some of the options to involve whether the tribes will be helping us with this problem. it would be happy to discuss the details of the options that you would work with you on this issue. but now that i think we've made progress in identifying specific options, i will do what i can to push for resolution. >> thank you very much. thank you, mr. chairman. >> thank you very much, senator barrasso. my question is for the panel. the budget control act requires an enforcement mechanism called an exit open in my remarks sequestration and in this regard to take effect in january of

2013. my question to the panel is what is sequestration high on any department's budget and your ability to provide cost of business is to tribes? >> well, we are very concerned about the sequestration. for the indian health service, a portion of our budget actually is protect it in the automatic decrease would be less. but it stood the 2%. and 2% for a budget equates to around $88 million that would have to be applied to both of our accounts and services in the 70s. and so, we argue now that our system is tied to its overt a lot of costs, including high medical costs of inflation and

so on. and having another $88 million to try dude sorry been our budget would be very painful, very difficult for health care facilities and would certainly impact services. and so we are following the progress in congress and have been talking the tribes about if this occurs, what is your preference is that where we might absorb these costs and of course the tribes are just not very -- they are very reluctant to have the conversation because they don't want this to happen because they've told me this will have a very significant impact on the services in their communities. so we're following this very closely and it will have a great impact, even the indian health service does get treated a little bit better, it is so significant impact. >> chairman akaka, we realize

that we are living in this era as constrained budget as we've consulted with tribes, we have received some target by omb, you know, to craft budgets. this helps us figure out what our true priorities are and for us as we do go through exercises where we looked at 10% reduction mm 7% reduction and even at the level we are now, in this proposal, where it is two tenths of 1% reduction, it is very painful. we try to meet the tribes priorities, but like i said a few minutes ago, you know, we are streamlining and we are going to management efficiencies and it's painful for the federal government because beatrice responsibility fulfilled. so we have some feeling about how painful it would be to have to undergo additional cuts in

the budget. and i am just hoping that you know, things can be worked through the congress said the sequestration does not automatically trigger because we are down to trying to solve problems that are very significant in and dan country, with a constrained budget already. >> thank you very much. i have further questions that i will submit for the record. either any further questions? >> well, it went to thank you so much today's panel for your response is. we too want to do the best that we can in streamlining of quarters is a difficult process,

but you know, they can certainly save and will be looking forward to things working out under sequestration i asked primarily because it is some pain that we hope we can work out at that time. so i would like to thank our first panel very much for your patience and for being here today and look forward to working with you. thank you. >> now, i'd like to invite the second panel to the witness table.

>> due to the delay of this hearing, i just thought you all to know that secretary tom s. can testify on behalf of the national conference of american indians. and however we will include it whole witness statements into the hearing record. he is serving on second panel is the honorable on sharp, president of the delete it tried

committee honorable mitchell hicks, principal chief of the eastern band of cherokee indians on behalf of the united south and eastern tribes. and the honorable robert shuck heard, chairman of pacific time block of time tried on behalf of the great plains tribal chairman's association. welcome to you in thank you again for your patience. will you please proceed with your testimony. >> thank you, chairman. on behalf of the affiliated tribes of northwest indians, we are truly honored to be here in thank you for the opportunity. we believe this is another reflection of an era with the partnership with the united states. not only do we have a relationship with the president,

but now with the legislature, the congress and we thank you for that opportunity and leadership you today to begin remarks by speaking to natural resources issues. the northwest is rich with abundant wildlife fish, hunting, gathering and we would like to speak to a couple of issues that relate to first of all the pie rights protection fund. we appreciate the increase, the proposed increase from 28 million to 32 million, but we do recognize when you look at the entire issue across the nation, we are filing incredibly short of the other group relations to her sister organization throughout the united states. for example, the great lakes indian fish and wildlife commission is looking at an increase of 17% relative to our

5% for the northwest indian fish commission and the columbia river tribal treaty commission. you look at chippewa ottawa authority and not to say 67% increase. so in the northwest, are too intertribal organizations are the 5% level, that these others are at a substantially higher level. so that is one issue that we notice in the appropriations. a treaty is a treaty regardless of the geographical scope and our needs and planning desperately need to have funding levels at a place where we can adequately protect our most precious resources. the second issue that relates to natural resource this is a pacific coast of recovery fund. at one point at its height in 2000 to come our funding level

is at $110 million in 2011 it was 79 million. a further decrease in 12 to 65 million. this proposal for third team is 50 million. a $50 million reduction. this fund is essential for as as we work to prepare and preserve and protect their watersheds and again our most precious resources and those natural resources subject to the endangered species act and as well as protect unanimous critical trust obligations, not only for our generation and future generations. the spending levels must be at a place where our trust interests are good. the next issue of byte to speak to has to do with law enforcement and public safety. in the northwest, we have tribes that border international

waters. we have tribes in montana, washington that border canada and we have noticed too and this budget that there is a proposed production of 2.6 million the special initiatives product. the special initiatives is designed a component of that to contend with international drug trafficking and border security issues. msa president of the nation i can at quest to the tragedy of law enforcement issues in indian country where we know that turned trafficking organizations have targeted our lan. the justice reports have noted that from the ocean into highly one-to-one with one we had 22.5 entry. we were covered and invested our own dollars into a drug task

force. $400,000 of her own appropriations this theater. that resulted in first-quarter, 48 arrests with 100% conviction rate we recovered, heroin, mass., prescription and in the last month, our drug task orders and explosive debate this last fall. i'm the mother with two children were hunting in an area next to violate and they came across a dead body so long after discovering it was not surrounded by vehicles on our four corners. so we desperately need help in law enforcement and the bad guys have recognize we are very vulnerable and it's not a time to reduce the critical fund.

so on behalf of the tribe of the north of sydney as we fully support ncaais requesting a proposal in thank you for this opportunity. >> thank you. thank you very much, president sharp for your testimony. chief hicks, will you please proceed with your testimony. >> chairman akaka, it's good to be here today and get to be back in d.c. in which we're here to testify on behalf of the united eastern tribes, which were one of the founding members alongside the seminoles of florida and the mississippi 56 member tries within the organization. i've worked for many, many years unbudgeted finance issues was elected in 2003 stressful chief of the eastern band. i served a budget and finance

are your then of course i also served in a capacity as an independent auditor for a tribe for a number of years at the new york based accounting for an ipod may certify it public accountant licensed for two years now and the reason i say that it's because i understand how difficult the budgeting process is big eastern band has adopted what we call the balanced budget act and what it ensures a cost kosovar government should not exceed available resources. you guys have to do with similar structure, the one of the things that i think but in a nice job of is identified. need space for critical programs, critical priorities for our government and of course, you know, remembering with the application is to get people of our tribe and the people of our region. of course the 2013 budget should reflect a federal priority of honoring its treaty and trust

obligations to indian people in overall we can all say we share can terms related to inflation, especially medical inflation and a decline in allocation or allotments to specific areas that affect many of the tribal programs. and of course the biggest issue that i think we are all facing the simple purchasing power. any time inflation kicks in and anytime you have your minimized resources purchase power declines and it affects the services we can put on the ground to the people again in the various areas. i've been fortunate to travel throughout the nation and to visit with many of the tribes that i'm testifying for today and there's a lot of needs in the country that are undone. a lot of needs out there that we as federal government can't be that as it is. a number of priorities that have to be addressed. and of course we all are aware

of the history of the cherokee people. it is no secret to anyone to travesties occurred in addition to the history and treatment of all native people and tribes. and of course again we cannot forget his travesties, but we must remind ourselves about her obligation is tribal leaders, have to remind you folks of your obligation regards to the trust responsibility to take care of the people. and i guess as you look at, you know, this land we were blessed with, there's not one mention of this particular land in our great nation that lives without native people's blood entrenched deeply into the soul. not one inch. our identity and tradition survey print, even though we are less than 1% of the population. we are still strong people and they still have considerable needs that have to be taken care of. he says police nhi it should be make no mistake to budgeting

priorities to the impact lives of native people and you know, we received various grants into contracts, et cetera. just a couple examples, i know there's been some small increases this year, but we have historically seen researchers have been postponed that were not life-threatening, but were critical. again was my travels throughout the nation, there is a lot of need out there that has to be met with their hospital at 60% of the current levels that it should have. and luckily we are blessed by having resources supplement that. but again today many tribes don't have the same opportunity. and i hope that as we go through this process, that's part of our valuation as to how do we do with? dealing with the bia and i know

that they have -- there's so many responsibilities that affect education or law enforcement, federal acknowledgment and other critical programs in the chart that is a pure earlier with a dia are going and unfortunately responsibilities continue to grow. how do we put leases on the ground quakes to commend economics. how do we get people in homes? you know, by having adequate resources for surveys and appraisals. so there's concern across the board in the various areas. one of the critical points that doubtfully at prize in the country to eastern band has a disturbed health issue that is called diabetes. 25% of our current population have some form of the disease. and again it's critical.

in 2000 -- 2011, the first lady, ms. obama, first lady obama identified what we call cherokee choices as a model program for reducing childhood obesity. but if you look in the budget this year and this is -- it's identified under the centers for disease control and prevention, these are cut out. we have served a 6000 members of the last 12 years that these funds. it can come in many tribes are set is. you think about the health care of our people. addressing health care is not one where you have the disease. preventive maintenance, preventive care is how we address the issues. not only today, but more important in the future. i ask in consideration of the budget this year yugos go back and look at this area.

being able to promote the maintenance i think is so important and it's no different for people or any other members of the united states. so again, please focus on this. in closing, i'd like to state that the budget identified and i hope through this congress that that can be addressed because the severe injustice to indian people. we stand beside her brothers. all 565 of them to address this issue and give us the economic opportunities and give us the land is to continue to protect our sovereignty. so i appreciate my time today and again it's good to be back in d.c. may god bless the decision of the committee and this great united states. thank you.

>> thank you very much come achieve for your testimony. now, german shepherd was you please proceed with your testimony. >> thank you. [speaking in native tongue] good afternoon, chairman. i'm honored to be here to represent this testimony on behalf of the tribes consisting of 16 sovereign nations. the tribes had the greatest geographical invasive any region united states as of of 11 million acres. our tribes of the total population of over 189 dozen people seeking only to gather donations. we are part of nations because the kerry true sovereignty and self govern even though we are not adequately funded good note and it or should ever be asked to upgrade essential services on

headed experience. these grants are short-term finance solutions to long-term problems. i now have requirements in some trades aren't able to meet and results in limited service is. we are therefore called upon congress to maintain the budget to the necessary funding levels. the only way to achieve sustainable games in education help public safety and a reservation as to direct federal agencies to streamline the program into indian country. especially for large land-based tribes but high unemployment rate and poverty rate. who would like to see funding streams consolidated come reporting requirements simplified and streamlined. federal agencies, especially the dia and ichat should be directed to stop the creation of agencies and goodies and to start returning funding to the regional and reservation level. both like to remind until the

united states returns to its obligations under that it's noncompetitive funding, improvements will continue to be limited and problems will increase. tribal nations know what the problems are. we know what our needs are and we can solve these problems but it requires restoration of the funding levels necessary to exercise the determination. an restoration of control the climate 30s reservation agent these and not top down. the written testimony describes the needed areas of education and the tribal priority programs, trusted national resource and economic development buffer distance and indian health care, office adjustment services, one resident travel courts and transportation. i would like to again remind the committee as travel nations they know what our needs are and will continue to try and that if i

needs of every resource available. that the necessary funding model for governmental services is obligated them to sign treaties or needs will not be folly not. i pass this to a good and i thank you for your time and consideration of our needs and recommendations. thank you. >> thank you very much for your testimony, district chairman. he mentioned tribes are ineligible for dozens of programs across federal agencies and are disproportionately underfunded. how can we bring parity to tribal and natural resource spending quiet

