consent the quorum call be terminated. the presiding officer: without objection. mr. reid: i move to proceed to calendar number 154. the presiding officer: the clerk will report. the clerk: motion to proceed to h.j. res. 66 approving the renewal of import restrictions contained in the burmese freedom and democracy act of 1963. mr. reid: i have a cloture motion at the desk. the presiding officer: the clerk will report. cro comploik we the undersigned senators in accordance with the provisions of the standing rules

of the senate hereby move to bring to a close the debate on the motion to proceed to calendar number 54, h.j.res. 66, aproving the renewal of the burmese freedom and democracies act of 1973. signed by 17 senators as follows --. mr. reid: i ask unanimous consent the names not be read. the presiding officer: without objection. mr. reid: i ask unanimous consent that the vote on the motion to i invoke cloture occur at 5:30 on monday, september 12. the presiding officer: without objection. mr. reid: i ask unanimous consent that when the senate completes its business day it it adjourn until 2:00 p.m. on monday, 12, following the prayer and pledge, the journal of proceedings be approved to date, the morning hour deemed expired, the time for the two leaders reserved for use later in the day, the senate be in morning business until 4:30 about with senators permitted to speak for 10 minutes each. at 4:30 on monday the senate would resume consideration of the motion to proceed to the

joint resolution regarding burma the presiding officer: without objection. mr. reid: there will be a roll call vote at 5:30 on monday on the motion to invoke cloture on h.j. res. 66. additionally a 9/11 remembrance ceremony on the east front steppes of the capitol. members will gather about 10 till 6:00. people should be here for the vote because we'll have to close it pretty quickly. i ask it adjourn under the previous order following the marks of senator warner. the presiding officer: without objection. the presiding officer: the senator from virginia.

mr. warner: mr. president, i wam afforded -- look forward to this opportunity to address the senate and recognize that i may be all that's standing in front of the presiding officer and the folks who do such a good job of maintaining order in the senate of adjournment so i'll try to make my remarks relatively brief. relatively. mr. president, i rise again today to honor another great federal employee, michael smith. as the director of strategic source program office within the department of homeland security, or d.h.s., mr. smith has saved u.s. taxpayers an estimated $750 million over a three-year period by merging the buying power of 22 different components within d.h.s. mr. smith recognizes which i also recognize as governor, i know the presiding officer did when he was governor of the great state of west virginia

that centralized procurement operations is a critical step to creating efficiencies and savings in government. as governor i fostered the development of the centralized re procurement system, eva and mandated all state agencies use that system for purchases. for example we were able to reduce what we paid for light bulbs in virginia from 38 cents to 23 cents. that didn't close a $6 million shortfall by itself but we buy a lot of light bulbs in virginia, i know they do in west virginia as well. mr. smith has taken a similar approach at the federal level. his accomplishment was no small feat. after analyzing the purchasing data at it was --, d.h.s. he identified several critical products and services that could be consolidated for purchasing such as ammunition, uniforms and communication equipment. he brought together the program and acquisition staff of 22 d.h.s. components including the

transportation security administration, and the customs and border protection to agree to work together. mr. smith eye supervisors said he listened to the different needs of the d.h.s. components and was able to lead them to common solutions to meet all their individual requirements under a new contract. according to the d.h.s. chief procurement officer, quote, "mr. smith led a new way of doing business where agencies provided a letter detailing their financial and policy commitment to initiative to obtain the best pricing for the government." mr. smith's collaborative approach has been so successful that the white house has asked him to introduce his methodology to other larger agencies. i hope my completion will join me in honoring mr. smith for his excellent work. i'm also proud to recognize him as a virginian. a marine corps veteran, and someone who has dedicated the past 28 years to public service.

now, mr. president, before i relinquish the floor i do want to take a couple minutes on two other items. one, as presiding officer this morning i heard a number of senators come forward and recognize that as others have over the last few days that we are approaching the tenth anniversary of 9/11. i'm sure all of us here remember where we were that tuesday morning. i personally recall that it was in a campaign for governor at that point, just gotten a haircut and the big debate was three days away and when i first got the news. suddenly the big debate didn't seem that terribly important. within an hour i'd been at my campaign headquarters, saw the plane crash into the pentagon and the smoke billowing out. for the last 10 years i think this country has made remarkable

strides in making sure that americans are safer than they were 10 years ago. we've seen a whole new series of collaboration between our intelligence service agencies. we've seen greater collaboration here at home amongst our law enforcement. i think as we you a come about on sunday and we flect back on the last ten years and the horrors that were brought to this country, i hope we'll all say a little prayer for those members of our military and those members of the intelligence community over the last ten years for the magnificent work they've done in trying to make our country and actually making our country much safer. i think as well as we see reports even today of possible threats that we recognize that we can never be 100% safe. during my tenure as governor during the first year we in virginia and the district and

maryland we're caught in almost three weeks of remarkable terror with what became later known as the sniper incidents. for a lot of that time we didn't know whether this was a possible terrorist incident or was it what it turned out to be, two deranged lone wolf assassins. we can -- wreaking havoc across most of the mid-atlantic. and i think one of the things we need to bear in mind is that we and our government will do everything possible to keep safe, we also have to rely upon individuals as they spot incidents that seem unusual, the collaboration with law enforcement, but even with that collaboration there may be times when whether homegrown or foreign, someone, lone wolf type assassin or terrorist could slip through. and i think it's important that the american people ten years after that enormous tragedy, that we as a people are more

resilient and that we cannot allow a single act of terror to change the way we live, our freedoms, our civil liberties, because candidly, there's no way any terrorist can inflict so much individual harm that it can do damage 0 our country. but if they do spread fear or make us as a people change the way we interact, the kind of respect we have for each other, and respect we're have for our freedoms then they will be more successful than any individual incident of harm. i join i know with the presiding officer and the folks who work here and so many of the young pages as we go into this weekend of reflection, i hope that many of the folks who are listening today will take a moment and not only reflect back on that tenth anniversary but also do an act of service. this is a great time for us as americans to show service back to our community.

so this is a time i know i'll be in the pentagon on sunday morning with where we were hit in virginia, the pentagon is a national institution but we in virginia are proud it resides in our commonwealth, to be with some who lost loved ones on that day but i'll also be doing acts of community service throughout this weekend as well to make sure we show that great spirit of america. i'd like to take one final moment and i will be very brief and this is i want to echo something my colleague from tennessee said, something that the prepre-siding officer has been very active over the last few months. we all heard the president last night, and some of us may agree or disagree with all the actions the president laid out. i do think there are things that we can do as a government, targeted to help spur economic growth and job creation, it needs to be our top priority. but i do think we have to recognize that there isn't a

single silver bullet that the major tools that government uses during a period of economic turmoil, we've actually already used. central governments can lower interest rates. governments can use federal stimulus. and a major way we've used both of those tools. there are additional things we can do around the edges but one of the most important things we can do to get this economy restarted is generate confidence. confidence amongst the american consumers, and the american people, that we in washington aren't going to mess things up any worse, confidence amongst our business community particularly larger businesses sitting on $2.5 trillion in cash, in a better position today than they were back in 2008 when we first experienced the beginnings of the financial cries toys get that money off the sidelines and reinvested in america. one of the most important things we can do and the president touched on it last night but there have been a group of

bipartisan senators who have been working on this for a long period of time, is to recognize that unless we get our long-term debt problems under control, then i don't think we'll see the resurgence of confidence that this economy and this country needs. so i look forward to working with the president and members of both parties, and targeted investments, but i hope as well that with the presiding officer, my friend from tennessee and georgia and others, that we can work with this so-called new super economy to urge them to be bold and if they be bold and we put in place over a ten-year frame a long-term deficit reduction plan that i hope would reduce the deficit by at least $4 trillion, incompassing what we've already done, that that plan phased in over a decade will do as much to generate job

creation in the short, medium, and long term as any other action. i look forward to that work ahead. i look forward to reflecting back with all my fellow americans about the -- both the sacrifice, tragedy, but also the amazing resilience of the american people in the last decade and again, compliment mr. smith and so many great federal employees for the work they do. with that, mr. president, and with that, mr. president, i look forward to going through one more item of business before we recess. i ask unanimous consent that the banking committee be discharged from further consideration of s. 1239 and the senate proceed to its immediate consideration. the presiding officer: the clerk will report. the clerk: s. 1239, a bill to provide for a medal of appropriate design to be awarded by the president to the

memorials established at the 24r50e sites honoring the men and women who perished as a result of the terrorist attacks on the united states on september 11, 2001. the presiding officer: is there objection to proceeding to the measure? without objection. mr. warner: i ask unanimous consent the bill be read a third time and 356d, the motion to reconsider be laid on the table and any statements related to the bill placed in the record at the appropriate time as if read. the presiding officer: without objection. mr. warner: mr. president, i do yield the floor. the presiding officer: under the previous order of the senate, the senate stands adjourned

this weekend the 10-year anniversary of 9/11 on the c-span networks with live coverage for me to the memorial sites. here is our live schedule. the flight 93 national memorial dedication ceremony and sunday morning at 830 memorial ceremony from the world trade center side with president obama and former president bush. on c-span2 at 9:00 vice-president biden from the pentagon and on c-span three, honoring those who lost their lives on flight 93. katie remembered this weekend on ostac-span networks. >> postmaster general toldce, congress this week that theam postal service may close next year if no changes are made to the agency's finances.21st he suggesting to congress possible money-saving ideas that

so include ending saturday delivery, laying off thousandsnt of postal workers, and ser restructuring pension and healtf care programs for retirees.ou this part of that hearing is a little more than two hours. >> as our nation pushed westusd before the railroads were builte the post office created the pony express' to keep america connected connected with its frontiers. and the post office subsidies for air mail in the early days of aviation helped jump-start the fledgling airline industry. through parts of four centuries now the postal system has actually helped make as a nation, connecting the eric and people to one another, moving commerce and culture coast-to-coast and to all points in between. postal service has also bound

the individual towns and neighborhoods together with the local post office often serving as the center of civic life. over the years, the post office has grown very large. today the united states postal service is the second-largest employer in the united states, second only to walmart. and with 32,000 post offices, it has more domestic retail outlets than walmart, starbucks, and mcdonald's to mind. sadly, these impressive statistics belie a troubled business on the verge of bankruptcy. business lost to the internet and more recently, of course, to america's economic troubles have led to a 22% drop in male handled by the postal service

and a gross revenue decline of more than $10 billion over the past five years. this year the postal service is expected to have a deficit of approximately $8 billion, maybe more for the second year in a row. the postal service will also soon bob up against its $50 billion credit line with the u.s. treasury, which could force it to default on a five and a half billion dollar payment into the health care fund for its retirees, which would normally be paid at the end of this month. the bottom line is that if nothing is done the postal service will run out of money and be forced to severely slash service and employees. that is the last thing our struggling economy and country needs right now. despite its shrinking business, the postal service still remains

a powerful force in america's economy and american life. it's still delivers 563 million pieces of mail every day, even with the rise of e-commerce, most businesses don't send out bills, and most families don't pay those bills, except through the u.s. postal service. while magazine deliveries are also down also because of competition with the internet and the recession, 90 percent of all periodicals, about 300 million paid subscriptions per year worth billions of dollars to the publishing and advertising industries and bringing about the employment of millions of people are still delivered by the postal service. only the post office will go that last mile to ensure delivery throughout the country

to everyone's address, and even using the grand canyon and snowshoes in alaska. last year, just to show the diversity, and the american people know this, last year the postal service process to over six and a half million passport applications. right now there is no other federal agency with the national presence that is ready or able to take on that task. now, why are we here today? before the homeland security and governmental affairs committee became the homeland security and governmental affairs committee it was the government affairs or government operations committee, and in that capacity it has long had jurisdiction over the united states postal service. that is why we are convening this hearing today. we are going to hear several

proposals this afternoon about what can be done to create greater efficiency, close the postal service deficit and give it the flexibility and tools that it needs to survive and thrive in america's future. postmasters general donato recently offered a plan that he believes would save $20 billion return the postal service to solvency by 2015, and that plan is the immediate impetus of this hearing, to both give him the opportunity to explain it, describe it, argue for it, and to give others the opportunity to comment on it and, indeed, to oppose it, which some will do. the proposal includes eliminating saturday delivery, closing approximately 3,700 post offices, shrinking the work force by as much as 220,000,

pulling out of the federal employee health care plan to create a separate postal service employee health plan, doing away with the defined retirement plan for new employees and transitioning to a fund contribution plan and asking that almost $7 billion in overpayments to the federal employee retirement system be returned to the postal service. these are self evidently been told, tough, and controversial proposals. as for myself, i don't feel i know enough about them yet to reach a conclusion. that is why i look forward to the testimony of the witnesses today, but i do know enough about the real crisis that the postal service is in to appreciate the postmaster's courage in making these proposals. i am also grateful that my

fellow senators have been leaders on behalf of this committee in dealing with the postal service problems and,o indeed, were the architects of the postal reform bill that passed back a few years ago. each of my colleagues, senator collins and carper, have now introduced legislation to deal with the current postal crisis. i am encouraged to learn that president obama wilson offer an administration plan to respond to the postal service's fiscal crisis. so, i have an open mind on the various proposals that have been made, but to me the bottom line is that we must act quickly to prevent a postal service collapse and enact a bold plan to secure its future. the united states postal service is not an 18th-century relic. it is a great 21st century

national asset, but times are changing rapidly, and so, too, must the postal service if it is to survive. senator collins. >> thank you, mr. chairman. first, mr. chairman, let me thank you for holding what is truly an urgent hearing to examine possible remedies for the postal service's dire and rapidly deteriorated financial condition. the drumbeat of news about the exhilarating lapses at the postal service underscores the need for fundamental changes. the postal service is seeking a far-reaching legislation to allow the service to establish its own health benefits program, administered its own retirement

system, and lay off its employees. this is a remarkable turnabout from its previous proposals. i appreciate that the postal service has now come forth with several big picture ideas, although many of the details remain unclear. as we search for remedies, we must keep in mind a critical fact, the postal service plays an essential role in our national economy. if the postal service were a private corporation, its revenue would rank just behind boeing and just ahead of home depot on the the fortune 500 list, but even that comparison worth the one used by the chairman

understates the economic importance of the postal service. the postal service directly supports a 1.1 trillion dollar mailing industry that employs approximately 8.7 million americans in fields diverse as direct mail, catalog, paper manufacturing, and financial services. many of these businesses can't return to readily available alternatives. they depend on a healthy, efficient postal service. but as vital as a stable postal service is to our economy, at its current financial status is abysmal. the most recent projections are that the postal service will

lose some $9 billion this year. that is $700 million more than the deficit that the postal service was projecting just at the beginning of this year. this hemorrhaging comes on top of eight and a half billion dollars in red ink last year, and 3.8 billion lost in 2009. unfortunately there is little cause to believe that an improvement in the overall economy will stop this slide. the fact is that americans are unlikely to abandon e-mail and text messaging and return to first class mail. the postal service's own projections now resume declining revenue all the way out to the year 2020.

the losses in mail volume are even more dramatic. last year the postal service handled 78 billion pieces of first-class mail. that number is now projected to fall to 39 billion pieces in 2020. this represents the 50% decline in first class mail volume over ten years. i want to give the new postmaster general great credit for coming forth with more creative proposals to stem this crisis. at times, however, the postal service response in the past has been inadequate and even counterproductive. some would cut directly into the revenue that the postal service so desperately needs while

leaving customers with diminished and insufficient service. consider, for example, the debate over post office closing. now, let me make very clear, there are undoubtedly some post offices in maine and elsewhere that can be consolidated or moved into a nearby retail stores. this simply is not an option for many rural or remote areas. in some communities closing the post office would lead customers without feasible alternatives and access to postal services. that would violate the universal service mandate that is that justification for the postal service's monopoly on the delivery of first-class mail.

let me give you a couple of examples from my home state, maine. two islands, post offices, good examples. the tennant this is 20 miles off the coast of maine. it receives mail five, rather than six, days a week and only in good weather. closing this post office or moving it into a large retail facility is simply not realistic for the residence of cliff island, closing their post office would mean more than a 2-hour round trip by ferry in order to send parcels or conduct all but the most simple of postal transactions. the fact is that maintaining all of our nation's rural post offices cost the postal service

less than 1% of its total budget that is not where the problems lie. that does not mean that there should not be consolidation and, indeed, i believe that closing some post offices and moving them into the local treasury store or pharmacy would work very well. similarly the postal service plan to move to a 5-day delivery is not without significant downside. it would harm many businesses and less the postal service can mitigate the impact. it would force industries ranging from home delivery medication companies to weekly newspapers to seriously consider other options. once these private firms leave the postal service behind, they won't be coming back.

and the postal service will suffer yet another blow to its finances. the major solution to the financial crisis should be found in tackling more significant expenses that do not drive customers away and lead to further reductions in volume. to actuarial studies have found that tens of billions of dollars have been made in overpayments by the postal service to the federal retirement plan. regrettably today the administration has blocked the bulk of this prep payment. i proposed last year a new, more gradual amortization for the postal service's annual payments to reduce the unfunded liability for retiree health benefits. to that, too, is no longer

adequate. more than 80% of the postal service's expenses are work force related. the failure to rein in these costs threatens not only the viability of the postal service, but also the livelihood's of the postal service workers themselves. the worst possible outcome for these workers would be for the postal service to be unable to meet its payroll. that is a very real possibility for next year if we cannot act together to achieve reform. in my a judgment the most recent contract agreement with the postal service's largest union by and large represents a missed

opportunity to negotiate a contract that reflects the financial realities facing the postal service. the postal service has to preserve the value and the service it provides to its customers while significantly cutting costs and streamlining its operations. and that is no easy task. senator carper and i have reached introduced our own bills to try to avert this crisis. i am the first to admit that worsening conditions clearly require far more significant reform. so, mr. chairman, thank you for calling this hearing. we do face an urgent task, and that is to save this icon of american society and this

absolute pillar of america's economy. thank you. >> thanks very much, senator collins. senator carper, because you have been doing such an extraordinary work on behalf of this committee i want to invite you to make a opening statement if you like at this time. >> did you very much. to our witnesses, thank you for joining yes. thank you for holding this hearing and allowing me to deliver an opening statement. appreciate it to you and senator collins for the attention that you and your staff has paid to this vitally important economic issue. for some time my subcommittee and i have been sounding the alarm about the dire financial situation facing the postal service. unfortunately while the number of bills have been fourth congress has been unable to up reach consensus on the kind of dramatic and likely painful reform that will be needed to avoid the looming

showdown. in addition the proposals put forth by the administration today have been insufficient. just a few weeks after narrowly avoiding the first ever to fall by the federal the government if we may be a few weeks away from??? the first ever default of the? postal service. that defaults, if permitted to? happen, would be lasting and? dangerous and would pave the way for postal insolvency by this time next year if not sooner. officer of manager and budget declined to testify to discuss the administration's plans for preventing the postal service from failing. it is my hope that the discussion we have will jump-start the process of developing a bipartisan, bicameral consensus around the reforms necessary to restructure the postal service's finances and transform operations to reflect the uncertain future that it faces. postmaster general donahoe will testify today that the postal service's finances continue to

deteriorate. he is projecting a year and loss of some $10 billion. nearly 2 billion more than projected when our subcommittee last held a postal oversight hearing, i think, in may. it will not be able to make the five and a half million dollar payment due on september 30th. come october it will have exhausted its line of credit with the treasury and we will have only enough cash on hand to get by. then under what is likely the best case scenario, cash will be completely exhausted by next summer and the postal service, absent any lifeline, will likely be forced to close its doors. if the postal service were to fail the impact on our economy would be dramatic. as postmaster general donahoe and others have pointed out time and time again the postal service operates at the center of an industry that employs? millions of people.?

