to address those issues. so it's a difficult situation. i mean we don't have, that i can see, any substantial, unused capacity to increase the recovery, speed of the recovery. >> so it's a difficult situation stemming from where we started because there is always a starting point here? >> that's right. >> so i look at, you know, a combination of tax cuts that went unpaid for, and deprived the treasury of enormous amounts of money at a time that we had two wars raging abroad in iraq and afghanistan, also unpaid for. and a new entitlement program passed in the past congress unpaid for. and a wall street that

instead of being a free market was a free-for-all market. you put that all together and that's what we're coming out of. so i'm wondering, you know, your answer to me suggests that there isn't anymore monetary policy that is going to come forward that could in essence seek a more faster, more robust recovery with a greater job growth? >> well, as i said in my, in my testimony, we, given that there's a lot of uncertainty how the economy will evolve, we have to keep all options, both for tightening and for easing on the table. we're doing that. but, again, we are already providing an exceptional amount of accommodation and, as you know, recovery is still pretty slow. >> now i want to turn to the question of the debt ceiling. i know you discussed that quite a bit. i find it interesting under president bush's years, he raised the debt ceiling to the tune of about $5.4

trillion, during his period of time. i didn't hear the same comments then that raising debt ceiling was something that wasn't necessary to do. that in essence having the nation be a deadbeat is okay. and, i find it alarming that there are people running for high office in this country and others already in significant positions who suggest that there is no great concern to allowing the nation to be a deadbeat, to default, and no real consequences. and so, in pursuit of a solution, you know, we have had these efforts to have severe, you know, cuts, to, consider entitlement changes as well. but i wonder whether entitlement changes shouldn't also be the question of entitlements, somehow, it seems that, revenues are now an entitlement as well?

it seems that those who are the wealthiest in the country, that major entities like the oil and gas industry, that is getting $21 billion in tax breaks when they're going to make 144 in profit this is year alone. no, we can't touch them. so, seems to me we have a new class of entitlements. isn't in order to solve this problem really going to require real shared sacrifice? because i look at gdp in this country and about 70% is driven by domestic consume demand. there is no jobs. there is no demand. if we're going to put this on the back of middle class working families who spend more of their disposable income, then i don't know how we'll drive this economy based on the previous answer that there isn't too much more monetary policy we can have. do you think it is fair to consider a shared sacrifice spread across the board to try to solve this debt ceiling question and the debt questions that confront the nation? >> well, senator, i think

you can appreciate i don't want to inject myself into these negotiations which are very difficult and delicate but i do hope that everything will be on the table and it will be frank and open discussion about the tradeoffs. >> as fiscal policy do you believe only one section of the american society should bear the burden? for example, is it overwhelmingly be middle in cuts that affect their lives and they have to reach into their pockets more at the end of the day the way we achieve fiscal policy for the country? >> well, i think that we want to have shared sacrifice. we also want to make sure we maintain a strong economy. there are a whole bunch of issues there. again, these are not issues that a true economic analysis can answer. these are values issues and this is what the elected officials are supposed to be determining. i really can't, you know, make those decisions for you. >> no, i'm not looking for you to do that. mr. chairman, i just think

that, you know, we have come to a point in which it seems that the tax code for those who benefit by it, whether it be large corporations, like the oil and gas companies, whether it be the wealthiest millionaires and billionaires in the country, they're entitled to keep those tax breaks but middle class working families seem to be called upon for the burden of the resolution of this problem. to me that is both a moral issue but also a fiscal issue. it is the wrong process by which we achieve the balance that we need. thank you, mr. chairman. >> senator. >> thank you, mr. chairman. thank you, mr. chairman for being here. moody's in their recent outlooks said that a credible agreement on substantial deficit reduction would support a continued stable outlook. lack of such an agreement could prompt moody's to change its outlook to negative on the aaa rating. do you think that sort of

statement about a plan for deficit reduction is induct tiff of the entire market? >> yes, i do. as i have said. there are two-prongs here. one is, to, navigate this debt ceiling issue without any kind of disruption. but the other, which is, would not be successful, that we just kick the can down the road in terms of our fiscal, long-term fiscal situation. so i very much support a strong fiscal deal. >> right. and i have asked you previously how quickly this lack of a sustainable fiscal path could bite us and could have serious consequences and i believe, i don't want to put words in your mouth, i believe you said you don't know but it certainly could be sooner rather than later and it is not necessarily years off. could you make a comment on that now? >> no, that's correct. markets are forward-looking. they're trying to assess the

likelihood they will get paid, you know, years down the road. and, we are seeing it in other countries around the world. there is loss of confidence by investors in our country's fiscal stability and its political resolve to those those fiscal issues, that interest rates can start to rise and you get a vicious circle. >> right. so if the resolution of this present showdown and negotiation is increasing the debt ceiling with no significant change in terms of our fiscal path, how do you think the markets will digest that? >> well, i'm sorry two things got linked together the way they did but i would very much like to see both parts of this work, you know, both addressing the debt ceiling and addressing the, seems like an opportunity we haven't had for a while to address longer-term fiscal issues. i don't know how quickly or in what degree the markets

would respond but i think they are looking to washington to show that they can, you know, manage their spending and control deficits over a long period of time. >> what you said a minute ago is part of my point. we've been talking about this event for months and it has been built up, smartly or dumbly, rightly or wrongly, as an opportunity to do something. so particularly with that build-up in that context, i guess my gut is if we extend the debt limit and essentially do nothing for fiscal sustainability, the markets will have some sort of meaningful, negative reaction as reflected in the moody's statement. would you agree with that or not? >> it's possible. >> turning to other policy and talk of essentially a qe3, i certainly agree with

senator corker's comments. i'm sure that doesn't surprise you, what, would you point to in terms of success with the qe1 or a qe2 in terms of suggesting and convincing us that a third round is adviseable? >> well, qe1 came in, basically in march of 2009, which was at a very, very weak point in the recovery. it was the absolute trough of the economy. the stock market was about half where it is now. the, the first round seemed to restore confidence. it seemed to strengthen financial markets. it helped the economy grow quickly in the latter part of that year. and, you know, it is not the only contributor to recovery and improvement in financial conditions but i think it was a significant contributor. qe2, as it's called, came about, was first signaled in

august of last year. as i mentioned in my testimony, that time we were missing our mandate in the same direction on both parts of the mandate. that is employment is very weak. looked like growth was so weak that unemployment might start to rise again. and inflation, rather than, not being inflation was actually falling down towards a very low level. and we know that, people don't have, we haven't experienced it here since the 1930s, that deflation is actually a very, can be a very pernicious situation. so, our policies which are, admittedly different from the normal ones but they work about the same way, they lower interest rates, they strengthen asset prices and they provide more incentive for people to borrow, spend and invest, seems to first of all, i think it is obviously as senator shelby mentioned, has addressed the inflation issue. we think by the second half of the year we'll be more or less on target in terms of where we want to be with inflation. and although, you know, job

creation hasn't been all we like it to be, it has been consistent with our expectations of about 700,000 jobs over two years. so we think it is moving in the right direction and it hasn't had, if our forecasts are right and inflation stablizes around 2% in the second half of the year, then some of these fears about up here inflation and so on will have been shown not to have been accurate. so, we think it has been constructive. that being said, you know, we are trying to maintain flexibility in both directions both in terms of easing and tightening. but we recognize monetary policy is not a panacea. we hope congress will address issues related to economy as well. >> mr. chairman, if i can have just one more question to finish out. >> very quickly, sir. >> thank you. >> in that framework of promoting growth, promoting recovery, what do you think the impact would be if we

announced today, letting the bush tax cuts expire the end of 2012 for the top brackets? so essentially a tax increase for those brackets. what do you think the impact of on growth and economy would be? >> and i can't really assess that. it would have some effects on higher marginal rates. it would have effects on incentives. higher rates would also take some consumer spending out of the economy. on the other hand, we've all been talking about the importance of addressing the overall deficit situation. so that would work in the other direction. we would have multiple different effects in the economy. again, as i said to senator menendez. those kinds of specific policy decisions are going to have to be worked out by the folks who are elect to do that. >> senator hagen.

>> just a reminder. you will see all of that sunday, 3:00 p.m. eastern on c-span. . .

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

>> would everyone take their seats in [inaudible conversations] [inaudible conversations] >> could everyone please take your seats? so we can get started. we've got a lot of cover in a limited amount of time. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

>> good morning, everyone. good morning, everyone. oh man. we'll try it one last time. good morning, everyone. >> good morning. >> yay! good morning to the governors, good morning to our distinguished guests, the reason that i'm good morning as loud as i can because if you recall in february i had laryngitis and couldn't say a word. and i'm back. it is now my honor to call to order the 103rd annual meeting of the national governor's association. we really do have a packed agenda for the next two and a half days. let me run through it. following this morning's session, we'll have a governor's

only lunch and business session, later this afternoon, we will convene the first ever u.s.-china governors quorum to explore opportunities for cooperation and friendship between our two countries. saturday's business agenda begin, a stand alone session with the economic development and commerce committee of. it will include a discussion in the business role and domestic job growth and job creation. we'll then have a governor's only lunch and business session, followed by the meetings of our other committees. sunday morning we will begin with the governor's only breakfast and business session. our annual meeting will conclude on sunday with a meeting on global challenges: facing america today and the role that education plays in the u.s. competitiveness. "new york times" columnist and pulitzer prize winner tom

friedman will join us. he has a new book out. word has it we maybe given insight. i look forward to seeing all of you at the sessions. now if i can with a little business begin by asking for a motion rt adoption of rules and procedure for the meeting. >> so moved. >> it's been move and seconded. part of the moves require that any governor that wants to submit a new policy will need a 3/4 vote to suspend the rule. so all -- any discussion? all of those in favor please signify by saying aye. all of those opposed? the ayes can it. if you have in proposals get those to david quam of nga. i would now like to announce the appointed governor 2011-2012,

governor herbert, nixon, and governor mcdonald will serve as chair of the group. we are also honored today to be joined by several distinguished guests. first we have members from the canadian parliament with us today. would you please raise your hands so we canning a knowledge you and thank you for attending our nga meeting? you are here often. we appreciate it. thank you very much. [applause] >> last evening i had the opportunity to meet a delegation of arab ambassadors. would you please raise your hands and acknowledge you and thank you for your attendance as well. well, i don't see them. they were here last night. well, welcome. and we have our delegation from china, and we will proceed to our historic forum a little bit later. this past january the united states and china signed a

memorandum of understanding supporting the establishment of a u.s.-china governor's forum. as i mentioned earlier, this afternoon, we will have our first ever nga and chinese people's association of friendship with foreign countries co-convening forum with chinese members. please raise your hands and let us welcome them to the great state of utah. thank you all for joining us. [applause] [applause] >> i'd like to take a minute, if i could, to thank our hosts for this year's meeting. governor gary herbert and his wife janet. thank you, gary, thank you

janet. the moving went well. yesterday was great. the weather is perfect. 56 and raining back home. thank gosh i'm here. the view is perfect. the hotel is wonderful. and your hospitality is second to none. gary, would you like to say a few words? >> thank you. yes. i would like to personally welcome everybody. thank you, madam chairman, we are honored and delighted and enthusiastically to welcome the national governor's association to the utah. it's been a long time since we've had the opportunity back in 1947. it was the last time that united states hosted the nga. and i made kind of a little joke this morning when we met with the press about back then alaska and hawaii were not members of the union. so there's been a change in the last 64 years. we are happy to acknowledge now the membership of alaska and hawaii to the union. we welcome everybody.

[laughter] >> let me just mention that we want to make sure that your time here is not only productive, but enjoyable. we have some activities outlined for you. this evening we'll have a picnic in the part just in the salt lake valley, there will be a lot of food, opportunities to socialize, network, and talk about important issues as well as the country western concert. good food, good music, and good company. tomorrow we'll have an opportunity to go up to olympic park where we had a lot of the training that was done. still the u.s. ski team and others train up in park city for the olympics. and where some of the venues took place. olympic stadium, you'll have an opportunity to see the venn uniand for those who are the hardiest among us, the opportunity to ride down in a bobsled. just like the olympians did. if you haven't signed up, now is an opportunity to sign up.

it'll be a thrill of your life and it is safe. but it will take your breath away. we have east versus west competition. so we're going to keep a clock on it. you have drivers and it'll be a fun time. we'll have aerial acrobatics that will take place and it will be a wonderful evening. we look forward to hosting there tomorrow night. sunday morning we have a special concert that's going to be performed by the mormon tabernacle choir in the conference center. just seeing the building itself is a delight. it hold 20,000 people. it's architectural wonder. if haven't had a chance to hear the tabernacle choir in person, it'll be a tweet. 7:30 is early. opportunity to have a concert performed just on behalf of the governors. i look forward to seeing you there. last but not least, i want to mention in your room there's a

gift basket. which is typical. in that gift basket you'll see one of these little sculptures here about the hancarck family. not everybody knows about them, particularly them in our family, personal, my wife, janette, about six grades back, ended up coming from england as she had joined the mormon church, her husband had died. she came here as a single mother with one child william, and another child jesse. came on a ship and came across and met out in far west missouri. and gathered with the mormons there as they then trekked here to salt lake valley in 1856. a lot have been here already back in 1847. but they got a little bit of a late start. again, it was an an inexpensive

way. pulling your cart, it was all foot traffic, pulling your merchandise and what you had. they had an early winter. they got stock in governor meade's area of wyoming. the snow was about three feet deep. they got stranded in a place called martin cove. the rescue team came after a couple of weeks. the frostbite was terrific. they had 600 that half of them perished on the journey to missouri to salt lake valley. she talks about in her journey she hopes the posterity would recommend the sacrifice they went through in order to make a better life for them. i mention it, it's not just a united states pioneer story.

it really is just a story of america. all of these have the same kind of stories that you could tell. pioneers, people who have gone before who have settled your states and trying to find a way for posterity to have a better life. as i've reflected upon that and the reason we've given the token of appreciation to remind you about utah and america and had the opportunities to, in fact, in some ways, being pioneers themselves. as we smooth out the path, grade the way, and smooth out the bumps for our posterity and those that some behind us. madam chairman, i think that's the national governs association really is about. we are trying to make things better. we have good examples in our history of those who have done it for us, and we have an responsibility to do it our our posterity and their posterity. take that as appreciation for you. welcome to utah. we are excited to host you. we know it's going to be fun for

all and productive for our states. >> on behalf of all of the governors and guest, thank you and the first lady for your amazing hospitality. you are making fun what for us is a weekend to get the people's work done and enjoy each other's company at the same time. ladies and gentlemen, please give a warm thank you to governor herbert. [applause] >> at our opening session, along with hearing our amazing speakers on what we can do if we really do partner between higher education business, we also want to take an opportunity to recognize our 15 and 20 year corporate fellows. but now let me first turn to the business of today's session. i have come to believe that education is the absolute key for us to put america back to work, to make everyone of our individuals be able to provide

for their families, the economic success of our country, and our competitiveness around the globe. so today's session is about higher education and its role as the catalyst for economic growth. strengthening our economies meaning making more of our residents and getting -- making sure they have the necessary skills so that they will be able to compete for jobs today and more importantly for jobs tomorrow. with the unemployment, folks have lost jobs that won't be there when out of the recession. think are gone. they need new training and skills. even with our 9% national unemployment rate, there are three million job that is are open right now because in many cases, the shortage is the result of not having the necessary education and training. in today's competitive environment, our economic development, education, training strategies must be one of the most important things that we consider as governors.