>> that connects my question. thank you, chairman. a couple things come to mind. the first to be to look at the eligibility of tribes to participate in the many opportunities throughout the federal agents seized to contend with natural resource areas. we estimate there are millions of dollars available to state and local government to contend with natural resources that tribes are not eligible to compete. and so, it seems that tribes could be included and many other opportunities, it should not matter are geographically the top of policy across the united states means. there aren't those type of barriers. so we have some of the most pristine areas in our tribal communities. the relatives to state and local government, our funding is incredibly forward of where their accuracy that would be one

recommendation. the other seems when you look at national budgets of tribal government, the revenue stream that comes in and the federal government is just one revenue stream. there are many others that if congress were to look that one increasing private sector development within tribal communities, there are some initiatives in the sba and others that the increase in a private actor, that allows us to increase our tax base and those dollars would go to meet things like natural resources, incentivizing private-sector or partnerships to tribal communities. if you look up the long term housing tax credits, were able to solve this, allowing corporations to deferred tax liabilities for 10 years and build housing of the structure. this tax credit available, but effectively not working because we don't have the infrastructure for businesses to locate and

take advantage of this tax credits. if tribes are able to sell the tax credit for indian employment tax availability, we just do not and if we could salvage just as is come in that county government, but businesses, it would increase the national budget by 25%. so there is a lot of tax policy, a lot of economic policy that is separate and apart from the federal funding and appropriations that could increase our national treasuries. and it is sovereignty based. empower tribal communities to pass, and so it is from intrusion of state and local taxes. that is another drain on our economy. many, many dollars are taken. a live on the reservation. the choice here prorated tax check to the county. those are just a few ideas of how we might be able to increase the parity for natural

resources. thank you. >> thank you very much, president sharp. principle she picks, and your testimony you state that insufficient funding for contract support costs requires tribes to direct millions of dollars from health care services to fix administrative expenses. please discuss the impact this has on number of tribes. and i'm not i'm asking that's because you represent different parts of our countries. the western area and the southeastern areas as well. >> within any organization you've got direct costs and indirect costs.

direct cost about put the services on the ground. those are the costs that pay for the surgeries are for the dental bills, et cetera. but she also have to get the administrative staff to support the i.t. systems. human resource distance, the overall managing of operations. so there has to be a balance there. again, or defining where priorities are, they are both priorities. so in regards to the support costs, they are very important to the operation at south. we are a compact hospital. we took over hospitals a few years ago, so we manage it ourselves. so those are extremely important to us the horrors as an mentioned my testimony, eastern ban is required to supplement because we only funded at 60% of water operation means to service

the 15,000 members we have in the area. so again it's extremely important and i hope that any restoration of these funds can be further defined in this budget process. thank you. >> thank you kissable cheese. this next question is for the piano. one of the ways they anticipate achieving saving of the president's budget and has been discussed is by streamlining services. ..

and we will have fawn sharp next. >> thank you. by streamlining the money i think that would really, would get more direct services. the money would be utilized for the services. i know when you have a different administrative offices, there is a lot of that money isn't being used for the purpose or its intended purposes of the services that are on the ground down on the reservation, all the money is tied up in administrative costs so we are stuck getting the leftovers

after they pay their wages or their administrative costs. we get the leftovers and that is not enough. it's not enough for any of our regions. and through consultation is the way to do it in the timing is important. having the conversation before they make their decision is when we should be having the conversations. a lot of times we get involved when it's too late and we don't really, where not very effective when were too late so the timing is critical and when we get involved with a consultation. thank you. >> thank you chairman. i would agree with my colleague that direct proposal is absolutely vital. many times we have had to withstand across-the-board cuts that are those unintended consequences that looked good on paper but if there is not a connection between that decision and how it's going to be

implemented on the ground within the indian country. so the impacts are devastating, so as soon as those recommendations are formulated, in real-time consultation, direct engagement with tribal leadership with subject matter experts and health, and all the different areas would be necessary and to your second of right criteria would we look at? it seems that we would look at areas personnel. if those personnel, if their work involves processing, administrative functions that are tied -- time sensitive those are some things we have experienced in the past where personnel are cut but that results in a six-month delay in getting an appraisal, though sort of thing so it seems the criteria we would look at is the function that personnel, those administrative functions, procedures, how that directly relates to our implementation.

so i commend the department for looking at streamlining in indian country. we have lived that. we have had to be very efficient and very lenient in our operations and we all should be looking at how dollars, precious dollars camden can be used to directly benefit the indian people. >> thank you. chief hicks. >> for stivale system, and with any tribe its unique. i think the first, one of the most important things i think we can do, instead of talking first and i'm speaking from an agency perspective, i think listen first is, and then we can get to the point we need to be. q. no streamlining is not taking a percentage out of the budget in saying we fixed it. we have to understand what the processes are. we have to understand what the

goal is and of course setting those priorities to make sure the system is working to its best his best interest on behalf of each tribe. so i think if we look at this entire process it obviously involves you know the parties and in this case the tribes, but you know to make sure again that we listen first and not just dictate, here is how we are going to do things. again, i have never believed in across-the-board cuts but i do believe if you base, in this case and realignment and/or reevaluation based on need than he can go places. that is my recommendation, as it relates to streamlining. >> this next question is to the entire panel, again. unless congress acts, the federal budget faces sequestration measures, which

could mean across-the-board cuts in many indian programs. can you describe the impact this could have on your members? >> the impact would be devastating. right now, the funding for basic services as i mentioned with their natural resources and law enforcement, basic governmental services are already in desperate need and for some areas the level of cuts that we are facing may seem to be a sliver but for indian country, there is a potential -- in an already open wound. our needs are desperate. going back to the answer i had to the first question, i would strongly encourage this committee to seriously consider an overall financial fiscal strategy for indian country that includes those things outside of

federal appropriations. i think there is an affirmative duty on this congress, knowing that those cuts are imminent, knowing that those cuts are going to run deep into its trust obligations to indian tribes. there is a duty to look at alternative sources of increasing revenue into tribal budgets, into our treasury and there are many, many other creative ways, strategic ways, to garner precious dollars and resources outside of federal appropriations with the private sector, with small business development investments. so, to answer the question it would be devastating that requires you to look at other approaches to funding our most basic services. >> again i go back to my comments about the foundation is before you cut the programs understand the needs of the

servers are and again i don't believe in across-the-board cuts. i think that potentially there detrimental whether it is large and/or small in the service being provided so you know i believe that, as the special process rolls out again that is my recommendation. let's look at the needs of the people and again the people's needs are just as important as anybody in this great united states and is tribal leaders i know we are going to fight for every dime that we can get and cutting funding for programs that are already underfunded is just simply not the right solution. we are also survivors. as we have gone through our history and you know with their lands takings and again, not receiving our duscher, we are going to survive. but we definitely need help with the services and programs. thank you.

>> mr. chairman, shepherd. >> i agree it would be devastating to our tribe into our region to indian country as a whole and again i agree that across-the-board cuts aren't the way to go. historically tribes have been underfunded since the beginning, and also in the beginning too, tribes were predominantly self-sufficient prior to everything that has been happening and assimilating to the way of life that we are attempting and to cut budgets even further, i mean the treaties have been around for a long time. the trust fund has been around for a long time and it's never been fully met financially.

and, the services i guess is what it comes back to, the services from the government. we are trying to run around tribal government. we have our own services. we provide the best we can and if you start cutting the dollars, it's going to take away from the people and it will be devastating for us to continue to cut over the years. thank you. >> i want to thank you very much for your patience here, and i thank you very much for your responses of the questions and your testimony. and i want to again express my thanks to the witnesses at today's hearing. the testimony we have heard today makes it evident that the president's budget request for

native programs reflects a concerted effort to fulfill the trust responsibility. however, we have heard significant concerns about the potential impact of streamlining sequestration and balancing fiscal responsibility with the trust responsibility. i look forward to continuing these conversations with the administration, tribal leaders like you and tribal organizations. finally, i would like to once again express the importance of a hearing from all interested stakeholders on these matters. the hearing record will remain open for written testimony for two weeks from today. so, thank you very much and

thank you for being here to help us work together with you to help indian country and the indigenous people of our country. thank you area much. this hearing is adjourned. >> thank you mr. chairman. [inaudible conversations]

>> fire j. edgar hoover? i don't think the president could have gotten away with it. hoover stands alone. he is like the washington monument. he stands alone like a statue encased in grime. as one of the most powerful men who ever served in washington in the 20th century. 11 presidents in 48 years. from woodrow wilson to richard

nixon. there is no one like him. and a great deal of what we know or what we think we know about j. edgar hoover is myth and legend. 's be fewer young people are smoking according to the latest surgeon general report of that the decline has slowed. 1200 people dying everyday in the u.s. from tobacco-related disease. health and human services

secretary kathleen sebelius and surgeon general regina benjamin talk about the reports findings. this is a half-hour. >> what a well behaved group. [laughter] good morning everybody and thank you for joining us here today. i am delighted to be here to kickoff the announcement of the 2012 surgeon general's report on tobacco use among youth and young adults and i want to start by a gouging some of my terrific colleagues, doctors regina benjamin, the surgeon general who you will hear from and a few minutes. dr. david satcher who is with us, the former surgeon general who has been involved in this effort for a long time. [applause]

dr. howard koh, my assistant secretary for health who you will also hear from. we have key members of the office of the secretary of health staff, leadership, a wonderful team here from cdc, dr. perry who is the author of this report who comes from texas to be with us today and lots of you who have been involved in this effort for a long time. since the first surgeon general's report on tobacco published in 1964, the good news is we have seen a percentage of americans who smoke steadily decline. in 1965, over 42% of americans smoked. by 2004, it had fallen to just under 21% and that is very good news. but, for all the progress we have made, tobacco use remains the biggest single threat to

america's health. it kills an estimated 443,000 americans every year, 443,000. every tobacco-related death is replaced by two new smokers under the age of 25. today's report rings more troubling news. the first of its kind to explore the causes and consequences of tobacco use among young adults. and it shows us just what we are up against. today, all over america, middle schoolers developing deadly tobacco addictions before they can even drive a car. the younger a child is when they try cigarettes, the more likely they are to get and stay addicted. one child picking up a tobacco product is one too many. it's a fact that each and every day across america, more than 3800 kids under 18 smoke their first cigarette and it's completely an acceptable.

this report also underscores the importance of the historic effort the obama administration has taken to stop you from using tobacco products and to help adults quit smoking. since the numbers weren't changing fast enough, we had to change the way we rid our communities of tobacco so that is exactly what we are doing. we have pushed wide-ranging legislation and among other things that makes it harder for tobacco companies to market to our children. it also restricts companies from using terms like light or mild on products and in marketing. it dance certain candy and fruit flavored cigarettes. all of those were technics aimed at people often younger than 18. that legislation has been debated for years and years in this country and we finally got it done. we are also supporting local programs to help people quit smoking and stop people from starting in the first place. as part of last year's health

care law we gave americans better access to counseling to help them quit smoking before they get sick. around the country we have great partners. we have seen states join his fight with 28 states and washington d.c. passing smoke-free laws to improve health. over the last three years we have also made great strides in our fight against tobacco and our efforts are paying off. at today's report is an important reminder that we have a lot more work to do to make tobacco death and disease a part of our past and not a part of our future. again, thank you for being here today for this important announcement and i would like to turn this over to her assistant secretary of health, dr. howard koh. [applause] >> thank you so much madam secretary and thank you so much for being here every one. secretary is another commitment and has to leave but we want to of course thank her for her

tremendous leadership and dedication to the tobacco epidemic. i too am delighted to see so many wonderful colleagues and friends here and let me thanked dr. benjamin who you will be hearing from in just a minute, her great colleague from the department of health and human services and fda and the cdc and the office of the secretary and so many others. we want to thank the senior science editor of this report in out of our colleagues who helped write this very important product. and most importantly we want to thank each and everyone of you for being here to support this very very important effort and this great day. we are here today to bring heightened urgency to the tremendous public health burden that tobacco continues to impose on our youth. a burden that completely is preventable. too many of our children are did.

too many cannot quit and too many go on to died far too young. in fact as you heard from our secretary each day more than 1200 people died due to smoking and each death is replaced by at least two new smokers under the age of 26. i have personally witnessed a cycle of dependence and despair when caring for patients for over 30 years and i can tell you it is heartbreaking when our patients tell us that they want to stop smoking but they haven't yet been able to do so. it is tragic when our lung cancer patients tell us that they started smoking as kids years ago to be cool and impress the other kids next door. today we understand more clearly that youth smoking is not an accident. it doesn't just happen. each year the tobacco industry spends $10 billion on marketing of tobacco products.