these people don't just work at? the postal service, magazines,? banks cannot printing companies, and businesses large and small across america. every state and congressional district. and they generate more than $1 trillion in sales and revenue each year. given the challenging economy facing our country we cannot afford to put jobs, these jobs in that kind of productivity in jeopardy. in fact, it is our job to do what needs to be done to save this industry, even if it involves decisions that might be difficult politically. like it are not come in a number of ways i don't like it very much myself. the postal service needs to right size itself to reflect the decreasing demand for products and services offered. it's needs to shed employees, downsize its network up processing facilities to reflect there is less mail to process and technology has made getting it to it's destination easier to

do. the postal service needs to be able to relocate or colocate some of the postal services that are provided in communities across america. putting forth a plan to eliminate 120,000 positions on top of the 100,000 that were lost through attrition. they have begun studying some 300,000 post offices around the country. looking at 3,000 post offices for closure or card location with other businesses. expected to propose similarly dramatic changes to its processing network in the next week or so. we are rapidly reaching the point, however, at which the postal service no longer has the authority to do what it needs to do to get by which is why i have introduced legislation that aims to clean up the postal service's finances and help implement the ambitious plan it announced last spring. postal operation sustainability

act aims to permanently address the various pension and retiree health related issues that have plagued the postal service for years. the postal service inspector general, postal regulatory commission, and to independent actuaries, one of whom is represented here today, have come to the conclusion that they have overfunded obligation by some 50-$75 billion. in addition, numerous observers and the office of personnel management have pointed out the postal service has paid $7 billion more than it goes into the newer federal employees retirement system. my bill will give the postal service access to the funds that it has overpaid. they would be able to use them to make required retiree health refunding payments picking a parts of $5 billion off its books each year for the next several years. once they're satisfied, the fines this bill would free up could be used to pay workers' compensation obligation and a

debt to the treasury. these reforms are in similar can be a vital part of any effort to improve the financial condition in both the short and long term. stopping these reforms and avoiding further and potentially more difficult changes will simply not be enough. to anyone taking an honest look at the numbers, it should be clear that more will need to be done. that is why my bill takes important steps toward giving the postal service the flexibility that those of us in congress all say we want to give them. the new realities and operate more like a business. no business facing the kind of difficulty the postal service faces today would survive very long if it were told how many retail outlets they should have and where they should be located or if they were prevented from making operational changes are taking full advantage of the resources and expertise at its disposal. if that is what congress does to the postal service. my bill and to address these

problems and take congress out of the day-to-day management, assuming the postal service can continue to build on recent cost-cutting efforts these changes could help set the service on more solid footing in the years to come. i don't just focus on cost-cutting. also aiming to give the postal service new authority to leverage its nationwide retail logistics' transportation and delivery networks to attract new business. it gives the postal service more flexibility to work with existing customers to keep them in the mail and partner with state and local governments to find new potentially profitable resources. i mentioned at the beginning of my statement that there have been a number of bills introduced to address the postal service financial condition -- condition. my hope and prayer is that they will do it this time to good effect. another approach. parts of both i don't agree with, but also parts of support.

overlapping the provisions in my own bill. we need to focus on the areas of agreement. from there, with input from the administration, a key stakeholders, prevent a default and insolvency and said the postal service on the road toward stability and profitability. in conclusion, mr. chairman and senator collins, let me say this, the postal service is an enterprise, a business enterprise. it is an enterprise that has more people than it needs if it is to reduce its head count we need to let them. we have more post offices and we need. the key is not closing post offices but to provide better service to customers and communities across america by co locating services to drugstores and supermarkets and department stores and the like. finally, twice the number of processing centers and they

need. they need to reduce the number of processing centers, and as they do those things we need to get out of the way. there is not a huge bailout that is needed, but to let the postal service act more like a business and come up with even more great ideas like flat rate boxes and last mile delivery. if you do that and we do our job, i think the postal service will be here for a lot longer. thank you so much. >> thank you, senator carper. postmaster general donahoe, we will go to you first. i thank you for being here. it probably does not need to be said, but the fact is that you÷ have had some tough proposals. i think everybody listening÷t should know that you are not÷ some sort of executive that was brought in from outside to go through the post office. you spent your whole career in the postal service, beginning as a clerk 35 years ago in

pittsburg. having had that experience, from my perspective, you remained remarkably youthful. whether i can say that at the end of the next year or so remains to be seen. thank you for being here. >> mr. chairman and members of the committee, good afternoon and thank you for scheduling this hearing. i appreciate the opportunity to testify about the financial state of the postal service and about the proposals to improve its business model. america depends on a financially strong postal service. the postal service provides a vital national delivery platform that is part of the bedrock infrastructure of the american economy. it supports a $1 trillion mailing industry that employs over 8 million people. every american residents and business depends on regular, secure, and available delivery of mail and packages. this will always be so, even in

an increasingly digital age. nevertheless, the postal service is at the brink of default. without the enactment of comprehensive legislation by september 30th the postal service will default on a mandated five and a half billion dollar payment to the treasury to pre fund retiree health benefits. our situation is urgent. the congressional action is needed immediately. mr. chairman, the postal service requires radical changes to its business model if it is to remain viable into the future. the postal service is in a crisis because it operates with a restricted business model. a self financing entity that depends on the sale of postage for revenue. requiring the ability to operate more as a business does. this applies to the way it provides products and services, allocating resources, configuring retail, delivery,

and mail processing networks and the way it manages its workforce. unfortunately the postal service today has a limited flexibility to respond to the changing marketplace. since 2008 the combination of weak economic conditions and divergence to electronic forms of communication have resulted in unprecedented declines in the use of first-class mail and the weakness in the use of standard mail. in response we reduced our annual cost by more than $12 billion our work force by 110,000 fewer employees in just the last four years. as impressive as these have been, we must accelerate the pace of cost reduction over the next few years. based on current revenue estimates the postal service must reduced its annual costs by 12 -- $20 billion by the year 2015 to become profitable and to return to financial stability. mr. chairman, we do not have the

flexibility in our business model to achieve these cost reductions. to do so requires the enactment of a comprehensive long-term legislation to provide us with needed flexibility. short-term stopgap measures will not help. our long-term revenue picture dictates developing a long-term comprehensive approach to help the postal service and mailing industry that we served. the postal service has made a number of policy proposals that merit consideration including giving the postal service the authority to determine its delivery frequency and transition to a national five day a week delivery schedule. the postal service needs to restructure its health care system and make it independent of federal programs and eliminate the mandatory annual five and a half billion dollar retiree health benefit payment with this action. we need to accelerate work force reduction by as many as 220,000

employees and are asking congress to consider the reductions -- be governed under the reduction provisions applicable to the federal employees. be are also seeking the authority to provide a defined contribution plan for new hires, rather than today's defined benefit plan. we are seeking the return of $69 billion in federal overpayments. we are also seeking to streamline postal governance models. we have advanced these and other proposals to provide the congress with a range of legislative options and are also aggressively doing things that we can do within our own business model. by 2015 we intend to capture more than $11 billion in additional cost reductions by optimizing our delivery network,

retail network, reducing mail processing footprint by more than 300 facilities, and by taking advantage of negotiated workforce flexibility. these are aggressive and necessary steps. america deserves a financially strong and independent postal service that can meet the evolving needs for generations to come. we require the flexibility to operate more as a private sector business would. this would enable the postal service to return to profitability and sound financial footing. this would also enable the postal service to properly fulfill its mission since the 70's, which is to operate on a profit test launch basis independent of taxpayer support. let me conclude by announcing the commitment and dedication of our employees during difficult times, even as we consolidate facilities and made substantial work force reductions. they have delivered at record high service performance levels.

mr. chairman, thank you for giving us the opportunity to testify today and i look forward to answering any questions you might have. >> thank you for your testimony. we will go to the hon. john berry, director of the u.s. office of personnel management directly to testify as to the subject matter as it relates to opm. he is able to speak on behalf of the administration as well. >> thank you, mr. chairman, for the opportunity to testify regarding the financial challenges facing the united states postal service. i have met with the postmaster general several times recently, and the administration is committed to exploring ways that can be helpful to the postal service. both the president and i know of the critical importance to our nation's economy that the postal service provides, and we are grateful to the men and women of the postal service for the important work they do for our country. the president's fiscal year 2012

budget proposed ways to provide postal service financial relief, but since those proposals were offered the financial situation of the postal service has deteriorated further. in response to this situation the administration plans to release a proposal in the few coming weeks that will ensure a sustainable future for the postal service. this proposal will be included as part of the broader one in a half trillion dollar deficit reduction package that the president has promised to submit to the congress. in the interim the administration supports delaying for 90 days the postal service's five and a half billion dollar refunding retirement health payment that is due on september september 30th. this would allow the congress, postal service, and administration the time to carefully worked through the details of a proposal. we believe that the postal service and its employees and

retirees are well served by the existing health benefits program and the retirement system. the postal service proposes reducing costs by discontinuing participation in federal health and retirement benefits this is a complex proposal that will require further study and analysis . as such the administration does not have of formal position on this proposal at this time. opm expects that a withdrawal of the postal population would not have a significant impact on the federal employee health benefit program as a whole. in addition, the overall cost of the program would be minimal and would not impact the integrity. however, it would have a significant impact on health

plans with a large postal population or such as rural letter carriers with the american postal workers union plans. if these plans chose not to participate in the fehbp in the longer it could have a significant impact on the number of choices that are available to our enrollees and overall competition in the program. the postal service's proposal to withdraw its employees from c.s. irs would pose very significant challenges because postal and not postal service are integrated in the same retirement system. as such many employees have a credible and door fers service both in postal and not postal employment, and the federal government will have a legal obligation to pay those benefits. any proposal to remove the post a population from federal employment health and retirement

systems would be complex and more analysis is required. as i mentioned earlier, the president's budget proposes improving the postal service's financial condition by approximately 5 billion in both 11 and 12. first we do propose returning to the u.s. postal service its surplus in the retirement fund estimated by opm at 6.9 billion dollars. also proposes a restructuring retirement benefits at an estimated cost savings of $4 billion in temporary relief. additionally, the president's budget proposes streamlining fehbp pharmacy purchasing benefits, and we believe this could save the postal service an additional $300 million over the next five years. lastly, i would like to address a number of reports questioning

whether the postal service has overpaid its obligations. moreover, i would like to clarify the term overpayment has been used by those who implied that there should be a change to the current allocation that is mandated and the law. opm applies the method established in tech current law for apportioning responsibility for ses are as cost between the postal service and the treasury. after careful review by the office of personnel management general counsel, our inspector general, and our board of actuaries, they have all concluded opm does not have the administrative authority to make a reallocation of the cms rs cost based on the 2006 postal accountability and employment act. however, if congress determines

that another methodology is more appropriate and explicitly establishes another allocation method, i pledge that opium will quickly and fully implement those changes. we look forward to working with the committee and the postal service to develop a solution to this problem and in addressing these fiscal challenges. thank you for your time, and i'll be glad to answer any questions?? >> the thank you very much. it will be submitted. if we give you the authority to return the money that the postal service believes is an overpayment to the fund that opium will implement that rapidly to.

i appreciate that.?? next we will hear from phillip? herr, the director of physical infrastructure issues at the government accountability office really here because under that general title he is the expert on the postal service. thank you for your testimony. >> thank you. thank you for the opportunity to discuss the serious financial crisis facing the postal service. as volume has declined that service has not generated sufficient revenue to cover obligations. critical decisions by congress, the administration, and the postal service are needed to help put it on a path to financial solvency. first, by most measures the financial situation is grim. net loss of 20 billion over the last five years. a projected net loss of 9 billion this fiscal year, and reaching its $15 to have

$15 billion borrowing limit on not making its retiree health benefits payment this year. the postal service has released several proposals to address these problems. one is to withdraw from the federal employee health benefits program and create its own using the 42 and and a half million dollars fund set aside for future retiree health benefits. this proposal should be carefully reviewed as it is not clear whether the postal service can achieve its planned cost savings or what the implications are for employees, future retirees, and the federal budget. currently over 1 million employees participate in the federal health benefits program and 300,000 employees are eligible to retire over the next decade. this is a significant obligation. several proposals would defer as a way of providing financial relief. however, deferring payments

increases the consequences should the postal service not be able to make future payments if its core business continues to decline, as expected. this increases risk to the federal government and taxpayers and possibly future retirees. important that the postal service continue to pre find its obligations to the maximum extent its finances permit. the knowledge this will be difficult until its business model is updated to reflect current realities, however. some key questions to consider regarding the proposal to create a separate program include how it will acquire the expertise needed to manage health benefit programs, what would be the budgetary impact of transferring 42 and a half billion from the treasury-help fund to a postal administered program that could seek higher returns in the market with potential risk. can savings realistically be expected from restructuring its health benefits program?

with such a change. if it defaults on funding or benefit payments to employees or retirees are changes significantly, as is possible, what would be the federal government's obligation to 1 million plus beneficiaries? the postal service has asked for legislation to access its surplus estimated to be about 7 billion. what is discussed last often is the postal service has an unfunded liability estimated to be about 7 billion. in june 2011 the postal service stopped making payments, meaning the surplus has been reduced by $800 million. the postal service has also proposed making new employees ineligible for annuity raising the question of whether other options have been considered. flexibility now accommodate different ecru rates for certain employees. the postal service also seeks to accelerate network and work

force downsizing. we agree networks need to be realigned. frankly, network realignment is overdue and necessary, whether or not actions are taken on the pension and health proposals. when fully implemented estimated savings could total $11 billion. several key areas include saving 3 billion by reducing processing plants from 500 to 200, 3 billion by reducing delivery from six to five days, reducing delivery cost drought consolidation and saving one-half billion by selling postal service to private businesses and closing up to 12,000 post offices. realigning will require trade offs in the postal service asking for legislation to eliminate the layoff provisions so that it can reduce its work force by an additional 125,000 career positions. if congress considers possible

changes questions include, is six day delivery still appropriate? what changes to delivery standards are needed to realize cost savings derived from network optimization? our statutory or regulatory changes needed to permit postal operations while assuring appropriate oversight. in closing, the stark reality is the postal service business model which until 2006 relied on continued growth has broken. the gap between revenues and expense of maintaining network has become unsustainable. difficult choices must now be made. members of the committee, this concludes my statement, and i'm happy to answer questions. >> thanks. i think you? have summed up th reality pretty well.? the business model, which worke? for a long time for the postal service, has not broken, and we? have to help fix it. thank you for being here.??ó?

thomas levy is the senior vice president and chief actuary at the segal company which has done work relevant to our hearing. proceed. >> thank you. i was the principal author of the 2010 report to the postal regulatory commission on civil service retirement system cost and benefit allocation principles and i'm here today with the encouragement of the postal regulatory commission to discuss the recommendations with respect to this important issue. let's make it clear. our assignment was to look from the current point of view at what is fair and equitable, not whether opm, in fact, and implemented the 1974 legislation correctly. i have not heard anything in our study to suggest that they have done otherwise. we do not suggest overpayment in the sense of not following congress's direction to the

extent that i may use that word, it is in a standard of fair and equitable in 2010-11. when u.s. ps was established as and entity in 1971 and important issue was the allocation of civil service retirement system costs between the work -- the federal government for worker service and the post office department and the u.s. ps. opm has consistently done this allocation in accordance with public law 93349 in 1974. the essentially allocating the federal government the cost of a frozen pension benefit for each worker as of june 30th 1971 based on service, rate of compensation, and the benefit formula at that time. the entire balance of that workers' pension over and above that frozen amount has been

charged to u.s. ps. the benefit design is more generous in the later years of the worker's career. since it was always the second employer, the benefit accrual charge was usually higher. because the benefit is based on the high three-year average salary for all years of service, usps is paying for the impact of post 1971 salary increases on pre 1971 pov pension accruals. in a report for the -- office of the inspector general dated january 11th 2010 actuaries' concluded that this allocation was inequitable in both respects. they estimated that an equitable allocation accumulated with interest would have resulted in

did usps share of the csrs assets being lowered by $75 billion for past payments with about $10 billion of savings anticipated in future years. usps requested the opinion on the fairness and equity of the opm method. after taking competitive bids the segal company was selected to analyze and make recommendations. we met with stakeholders and reviewed the actuarial and accounting standards, and we concluded that the most relevant benchmark was the accounting standard applicable to private companies. this was the only one that had as the primary objective the matching of revenues in the postal service's case, selling postage, with the labor cost to produce those revenues. that was our assessment of the appropriate basis for evaluating the fairness of the csrs cost

allocation. the accounting standard provides clear and not discretionary direction with regard to plans such as csrs that provide non uniform benefit accruals, in this case higher accruals in later years of employment. the expense charge requires following the plan cycle formula as opium was doing. it also requires the cost allocation for a final average salary plan like csrs must reflect the anticipated future salary at termination or retirement and may not be limited to the cost based on the compensation at the time the work is done. reflecting future compensation increases in the allocation would not part of the opm methodology. based on this analysis we

concluded that the preferred method to allocate csrs benefits to the federal government was to reflect post 1971 salary increases with respect to up 31971 service, but otherwise to follow opm methodology. we indicated we did not believe that the commission of future salary increases with respect to pico de services was fair and equitable. in effect what that did was gave the federal government a lower-cost because of the establishment of usps then it would have had had the pierre de continue to operate, and we did not see anything to suggest one of the objectives of establishing the usps was to reduce past pension cost, but that is, in fact, what the law has done. we also noted a pro rata

reduction of accruals that did not follow the csrs formula was within the range of fair and equitable alternatives, but was not our preferred methodology. we did not do any calculations of our own, but roughly estimated that are recommended allocation would result in accumulated savings of 50- $55 billion for past allocations compared to the opm methodology with an additional savings with respect to future payments of 6-$8 billion. that completes my prepared testimony and i'm pleased to answer questions. >> thanks. we will go now to questions.q let's do six minutes since there are a number of senators here. postmaster general donahoe, you mentioned that without some change by the end of this month the postal service would have to default on the five and a half

billion dollar payment to the health fund. indicated the administration would seek legislation to delay that by 90 days, but assuming that is taking care of -- let me ask another way. if nothing happens, you receive none of the relief we are talking about providing, by what they teach you think the postal service will not just have to default on the health payment but will begin to find it impossible to carry out its normal responsibilities such as delivering the mail? >> probably next august, september timeframe. what we are looking at is even if we push the payment off for three months, we have got the payment of over $1 billion due in october. >> what is that? >> workers' comp. >> department of labor. >> department of labor. then we have a couple of

payrolls in october. we will be very close, even not paying the prepayment. now, over the course of the winter mail volume picks up and we will pick up revenue. we think that by the august-september timeframe next year given no action we will be out of cash to pay employees and contractors.óóó >> and if for some reason you don't get that 90-day delay, what is the consequence? >> well, the delay one way or the other we will not make that payment. so the delay now, it does not really matter. if they delayed it makes a october more bearable. >> right. you are saying here, and i know you said it before. there is no way you will have the capacity to make the payment due at the end of this month. >> i will not. >> okay. let me ask you this. you made would be described as controversial proposals reducing

delivery to five days a week, closing significant -- over 3,000 post offices and reducing the number of distribution centers and ultimately asking for authority for reductions in force comparable to what exists for other federal employees. help us understand the basis of those requests in this sense. why are you confident that the result of those cutbacks will not lead to a further drop in business for the post office? in other words, why do you think those changes will not only save money, but will really put the post office back on the road to being balanced fiscally or even slightly in surplus. >> here is the way we look at this. there are two major things happening right now. one is the decline of

first-class mail. i think that we can cut the price in half and not be able to slow it down. >> that is important. it is all the internet. >> 60 percent of americans pay bills online, and that will not change. as a matter of fact, what we are seeing are a number of companies requesting payments to have a hard copy statement mailed to once house. >> that's right. >> banks are now starting to charge for checks. so all of these things will continue to force the first class mail volume down. we think that is something that will try to slow, but will continue. where we see our business going forward it into direct areas. one is standard mail. the drop-off of the economy. standard mail has leveled off, and i will tell you for the most part standard mail is an excellent investment. >> define standard mail. >> advertising.