we must be clear that what our states need from our colleges and universities is obvious and clear to them. we must hold them accountable for the progress that we want for taxpayers money and tuition by our students. that means being able to answer for taxpayers and for students and their families. questions like: how well are our higher education systems doing at graduating schools with certificates and degrees that employers need? how efficient are our colleges and universities? how much of a run do they provide on the investment made by the students and taxpayers? how do we make sure the students are listening what they need to be career ready, even as we encourage them to graduate and graduate faster. when they do, are they career ready? my initiative was complete to compete. the document that you have at

your table, it is a effort on our part to develop metrics to help us answer those very questions to use those metrics to make policy decisions as governors about the direction that we want to take higher education in our respective states. we started on the work last july. with the nga common completion metric. today we -- i can report we have 30 states. including my own state that have committed to collecting and reporting. this would not have happened without the work of our partners at complete college america and the lumina foundation. i want to thank them for their work in advancing this. this is the key for the competitiveness around the globe. colleague completion is critical. it's one part of the bigger picture. to help answer the question, nga has brought together a group of governors and advisors to

identify the efficiency and effectiveness in higher education. that report, as i mention, is before you. it's the result of their work. it recommends metric that is all states with collect and report on higher education accountability. perhaps more importantly, the report offers ideas and best practices. for uses these and other performance metics to create a postsecondary system in every state across the nation. we have plenty of data about higher education. what we need to know now more than ever is the ability to use that data to improve and reward performance in higher education. the combination of completion and efficiency and effectiveness sends a very clear message that we as governors are prepared to ask the tough questions about outcomes and return on investment to our colleagues and universities. so that's why i'm pleased to announce that nga will be sponsoring a policy academy on collecting and using higher

education performance measure that is would begin in october, the academy will provide technical assistance and grants for up to eight states, interested in increasing efficiency and effectiveness in higher education systems in their state, and using those measures to make key policy decisions as governors. your chief of staff and your education policy folks have been informed about this. earlier this week, i want to encourage you if you are interested to follow up. helping our community colleges and our four-year institutions achieve greater success in graduating our students ready for the global economy is a paramount responsibility that each of us must bear. it is the -- it is critical to the u.s. of our economic future. so with that in mind, today we are very fortunate to have two leers who bring a wealth of ideas and experience to this conversation. they are going to share with us their perspectives about the role of higher education in the world that is enfolding.

what that means for states, colleges, and universities? susan hockfield, thank you for being here. leads one the worlds premier research university, the massachusetts institute of technology. in that role, she has been a tireless advocate for innovation, encouraging collaborate across schools, disciplines, and departments for sparking creativity for tomorrow. she beliefs strongly in transferring research into practice, transferring the university's collective knowledge to tackle some of our most pressing challenges. m.i.t. has helped students succeed and contribute to economic clusters that are so important to local, state, and national economic growth. dr. hockfield is a

neuroboyologist by trait and they must apply their vast knowledge to the task of applying models and research that fit the demand of the global age. before assuming the presidency at m.i.t., she served at yale as a faculty member, dean and provost. most recently, just a few weeks ago, president hockfield was asked to combine with dow chemical ceo to aggressive strengthen u.s. capabilities in advanced manufacturing from revamping work force training to accelerating cutting edge manufacturing methods. we look forward to your remarks. we thank you for being here. we also have with us john seely brown, thank you for being with us as well. he's one of america's foremost experts when it comes to technology and involve vision. -- innovation. as chief scientist for the xerox

company, he helped to change the face of corporate research. he's also an acclaimed bringer, co-authoring, surrounding the role of information technology in today's society and describes the changing nature of education. it ins his second printing and has been translated into nine languages. today, dr. brown has one foot in the corporate world and one foot in the academic world. he cochairs the center for the edge which conducts original research on new corporate growth. he's also a visiting color and senior advisor to the provost at the university of southern california. in staiding both worlds, dr. brown can share with us how firms large and small best benefit from university-industry partnerships and discuss the implications of state policy and campus practice. so we'll first hear from dr.

hockfield, then dr. brown. ladies and gentlemen, the head of massachusetts institute of technology, susan hockfield. [applause] [applause] >> thank you. thank you, governor for your kind introduction, and also inviting me to speak with you and your fellow governors. it's a great privilege and joy to join you in governor herbert's beautiful home state. i was here a couple of months ago and had the privilege of hearing the governor speak about astonishing advances the state has made in becoming a startup state for the nation. congratulations, and thank you for hosting this meeting. now in seeking a solution to america's current economic quandary, it is, i would say, almost impossible to think of any group closer to the action than you, the nation's governors. you carry an extraordinary burden of leadership both in addressing the human suffering

and budget impacts of the lingering global downturn, but also in charting a course for the brighter economic future for your states. i join you today with a profound sense of responsibility as i want to share with you some thoughts on how to revive america's innovation-based economy. now i took a look at some of your state of the state preseon coherence, but this particular coherence is really sobering. our budget is a jobsville. the enemy in ohio right now is joblessness. michigan's job one is jobs. governor sandoval declared the key is to get nevada working again. governor bentley, highest priority for alabama is creating jobs. governor scott called the florida legislature into emergency session because as he put it, for the 1.1 million floridians out of work, it is an

emergency. i also learned in the words of an nga staffer that governors like to do things. good news. so there's really just one question before us, what are we going to do together to restart america's job creation machine? now i believe the answer lies in retooling the engine that has driven wave after wave of economic growth after world war ii. that america's innovation system. and so today i want to provide what i hope will be a clear picture of how the innovation system works and outline what we can do to make it work even better. of course our innovation system comes to life from the spark of scientific discovery and invention. the kind of innovation goes beyond a cool idea or advance on practice or product. we are driving for the kind of innovations that produce big new ideas based in science or technology that can be

transformed into market-ready products. innovations that can create new markets, sometimes even new industries. and that creates a future that's different and we hope better than the present. what kind of innovations do i mean? let me give you a short list. realtime network competing, these are radical advances that transformed computers from what were overgrown calculators in the hands of scientist to the communications infrastructure of our whole society. where pet scans that allow doctors to pin point ma anything than tumors without innovative procedures, or lasers, lasers not so long ago were tools, instruments that no one really knew what they'd be good for. now we use them every day at checkout counters or in getting your vision corrected. or drug eluding stinting, one

the miracles that reduced death from heart disease by 63% over the last 30 years. or the air traffic control technology that most of us depended on to get to the meeting. or gps, remember, that was a technology that was invented to position nuclear missiles. we now use it universal to find the way to the hospital, to find a way to job interview, or even i use it quite frequently to find the nearest starbucks or ebooks. we all -- each of us probably carries with us more books than we will ever have time to read. or even the idea innovation like google. today all of the routine tools are in our hands. but each one represents a science-based innovation that made a big impact in the marketplace and in our daily lives. and all of these life changing innovations have something in common. they grew out of advanced research conducted with federal dollars at american

universities. and they were translated into market-ready ideas by u.s. entrepreneurs and companies that have made a dramatic impact op our economy. now that's the american innovation system at work. it's a direct asensensen -- asct that the u.s. developed like the radar and atomic bomb that won world war ii. eisenhower working with congress and scientific advisors recognized that the strategy of investing in advanced scientific research that produced incredible war-winning results could produce the technologies that would win in peacetime too. so across the country from texas to michigan, california to georgia, north carolina to pennsylvania, and massachusetts. federal research investments essentially reinvented american

universities as power houses of modern scientific and technological research. the ideas that flowed out of academic labs help deliver huge gains in productivity and employment by fueling one innovation wave after another. electronics and conductors in the 1960s and '70s, mainframe in the computer, personal computing and the internet, and in the late 1990s, biotech. just as one example, accumulative effect of the i. t., information technology, produced one the most successful periods in the recent economic history. from 1996 through 2000. the u.s. sustained annual gdp growth of 4.2% and productivity gains of 3.5%. these are actually stunning results in a mature economy. we saw real income growth for everyone. not just those at the top.

the i.t. wave was transformative over the decade of the '90s. the u.s. economy created 22 million net new jobs, about 2.2 million jr.s a year. and comparing that to our current lackluster jobs growth only underscores the importance of the innovation agenda today. in fact, economist have shown that since world war ii, more than half of u.s. economic growth can be attributed to technology. more than half. much of that technology springing from federally funded advanced scientific research. now not surprisingly, technology-based companies often have a disproportionally positive impact on their local economies. when they sell products into the national and global markets, they draw money into the local economy from the outside. unlike a new service company. like a dry cleaner or restaurant. and those external markets also

give technology-based firms the wherewithal. let my give you an example from m.i.t.. we found companies at an astonishing rate. about 900 a year. of all of the companies they found, pretty evenly distributed between service-basened and technology-based, those based on technology account for nearly 92% of the aggregate company revenues and 85% of all of the jobs created. technology companies simply pack a tremendous economic punch. what's more, and this is, i think, really important for us to think about today. economist with the foundation has determined that the companies reduce most new jobs are the new ones. since 1980, nearly all net job creation have come from

companies less than five years old. so if our innovation system has the kind of power that i i -- that i assert, what is it now? how do we crank it up to produce more new job-generating, economy-building companies? i'm happy to report the innovation system is alive and mostly well. but at the same time, i believe there's a lot of things to do to make it more effective. let me offer a quick case study. a story that shows how the system works at it's best. the example, of course, happens to come from m.i.t., i'm certain each of you can tell the same story unfolding at a research university in your state. as i go along through the story, i'm going to draw out five underlying rules that i believe we can build on to rev up america's innovation economy. like many great american tails, this one begins with a family that came to the united states for the political freedom, for our educational opportunities, and for our economic

possibilities. so when he was six years old, mr. chang arrived with his family. by 16. he was a naturalized u.s. citizen. he got into m.i.t. and was substantial financial assistance he earned his bachelor, he chose to study material science. the study of the structure of metals, plastic, concrete, how to improve them to make them stronger, lighter, less expensive, or less toxic. as an undergraduate student, he learned to do frontline, hands on research by working in an m.i.t. professor's laboratory. and more than 85% of m.i.t. undergraduates have the experiences. they do this kind of advanced research, side by side with faculty. in those experiences, they are learning by doing as a frontier of human knowledge. so rule one, in my rule book, is attract brilliant strivers and help them get all of the education and the hands on

experience that they can handle. mr. chang continued at m.i.t. and earned a doctrine and joined the faculty in 1984. as a product of the entrepreneurial culture, within a few years, he had started his first company. all the while continuing to teach and do research at m.i.t. rule two, is that scientists and engineers can be great entrepreneurs. but entrepreneurial culture really helps them to flourish. in 2001, supported by basic energy sciences grant from the u.s. department of energy, he made a breakthrough in how to manipulate the structure of lithion batteries to improve the battery strength. it also connected him with veteran entrepreneurs in the m.i.t. community who helped guide the development of a new

company. within a year, they launched a new tartup within and then the following year, thanks to another d.o.e. grant, they hit on another and far more important breakthrough battery concept. rule three, is that growing new ideas takes money. from the right source at the right time. today professor chang continues his reng continues his research and ttoday professs his research and the co-founder of a123 systems, a growing young company helping to develop the batteries for electric cars. with $97 million in sales, they are manufacturing millions of batteries a year for power tools, aviation, motorbikes, formula 1 case -- race cars, and most recently, the electric car. a123 batteries also power hybrid

bus, in new york city new york city, houston, san francisco, seattle, and a bunch of other cities with 100 million road miles to date the largest battery effort in the world. a123 employs about 250 people in massachusetts. close to m.i.t. so they can stay plugged into the clean tech that includes an ambitious research community through our universities, educated workers, small and large firms, and supportive state and local governments. massachusetts is now home to 400 clean tech companies and 44 of them are in my hometown of cambridge. rule four, innovation clusters are powerful and they get stronger as they grow. a123s manufacturing story is instructive too. now important advances in

conventional lithium ion battery technology emerged from federal research at a number of university. university in austin at cal tech included. even with these important innovations in hand, the united states lost the market advantage because we allowed the manufacturing to go abroad to korea, china, and japan. when a123 started up, they knew it was going to be really tough to enter electronics fields that were dominated by those nations. they hit on the unusual niche in which they could develop their advanced batteries, power tools for black and decker. then they used the niche to master their technology and product. they moved on making batteries for transportation. their new and very sophisticated plant in michigan makes battery for hybrid and electric vehicles. it's the largest lithium ion battery factory in america.

this advanced manufacturing plant employs 800 michigan workers. and about half of them were out of work before a123 came to town. rule five, this is really important, if we want to make u.s. jobs, we can't just make ideas here. we have to make products here. that's the a123 story so far. what can we learn from this? my view is that there's nothing wrong with the american innovation system that we can't fix together. but we need to recommit to each of its elements. let me wrap up by reviewing his rules once more. with a few to dos or action items. rule one, attract brilliant strivers and help them get all of the education and hands on experience they can handle to serve our homegrown brilliant strivers. we have to dramatically improve science and engineering

education and we have to increase the number of u.s. graduates in the fields. you know, the united states now trails almost six -- 16 nations in europe and asia and the proportion of 24-year-old with bachelor degrees in engineering and the natural sciences. what's more, between 1989 and 2003, the number of american science and engineering phds remain constant. constant. absolutely flat. at about 26,600 a year. over the same period, in the same fields, phds awarded in china shot up from 1,000 to 12,000. the trends speaks for itself. and i know the nga is developing a range of ideas for making public higher education more accessible and relevant. that's really important. m.i.t. is contributing in a number of ways. i want to call out something we

call open course wear. where we have put the material for almost all of our courses, 2,000 courses online open to anyone in the world for free. we have a special set of course materials called highlights for high school. and this is material designed for high school students and teachers. there's a particular focus on that site on materials to help students and faculty acquire the information needed for the ap courses. we also have to capitalize on america's ability to attract talent from all over the world. this has been the secret to our success, not such a great success, but part of the success for the centuries. 40% of the m.i.t. faculty were not born in the united states. more than half of silicon valley startups were launched by people born outside of the united states. congress should encourage by

revamping the arcane immigration laws for highly educated workers. we must make it simple for foreign students that earned advanced degrees here to stay here, start companies, and create jobs. rule two, scientist and engineers can make great entrepreneurs, but an entrepreneurial culture helps them flourish. every research university, public or private can do more to build up it's entrepreneurial culture. you can encourage faculty and students to launch startups and build curriculum and mentor networks to teach them how. we can license technology seamlessly and fast to get products into the marketplace. you can run startup competitions to inspire, test drive, and showcase entrepreneurial teams. and can organize alumni to advise the fledgling ones. they do it for free, and then they thank you for it. the last idea may sound crazy. but at m.i.t., we have number of

these kinds of projects. bun is -- one is called the venture mentoring service. it was started by volunteers. we invented less than three million in funding over ten years. with that money, it's helped launch 142 ventures that have raised $850 million in external financing. it has helped more than 20 other groups launch the services from the university of miami and mississippi state to economic developing agencies in st. louis and chicago. rule three, growing new ideas takes money from the right source at the right time. from his time as a venture capitalist, governor snyder can tell us that there's surely a right time for vc money to back a new idea. but the truth is if we want big breakthrough innovations to drive our economy, there is simply no substitute for strong, sustained federal funding for

advanced early stage research. it's that kind of funding that generated the i.t. and biotech innovation waves. few technology sectors right now on the launch pad are posed to spur new innovation waves and the jobs that go with them. clean energy, robotics, advanced material, convergence of life science and engineers and biomedicine and beyond. these waves are hang in the balance. will we let other nation's lead them, or will we seize their potential for america's workers? we we let congress take away research funding, we will lose out on the innovation waves and the jobs that come with them. rule four, innovation clusters are powerful and they get stronger as they grow. many of you have had the experience in your states. fortunately, innovations don't pop up randomly, we actually make them happen. bringing universities business and government together. to amplify the density and

intensity of the research communities. one example is north carolina's research triangle park. and i compliment governor perdue for taking this happen -- for increasing an accelerating it. this brought together corporate academy and government leaders to create something in the space between three leading universities, filling with technology companies that could benefit from university research between 1970 and 2007, employment in the region more than tripled. rule five, much of own minds today. if we want to make u.s. jobs, we can't just make ideas here, we have to make products here. unfortunately, no amount of innovation is going to be enough if we ship all of the manufacturing aboard. america's remains the worlds second largest manufacturer, but with so many nations cupping our very successful innovation model, we must take our bets on the kind of advanced

manufacturing the future demands. as governor mentioned, the president recently asked me and dow chemocams ceo to co-chair a industrial development task force to accelerate the progress in advanced manufacturing. at the six universities and eight companies that have now joined the steering committee, there is a lot of enthusiasm and great work on the new frontier. but the workers for the new era of advanced manufacturing are going to come from the community colleges, the high schools and engineers schools in your states. so i invite you to join us in making this new effort truly a national effort. in the nga report released today, you outline ways to get america's companies working closely with community colleges so the students will be prepared for tomorrow. i truly welcome any other idea you have for how to used advanced manufacturing to deliver the most value from our

innovation system. so let me close with a reflection on one of our -- some of our cultural assumptions and with a call to you to help change them. i was a member of a panel, recent panel on innovation, and the moderator asked me why any entrepreneur would go to college. and we all know the legends of people who have been very successful as college dropouts. let me be clear, the innovations that drive lasting economic growth emerge from the most advanced science, mathematics, and technology. a123 systems lithium ion battery technology, that draws on chemistry and engineering that you just don't learn in high school. we need our brightest young women and men to value advanced education and innovation as much as they love football and

basketball. we need them to understand that the smartphones and video games and the music players that they covet were invented by real people just like them. and that science and engineering can offer them the powerful to become not just the worlds consumers and spectators, but it's makers and doers, the inventers, and creators who will restore america's prosperity. as we focus on the hard work ahead, of making higher education more affordable, reforming immigration, of leading the charge for federally funded research, of building entrepreneurial ecosystems and innovation clusters and seizing the opportunities of advanced manufacturing, i urge you to do something that i hope is a little bit simpler also.