this exceeds $1 million an hour, over $27 million a day in the u.s. alone. the tobacco industry says they are intent is only to promote brand choices among adult smokers, but there is a difference between stated intent and documented impact. because regardless of intent, the impact of tobacco marketing is to encourage under age youth. and in fact nearly 90% of smokers start by age 18 and more than 80% of underage smokers choose brands from among the top three most heavily advertised. you will hear an misreported major conclusion that advertising and promotional activities by tobacco companies cause, cause the onset of smoking among adolescents and young adults. research documents the adult

response relationship. the more young people are exposed to marketing activities the more likely they are to smoke. far too many kids still see smoking images and messages every day that normalize this dependence. for example in 2010, nearly a third of the top grossing movies produced for children contained images of smoking. just about half of our state continues to allow smoking in public places. images and messages normalized tobacco dependence on the internet and retail stores. in short, kids see smoking in the movies they watch, the video games they play, the web sites they visit and in the communities where they live. from 1997 to 2003, youth smoking fell rapidly but since that time the rates of decline have slowed.

in fact nearly 3 million fewer smokers today if we as a society have sustained the success in the decline seen between 97 and 2003. of great concern we are also seeing students use other tobacco products including smokeless tobacco and small cigars. in total we can now document at least 3.6 million cigarette smokers as well as 1.7 million adolescent using non-cigarette ruddock roderic such as smokeless tobacco products and cigars. moreover, any young people are concurrently using multiple types of tobacco. in fact among those who use tobacco, more than half of high school males and nearly a third of high school females use more than one type of tobacco product whether the cigarettes, cigars, smokeless tobacco or some other form. this surgeon general support not

only provides powerful details of the factors that lead to youth use but also identifies proven effective strategies that can enhance prevention. we at the department of health and human services have committed to fully implementing these proven effective strategies as part of a comprehensive coordinated national approach. in november of 2010 we were proud to release ending the tobacco epidemic and the tobacco control strategic plan from the department of human services. the plan sets forth specific actions where the department can implement fraud grass, build on milestones, respond to the changing market of tobacco product and support throughout the country. we have ample evidence that these comprehensive multicomponent interventions work. such programs more than pay for themselves in terms of lives

saved and dollars saved. the current problem is that we have not yet fully applied the evidence-based tool that would end this epidemic. between 2005 in 2010, 20 states had declined 20% of more and that is encouraging but we need to accelerate these declines in each and every state and to sustain it to benefit all of our kids for the future. until he and the tobacco company epidemic even more young people will become addicted. even more will die and even more families will be left behind devastated by the loss of a loved one. so i thank you so much for being here today. we must redouble our collective commitment to accelerating conference of programs, making cessation services successful and affordable, creating an environment that denormalized is this dependence and most of all

give our young people a fighting chance to be healthy and tobacco free. thank you very, very much were being here. [applause] >> i am very pleased to introduce our surgeon general, dr. regina benjamin. [applause] >> good morning. such a nice turnout or code thank you all for being so interested in such an important health commitment to tobacco control. i would like to say a very special thank you to our secretary sebelius. she had to leave. for strong and unrelenting leadership on this most important public health issue. she has made it a top priority. i would also like to recognize my tobacco free advocate, the

young students and groups i've been working with. they come from north carolina and virginia. why don't you guys standup? [applause] also the others who are watching on the web stream there. you know, 2012 surgeon general's report preventing tobacco use among youth and young adults is the result of the contribution of over more than 130 health experts so i would like to recognize the editors who are with us today, dr. cheryl perry, dr. melissa siegler.year frank that are here and they will be here to help with the questions and answers. also i understand, think dr. kessler is here to represent

him and we thank you for being here. i would like to recognize entangle my medical professor and mentor dr. david baxter assistant surgeon general and all of the former surgeon general's for their work on tobacco nationally and internationally. every surgeon general since 1964 is waiting on the issue of tobacco and everyone has called for the immediate action to solve this problem. today is the 31st surgeon general's report on tobacco, preventing tobacco use among youth and young adult. it reminds us once again that the burden of tobacco puts a heavy burden on society. the report challenges us to and smoking among young people. the numbers in this report are shocking. you heard some of them earlier but they are worth repeating. every day, 1200 americans die from smoking. each of those people are being

replaced by two young smokers. almost 90% of those replacement smokers smoked their first cigarette before they were 18. despite all the reductions and tobacco use in the past decade, today more than 600,000 middle school students smoke and 3 million high-schoolers smoke cigarettes. ..

>> many ingredients, when they are added, they reduce the harshness and approve taste and consumer appeal. chemical ingredients like knew -- pneumonia works across the blood brain barrier. ventilation holes and filters make smoke easier to inhale deeply into the lungs and convert nicotine into free nicotine. these design features work together to enhance the kick and pleasure smokers feel. adolescents body are more addicted to nicotine than adults. this helps explain why 1,000

teenagers become daily smokers and three out of four high school students continue to smoke into adulthood even if they attempted to quit in a qu years. there are also other tobacco products that youth find appealing. the cigarette sized cigars have fruit fliferred things like strawberry and grape. some of the latest smokers tobacco products are spitless, and others dissolve like mints. part of their appeal is that they can be used at school or at home, in front of mom and dad, even, you know, so they can't be detected and may not know their kids are using them. understand these products can also cause nicotine addiction, which can lead to serious disease and death. this report also highlights the health effects. in addition to the increase risk for serious chronic diseases

like cancer and heart disease and everyone see ma, there's an immediate damage to the rater and lungs. they have early damage and changes in the aorta. that puts them at higher risk for disease, and they tend to die very young. smoking of an adolescent throws development of lung function. teens who smoke can end up as adults with lungs that never reach their full functioning capacity. another finding in this report is that marketing in advertising of tobacco products to young people have been very successful. 234 this report -- in this report, scientists use evidence and studies to show causality. the more the youth is exposed to markets in advertisement, the more likely they are to start and maintain smoking.

in the united states alone, more than $1 million an hour, over 27 million a day is spent on targeting messages and images to portray smoking as an acceptable and appealing activity. we know that prevention is the key. 99% of smokers begin smoking before the age of 25, so we want to prevent our next generation from ever starting to smoke. . if we get them to remain smoke free until they are 26, then less than 1% of them ever start. we know it works. we know that when we enact smoke free policies, we reduce exposure to secondhand smoke, change norm, and support healthy decisions. we know that when we increase the price of tobacco, smoking rates decline among youth. we also know that when we educate the public with the

aggressive media campaigns, we inform them of the risks, encourage user to quit, and prevent youth from starting to smoke. science says sustained multicomponent programs prevent young people from starting to use tobacco. we saw this approach in new york city when they cut their youth smoking in half in little as six years. we have implemented these types of comprehensive tobacco programs in the past when we saw a steady decline in the rate of youth use between 1997 and 2003. had we maintained that course, we could have prevented 3 million smokers. we need to bring back that level of commitment, bring it back to the programs today. it's time for us to really end the single most preventable cause of death in this nation. as you can see, we're committed to saying we can make our next

generation tobacco free. i've tried to describe to you some of the many findings in this 2012 surgeon general report. the full report is 900 pages long. [laughter] it's really written for a scientific audience, but it really is important that americans, and all of americans understand that we can end in tobacco epidemic by preventing youth to start using it. we developed a consumer booklet that you can see that's in your packet, and it's written in plain language and good graphics, and it's entitled "the surgeon general's report: preventing tobacco use in youth and young adults." we can make the next generation tobacco free. i want to say thanks to the centers for disease control and preventions office of smoke and health because they've helped us with a new project, so i'd like to formally and officially

launch the surgeon general's video challenge, and this is a competition to engage young people in developing original videos that feature what are more of the surgeon general report's findings. contestants are encouraged to use this consumer piece that i just showed you as a guide to writing health messages in their videos, and the contest will have two age categories with english and spanish, age 14-18, and age 18-24. you can join as an individual or groups, as teams such as schools, and after you submit your video, it will be screened, and after screening, videos will be put up on cdc's youtube channel for public voting, and then the top 10 of those judged by an expert panel. there's also a $5,000 grand prize and several $500

runner-ups. we're looking forward to having good videos in this competition. more information can be found at surgeongeneral.gov. i thought i would now show you my video. [laughter] it's also called a public service announcement. >> at 12, i smoked my first cigarette. >> at 15, i was addicted. >> by 40, i'll have lung disease. >> by 50, i'll have a heart attack. >> cigarette smoke causes immediate damage, leads to health problems, even death. those who quit or die are replaced by a new generation of smokers. i'm the united states surgeon general and go to cdc.gov and learn how to make the next generation tobacco free. [applause]

so i'd like to ask dr. perry and i, we'd be happy to take your questions. >> i understand we -- i understand we have time for several questions, but delighted to take some new. >> yes, the question is for the surgeon general. what role do you see for the primary care physicians role in this? >> i think primary care physicians and any physicians are well-respected by their patients, and they listen to their parties. i ask patients to talk to your doctor, and as far as doctors, we have to always talk to our patients about smoking and ways to quit smoking.

particularly in the primary care arena when we deal with adolescents and this age group. we can have a very strong effect there. >> other questions from the audience? going once? [laughter] okay. thank you very much for being here. >> thank you. >> thank you. [applause] [inaudible conversations]

>> and not fighting and dying because they are al-qaeda or sacrificing their lives because they are muslim extremists. they are fighting and dying because they want the same universal rights and freedom we guaranteed in our constitution. >> i think if we don't get the international community together in a coalition of the willing soon, we're going to look back and say we not only didn't do the right thing morally from stopping innocence from being killed, we missed an

extraordinary strategic opportunity. >> i want to make the point that the concerns that senator mccain and you and others have expressed are exactly the concerns of the administration. we're not divided here, and we are not holding back. this administration has led in iraq. we led in afghanistan. we led on the war in terrorism. we led in libya, and we're leading in syria. we are working with those elements to try to bring them together. if the agreement here is that we ought not to just simply go in unilaterally, we have to build a multilateral coalition. we've got to be able to work at that. it's not that easy to deal with some of the concerns that are out there. >> watch this week's hearings and news conferences whenever you want online at the c-span video library. search events from today, this year, and earlier with over a quarter century of american politics and public affairs on your computer at

c-span.org/videolibrary. >> the house today passed a bill making it easier for small businesses to raise capital and go public. democrats and republicans remain divided about a larger jobs bill. house republican leader spoke to reporters after the house vote. first majority leader eric cantor. [inaudible conversations] >> good afternoon, how are you? we're really excited. we just saw a tremendous vote in the jobs act. you know, i think that this vote today, and nearly 400 votes for the bill, will get the final tally in a minute, but i think what it demonstrates is that we are able to set aside our differences when we want to and come together for producing results that people want to see, and what this bill does is it

provides a real shot in the arm to entrepreneurs, small businessmen and women, removes red tape, allows small businesses an easier time to go about starting up retaining and creating jobs. the president asked us in his state of the union address to send us a bill that helps business startup, and the jobs agent does just -- act does just that. again, the vote was very strong, and what we've seen, i think, over on the other side of the capitol, is senator mcconnell has been terrific in making public statements towards supporting this bill. i hope that leader reid on the other side of the capitol can act with dispatch and follow the president's request so we can get the president this bill for signing as quickly as possible. it's what the economy needs. we have to get this growth going again, and we do it through business startups.

majority whip, kevin mccarthy, who had a piece of this bill, and all yours. >> thank you very much. today was a good day. today was a very bipartisan day. you watched through a process, and the uniqueness of it, if you follow the entire process of the bill, very open, through subcommittee, through full committee, debate on all sides, a bipartisan bill, but the most important thing is what it focuses on, small business. history of america's created on small business. job creation, the most job creation you have is through small business, but the biggest challenge we have is we're at all time low in the 17 years, and the greatest obstacle to small business is access to capital, red tape, and entrance to market. this bill deals with all three. what's important is you got bipartisan ideas coming through. you got the president putting out a statement in support talking about ideas in this bill. you have not seen that in a long time in washington.