what happens is companies tell us over and over that they get the best return on investment because it gets in front of the customer's eyes, like the internet and radio or tv. .. >> we are like the final mile. >> you are doing the last mile. >> we see double-digit increases over the last few years and we will continue to see that. our infrastructure is great. our people do great job with this very affordable so we will see things there. the third area we think we'll see growth is potentially in the digital area. di that whole area is open for thel postal service and it's not so much bill payment as you seeh ay being done, we think there's some opportunity to provide secure digital messaging. messag.

it's not cling to make up for the first class difference but those are three areas so given that we have plot of volumes and revenues over the next ten years. we are using that revenue as the governor of our business. we do not want tax payer money. we have to get our finances in order to provide good dependable service. i think if we provide good dependable service which we have an excellent history of doing on the standard mia lee and remaining first class mail and packages our business will be fine and we will not have people moving away on account of the changes we are making. thinks my time is up. senator collins? >> thank you. the failure of the postal service would be devastating to our economy. i see that you are nodding in agreement. it would pose a threat to the jobs of millions of americans. today you've heard the

postmaster general describes a crisis. he says the postal service is on the brink of default. a year from now we will not be able to meet its payroll and carry out its operations yet this morning or this afternoon you come to us and tell us that the administration does not yet have a plan. you've proposed several of the reforms, the fundamental reforms that postmasters general has put forth as far as the separate retirement system and changing to the contribution system. you asked for word you say you want more time to study it, you asked for a 90 day delay in the 5.5 billion. you haven't mentioned your procession on the noeth layoff provisions that are in the union

contracts other than to take a position in opposition to the repayment of the $55 billion of the csrl s system that our actuary has described. i just don't understand why the administration doesn't have a concrete plan to put before us today he given the dire straits that we are in the senator harper and all i have pulled out there for many months they are not perfect and they've been overtaken by the rapidly deteriorated in crisis that we face. why doesn't the administration have a plan before us today? >> there will be a plan as i testified that the white house

will have that submitted with the deficit reduction package within the next few weeks, and the president will meet his promise to give that to the congress. i also just want to correct what the administration hasn't taken a position of the postal service proposal on the retirement system's so i'm not here in opposition to those. >> you're not supporting it either. >> all i did was to explain it will require further study but there is no formal administration position of opposition, so i want to be clear on that point. the other is something we are supporting and it's in the president's budget and is reflected in a number of the pieces of legislation is the overpayment, the surplus in the retirement of what we estimate to be the $6.9 billion the

administration does support returning that the postal service. it would require legislation to do that, but we are supportive of that relief and i think that will go along way in terms of helping some of the challenge that i know you all are wrestling with the we want to help. >> but mr. berry, the 6.9 billion pales in comparison to the 55 billion that mr. levy described, and you said that you don't have the authority. i've gone back and forth on this. i wrote the provision of the 2006 act that gives the authority and section 802 c2 and it says the postal regulatory commission can hire an actuary that's what they did to take a look at it and it gives you complete authority to then change the formula. so, i just don't understand why

the administration continues to say that it doesn't have the authorities. >> i am not an attorney, and i have to defer to my general counsel, my inspector general and board of actuaries in their reading of bill walsh and i know there is no disagreement in this what with respect, they advise me. i do not have the authority to determine fair and equitable as he testified. that authority rests with you and you alone, with the congress. i'm not here testifying against the report in fact we find a lot of value in the report and it might be a good basis for the committee, for the postal service and for us to have our act worries and staff work with you to determine what is fair and equitable, but the congress needs to said that in the law

and that's where i'm stuck. >> mr. postmaster general, my time is expiring rapidly. but you did not mention the need for her reform and the workers' compensation program. this is an enormous expense that's supposed be a safety net for workers were temporarily out of work and yet the postal service as is pointed out is something like 2,000 individuals over age 70 who are receiving worker's comp. mr. postmaster general, those people are not coming back to work. >> i think it is in my written testimony, will double check that we need reform with workers' compensation. the proposals you put forth makes a tremendous amount of sense to us and we would like to have that included in the comprehensive legislation going

forward. specs before. >> thanks for the information and according to the normal custom of calling on membersñóó right before the gavel in order of seniority and after the gavel in order of appearance if theyó are here we will call on the?ó senator's a cocotte, orrin,óó clyburn, brown, mccaskill.óóó senator akaka is not here,óóó senator moran is not here so weó will go to senator begichóó petraeus genex before mr. chairman. let me if ióóóó can follow-i can and regards to mr berry to follow-up on that i understand the 6.9 billion, you don't question that. you want to give it to the post office sooner rather than later. we all agree on that. the 50 billion give or take, do you agree on that number? i am to stand you've got the process convoluted between the

sides so do you agree on the number? >> it would take -- we would need to get the actuaries on all of the parties in a room together. >> but you said you had asked where eagles do the work. >> i appreciate your message that we are following the law because that is what has driven our interpretation is applying the standard of the law. the law has us do this on an annual basis and not look forward in terms of the issues that you heard mr. levy discuss on a fair and equitable. >> the work that your editorials did, did they indicate any overage payment, any payment above 1 million, million, 40 billion, 50 billion, any number?

>> we would agree there are many ways to accomplish the goal of a fair and equitable -- >> that's not the question i asked you. can you provide the study that your editorials did in regards to this issue? >> absolutely. can you provide also i know we got a letter from you about your legal interpretation kind of from the council to you to then us but i would like the legal analysis that was given to you. >> absolutely. >> we will get the act were real documentation which will show how they did their analysis on this question of the money, not the process on do they believe or not. we are clear on that? >> yes. >> if i could because i don't -- i am not trying to avoid your question is when you look into the future yet to make certain assumptions on inflation rates and mentality rates and on the difference between genders and all these other things that need

to be accounted by actuarial and that's where in other words -- >> by understand that part as a former mayor i have to revamp several retirement programs, the whole system defined for all of it so i want to make sure understand you have a basis of assumptions and i will differ from his assumptions and everybody's assumptions. i want to see if there is a number and how you got there. we can argue over the inflation rates and return on investment and all that stuff. >> knowing of the importance of this and both with senator collins and the chairman and the whole committee and appreciating the criticality of this issue i can pledge to you our actuaries stand ready to be here to help inform your judgment on what is fair and equitable. >> in all of my years dealing with this issue from a small perspective still in the hundreds of millions of dollars it took many years to resolve

these issues between the unions and the individuals as well as the retirees because there's no group representing them and the list goes on and on and so i'm very familiar with how this works i just want to see your assumptions. were you about to say something in regards to this also? >> the 50 to 55 billion relates entirely to past payments. it has no actuarial assumptions. it's the 68 billion for the future that as actuarial assumptions involved. >> the 6.9, no one disagrees with that. you're going to pay at some point if we give authorization? what i'm interested in is the 50 billion. the 50 billion number in 03 you determine of past behavior. >> i wasn't here. islamic there was a determination by the congress that there was an overpayment 73 billion if you direct us to

pay and we pay it back. in 06 you did the same with military service credit, 28 billion-dollar credit and was a determination of the congress that would be fair and equitable to have that paid by the treasury, not the postal service. it is reasonable congress might decide in this circumstance that a fair and equitable solution would require a new determination of that number and if it determines we will quickly implement a. >> in regard to eliminating saturday service as you know we are concerned about this in a variety of reasons the world component but also as a small-business person but it will impact a small-business owner who really depends on as much as possible they are not corporate, they don't have male runners to a package of their stuff and should it over to the

post office the owner has to do it and they have to go do it and the small business been on the delivery as well as making sure they get their mail coming in for the supplies. how do you respond to that? >> that small business owner, i'm talking small, 1500 employees >> as we have looked at what will be the best day if any to eliminate the delivery saturday is it generally the volume is about ten to 15% lower on saturday and the rest of the week we will keep post offices open on saturday so people will have access to our 30,000 plus post offices. >> shipping packages and so forth. >> and we would be able to provide that service. now we will not be running what we call outgoing mail that might set a would go out on monday but they would have the access to the services.

>> i have questions i will submit for the record and go from there. >> thank you, senator begich. previously as somebody mentioned the 3 billion-dollar figures of savings annually for eliminating the saturday delivery is that your number also? >> that is our number, yes. >> next, senator pryor. >> let me start with the federal employee health benefit program i am curious about the numbers that you think you can save a else tell the committee once again about how much you think can save. >> we've been frustrated to resolve this retiree health benefit payment going forward and truthfully like i said in my opening statement any other company would have been bankrupt so what we've come is gone back and taken a different look and what we did is we sat down and

thought rather than arguing about whether or not we can get the money back from them we will present a different approach and that approach was how he eliminates the need for the prepayment by changing the cost and the health benefit program savitt lagat with any other company would do and this is the way that it breaks down. number one we think with 1 million people in that plan we can pull the costs down. our experts told us between eight to 10%. i will write a check this year for $7.2 billion for health care without refunding money and it's almost 13 billion. so you pull the cost down eight to 10%. second thing is medicare. we are one of the largest contributors to medicare in this country we do not require people to use medicare and we have about an 80% usage for medicare and about 75% for bea. we knew that the current retirees in the future retirees using medicare will pull those

numbers down jerry to the tune of around $20 billion over the course of time. the third part of the proposal is changing the way that we provide health benefits to the current retiree is what we would do is not take anything away from the current retiree is what we would freeze them at a certain level and increase, we would increase the money going to them to pay the retiree health benefits based on the cost for the plan so we would have very good control. the fourth thing would be for people like me. capped payments going forward so when i retire i will not have the same percentage that you see the federal government, 72%. it might be 60, 55, the way we work through this we've been able to completely eliminate the need for the refunding. it's about $46 billion at the same time, the overall cost. >> has understand your proposal, you would actually lead?

>> that's our proposal. >> you know what impact that would have on the rest? >> i would have to believe that optimistic. >> in terms of the dollar impact would not be significant. islamic what about on medicare? tell him again about the impact you think he would have on medicare. >> we think that right now we will spend and add about $1.1 billion of the medicare fund this year. we spent about 24 billion. we know who increased medicare and it's our feeling we pay into medicare now we should have full benefits of it. >> let me ask about workers' compensation i think that's an important issue that sometimes gets overlooked and we have some ideas on the worker's comp

reform. >> we are in agreement with what is being proposed by senator collins and we also like to explore what a lot of the states do we are proud of the fact of the last ten years we've improved the safety rate and we are the number one voluntary protection plan as far as we have more facilities certified and the accident rates have gone down from the problem is the costs continue to go up so we need some way to control the costs. senator collins is a very helpful and we would like to be able to take a wide look just like we've been looking at the health care how does the private sector do it that is what we would like to do. >> why mtv, one bit of warning you have to remember when you're doing the workers' comp reform people, state and federal government should do from time to time remember the goal of the workers' comp is to compensate the workers and sometimes in an effort to find a lot of savings

the workers can get left out. >> improve the accident rates and do the right thing that reduces the accidents and then go on a worker's comp. >> it sounds like you've had a fair amount of success in reducing your accident rates. >> we've done a good job, a lot of programs and we are proud of that fact and i think it to the cut from an employee's standpoint when you have a person come to work every day he we look at how to find savings and cut our spending and% term mccaskill part of this is to make sure that every single sacred cows that everything >> everything is on the table. >> including executive stuff as well as facilities and vehicles? >> we have a proposal that we

are going to be implementing reductions in health care contributions for the executives. we would be at the federal rate in three years, 10% a year and that is one of the recommendations made where we >> the relocation expenses for employees, have you taken care of that? >> yes, sir. estimates before mr. chairman. >> thank you, senator pryor. senator carper? and then senator coburn. >> you have a meeting at 3:30, d want to go ahead? >> no, no, go ahead. >> please, go ahead. it's been a call is the

operative word. >> we put back to the restrictive business model. i sit here and think about we're talking about the editorial changes of the $55 billion over 40 years how does it take 40 years to figure out $55 billion off in terms of what was compensated? the absolute stupidity of congress and what we've done is totally amazing to me. >> the other thing i've heard and i've had this discussion with every postmaster general since i've been in congress is the revenue estimates. the revenue estimates we have for 2020 are absolutely in exaggeration that means 401st class pieces of mail nine years from now will go to every household in this country i don't believe it. i don't believe that its half of that so unless you are going to double the rate on the first

class mail the revenue estimates are totally bogus and every of revenue estimate that i've heard over the last 12 years has been bogus coming from the postal service so we're looking at the numbers of 39 billion pieces of mail first-class mail i would bet you $1,000 right now mr. postmaster that it won't be half of that nine years from now. >> the technological change is coming and unless we anticipate we are going to be six years from now doing the same thing >> the third point i would raise is standard mail and partial service is important to the business and i know that you are worried about the impact of pricing on the business but the first class mail is going away and unless the business model adapt to that it doesn't matter

what we do senator collins or senator carper's bills it's going to be a short-term fix that is going to be short-lived. and so i would caution us to think challenge the assumptions that are being made like mr. o'hare, challenge the assumptions being made and when we think we figured it out then go to war three measurements again before we cut to make sure we are not like we were in 2006 and i will remind my colleagues in 2006i predicted we would be back here. i actually voted against postal reform bill because we did not anticipate. we did not fix what we knew and as a matter of fact you always said we did at the time so do we sit five years later not having fixed the problem because we didn't measure three times and then cut. i'm not blaming anybody for that. it's because the assumption change because the scenario we

laid out were too rosy. we fixed a lot of things and if things would have been worse had we not done at now we find ourselves here again. just as you said taking the economy out of the equation, first-class mail is going to go away anyway regardless of the recession. the technological changes. so i would caution us i think that we are going to come together with a great bipartisan agreement on how we offer the things that are needed. this isn't a partisan issue in front of us but i think we certainly need to think way down the road and we certainly need to provide the postal service with the effective means of running a business that allows them to make changes based on dynamic changes that they are going to experience in their business and if we don't do that, we will not have fixed the problem and with that high yield and will submit questions for the record. >> thank you, senator coburn.

senator carper? islamic it is the lack of certainty and predictability, a great deal of uncertainty. a couple of years ago when chrysler and gm were going to go out of business people stopped buying cars and the first question i have mr. postmaster general was given the uncertainty and is the post office are going to be around another year when our three or four months from now what kind of impact do you think that lack of certainty and predictability is having on your business and the devotee to book more business? >> i think that uncertainty has a tremendous impact just this weekend i got an e-mail from my chief marketing officer and he was asking about a couple customers who were worried about doing business with us in the small package area and i told them i said i will call the company's and reassure them myself that we will be okay.