please, please celebrate jr. -- your states inventers and entrepreneurs. make them your students heros. today. because your students can be the heros who turn on the lights in america's factories tomorrow. thank you very much for inviting me to join you today. [applause] >> dr. hockfield, i can't tell you how much we appreciate. i know you busy and can spend just a brief a. of time with us. it's a delight to have you here. we're fortunate to have you leading m.i.t., i personally can't tell you how much i thank you for the message that when you are the home of microphone to say to the people of washington state, go get a college education, thank you very much. with that, dr. john seely brown, the other side of the

partnership, please join us. thank you, dr. brown. >> what else is -- what else can i say? what an inspiring talk that was. i have to tell you also that although i spend most of my time on the west coast, i can't help by always end up walking through m.i.t. campus in the sense of the excitement on the campus and the entrepreneurial spirit kind of constantly turns me on to what is really possible in america. so i'm personally thank you. i'm interested in this issue of innovation, but also the changing game of innovation. i think actually the game has changed quite a bit.

i think it's worth spending time thinking about that in terms of new methods, new tools, new resources and issues that take us just beyond issues of money. so the first question that i might ask is, sure, john, what's changing? what does it mean for higher education? what does it mean for innovation and economic development? i have one simple chart. that is driven a bunch of us for over five years rethinking what this might actually mean. we call ited big shift. if you look at the last 100 years, during the 20th century, basically changes happen in terms of you might call the s-curve. long periods of stable, brief moments of disturbance when big changes happen, then 30-40-50-60 years of stability in which we reinvent work practices, social practices, educational practices. we knew how to play that game

pretty well. what's happened now is in the last probably ten years we're moving to a different kind of infrastructure that has driven by the laws, the digital laws of computation, accelerating as we speak. now what we really find is we're having a world in which we have constant disruption nearly every year. and the challenge is how do you actually start to leverage that rather than fear that? in terms of driving innovation. i see this as not doing to slow down as all in the next 30 or 40 years. if it the law slows down. let me say this personally. the curve on the right i could actually recoo pick late the last ten years of my life and say the last three blips up there in the far right hand corner took me from classical computing, the server architect

into cloud competing, well known to several of the states here, into graphicking processing unit that giving us the ability of scientific computing of a fraction of a cost and now the form of quantum computing. i had to relearn everything i knew and understand how to big the back plains along a amazon and microphone of the cloud computing. also when i've done that, i have to think about how to move to the units. most of us here are trained in computer science. we know how to program things we call single process threats. in the last year, the chips we've been producing now let me run 12,000 processes or threads simultaneously, almost everything that i knew before has to be reinvited and so on and so forth. so we are moving to a different type of a world. and i think the catch to recognize is the half-life of

our skills is shrinking. it used to be most of the skills that you learned around this table starting with myself, you could plan to live with for 30 yores. now you may have to retool yourself in interesting ways probably every five years. how do you know rethink talent development? talent development now on the notion of the arc of life learning, not just single shot learning. how do we create resilience and a willingness in our students and industries in order to embrace change, not flee from change. how do we move to a world in which we are constantly driven by questing, asking the unusual questions, what if, what if, what if. and how do we actually drive collaboration across disciplines and also between university and industry? and most important, i'll come back to it in a minute, how do you create a new mindset? a mindset of openness and a mindset of listening with humility? i think susan, we can create a

ability to listen with humility many of the problems that you and i face would start to change. those are the challenges. and i think that an interesting example going back to actually to north carolina, actually going down the road 30 miles o so, not for the triangle, but the notion of north carolina state university and their effort in the last ten years or so to reinvent the land grant college, the land grant university for the 21st century. we all know that the country was built around land grants. somehow that has left our discourse. we don't talk about the reinvention of land grants. i think if you look at north carolina state university as an interesting case in study of the school and the government that set out to say can we reinvent the notions, the spirit of the

land grant. and in north carolina, as you know, a state built on textiles, the textile industry has decimated. low and behold, when i first walked on to your campus and starts hanging around the centennial campus, it's a new area which not only has departments, it has companies, it has ngos, it has government, all in the same campus, operating shoulder to shoulder. i discover some of the most interesting nano technology in the country. what are they doing? they are taking textiles and say what happens if we actually think about fiber that you weave with being made out of nano material? we could completely reinvent the entire textile industry around nano science. and the answer is, yes, that is happening. it is leading to some amazing new technologies, including

actually building structural beams for cars out of textiles, weaving the orders for our hard capabilities out of these textiles and for some of us in the room that are engaged in a lot of military work, building some of the most amazing bullet proof fiber that you've ever thought possible. all of this is happening. what's particularly interesting to me is the spirit of engagement, a deep engagement where the professors, the graduate students, and the students think they can learn as much from the environment as the environment learns from them. we usually think of stuff passing from the brains of universities into this surrounding world. i think of it as a dio to be a geek engineer. now maybe we can open up an ocean from shifting to doi to dialogue.

i was intrigued in the operation they had outreach operation in every single county of north carolina. they are learning as much back from in terms of the real problems as going the other way. it's amazing to see graduate students doing thesis on weaving together different industries, different subaspects of the textile industry there. blah, blah, blah, i could talk forever and move along. i think it's fair to say that coupling though, universities in general for the industrial base ain't always easy. it's not surprising. innovation, off all, is about roi. there are at least three kinds of roi that we have to consider. one has to do with course as we turn on investment. but there are two other ris, return on research of interest, and roi in terms of results of important that government cares

about results of important. industry cares about return on investment. the research returns on research of interest. we have three different rois that could actually be brought together in kind of a magic way if we understood the different mindsets that in the past have made this difficult, but now i think we're beginning to see ways to really bring it all together. in fact, if you look at the way we have dealt with the university, basically industry deals with the licensing officers, et cetera, et cetera at the top. the licensing officers is the representative of everything going on in the university to those of us outside of the university. that actually is a fairly narrow pipe. i want to argue that, in fact, that pipe can be sometimes amplified by asking how do the kind of rules of leading edge or early stage venture capital that

have gut understandings of what maybe useful. how might you accelerate commercialization, how the knowledge sphere that certain types of the venture capitalist can bring to the game are actually a lot more aware than classical licensing officers, more classical than the community development organization of the government i might add and so on and so forth. i think we have to kind of understand how do we kind of expand that knowledge sphere to couple in, but why that's interesting, is that, in fact, the real game here, and when we see this cracked, the results are amazing. you can find the sweet spots with all of the different levels of the university and all of the levels of the ecosystem. researchers, research of interest, find a coupling to the a particular problem in

industry. i can show you an sample in north carolina. the real question is can we find new ways to build connections at every level in the game? :

>> just a tiny example, what does it mean to be able to connect at all to the levels and all different levels of the industrial ecosystem. but the game is changing even more now. cloud computing has now come to the floor. and cloud computing enables many startups today to not have to use their early stage funding to go out and buy massive numbers of computers, which will be reduced to zero value in about three years. they been able to ship cap acts at the one time i is most expensive, into saying no, what can i just do in terms of operating expenses. and actually with credit cards today, start companies. and, in fact, i can take you to a set of companies that not only have started with credit cards, but also actually turn a profit the first year so they don't even need additional capital.

these are admittedly companies like different variants of social networks, et cetera, et cetera, but this cloud enables us to do a whole range of things we couldn't think about doing before. most of us around this table all know about the ways to use cloud, to do things like social networks. but it brings cash that would bring susan and me together is the fact we use cloud computing today to do material science. you've heard about the famous silicon valley garages to do computing, well, we now build silicon valley garages in material sciences. we do the might been able to build amazingly complex models, run them 1000 -- 10,000 computers simultaneously, and takes something that you would usually take me six months to do, get it done in one day.

so the cost and speed of innovation is changing once you know how to use these tools. but you've got to be able to think analytically. you've got to build a quantum models to make this stuff work. once you understand this, it is simply astounding. but i also want to mention, which we don't talk much about, is that innovation turned as much on craft as it turns on so under deep signs. there's a spirit of tinkering that comes, surround epical craft but also makes a big, big difference. we don't talk about tinkering much these days, especially in education were. but i will tell you that most of the startups that i'm a part of, tinkering is in massive part. doesn't sound sophisticated, but

it is. and the question is how do we renew to the spirit of tinkering in our kids today, big a 15 years old, or bd 35 or 45 or 55 years old, something we should think about. and, of course, what's happening today is we now tinker with digital tools like we never could before and we connect with other people tinkering. and start to share ideas in a spirit that was again kind of impossible before. simple example of tinkering, brought to us at not just the high school level, at the college level, universal level but all the way the stack so to speak, something called tech shop. tech shop is the with digitally controlled, computer controlled chimerical tools to build almost anything. you can get access to these jobs for approximate $1000 a year, often even less if you want to go in for a month, like $100 a month. what you find in these tech

shops which are not actually being franchise around the country, the first three to four actually we are just about to open one in detroit, actually couples in to the gut intuitions and experiences of people that are not deeply trained and/or to get in there and build things together and learn from each other. the amount of mentorship that goes on with things like tech shop is truly amazing. if you have a chance, he ought to go visit one. likewise, the attempt to bring back the honor of making things with your hands is happening. it is now spreading. we have, the last went out on the west coast at 175,000 people show up for it. here, here are the different cities that are now developing their own maker's fair in terms of driving this kind of tinkering. so let me kind of step back a moment and say, what's the

bigger picture here? i think one, and susan did a great job of mentioning this, is things like the mit open courseware. and susan, what you didn't mention, changing this, adding to this ap program to get into the high schools and some of the kennedy colleges. so how'd you take things are already happening, no huge expense is required, but wrapped up in ways and only three colleges can use them and so on and so forth. look at open course now multiple and they're doing this, but i think it's kind of a pioneer want to look at, but i bring you knowledge about this, call attention to this for a different reason. a personal reason. if you go back to that big shift i told you about, i personally have to constantly rejuvenate my own understanding. and i discovered actually open courseware because i needed a

way to constantly refurbish my own skills. and we never talk about things like this as a way that people of our age, i'm over that almost anyone here, but constantly are rebuilding, finding new ways to look at the world, and i don't think we had that in mind you would -- but i take, this is a fantastic scaffolding that costs, once it is done, and virtually nothing. if, in fact, you have the money to constantly pick those up. a number of entrepreneurs and i know in the silicon valley, because of refreshed their own skills by looking at this as interesting. this is a high leverage low-cost opportunity, if you want to think about it. but i'm also struck by another major change that i see happening, it was actually steven chu who called it to my

attention, a beautiful comic he says, we seek solutions, talking that research universities, we seek solutions, we don't seek, dare i say, just scientific papers anymore. i don't know how much of this was covered, but i think it is a critical difference to say if you're going after a solution, you can't live in a silo. almost all of problems today, sociotechnical problems that require many disciplines to work together, and many interaction with the outside world as well as the inside world. and so, the key notion here is how am i going to the root of the problem, the fundamental work that susan was talking about, creates the boundary objects that really do bring cross disciplinary work to the floor. if there's anything you can't do as the president, as a dean come as a director of a major research operation, is till five

disciplines to come together and start working together. that doesn't work. on the other hand if the problem sucks people together because they're excited about the problem, you can't pull them apart. we have to think more about poll, not push as we move forward here. two last comments. going back to the manufacturing issues that susan brilliantly brought up. if we can do not be much attention to process research, process research isn't as sexy as technology research but many of our technologies require major breakthroughs in order to be able to build this stuff in a cost effective way. we will not return manufacturing excellence to the country without appreciating the power of process research. and process research also has a certain kind of tinkering with it, so tinkering and process research come together. and here's a kind of example, it

may seem strange, this is the new plan in built by general motors. you might see there are not many people there but there are people there. they are behind the scenes tinkering with the programs and capabilities of these robots. and curiously, i was hired by general motors some time ago to study toyota. i went to a toyota plant and i got pulled down to the plant, this group said come, come, see we have done. i've got to show you my robot that we, the people on the assembly line built themselves. this is an assembly line that basically everyone has. they saw the opportunity to build what they needed in order to become better at building what they wanted. there's a spirit there that i think we've got to figure how to restore if we really want to bring to manufacturing excellence. i want to just call attention to

the fact that we all want innovation ecosystems, but we tend to look at the tip of the iceberg, the sexy stuff, the really technical stuff. come to silicon valley and i will take you to the googles of the world, et cetera, et cetera. but you see that stuff above the surface. do you know what really matters? at least as much as discussed below the surface. the infrastructural of that economy. in fact, i can't build a start up today if i don't know how to access, design houses across the country or around the world, wind foundries to try out ideas, always needing public relations, law firms, the bio game. i now far out, how do i build bioreactors. by the way, on the east coast. in order to buy content build these models. that stuff doesn't get talked

about. it's not too visible. now i have to say that a company that it won't mention when you started i'm a part of, we had to leave the united states in order to find the right kind of foundry to experiment with building a new kind of transistor. we did not have the hidden infrastructure we needed to try this out. that was not meant to be a generic case could it was a particular case. not that significant but i'm just calling attention to the fact that it's the shadow stuff beneath the water that often makes a huge difference in being able to jumpstart a new type of a company fast to the market, and spend the money, what really matters in thinking and not doing the things that none of us are world class at, you know. very few people i know really know how to run reactors unless they built them. that underlie some of the stuff pics i just think we got to kind of be aware that there's top,

probably 80, 90% below. i think you folks as governors may want to pay some pretty careful attention to. and the last example i want to bring it is this sense, you can see a spirit of what i want to say, a lot of resources around. how much time do we spend connecting them in order to do new things? we talk about financial leverage all the time in this country. we don't talk about capability much. what are the capabilities we have that can be leveraged together with disability why things together for cloud computing, internet, blah, blah, blah. here's a simple excel for. this is an amazing example we're not duplicating in chicago. it's kind of like how do you look at all the capabilities like in new york city. you can build not only in school programs but much more importantly, afterschool programs. how do you build a network that connects all these afterschool

capabilities, you know, in terms of the museums, science museums, history museums, public libraries, all of this together. because if we really look at where our kids have get their minds, it's as much outside. we are just constructing in chicago an amazing public library room, huge room where these kids are inventing new ways to write in terms of the new media. the surprising thing in the room is very, very digitally oriented oriented, and yet more books, real books, not digital books are being checked out. now, than ever before. how do you start to say this stuff is here, how do we honor -- how do we wire it together? how do we leverage these types of things? because if you can get kids to do this they've already have by the time they get done that disposition preparing themselves for life during the august the

notion of the big shift and sang i've got to constantly keep learning and how to become fun. with that, thank you. [applause] >> so thank you, dr. brown, very much. insightful challenging to each of our respective governors, we can't tell you how much we appreciate your being here today. we have time for some questions so let me turn to the governors for questions. governor quinn from the great state of illinois. >> we have an innovation council in our state. we also have group on which has grown from eight employees in 2008 to 6000 today. one of the heads of groupon is involved with our innovation council. what we've done recently is try to put all our data sets from the state of illinois, all the information that we have about

anything online, working with the city of chicago and cook county as well. the whole idea is to to try to inspire these folks in the grassroots level to innovate and to create. and we've had some, you know, we just started this but i think this goes into your idea that this chaotic group of tinkerers are the ones who will create the bold changes. do you know anything about this data set initiative elsewhere? you know, how we can expand upon it. >> i think your observation is right. groupon uses cloud computing for that data set to analyze that data set. where we're finding more and more, the ability through data mining over data sets is almost all were in some sense the return on investment relies. if you can actually find the signals into noise with these data sets, as you know, groupon

impetigo has a very clever idea. that it also says, i don't know how many of you know groupon. i have to tell you, when i first heard the business plan i thought they were kidding me. i was as usual dead center wrong. actually turned out to be pretty damn interesting. and what i find so curious now is, i think like 12 people started that company. well, the person who started it with the idea, he was a music major in northwestern. he went to public policy school at university of chicago for three months, dropped out. his first idea kind of fizzled. he did have access to some capital, second ideas exploded. but what i'm particularly interest in is using all this data, this information that government has, that's just sort of sitting there.