unfortunately, it still has to pass the hurdle of the senate. now, we know the senate's had difficulty passing jobs bills even though they are bipart san. we're hopeful with support from the house and senate and signing of the president, this will come into fruition because it's a win to all americans and especially to small businesses. >> steven fisher, man from frog jump, thank you, whip. as a freshmen congressman, it's been a bumpy year and a half, but today we have a bit of optimism that we've had a jobs bill, bipartisan bill focusing on the private sector. jobs are not created in the halls of congress, but created in the private sector. that's what is good about this. now we look to the colleagues in the senate and urge senator reid to let the process work its will, let it go through the senate chambers, and give the american people something they

have been longing for ever since the last election. i can't say enough about our team and how we've been focused from day one on energy, on jobs, trying to put americans back to work and giving the power back to the people, and last, but not least, last night, i couldn't sleep. i was thinking about -- i have three children, one girl is 8 years old, sarah, and she wants to be a dentist. how sad would it be when she grows up i have to say, honey, this is not america anymore. you can't be what you want to be. we have to focus on the private sector and make america what it always could be, would be, and will be. thank you. >> he's right. our private sector, our citizens are the folks who create job, and our job here in the hauls of congress is to make sure that we have a climate that will allow our citizens to do what they do

best and to let them have the dignity of participating in what has made this country great, and that is to have a good productive job and to have the opportunity to invest in growth. the jobs act does both. we need the help of the senate to get this jobs bill to the president's desk. we have cooperation of virtually ever member of congress across the spectrum to get this job done. this proves that we can work together and do great things to put america back to work. let's get the senate on board. let's pass this bill, get the president's desk, get it signed, and get going. >> you know, this is one of those moments, particularly, as a freshmen congressman, you are actually finding some joy. think about this, many of the bills in the package we've been working on for a year. they have been well vetted, arguments, debates, we made really good quality intellectual product here, and bringing them

all together one time is more powerful than even standing on their own because for capitol formation, these bills provide all sorts of different silos, all paths for companies to grow, for them to hire, for them to expand this economy, and yet, it was done from the republican house, but we listened, we worked with our democrat colleagues, and therefore, you soften the board, a terrific bipartisan vote. we did something really good today. >> patrick mchenry from north carolina. the world bank said in 2007, we ranked third in the world in creating ease of small business. today, we're 13 #th. we've fallen behind, and the world caught up to us. our markets used to be the envy of the world, and today, the rest of the world wants to take that place from us. what this legislation does today, we know that dodd-frank restricts lending and makes it

more costly to get lending, so what we're doing is moving counter to that and reducing red tape, updating regulations on the books, some on the books for 80 years in the case of mr. mccarthy's legislation that allows you to communicate about a stock offering, my legislation that is contained in the bill is called crowd funding, reduces the hurdle for small businesses to access small amounts of equity investments on a mass basis, and so what that does is take the best of microfinance and crowd sourcing and puts them together. it's high time we pass legislation like this to update the ranks in the books, reduce red tape, and to unleash the private sector and small businesses so we can create jobs. glad to have a bipartisan vote, and i certainly appreciate the leadership of everybody here to bring this moment about. >> questions? >> mr. boehner, do you think ron

paul and rick santorum and newt gingrich should drop out -- >> that relates to the jobs act how? no. >> well, they have different jobs -- [laughter] >> what's your question? >> should they drop out of the race now? >> listen, we are about a system in the country. everybody can speak their will, free to conduct their lives in any legal way, and, again, we're a party of ideas. we've seen a very hard fought primary with a robust debate, and i'm looking forward to the party focusing in on the issues that most people are concerned about today, and that's what this bill is about. it's about getting back to work, creating job, and we know we do that through small business which is why this bill is appropriate. >> sure, they'll support the package because they supported the measures in the past, but some of them already passed the house, and additionally, leader

pelosi said she, this morning, called this package too meager. it's so meager, she said to me. what do you think of that? >> you know, i think, look, the problem is the congressional performance in producing results has been brought into question, and what we're trying to do is to regain the confidence of the people that sent us here, and by having a win like this, i think we can demonstrate that we really can work together, and so it doesn't help to denigrate any time that we do actually work together and produce result like today because you probably have to look far and wide to see when that actually happens in such a deliberate and civil manner. you know, we went about this bill reaching out across the aisle. as you know, many democratic members were involved in this process. i met with steve case, president's appointee to the jobs counsel that actually focused on these issues of

entrepreneurship, of starting up businesses again, and it's with that process that we came forward with a product that reflects all views, allowing us to come together. i hope that leader pelosi can work with us in this same vain and accomplishing yet even more as we go forward to help get the economy growing again. >> word from the senate and your office sent out a note saying 30 jobs bill have been sent to senator reid, but had not acted on that. how does that rhetoric play into what the senate does? >> that's not rhetoric. that's fact. the bills are there. we obviously are frustrated as are the american people, that we can't see the senate act enough in terms of trying to remove the difficulties that suburban nears and small businesses are having. we want to make it easier for them, and as my colleagues said today, this bill makes it easier for startup businesses to happen

again in america. we have to be a startup country again. we are the envy of the world when it comes to our capital markets and the opportunity that we provided to the people of this country. that's who america is. we got to do that again. we're asking leader reid to join us in that. >> the senate said they will -- or democrats said they will try to have their own version of the jobs agent next week. if they pass that version, willing to go to conference to put the bills together? >> all i say is the president endorse the this jobs agent, and if we want to act with dispatch so that small businesses and startups can get going again, seems to me that the simplest way forward is to listen to the president on this one, listen to the majority, overwhelming majority in the house, bipartisan, and let's join together and do something for entrepreneurs and for small businesses once and more all to get the -- once and for all to get this country back to work. >> were you concerned after the

loss the other night, an anti-incumbent mood out there, people further to the right of your members or threat of your members worrieded about primary challenges? >> you know, we are certainly in election season. i think the test for any candidate right now is whether they can produce results, and where the leadership is, and, you know, our majority came to the town to affect the reforms that i think the american people have been looking for for a long time. it's about getting the economy going again, getting people back to work. it's about spending within our means, and it's about providing the leadership that we actually do have a vision and a plan this place that we're trying to implement. i think that will be the governing aspect of not only the primaries, but the general election in november. thank you very much. [inaudible conversations]

jay edgar hoover? i don't think the president could have gotten away with it. >> tim weiner details the fbi's 100 year history and hoover's

fight against adversives. >> hoover stands alone. he's like the washington monument standing like a statue encased in grime. as one of the most powerful men who ever served in washington in the 20th century, 11 presidents, 48 years, from woodrow wilson and richard nixon, there's nobody like him. a great deal of what we think we know gout hoover is myth and legend. >> time weiner on enemies, a history of the fbi on sunday's q&a. >> i believe it is yet possible we'll come to admire this country not simply because we were born here, but because of the kind of great and good land that you and i wanted to be and that together we have made it. that is my hope.

that is my reason for seeking the presidency of the united states. >> as candidates campaign for president this year, we look back at 14 men who ran for office and lost. visit our website to see video of the contenders who had a lasting impact on american politics. >> the leadership of this nation has a clear and immediate challenge to go to work effectively and go to work immediately to restore proper respect for law and order in this land and not just prior to election day either. >> c-span.org/thecontenders. >> at this house hearings on food stamp fraud, agriculture department officials testified about efforts to catch retailers who cheat the food stamp program. a script howard news service report last month found that disqualified stores were still in the program.

[inaudible conversations] >> the committee will come to order. the oversight committee exists to secure two fundamental principlesment first, americans have a right to know that the money washington takes from them is well spent, and second, americans deserve an efficient and effective government that works for them. our duty on the oversight and government reform committee is to protect the rights. our solemn speedometer is to hold government accountable to taxpayers because taxpayers have a right to know what they get from their government. we will work tirelessly and partnership with citizen watchdogs to deliver the facts to the american people and bring genuine reform to the federal bureaucracy. i'll now recognize for an opening statement and pursuant to the mission statement ask that the video be played because it reflects the watchdog in

question. >> food stamp fraud, costing americans millions in taxpayer money. >> it's happening across the country, new york, miami, detroit, and here in san diego. >> the usda discalled retailers. >> 24 arizona stores disqualified. >> san diego retailers ripping off the federal government. >> 23 of the retailers are in the palm beach store like many we found is both ban from accepting food stamps and approved to accept them. >> investigators poured over the records. we learned 1500 stores across the country on both of them. >> the usda says 99% of the time it's for illegal trafficking. >> a retailer overcharges a customer and pockets the difference. >> they want to trade benefits for cash or bannedded merchandise like alcohol. >> trading booze for taxpayer money. >> the store keeps $50. the card holder gets 50, all

taxpayer money. >> what's this backseat door cost us taxpayers? >> according to the records, $330 million in 2008. >> america deserves better. just yesterday, one of our witnesses penned an op-ed that depicted the improvement in the program stating how much better it was. it is not for us today to question whether or not the program has improved, but the question is in a day in which in a moment's notice, and in a few key strokes, i can look at a store front anywhere in america, find out who, what, where owns that, or in this case, script howard, could do a few public record searches available to the department of agriculture and find out what they were doing wrong from open source.

we need to do better. the hearing today is about children. the hearing today is about families. ultimately, the food stamp program is about providing nutrition to people in need. 42 million people rely on the food stamp program. a few misuse the program. our hearing today is not about the individuals who out of desperation for drugs, alcohol, or just spending money misuse food stamps. it's about america's responsibility. this administration and this congress' responsibility to make sure that the money or the benefit of the money gets to the people who are supposed to get it. it's not to buy alcohol, cigarettes, or drugs. a relatively few store fronts around america represent a considerable amount of fraud. understand that a small amount

of stores does not mean there's a small amount of fraud. people who want to use or misuse, i should say, use resources provided to them by the taxpayer in the way of food stamps seek out stores who will cheat. it's not an accident that you find out that somewhere in the neighborhood an entity trades you $100 in food stamps for $50 in cash so you can go score. that score is bad enough, but let's understand somewhere there's a family that relied on food that instead got nothing. these companies and individuals behind these companies need to be punished on a consistent basis. if, in fact, they are suspended, it needs to be for a period of time with an understanding of whether or not they are ever going to be able to sell again. if they are permanently excluded, then, in fact,

permanent needs to mean permanent. more importantly, in this day and age with the ability to research, if you only have 100 people to track this huge amount of potential waste, one can make the other 99 more effective. the scandal we are looking add today is important because we know that 100 people working for the secretary, in fact, found people who were stealing from the taxpayers and stealing from families who need that food and need that benefit. one of those 100 assigned to do what whistle-blowers have done for us, in fact, could have prevented many of these stores from being back in business. it's that simple. we will hear today, as we often do, if we only had more resources. this committee has no more resources to provide. in fact, you're going to have to do more for less.

that's more oversight, more accountability, with less money available for that and more need by people on the food stamp program. ultimately, we are going to hear testimony that, on both sides, saying we're doing a better job, and we're going to hear people saying you're not doing well enough. both can be true. america, in fact, expects both to be true, continuous improvement, but, in fact, never satisfied that we've done enough. with that, i recognize the ranking member for his opening statement. >> well, thank you very much, mr. chairman. i welcome today's opportunity to conduct oversight of the program which is one of the most vital missions of any government program, and that is to prevent abject hunger and homes all across america. i'm so glad that you said that this hearing amongst other things is about children.

mr. chairman, chank for agreeing to -- thank you for agreeing to invite that majorities and ms. thatcher of the food and marketings institute. it's about store owners, and so i thought it appropriate to invite them. ms. hatcher's organization remits 26,000 supermarkets and food stores across the country that implement the program on a daily basis. i also thank you for allowing the minority witness to appear as well as everyone else. you didn't have to do that, but you did, and we are, indeed, grateful. let me start by emphasizing an important appointment. more than half of the beneficiaries of the program are poor, hungry children. it serves 46 million millions with incomes at or below 130% of the poverty level. according to usda, 47% are under