we have to get stability in the systems and we've got to address these issues long term to senator colburn's point and i agree 100% this cannot be a short-term fix. we have to not only look at revenue through 2020 we have to look at the revenue beyond that and make sure from the postal service standpoint we resolve this issue now to give the postal service the flexibility to manage going out in the future. >> i would say to the colleagues what we need here is not the dealing with the symptoms of the problem. what we need to do is solve the problem. as didier as the situation as i certainly believe it is not a hopeless situation. this is a problem that can be fixed and there is it can be provided. from the folks that work with you at the postal service but may be a greater extent to the congress and the administration and working with you and the other stakeholders. i'm going to go back and talk about the auto industry for a

moment. it's not a perfect comparison but there are some points that are relevant. number one the auto industry two or three years ago had more workers than they needed given the demand for the product. number two, the benefit structure for the folks working for them was too high. number three they had more plants than we needed, and what happened is a lot of people think about the federal bailout to the auto industry. as tax payers we go back every dime that we invested in chrysler and gm. we are not talking about a bailout in the postal service. we are talking to that is whether the postal service will have access to 50 or 55 or $60 billion that appears to have overpaid their retirement system to a federal employees retirement system it's not a bailout. should the postal service have access to the money a lot of people from the group believe

arguably could be drawn back and returned to the postal service allowing the postal service to pay down their very conservative retirement schedule for the retiree benefits. very conservative approach. but here as i said before the three things the auto industry needed to do. there were three things the postal service needs to do and the question is are we going to let them? i'm not interested in laying off you or anyone else lead off the tens of thousands or hundreds of thousands of postal the employees but i think that you resist by about a quarter of the last six or seven years that's a lot of people and maybe 200,000 or so you have about another 100,000 folks that will probably leave through attrition and people retire and say that's enough i'm ready to go on with my life and about 120,000 or so who if incentivized would have

encouraged to retire would actually encourage or retire and the question is are we going to make sure we have the resources and the cash to incentivize those people but run the numbers and think about this just run the numbers for what it cost to incentivize 120,000 people to retire we can look at the auto industry and they had more people who to go for the retirement than they expected. but if you offer the retirees say $20,000 may be 10,000 over the period of time to take over the retirement to go ahead and retire early how much will that cost? if you're trying to get 120,000 people to take early retirement that works out to about $2.4 billion. the overpayment to the federal and please retirement system is about $7 billion. we are talking about using one-third of the overpayment to the system that would enable you arguably to reduce your headcount by another 120,000 people beyond the 100,000 that

would bring your headcount down if i'm not mistaken i think close to 400,000 people, something like that and my sense is that would be an ongoing enterprise much as the auto industry is going forward. the other thing the auto industry has done is they've put on their thinking caps and how to come up with great looking vehicles and electronically it is much smarter vehicles and in your testimony when you talk about how to use the digital approach and things like that that would enable you to actually capture some new business and my friend tom coburn is gone. he talks about first class mail going away and will continue to be. the question is are we smart enough for the postal service to come up with new products, and new innovations and are we smart enough and the congress to let them market those when they come

to work? but me ask you if i can the company drawn into this and thank you very much for coming. i'm glad you are able to come on short notice when i was the governor and treasurer we used the company a lot and thank you for that service and this service as well. >> [inaudible] >> thank you. we used the group a lot helping with our personnel and issues in the state and obviously they are one of the company's. so here we have independent sources both highly regarded siegel and hagel and the inspector general which has a different view there's been this overpayment. we don't ask the gao would you take a look at this? would you take a look and see the work the group has done and

the auditors within opm. >> that is an offer we might want to take advantage of. >> have you had the chance to meet with the folks to understand what their assumptions are? >> i know ever staff has and there has been communication not only with them the the other studies done and we welcome the gao's participation in the sand with the committee staff in helping the committee decide what that fair and equitable standard should be. >> i'm over. let me stop there and say thanks for giving me a few extra seconds and thanks for the response. >> cementer mccaskill. >> we were in the middle of hearing the 167 post office closings being proposed in my

state 85% of those are in the counties of less than 50,000 residents. i spent a lot of time in my state going around outside of the urban area the last month i worry that the transparency of the process and the last time you testified before us senator pryor asked the question to my knowledge that question hasn't been fully answered has there been time places have been removed from the list following the public comment and the comment process ever had an impact on the decisions, the initial decisions to close. >> i would have to double check on that as far as there have been cases i will double check. >> if you could get back on that i want to make sure this isn't a dog and pony show for these folks some of their hearts are breaking over this the other post offices are going away and i want to make sure the process

is fair and transparent. the other thing i want to talk about is the five day delivery and i am one that is in the camp of first of all several members of the savings as you know there hasn't been a consistent number you quote one number the regulatory folks said it was half of that and i'm somebody who is worried about the spiral of the five day delivery. it's a marketing advantage the postal service has a six day delivery and it seems to me that we ought to be focusing on how to get better advantage of the marketing advantage that mitch we have in the market and no one else has that saturday delivery is something nobody else can offer and have you consulted with the newspaper magazine folks about the impact that will have on their business model? >> we've spoken to the newspaper and magazine and there was some concern on their part about the smaller town newspapers that

have saturday delivery generally one day a week. >> the other thing is coming and i know this may sound corny and 90 and frattali initial that i had the opportunity to go through a box of letters that my mother had from my grandmother's house that were my letters i sent to her in college and as we went through these letters i remember through history how many times in history courses i had taken the gaps in history were filled in with letters. we had a lot of best-selling books that were letters between everything from the founding fathers to the soldiers in the battlefield, and i am not sure that there's been a marketing campaign about the value of their written letter and what it means and how it is preserved and what it means to families. my kids are in college. i don't have a box like that. i had to impose the will you

can't get money by text message. [laughter] they didn't even -- we were not even having conversations. i was getting gibberish spellings need money 2day. it was ridiculous. it is a longing in these uncertain times for some of the things that have provided stability over the years and just as we have a place in our hearts for the reliability of the service there's also something special about that piece of first-class mail knowing that it's come from somebody you care about its bringing you news, and i think that while you have done a great job with the flat rate delivery i'm sick of that guy. [laughter] >> we love that guy. one price, one price. it works. has your business model shown

this works? haven't you increased the amount of packages that your handle on that one price? stat absolutely. >> so i really believe if somebody would begin to market the value of sending a written letter to somebody that you loved you might be suppressed redican for your christmas season. i know the christmas will help, christmas cards are part of the culture that we value, but i think that to give up i disagree dr. colburn. i don't think we should give up on the notion we are going to sit down and write a letter and put thoughts and prayers and hopes for somebody that we care about and we are going to just be electronic from here on out. i refuse to let go of that and i think that if you do that you might be surprised on how you can stabilize first class mail. it's more than bill paying. >> we agree 100%. let me just say moving away from any of the traditions we have in

the sixth day delivery to the post office, they are all terribly hard decisions because we touch american lives every day six days a week. we have programs we deliver one we run in schools where we try to teach the kids how to write letters. it's been successful but it's something we have to keep pushing on because a lot of times the schools are interested in teaching computer skills versus writing skills but i will take that under advisement. the other thing we won't be advertising mail this fall we are going to put advertisements on tv talking about the volume of mail, the physical connection and that somebody comes to see you every day and there's a lot of value in that. the unfortunate thing we do face is just the technology behind the bill payment. that pays so much of our overhead and so much of what we do every day and i think if we don't look at all these changes that we will never be able to recover financially.

>> and i get that and i know we have to make painful decisions but i just think it's important that we continue to look at the processing network and maybe moving to the curbside delivery. that is a huge amount of savings estimated also. i would rather be eliminate everything we can that is realistic before we get at the essence of the six day delivery and i feel strongly about that and i know others disagree but i want to go on the record i feel strongly about it. thank you mr. postmaster. >> thank you senator mccaskill. we are open to all suggestions and yours is wonderful. passionate letters for those we love. >> [inaudible] [laughter]

that was meant to be positive actually. we had a great time in the last committee for your efforts there and i don't know if it was mentioned i've been wrapping up meetings in my office but i think it's important to note the devotee of the postal employees for the work they do every day. they seem to be getting lost in this mess and i think it's important to note we have a lot of hard-working people in my home town and i know every person there i've known for 22, 23 years and i have been to many retirements and other communities, new postmasters' coming and being there and they are so thrilled to go through

the chain and be a hint of something very special, and i don't want that lost in everything we are trying to do and i never said the challenge. we have met everybody here and often this we met in my office in both the real fiscal challenges and it is unfortunate. it's kind of sad and i feel melancholy in that we have an institution like the post office going through these changes but here we are and that being said i'm wondering if the 2015 deadline that you've given yourself to meet the changes is to mcginn dishes or you feel is just about right and what pushback you think you will be getting along the way. >> first of all let me just comment on your statement about the employees they do a great job as people would have looked just in the past couple of weeks with her rican aye reena and we give people the next day making sure the male got delivered and

the process through the bad winter this year so i appreciate your comment and it's something we take very seriously. from the standpoint of our plans we laid out a plan that includes changes both operational with of the benefits it is an aggressive plan what we are looking at is trying to get profitable by 2013 when i say profitable is about a billion or $2 billion but that does is allow us to start paying down the debt and allows us to eventually get in the position where we will be able to make important investments. we need to do something about vehicles. there were other investments we need to make but more importantly than that is the fact that we need to stabilize our finances. a good stable postal service as i testified earlier is critical for the american economy. critical for the way people feel about the postal service.

every corner i have to report lost and go through the same discussion and they can't get their head above the water and their antiquated. none of that helps because it potentially scarce the business away so i'm very focused on getting the profitable, getting the changes made in the network's, getting the changes made in the flexibility with employees. it's critical that we get to that point as quick as we can because the revenue will continue to go down so it's important we get to the point where we can stabilize and then continue to work the way forward from that point. spry i appreciate one of the things i'd appreciate about this issue and i've only been here about a year and a half now but i have appreciated the full full approach and i just a lot of tough questions privately in the office with folks that have come in and i feel very direct dancers and it's important to have that coastal's to understand the problem and get

up to speed so we can make a proper decision here. do you think a lot of these changes will such as eliminating the saturday service will prevent -- i want to see because it is on my notes a death spiral or just such reduction in consumer usage it will get out of control and you won't get to the profitability breakeven point? >> i think the failure to act on these issues to get stable will result in a death spiral. i think that if we continue to try to make incremental changes going in with one swoop and making big changes we will cause every year we will be in the situation we are reporting losses said you have to make this cut and move on from there. >> thank you for coming today.

how do you view the postal service proposed plans in line with getting the network work force and competitive do you think based on the volume of the mail and etc? >> we've been talking about the need for the network realignment for several years now and that's an important step in the proposal to cut plans from 500 to 200 is a noteworthy step. >> is the time for inappropriate for the aggressiveness? >> it's going to be tough by 2015. a lot of stakeholders are involved, a lot of plans. it will take a plan and everybody coming together saying we think this is important and we are all going to get behind it. >> the timeframe and anyone can ship them on this comegys think we need to move? i've been here a year and a half and i discussed about the way things are done here, the lack of bipartisanship and come artery. it's gotten better with certain people but all in all we should

be doing a lot better. what is the time frame? i don't see us moving too quickly on the host of things and i hoping it doesn't come down to -- from all the postal service shutting down and we are going to be in the tenth hour 1159 trying to ram something through that doesn't make sense to you have an indication mr. chairman or ranking member what is your time frame that you need to get this done? >> as we proposed, we would like to see the long-term comprehensive legislation by the end of september. we have asked for the ability to take over the health care benefit we can resolve the pre-funding issue that way. it's a tough decision but it has to be made. let us move to get our money back. it will stabilize the finances. i'm offering right now with a week's worth of cash a 65 billion-dollar business. nobody would be doing something

like that. >> you need congress to move by the end of this month. so mr. chairman whatever we can do. we have to figure this out to the line type of waiting until the last second. i hope we could work on a bipartisan manner and in a manner that the president will sign the bill to get this done. come on. this is a no-brainer, folks. >> i agree with you don't know that we can meet that schedule will the postmaster has given that is you have that comprehensive legislation by the end of september and i don't think we can and interested he said in his testimony that the president will submit a plan to meet the postal service fiscal crisis along with his recommendation for the joint special committee of 12. i still would like our committee to market a bill that responds to both with the postmaster has

proposed and other proposals because i feel we've got particularly but senator collins and senator carper has much or more expertise as most people in the congress to and i know that you're the ranking in the subcommittee, so i am committed to moving this along and the postmaster has been pretty clear that even assuming that he defaults on his 5.5 billion summer, 2012, he's not going to what i'm saying is i agree. we should put together the legislation, pass it and give before that so you are not the point we are saying tomorrow the male is not going to be delivered. >> are we going to fight by the post office, too?

>> i hope not. on the agree. >> i know you agree. you are one of them trying to work together as was the gentleman to my left and the leedy to my left. so we need to kind of push our colleagues and leaders to put this and make this a priority. thank you. >> thank you i know if you had another hearing and i appreciate that you've been able to return to ask questions of the panel. >> thank you very much, mr. chairman. i will say a few words before going to the questions. in 2006, congress passed a bipartisan legislation to modernize the postal service. now as the economy faces the challenges nearly $5 billion per year, pre-funding payments required by the 2006 law

threatens the postal service with insolvency. the core of any proposal post service must address the refunding issue while eliminating or offsetting the payment. other reforms likely will be needed, some of which are under the postal service's control and some which we may need to enact the legislation. i express my concerns over the past proposals including delivery reductions arbitration changes and facility closing. s chairman of the federal work force committee i also have concerns over new proposals released by the postal service on health and retirement programs and lay off. congress must be cautious when affecting contracts negotiated in good faith.

the house oversight committee is also released legislation. however, i do not believe it is a responsible way pleasing one of the nation's largest employers into receivership by stripping the postal management of its authority will not address the fundamental problems. the postal service needs more flexibility, not more bureaucracy. the postal service is operating on borrowed time because congress has not yet acted on any proposals. failure on our part to the enact legislation could have negative consequences affecting the nation's economic recovery. i remain committed to ensuring a viable future for the postal

service and i look forward to continuing to work with my colleagues to craft legislation to achieve those goals. i have a longer statement, mr. chairman, which i will submit for the record. director barry come in the 1980's the six federal agents have had their own health insurance plan available to employees in addition and eliminated their plans most notably the federal department insurance corporation in 1998 the fdic had to pay millions of dollars to bring employees back to the sehb after they found that the plan was more costly. my question to you, director, is

how feasible is breaking the postal employees breaking off from the sehb and what would be the consequences if they ever wanted to come back? >> mr. chairman, think you for your question and it's always good to be with you serve with the agencies that you described that of broke away from the fbhp and came back and found that the savings they projected or not to be had this is one of the reasons that the administration is proposing that we move extremely cautiously and carefully in this area. the administrative overhead cost of our .08%. we provide choices and plans in

all 50 states and including urban and rural areas. to provide health care. currently, the co-payment cost share for the postal service is less than provided by the federal employees for the same plan. so that is negotiated, but it is a 10% differential. in other words, the postal service pays 10% more than the federal government pays. the employees in the federal plans pay a higher co-payment percentage. so when you look at all those choices i fink we need to move very carefully before we would remove. we have over 9 million employees in the market pulled now in the

federal plan. each year we consistently deliver a rate increase that is below the market rate increase in the country and we will do that again this year. i don't see how with 600,000 to a million employees going off on their own with an age that is higher than the pool they are going to achieve the savings the postmaster general with all due respect has projected so i think we need to move extremely carefully and be very cautious and study this extremely carefully before we would recommend moving forward. >> the postal service also considered leaving the program in the 1990's but nevertheless my question is didn't the postal

service leave at that time? and what those reasons apply today? >> thank you, senator. in the 90's we looked at leading but there was a decision i think it is pretty much the same decision that happened to the fdic the fasb economy rules would have required us to put the health care cost on our books. since then the fact that we are pretending, that issue is no longer an issue than it was back then. what we decided to do with exploring the option is to see if we would be able to take the cost down through the plan. i do not disagree at all with the director. this is something we have to study carefully and i think we have to study it jury quickly because what we are proposing is not unlike what any other large corporation does when you go out on to the open market and get the best price for the health

care plan. let me assure you this i do not want to do anything that would have a negative effect on the employees or their retirees. we want to the right thing and we are trying to figure out how to manage the cost going forward and this is one of the ideas we had. >> i know my time is expired. i have one more question. >> how can i say no to you, senator. >> thank you. your testimony once again brought the issue of modifying the collective bargaining process to require that they consider the financial health of the postal service. the cbo analysis in the last conference continued this provision did not project any savings on this issue. my understanding is that the trade is routinely considered

the postal service finance. my question is how has the gao done in the analysis suggesting there would be cost savings from this change to the arbitration process? >> in the work i did not refer to it in my statement today but we did in the business model issue dillinger rego we said that would be an issue for congress to consider going forward as it thinks about collective bargaining agreements, what's affordable for the servicing the situation where the contracts go to arbitration to ensure that would be put on the table because the precedent in the past has been that there is in mail volume and revenue to pay for the cost increases and things of that nature. we are looking at a very different scenario now and it is s testified as the postmaster general testified has been discussed here today that we look forward as a bright one

there would be the letter-writing campaign and people would begin to write more letters that the fact is many bills are now going to be prepared and distributed electronically and that has been the lifeblood and a lot of the financial literature as well, the czechs and things of that nature from the banks, those are all moving digitally now, so it is in that spirit we made the discussion for the congress to consider. >> thank you very much. >> thank you. finally, senator moran. >> i know you're disappointed i returned to the committee. [laughter] >> it's always a pleasure to see you. >> you're so kind. >> i can't speak on behalf of the witnesses on the second panel but no, we are glad you came back. >> i have been to a corporation subcommittee hearing on the homeland security, and do want to ask the postmaster general a couple questions. first i would like to commend him for his efforts to find solvency in the united states

postal service and want to be an ally working with him to do so and hope that he is asking his staff tall levels of the service for suggestions about efficiency many times i think the best and brightest ideas come from the people who work at the postal service for their suggestions about how to improve the bottom line. 3700 post offices is something certainly that caught my attention 134 of them are in kansas and i don't want to be overly provincial here but i always want to make certain that rural america doesn't get just forgotten decisions made in the nation's capital. ..