and rather than wait for summer to ask for it, through freedom of information, is putting it online. that's what we're doing. all this information about highway accidents, where potholes are, things like that. and the million other things. that's our whole goal to put all our data online. and then trying to encourage, you call them data miners or tinkerers, to figure out innovations. that's what we're really focused on. and a beautiful example, touching on something sometimes goes government 2.0, how do you build smarter government, not bigger governments. i think if people actually twittering in, what's not happening with people -- not been repaired and sold. but the amount of data, and i don't know state government, you know, we know what sitting inside the federal government is astronomical. and he catches had we kind of

release more of that to this data mining to find the gems in there. i completely agree with the spirit of what you're saying and the importance of it. there are certain states that are doing that. >> i thought both presentations were great. dr. hockfield mentioned, start hiring in delaware. i do wonder, particularly with respect to john brown's comments about the shrinking half-life of the skills, and tom told me on sunday, had a column and a penny in your times of the day, where he essential is making a similar case for our kids really need to be focused on continually reinventing themselves. because innovation is just

happening, unicom is not the s. curve anymore. it's happening all time. and i do wonder to me, we can do some of the structural things like build ecosystems is one of her last, mentioned the design houses and all that. we can do that. so much of this seems to me to be cultural and getting people to understand that the world has changed so dramatically, not the last eight years but the last five years. and until we get the kids and their parents to understand that this change is taking place and it is accelerating on a daily, weekly, monthly basis, i'm concerned that so much of the acceleration, so much of the innovation does go overseas, i thought the point you made about making sure we get more, a lot more of the immigrants to state after they get their education is spot on. but i wonder what it is we can do collectively in terms of making sure people actually get.

>> dr. hockfield? >> i'm terribly supportive of your observation. and i think one of the, my -- we have to celebrate the heroes of tomorrow, not the heroes of yesterday. if we believe the national heroes are so big athletic heroes were the heroes of yesterday's manufacturing, it's not going to move us forward. in terms of what states do, it's taken an mit idea and spread around the state of its business plan competition. there are ways, people love competition. it gets them to be. i want to comment on this sense of the need to reinvent yourself, and then the tools to do that. john comment about open courseware. when it was launched a decade ago, it was designed for college and university professors. that was the target. we will provide so when you want

to start your course you can use any of our materials. i think nothing is the price is more when we get about 2 million visits to content a month, nothing has surprised us more than half of the users over courseware are not students or faculty, their independent learners. and so what i see as desperate housewives. and the fact is it's low but clandestine because he would say to their friends, i spent the afternoon boning up on my electricity mac system. you're supposed to be doing something else. so i think as a nation, i think we need to shift the focus on what we consider to be celebrated activities away from leisure, what week currently consider leisure activities to activities of rebuilding our own abilities. >> governor barbour from

mississippi. >> thank you, governor. thank you for giving these two great speakers. and i want to thank you folks. i just have to make an observation, both of you touched on. we are, america is a global talent in the competition workout is unbelievable. thank you, dr. hockfield from making the point, i put it this way, every foreign-born child in the united states who gets a ph.d in math science engineering or technology, we are to staple a green card to their diploma. and otherwise, they will go home to mumbai and start a company that employs 800 people. if we let them stay they would rather start one in memphis that employs 800 people. so i appreciate you saying that. dr. brown, the constant learning, one of the things that we are not, we, governors, or some governors are not as good as we ought to be, and it was

touched on, this applies to people who work on the assembly line, too. it is not just a guy or girl who will get a ph.d, that they've got to really learn and relearn. and we need to understand that workforce training is not something you do at force. it has to for companies to stay competitive, by becoming more productive, the workplace is changing all the time and we need people who work on those lines to also have access to this continuous learning. i thought both of y'all gave us a lot of really good thought. thank you. >> let me just say one thing building on the last comment. we also have to get industry to recognize that talent developer is not just sit back and being retrained. it's how do we change the work escape it's also becomes constantly a learning escape. and i think that is a fancy kind

of fun where but i mean, we have to pick up much more so see. training is not an h.r. function. it is the way we design work. and that's i think so key. >> governor nixon, our last question from the great state of missouri. >> very quickly, dr. hockfield. your .5 here, any amplification of that for all of us? because those are solid jobs i think all of us are in situations where we're feeling and sensing that we can do that, that as companies approaches and talk to us, they're talking about shorter supply lines because the cost of fuel and a great thing about americans, we are consumers. it's not hard to get the product to market. we all have examples, whether you talk about to grow cotton in southern missouri or mississippi or in alabama, to send out across an ocean 12,000 miles and turn into a pair of jeans and bring those jeans back in some

right next door to that field is not working long run for the cost. those types of goods. but in the higher complexity good, but what advice do you have to make products to your line? >> i could speak for ahead. i am a professor, after all. [laughter] let me just give you a couple of tidbits. i think on the first thing i call out is what john talk about this process innovation. you know, it's easy to assume that it can be made cheaper elsewhere. and using old manufacturing technology, it probably can. we have to be committed to process innovation. you know, this new partnership, the advanced manufacturing partnership that i'm co-chairing is exactly to see if we can accelerate that kind of thinking. at mit we recently launched a study about 21st century manufacturing. in the 1980s when the japanese

were exceeding -- a group of faculty from the school of engineering and the sloan school got together to think about how to reimagine american manufacturing. we produced a book called made in america. we figure it's time to do something like that again because, frankly, we don't have all the answers to question, but i would say, i've been out selling this idea of a new study coproduction and innovation economy. about half the people i talk to look at me and say, didn't you get the memo? america doesn't do manufacturing anymore. now, that's dead wrong. the other half says this is the most important thing for the gotcha. i think part of the goal of our advanced manufacturing partnership is to raise the build and get people to think about it industries would. to john's point uses an iceberg. i use an hourglass as my image. that manufacture itself, advanced manufacturing, the kind of new manufacturing technologies that are being developed at mit and other university campuses, you know,

it's like a photograph you showed of the new gm factory. it's kind of jobs free, but that's the narrow waist of the hourglass. there's a gigantic funnel of jobs and supply that feeds into that narrow ways, and and another giant array of jobs and activities that fill out of it. and when we give up the waste, we give up the entire hourglass of jobs amateurs. so part of it is a national orientation. i think part of it is just taking seriously about how to redesign processes so that they do become economic and valuable and some of it is attitude and some of it will be policy and structure but there's no question in my mind that we got to thinking -- start thinking in a different way. let them over there do that stuff because we can get the five if we seldom have a a great ideas. >> we all know that's not too

and we got to figure how to manufacture in any way, do productive in any way you can also john's point about this, accelerated rate of change. we've got to figure how to accelerate the entire pipeline from the genius invention that the research universities across the country, how do we get those into product. john dr. koh boys have to do that and get them into production industry with him around the world more efficiently. i think we can do it. it is an innovation-based country, but if we don't focus on it will never get there. so i think we need to raise the consciousness. thank you for the question. >> issuer governor quick? >> my question is when more of a comment, i think you -- a thank you. they came out two, three weeks ago, when the entrepreneurs from mit to help set up this competition to take business plans from young students, connect them to investors, which is really what i love about it

is going out and trying to spread that gaza. entrepreneurs made a ton of money. they're integral to mit, tightest directed across the country. you should all hang out close to mit. also said the same thing with governor quinn. there's a bunch of these organizations that are doing things that we should all be paying attention and comment -- copying. >> thank you. i think this is a thought-provoking, challenging, but tomorrow the united states has been hard put to force by dr. hockfield and dr. brown. on behalf of all of us, thank you for coming to the great state of utah. thank you for challenging us and thank you for offering to be our partners so we can move our country forward. [applause] [applause] >> before we leave i have a couple of things i want to do.

the first one is a bittersweet moment for the national governors association. as we say goodbye to a very important colleague to each of us. governor barbour, would you please come forward. today, we are here to thank governor barbour for his commitment to public service and his commitment to the national governors association. in july of 2009 some of us were very honored to be hosted by governor barbour at our annual meeting in biloxi. he currently serves on our nga executive committee and our finance committee. one of his i think he would share with you greatest accomplishments is his leadership in responding. we all thought, we watched across the country as he responded, and he rebuild, and we saw when we're in biloxi, those of us who couldn't attend, the coast of mississippi in the face of what was then one of the worst natural disasters in american history, hurricane

katrina. governor barbour took the lead early to help his fellow mississippians, to rebuild and recover, to take what was a time when people were down and out and say, we can rebuild, we will. and he went out to the people of mississippi and did just that. under his leadership, mississippi experienced the largest increase in net new jobs since 1999 him and the largest increase personal income since 1998. he also initiate the most comprehensive overhaul of workforce training and develop programs in the state's history, and increased funding by record levels for public education, from k-12 through community colleges, to states and universities. with that on behalf of national governors association, i want to thank you, governor barbour for your dedication, for your leadership. we are all proud, and i'm sure you are of the legacy that you have left to the people of mississippi. we are also very thankful of the legacy that you have left here,

your friendships that you have will be for ever with us. we thank you on behalf of the national governors association for all that you've done for us, all that you have been, a friend for us and we wish you the best in the future. thank you and congratulations. [applause] [applause] >> thank you. thank you all. don't forget what they said about politicians. don't applaud, it only encourages. [laughter] i would simply say chris, we would like to get you lined up to talk at my funeral. [laughter] >> thank you all. [applause]

thank you again. i do know about the funeral part, but thank you very much. [laughter] at each annual meeting we take this moment, not only to thank our corporate fellows, but for the collective support, but also to recognize those companies that have maintained a sustained commitment to governors and the work of the national governors association, senator best practice. i'm not critical honored by his chair, david heineman, to present the awards. >> thank you very much, and hey, thanks for the shortest speech i've ever heard you give. [laughter] the nga corporate fellows program was founded in 1988 for most of the exchange of information between the private sector and governors on emerging trends and factors affecting both business and state government. the corporate fellows share their unique experiences, perspective and expertise with governors as chris mentioned to the nga center for best practices. we really do appreciate their

support, the corporate fellows program is comprised of more than 100 of america's top companies. and today we want to honor to companies for their years of membership. and as i call your name, i would ask you to come forward. the first one for 20 is a membership in the corporate fellow program is general motors and representing them today is brian russo. [applause] >> second coming want to honor today is for 15 years of membership in the corporate fellows program, fantasy, represented in is j. jennings. [applause]

>> so with that we will a church our first plenary session come into our governors where they governors only session, some very important information we want to talk about. i don't know where we're going. where are we going? grand ballroom a, governors. 1:00. thank you all very much. and again, thank you dr. brown, thank you dr. hockfield for your fine presentation. [inaudible conversations] [inaudible conversations] [inaudible conversations]

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[inaudible conversations] [inaudible conversations] >> lots more coverage this weekend of the 103rd national governors association meeting in salt lake city.

>> 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 held here at the library. just how many congressional collections are there?

well, you'll find answers about this unique library in c. spent original documentary, the library of congress in and this monday night. we will two of the iconic jefferson building, including the great hall and 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. learn how the latter is using technology to discover hidden secrets in their collection and to reserve its holdings for future generations. join us for the library of congress this monday night at 8 p.m. eastern on c-span. about that question, the library holds the personal records of over 900 current and former members of congress. >> news corporation chairman and ceo rupert murdoch has now agreed to testify to appear tuesday before british parliament committee.

>> part of the u.s. delegation attending the independent day similar. thursday he testified before the senate foreign relations committee about u.s. politics toward sudan and south sudan. including continued military conflicts in the region along with the two nations border and disagreements over oil revenues shoot. this evening is 90 minutes.

>> -- this meeting is 90 minut minutes. >> the hearing will come to order. thank you all very much for being here this morning. ambassador lyman, it is a great privilege to welcome you back to the committee we appreciate enormously the work that you are doing as the president's special envoy to sudan. and i want to just thank you personally. i've had a chance to see you working in many meetings that we've had together there in sudan, and i've been extraordinary impressed by your steady, calm, tireless commitment to working under

difficult circumstances to make progress. it's the essence of good diplomacy, and i really congratulate you and thank you. i thank the president and the nsc and all the folks, secretary clinton, who have been engaged in this effort. they have done a terrific job of laying out a roadmap, living up to it, nurturing the process and staying committed. when a lot of people thought it might have been impossible. and i know that six months, nine months ago, even a year ago when we were working with general gratian and yourself, there were a lot of doctors as to whether or not a referendum could ever take place. and i think that it was a good efforts of a lot of folks who came together and stayed steady. and our allies in that effort. the norwegians, others have

been, british, then particularly committed to this. and i think it shows what can happen when people stay focused and put their energy into things. so we welcome you here this morning to discuss a remarkable and a rare event that took place last week, the birth of a new nation, the republic of south sudan. six months ago when the referendum that set this in motion, i had the privilege of being in juba with you, ambassador, and others, and general gratian. and it was really impressive. it was a remarkable event. i had the privilege of speaking and the cathedral with president kiir, and millions of southern sudanese stood in line for hours to cast their votes for

independence. i remember coming out of one of the voting places, and i had a sense of gosh, some of these people are going to walk away, the line just so long and they can't wait that long to vote. so i went up to them and i said, you know, i hope you'll be patient, wait to vote. and so help me, two or three people in good english just turned red to me and said senator, we have been waiting for 56 years, we can wait a few more hours. they didn't mind it. and last saturday as a result, five and have decades of waiting came to an end. and today, today, even as we're here now having this hearing, events are taking place in new york at the united nations and south sudan becomes the 193rd member. we should recognize, i know you do, mr. ambassador, that while only one country to join the

community of nations, the reality is that two nations emerged on january 9. the newly independent south, and a greatly changed north. both of these nations are fragile, and they will remain that way until they reach an agreement that allows them to live separately but worked together. sudan and south sudan share more than a poorly defined border, and a bloody history. they share traditions of migration that must be respected. this year trade routes that need to be reopened. and they share a mutual interest in not merely avoiding a return to all out war, but in crafting a lasting and a genuine peace. abyei is at the heart of this conflict. and of any lasting resolution. tomorrow, international peacekeepers will begin to arrive there, and i hope that they can pave the way for the return of the tens of of

displaced ngok dinka who call or be home for a resolution that addresses the needs of the misseriya migrants as well. obviate is one crisis point. southern kordofan on is another. once again, we are hearing chilling reports of serious human rights reports. there are new and serious allegations of mass graves, shells are falling in the nuba mountains. people in need of been cut off from humanitarian relief. sudan must not go down this road again. southern kordofan needs the united nations monitoring mission on both sides need to agree and abide by a cease-fire. atrocities are occurring. they must stop and they must be accountability. this bike is great worries, there are also positive signs.