18 years old. the program serves millions of people who are elderly or have disabilities. it's never been more critical than it is today. 2008 financial crisis drove more americans into poverty than any other time since we started tracking this data. the collapse of wall street and the eviseration of household savings forced millions of americans to turn to this critical safety net, and it's been there for them. while the need for the program is at an all-time high, fraud within the program is at an all-time low. this is one of the most efficiently run federal programs with one of the lowest fraud rates of the program. fraud declined from four cents

of every dollar expended in 1993 to only one cent of every dollar expended today. i agree that's not good enough. they base today's hearing on a recent press stories about a certain store owners who have been disqualified from the program, but allegedly regaped entry -- regained entry in some way. problematic, but true, we have not seen split allegations that there's a pervasive weakness in the program or the magnitude or fraud in the program could be greater than first reported. in fact, today, we'll hear just the opposite, that this press account has significant problems. the usda adequately addressed the bad actors and the program continues to be an extremely well-run program. given the strong track record,

i'm concerned the true purpose of the hearing is to discredit the entire program in order to justify draconian cuts. last year, every republican member of this committee voted to convert the program into a block grant program and slashed its funding by $127 # billion over ten years, a massive reduction of almost 20%. again, i go back to what you said a little bit earlier, mr. chairman, in part, this is about children. this proposal was part of the plan proposed by budget committee chairman paul ryan, and it was adopted by house republicans last april. according to the center on budget policies and parties, this proposal will force up to 8 million men, women, and children to be cut from the program or severely reduce the amount of food they can buy. where are these children supposed to go if they are hup

gri? i believe there is a compassion deficit here in washington. obviously, a dollar squandered in this program is a dollar that does not go to support families. they desperately need food, but to propose draconian cuts to the program causes greater harm to the very people who need the most help. while i strongly support efforts to make the program more effective and first time, and i strong -- efficient, and i strongly support the fact that we must root out fraud, i'll do everything in my power to oppose efforts to use these isolated examples to discredit and gut the entire program. i look forward to a productive discussion today on ways to improve one of the most successful federal programmings to prevent poverty and hunger flout -- throughout these united states. with that, mr. chairman, i yield back. >> i thank the gentleman. members have seven days to submit statements for the

record. i recognize the first panel. under secretary for food and consumer services at usda. prior to service at the department of agriculture, he served as director of three different state government departments of health and human services, maine, oregon, and iowa. welcome. ms. phyllis fong is the usda inspector general and received the department for ten years. she is also concurrently serving as the first chairperson of the council of inspector generals on integrity, efficiency, and, in fact, in that role, you may be aware that this committee would like to pass on to that council greater authority and subpoena authority that remains one of our long term goals to convince the senate of the importance of investing in inspector generals.

ms. hatcher is the senior vice president for the government and markets affairs of the institute and served as chairperson for chairman spencer baucus as his chief of staff. lastly, ms. faulkner is inspector general of the commonwealth of pennsylvania. prior to being inspector general, she was a law partner to philadelphia office of ballardspaul, llc, and not that lengthy, you're too young, and attorney general of pennsylvania and philadelphia public defender. that is a lot to pack in a short time. if you would all rise, pursuant to the committee rules, all witnesses are to be sworn. please raise your right hand. do you swear or affirm the testimony you're about to give will be the truth, the whole

truth, and nothing but the truth? i do. let the record reflect -- please be seated, all answered in the affirmative. this committee historically tends to have a soft gavel, as i informed the witnesses ahead of time, we have a vote on a district work period last working day. i know my people. they will not return. in order to not have you wait an hour for a relatively small period afterwards, if we've not concluded by the time of the vote, we will end at that point. as a result, i will hold everyone on your side very close to the five minutes. i will hold my own people close to the five minutes, not just for questions, but for your answers. i ask all the members on the dais to include time for questions and reasonable period for witnesses to answer. with that, mr. secretary, you're recognized for five minutes. >> thank you very much for the opportunity to join you today,

and i thank the inspector general fong, strong independent oversight agent at the usda. the supplemental nutritional assistance plan or snap, is a program for those to get back on their feet. it's never been more important than now. strong administration and oversight with payments and proper use of benefits are just as critical. the focus of today's hearing is about usda's oversight and management of the retailers that are authorized to redeem snap benefits across the united states. particular emphasis given to recent news stories, the result of several months of intensive invest good faithive journalism at script howard news service focused on retailers that were disqualified from snap for trafficking. it's the sale of benefits of snap benefits for cash and punishable by disqualification,

crimes, and criminal prosecution. while we recognize the importance of the issues raised by scripts, i want to set the record straight about several facts. as with other leads, we received from the public, scripts brought to our attention very seriously. we immediately began our own investigation into the stories referred to us. our results suggest issues may not be as widespread as reported by self-incriminates. as many of the cases they raised have not proved to have integ my problems of the 36 owners scripts referred to as suspicious, our investigation found that over three quarters had no connection to the disqualified owner or not authorized to snap stores. the remaining quarter have been disqualified, charged, or withdrawn from snap. one is under criminal investigation by the oig. that said, we still believe broader action was needed. we increased security measures to keep out previously

disqualified owners including more robust records and shorter time period authorizations for stores and locations with previous disqualifications. prior to these reports, fns upgraded electronic transaction data mining technology to better detect suspicious redemptions, and we are preparing to post information regarding the owners of permanently disqualified stores to gsa's excluded party list system, a federal list to protect other federal agencies. we're also developing rules to increase penalties for trafficking stores. combating fraud has long been a usda priority. over the last 15 year, enable the charts are rotating up there, you'll see one of the charts reflects various initiatives that were taken over the years. we are not yet satisfied, and usda continues to work closely with our partners to fight

trafficking. in fiscal year 2011, fns reviewed over 15,000 stores, conducted nearly 5,000 undercover investigations, and sanctioned or punished 2,000 retailers. while usda has direct responsibility for overseeing snap retailers, our integrity work includes every aspect of snap administration. by overseeing and working closely with our partners, including state and local governments, usda strives to ensure that scarce taxpayer resources are managed with integrity and accountability. first, over the past decade, we have made major improvements in snap payment accuracy. over 98% of snap clients are eligible and accuracy in 2010 reached 96%, a historic high. 2010 errors were less than billions than they would have been under the 2000 year rate. second, usda also oversees and provides guidance to states

defined and hold accountable recipients who commit fraud. usda issued new policy to clarify the intent to sell benefits, for example, by offering a snap card on a social media start like craigs list can lead to disqualification. last year, i wrote to all of the nation's governors, individually, asking them to make snap integrity a priority. we've engaged the retailer community in this effort. i personally met with state commissioners around the country to enlist support with a greater focus on trafficking and increase partnership with law enforcement. to conclude, fraud is neither new nor stat tick while a vast majority follow the rules, bad actors also seek to exploit snap, but the program is too important, the taxpayer investment too great to tolerate fraud. as in cybersecurity, we have to be vigilant and continually update systems defined to fight

new fraud schemes. we'll continue to track down violaters, welcome the partner's constructive engagement in this effort. thank you very much. >> thank you. ms. fong. >> thank you, mr. chairman. thank you, mr. chairman, ranking membering cummings, and members of the committee. at the outset, i want to express my appreciation to you, mr. chairman, and to many of the distinguished members of this committee for your support of the federal ig community over the past several years. you have a noteworthy record of bipartisan support for ig contributions, and you've demonstrated time and again through legislation, hearings, and speeches, your interest in our work, and so on behalf of the entire community, i want to thank all of you for your support. today, you've invited me to testify about usda ig's work to protect the integrity of the snap program. to put this in context, the ig office at usda is responsible for providing oversight to all

usda programs, which currently number over 300. of course, snap is the largest program in the portfolio with over $70 billion, and it has drawn much of the attention over the past few years. in the last two years alone, we devoted half the resources to addressing snap fraud with measurable results. we currently have over 900 cases open and over 600 cases involve retailers in some way. my written statement provides example of the most significant cases involving disqualified retailers. i want to emphasize more than the cases that we do, that the core problems in this program are not new, namely, there's always people willing to commit fraud and to traffic and snap benefits even though the specific schemes, themself, may take different forms, and so we, as animal ig office, work on the

issues with fns, our partners, and state and local agencies for many years to address these issue, and i can assure you that we have cases going on now in the country, and the agents are continually adjusting their work to deal with new schemes that arise. let's bring to justice wrongdoers. they will not fix the problem. we have to focus efforts on looking at how retailers bypass the system that we put into place to control access to to try to figure out what can be done to improve the program for the future, and to this end, we issued several audits over the past few years with recommendations for corrective actions. we have been working with fns, our partners as usda to address these issues, and in particular, we recommend that retailer

applicants need to have clean backgrounds with no history of criminal or illegal activity. there needs to be a way to do that. we also believe usda should make better use of suspension and debarment appropriately to ensure disqualified retailers do not participate in government programs in the future. to conclude, we strongly believe that retailer integrity is a critical component of ensuring an effective snap program that delivers nutritious food to people who need it. in our experience, unscrupulous retailers are at the heart of most of the trafficking schemes that we have seen, and so we look forward to continuing our work with fns, state and local partners to address this fraud where it occurs and improve integrity of the very important program. thank you for your interest and look forward to addressing your questions. >> thank you, ms. hatcher. >> good morning, mr. chairman

and members of the committee. on behalf of the food marketing institute and the families served by the 25,000 stores operated by our members, i want to thank you for the opportunity to testify today. i'm jennifer hatcher, senior vice president for government and public affairs at fmi. for the past 13 years from the transition to paper food stamps to electrons benefits transferred to snap, i've worked on these issues. snap ebt is a positive example of a public-private partnership that works and that adds efficiency and reduces fraud for all stake holders in the program. soup market retailers are proud of the partnership with usda and state agencies to deliver safe, healthy, and affordable foods to customers in need of assistance. unfortunately, the number of customers in need is higher today than it's ever been. in large part due to the conversion to electronic delivery of benefits rather than paper food stamps, a significant

portion of the fraud has been removed from the system. many supermarkets remember vividly situations where paper food stamps were sold by criminals in front of the store. paper stamps provided anonymity for the perpetrator of the illegal transactions. ebt ties any fraudulent activity to a particular transaction, customer, and store location. this has taken the criminal element out of our store parking lots. electronic delivery has also provided state agencies with a better mechanism to compare transaction activity and look for duplication across state lines, particularly with states that share a common border. some states employed mathematicians to electronically identify potentially fraudulent patterns of sales. ebt also improved efficiency cutting down on potential for human clerical error. snap ebt transactions are protected by users' perm

disqualified dentification number, pin, so they are more secure than paper or even credit cards. fmi members take their responsibility as authorized food stores, delivery of the benefits very seriously. being an authorized snap retailer is part of the identity and reputation in their communities, which is very important for them to protect. after reviewing the scripts report and list of disqualified retailers, there were no fmi members on the list, and those who impugn the program should be removed. fighting fraud before it happens is critical, and i thought i'd share steps our supermarket members take to prevent front activity in their stores. first and most important is training. fmi member companies conduct on-site and off-site training for associateses -- associates and managers for those who conduct snap transactions. there's a manual on the website

we conduct on a daily basis for rules and regulations of the program. there's also a 25-page guide for retailers and 5-minute video in multiple languages to be utilized for these purposes. several of our members also set up their own internal audits to ensure they're in compliance and each transaction is in compliance. the vast majority of the members utilize computer systems that allow them to program via upc code eligible and ineligible food items and lock the point of sale purchase system should someone attempt to purchase ineligible items with snap benefits. fmi sen our members on a regular basis the names and contact information of the usda, fns regional office and state administrators for snap ebt. both fmi and our members make the fraud hotline number

available to the associates and managers through each of the training materials. there's one more issue that i feel i need to raise in the context of this hearing, and that is the extreme concentration of benefits issue in the first months of the states. there's the snap benefits across the entirety of the month rather than just on the first day could help accomplish and a reduction 234 fraud may be an additional positive result of this change. thank you for inviting fmi to share our thoughts on identifying and reducing fraud in the snap program. our industry is committed to ensuring a pleasant and efficient shopping experience for all of our customers and welcome the opportunity to work with the committee and department to improve additional efficiencies in the snap program. thank you. >> thank you. ms. faulkner. >> thank you, mr. chairman and members of government and

oversight reform. thank you for allowing me to address you with this opportunity to combat fraud in the supplemental nutritional assistance program or snap. it is important to provide health and human services, sufsz -- such as snap, and fraud takes limited resources away. as inspector general, it's the mission of my office to uncover fraud, waste, and abuse to hold individuals who committed fraud in the program accountable for actions and recover overpaid tax dollars. the office conducts a mission to combat snap fraud by operating simple programs within this bureau of fraud prevention on prosecution. these programs are the field investigation, fraud investigation, and snap trafficking programs.