not that i mind that, but what i would love to know is it's very things that community members can say, evidence that can be garnered, facts that can be told, and that would then alter the decision made at the postal service as to whether or not this particular communities post office will continue to be in existence. my impression that many people who have attended those meetings is almost without exception the postal service has made up their mind. they go through the motions. they are in the town to pretend to listen to us, but we never

get indications that there's anything we could do to reach different conclusions than closing the post office. but adenosine or what am i missing quite >> i think the key thing is to make sure that our people understand exactly what the community would pace with change. i think that when you look at what we got proposed, we are looking our criteria is that of less than two hours of work on a daily basis. and generally, it is under $20,000 in revenue. one of the things have got to keep our eye out and make sure we don't do is make access impossible for people in states like kansas because you don't want to have two or three post offices within a certain area that get changed and become a village post office circuit consolidated and have to drive a 20 or 30 miles to get postal services. that is the key thing. i think constituents need to

make sure whatever we are proposing is reasonable for them and reasonable meaning a couple miles, three, four, five miles to a post office. we take universal service very, very serious and want to make sure we are not setting our customers have. the other thing i encourage that customers have ideas, we are all gears. we have been encouraging businesses to step up and say hey, will write a contract, but the village post office is we can provide access seven days a week, but they may only get a couple hours a day. so those are a couple things i'd encourage. if there is written criteria, a checklist when postal employees come back to the community meeting they met this, but not as commander to see what the criteria is that there is an opportunity for communities that matters to the postal service. as you and i said before the hearing started, i'm an alley of the earth in signing the win-win

combination in which there is a village post office saving space and personnel with a check store pharmacy. those things matter a lot to the community. i wrote you a letter, postmaster general. on august the 10th he responded in a thank you for that. one of the things i want to raise that i didn't understand or didn't see the answer to it is the united states code permissions is postal service shall provide the fact that reiko areas, communities and small towns are post office are not self-sustaining. no post office shall be close solely for operating a deficit, it been the intent of congress the postal service be insured to residents of both urban and rural communities. when you're out having hearing for the list of 3700 post offices, my experience in 14 years as a member of the house and just a month as a member of the senate is the post office as i worried when i walk in and

discover the postmaster is about to retire but the building has deteriorated. what's the criteria now? what do you expect to be able to do with this legislative language? one of the things you might be asking is to eliminate the legislative language. and the essence of this, how can you close 3700 post offices? >> one of the things we don't want to do is ask any changes in the language. your post offices out there that lose money that are large post office is insert dozens and dozens of people. most of our offices to lose money. but what we are looking to do from a standpoint of reviewing offices is to come up with a very fair in standard criteria. that was the idea of post office is that of less than two hours with a business, less than $20,000 worth of business coming across a counter. when you have that criteria, and

then you cannot get it very objectively i'm a candidate like we mentioned earlier about what is the geography? is there a place to consolidate? is there a story can contract with? that's the way we want to approach it. but we don't want to do is have a situation where postmaster is afraid to retire. what do you not have to did things like that. we'd rather have a much more transparent criteria so that anybody out there that the same these kind of changes is exactly where we are coming from. >> i just came as a set from a homeland security subcommittee, where we worry about the relief of people suffering from disaster. read incoming kansas is a construct a tornado, never in a list of 3700. out of the building is damaged they are having a community meeting. this is the wrong kind of message on how to recover from a tornado at that because we suffered this natural disaster

come the postal service is now contemplating closing our post office. >> i'll look into that right away. >> thank you, sir. thank you, chairman. he might do much to make a brief statement before we move onto the next? >> thank you, mr. chairman. i know all of us have so many more questions than we have a panel that we've been waiting for for an hour. i just wanted to make a comment and also give another assignment to mr. trini. -- mr. herr. first, it's important to realize that if they postal service defaults on the $5.5 billion payment for what the retiree health benefits fund, that unfunded liability does not go away. and in fact, there is an unfunded liability in the fund

that i believe is in the neighborhood of $56 billion. and i think that is important because even if we restructure and they really salute the postmaster general for his sweeping proposals. i think they are very construct days. whether i agree with them all or not, they are very construct it on what they need. but the fact is that postal service has huge unfunded liabilities and i can see general agreement with that. so, my assignment or request to you, mr. herr is, if we were reinventing the postal service from scratch, a de novo approach, how would restructure? would we have a chilling with the federal government's retiree health programs, employee health

programs, pension programs? would we give it access to prior work to $15 billion from the treasury, which is obviously an advantage that private enterprise doesn't have. would we give it hard to launch in setting rates and if they deemed who it delivers to acquire i would like you to help us figure out what would be the ideal while still ensuring that we are providing this absolutely vital linchpin to our economy, a linchpin that is not only important to the 8.7 million people who work in the mailing industry, but also has to bring this together as a country. after all, that is why the constitution mentions the postal

service. so i would like your ideas on if we were starting from scratch, how would we sat forth this vital institution? thank you, mr. chairman. >> thanks, senator collins. i will send a request to gao. thank you to the panel. you've been very informative and very start. i want to say again, there is a clock ticking. $5.5 billion, the postal service owes. you're not going to be sued clearly today that by next summer or, if nothing else is postal service, you're going to effectively have to start delivering the mail. and that should get a spyware

can come even across party lines. thank you very much. second panel please come to the table. cliff guffey, president of the american postal workers union. louis atkins from the postal >> tonight's news anchors perspectives on covering the events of september 11th, 2001. former anchors charlie gibson and dan rather. former cnn washington bureau chief frank sesno. former journalist marvin kalb moderates had stored was in university tonight at 8:00 p.m. eastern life here on c-span2.

>> in 1844 henry clay ran for president of the united states and lost, but he taste political history. he is one of the 14 and featured in cs band's new weekly series the contenders. this week his kentucky home. >> this weekend to the 10-year anniversary of 9/11 with live coverage for me to the memorial sites, new york city, so, pennsylvania, and the pentagon. here is our live schedule. the flight 93 national memorial dedication ceremony. sunday morning and a 30, a memorial ceremony from the world trade center site with president obama and former president bush. on c-span to vice-president biden from the pentagon and on c-span three honoring those who

lost their lives on united flight 93. 9/11 remembered this weekend on the c-span networks. book tv pcs 9/11 authors saturday. and sunday marion fontana, patrick creed, and rick newman, lawrence wright. this weekend deal of surprise when the washington post reporter suggests the federal government's efforts to protect america after september 11th are secretive and dangerous and need to be exposed. interviewed by a former undersecretary of defense. also, personal and political more. dick cheney talks about his experiences during 9/11 and the lessons he has learned since then. you can look for the former president interviewed by bob woodward. our complete schedules online at booktv.org.

>> former homeland security secretary and 9/11 cochaired testified thursday on the challenges and progress made since the september 11 the tax. also testifying, the comptroller general of the government accountability of this. new york's picking chairs the committee, just over three hours.ni >> good morning. land the committee on homeland security will come to order. meeting to hear testimony assessing the status of homelanc security on the occasion of thee tenth anniversary of the september 11th, 2001 terrorist attacks. to remind our guests today that demonstrations from the audience and the use of signs and t-shirts or verbal outbursts are against the rules of the house.

we thank you for the cooperation in maintaining order and the proper decorum. i now recognize myself for an opening statement. i welcome everybody to the hearing today and i especially thank the witnesses for being here today. chairman lee, lee hamilton, who had a truely outstanding career in the united states congress, as chairman of the foreign affairs committee, foreign committee, a person who person son mid the best of congress and served as co-chairman on the 9/11 commission, and somehow we always get him to come back. he has amazing stamina and dedication, lee, great to see you here again today. i understand he's running late to travel today, but also secretary tom ridge will be testifying today. tom ridge was the first secretary of homeland security. prior to that, he served as governor of pennsylvania, and served six terms in the house of

representatives, and our third witness this morning is the honorable eugene dedaro. all of us have personal stories from september 11th. in my own case, lost 150 constituents and friends on that date. you can go to other districts where there's many, if not more, and i know we've worked with family members of the 9/11 victims, but it's important that we not be bogged down just in grief, that we look forward, and that was really what i think our country did starting on september 12th, 2001. one never forgets september 11, do all we can to the families of those murdered that day, but also to all that we possibly can to make sure that these attacks are never replicateed.

we have not been attacked in the country for 10 years, and this goes to other administrations and the obama administration. this is one issue which is probably as close to being bipartisan as possible. obviously, there are some philosophical differences and policy differences we have, but the fact is certainly when i was chairman before and then ranking member and as chairman now, i always believe had the excellent working relationship with ranking member thompson as we tried to find commonground and try to minimize the differences between us. there's been other actions taken beside the creation department of the homeland security. there's the director of national intelligence, and, of course, this committee itself was set up in response to the attacks of september 11 which probably goes to one of the areas where

congress' not done what it was supposed to do by what was recommended of the 9/11 commission, which is to consolidate jurisdiction within this committee as much as possible. there's still over 90 or 100 or whatever number we want to use, subcommittees, committees, and commissions that the department of homeland security has to report to. this is not a turf battle. this is the fact we send mixed messages to the department. we are sending mixed signals as far as what congressments in the area -- congress wants in homeland security, and this fragmentation to me is inviting, if not disastrous. certainly it's preventing law enforcement and intelligence agencies from doing the jobs to the maximum by sending so many mixed signals. again, this is an area where ranking member thompson and i fully agree. it's an area where secretary ridge, secretary napolitano

fully agree, and just as i said, overall, our policies have been bipartisan both in congress and the executive level, and also the failure to consolidate jurisdiction has been a bipartisan failure, and we have to do all that we can to bring that to consolidation about, and others in the area of grants which has been spread to other areas that need them the most, and i give credit for -- the work that was done, and not trying to draft back into duty, but congressman frank wolf and i are reconstituting the commission ten years after. other areas to move forward and

allocate to police, firefighters, first responders. no one wants to go through another september 11th where there's a lack of communication, inability to communicate, and ten years later, we have not taken action. i'd like to acknowledge to the audience chief johnson and story county from iowa who were in the forefront of fighting for the deblock which is absolutely essential.

the leadership is devra davis stated because of bin laden and all those who oppose terrorism. at the same time, and now we have al-qaeda attempts to recruit in our country and attempting to recruit people under the radar screen so as we have scored successes in one area, the enemy is adopting, and we have to continue to adapt along with it. as we approach this weekend, it's important to think back on how horrible that day was and told ourselves we would not

allow that to happen again. the further we get from 9/11, the horror in the people's recessed memories, but the further it's behind us, the more we, i believe, invite another attack whether it's in congress as far as cuts we make to homeland security, whether it's media who agent like the struggle is over, or just the american people who is very understand baling, wants to put this in the rearview mirror, but the fact is, the enemy is there, just as dedicated before, it's weakened, but adapting. we have to stand as one to do all we can to make sure that 9/11 never again repeats itself so with that, i want to thank all the witnesses for joining us here today, and i'm privileged to yield to the ranking member, the gentleman from mississippi, mr. tompson. >> thank you very much, mr. chairman, and most of what you

said i agree with, and as you said, we clearly have had a wonderful and positive relationship as we have differences from time to time. i'd also like to welcome our newest member on the democratic side to the committee, so we now have a full complement, and we look forward to the debate. >> welcome you also, thank you. >> mr. chairman, today we meet to hear testimony on the nation's progress in bringing about safety, security, and resiliency against terrorism since the attacks of 9/11, but before we look back, i want to acknowledge and remember all the firefighters, police officers, and on-air people who lost their lives that tuesday morning. remembering those who died must inspire us to make this nation better and safer. mr. chairman, there's no doubt

that the events of september 11, 2001, brought about fundamental changes to this nation. the events of this morning changed just about everything we know about aviation security, information sharing, and fast response and recovery. overtime, this government changed policies and practices. the american people have changed their expectations. today, most people regard many new security issues as a reasonable price for security, but as we enter the second 9/11 decade, we must begin to question the price we pay. between 2004 and 2010, the department spent nearly $300 billion to secure our nation. several initiatives have improved our security and eliminated many vulnerabilities we once faced. increases in the number of border patrol officers, the establishment of secure flight, and u.s. visit, the

revitalization of fema, and new attention to securing chemical and bilogical materials all improved our security posture. all of these things have been good and necessary, but as we reflect on the past 10 years, we cannot pretend that progress has been steady and unimpeded. many pointed to the growth in homeland security spending and reliance on outside contractors at the beginning of homeland security industrial complex which may undermind our security in the long run. i cannot isolate the cause for this incredible increase in spending, nor can i deny that congress' has the inability to consolidate jurisdiction is a contributing factor. the splintering of jurisdiction fractured every aspect of the didn't's operation and decreased its ability to operate effectively and efficiently. the inability of congress to provide the department with one

strong and steady hand created opportunities for the network of using consultants who we may call the beltway bandits. i hope that the chairman works with the leadership to ensure that these jurisdictional hurdles are overcome as chairman already said in the opening comments, there's enough blame on both sides to go for this jurisdictional hoer rases that we in this case. this committee mors pursue jurisdiction of the department. mr. chairman, as we were called on 9/11, we must remember that the terrorist attacks of that day caused us to fight a new kind of war. the war on terrorism has not only been waged in information and iraq, but it has also been fought on our shores. a recent study reports that nearly 200 terrorism cases have been brought in u.s. courts since 9/11. nine out of ten of those cases

have ended in convictions. we should be proud of our success in engaging threats here at home, but our work in securing the nation must also assure our rights and freedoms. the 9/11 commission understood this necessity and recommended a privacy and civil liberties oversight board. today, that board is still not functional. i hope my colleagues will join me in requesting that appointments be made to this board immediately so as i consider our progress since 9/11, i would call it a mixed bag. we made strides, but still have miles to go before we can rest. i yield back. >> thank you, ranking member tompson and members of the committee are reminded opening statements mob published for the record, and i also ask unanimous concept to insert the 10th anniversary report card, the recommendations prepared by the

bipartisan policy center, national security preparedness group. without objection, so ordered, and now we'll -- secretary ridge, good to see you, very good. joined by secretary ridge. first witness this morning as i mentioned is lee hamilton, long time distinguished member of congress, vice chairman of the 9/11 commission, former president of the national center for scholars and true gentleman in every sense of the word, and if anyone served in congress and served his nation in a bipartisan and patriotic way, it's lee hamilton. >> thank you very much, mr. chairman. i ask unanimous consent my statement be put in full in the record. >> without objection. >> ranking members, mr. chairman, members of the committee, thank you for the opportunity to appear with you today. this committee provided outstanding and enduring support

for the implementation of the 9/11 commission recommendations. we are most appreciative of the leadership and its members for your support. by doing so, you're helping ensure that our nation takes the difficult steps necessary to confront the terrorist threat and to protect the american people. today, i'm appearing in my capacity as a co-chair, the bipartisan policy centers preparedness group which is a successor to the 9/11 commission through the nspg, governor chain, who could not be here this morning, governor ridge and i together with a bipartisan group of security experts monitor the implementation of the 9/11 commission's recommendations and address emerging national security issues. it is a very special pleasure, of course, to appear with governor tom ridge as well as the comptroller general before you this morning.

last week we released a important on the commission's recommendations. the good news is that substantial progress has been made in fulfilling many of the recommendations. among these is the transformation of the intelligence community in breaking down barriers and information sharing. however, the unfulfilled recommendations in the report indicate we're not as secure as we could or should be. i'll cover several now and allow ridge to discuss the others. unity of effort for the many actors at a disaster seen is critical because a well coordinated response saves many lives. our nation was not fully prepared for the size and complexity of the 9/11 attacks or for that matter, hurricane katrina. many metropolitan areas where multiple agencies respond to a disaster still have not solved the problem of who is in

charge. dhs and state and local governments have to work together to resolve gaps in establishing roll roles and responsibilities, conducting disaster planning, and exercising those plans. a unity of command, knowing who is in charge, is a no-brainer in terms of what must be done to respond to a disaster, and it is a source of high frustration to me, and i think other members of the commission that we have not yet resolved that problem satisfactorily across the nation although some communities have made considerable progress. secondly, the civil liberties and executive power. i spent a good day yesterday listening in good part to the extraordinary capabilities that we have today in government to surveil people and to keep track of what they're doing.

i've had that briefing before and i'm impressed over again. if you have not had the opportunity of what the capabilities are today and what they will be ten years from today, i urge you -- taking whatever steps you can -- to get that briefing. we recommended in the 9/11 commission that a privacy and civil liberties board should be addressed to monitor civil liberty concerns across the government. you will not fail to be impressed by the potential of government and individuals now to intrude into the lives of ordinary people. although legislation was enacted to establish this board, it's been dormant more more than three years. to date, only two of the boards

five members have been nominated by the president, a chairman has not been selected, the remaining three should be appointed immediately. next, the director of national intelligence, the establishment of the director of national intelligence and the national counterterrorism center 20 coordinate the activities of the intelligence community represented major progress and intelligence reform; however, there's some ambiguity about the dni's authority over budget and personnel, and there's been four dnis in six years. further clarity about that role is needed, and that clarity can come from either additional legislation or by action of the president with repeated declarations from him that the dni is the unequivocal heard of the intelligence community with regard to budget, personnel, and other matters. next, standardized secure id's. 18 of the 19 9/11 hijackers

obtained 30 state of issued ids amongst them enabling them to more easily board plain -- planes on that dreadful morning of 9/11. therefore, we recommended that the federal government set standards for the sources of identification. 2008, dhs issued detailed regulations setting standards for driver's license issuing. however, the state's compliance with the regulations has been delayed until 2013. that delay in compliance creates vulnerabilities and makes us less safe. no further delay should be authorized, and instead from my point of view at least, the deadline should be accelerated. next, transportation security. with significant federal funding, tsa deployed large numbers of enhanced screening equipment in explosive detection. unfortunately, explosive detection technology lacks reliability and lags in its

capability to automatically identify concealed weapons and explosives. dhs must improve the way it sets screening technology requirements, works with the private sector to develop this equipment, and tests it in the field. finally, with regard to standards for terrorist detention -- i know this is not within the jurisdiction of the committee, but it's an important matter -- for too long we delayed resolving the important problem of recon silling the rule of law of detaining alleged terrorists, no doubt who they attempt to do the nation harm. there must be a law, comprehensive approach for how to handle detainees and protect the american people. to conclude, while we have done much since the attacks ten years ago, we are safer than we were that day, all of us, i think,

there is still much more to do. political leadership from both parties and at all levels of government should renew their focus on completing implementation of the 9/11 commission recommendations. thank you. >> thank you, chairman hamilton. the next witness is an old friend of people in the congress. i had the privilege of serving with tom ridge when a member as congress, became an outstanding governor of the state of pennsylvania, and was present at the creation when president bush appointed him to be the first assistant to the president of homeland security. he's a unique perspective on this being there from the start an monitored the develop over the department and of the homeland security mechanisms in the country over the past ten years. tom was a college graduate, law stay tuned, drafted, served in vat nawm, received the bronze star, and truly outstanding

member of congress, and, again, like chairman hamilton, dedicated to his country and on this issue in particular. it's an hoer nor to have you here today, and you are recognized. >> thank you chairman, ranking members, and members of the committee -- [inaudible] i join my colleagues in thanking my colleagues to express my appreciation for the opportunity to appear before you today as we reflect upon the nation's security efforts ten years after the attacks of 9/11/01, and frankly as we consider the priorities for the future. i'm very pleased to be joined today at the witness table by someone you recognize. we all recognize as a great patriot, lee hamilton, and obviously we recognize the service and contribution -- >> pull the mrch close. i'm having a hard time.

now it's fine. thank you very much. >> i recognize the service of comptroller gene dodaro, who bring distinguished credentials and significant points of view to our conversation today. as i look back over the last 10 years, it is abun adaptly clear that america was, is, and will always be an undeniably resilient country. in the decades' time, we strengthened intelligence assets and partnered with allies and friends, captures and killed terrorists, destroyed safe havens in afghanistan and around the globe. we set up a new department, the department of homeland security, and repositioned as the country embraced an e motionally charged, but i think strategically driven, national mission. we improved preparedness and response kates and established layers of security throughout our aviation system. we embedded new technologies and security measures throughout

both the private and public sectors. individual citizens, i believe, are more prepared and they are certainly more aware. with public and private sector leadership in investment, we are more secure, but we remain a target nonetheless. over the course of 10 years, the threat remains strong and continues to change. we have twharted some attacks, but others have simply failed. what makes some uncomfortable, we must acknowledge no matter how hard we try, another attack is likely. the responsibility is on us then to understand there's more to do and that luck is not a strategy. as we close one as a rule inert, we should anticipate the terrorist adapts and seeks out another and be ready for that. we must view security as an

ongoing process, not an end point, a deliberative process, not a breathless reaction to all conceivable threats 1 required at all times. terrorists do not rest, so neither can we. we wear wristwatches. they have time. a number of security measures await our attention. we have strengthened information sharing in this country and among allies and friends, but we still saw an attempted christmas day bomber come close to his goals doo to an information not being shared. i, for one, also believe that the failure to share information and the failure to act led to the horrible tragedy associated with the deaths of the people at fort hood. we need to create a culture of intelligence sharing where everyone feels empowered to hit the send button to share more,

not less. we bolstered communication technologies burks -- but an inoperateble communication system remains undelivered. if the tragedy of 9/11, the specific recommendations of the 9/11 commission, and the sustained pleas of police, firemen, and emergency service personnels cannot generate federal support for such a network, what will it take? ladies and gentlemen, what will it take? we have instituted an entry system to validate who comes into the country, but have not created an exit system that ensures the same visitor leave and do not exploit an unfinished system. it is likely, therefore, we have people among us overstaying their visas. where are they now? what are they doing? why are they here? respect the way i say this -- the issue of congressional oversight is a 9/11 recommendation that also goes unanswered.