sudan was the first country to recognize the south as an independent state. it's worth pausing to acknowledge that fact. not just because it suggests hope, for the relationship between north and south, but for the relationship between sudan and the united states as well. because of the successful january referendum, president obama initiated a review of sudan's designation as state sponsors of terrorism. completion of that process rests on the review itself, as well as the resolution of all the major issues outstanding from the comprehensive peace agreement, including abyei. and, obviously, this process will not go forward if gross human rights violations are taking place. finally, the true transformation of the u.s. sudanese relationship runs through

darfur. cartoon needs to reject its recent returns to old destructive patterns and recognize that reform can bring with it new relationship to the international committee including the united states. i very much would like to see that happen, but wishful thinking will not bring it about. it's actions by the gls that will make that happen. we are also entering a new relationship with the south sudan. along with president kiir, we hope the july 9 will mark, as he said in his words, india beginning of tolerance, unity and love in which cultural and ethnic diversity can be a source of pride and strength, not parochialism and conflict. south sudan bears the scars of wars in many forms. including roads, schools and hospitals that were never built. they provide their own sense of

permanent scarring. it must also overcome internal corruption and internal rebellions. but as they have already showed the world, the people of south sudan are capable of rising to a challenge. america has stood with the peoples of sudan throughout these struggles. we helped to broker the cpa. we have provided billions of dollars in humanitarian assistance. our representatives, including ambassador lyman, are working tirelessly to bring the parties together. and we must remain involved until there is lasting peace in the region. i would remind people that the war that took place there was the longest war in africa's history. and a cost of over 2 million lives. the last thing that we want to do is go backwards. senator lugar. >> thank you very much, mr. chairman, and i join you in welcoming you back to the

committee. i very distant bush witness was a long record of service to country and in unsurpassed depth of experience in african affairs. on july 9, 2011, the republic of south sudan was declared by its elected government to be independent of the republic of sudan. this is a rare modern milestone and one that follows decades of violent oppression and conflict. the people of south sudan have realized their dream of the independence and deserve recognition for the sacrifice and commitment they made to achieve it in the face of enormous odds. the people of the united states, from government officials to religious and academic communities, to young citizens, have had a profound impact in elevating the importance of resolving this deadly conflict. there is a prospect for new life and economic and social development in south sudan.

nonetheless, violence remains a real prospect for millions along the borders of these two newly defined countries. each country's respective security forces are continuing to engage in the three disputed areas along their common border, and there remains untold suffering, scarcity, and tension within both countries as well. it falls to the leaders of each country to acknowledge the challenges and begin to respond fairly to the needs of the people and to build upon an inclusive vision of a stable and productive future. the challenges are daunting. both sudan and south sudan represent widely diverse populations with a history of often violent competition. khartoum will continue to govern many regions in the north that bridle at the harsh yoke of the omar al bashir government. darfur remains unresolved, a

region with millions displaced as a result of genocide, and the eastern provinces continue to suffer atrocities. in south sudan, the leaders in juba must learn how to govern and empower a new country with few common ties other than a common enemy. that enemy will remain a threat, as it was through proxy militias during the decades of war. the prospect of civil war across the south looms if the oil becomes a source of inter-tribal conflict rather than the means to build a better country. oil, the primary source of income for both countries, could also be a bitter disappointment if, as many experts believe, it is limited and diminishing. south sudan will initially join sudan near the top of the list of the world's failed states.

while the comprehensive peace agreement of 2005 achieved the independence celebrated last weekend in juba, there has been little progress in concluding the essential agreements between the north and south also required by the cpa, such as wealth sharing and border demarcation. the new country has limited governance capacity, weak and non-existent government institutions, and heavy reliance on outside donors. high capital costs limit prospects for private investment. these factors increase the likelihood of competition among ethnic tribes and diminish the odds for near term stability and growth. while the united states should maintain its critical interest in a stable and productive south sudan as well as a more responsible and responsive republic of sudan, it is evident

these countries must begin to deliver for themselves. the u.s. has played a prominent role so far, from senator danforth's efforts at concluding the cpa to secretary powell's efforts to stop the genocide in darfur, to secretary clinton's recent direct engagement at the un on an abyei peacekeeper agreement. now the administration must clearly define and limit its responsibilities and expectations associated with a long-term relationship with this nascent nation. the heavy burdens that now fall upon the people of both sudans should be tempered, when and where appropriate, by the international community. neighbors like ethiopia, kenya and uganda must help integrate the new country into the region while balancing emergent threats such as the approaching famine in the horn of africa and the human calamity in darfur, which lacks a viable peace process.

i thank ambassador lyman for his decades of dedicated diplomacy. i look forward to hearing from him how the international community can assist in this effort across both sudans and how the united states roadmap has worked to date and prospects for its continuation. eye thank you very much, mr. chairman, for calling their. >> thanks a lot, senator lugar. norway we just have the openings of both the chair and ranking member, but today we're going to make an exception to that rule. senator isakson has taken a great interest in this area, this region as well as in this issue and he is taking the to travel there. and, therefore, it's my pleasure to recognize senator isakson for an opening. >> i think that year. i wanted to do two things in particular.

first i want to thank princeton lyman for his dedication to this cause. and acknowledged the last 10 years between the bush administration and the obama administration there have been five special envoys beginning with mr. danforth and their work has brought about the comprehensive peace agreement. ..

>> our pleasure to welcome you and look forward to your testimony. >> thank you very much, chairman kerry, ranking member, senator lugar, two giants of leadership at the very great privilege to be here. senator isakson, who has taken such a great interest in africa. all the time you've been on the committee. it's really a privilege to be here. thank you for the very kind words. i have to say i have never worked on an issue in which there has been so much sustained support from the administration from the president to vice president and the national security council, secretary, this committee, people in the house, people in the public, it makes an extraordinary amount of difference. it's a high priority for the united states and the united states public. and all branches of all government and that makes a tremendous difference in the work that we try to do.

thank you very, very much for all you are doing. i would like to submit a full statement for the record if that's all right. >> without objection. it'll be placed in the record as if read in full. >> i agree that one the first things to recognize is that one of the fundamental objectives of the comprehensive peace agreement was for the people of south sudan to have a choice as to whether to stay within one state or separate. they were able to make that choice, as you point that out in january, and on july 9th, they were able to achieve their independence. and it was an extraordinary event. it was a privilege for me to be there. very happy event. there must have been over 100,000 people at this ceremony. and it was quite moving. i think all who have been working on this for decades, senator isakson is quite correct over many administrations, over many people in and out of government, i think they can take a great deal of satisfaction from what has

happened in that regard. nevertheless, as you all pointed out, the past few months have not been free of conflict, and they haven't been free of tension. the parties failed to reach agreement before july 9th on some of the most important issues that they face to have a full and productive relationship. and then we had crises in the disputed area of abyei as you pointed out and now an ongoing conflict causing many deaths and abuses and displaying over 70,000 people in southern cord baa. we have to focus several efforts on those two crisis. so the entire relationship between the two countries after july 9th is going to be one that is not yet free of tension and

not free from the threat of future conflict. the next few weeks will be critical in this regard. they must follow through first of all on the agreement of abyei. an agreement that allowed an enhanced peace keeping force to come in, and the withdraw of sudanese armed forces that took over abyei a few weeks ago. we haven't a political solution to abyei while it's being occupied by one side militarily. that process is just getting under way. it must be implemented. they also have not resolved one the most important economic issues between them, and that is the financial relationships related to the oil sector. and i fear that if they deponent come to some resolution by the end of july, we could have a serious confrontation over that issue. threats from each sides to shut

down the oil flow are not helpful. and they only raise the specter of confrontation. this is a difficult issue for the south to deal with. they see any final resolution of how to share the resources from oil as linked for the solution of abyei and some of the other unresolved issues. the timetables now are in in sync. what we are urging is by the end of the july, at least they reach an interim agreement to keep the oil relationships going and set up a very firm timetable on dealing with abyei and the remaining issues like disputed border areas. they both face problems inside their countries as you have indicated. we are very concerned about the situation in southern kordivon. it is you know, it is the state in the north.

it was heavily involved in the civil war. people there fought on the side of the south, but they are from the south. there are several that come from the south, and they called for a political process in which their rights without addressed and united grievances. the fighting broke out between the armed forces and units. we are concerned about targeted killings and human rights abuses. as you said, the abuses must end. there must be an investigation and perpetrators held accountable. the two sides on june 28th signed a framework agreement involving both southern kodofan

and blue nile. it's a promising agreement as it provides for talks on both the political and security issues. unfortunately, president bashir has raised objections to portion of that agreement and that puts the negotiations at risk. without those talks, without parallel political, as well as security talks, the chances of ending the hot -- hostilities and reaching the thousands of people in need are slim. we hope the talks will resume very shortly. in the meanwhile, we call on the government to sudan which somewhere has resisted in allowing for a u.n. presence in remain in southern kodofan and blue nile. we need that presence not only to monitor what's happening but to help in humanitarian activities. now the situation in darfur which you've all mentioned remains a very serious problem

as well. this week, in fact, promptly today, the government and one of the armed grouped, liberty and justice movement, the lgm are expected to sign a peace agreement or protocol around a peace agreement. one other movement, j.e.m., justice and equality movement, are on the fence and most did not take part in the peace process at all. what we are emphasized to the government of sudan is signing an agreement with lgm is a positive step. it has to continue to negotiate and be ready to negotiate with the other armed movements. they can't say now we've done it and the other armed movements sign this or they are outside of the process. but we are also concerned that several of the other armed groups are not very interested in darfur so much as they are interested in broad change in sudan. and are fighting on that basis.

which makes it almost impossible for them to come and be part of a darfur-based political process. we have urged them to come to the table and negotiate around the issues of darfur. also to look ahead, we need to engage the people of darfur. they deserve a much of a right to participate much more greatly in determining not only the process of peace, but their future. but the conditions aren't right yet for carrying out a darfur-based political process. so we have set forth a list of conditions that we think are very important to create what we call an enabling environment so that we can have a darfur-based process. it means lifting the state of emergency, it means freeing political prisoners, it means allowing for freedom of movement and expression, better rights

for unimid, et cetera, we hope to pursue with the au, the u.n. and the government of sudan in order to make it possible to have such a darfur-based process. let me turn to the issue you've also all raised which is our relationships with the government of sudan in khartoum. sudan needs to end it's isolation in the international community. it has to secure relief from an estimated $38 billion of debt, it has to obtain access to the international financial institutions, it has to create an environment that will attract private investment. none of those things can happen when it's engaged in constant conflict and under sanctions not only from us, but from others. we have told khartoum, as you have pointed out, senator kerry, we are prepared to help and we've laid out a road map to

normalize our bilateral relations. the president followed through after the referendum on january 9th to open up some licenses and initiate a process of reviewing sudan's designation as the states sponsor of terrorism. and that review is continuing. but we can't move forward as all of you have pointed out with improved bilateral relations as we have said in the road map if the government of sudan does not fulfill it's obligations from the cpa. and that isn't just the position of the united states. it's also the view of other members of the international community and of international creditors. the negotiations, of course, require readiness on the part of both parties to take what are often very difficult political decisions. so we will be working with both the ncp and the splm to encourage a commitment to

reaching agreement on all outstanding issues as soon as possible. now south sudan again as you've all pointed out, faces enormous governance and development challenges. antigovernment militia are causing havoc in parts of the country. and the government needs to respond both politically and militarily to these challenges so that legitimate local or ethic grievances are not ignored. there is also a straggering lack of infrastructure and educational levels on which to build development. the government of south sudan will depend heavily on international support as well as it's own resources to address the challenges. we have strong ties with south sudan. they go back many decades. we are committed to continuing that partnership and helping them meet those challenges. but we're not going to be alone. the u.n. is inaugurating a major

program helping the government in a variety of areas. other donors are coming in in various aspects of economic and security assistance. but we have told the leaders in juba that to succeed, they must work to build an effective democratic and inclusive government that embodies south sudan's diversity, respects human rights, and delivers services with transparency and accountability. i've very pleased that president kiir in his inaugural address spoke to the same issues at the ceremony in juba. the challenges ahead with great. but the historic occasion last saturday offered a few e begin ning people of south sudan and sudan. it's now up to the leaders and people of both to turn the moment of promise into lasting peace. over the coming morns, the

obama's administration engagement will be unwaiverring and we'll be a steadfast partner to all of those in sudan and south sudan who seek peace and prosperity. thank you, i'm happy to answer questions. thank you very much. >> thank you, ambassador. it was helpful and comprehensive. i appreciate it. let me begin by asking you on the south kodofan issue. do you have any evidence at this point or hard information with respect to the scale of the abuses? >> i don't have hard information on the scale. but it's very -- it's very credible allegations of very gross human rights abuses. let me say something more about this. because i've raised this with the sudan government. they have a pattern of fighting their wars in a way that invites gross violations of human rights. we've seen this historically,

and we sought it in abyei, and now southern kordofan. the ormy comes in, called by and supported militias of people defense forces, pdfs and other groups who come in and loot and kill and do all of these things. i have said to the government of sudan, that is not the way an army in the 21st century fights war. there are human rights principals. and they don't follow them. and as soon as they do that, they are always going to be subject to the harshest criticism and sanctions for what happened. this is not the way to fight a war. even when you are fighting a war. now what's happening in southern kordofan, it raised fundamental issues for both sides. fundamental political issues. what the political issues in southern kordofan and blue nile and darfur, how is the

government of sudan going to be structured and operated with the succession of -- secession of te south? is it going to recognize authority and opportunities for wealth? or highly centralized and trying to force these issues? that's what's really raised in southern kordofan. for the splm there, ledded by former deputy governor abdallah zeiss, these are the fundamental issues they fought for in the war. they are not prepared to be disarmed or have air forces integrated into a single sudanese army until they know the political issues are being addressed. the other side, the government says wait a minute, we can't have two armies in one country. we have to disarm you first. that's not tendable in the situation. that's why the agreement that they signed to deal with the political issues as well as the security issues was so critical. and we've got to get them back

to that agreement and to get those talks under way. otherwise we're not going to get either side to agree to a secession of hostilities and open up the door to hue hantarian aid. >> you are talking about the north of khartoum? >> right. >> mr. ambassador, whatever degree it is helpful, since i have relationships with all of the folks, i hope you will convey and i will be speaking with president kiir later this morning. i think it's important to log some calls to the north also to emphasize that everything that was talked about in the road map and all of the transitional components that they are hopeful can be affected as we go forward with respect to the their economy and debt and future depend on as you said and we've said, but i want to reemphasize it, it depends on their

behavior. and what happens in these next weeks and months in terms of accountability. and so i hope to the degree they are listening to this hearing or any of the other comments, it's not a matter of deckation, it's a matter of living up to international standards of behavior and their promises. their own promises. this is going to be a critical component of their own ability to secede. i know there's a lot of turmoil in the ncp, a lot of questions about future politics of the north which is why i mention that they are also a new nation now. and they are going to have to figure out a constitution and other component that is meet with this new situation. but we will back you up and i want them to know that to the inth degree in your effort and create accountability and move

us to a new standard. i think that is absolutely critical. >> thank you. >> do you have any sense of how rapidly or where we would stand with respect to getting the cease fire, restoring presence, and humanitarian aid? >> i wish i would be more optimistic on this, senator, frankly. i've talked extensively to both side, and other leaders of the splm north, i've talked with the government about it. i think until we get those political talks going, it's going to be a hard for them to agree on the security side. now what we have pressed for -- >> until you get -- >> until we get the political talks or process going, it's going to be very hard. they differ on how to deal even with the cease fire or security side. what we have pressed hard for is on the humanitarian process. they've got to allow for more help for the people who are

being killed, displaced, et cetera, and so one the things we proposed is how about a humanitarian pause? 72-hour pause. that's happened in other conflict situations. where you can get in food, medicine, both sides have said they are open to that. we are going to press that if they can't reach a broader sensation of hostility agreement. but i'm hoping that the talks are going to start very soon. and that they clarify these objections to the framework agreement. and get started. we'll continue to press on that. and particularly if we can't get alonger sensation of hostilities, try to get a period where we can get help to the people who need it. >> do you believe that among the leaders in the north there maybe any doubts or reservations about how the united states may behave

here? are our cards on the table sufficiently -- do they have confidence in the road map still is the way to say it? >> i think there are elements in the government that do not have government. every once in a while we heard that publicly. i hear it a lot privately. because they think we have moved the goal post, or accused of of moving the goal post. there's a lot of people who continue to argue inside the government that don't trust the u.s., don't base your policies on that road map, et cetera. i think we've made progress. we have struck to the road map. you have not added new can bees. you've made it clear in the opening statement and subsequently, the conditions were the same ones you talked to when you came out. we have done our part. they have to do theirs. we keep making that point. i think more and more there are people in the government who do realize it.