these programs are operated in coordination with the pennsylvania department of public welfare that delivers this snap program. the office of inspector general's approach to combating fraud begins with the application of snap benefits. dpw refers an application or re-application for snap benefits and suspects fraud or receives inconsistent or incomplete information, it refers the applications to my office, the office of inspector general. the oig investigates all applicants' circumstances and provides dpw with the findings. based on the findings, dpw may deny or approve benefits. this process exists for active recipients of snap benefits where dpw is aware of circumstances in ongoing cases. this approach to combating snap fraud before benefits are authorized or investigating

ongoing cases to ensure only those entitled to benefits are actually receiving them is a critical function of my office. .. office. as a best business practice we have greater efficiencies in denying or reducing men correctly authorize benefits versus attempting to collect overpayment benefits. in fiscal year 2010, 2011 the oig conducted approximately 22,308 field investigations where s.n.a.p. benefits were involved. that cost the taxpayer supported based on the oig investigations were either denied, closed or reduced, was a little over $19 million. not all fraud however can be prevented by the oig field investigation program. when dpw becomes aware of such circumstances which affect its recipients to pass the benefits it will calculate an overpayment of s.n.a.p. benefits them or for that overpayment to my office

the oig for investigation. the oig in its fraud investigation program conducts investigation on overpaid s.n.a.p. out of it and determines if the overpayment was due to willful intent to defraud the program. investigations where the oig is able to substantiate their fraud occurred either criminally prosecuted or adjudicated there an administrative hearing. court findings of it tension all findings include orders to fully repay restitution to the commonwealth or carry the program disqualification for the defendant. the oig follows federal regulations and the progressive disqualification penalties for intentional violations with a first violation carrying a 12 month disqualification period. in the fiscal year 2010/2011 for s.n.a.p. overpayment claims the oig conducted approximately 3335 investigations which involves s.n.a.p. involve s.n.a.p. benefits. the oig filed 613 criminal complaints for a total restitution of a little over

$1.4 million. the oig disqualified 820 and the result of criminal charges which resulted in a little over $1.6 million in cost savings from preventing further program participation. the oig filed 180 administrative hearings with a total restitution amount of $322,000.463. the oig disqualified 172 defendants as a result of civil proceedings which resulted in approximately $496,000 in cost savings from preventing further participation which includes figures from s.n.a.p. trafficking programs. in addition to efforts to combat s.n.a.p. fraud at the application stage we will -- the oig focuses on fraud occurring through recipients who sell or change s.n.a.p. benefits to negotiate them into cash services, credit or anything other than food. the practice of s.n.a.p. trafficking is actively pursued

and has been done so for many years in pennsylvania. to maintain the integrity of s.n.a.p. and by ensuring the credibility of the vendors and recipients. the oig operates a small but dedicated unit to operate at s.n.a.p. trafficking program and works integrally with the usda and the nutrition service. the usda and the inspector general local district attorneys who identify store owners engaging in s.n.a.p. trafficking. this active participation between the usda and oig is the chief reason why pennsylvania has success in targeting s.n.a.p. trafficking. the usda is responsible for disqualifying individual store owners and filing criminal charges against them. as you know it takes the active participation of the recipient of s.n.a.p. benefits for s.n.a.p. trafficking to occur. the oig's responsibility in partnership with the usda is to actively pursue trafficking and hold them accounting old for

their actions including criminal prosecution obtaining the payment of illegal transacted benefits and disqualification from the program. >> thank you. i will now recognize myself for five minutes. ms. faulkner a lot of what you're talking about of course are people who receive the benefit and abuse it. that presents -- represents a large part of the states role, is to make sure, we still use the food stamps but the stat program funds get to the ultimate recipient, which is usually family members. is that correct? now, in your enforcement, the fact that these are basically credit cards that are digitally monitored and that you can track, that has dramatically made your job more accurate, hasn't it been the old days of paper? i'm sorry, your microphone?

>> yes, it has. >> well, that begs the question i think well, ms. hatcher i have been at the grocery store when i've seen the exclusion of unauthorized material where it every grocery store i have gone to has the software where they simply say yes that's fine, you have just credited $35 you still owe a $6.50 for the cigarettes or whatever. that's great. to 100% of your members have that and if not, why not? >> 100% of our members that have electronic point-of-sale would have some of the ability to download that and we are increasing that number. i would have to get back with you on the exact percentage of stores but it's over 90%. >> that's excellent. mr. concannon every grocery store i go to these days is electronic. not every liquor store i go to his electronic. one of the basic questions is if you cannot reduce fraud to an

acceptable level to make your ig happy if you will, is it that important at every liquor store and i used the term liquor store very specifically because some times people want to call them convenience stores but we all know as the ratio gets close to your minimum food to cigarettes and alcohol, your fraud level goes up, no question at all and well understood. is that one of the areas in which the tests must be higher in the tolerance for any slippage must be lower? >> i appreciate the question mr. chair, and to the point you make, stores by federal requirement must provide a certain number of foods in the food group and is what we refer to as the depth of stock requirements. i'm very interested and i know secretary vilsack is as welcome in increasing the application on stores that have more food than

those minimums that currently needed. for stores that they're really their religious is in selling tobacco or selling alcohol. you can't buy that with your s.n.a.p. card but it's encouraging people to come into those locations. >> i appreciate that. in your op-ed which i would ask unanimous consent be placed in the record. without objection. in your statement, quite frankly give a fairly rosy picture in the case of your comments on scripps howard. was a little bit like the ranking member thanking us for the hearing and then saying we want to starve the children implication and everything republicans do in the budget. scripps howard exposed at least in some cases fraud that you were not aware of. is that correct? >> yes they did in a very small number of cases i want to correct the record because scripps mistakenly made the notion -- >> i appreciate and you said that in your op-ed in their

opening statement. >> my time is limited and you are invited here because we are concerned and we really don't want to have our whistleblower bashed even if there was 1% accuracy and there appears to be far more than 1% accuracy. here is the question i have for you and it's the only question i'm going to make today and i think ms. fong will particularly appreciate it. the rest of government uses permanent exclusion and department fairly aggressively. it's not an easy task but it guarantees that those who have cheated the american people as vendors are not just removed for a period of time from your program but in fact are removed from eligibility governmentwide. why do you not use a broadly and will you begin using department or do you believe you don't have the authority to? >> there are many compelling reasons why we do not currently

use it. we are able to take stores. we have taken stores out this very weak for simply trafficking or misleading us in their application, falsification. we don't have to hold hearings. we give stores 10 days to respond to us and we take them out. if we use department we have to go through a hole the hold extended hearing process. when we take the stores out, most of the stores we are talking about her small stores. they rarely interact with other parts of government. they don't have pharmacies. they are not stores, government does not buy as a reference.. it's far more efficient for us to do this and i will say this. we have completed requirements the requirements with the general services administration to allow agencies, our agencies could, to filing excluded parties listing which means once the company is on that list they can't do business with any part of federal government.

this is a more efficient way to do it in the meantime we can take that out. >> ms. vaughn, my time is expired but it looks like you have a partial answer beyond that. >> thank you. we feel very strongly that usda is a whole needs to do a better job with does debarment. we believe there may be room to work with fns to really get the best possible system in place and i think excluded parties, program disqualification and disbarment are necessary remedies to look at and i feel strongly about that. >> thank you. the ranking member is recognized for five minutes. >> thank you very much mr. chairman. let me make it very clear that there -- if there is one dime of money that is not going where it is supposed to go, there is nobody i think in this room and particularly not on the side of the aisle or the other that would stand for that. i want a higher standard than the 1%. i won zero. at the same time though i want

to make sure we get balance in this whole process so we have taken $127 billion out of the program. we want to make sure that people who need the program have an opportunity to get the funds that they need. now, mr. secretary concannon i want to thank you for your testimony and again going back to what i just said, the house republicans have cut $127 billion out of this program. that means that they would eliminated food assistance to some 8 million people according to the center on budget and policies. mr. concannon, according to your agency state and nearly half of the s.n.a.p. and the fisheries are under the age of 18. is that right? >> correct. >> i want to go back for a moment to something that they chairman, he didn't give you a chance to answer it but i think i know what you're trying to get

to. sometimes you will have a store that has been debarred. this goes with the owner, is that right? >> that is correct. see when i was practicing law, somebody would say for example had a liquor license and they were a bad actor. they have been thrown out or sold or whatever, then the new person comes in and it's like a new situation. is that right? >> correct. >> some of the scripps article was about folks who had been taken out, but then the store was owned by somebody else and then they came into a new situation. is that correct? >> some of those are points of reference suggesting that the location and the owner were one in the and the same when they came back in. 231,000 locations in the united states on the rise. the majority of them are small stores and that can invariably

lead to where the -- we have taken out permanently some 8300 stores over a ten-year period and in just over 1200 locations of that 8300, different owners came and are operating the program. so it's not the same as saying that same person came back but in fairness to scripps howard they found a small number and that had slipped back into the program by falsifying their applications. we have stressed on the basis of working just in the past two months, stressed the requirements for a variety of vetted pieces of information that will assure us that there is no connection whatsoever to a prior owner. >> now, you know, let me give you some interesting information. my good friend senator demint

down in south carolina introduced legislation to cut that benefits provided under the recovery act. the pennsylvania governor, tom corbett, announced a plan to disqualify anyone under age 60 who has more than $2000 in savings, which would prevent families from working toward self-sufficiency. the mayor of philadelphia calls his proposal this proposal and i quote, one of the most mean-spirited and asinine proposal to come out of harrisburg in decades. other states have pursued similar proposals. in georgia bill was introduced to require beneficiaries to obtain mandatory quote, personal growth end of quote activities. mr. concannon, do you know what these personal growth activities are and do you know how they would be implemented on a national level or a state-level? >> i am familiar with that. i have seen references to that in the media but i'm unfamiliar with the specifics of the bill.

>> now we all know that there will be -- and we all agree that we need to be vigilant to prevent fraud. in all of these cases, according to your data fraud in this program has been going down, not up. is that right? >> that is correct. >> do you concur with that, that it has been going down? >> we have not personally assess those studies and we plan to do work on that. >> now mr. concannon, they have drug to an all-time low record of less than one person, is that right? >> correct. >> i have about a minute and a half longer but -- >> we have been working very closely with states across the country both to reduce what is called the improper payment level meaning individuals get more than they showed her less than they should. that is less than 4%.

it was traditionally an 8% number and the case of trafficking as mentioned earlier by the chair in the air -- error of paper coupons, electronic benefits card has considerably brought that down. .. i think that this is one thing that we can agree on both sides of the aisle. we don't want to see hungry children. we don't want to see hungry people. but in a country that is fortunate to share and helpate e these people and it isn'tress is fortunate here in congress is so common for democrats andts and r

republicans to make accusations against one another when bristly we agree on all these programs designed to help people who wanh to siti very best we can to make sure those in need are the ones getting the help. can do the vee can to make sure that not a single gallery is taken away from those in need, then we can get a lot further than arguing and making accusation. i know that's the case in medicare, it's the case and medicaid, it's social security, disability. so often one side accuses the other countries over the top. oftentimes that's for political reasons, and these are not democrats issues or republican issues. these are people issues. so again i appreciate you being here today. ms. fong, if we're going to try to do the very best, whether it's 1%, 5%, a half percent, when you do find what the problems are and how to solve them.

can you tell you what is the most typical kind of fraud that you see in the food stamp program? >> well, we have a number of schemes that we see. most of them focus on trafficking, which is a situation where the recipient goes to a retailer and tries to cash in the cards for money, in which case both parties come away feeling that they've gotten a good bargain. there are numbers of ways this happens. we've seen different schemes over the years where retailers and recipients get very creative about shopping the card, as it were. >> does the people of illegally traffic food stands, to the people -- to be seen to be people that also tried to commit fraud and other government assistant pro grams like section eight or housing? >> i don't think you have data on the. although on occasion we do joint investigations such as hhs which

manages the medicaid medicare probe ram, and sometimes they will be recipients who are involved in all of those programs. >> how much money could a store owner who trafficked in food stamps likely make, illegally? >> well, i think you would want to look at sort of a per benefit basis. it can range. there are some very small retailers who, in the context of their business, will make thousands of dollars. there may be other larger retailers or smaller ones who engage in multiple transactions who can benefit by hundreds of thousands of dollars, or even millions. and some of our investigative results will show restitution sentences that can range from hundreds of thousands to millions. >> okay. just so we kind of know if there's a citizen watchdogs and people out there that are looking for this type of problem, can you give us an example of the most elaborate scam involving store owners that your office has investigated?