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but we all know this threat would remain long after the man was killed. 10 years is not a lot of time, but it is enough time to know in the next 10 years to fight will be with us. it will go on, but so will we, as a stronger and more secure country, as the resilient in freedom loving people we have always been a designation that will always remind you those the last one september day. thank you, mr. chairman. >> thank you, secretary ridge. our next witness is to keep everybody on this. attorney general gene dodaro come within more than 30 year record of achievement. he served more than nine years as chief operating officer at

gao and with that i look forward to your testimony and it's a perspective we don't always hear, so i search and look forward to you this morning. >> thank you, mr. chairman. ranking member thompson, members of the committee, very pleased to be here today to discuss gao's view on homeland security issues. it's a privilege to appear with hamilton and bridge this morning. we issued a report of the work we have done over the past decade, looking to homeland security issues. we've made over 1500 recommendations during that period of time. with adopted a constructive approach and try to do our part to help about quest to make our homeland more secure. the department has reacted favorably to implementations and is adopted many and many have not been fully implemented. they bought a message of our report was progress indeed has been made since 9/11, but much

work remains on gadson weakness is that the department needs to address in order to reach its full potential. on the progress site, when secure flight. we've assisted out to check against terrorist watch lists on passenger lists. we have a visa entry biometrics system as governor ridge mentioned, to track people coming into the country. we have a visa security program come over dhs is now working with department of state officials in the process of determining who gets a visa in order to come into the country. there's also what automated verification authorization system for the visa waiver countries, where pieces aren't needed, that checked if they counted. we toasted resources at ports of entry, equipment and infrastructure they are and that

the borders across the country. i'm also pleased there's been greater emphasis on cybersecurity in the national infrastructure plan in fema has issued national response framework and documents to ensure emergency preparedness and better clarity of goals and responsibilities. on the work remaining side, first to point to the fact that we need to continuously improve the processes and technologies for screening at the airport, particularly including a plan to bring the equipment for screening checked baggage up to current levels for detecting explosive devices. secondly, i would echo the comments of my colleagues in that we need an exit system for this country. over stage remains a significant problem. estimate to between four and 5 million people and if we all recall, five of the 19 hijackers on 9/11 had overstayed their

visas. so having an exit strategy is important. his great opportunities to expand the visa border security program. dhs is not working with the state department on all critical high-risk issues previously done by placing additional people overseas are perhaps remotely working within the united states. so that's an important issue as well. there's also a task to provide more timely and actionable threat and alerts on cybersecurity issues to the private sector and others and help them dealing with a growing problem of cybersecurity intrusions. there's also a need for fema to come up with the metrics assess it to assess capabilities and readiness of jurisdictions. we have framework and guidelines , but we've yet to have any objective assessment of readiness and preparedness

levels across the country. also, you need to effectively implement the global nuclear detection strategy and we've made some recommendations in this area. there's a need to strengthen efforts to detect biological agents and threats to our country. lastly, i would point to a report, highlighting the need for the department to improve their management systems and infrastructure to help support these very important missions. problems that have been occurring in the acquisition area. it's been a number of failed acquisition attempts. a lot of money is at stake to about 40% of the budget is on acquisitions and that means to be improved, along with development and testing of technologies before they're deployed. so the financial management systems need to be strengthened to properly account for funds

available. they're one of of the few departments that are unable to pass a clean audit opinion. going forward in the austere budget environment, it's important that we make the most efficient use out of the monies and manage wisely. this concludes my opening statement. i look forward to answering questions. thank you very much, mr. chairman. >> thank you controllers general dodaro. my first question would be to secretary ridge and hamilton. i'm on this committee, the intelligence committee and i haven't figured out what the role of the director of national intelligence is. i don't mean that in a sarcastic way. he seems to be no defined role. if anything comes position is weakening. chairman hamilton, he mentioned that they take action to firm up responsibilities. we tried to have the race firm

that we in general petraeus. i don't see much likelihood you'll see this president or any president in the immediate future coming back on the powers of the cia. as a practical matter, where do we stand with the dni? >> i think it's very important to understand where we were before 9/11. at that time, you had the so-called leader of the intelligence community, director of the cia, who didn't have power over the budget and most of the personnel in the intelligence community. so all of the cia nurse focused on the cia and not the other 14 or 15 elements of the intelligence community. our principal recommendation in the 9/11 commission report is that you had to get away from stove piping information from conduct human agency and the basis of need to know and can do

the agency on responsibility to share because we lost lives because we did not connect the dots. we did not share information. we recommended that you needed someone overseeing the entire intelligence community with considerable power, with respect to personnel budget. he passed a law saying that the direct or of national intelligence that power, but in the same landwehr was wordage that kind of weakened the power so you may get some unambiguous. so the director four and six years in that job. the direct heirs have performed very well. it's a test spot, even with the statutory power because you are dealing with very big players in

any administration. secretary of defense cia air. regardless of statutory powers he may have come enough to exercise power with a great deal of diplomacy and discussion in order to make it work affect lee. personalities are very, very important. i think the dni has done tremendously good work enforcing, if i may use the word, sharing of information. do a better example of what tom ridge referred to, removal of osama bin laden, when we had a marvelous example of sharing of information, coordination, integration, military civilian components of our government. so i think mr. chairman, the dni is a work in progress. i think several of them have made very significant progress

over a period of time. we are not there yet. you do not have the seamless sharing of information that you would like to have, but it seems to me, it's a lot of progress has been made. but a personal preference would see a lot in a bid, making it unambiguously clear that this man is in charge because somebody has to knock heads to be blunt about it, within the intelligence community, to get them to coordinate and integrate their activities. i think almost the same thing could be accomplished if the president made very, very clear repeatedly, his support for the dni. i think president bush and president obama have both done that, but not as forcefully and repeatedly as they think the job requires. so it work in progress. a lot of progress made, still a lot to do in improving

intelligence sharing and the government. >> secretary ridge come anything to add to that? >> one brief comment. i appreciate lee hamilton did on that and i share it. the role of the dni if you look at lucy might eat to coordinate activity. well, this might be attempting to courtenay activities between agencies that the mine site and are led by strong personalities. so the extent we should could clarify with great specificity the role of the dni is strictly oversight. does he have budgetary control? is one thing to control or at least had the opportunity to coordinate a dvd, but it would be well stated if you want to get somebody's attention, you control the purse strings. the men who have served us as

dni had done a remarkable job. it's a difficult task given the institutional mindset about the agencies of which the oversight responsibility and coordination accountability. and i was not privy to some conversations that the dni's have had with respect to the intelligence community leaders. it's difficult to them and acting secretary, as congressman hamilton has pointed out, further clarification of greater specificity as to the church might be helpful. >> my time is running out for her. i would like to ask important questions of chairman hamilton as secretary ridge. do you just synthesize a few at the import of radio interoperability and i respect term? >> well, look, this is another no-brainer. did people but the responsibility at the scene of

the disaster must have the ability to communicate with one another. not just verbally, but exchanging all kinds of data and information that can be helpful to the first responder. this is a source of enormous frustration why we can't solve this problem 10 years after the fact. i know there are two bills pending in the congress. the commander of ground. you can argue it flat. i don't want to get into that this morning. it's less important which approach of these is taken minutes to get it done. we cannot permit delay of this. we lost lives that 9/11 could be lost lives that katrina because we were not able to get good communication. one thing you know when you study these disaster events is that communications under the best of circumstances are going to sail.

it's a chaotic situation. but going into the event, you want to have the best communications you can. so my plea to you is get this thing resolved. i think it's an urgent question and shame on us, shame on us if we have not solved that problem in the next disaster strikes. >> secretary ridge. >> once again, i find myself doing that the hip with lee hamilton. but it simply, ladies and gentlemen, detect elegy exists. where is the portable will to get it done? by the way, there are competing measures before the house and the senate. but i look to you this. policemen and firemen and emergency responders what you do make a choice. all they want is a system. the opportunity to get voice and data and video over the broad

band and not just in response to a terrorist attack, but a natural disaster or horrible accident or incident. what if we do for this country, although it's an investment taste upon the reality of associate with 9/11 would dramatically improve public safety across the board. as i repeat again, it's not a matter of technology that exists. it's in order to execute on the recommendation of the 9/11 commission. >> i recommend that i introduce to your. that's excellent leadership. >> i think -- think the number. >> thank you very much, mr. chairman.

mr. hamilton, jurisdiction is the heart and soul of committee's ability to get this done. as you know, that's an issue. we try when democrats are in charge. we shy when republicans are in charge to get the jurisdiction of the committee. in her testimony as well as secretary ridge's is again another one of those no-brainers for us not to get done. can you just put up team time, repeat how important consolidated jurisdiction is? >> well, you think both the chairman a new, mr. thompson, have articulated it well in your opening statements.

i don't know how many cities in such committees are now involved. i think close to 100 oversight and both houses and oversight of the dhs. governor ridge, secretary ridge can speak to that better than i. but it is an enormous burden to put on a secretary to come running up here for a second time, sport and as that is an chu azzarello all the questions and reports so that the fragmented jurisdiction becomes a real hindrance to their respective performance of the department of dhs and they have enough problems without an additional one here. now, i serve on every congressional reform after we had in this congress during my years in the congress and i

think our results were less than spectacular. but i know something about how difficult it is to change jurisdictions. i think what has to be done here is for members of congress and particularly the leadership of the congress to recognize that in setting up these jurisdictions, they are not just moving boxes around to placate members of their caucus. they are dealing with the lives of the american people. and the jurisdiction, and integrated jurisdiction of the oversight committees is essential to the effect of performance of the homeland security depart name. >> mr. secretary, do you want take a shot at it? >> well, thank you, congressman. i can remember proudly and

happily the 12 years i served in the congress of the united states. an essay sitting at this level are probably enjoy asking questions more than answering them, but that's another story of enjoying the conversation were having today. i remember a time time again with colleagues on both sides of the outcome a walking to get a vote and we be scampering from the committee to subcommittee and we would all lament. wheresoever schedule. we don't get a chance to spend an hour to an committee because there's so much jurisdiction that's been shared and there are too many people to stay focused on one or two committees because the diversity in assignments is worthy of her wording, even on members of congress. and i believe that the department, still evolving, still trying to integrate the business line for maladies associated with procurement reform and budget reform and finance and h.r. and i.t. and

you still have the responsibility to develop and execute on policies. your partnership come in the partnership of the congress of the united states, the strategic heart mayorship is absolutely essential to the success of the department and enhancing the security of the united states is in the hands if you can compress the number of committees and subcommittees so that there is a certain level of web-based expertise among a smaller group of members, of house and senate members that will oversee the department. again, that responsibility falls to the leadership and i would be hopeful one of these days we can create the true strategic relationship and partnership by integrating some of these committees so there is not as much oversight. i can recall in my own experience, we were conducting

war in afghanistan and iraq and i appeared before the house and senate more often than secretary rumsfeld did. but that's not just yours truly. that's the undersecretary and to be secretary. and by the way, everybody takes their responsibility to a beer before you seriously. there are boards and we sit in front of our colleagues and ask questions you might anticipate and then obviously there's questions for the record. would be a much stronger strategic partner if you would consolidate the jurisdiction and i think the dhs can regardless of the administration and he's in charge could benefit from it and certainly appreciated. >> thank you very much. mr. dodaro, we have a question about resilient spending. you lucked out with the department is doing well and what they need to improve on. but there are some people who say we spent over billions

dollars in dhs. can we look at that investment and say that is a level of security that we can reach, that won't guarantee that nothing bad will happen, but we need to also prepare the public for when something bad happens, how we come back as a nation, whether it's a county, city or state. have you looked at that issue from an investment of dollars in point in seeing whether we should be also preparing for something to happen? >> we basically look at the concept of resiliency and the fact that it needed to be built better into the planning efforts of the department, along with the response plan. we focused a lot on the initial recovery from an event -- excuse me i got it backwards.

the initial response, but the recovery efforts have been ones that take longer and still go on over a period of time. as we looked at it conceptually. we haven't, i don't believe, look at how many dollars go into that area versus the other area. but we have looked at are the investments made over the years and i do think the depart and greatly needs to expand its capabilities to make those investments were wisely and prudently. we've made many recommendations. they've developed better plants, but they have to implement plans to make sure whatever investments they make, whether it is for the initial response to recovery or resiliency for going to provide a good return on investment for the american people. i think they have had some major problems right now i'm the i.t. portfolio. our 466 projects every $3 billion in needed serious

management attention back to run accounts of the board. so this is a broad-based problem. it's not just one focused on resilient they. >> well, the point i'm trying to get at is, do we continue to throw good money at the situations or is there a point where we have to come up from policy standpoint, prepare this country to be able to come back after the occurrence, notwithstanding doing the best job you can, i think the resiliency aspect of the depart and is something we need to put front and center because every situation that occurs, historically we throw millions and sometimes billions of dollars after the christmas day bombing incidents, we thought

machines for afterwards that people already said they would not detect other items that we already know that will be coming through airports. so is that a good many? >> basically, i agree there is a need to make more prudent investments. we've said many times that reports the technologies need to be tested and environments before they are deployed and we've made many recommendations to make sure that they strength in the ability to do that. there is the initial, you know, the action that people want to do something quickly. we have suggested they need to put better processes in place to make sure whatever they do and they make those investments they actually work and get us. so i agree completely with you. i know we've made many recommendations. i think the department is trying to improve their acquisition

process is an investment policies and we are going to stay focused on the issue to help make sure that they do. you know, we have been managing the transfer of department of homeland security that we keep for the congress. one of the main reasons it's on the high risk list is because the management pack says support these provisions have it been implemented using best practices. >> thank you. >> thank you, ranking member. i recognize the gentlelady, ms. miller for 10 minutes. thank you, mr. chairman. i appreciate the witnesses and your service to the nation. a quick observation before asked the question i'll pick up on sending secretary ridge said when you talk about the christmas day bomber and the lack of sharing information. this particular incident has fallen off the radar screen. but it sure has announced for a security area. it's crazy watching the skies go

to the federal court system. he's not representing himself. you know, we had to give him his miranda rights, send and to the university of michigan and here's this guy who, in my mind, should've been tried as an enemy or military tribunal and it makes me mad. i know you're a vietnam veteran. i'm pretty sure when you're in vietnam looking at the enemy come you didn't think about giving them the miranda rights or what have you been letting them go through the federal court system. we are facing a different kind of enemy. every time i look at the poster on the back, showing the twin towers, i think about these cockroaches, these murderers commit these terrorist after us now. that particular day, back i saw the battlefield in an asymmetrical term and battlefield in his mind that davis unseat 198 and the northwest flight. i think it's outrageous that this administration does not

treat these terrorists as enemy combatants. that is what they are. we need to have a clear view of the animal rear facing for going for going to be successful in securing borders and securing our homeland. i'd like to ask a question. i'm going to pick up on the visa issue that both the secretary and mr. dodaro mentioned as well. i am the chair of the subcommittee. my ranking member mr. cuellar and i will have a hearing on the entire visa situation which is a great consternation, pointed out in the consultation, continues to be of great consternation. it has been advanced that about half of all the illegal aliens that are in our country actually did not come here across the border. ..

strategy and there's been a lot of talk about the expense of whether its biometrics, i risk and, whatever we do for that. i haven't read all of your 1500 recommendations h yet. but in regard to the visa, isu n there anything you could tell u. pretty are hearing? >> yes, first i mentioned the visa security program.tment in e this is a dhs is working with the state department in the initial screening before the visas are given., right now there's only a think

about -- they're not fullydeplol deployedl in all high-risk are. i can provide statistics for the record, but our basic point they are basic.there is that having dhs work more with the state department can enhance that initial screening process and that is particularly important because of this overstay issue and it will take us a while to be able to deal with that issue. so we think dhs can either be deployed in order to work with the state department but also to work with remotely her to work with them to screen them and communicate electronically. the main point there is that all high risk country should he covered and can be covered. right now they are not covered. also on the visa waiver countries, the electronic notification system, that is working fairly well in about 90% of the people are authorized using the electric system. but 2% or not and that is over 600,000 people, so we have made

a recommendation to the department to figure out why they were allowed thinner why the electronic notification did not work harper lee in that area. and then there is the exit system strategy. there have been a lot of pilots that have an provided satisfactory answers. that is one of the things i want us to do more work on to see if we can help identify some means to do this. it is a huge issue but it is very important. until we have all three of those initial screening the countries that are not in the visa -- required to have a visa or visa waiver and those that are on a visa waiver and have an exit system you won't have a complete system of protection. >> could i just add in response -- look at biometric exit system is required today by law. it is in the law. dhs will tell you that it costs too much to implement. if that is the case then they should come back to the congress and give us a plan as to how

they are going to do with it in ascii for the money. but like anything that is complex the thing to do here under the present circumstances is to face it, and that might take a period of a few years. you can start with the vast majority of travelers who go by air and you can have a biometric exit system today incorporated into our current airline operations without much difficulty. very similar to the way that you get a -- and a reservation situation. you can do it with one fingerprint per passenger. so what i'm saying is that it is a tough problem and it is not easy and it isn't expensive. but the law is the law and it is vitally important to the security of the country that we have a biometric exit system. if you can't do it all at once

which you probably cannot, at the very least we ought to phase it in. the canadian border you are right in there at the canadian border, you could make that land border and exit of the united states and new technology could play a role in making exit a reality there at a reasonable cost. i want to see us move ahead on this. >> thank you very much. >> thank you mr. chairman and thank you for your service to our country and for being before us today. i wanted to comment a little bit on the whole issue of jurisdiction because you all have no problem with us up here wanting to solidify the jurisdiction of this committee, and it is very frustrating on our part to put so much time and effort into understanding the issue that the department is

dealing with and doing our oversight to it, to try to go along and draft legislation and to try to pass it, passing it out of committee in many cases and then having it signed because it does have another jurisdiction and it has got to go to another committee and they never take it up or they really never take it up. so when you look at the actual legislation that comes out of this committee it has been very little in the five, six or seven years we have been around now because we are signing by those jurisdictional issue so anything you can do to continue to soar to push the congress to get it all in one place or at lease in less than the 88 subcommittees and committees both on the senate on the side that i last counted that have some piece of jurisdiction would be important for us here to be able to actually follow through on a lot of the work that we do.