but it's still an argument inside the government, oh the u.s. will never do this. it becomes an excuse for them following other policies. >> i think you made an point. we need to think more about, perhaps examine more here. that's the doha process and the darfur issue itself. i gather that even this morning it's possible they may have signed that agreement in doha. do you know if they did? >> i don't have a report. it was supposed to be 4:00 their time. i was told they didn't sign. i knew there were some outstanding issues. >> if they did, or contemplate, it leaves us with the same problem. that's an important one which is that j.e.m. and two major factions of the sla, the

abdallah waheed and the factions aren't there. as you stated, they have a different agenda. i think we are going to have to think carefully about how you measure it. one the things i heard repeatedly from people is look, you can't hold us to the darfur accountability act. which requires complete settlement in darfur before you do certain things with us if the players in darfur aren't choosing to be part of the process. if their goal is our overthrow, that is different from the struggle that took place in terms of the genocide in the 19 -- in 2000s, 2004 and 2005. i think it is fair to say that those groups have a different agenda and they are behaving differently, they are going to

go do thin our thing. not to mention some of the other groups which are criminal enterprises, to put it bluntly. i think we have to think very carefully about the makeup of those groups. i wonder if you would comment on that. >> well, senator, it is exactly as you say. and we have said to those groups very candidly, that you can't expect the government to come to the table to talk about your overthrowing the regime. and we've said something else. if you are interested in changing in sudan, why don't you demonstrate that by getting change in darfur and becoming a political part of the process? and we've pressed them very hard on this. i think they are also some of them watching as to what happens in southern kordofan and the north and south as to whether there's going to be a great deal of instability and how that affects the calculations. if we are successful in

containing the situation in southern kordofan, improving the north/south, it may help them change their calculations. we've been clear. you are right, the government has a legitimate complaint if these groups are not prepared to talk about darfur and engage in a peace process. we continue to press them on that. and your point is quite valid. >> senator lugar? >> thank you, mr. chairman. i want to ask you to discuss for just a moment the role of the united states as we go forward not only in south sudan and in sudan, including darfur and the three -- can you identify some of the players which countries are likely to be involved in joining with us or have already

for that matter? this is a considerable interest i think so many americans who take a look at the responsibility, understand our interests in humanitarian way, but ask who else in the world? and so describe if you can, that context. >> i'm glad you raised that, senator, up until now, we've had a large degree of international involvement, other donors have contributed roughly $700 million to southern sudan and humanitarian activities in sudan. of course, others carried 3/4 of the peace keeping budgets for unimid for the new mission in the south, for the new mission in abyei, but i want to make it to another point that you mentioned. because i just met before i left khartoum, the representatives of

most of the european countries. and we were asking that very question. how should we organize ourselves now when the cpa is formerly over? even though there's issues. how should we organize yourself nows to continue to have a major role in bringing about peace and resolution of these issues? we're talking about a number of ideas. of how to create or recreate, if you will, this kind of group of international countries all of which committed to this peace process. we also have the africa union, of course, has the mandate to oversee the negotiations on the north/south. we work very closely with them and his colleagues on that. we need to think now in the new situation exactly how to do that. and i'll come back to you, because we have agreed to think all together about this, get together again in a couple of weeks, and think about exactly that. how do we keep up not just the

donor program, all of which are very important, but lily, how do we act together in the consistent play on the issues that we've been just talking about? >> well, under lying maybe obvious to all of us, especially today. underline why it is important that in the international community, as opposed to just the united states as a default and describe at least the feelings in north, south, darfur, what have you with international participation. >> it's very important. others have special contributions to make that are extremely important. the british have played a major role in the security sector reform in the south. they have connections in the north that we don't have that we can draw on. the dutch are extremely knowledgeable about all of the arab tribes along the border the

norwegians play a major role in sorting out the issues of oil and advising both sides how to treat the oil sector. the eu has it's own set of sanctions, it's own set of responsibilities, and so working together it reinforces the political impact that we can all have. and also, of course, sharing the burden of resources. but i want to mention two other countries that play a major role. that's china and russia. and i've been in touch with both of them about their role. china has 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. now china understands that they have important investments in

both the north and the south. because the oil industry in which they are heavily invested is in both the north and the south. so 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 foreign minister from russia, because although they are not as heavily invested, they are arm suppliers, they are a member of the p5 and how they play their role with us in the security council is extremely important. so getting them as well as our western european friends on the same wavelength becomes important so that the messages that various parties are receiving in khartoum are consistent. >> you've mentioned specifically china. this may be simply an amateur reflection, but a good number of americans have observed that

throughout all of the problems in darfur, the charge of genocide and what have you, religious groups that have come to see many of us in our offices here in the united states. the thought that kept coming through was that china realized that some very bad things were happening, but oil came first. the desire to get the oil out, come hell or high water so dominated 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? >> well, i think two things. one the emergence of south sudan as an independent country which has 75% of the oil. so if you are -- if oil is one of their interest, then having not only a positive relationship with south sudan, but also stability and no confrontations over oil. no turns off the pipeline or turning off the oil pumping, et

cetera, which each side might do in a confrontation. it also means they have to balance their relationship between khartoum and juba. they are not inclined to trade, but realize they need to have good relations with both. that gives them a take in seeing some of the conflicts involved and not have instability or conflict between the two. we talk about that a lot together. >> last year we spent as the united states approximately $1.5 billion, including half a billion for peace keeping in the sudan situation generally. what is your estimate of whether these sums are likely to be larger or will it be request by the administration for more than one and a half billion in the coming year or -- can you give us any benchmarks as our whole

budgetary situation as you recall is tense elsewhere. but sudan, it's important. what would you predict in that area? >> well, i realize that we have one of the largest combination of peace keeping operations in sudan in any place in the world. we have the combineed u.n.a.u. forth in darfur, and in south sudan, it's peace keeping, but a lot of assistance to creating a viable government and system in the south. and that we have the special force in abyei. without which we would not have been able to get the armed forces to withdraw. i don't see any major additional. the government of sudan has said we don't want a continuation of the u.n. in the north. but there are a role, and not a heavy role, in helping monitor the border under discussion.

it's not another big mission, et cetera. so i don't see any major new mission requirements. i can say the ones we have will diminish in the near future. until some of these big issues are resolved. >> thank you very much, sir. >> thank you, senator lugar. excuse me. well, senator isakson, then udall. >> thank you, mr. chairman. i'll be brief. my impression when i was in khartoum as far as their view of the -- of darfur was they were pretty much content to fight a surrogate war in darfur, because it was far enough removed from khartoum, they didn't feel any real pressure to do so. you made an interesting comment. the j.e.m. and sla are watching and what's happening there. because of it's proximity geographically, if the north continues the alleged or apparent atrocities that we've

had some evidence of from satellites and others, that changes that 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 one that the government needs to avoid. they don't want a war in the north. they complain about what they think is an attempt to create an new, as they say a new cpa between the southern part of sudan and the rest of it. but the fact is if they don't address those basic political issues in southern kordofan and blue nile and 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 and they -- they've said this as much, needs to think through what kind of a new constitution they need, what kind of a new political set of relationships they need, but they haven't

indicated just exactly where they are coming out and they are being challenged forcefully to make those decisions and hopefully not make them with just the military response. >> so the north which is interested in self-preservation first and foremost in terms of the government runs a risk if they continue in the southern kordofan first with the removal of state sponsor of terrorism. they continue that. that'll be a violation. plus they run a risk of the expansion of the hostilities against them. was that not correct? >> that is really a very major risk. >> hopefully that'll be a motivating factor for them. have they done better with the ngos and darfur. i know there was a lot of manipulation of pieces and entrance in and out. >> it's very uneven. still not satisfactory. unimid has better access. it's not perfect. we still run into some problems with the ngos. it's one of those conditions as

we have said for having a darfur-based political process. because it reflects a lack of openness and movement. so we continue to work on those all of the time. >> mentioned the conditions aren't right for a darfur agreement. the main condition is that khartoum is not ready to be a player in doing that; is that correct? >> i think khartoum is not yet ready to create an atmosphere of real freedom inside of darfur. you could have a real political process there. we've had occasions gnat past where people speak up and then are arrested. they released some political prisoner yesterday. there are more. people have to be -- feel if they speak out in some kind of a domestic political process, they are not going to be harassed or jailed or something. that's something you don't do overnight, you prove it by

creating the atmosphere that people can watch it and see it happen. we don't have that. they have to lift the state of emergency. we will see. 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 our own destiny if they just wake up and realize that. >> they are. they are. they have the armed movements that are fighting. they have a lot of opportunities to create an environment that's very different in darfur. >> as i've said in the opening remarks, thank you very much for your service. thanks for being here today. >> thank you, senator isakson. senator udall. >> thank you, senator kerry and i also want to thank you, ambassador lyman, for your service. south sudan, one the critical issues is education. and as you are very, very aware, it's one the least educated countries in the world with one the highest rates of illiteracy.

i'm wondering is -- are there any plans to increase the amount of u.s. volunteers to go to south sudan, would it help our relations to -- 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 are exactly right. it is one the highest illiteracy rates. 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 providing the bulk of health and education services right now. we have had some discussion of whether we could bring the peace corps to south sudan. you have to be sure that the living conditions are possible and the other things there.

so we'll look at that and other ways for ngos and young people to volunteer. because i think there's a real opportunity. one 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 now to operate in the south where arabic is not going to be the major language. there are a lot of opportunities of the kinds that you mention. and we'll pursue them and i'll let you know what happens there. >> are you -- you mention the peace corps. are you doing an evaluation to see if the conditions are ripe to have the peace corps there? >> there's been -- there's been so discussions of it. i'll check with the peace corps what their next plans is. we have to wait until the south was independent. i'll check with the peace corps and see what the current thinking was. one the 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 know, one of the -- you mention the lack of education being a drag on development. one of the other issues is this issue of sustainability and land use and those kinds -- the use of natural resources. i'm wondering what were doing as a country to ensure that sustainable development practices are put in place and so that there will be cropland there, viable for future generations. >> well, you know, we have been fortunate and i appreciate the congressional support on this, we've been able to draw on a bureau in the department, conflict and reconstruction and

stability crs bureau to provide a lot of the surge capacity for the african bureau to deal with sudan. one the things they've been doing is providing expert teams that go out to the all of the states in the south and look at what are the issues out in the areas. land is an important issue. land ownership, land management, et cetera, especially as hundreds of thousands of people from the -- 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 urge the government to deal with the issues out there. because they could be sources not only of injustice, but of instability. so issues of land, issues of access, opportunities, et cetera, these are important issues and we're getting handle on them and we are trying to

build up the capacity of the government to deal with it. >> and then also i think infrastructure is currently lacking in south sudan. and if south sudan is going to achieve some economic freedom then it will need to be able to bring goods to market, what needs to be done to improve transportation and to create the infrastructure needed so that farmers can sell the crops outside the country? >> when you fly over south sudan, you don't see hardly any roads. usaid is building a major road down to the uganda border and a couple of other roads. we are hoping donors are going to come in more heavily on agriculture, health, and education. we are 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, it won't have the right result. so we're going to look to other donors to do more in the infrastructure area. >> great. thank you very much. thank you for jr. -- for your service. i see senator coontz is here. thank you for your time. >> thank you. i like to thank my colleagues for leadership. and all of the dedicated people who have worked so hard to make south sudan achieve independence. less than a year ago, it looked unlikely independence day would ever come from south sudan, it not only came, it came on time. through a peaceful and free and fair referendum. but all celebrate as the 54th nation. i remain concerned as my colleagues as the path forward and in darfur. that's why senators isakson,

wicker, and i will soon introduce a resolution welcoming the independence and calling on the governance of south sue dan and sudan to peacefully resolve the outstanding issue, the final status, citizenship, and current as you are detailed troubling conflict in south kordofan. the recent violence in abyei and kordofan remind us to the role in conflict. that's why the united states must continue their sustained effort to urge peaceful resolution that south sudan will face in order to become a stable nation. i know you've already discussed the current situation. i'd be interested in what you believe to be the outlook for a final agreement or referendum. i'd be interested in what became of president becky's plan. he and i met and half became of

his proposal on abyei that would have the backing of the international community. >> thank you, senator. what happened is that as you know, as part of the high level panel was to develop a proposal back to the two presidents on abyei. and our timetable got revailed by the military takeover of abyei. and even though the government said, well, we can have a political solution while we are occupying it, nobody felt that that was a situation that was tendable. so we were diverted, basically, and lost weeks in works through a way for the withdrawal of sudanese troops and introduces peace keepers. it's going to -- the feeling now is we've got to get those peace keepers there, the troops that sudanese troops out and begin to get the displace which is about 100,000 people back in.

then that will be a better atmosphere for bringing a final solution idea to the table. and unfortunately, what that does is delay this for weeks and months. i'm very bothered by that. but i understand the logic of it. it impacts on the other negotiation resulting in the oil issues, et cetera. but the advice of most of the people working on this, people who are close to, and i've talked to people on both sides and otherred involved is we need to make sure that situation -- that abyei is demilitarized and that people feel safe. then we can deal with the issue. so it's been delayed. i'm bothered by it. that's why i said earlier, i think we ought to have a firm timetable for addressing it. because otherwise it just lingers as a source of conflict. >> you mention the peace keeping mission. there's actually if i understand, three distinct peace

keeping missions across the wide area. i'm concerned about coordination and the quality of the groups. what sort of work is being done to coordinate around supply lines, logistics, quality and sustainability of the troops and how long do you think they might continue operations or continue to be necessary? >> i think -- this is an issue that our colleagues have been very concerned about as well. you have three different missions right now. there are talk of creating a special envoy who will work on some of these issues from the u.n.. and it hasn't been finalized. it's one way to try and have someone who's dealing with 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 peace keeping operation going into abyei responds to a point that you just made. it's the effectiveness of the peace keeping operation. the peace keeping operation that was in abyei was no effective. if it had been, we might not have had the crisis that we had. so we turn to a country that we knew would put in peace keepers who would carry out their mandate vigorously. that's the ethiopians. it took us a long time to work it out. and i think they are going to be there for at least months and maybe longer until we get a resolution. mission in the south is a big mission. it's going to be there for a while. unimid if we can get darfur, that'll be wonder. that's going to take some time. i can't honestly put a timetable on when the missions will end. but i think this issue of coordination is very much on the mind of the u.n.. and our u.s.-u.n. people.

and as they work that through more, i'll get back with some of their ideas on it. >> last, i know that you've already addressed in response to senator lugar some concerns about children and -- china and their role. i'd be interested in whether you can elaborate on where you see the united states and china overlapping on south sudan. are there examples of china playing an constructive role? what advise would you have for us? we're going it have a hearing on the role within the next few months. i'm concerned about what better understanding constructive role they might be asked to play in south sudan. >> well, i think, you know, china is already a vigorous player. africa has important political and vigorous interest. they overlap with others. we're in competition. in sudan, i think it took a long time before we got on the same page on darfur.