>> well, i think we certainly have a number of cases going on. most recently we've seen situations where there have been runners employed who will take cards from recipients and take them too many different retailers and swipe those cards to get benefits, and there will be maybe a group of retailers who work together to do this. that there's very some complicated schemes there. >> ms. faulkner, you probably also have seen this type of thing, and could you share maybe what one of the most egregious fraud cases that you're aware of? and then when that happens do you think we see children deprived when their guardians engage in s.n.a.p. from? >> i think anytime there strong children are involved, especially when it's this that program. i think in a program such as s.n.a.p., a recipient look at the restaurant or a bar, and

this is not a place where they would accept cards, but do go there in the restaurant or bar would go to a grocery store to buy say $200,000 worth of groceries, and then, for the bar restaurant, and then they would give the recipient have, 75%, you know, something off of the ebt card. and really it cuts out. you never really see the bar, restaurant transaction. what you see is the recipient using the buy $200 worth of groceries at this particular grocery store. that's a little hard to track, and being stricter on the retailers will help this problem. because you cut out that restaurant that is being used to get the money. so we see that in pennsylvania sometimes. >> i see my time has expired, but thank you all for what you do to make sure that those people in need get the food that they need. i yield back.

>> the chair thanks the children from tennessee and recognizes the gentlelady from california, ms. speier? >> thank you, mr. chairman. i want to compliment the chair of this committee in recognizing the important function we have to look at government programs and evaluate the fraud. having said that, i want to compliment everyone on the panel. i mean, i think you have a 98% grade, and in 98% grade is something we should be applauding. a 1% fraud rate is just remarkable, and i'm very impressed by what you're doing. here's my question. are we spending more with the budget for fraud detection and the id then we are generating in restitution or repayments? >> i will be happy to comment on that. i will say that our budget in

the i.t.'s office is around $85 million a year, and we bring in, on average, 14 or $15 for every dollar that is brought to us. >> so your valuable in what you're doing. here is my concern. has been a recommendation i think by the i.t. that you review retailer applications for criminal records. makes a lot of sense. why aren't you doing it? >> thank you very much. we have received a recommendation that we rely on something called the ncic, the national crime information center, data. i was a former state director, and i used that system through the state police in the states that i was in. one has to be a law enforcement agency in order to access those data. we can't do it as the fns. the oig if it had the resources, he could possibly do so. we are not allowed to.

you have to be a law enforcement agency to get into that. >> i understand what you're saying, undersecretary. so this is too general fall, how would you suggest we review the criminal records been? what do we need to do in order to acknowledge that? give us enough bang for the buck if we invest in doing that, will we save a significant amount so that it would be worth our while to do with? >> that's a very complicated question, and the undersecretary is right. we have been back and forth on this issue as to the best way to get criminal background information. i think right now the application form has been revised to require certification underpinning of criminal prosecution. i think that's a very good move. i think we can continue our discussions on this. right now we do have the authority of the ig's office to run these kinds of ncic checks for programs purpose. so we will need to do some further consultation.

>> well, you know, we're able i know in california to do background checks for childcare providers. so i can't believe that the federal government, as talented as it is, cannot find a way to create a means by which this background check can take place. so why would encourage the committee to pursue this and find a way to achieve that. the other issue that i wanted to draw attention to was this issue of suspension and debarment. i understand it, there were 615 wholesalers and retailers convicted, but none of them have been suspended or debarred. the rationale for not doing this is it is costly. know, democracy is costly. i don't think we can use the argument that it is costly. if we have evidence of convictions, and these retailers have violated the laws and we

don't debar them, then shame on us. anyone want to respond to that? >> i can try to answer that. the preamble to the new departmental regulations under department excludes the s.n.a.p. and wic program transaction because the statutory language that provides a comprehensive statutory disqualifications. in everyday english, let me say that we rely upon our taking owners of stores and corporate groups out of the program. and as i mentioned earlier in my testimony, we have been negotiated with the general services administration to have these folks listed on a listing that they operate where people who are permanently barred from doing work with the government, they cannot, they will not be listed on this list that goes to all federal agencies. so in our view, it would achieve what debarment is intended to but it while i'll us to take them out without extended due

process hearings that drag this out on and on, and allow people to stay in the program during that time. >> all right, my time is expired. thank you, mr. chairman. >> the chair when i recognize the gentleman from pennsylvania, former united states attorney, mr. meehan. >> thank you, mr. chairman. use it well in that seat. -- you sit well in that seat. i'm very appreciative for the work you did. and i want to attach myself to the comments of mr. desjarlais hurler in our shared interest. first and most importantly in delivering these services appropriate to those most in need. such a state where able to effectively root out the fraud where it's available for the purposes. ms. faulkner, i noticed there was some testimony, i did want to correct the record to the best of my understanding. there was some testimony today

about the pennsylvania administrations guidelines with regard to points at which there would be determination of eligibility, and i know that the was an original proposal. but to the best of my understanding there was also some collaboration on the part of the governor's office, and that they've made a significant change with regard to the guideline so that it's far more realistic in terms of -- is that acted? >> yes, but i would like to say you've been referring -- it was always in place in pennsylvania 2008 but the asset test apples and oranges. we're talking a fraud and the acid test is something different. but yes the government reinstated and it will increase the threshold for $9000, and a 5500. so it has been increased. it was always in place. and really it is apples and oranges from fraud to what we're talking about here today. >> i just want to make sure that was correct. i want to express my deep

appreciation in very short time you've really developed quite a reputation for the very good work that you doing in office, and i'm particularly interested in the work that relates to this concept, between eight and 15% of the fraud is associate with trafficking. it would seem to me this is a choke point that we be able to work on. now, is there some things that you do that you see characteristics that take place when there is trafficking to help you identify those that may be the most suspect of? >> what we've been doing in pennsylvania is we have a dedicated union. we have fraud and we have, we have a whiskey which is really just beginning to focus on s.n.a.p. and what we find in pennsylvania is that that has been growing. the fraud hasn't been reducing. so we have worked with federal and local vas offices to try to reduce what's going on with the retailers and the recipient. and what we find is that once the federal government

determines who these stores are, we then come and tell them who the recipients are in order to close the loop because the recipient is the one who really starts the ball rolling in this. >> it would seem to suggest, here's an increase then that's sort contrary to some of the important progress that we've been able to make to the electronic process. but you have given testimony right now about, earlier, that creative criminals can always find ways around a system. so are you looking for patterns and other kind of things that help us get to those? i'm particularly interested in the retailers because they are the ones that are facilitating the ability. >> one of the things we did notice, with realtors is that they would have a whole dollar amounts. go to the store and see hundred dollars use. we do follow that.

people go to the same stores all the time. those are just indicators. we look at those things to see if trafficking is occurring there, and we have like i said a small unit in the office right now, a supervisor and three people working on this entirely. we're hoping to expand it more. that's what we see in pennsylvania, but there is a need to investigate this more. i can't talk about federal government or others but in pennsylvania we see a need -- >> do stage work with other states so while you're looking at patterns within your own state, are you able to ship with new jersey or delaware or maryland in any way to determine whether you are matching your efforts to see if there's patterns that exist along some of the same individuals of? >> i think the concern is i did reach out to new jersey. they handle their s.n.a.p. a different. every state is different, so while i have personally done some reaching out, i have not

been able to connect in sort of determining whether there are patterns in states. >> thank you, and they just come as a former prosecutor, i am sort of quite surprised by the concept that we are not able to take very simple information that's contained in the ncic, one of the fundamental databases that we use oftentimes. i would really appreciate the work of you -- a few individuals to help us identify what we can do. i would be delighted to work with the generally from california to assist you in this effort, if we can facilitate the basis to do what seems like a very common sense thing, i would ask your assistance in following up, submitting to us whatever recommendations you have that would make it easier. and i want to get applaud the work of each of you for the efforts that you do. thank you. >> i think the former distinguished u.s. attorney from pennsylvania, mr. meehan, and i

would recognize the gentleman from new york, mr. towns. >> thank you very much, mr. chairman. let me begin with you, mr. concannon. can you explain to me what kind of quality control system the staff program uses to ensure that only people are truly eligible for s.n.a.p. are actually receiving it? what do you have in place to detect it? >> thank you very much. as was mentioned at the outset, iowa state health and human services director for 25 years in three states, and of all of the federal and state benefit programs that are administered, the food nutrition service, long preceding my time here, put the particular emphasis on what is referred to as a quality control area, many people need to be eligible for the programs so they have to demonstrate in fact their eligibility by virtue of pay stubs or other sources of information. they also have, we have to make

sure that when i present myself, i am who i say i am. and that qc program, that error rate has gone from historically up in the eight to 9% range down to below 4%. and that has been achieved by encouraging states to use multiple databases. so for example, in the states that i worked in, when somebody would come in and apply, mr. concannon would check against the labor department, check against irs, we could check against child support program list for new hires. every state has to maintain social security has something called the social security list. the u.s. department, health and human services has another list. the acronym of which is terrorists. now some 47 states rely on that database alone. back in 2000, only 16 states use a. the office of inspector general

among others has urged us to make sure that states make use of these particular databases. so there's a variety of ways to osha work, one, i envoy and and that when a report my income, it is that which is truly income that is coming into my household. >> how does the s.n.a.p. error rate compared to other federal programs? >> i believe, i have a really tracked them lately but i can tell you i think it is one of the best among federal state benefit programs. and i know that at a state level, governors offices i know this very directly pay careful attention when they qc error rate is made known to each state. we do this individually. we punish the states that fall below certain minimums around qc in rates, and we reward states who do an outstanding job in that regard. >> let me ask you, ms. fong, i think it was you that mentioned the amount of indictments, i

think. my question to you would be what is the conviction rate? you know, sometimes we read about indictments, and that's all we hear. sometimes people get all excited because there's an indictment but there's no conviction. so what is your conviction rate? >> i'll be happy to provide that for the record, but my right election of the data is that we have a very high conviction rate. it's a significant percentage of our indictments. >> the reason i raise this question, sort of thing in terms of the question that the gentlewoman from california race in terms of your budget versus the amount of money that you bring them. because i wish is winning about that of peace in terms of which is not a part of your budget, that would also be a certain amount. i'm not sure just how much so i was just sort of looking to see in terms of the profit involved here, you know, based on your budget, based on the amount that you actually are retreating.

>> i am retrieving some data here. just to give a general sense of it, in the last few years, our monetary results at s.n.a.p. alone have been almost $30 million. i think i should just make sure that i provide that for the record, but our conviction rate is close to 50%. >> all right. and the reason i ask this, i don't do this committee as one of those gadget committees. i feel it's a committee that is working to save the government money and to make certain that people that are supposed to get service, that they get service. and that we have an obligation on this side of the aisle to work with you to try to make certain that that happens. i want you don't that's my recent been on the select for 30 years. that's my purpose. my purpose never change. thank you, mr. chairman. >> real quick. mr. concannon, you said you punish the folks who have bad

error rate. how do you punish things speak was we punish them by return recover, we can penalize them financially. we send them letters, warning letters saying basically following below a certain threshold. our goal is to get that error rate down so that we provide technical assistance and training but we put them on notice. over a period of five or so years, i think we've sanctioned some 17 states. i'll make sure i verify that, but that's what i recall. i know we take, again, it can be a financial penalty. we did a attention to the performance of states because we know it affects the very consumers that members have been asking about here this morning. >> thank the gentleman. win this committee was looking at medicare, medicaid fraud iced distinctly remember the hearing. because there was outrage, appropriate outrage that the

entities that it engaged in the fraud were still doing business with the government. i thank the gentleman to my right expressed a very appropriate outrage. so my question, ms. fong, is the same as mr. cummings was then. when you have reset it is, repeat offenders, what do we need to change about the department process so that that is the default instead of disqualification? because of disqualification is an insufficient penalty to me for reset it is offenders. >> i believe that the government suspension and debarment process is an effective process. and usda has implemented regulations, and as a whole the department could do a better job of implementing that. i think that there are concerned as the under-secretary has expressed about timeliness and length of time. i think we need to engage in those discussions because my understanding is that he get that somebody convicted a

criminal felony, that disqualification, while it may be incentive, vis-à-vis the food stamp program, it's not really as effective for other government programs. and if you got a criminal conviction is should be a pretty quick process. because conviction in and of itself is sufficient evidence to proceed. and so it should not take a long time to do this, maybe a month or two months. >> let me say this. i distinctly remember spending four days in a courtroom prosecuting a lady for disturbing a school. and i spent three days in a courtroom prosecuting someone for throwing an ice tea cup add a dea agent. so resources and time should not be the only barometer by which we decide whether a case should be prosecuted or not, or else we would never prosecute any crimes. so whatever needs to be changed in the process, i hope you will give all of us that have expressed an interest in it a