i am also very concerned with the u.s. visit program. for mr. choir i was the chairman when the democrats controlled the maritime border committee and that was a very big issue for us and in fact when secretary napolitano was before our committee this year, i asked her specifically about the exit part of the u.s. visit program and she said a sickly that the department was not going to continue to work on that exit peace and instead would prefer to put money into ice and that there was really no way -- the department stopped working on the backend of that, so in a minute if you could give a comment to that, what do you think that is wise or whether we should continue with my good friend mr. hamilton said at lease began to implement it in the airport situation.

i also want to ask you about the program if any of you are familiar with it. that is the transportation worker identification card and in particular may be to our secretary over there. because we have had so many problems putting this together. it is a biometric card. it is a card that is supposed to be read by a reader. there are no readers yet and it is a big problem in particular for people -- for workers who have to go every day and you have to take time away. do you think a mail-in system to review a -- we are almost coming on the fifth year of the renewal of this twit card for our workers and they will be facing some of the same problems they face five years ago when we started into this program of how do i get it, where do i go? do i have to drive two hours and

as you know right now it is a flash card rather than a reader card so if you could comment on that. the last and is the issue of the continuity of the congress. in particular as it relates to the house of representatives. we really have done nothing to insure, and as you know in the house of representatives, if something should happen to a majority of us, there would need to be special elections in order to put someone forward and be able to constitute the house back, and that might eat a laborious process. if you could comment at all to whether the congress or this how should really be concerned about doing something about the continuity of the congress? and any of you who would like to. >> i will start on the twit card, and i would be happy to submit our report on this card for the record. we find a lot of control problems with the card in terms of how dhs enrolls people to use

the card. the fact that they don't require updates and whether people still need the card or not. we actually had undercover investigators gain access to forge fake cards and false documents so there is a lot of control problems in order to make it work effectively under the current program. we have made a number of recommendations and i will submit that report for the record. with regard to trying to address the overstay issue with i.c.e. resources, you know basically that would be helpful but that is really not going to address the problem in our opinion. i.c.e. basically has about 1000 cases a year where they identify oversights -- overstays and that is compared with estimates of 45 million people in the country, so i think the exit system is very important and

needs to be implemented, whether it is in phases or not. the volume is too big and it is always more difficult to find people after they are here than to make sure you know when they are leaving. so those are my comments on those two issues. >> on the continuity of congress question, i have not looked at that in great detail but obviously you ought to -- we ought to be very sympathetic to that. the airplane they came down in pennsylvania we think was headed for the capitol building and had it struck at the right time and in the right place you could have had a high number of casualties among members of congress. so i think it is a serious matter and a few years back probably not so serious but becoming more serious, and the technology that is becoming increasingly available to the terrorists, including anthrax

and we saw the effort to acquire castor beans for the production of this resin, a very toxic poison. those kinds of things could strike on capitol hill very quickly, so i'm quite sympathetic to efforts, and i don't know the detail of the continuity in the congress. on a committee jurisdiction question, i wrestled with that one. it seems to me that if it is going to be done, has to be done at the beginning of the session, and because that is when you consider the structure of the congress and it has to be done by a bipartisan agreement among the leadership. it could not be possibly done by the leadership of a single party. the perspective that has to be taken is that this is a national

security matter. the lives of americans are at stake. on the basis of the quality of oversight of the congress, and this is not a matter of placating members of your party caucus. this is a national security matter. now we all know that the leadership wrestles with an awful lot of problems and they tend to solve those problems and my experience would be on the basis of their caucus. the leaders report to the caucus and follow the will of the caucus. i have suggested to the executive ranch and incidentally the executive branch is enormously frustrated by this, really frustrated. the director of intelligence of dhs and governor ridge has expressed that very well. i suggested the other days to

some of the executive branch people that maybe what should be done is to put together a kind of a super committee if you would of past national security people, who have great stature, republican and democrat, and go to the leadership prior to the beginning of the new congress and just try to explain to them how important this matter is, that this is really critical for the national security of the united states. all of them would say that, have no doubt about it because i have talked to all of them. trying to get the leadership to see this problem in terms of a national security problem rather than helping particular members retain jurisdiction of the dhs. it is a very tough problem and i

am very open to other suggestions on it but maybe this is worth a crack. bipartisan leadership action will be necessary to get it done. >> thank you. the next person in line of questions is congressman walberg and congressman marino has been called back to his district. the gentleman is recognized for five minutes. >> thank you so much. i appreciated. mr. dodaro being a former prosecutor and district attorney, u.s. attorney, attorney, know the importance of trying to be able to communicate with agencies, whether it is a terrorist attack, whether it is an automobile accident or a drug raid and i am all for coming up with a system and implementing whereby if we needed to, someone in pennsylvania could be talking to someone in florida via some type of direct communication. have you ever calculated or

estimated what the cost of something like that would be because i know in my area of northeastern and north-central pennsylvania, the mountains cause a great many problems so we are probably talking about satellite. do you have any idea what that would cost us? >> as a pennsylvania native myself understand the mountains. very good. i don't believe we have. i know we have done a lot of work looking at the development standards to ensure the interoperable communications would take place. i will go back and check. if we have anything i will give it to you but i can't think of anything off the top of my head where we have done the calculation that you are requesting. it would be an interesting exercise. >> this is one area where i am leading in the direction of, you would pay for itself 10 times over. but thank you. i appreciate that.

>> the cbo has made estimates on this and it is expensive and there isn't any doubt about it. do you put it the block network construction in place as the estimates from between 11 and $24 billion that i have seen. now, you are going to have to do all you can of course to control costs. the option of some of the spectrum can be used. i know that is a very complicated and difficult matter, but like all tough decisions in government is a matter of priorities here, and the capacity of the first responders to talk with one another is so important. it seems to me that costs have to be worked out. it is a very high priority. we lose hundreds of lives because of this. i have experienced that myself. >> congressmen if i might add

being familiar with pennsylvania myself i dare say it would be a long time i suspect before we have the kind of technology that will reach into every community in every state. i suspect as good as the wireless is and as good as the technology and the dramatic improvements within the private sector on a regular basis to expand the reach, but i don't think we have to make a perfect enemy of the good. i think it is like the homeland security, you manage the risk. would u2 to manage the risk? in this instance you save yourselves what do we do to bring the maximum bass communication capability with existing technology to as many people, communities and the state as we can. it arctics this. i think it would be the infrastructure technology we have 290 or 95% of americans. i think we ought to move as quickly as possible.

>> congressman hamilton and governor ridge, this final question. there has been some talk among colleagues, among people out in the field that, do you think at this point there should he at least a discussion as to combining the department of homeland security and the department with another department? would there be any efficiency and matt? for example, defense? >> creating a new department of government is arduous work. and once you have created it to work is just beginning in a sense. i was around here when we created the department of energy back in 1976 and sometimes i wonder whether we have got an integrated department there even today. dhs has had very good

leadership. tom ridge is a good example of that. >> that was not my intent at all. let me make that clear. >> look, what was 22 agencies or something like that were brought together, it is now has a budget of $50 billion or whatever the figure is, and if you suddenly moved to a new reorganization, i would be quite skeptical of that at this time. i think the focus at this point should be on getting the dhs to work and to work much better because when you reorganize the major department of government and the federal government you have really got a formidable task on your hands. >> governor i have eight seconds. >> i recall the days where we try to identify the units of government that we would pull together to aggregate them to create the department of

homeland security and there was much discussion as to other entities would we voted are not. i believe that the congress and working in the executive branch at that time assimilated the right number and the right rooms. the congress has been looking for day -- but all those reports like a lot of others have gathered dust. so i think we need to remind ourselves that most of these were men and women working and existing agencies and the assimilation process continues. we also need to remind ourselves that the condition of homeland security will wear your customers and border protection, fema, the secret service, immigration and customs enforcement, coast guard, they'll have traditional missions as well and on top of those missions we layered on additional responsibility to homeland security, so i think he want to integrate anything to make homeland security more effective and more efficient, it

is a national security issue. you don't need to integrate it to anything else. you just really need to integrate committee oversight so congress can become a strategic partner that dhs needs. >> gentleman thank you. and chairman thank you. >> the gentlelady from texas ms. jackson-lee is recognized for five minutes. >> mr. chairman, thank you very much and i believe it is appropriate during the days prior to the tenth anniversary that conjures emotions amongst many of us is to really cites the patriotism of the three witnesses and the value that they have given to the necessity of securing the homeland. i pay tribute to each of you and your own responsibility and the way you let in thank you so very much for that service. i want to acknowledge as well my chairman and ranking member

because they are accurate that we have worked together. the one thing that we have not done on this committee is challenged members to patriotism. we have disagreed on policy but we have not challenged the patriotism. i consider each of the members and myself a patriot and i am so grateful that even though we critique studies, that the 9/11 commission will find its place in history along with secretary ridge who had to feel your way after the aftermath of 9/11 but the 9/11 commission report congressman hamilton, will be a book that we will continue to learn from. i think it is important to join the legislation of this --

[inaudible] and i believe that it would be important for us to make two commitments. one, 10 years later, we should have the ability to communicate amongst the first responders and of course, it anyone that is addressing a natural disaster. the second commitment is the combination of jurisdiction if you will, combining so that we have an efficiency of scale. i would like to thank our first responders but to add to that our rescuers because there are those who came unlabeled at the world tower and in pennsylvania obviously there was devastation and a lack of possibility of anyone who had survived.

no one knew that in the powers and there were a lot of those who were discovered and found, and let me thank all of those individuals and if i might say, i hope may maybe in these next hours the new york celebration will find a way to add our first responders and add those who may not have been able to find space. a big pa system and put them all up in manhattan and i think it would all be happy. the reason why he laid the groundwork is because i don't think there is a more and important task than what we have before us. i wanted to probe mr. hamilton the comment he made about the inability to detect explosives and the comment in our memorandum that says aviation and airport still remain vulnerable. can you expand on your point about the inability to detect explosives and my belief that

this is still aviation airports are still one of the more attractive targets for terrorism? >> i think a lot of effort has been made in the area of technology to develop a device that can detect immediately various kinds of explosives that may be hidden on your body or in your body. and this is a problem that receives 9/11. this too has been a great concern that over the years and having spent a lot of money and having a lot of i guess very evil scientist looking into it, we have not succeeded yet. the gao i think has issued a report on this and i am sure the general may want to comment. but i think we have to accelerate this effort as best we can, and get our act

together, because this is a huge vulnerability. in our air traffic system today. the detroit incident has already been referred to her, but i think dhs really has to bear down on this. secretary ridge may be able to comment on it as well -- to develop the technology to the point that we can make the detection of all kinds of explosives. all of us recognize the vulnerability. >> let me thank you for your service and have these questions if i might mr. chairman to let secretary ridge. >> the time of the gentlelady has expired. answer the question. >> if i could put these questions on the record, let me just ask this question. >> i want to ask the question beyond the five minutes. >> it falls under my committee. >> the gentlelady can ask

questions but they won't be answered. >> if you would comment in the course of answering the one about the explosion, the value of the passenger fee for security and not privatizing tsa? >> i would ask if the answer could be given in writing to that question. >> thank you mr. chairman and i thank the panels for being here today and for your service. being a new member on the cybersecurity subcommittee, it has been an eye-opener for me beyond just my normal thought that the light switch works when i turn it on and off, and the computer screen comes on. i have the necessary protections on my computer that i can purchase for various things. as i have gotten into this committee it has been amazing to think about what has to be done in an age when a small cell can

spend very little money to purchase resources that can break into and in fact can destroy our infrastructure very quickly, thinking of cms energy in my district and detroit edison and going through some of the processes that they do, amazing processes, to deal with these cyber attacks that come in on a regular basis. and then hearing talk about rum our own government level of the need to have a public private partnership and in dealing with these concerns for our energy infrastructure, our computer communications infrastructure. i guess my question along this line specifically to governor ridge and congressman hamilton, what is the best way to address this threat to our critical in per structure from those who

don't even need to set a foot on our land and also what can be done to improve this partnership, this public-private partnership that everybody talks about but at this point in time at least to my understanding doesn't seem to be implemented to a great degree yet and is always seemingly below, performing below expectations? any solutions to this that you could address government -- governor ridge? >> first of all, i think the administration has clearly begun the discussion with a piece of legislation that has invited a great deal of scrutiny and some criticism and as i've been participating in a couple of public forums it is pretty clear that at least initially they understand that it is something that they actually needs to engage in the private sector in and the discussion as i said

standards and the like so i think you have got a long way to go. .. in the digital world is attribution. accountability, with their strategy once we identify a perpetrator and how do we hold them accountable? that is worthy of a separate and independent question. i have enormous regard for the men and women in unelected capacities.in uneected ca we attrapact lawyers and, signed scientists and cyberexperts, but make no mistake about it. the great capacity of knowledge e d information on this issueesd lies outside of government. if there was ever an issue

republican and democrats, both of whom talk frequently about public private sector collaboration come if there was ever an issue where you might want to think of some of your standards and regulations around a track to end up biting and creating a true public either part or ship can we bring in a series of x-rays to work and then collaborate systemwide this would be the issue. this is the issue that i think puts itself to the kind of holistic collaboration between all the expertise you have in the very, a lot with well-intentioned experts within the federal government. one final comment. when i try to attract just advisory board, nonpaying, to

assist decorated terry of homeland security to deal with several issues, the requirements for the public site are in the kind of information they have to share with the congress or regulators discourage a lot of well at tension people to participate in the riser report. and i understand excreting, but on this issue and other issues, we have to get it on the mindset that people with the expertise and a private set her cardhouse seems to simply feather their own vast to work and collaboration with the congress of the united states. on this issue, perhaps the enemy. but at some point in time would have to trust americans to help america. and when you create regulatory barriers and impediments to well-intentioned people who went to disney executives, gillette

executives to participate on a day-to-day basis, i think we really frustrate the value of the true public private sector collaboration. and this is what i think really needs to be done and needs to be met now. >> thank you. >> i appreciate the question. they think we are beginning in the nation to seriously good address it, but were only beginning to. you're quite right to point out the vulnerability. we are exceedingly vulnerable to cyberattack in this country, both in government and in the private sector because the premise that are controlled so that the infrastructure. secondly, when you have an attack, it's difficult to know where it comes from and it is very hard to hold someone for something to teach, some state responsible. not impossible, but not always

easily done. having said that, one of the things i think we need to do is make very clear that a warning briley, an attack on this country's infrastructure by cyberattack, we will take exceedingly serious and we will respond. we will respond in the most appropriate way possible. we can't predict exactly how that will be. but if we can identify the perpetrator, then we'll go after them. will go after them with whatever means are necessary to wipe them out. we cannot tolerate this kind of an attack. now, the next point is next point disorganization. and here i am a little fuzzy to be blunt about it, but i think the government -- i hope the government is beginning to get its organizational structure in

mind to deal with cyberattacks. the line of responsibility between nsa and dhs is not all that clear to me, but i think it's moving, although not as fast as i would like. the type knowledge he expertise on this within the government so far as i now come to rest with the nsa. and they are developing both offensive and defensive means of dealing with a cyberattack and that needs to be encouraged. i do think, and you make the point very well in your question, that we have to strengthen dhs's ability to work with the other. my judgment is that this point on my experience is the private sector is quite an evening here. there are many people in the air

who are very plugged in on this and other vulnerabilities and are taking steps to deal with it and are consulting the government. but there are also many areas in the timing to be not the huge companies that are not so plugged in. and so, i think there has to be in the art as governor ridge has suggested between the terry and the government to sharpen our defenses. >> thank you. >> mr. cuellar is recognized for five minutes. >> thank you, mr. chairman. i went to cheney mac and the ranking member for having this meeting, the work with if you have done to improve homeland security. i want to thank the witnesses, chairman hamilton county secretary ridge and the controller, thank you for all the work gao, all three of you with the information resources you provide for homeland

security. let me ask you this question that has to do with aviation. in the wake of 9/11 we made sweeping changes to her aviation security that includes strengthening security measures for the two flight schools. i know all three of you mentioned a lot of progress, but it's still about more work to do. however, as recently as two weeks ago, we the situation close to my district in south texas. several were discovered receiving flight training in south texas without the proper visas. as you recall come the 9/11 aviation flight schools in visas also. those are the three major -- there is a major reason. in this case, what there's no indication of terrorist intent on this particular case, we know the aircraft remains a highly attract a target for terrorists. it is strip leading contenders after 9/11 we have foreign nationals taking site and training in the u.s. without the

requisite fretting or riverside. in fact come a few days ago the fbi and homeland security issued an al qaeda threat to small aircraft just a few days ago. just let me give you briefly the facts come in the way understanding. we depart from its core that of busting a tree at both important and so. that's how this got started. the boaters out there. this person is taking flight lessons. he was one of several mexican foreign nationals who traveled to the valley to get the pilot's license. homeland security went up there after the fact and deported three of them because i think the problem was instead of using a proper and one student visa, because they were getting training, they were operating under a v1, b2 visitor visa.

so instead of a student visa, the recent tourist visa is to get that training. eventually, saa was asked in a sad, the mexican-based company that comes are tedious to do their training was leasing the aircraft to the pilots to train. again, fao rules basically the pilot and is responsible for the aircraft itself. the issue i have after 9/11 when you had aircraft, flight school training. you had visa issues, here we are 10 years later, what does this incident suggests that our progress in the broader issues of aviation security, visa security, 10 years after 9/11? secretary, since you were there at my friend, president bush, governor bush, you had to get right on that and then the other gentleman can answer that.