a long time, but now as i mentioned earlier, now that 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 they will contribute to the infrastructure areas as well as other training. we took -- look to them and discuss this together with the chinese. in their contact with president bashir and others in the north to press hard for the points that we were just discussing earlier about resolving issues like southern kordofan differently. the chinese and the russians stood with us in the p5 and the u.n. security council to keep presence in the u.n. and blue nile. i think we are getting closer

with them in terms of shared interest there. i think that's an opportunity for us to see them making an even bigger contribution. >> thank you very. thank you for your service as well. thank you, mr. chairman. >> mr. ambassador, our relationship right now with the north, sudan, it's caught up and controlled by a number of over lapping laws that have been passed over the course of about ten years. but obviously as of last saturday, the map has been completely redrawn. looking at the map, i see that you are currently able to do current kinds of work in darfur, south kordofan, and blue nile. but you are not allowed to do it along the rest of the border. but obviously the relations

between sudan and south sudan aren't limited to the areas now. particularly there's this cuteness of delivery, i think on our part. both through the south and the north. to south sudan and the north. so my question is as you know are 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 reasons, not the at least of which are con trained the ability to deliver to the north unless we do. would you comment on whether or not you think it would be helpful, for instance, for you to have the legal authority to work on a peace empowerment zone that stretches across the entire border rather than have certain sections carved out the way it is now? >> there's a lot of attractions to that idea, senator, because the border area is where a very

large portion of the population on both sides live. and there are a number of flash points there. there are disputed border areases. there's going to be questions of crossing borders of muture development, et cetera. think it's an area where we can make a significant contribution. if we had the ability to work wherefore we thought that would help alleviate both pressure and real humanitarian needs, i think it would be wise. >> can you share with us ascents of the kinds of projects that you think might facilitate more lasting peace? >> well, i think, you know, part of the attention that arises is in the migration from north to south. access to water, access to pastures, et cetera. what we had talked about 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 equality from that kind of development. you would also ease some of the migration pressures if you could develop some of the pastures and water. we see in abyei and south kordofan. those things would help alleviate. i think equality important, build cooperation. you really want on the border, cooperation between the governors on each side, and a lot of them, the governors are very interested in this, and programs that facilitated that as well as conflict resolution could be useful. >> what about legal authority to work in an area like food security or democracy projects? >> well, i think, you know, on food security -- i think sudan -- the government of sudan is going to face a lot of difficult

economic channels. they are losing a lot of their oil income. as somebody -- one i think was maybe senator isakson mentioned or maybing but senator lugar, the oil doesn't last that long. the economic adjust wants are going to be great. food production is one of sudan's great potential if they would invest in it. 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 up is important for the people in sudan and it will be important for everyone because of the trade. >> and provide you with leverage in the negotiation? >> i think it would be important in terms of demonstrating

something that we've tried to say over and over again. which is the interest of the united states is to see two viable, successful states. without that, there's not going to be stability in either one. and that we don't want sudan -- northern sudan to be in deep economic trouble anymore that we want southern sudan to be. yes, i think it sends an important message to say that if you are moving in this direction, coming back into the international community, we're very serious about the people of your country not, you know, going into economic turmoil. >> well, let's assume that you get an agreement ultimately sort of grand bargain that addresses abyei, borders, commit call --

critical issues. including the apportionment of debt. would you not need some kind of legal change here or 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 that they have with the south, they have taken on the full burden of the $38 billion of debt. on the conditions that the international community will eventually give them debt relief and the south will support them in that politically. i think as we move forward if they -- the president will need an understanding with congress about those restrictions. right now it's in a technical

mode. the world bank is doing what they have to do. which is to gather all of the details, knowledge of the loans, and reconcile. after that, it'll start to move into -- >> we need to address it. >> i think it's going to be important. >> okay. just a couple of quick other questions, how would you say the government -- how would you say south sudan government is doing right now in terms of prioritizing it's own governance agenda and development agenda? >> i think it's really still in very early stages. we are working usaid is going to sponsor a conference here in september in which it's not a donor conference, pledges conference, it's a conference for them to come and present exactly that. what are their priorities, how can the private, as well as public sector help. 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 the government. that transition isn't entirely complete. they have to engage in a new constitution. they have an interim constitution. but they need to develop a constitution that brings much, much more popular parts of participation into the process. so i would say they are at early stages on a lot of those things and will need a lot of engagement and help. >> you mentioned the question of the army. and it's own transition. i guess they have a force of about 140,000 soldiers. but they incorporated within that ranks a number of different armed groups. so my question is, i don't think that's sustainable for the long time both politically and otherwise. so what should their priority be for security reform and how can we have an impact or should we have an impact with respect to

that? : >> and then engages in a program of reduction and demobilization where people go out with the 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 and some military assistance. in support of the transformation of their security sector. there are some, i don't want to say it's a huge debate, but there's some who've suggested that now that they're an independent nation, it may be time to consider the provision of legal support, including air defense, training, technology, et cetera. you have any counsel with respect to the specs wax we have not made a decision to provide any legal assistant. we are focused only on issues you raise. how to develop this into a better organize, more professional national military

force. so we have made no decisions on legal assistant. we do so or contemplate, i want to come back to the congress and discussed that before we make a decision. >> we will welcome you back. we are going to stay actively engaged and tried to provide some transparency to the transition process, and hopefully that can be helpful and assist you in the process. and we will do it obviously 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? >> a couple more. ambassador, -- >> let me finish my thought. i 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 are very grateful for the interest you have taken on this. >> at me just carry forward a

question that was raised about the lack of the constitution, and you've tried to fill in some of the gaps, at least to our understanding, barring constitution there is at least a military force there, and it's expanding as you suggested, taking in militia and so forth. and so, for the ordinary observer of this they would say essentially the government right now is the army or the military force. is this true in the sense, or the generals -- are at their generals who is leading us, at the top of this? in other words, trying to describe what the executive authority is in the country, something you look at in terms of military hierarchy at this point. >> they do have been into him

constitution with president kiir signed at the 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 they have just signed centralizes power quite a bit. one of the sources of controversy when it was developed. many of the leaders in the government are former generals who led the liberation struggle, including president kiir, and a number of others and have a long history of fought. but there are others who are, what we call technocrats, people who, with skills in those areas. but i think this is the

transition from growing heavily as as they understand have on the military leaders to fill these positions, and some of them are extraordinarily good, to building a broad-based government that makes a clear separation between the government and the military. and that's going to be part of what secure he 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, by that i don't mean the end of time, but say three or four years from now, we can observe that essentially this government looks much like those governments involved in the so-called arab spring? now, 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 later. and if so, -- to that leader. and if so, 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. because it's very tempting when you're the overwhelming local as well as military force in the country to just run it as a quasi-one party state, and not see any challenges to you as something to push back on. and that's a challenge. and we had ndi they are 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 this. 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 medical openness. its fairness to a loud 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, but let me carry this a little bit further. one of the point often made about recent egyptian express was not just simply the young people in tahrir square, but the fact that there were millions of people throughout the country who lacks very much food this year. with the price of wheat having doubled and egypt depended upon us, the united states for 62 of its 65% of its week. the amount of so-called subsidies, money splashed out in

the countryside, was inadequate. and, therefore, a lot of the revolt really came from people who were 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, darfur to the site. but there's only a limited evidence, at least of this thus far. and furthermore as the norwegians have suggested, you mentioned this, the oil may run out. the basic element of the money for this state, even if they get it right constitutionally, is -- how are people going to make a living in south sudan? are the prospects entirely agricultural development, or is it 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 the currency, the sudanese down,

which has raised the price of imported food. the south which is depend on food coming from the north as well as from the south is also facing very high prices on food. in my view it's a very serious situation that both countries have to really deal with. and the investment in sudan, northern part, have not kept pace in food, and should have. in the south, you just don't have a lot of organize production. because displacement in the war. when you fly over it again you look for faults. you don't see very many. agriculture should absorb opportunities for most people. but that our money opportunities, even some tourism opportunities because they have discovered a huge amount of wildlife along the nile. in the south. it's that potential but you have to develop all the infrastructure for it. but i think in the south, agriculture will 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 then there are, as i say, mineral, other mining and other opportunities. industry maybe if the infrastructure improves. if they joined the east african union which they're talking about, or come me so, 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 another and at some point, but -- >> let me just say thank you very much. i will see you on the trail. >> thank you. >> i'll conclude in just a moment. >> anytime. >> essentially, one of the dilemmas of development of agriculture in many african countries, leaving sudan out of it altogether, has been

disagreement between the united states and european friends on so-called genetically modified seeds or procedures. and if so, it's a debate in brussels. the dilemma here obviously, the gates foundation, department of usaid has put outcome if you're looking for the kinds of yield increases that have made agriculture a very different situation than the united states, i have seen on our own farm, my dad getting 40 or 50 bushels per acre of corn, whereas now we are getting 170. in my lifetime, a fourfold increase on the same land. but only because we adopted procedures that are in dispute internationally. and this is why, as we take a look at the international involvement in sudan, i am hopeful that somehow humane streak will come over all of us,

europeans as well as the united states, because otherwise possibilities 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 here leaving aside all the other reasons for conflict. the most essential reason people may fight is before they starve. and so i'm not putting too grim a note on my final request -- final question, i'm hopeful in our delegation to sudan, there are people who are gifted in this particular skill. and that would be true really of assistance we're getting to all african countries presently. >> well, you touch an issue which i have rather strong feeling but i don't know what the u.s. government position is. but, frankly, i think that debate has not been fair to africa. and paul, the author of mod -- bottom billion, taking the same

point you did and which i agree with, is that there are opportunities in this technology for africa that might be vital and essential, and out of the opportunity to develop those. so i have to feel that way, too. i will have to check with others to see where u.s. government is, but raj shah, or use ambassador, told me that in his visit to southern sudan that technology that we could introduce today would have a dramatic affect on the yields 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 because he came back enthusiastic. also, the minister of agriculture in south sudan is terrific, and she's heavily focused on these opportunities. >> this is great news, both raj shah 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. at least on the situation. i joined the chairman once again in thanking you so much for your coming today. this is been a very important hearing, and you have given very important and encouraging testimony to us. >> thank you. it's a great privilege, always, to be before you, senator lugar. >> i will conclude by saying the hearing is adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

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>> i'm very interested in what i call disappearing america. america that may not be here 25 years from now. >> for 30 here's carol highsmith has traveled the united states document that contrary to the camera lens. every photo donated and a failed at the library of congress. followed her story sunday night on q&a. it's a prelude to monday's debut of c-span's original documentary, the library of congress. >> this is the members from here at the library of congress. a private room for senators and house members. they can also the personal

records held here at the library. just how many congressional are the? you will find answers about this unique library in c-span's original documentary, the library of congress airing this monday night. we will do the iconic jefferson building, including the great hall and 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 the library is using technology to discover hidden secrets in the collection and to preserve its holdings for future generations. join us for the library of congress this monday night at eight eastern and pacific on c-span. about that question, the library holds the personal records of over 900 current and former members of congress. >> americans could be paying up to $2 billion a year in unauthorized charges on their phone bills, according to a

study by the senate commerce committee. the committee released a report wednesday at a hearing on cramming. that's when phone companies allow third parties to add charges, many unauthorized, to landline phone bills. committee chairman senator rockefeller announced he plans to introduce legislation to ban third party fees. we hear more about the practice of cramming at this 90 minute hearing. >> good morning. this hearing will come to order. and today's hearing is about a scam that has cost telephone customers billions of dollars, all of you at the witness table are aware of this in various ways. and it's called unauthorized charges. telephone company can have authorized charges if you want to buy dish tv or something of that sort. that's an authorized charge, but

a great percentage of them are unauthorized charges but the telephone company's still of a -- still let them appear on the bill. so what happens, they appear on the bill and the person who doesn't necessarily carefully read the bill, which is offered for five pages long, sees this thing and doesn't know what it is, but they didn't ask for it, they didn't want it. it's not authorized to be there. legally it shouldn't be there. but it is there. and it's called cramming. and it refers to what we call mysterious charges that appear on american phone bills for services that people don't want and don't use, i didn't ask for, and shouldn't have to pay for. the companies responsible for these cramming charges don't sell legitimate projects. that is, the on authorized ones. they don't really sell anything. most of them don't seem to do that.

their sole purpose is to place bogus charges on your telephone bill. and they are very, very good at that. they are very good at. and hope that you will pay your bill every month without looking at it too closely, which unfortunately a lot of people do. in the late 1900s, the congress and the media devoted a lot of attention to the subject of cramming. i remember it well. committees held hearings on cramming as an anti-cramming bills were introduced both in the house and the senate. at the time consumer advocates and federal authorities at the television communication a great something should be done. the question was what should be done? the industry told congress that they would fix the problem themselves. and that made sense, but they didn't want to have -- they work of voluntary guidance but they didn't want that any sort of mandates, or as they said, this

industry as a powerful self interest to correct this problem and we're working overtime to lead the industry of this scourge, which is kind of a strong statement. and the congress and the press, i guess everybody kind of went along with it. nobody paid much attention to it. so, congress took their word for it. we moved onto other important issues because we believe the cramming problem was being addressed. which, of course, it was not. but we know now is that the cramming problem was not solved, far from it. them in congress decide to trust the industry that it would fix this problem, grammars saw that relaxation and they moved right back in. and american families and businesses have been paying the price ever since then. so, in this committee we held a year-long investigation on this, hundreds of thousands of pages, hundreds of witnesses, consumers, businesses, small businesses, all kinds of folks. and we have a very good idea of

how high this price has been. here's what we have learned. more than a decade after telephone companies implemented a voluntary guidelines, hundreds of cramming companies, we don't even know how many, we don't even know how many, continue to place tens of millions of bogus charges on families and businesses on their landline so that's an important distinction. not on their cell phones but on the land lines. they do that every year. individual charges are usually small amounts between 10 to $30, when you add that up and it becomes an enormous amount. it's billions and billions of dollars. now, there's also a cost of cramming that is hard to put a figure on, and that is the agony that people have to go through try to figure hey, i didn't order this. if they do look at their bill. how do i get rid of it? who will i call? they call the cramming county

and no answers the phone, or maybe some he does and refers them to the telephone company and they just get lost and give up and get mad, and feel even less friendly about their congress. so it's a problem. was the question was asked during this investigation is would have the telephone company's been doing for the past decade to protect their customers from these abusive tactics? i was with a major telephone ceo last night, and we sort of talked about that. there wasn't a great deal said. anyway, the short answer is not enough. all telephone companies have anti-cramming policies. they haven't made a serious effort to keep the grammars off their landline phone bills. even when phone companies take the company off the bill, the grammars come right back into a waiter week or so and become -- a flood right right back in. many generations of their

obnoxious behavior. now, one reason, however, the telephone company stokely crackdown on crammars is a make money from crammars. oh, yeah, they make money. do they make a lot of money? know, but in america money is money. and if you can make money, why not? according to the financial information that the committee staff has reviewed, telephone companies earn a dollar or two every single time they place a third party, unauthorized third party charge on their customers bill. so do the math. that is well over a billion dollars in profit. today my staff released a report detailing how cramming works and how much money it is costing. and not just american families and businesses, small business businesses, people. so i ask unanimous consent to

enter the support and other related documents in today's record. hearing no objection -- >> no objection. >> it will happen. thank you. although congress and the telephone companies had been doing enough to protect consumers from cramming, our fault, i'm glad to say that some state and federal law enforcement agencies have stayed on the job. we're going to hear from the attorney general of illinois, lisa madigan, who sits right there. and she's going to tell us how her office has filed more than 30 lawsuits against crammars. and we'll hear about the state of vermont how it protects its citizens against cramming. a lot of other law enforcement authorities, including federal trade commission, federal key mutation system have filed lawsuits and shut down crabbers. but what they need to know is crammars can come right back. they are ubiquitous. they're everywhere.