list so we can put a little more teeth into the punishment when people systemically a fraud that government. i want to move to the gentleman from california about in cic. ncic has arrests that don't result in convictions. it is other information that law enforcement may have an interest in seeing. but they're not convictions. but the remedy is very easy because schools do it in churches do at attend afterschool programs do it. just have one ncic trained operator on site, and then reject the non-convictions. the notion that we can do background checks on people who want to do business with the government, people do them all the time. for schools, churches, everyone does it. redacting information, go to a

law enforcement agency that does track convictions, go to the clerk of courts office, there's a way to get that information other than ncic. and is a need an exception to ncic, for government agencies that are looking at fraud, i can't speak for the gentleman from maryland but i will be happy. to do that, and adobe law enforcement would resist it one bit. ms. fong, you mentioned a 50% conviction rate. i would have been run out of office if i had a 50% conviction rate, and i don't think mr. cummings would have been hired as often if he had one. that strikes me as a low conviction rate. is it because you're negotiating a civil punishment instead of a criminal punishment? does the statute needs to be changed? what needs to be done so we don't swing and miss half the time? >> let me take a look at that

data, because i want to make sure that i get to the right percentage, and i will provide that for the record. and when we do that we will also provide you with our insights on the. >> all right. and my final question for you is this. if i wrote the numbers down by, you said there are 900 cases, 600 of which are gives retailers. i think your energies and efforts should be directed towards retailers, what not to the total exclusion of individuals who are providing a market, if you will, for this kind of fraud. so what do your numbers look like on prosecuting individuals who either sell their cards for cash, or otherwise engage in fraudulent activity? >> let me just generally address the approach that we take on law-enforcement. we focus our efforts on the retailers, he goes when we go to the u.s. attorneys offices for federal prosecutions, they have

certain thresholds for prosecution which involve dollar amounts, et cetera. and so the dollar amounts tend to be on the retailers decide which is much higher. when it appears there are recipients involves as there usually are, we partner with the states, the state prosecutors, because those tend to be violations of state and local laws. and so are most effective approaches are when we do joint work, where we take the retailers to the federal prosecutors, the state prosecutors worked on of the individual recipients and we can approach all of those as a global kind of approached. >> that sounds like a perfect match but if you're going to need witnesses against the retailers and sometimes the recipients make very good witnesses. with that the gentleman from massachusetts. >> thank you very much, mr. chairman. this is exactly the type of oversight we need to be doing up rogue rounds. if we're going to programs were everybody agrees we need to reduce hunger and we agree that

fraud can't be allowed, have the public support behind, this is a good thing for this committee to be doing on that basis. in my district, we have a lot of tremendous groups working very, very hard to try to reduce hunger. we've seen a 40% increase in people accessing kitchens, soup kitchens and pantries with the economy the way it is. it's been very, very difficult for them. massachusetts is the only state on the web as a line item for this type of issue under the mask emergency food assistance program. so all of my folks, 20% cut s.n.a.p. program, it's panic. they want to make sure that fraud isn't an issue as well but they want to make sure that they have the resources to want to hear the note of 4% down to as low as 1% on fraud, 20% cut in the budget, i understand why they're looking that way. you know, we have about 15,000 people in our district that benefit from these programs. i guess 35% of them have a

household member over 60. 41 plus person like have a house member under 18. we're talking seniors and children. so it's important we get this right. julie fontaine who does art open door program, they serve about 5400 families. about 2200 families on that, but do we have bootstraps, a lot of people working very hard on the. we need to know that we're focusing, and this is a situation we have to do. but i do make the know, you know, this committee has a broader portfolio on the subcommittee which i sit. we've been looking at contracts in afghanistan and i just noted on food service, a subcommittee chairmen to have a hearing on the. we just reason a situation where the defense logistics agency thought that they were overpaying the food is triggered in afghanistan $787 million have asked for the money back. that a serious, serious money. i'm impressed, mr. concannon, that you will continue work on this and your numbers are

getting a debit we need to do it right across the board on that because we can't allow it to happen. folks here, what i'm hearing is you think you have got and well below 4%, maybe as low as 1%, is that correct? and you are trying to get all the new permutations of the people -- do have a new website? >> we have a new website. later this spring we will be promulgated regulations that have increased the financial penalties when a source taken out of the program and it is sold to a new owner. i have been interested in increasing the financial penalties so people don't use it well, it was the cost of doing business, i'll flip the store. so we continue to add layers. >> how did you attack than? >> we have notified, that's the inspector general was talk about new types of fraud. that's an example. we've had several examples that way. recently, and we have written craigslist comes on the other social media sites, but we have

also amended our regulations. so even a simple intent, the express intent to sell your benefits constitute a violation. we consider that trafficking. you'll be out of the program. >> you try to increase some of the fines, things of that major? >> we have indeed. we have strengthened against requirements and to look for in a variety of, for example, tax. these are particularly from stores to the earlier comments that were made, on looking for additional corroborating information beyond what we have traditionally sought. and especially so in locations where we have had prior issues. these kind of issues of trafficking tend to congregate in the same locations. so we want those spots get moved up on our high-risk profiles. but we also want to make sure that we are exhausting every of able source of information to us. >> on the debarment issue, that

contract in afghanistan those overcharge $787 million, he is still operate on a single source contractor didn't have to compete for the contract and they're still in business so i know you're efforts of deporting people is important to this committee. and moving put on that i hope that you do perceive it but i'm hearing from pat baker does our mass lottery from secured in a very good job, and they're adamant to work with you on that. but people are clever and they keep coming up with different ways. one of the ones they've noticed recently, they're finding some women who are supporting their children on this are being threatened. sometimes even physically attacked by people to get them to turn over the electronic card. are you addressing that issue at all? >> that would be the kind of incident where we have a number of partnerships with what we call state law enforcement bureaus as well. and we would have wanted to know

about that because that absolutely is the worst kind of extortion. so we would want to work closely as inspector general faulkner mention. we work very closely with state agencies and a variety of things, but that would be horrific. would be happy to pursue that. >> thank you all. i think it's important work that you are there. thank you, mrthank you, mr. cha. >> i thank the gentleman from massachusetts. i apologize to the gentleman from virginia and texas. i got the order out of whack so i will now recognize the gentleman from virginia as i should have, and then the gentleman from texas. >> mr. chairman, thank you. no need for apologies. i know the pressure sitting in that chair. but you're always gracious and i thank you. mr. concannon, i'm old enough to remember some groundbreaking books, like let there be promises, and the other america.

and a groundbreaking work done by dennis its congress, especially by then senator george mcgovern, bipartisan basin within senator bob dole. to establish a food stamp program to address a pervasive problem of hunger and meditation in the united states. has the food stamp program in fact successfully address hunger and meditation in the trainings because i believe the food stamp program has been one of the most effective first line efforts to reduce hunger in the country. and it also has reduced poverty. we know even the census bureau in the last year pointed out that last year alone, 4 million additional americans would have sunk below the poverty line, absent the food stamp program. as has been mentioned here today, almost half, 47%, of beneficiaries of food stamps our children, another 8% our senior citizens over 60.

about 20% of households have a person with disabilities. and increasingly these days, the foods that program and serving households in which 41% of the household members live in a household where one of the adults is arne, that is, is in the work force. and i refer to that group of beneficiaries as in often many faces of s.n.a.p. these are folks who have been displaced in this difficult economy. they may not be getting as many hours at their work comes so it is really important that the s.n.a.p. program be responsive. across the country s.n.a.p. is now serving 72% of the eligibles in the country. and that reflects, that has been moving upwards from in the mid '50s, then the mid '60s, now 72%. we are serving more than 90% of the eligible children across the country. there are few states that are still far below the rest of the country that we continue to dialogue with and work closely

with. but the program really is responding, as they should, to the needs of folks in this country, is the most inclusive of both state and federal feeding programs. >> so if i understand your testimony, in the 40 push yourself we started this program it has in fact achieved its desired results in reducing hunger, malnutrition in rural and parts of urban america as well as reducing the poverty rate in the united states? >> yes, indeed. there's a measure the federal government use that we publish reports on annually, food insecurity. we have data that points to the impacts of the food stamp program as it is still known, about 20 -- >> what percentage of food stamp recipients are children? >> 47%. >> and that translates into how many people? >> there are 46 million people, so in round figures --

>> million children. it's too bad the tide of this hearing is food stamp fraud as a business model. usda struggle to police store owners but it seems to suggest or one could infer from that title that we've already prejudge the case, apparently fraud is rampant to a kind of begs the question on the purpose and original mission of this program, and was it in fact has achieved that mission or some fraud that has to be stamped out not withstanding. but let me ask you a question. given the title what percentage of s.n.a.p. funds were improperly issued last year? this committee, subcommittee i sit on has looked at improper payments. what percentage of the federal program has been classified as improper payments to? >> last year we achieved record low. we instead, i should point out we were closer, all of our benefits are extended through states, and we achieved an improper payment rate of

three-point 81% to about 3% of that was overpayments, and just under 1% of that was under payments, meaning the beneficiary based on his or her income or household income, 3% of them received more than they should have. less than 1% received less. this is part of our quality control effort. >> mr. chairman, your pitch hitter as chairman offered to give me one extra minute, i think. >> he is so much kinder than i would be. >> i lucked out, mr. chairman, batch right. so i would ask the chair to honor that request. 3.8% roughly of improper payments. to all of that was not fraud? >> correct. >> what percentage of fraud against the rest of fraud figure we have is 1% stake have we reduced over the last decade? >> that is one of the charts i think we handed out. we have reduced it considerably

over the past decade, and continue to focus on it as well as reducing fraud in the program. >> so it's good that this committee is having this hearing to absolute highlight there are still problems. we have to get, agriculture always be to get dizzy or. but let's not overstate the problems and let's not lose sight of the mission. especially at budget time when some people might be thinking of $100 billion cut in the program. ms. fong, you mentioned to us that you still think that mr. concannon's operation still do a better job of department and suspension, corrects? >> that's correct. >> mr. concannon, could you address that come in my final question? >> as i speak in your second overrun minute. go ahead, please. >> i mentioned earlier that we believe that the approach that we take of moving people out of the program immediately is a more effective way, and two, most of the beneficiaries, stores i should say that we're

concerned with, don't do other business with the federal government. but even to cover that, we have been working with the general service administration to have these stores or companies put on the excluded parties list system, which will prevent them from being able to participate with other governments, government programs but we're also, we continue that dialogue with the office of the attorney general to see if there are ways we can do both. our desire, we will have an aversion to the debarment process. it's that it slows it down. and we like the authority we have right now. when we find that a store has misled us about their business relationships, or being debarred before, we can take them out of the program. we send them a letter, given 10 days, they are out. i don't have to give them more hearings. i don't have to give them due process. they are gone. >> mr. chairman, i thank you for your consideration.

>> because i know he wants full disclosure, ms. faulkner, i think of something to say on those questions, to. >> i wanted to talk about what my s.n.a.p. trafficking program has done in the fiscal year 2010-2011. we conducted 584, just s.n.a.p. traffic investigations. we scheduled 150 administrators with its recitation back of over $250,000. we disqualified 77 recipient of s.n.a.p. benefits. which really gave us a cost savings of close to $500,000. and that's with the limited staff we have. so in pennsylvania as i stated earlier, we are seeing more fraud. we are. and that we have little staff, hope to get a little more. that was our 2010-2011 a loan. we don't expect it to go down.

>> i know ms. fong has previously said that you don't necessarily concur with those figures independently at this point. and i would only ask since the secretary said that they're going to redo them again, i would hope that we could expect them to be mutually agree to biometrics that then you could essentially concur with. >> yes, we have some work planned for this year to take a look at methodology and those numbers. >> thank you. we not go to the gentleman from texas. >> thank you, mr. chairman. and i'd like to do with something that i hear about from my constituents, and that is the stretching of action items that qualify under the program. for instance, i received a photograph from a constituent of a sign outside of a place that prepares pizzas to order. they just don't cook them. so apparently it qualifies under the letter of the law, certainly i u