>> the details were first made known to me today by your explanation on it and make thank you for the. my first reaction suggests that it points -- the incident points to the lack of a broader infrastructure associated with not the question of getting maxes theo the airports and flying lessons, but the broader and the structure this needs to be inadequate with regard to the issuance of visas and the identification relative to the individual to get the visas, their nationality and the reason they have extended the visa. it would be problematic to me. and i don't know how to escape attention to the department of homeland security, but if there was a biometric card associated with this, they were lawfully

just on a piece that i could check their tourist visa, i'm not sure if the proprietor i would've been inclined to give them flying lessons, at least not until i check with homeland security to give more background information. it speaks to a broader challenge we have. i know this is not the place to do with it all, but the broader idea of immigration reform and frankly the 21st century infrastructure to identify and monitor duties of those who would grant the privilege of crossing our borders as guests on the visa. >> and secretary, there's only one flight school. imagine what could be happening across the nation. >> congressman, we did work in 2004, 2005, looking at flight schools in tsa over the flight

school and there is need for improvement in that area and made recommendations it will be starting schools in following up in tsa's oversight over the flight schools. the other comment i have as it relates to general aviation, we have a lot of regulation of commercial airport at an state-level regulations and requirements for aviation. we just issued a report to be happy to provide for the record, highlighting issues they are. with regard to visa, i reiterate my previous point that there is a need for the exit approach and whether or not these individuals with overstayed their visa or not. i'm not familiar as governor ridge mentioned that the details, but the system still needs to be strengthened. >> hamilton. >> every one of your phone on private aircraft, general aviation in the fall of that

impressed with how convenient it is compared to the commercial airports and how easy it is. and i thought a hundred times as i've done that, boy zero boy, this is a vulnerability for us. i'm glad to see now authorities are beginning to look into the small aircraft problem because it is a hugely potential problem for us. i can't add to it the others have said. >> thank you, mr. chairman. mr. choir in the chair now recognizes the chairman of the terrorism subcommittee, mr. mann. >> thank you, mr. chairman for this distinguished panel and not just her presentation here today, but i would actually say at the zenith of your career, committed to these issues can each of you has taken on a remarkable role in this. and i appreciate the fact you have looked back and taken the

time to analyze what hasn't been done on the recommendations who previously made. i want to focus a question with respect to that. mr. hamilton, i had the opportunity to go back and revisit a site in which a terrorist incident was averted and related to the situation in which there is a cartridge that was attempted to detonate on an air carrier plane, a ups plane. and the after action review that i got a chance to participate in was a case study you made about the lack of somebody really being in control from the simple way for people who are trying to paicipate ..help you are getting different demands from different agencies that the same time, same information. how do you get it right in that

critical moment when as you stated, decisions are being made to be life or death choices. what we need to do to get better at the point of incident? >> you are speaking about the first responders and the unity of effort at the site? >> yes, incident command. and you identified in this report, which is not going back to that point. >> it's critically important. i don't want to suggest that the mass >> i think pilot programs have been run, attention has been given to it, but i don't think it's a resolved question. politically it's difficult

>> you have the president and federal officials, and politicians don't like to address these kinds of problems ahead of time because they are difficult to deal with who's in charge, but our whole effort was to encourage that decision to be made in every metropolitan area, if not the country. at the time, of katrina, the governor of louisiana was very heavily criticized that night. i don't know the details of that, but she had four helicopters in her command. she needed 150, so i have come to the conclusion that if you have a major disaster in an area of multiple jurisdictions, the

federal government has to step in, and the reason they have to is because they are the only one that has the where with all, the resources to respond. you need water. you need housing. you need food. you need hundreds of decisions that have to be made fairly quickly about the response, so i think we just have to keep encouraging local state, federal officials to plan and to exercise their plans. it's not enough to have a plan. it's important to have a plan, but it's not enough. you got to -- like the military does, they constantly have maneuvers and exercises. you've got to have exercises in a given community. it seems to me to get through this problem.

so those are some random thoughts on a very, very difficult problem. >> thank you very much. i want to see that we follow-up on that. >> yeah. >> governor ridge, this has to be a remarkable moment you are sitting here ten years later. you served in the congress. you were governor of a major state, but you were on the ground floor of the creation of one the biggest agencies in responding to this issue. you were there every day sitting with the president making decisions in realtime. as you look back now 10 years later, what keeps you up at night about what we can be doing or doing better or is there an observation that you say, boy, if we could do this now, this is the way that i would do it. >> someone asked me in the first couple of months, actually, while i was in the white house before we even created the

department of homeland security if i slept at night. i said i don't sleep much, but i sleep well, and they were astonished by the answer, and the answer was that obviously the duties of the day required vigilance throughout the day and evening, but i knew there were literally thousands, if not hundreds of thousands of americans working in the government in all levels working together to make america more secure. i still feel that way today. at the heart of combating -- but there's two matters we need to really embrace as we look at the next ten years. first, it is a risk that we have to admit to ourselves that we can only manage. we cannot eliminate. the political world, the world of the private and public sector, we can't guarantee ultimate safety. we have to accept that. i mean, i think chairman

thompson asked about resiliency. we proved we are resilient. we're coming into a time with limited resources. let's be smart, target the issues, and understand that we can only manage the risk. i think john pistole is starting that program where people frequently fly and there's background checks so tsa employees focus on people they don't know and baggage they don't know. the risk is manageable, and we need to manage is very, very effectively. i still can't believe after ten years we talked about the infrastructure and the no broadband communication, but i still can't believe that incidents like the detroit incident and fort hood would

occur when people within government, within the federal government, had information, i think, that was substantial enough to act. i mean, there's a lot of criticism because we were not adequately prepared for katrina. you have to be, in this day and age with the new norm of terrorism, you have to be a little less cautious. you have to act, and when we had, as i understand it for public information that the fbi was aware that hussan was e-mailing to a radical in yemen, and an active duty soldier and how they passed the department of defense, i'll never know. connect the dots. every once in awhile there's a dot, a big one, that just flashes on and off. you got to act. the same thing with the father

comes in to talk with the state department. we ask for human intelligence. a father comes in to tell the state department that he believes his son is radicalized, and, oh, by the way, i think my son is in yemen. you put those pieces together in a post-9/11 world knowing what we know about al-qaeda on the arabian peninsula, and somebody's got to yank his visa to come into the united states until we sort it out so i think this information sharing is the heart of everything we do and it's still probably the most difficult and challenges, and by the way, as my colleague and friend, lee hamilton said, the most difficult and complex characteristic or quality of combating terrorism, but you'd think after ten years we'd be less cautious. i'm not saying we're being politically correct, but there's some things that require action, and we need to get into that mind set.

>> may i suggest you visit your fusion center? we have 72 fusion centers around the country. maybe you've already done it. there's mixed varied capacities, but they do bring together the right people in the area, state, local, and federal, and it is in that center, i think, where you can see what has been done, what has not been done in a given area. i visited the fusion center in my state of indiana. i've done it in a couple other areas, and i think they represent probably the best hope for giving you the kind of response you want on unity of effort in any given crisis. >> i recognize the gently day from new york, ms. clark. i'm sorry, from michigan. >> thank you, mr. chair.

my question to the entire panel is how can the department of homeland security best judge an urban area's risk of an attack based on the assessments used now? we have in large international airport hub in detroit. that airport was the destination of the plane that the christmas day bomber attempted to blow up, so there's some likelihood that our region could be the target of another attack. now, in addition to the likelihood of an attack, the department also needs to look at the consequences of an attack. metropoll tan detroit, i'll use that as an example, we have a large population center. we have a border that is water that is also the busiest

international border crossing in terms of trade in north america. we also have the large regional drinking water system, and my concern is that many metro detroiters are at risk of being poisenned if a terrorist decides to dump a bunch of bilogical agents in that drinking water system, so essentially it's this -- the gao report mentioned concerns about how the department assesses risk. any of you three gentlemen have comments on how we can improve the accuracy of the risk of threat of attack to certain urban areas like metropolitan detroit. ten years later, my people i represent, they are still at risk of attack. i want to protect them the best i can. >> look, there's no way we request give you certitude

because we don't know the mind of the terrorist, but they've given us two big hints. one is they are going to do as much damage to us as they can, and the second is that they want to hit symbolic targets, so every community has to sit down and analyze what in this community is most vulnerable? they have to prioritize those as a as a rule -- vulnerabilities. it's the local community to make the analysis of what's the targets in my community most likely to be hit given the standards that the terrorists have repeatedly given to us. do you protect wherever people gather in large numbers? that's obvious. you protect iconic symbols and

so forth, but it's a question of establishing priorities within the community, so the leaders of indianapolis, indiana or detroit in michigan have to come together in se, okay -- and say, okay, we have the following facilities, and there may be 200 that need protection. you have to prioritize them. you can't do it all, and that's a tough decision to prioritize, but it has to be made in order to reduce the risk. there is no 100% guarantee that you got it figured out right, but that's the way you have to do it. >> i would say that in that frame work that mr. hamilton just outlined, dhs, those do a lot of risk assessments by different sectors, water sector, you know, transportation sector, ect., and our comments though have been that the information in these threat assessments and risk assessments should be

shared more and used more in decision making purposes so i think that's the issue and governor ridge mentioned to acting on certain threat information or certain information, so i think the real challenge is how do we use the information that's now being collected both at a national level and in a regional and metropolitan level. that's something we'll be continuing to take a look at. >> i don't know, congressman, if you're referring to the methodology associated with urban area grants for homeland security. i can recall -- >> yes, definitely. >> thought that's what you were referring to, and i think that process clearly has evolved i think in a very positive way over the past eight years. i can recall since we were there after congress directed that the department create a model, an

assessment model for that very purpose, that we went through a couple of it rations that were challenging and the like, but at the end of the day, and i have no idea the evolution since i left, but at the end of the day, a significant portion of that calllation was based upon threat information gleamed over the previous years, not just from the fbi, but the broader intelligence community. i can recall getting a -- let me call it a call of disappointment from a member of congress that the stay that they happen to represent was no longer viewed as potential target, and therefore wasn't eligible that year for the funding it received the year before, so it continues to be one of the big challenges of homeland security. generally, it's probably the only department where you have

more political interest and engagement than any place else. you don't want to make those political decisions, but it is subject to political influence, and you want to avoid that at all costs. i think in this instance relying on threat assistance from the intelligence community is probably the most effective way to channel those dollars. >> gentleman from south carolina. >> thanks very much, appreciate it. >> thank you, mr. chairman, and i want to personally thank you for rehanging the pictures that surrounded room here to remind us of the tragic events that happened ten years ago this weekend, and i want to thank each of the gentlemen on the panel today for your service to the country and your varying capacities, and i want to take the opportunity because i'm near the end, most of the questions have been asked, but just to thank the firemen in the room today and the police officers and capitol hill police who are here defending us and what you guys do every day and fire mep and police officers and military

personnel all around this great land to keep me, my family, and constituents safe so thank you, guys on your work on the 9/11 commission report, and i have a copy with me, and i'll talk about that in a minute, but i noticed, and i talked about this numerous times on this committee, but i noticed the 9/11 commission report identified a number of threats to the country, and you use the terms to identify those threats such as jihad, religious, hamas, hezbollah, enemy, violent extremism, numerous times in the 9/11 commission report, but if we look at the fbi counterterrorism lexicon in 2008, they use the word "jihad" zero times, hamas, al-qaeda,

those words are used zero times. the national intelligence strategy in 2009 uses those terms zero times. the lessons from fort hood uses those terms zero times. i think it's important that we understand and can identify the threats to this country and discuss it openly without fear of using those terms if that's a real threat to this country, and so what i'd like since you guyed developed that report and you use those terms that many times, mr. secretary, i'll let you start. why do you see that we're not talking about our enemies or threats to this country in those terms anymore? >> well, i'm not going to -- first of all, i respect and truely understand the question. i think -- >> the mic, please, governor. >> i understand the thoughtfulness of the question, but i think the appropriate

response would be the attorney general, and having said that, i think there is a -- depending on the mind set that you want to bring to the work to combat terrorism that continues to be a discussion whether they should be treated and viewed as criminals as i think the administration generally does and the attorney general generally does, and i think that's reflected in probably the language that they use. i don't agree with it. i did enough criminal defense work and prosecution work to appreciate the fact that most criminals that i have either prosecuted or defended didn't want to be cut or surrender their lives and so i do think that that language probably reflects a mind set that has been more appropriate as to how the attorney general believes this country should deal with the terrorists once we apprehend

them. i don't think there's any question in the attorney general's mind that the fundmenteddal problem is with those who within the muslim community who have taken a traditional religion and wrapped themselves around a perverted and distorted version to justify the killing of innocence, but i think the language reflected his preference to treat them more as criminals, and i don't share that point of view. >> all right. mr. hamilton? >> well, i believe the greatest, current terrorist threat to the united states is from islamist extremists. whether or not they are part of the core al-qaeda or one of their affiliates or ideologically affiliated, they represent the greatest threat. we've also had the addition of home grown threats. likewise, i think islamic

extremists, and i think it's very important that you make a distinction between the islamist terrorists, the extremists and benign islamists, and i think the country's done that very well. i still remember as i thought was an excellent example of what we should do -- i remember president bush soon after 9/11, he went to a mosque and made that point, and i thought it was exactly the right thing to do because he was drawing a distinction between the extremists and the good, if you would, islamists, so i think we have to actively and aggressively counter the range of that ideology that are violent add advocates, and do what we can to remove them.

i'm not here to speak for others with regard to terminology. we said in the commission report we had two enemies. one, al-qaeda, and two, islamic extremists, and we thought quite a bit about what terminology to use. i'm comfortable with the terminology we set out in that report. >> thank you. my time's up. >> i thank the gentleman. recognize now the gentleman from massachusetts, mr. keating. >> thank you. i thank the panel for their service. less than ten months ago as district attorney, i was investigating the death of a 16-year-old young man whose mutilated body showed up in milton, massachusetts, and our investigation led to south

carolina where this man hid himself in an airliner and jumped out from the landing gear reaching boston. much has been said about the security and the screening check points and the need to look at explosives there. the tsa said that every commercial airport in the united states receives a security assessment every year including evaluation of perimeter and access controls. however, in 2009 the gao said 87% of the commercial airports had not conducted any consequence assessments or perimeter checks. with so much attention on the gates and check points there, it seems to me we are wide ohm on perimeter security in this major airport of north carolina. there had been -- since this occurred -- repeated breaches on

security we're aware of there. i can't imagine that airport is alone. how do you assess our ability in dealing with perimeter security? if he put his body in that wheel well, he could have easily placed explosives there if he was a person, the tragedy of this young man and his family, but what if this person had different intent? what if they could put explosives in there? we are focused so much on that, and it's important, on the gate. what happens as we look out from the gate and the perimeters? that's a serious problem, and can you address how serious it is? gao commented on it, but i don't see much action frankly. >> our recommendations have been more that tsa needs to do joint vulnerability assessments with the fbi on the perimeter security issues, but that this has not been done in a lot of cases, and we've made

recommendations along those lines. the other issue is the screening of workers who have access to the facilities on a regular basis, and we believe that that issue needs to be addressed as well. i'll be happy to provide specifics for the record. >> okay. any other panelists want to comment on that? >> i'm very pleased to hear your remarks. my general impression would be that you're right. perimeter security is still a great vulnerability so i would be supportive of efforts to make more inspections and bulk up our efforts at perimeter security. you know, there's so many areas of as a vulnerability, and we concentrated a lot on the ones that we think are the greatest risk, but others pop up, and you

put your fininger on an parent -- finger on an important one. >> i think aviation to my knowledge is a suspected area, and it still comes up on reports that the intelligence has as a potential target. i think we should never say we've eliminated it, but the notion that someone or a group could hijack a plane and take a commercial airliner and turn it into a missile, i think that threat has been managed quite well, but i think we would be kidding ourselves if we didn't think that aircraft generally as a target remains a as a vulnerability and remains a target of interest for those who would bring us harm. >> thank you. what's frightening is we looked at the videotape and knowing he'd done it, they still could not see him do it afterwards. quick question if you can, maybe a yes or no since time is

limited. napolitano said since 9/11 she considers the current period the most dangerous since 9/11 that we're in now and in its most heightened state. would you agree? >> well, certainly, the secretary has more intelligence than i have at the present time, but there's a new dimension complicated her world and this country which is home grown terrorism. we've seen the arrests of 70-80 citizens, naturalized citizens, or visa. i think it's more complicated for her and the country. >> i'm not aware of any immediate specific warnings, but, of course, we've found in the trove of information we got from bin laden's raid that their interested in doing something on the anniversary of 9/11, so i

understand that our security officials have ratcheted up the security levels quite a bit for the next few days. that seems to me to be entirely appropriate. it's been expressed in the information we got from bin laden's hideout. >> i thank the gentleman. the gentleman from arizona is recognized for five minutes. >> thank you, mr. chairman, and thank you for holding this hearing, and thanks to the witnesses for being here. governor ridge and congressman hamilton, what's your thoughts on the threat of the southern border? with the drug cartels, the continuous battles and the gulf cartel and the levels of violence that continue to escalate and the sophistication of weaponry continues to advance -- i was down earlier this spring at a port of entry in douglas, arizona, and one of the things we saw in the video

was the night before one the drug cartel agencies took a stolen or made up police vehicle, drove right by the port of entry, 100 yards from our border, entered into a restaurant, unloaded 300 rounds of ammunition wounding scores and people. what do you think the level of threat to our homeland based on the level of violent activity being pursued by the drug cartels in mexico and how that affects our threat assessment from that area? >> well, first of all, i think the past two years in the intended public awareness of the narco threat at our borders clearly demonstrates that a area

of lawlessness adjacent to our southern border that we all should be concerned about, but, you know, it is just a manifestation of a threat that has existed for decades that we still have not gotten our arms around, and that's the importation of drugs. i mean, we talking about weapons of mass destruction, and long before 9/11, this country was dealing with a weapon of mass destruction, and it was called drugs that had been coming into the country from multiple sources from around the world, and we still have not got p our arms around that, so my sense is not privy to the kinds of information frankly that i didn't enjoy knowing, but grad to be part of the group who knew it and could potentially act upon is is there's still a greater need for us to develop trusted relationships with our counterparts in mexico. there's probably a greater need