like all the little satellite in space things. they just drift around, waiting to plot out on the field -- a phone bill. sorry i'm so long. when they shut down one crammer, new crammars appear to take the place. so it's obvious at this point of voluntary guidelines are not going to solve this problem. it's also pretty clear that case by case law enforcement approach is not going to work. they are just too many crammars out there ripping off to many consumers. so it's time for us i think to do something more about it. say one more thing. there are about 300 million charges, mostly unauthorized, entered onto telephone bills each year. 300 million. and that's about, worth about $2 billion. you know, so that's not a lot of

money except if you have to pay it. people living on the edge, 1995, that's a lot of money. and again, all 2 billion were not cramming charges but most of them are. we estimate there's been about $10 billion worth of third party charges on consumer telephone bills. we estimate that at&t and qwest and verizon have earned more than $650 million. those three companies from this. that's pretty money. that's pretty big money. and so anyway, we've got a real problem here. and we want to do the right thing and we want to protect people, and that's the end of me, so i call on senator ayotte. >> thank you, mr. chairman. i want to thank you for holding this important hearing. i know that you and your staff have put a great deal of time and effort into preparing investigative report the

committee released today. i also want to thank those at the federal and state levels who have pursued enforcement actions against those perpetrating this fraud on consumers. .. >> found to be cramming or ban them entirely from access to the telephone company billing

apparatus to prevent further harm to consumers. as we continue to examine this issue and discuss how to best address it, we must not lose sight of the fact that cramming affects regular hard working americans who are being scammed out of their hard earned dollars. as a former prosecutor, it's my intent to bring to justice bad actors, but simultaneously recognize there are legitimate business providing services to consumers. it is my hope that we will spend some time this morning talking about the prosecution of crammers, how to best go after those defrauding the consumers, without fear of retribution we are certainly not fully addressing this issue. in addition to the witnesses from illinois and the vermont law enforcement who we will hear from today and i appreciate mr. berg being here as well. we should note the ftc and fcc have played a key role by

bringing law enforcement actions regarding illegitimate charges on consumers phone bills. just yesterday they announced rulemaking intended to prevent unauthorized charges. there is ongoing action to help consumers protect themselves. however, one the issues this committee will be i hope addressing is whether those steps are sufficient to protect consumers and hold wrongdoers accountable. given the clear importance of the issue and urgent need to find workable solutions that protect the public, i very much appreciate the work that went into this year-long investigation. i am disappointed that the findings were only released right before the hearing. i would have liked to have heard from the witnesses more of an analysis of what their view also is of the report. so going forward, i hope that all of you will feel --

department of justice, ftc and fcc who prosecutorring and imposing fines on those who conduct cramming. so that we are hear the perspective on this report and also provide additional information as we address this very important issue on behalf of consumers. i look forward to the hearing today. i want to thank each of you for being here. i yield back the balance of my time. thank you. >> thank you very much, senator. should we be kind? we have amy klobuchar here, she has another hearing to go to.

she might want to say something. that leaves mark begich. >> i'll pass allowing senator klobuchar to have as much time as she deserves. >> thank you. we talked about the leadership of you and your staff it's been very helpful. our state has been taking this on not only at the federal level, but the state level. last january, she and i joined together and talked about the following of a consumer fraud lawsuit against the company that fraudulently charged thousand of minnesotaians for service they neither authorized nor used. the company which was called cheap 2 dial had charged 2,567 consumers for long distant service fees. you know how many people used the service, mr. chairman? nine people. nine people.

of the 2 a 67 that were charged. it's just one example of a consumer practice that have has cost millions if not billions of dollars. i'll never forget the consumers. think one was a -- they were a lutheran minister and his wife. of course, she had checked the bill every tiny detail and she was able to discover that charge which is not something that i would do. so it was very hard for consumers to notice these charges because so often they can be $10, $15, $20, $5 amounts that they would not normally notice on a larger bill. and that's why when you all add it up, it becomes a big chunk of change. i am one that believes that it shouldn't be up to the consumer to play detective, going over their phone bills with a magnifying glass every month. i believe that phone companies and third partying a gators need

to crack down on crooks who are stealing from the citizens and businesses. we need clear rules of the road. there's been good things, it's led to innovation. but also issues that we are seeing like this one. where crammers have been exploiting this open market. so i applaud the commission for the rulemaking. i look forward to helping in any way that i can. i look forward to hearing the system. i'm chairing hearing in judiciary on the balance against women which i know the chairman cares about very much. so i may not be here for all of the questioning. if i'm not, i will submit them on the record. thank you. >> thank you much, senator klobuchar. my vice chairman, senator -- not going to make the next introduction. >> thank you, mr. chairman. it is my privilege to introduce the attorney general from

illinois, lisa madigan who will provide testimony today who have been active on going after crammers in her own state. again, i've had the privilege of serving with her as attorney general. i know how diligent she is in protecting consumers. so thank you, attorney general, madigan. >> thank you, senator. mr. chairman and distinguished members of the committee, i appreciate this opportunity to testify. today i want to stress three points that draw on my eight and a half years of experience investigating and bringing enforcement actions against phone bill crammers as the attorney general of the state of illinois. number one, most consumers are completely unaware that their phone number can be charged almost like a credit card. so many consumers will never discover there are unauthorized charges buried in their phone bill. number two, my office has yet to see a legitimate third-party charge placed on a consumers phone bill.

three, phone bill cramming is such a persistent and pervasive problem. i believe the only effective solution is to enact legislation banning third party charges on phone bills. to give you an overview, individuals, businesses, churches, and government agencies have been filing complaints with the attorney general about phone cramming since 1996. in a response, illinois, as well as other states and the ftc have taken a series of law enforcement actions when they did that initially, it did temporarily quell the problem. however, we are seeing a very strong resurgence of the number of cramming complaints. initially, the phone bill cramming scans that we saw were primarily through tell marketers, especially in the years prior to the national do not call register. recently, crammers like many other illegitimate scams from move to the illegal. some say they have done nothing more than submit their name, address, and importantly phone

number in a response to online offers for either a prize drawing, coupons, or free recipe. eventually they learn they have been crammed. again they did not know that they were buying anything at the time. and they did not know by giving their phone number, they were authorizing a charge on their phone bill. they are understandably puzzled and angered when sometimes later they notice their phone bill contains a charge for a product or service they didn't seek out, didn't authorize paying for, and very importantly, they never used. that's when some of the victims turn to my office for help. however, ftc data indicate that as few as bun in 20 consumers that are billed for third-party charges on the phone bills are even aware of the billing. my own investigations have revealed similarly low level of consumer awareness. through the investigations, we have learned that many victims never visited the web site of the vendor of the product or service they are being charged

for. worse, some of the victims don't have access to the internet. additionally, victims tell us they have never used the product or service for which they were billed. that's not a surprise when they didn't know they purchased anything. one case that my office handled, we managed to obtain the data on more than 3500 illinois consumers who had been billed for internet service and extended cell phone warranties. most of the consumers we talked to did not know they were being billed, none of the 3500 consumers had made a warranty claim or had used the internet service. our investigations consistently reveal that most phone crammers rely on deception. however, other engage in outright fraud. for scams involving deception, the basic markets strategy has revealed --

>> senator, we'd like to hear about it. i'm very much appreciate the opportunity to testify to committee today over the past year and a half our office has been issuing subpoenas to third party billing aggregators, vendors, we have been serving consumers, interviewing consumers, and we've reach add number of conclusions that i'd like to share with you today and i'd like to talk about a potential solution to the problem that has been embraced in vermont. first of all, the incidence of cramming in vermont is extremely high. close to 90% of the people who responded to a survey had absolutely no recollection of ever having given consent to be billed on their local phone

bill. secondly, the level of consumer awareness about the possibility that one can be billed for third party charges on a local phone bill is extremely low. thirdly, we have found many instances of deception being used in marketing, third party charges that then get passed on to a local phone bill, and forthly, this is really the major point that i want to make. it has to do with consumer expectations. people -- ordinary people do not expect that third party charges by companies that are unrelated can be placed on the local phone bill. they are simply not aware of that any more than any of us would expect to have monthly mortgage placed or our electric bill. and without that awareness, people are not going to play the

detective that we heard about, they are not going to produce noise the phone bill to try to figure out if there's something they should be complaining about. vermont has given the potential solution of disclosure a fair shake. for the past decade, there has been a statutory requirement in vermont that third party venders send a notice through the mail to people who are going to be billed on the local phone bills by that vendor and the fact is that that system has not worked. and the level of awareness of possibility of those charges has not increased in the state. so what have we done by way of potential solution? in january, the attorney generals office proposed pot vermont legislature that a bill will introduced that would actually prohibit third party charges on local phone bills. with some limited exceptions for

things like direct dial or dial around service that is are initiated by the consumers from the consumers phone, or operator assisted or collect calls or companies that are directly regulated by the public utilities board. the proposal was otherwise to ban such charges. and a bill was introduced to do that. it was approved by voice vote in both houses of our legislature, it was signed into law at end of the may, and became effective immediately. and under that law, a claim by a vendor that the consume somehow consented to the charge is not a basis for allowing the charge. this is an actual prohibition. other forms are payment are allowed. vendors who want to charge people with the credit card, debit card, kinds of payment mechanisms that people understand and expect opinion

that is all permissible. you can't do it on the phone bill. since may, there has been no negative feedback whatsoever about the bill. we think people are pretty happy with it. i would point out that the local phone companies supported us in that initiative in the legislature. we approached them last fall and made -- basically made the pitch to them these are their customers as well. and they came on board. with that coalition, we were able to get that legislation through and i would very modestly suggest this maybe a model for other states and the nation. thank you. >> thank you very much, mr. burg. now we turn to mr. susan eppley. >> thank you very having me here. i'm susan eppley i'm from

decatur, georgia. i'm here to tell you about my experience with cramming. in earl 2011, i worked for a franchise of 32 restaurants as accounts payable. the company in tough times offers incentives to managers and crew, including but limited to bonuses paid for managers for hitting their numbers based on profit and law. in october, i was entered the at&t invoices and i got curious about how different the stores were. i notice there was charges from services not from at&t the telephone company. i called at&t who spoke with the customer service representative who recognized the problem and she explained at&t was billing on behalf of the third party. when i asked further, she said it was the customer responsibility to block bills from such charges. she told me she takes a lot of calls like mine. i contacted the third party company at the phone number

provided and spoke to their customer service representative who said we requested the service. i then contacted the area manager and he said he didn't request the service. it went back and forth until i insisted the charges were never requested as only area managers have authorization to make those requests. upon my insistence, the representative offered to take three months of the charges off and credit the at&t bill for the next month. but i insisted all $1,009 be paid back, he said he couldn't do that and recording for the request for service. i asked to hear it. i was transferred to a supervisor who then credited all of the charges and i never heard a recording. for the next two months, i come through every single at&t bill for all of our accounts, set up a block on each account to prevent future cramming and to my best estimation, i spent

about 15 hours dedicated to the issue. they do not include the time the accounting department and area managers have spent on it. in the end, six of our 33 accounts for affected and the estimated total amount was about $4,200. upon my persistence that amount was credited back. even though each time the third party company told me they had a recording proving they requested, they never played that recording for me. it certainly is annoying and a hassle to deal with additional administrative paperwork, making additional phone calls, and keeping information organized, especially for services not requested. our already busy accounting department had to deal with their own administrative issues, such as readjusting profit and law, et cetera, et cetera. but the inconvenience and cost of administrative paperwork on the issue pails in comparison to what it has taken away from the managers of our restaurants. these managers work long hours on a busy demanding environment

all with a smile. they have a tremendous job juggling employee relations, customer satisfaction, serving safe food and controlling cost. as i mentioned earlier in my statement, great managers are rewarded, and some of the managers no matter how hard they work and earned it, did not receive their bonuses because of cramming. it infourfour -- infear rate -- infour rating for businesses charge without authorization and take money out of the hands of hard working, deserving men and women. i shutter to think that senior citizens are falling victim to cramming because they don't have an accounts payable to check the phone bills for unauthorized charges. it is my hope the lawmakers will prevent businesses and individuals from being a victim to crams by making it illegal for at&t and other companies to allow third party bills. thank you. >> thank you.

very much. i wish there were more consumers like you. let me -- you just -- you are a bulldog. you had to be. >> thank you, sir. >> i guess it's not complimentary. but i meant it to be. [laughter] >> our next witness is dave spofford, from xigo, you are from virginia. what do you have to tell us? >> chairman rockefeller, other senators of the committee, thank you for having me. my name is david spofford i'm a founder of xigo, a communications company based in virginia. i want to thank you for the commitment for investing the issue of cramming. i have a 20-year background in telecommunications. i've never seen cramming as bad as it is today. as we process tens of thousands of invoices every month for our customers and are responsible for moving these third party

charges for many of the clients. we are particularly interested in the subject matter. cramming or unauthorized charges by communications carriers on behalf of third parties have been and remains a major problem for the industry. xigo manages approximately $1 billion per year in telecommunications expenses for more than 200 clients. we have built software that helps company manage expenses and identify areas where they can cut cost. we are member of the communications for which i'm president. our clients spend $50,000 to $10 million per month on a variety of services. we monitor the invoices every month, which allows us to identify trends, recurring problems, and the results of our joint effort to get control of telecom expenses. because of this, we have a unique view into billings and services. after reviewing three years, we have found the following

information that i hope will help the committee to investigate the problem. we have found 40,000 unique instances of cramming during that time frame, the recurring amount for an average cram is approximately $18 a month. we estimate that over 80% of all businesses experience cram charges. 71% of our customers have experienced cram charges in the last three years. since the average charge is small, the time investment required to eliminate the charge is high, many customers simply pay the charge. xigo has identified several major third party billing con sol day tours who are responsible for the majority of these charges. in addition, we have identified approximately 600 third party biller names that are used to bill nearly 3,000 different line item charges. the large quantity of biller name that is are used by small numbers maybe a strategy to

avoid automated detection by systems like our. they often have descriptions such as voicemail, e-mail, web hosting, and other names that are normal to the customer. as it turns out, more than 99% of these charges are unauthorized by the customer and are for service ises that they are not receiving. decentralized multilocation companies seem to have more exposure than other businesses. so large retail chains, for example, are particularly hard hit. more invoices a business receive, the harder cramming is is to detect. it maybe assumed that the remote location may have bordered the services being built. xigo has provided the committee staff with the details and names with the line items commonly used for the charges. communications industry both fixed and mobile is is complex and growing quickly. to stop the practice of cramming would be a welcome relief.

chairman rockefeller, i thank you for your time, xigo is is committed to supporting your effort in any way that we can. we look forward to working with you and putting a stop to the problem. >> thank you very much. our final witness will be mr. mccormick who is is the president of the united states telecom association here at washington. >> thank you, mr. chairman, thank you rockefeller, members of the committee, thank you for giving me the opportunity to testify today on behalf of the united states telecom association. and i might add it's a personal pleasure for me to be back before the committee that i had the honor of serving as majority and chief council to the minority. our industry accepted your invitation to appear today for three reasons. first, to acknowledge the existence of a continuing problem. one that impacts consumers, one that has continued for many

years, and remedian measures under taken by our industry and the federal communications provision. we appear to honor and operate in your attention to cramming and eliminate it. third, we appear to pledge the industry's good faith to work with you and with the committee and with the appropriate regulatory agencies towards further reforms. mr. chairman, our position simply put is that consumers should not be charged for services that they did not purchase. for our industry, third party billing had its genesis in a well intention consumers initiative by the federal government. in the wake of the at&t vesture, the fcc required telephone company that have been part of the bell system to bill and collect charges on behalf of competing long distance carriers and enhanced services providers. federal regulators believe that the convenience of having all

communications related services on a single bill was an important pro-competition, pro-consumer policy. although no longer required, third party billing continues to be valued by many legitimate businesses and by some consumers as a convenience. three inter-related measures formed the foundation of the basic consumer protection framework that is in place today. they are the industries anti-cramming best practices guidelines, the fcc bills order, and agency enforcement. pursuant to the measures, steps the telephone companies are taking to protect their customers fall into four distinct categories. the first level of protection. seeks to prevent bad actors from getting access to the telephone bill in the first place. contractual commitments with billing require active oversight of all service providers for whom they commit -- submit the

charges. the second level of protection seek to make charges on a customer's bill clear and transparent. for example, third party charge the are aggregated in a separate section of the bill along with notification of such charges maybe contested without risking phone service. the third level of protection is to provide instant credit to any customer that notified the company that the charge is not authorized. policy of leading companies in the industry is to eliminate the charge, no questions ask. the goal of the first call approach is to provide the consumers with full relief, without further hassle, including an offer to block further charges from that service provider and review prior bills to see if similar charges that previously went unnoticed need to be removed as well. finally, many companies offer the customer the option of placing a