but another topic today is lessons unlearned. we've talked quite a bit about cycles in other people's speeches and how organizations learn lessons and then unlearn them. i think this particular model can be applied a little bit to what we've got going on today. and that is our prime way to get to and from the international space station is the russian soyuz, okay? now, you have to realize that this cycle is going on in russia too, all right? and there have been signs that they've been on the nasty side of that cycle for a while. they did a lot of cuts, and then suddenly they've got to put a lot more soyuzes into space, and they don't have a back-up option. you know, when shuttle needed to be grounded while we were working through the technical part of sts-107, we had soyuz to take crews back and forth to

station. if we have to shut down soyuz, we're not going to have anything for quite, you know, another five years or so, four or five years. and that puts extra pressure on them to keep their vehicles flying. maybe even when they shouldn't. so it's something for us to be really sensitive to. we need to be supportive of them. and we need to work, i think, as hard as we can to get our alternative vehicle going as quickly as we can to be good partners with the russians. and that's all i've got. it's time for pam to talk about the crew survivability study. [background sounds] >> okay. i'm actually going to talk about a couple different things as they progressed, and can as they say, where you stand on

something is usually where you sit. so where did i sit? at the time of the mishap, i was also in florida. i was the caped crusader, the lead caped crusader that recovers the crew members. so i was waiting for my fam training to unstrap the sts-107 crew out on the runway. because of that position, when the reconstruction was decided to be set up at ksc, i was asked to take over as the crew module lead. so throughout the reconstruction i was in charge of pulling all the debris, organizing it and securing it. as a follow onto that job, i stayed with the reconstruction team as it morphed into the columbia preservation team that determined what was going to be done long term with columbia, with the debris and the issues going forward from there and finally culminated with being the deputy project manager for the columbia crew survival investigation. and all of these things really

fed into each other. um, i could easily spend 15 minutes talking about each one, especially the technical lessons learned. instead, i decided the try to keep it at the top level and focus on some really big things that i consider the foot stompers for all of them. for the reconstruction we've seen this picture several times today. one of the things that you never see when you see pictures of the hangar is crew module debris. and that is because it is off the picture on the right-hand corner behind a wall. so i didn't know what the plan was, i was just told, hey, ksc wants you to get out there and figure out what to do with the crew module debris. and as is not surprise, everyone sort of went pack to the challenger model and said what did we do for that, and a desperate room was set aside.

and so that's what ksc decided to do too. so i showed up, and there was a small room set to the side. it had a computer and a telephone, and there were a bunch of people who said what do you want to do. and, of course, i didn't have any idea what i wanted to do, so it was a very interesting experience. but i think it turned out to be extremely important. and one of the things that i found was that when crew module debris as it worked its way off the truck, through quality and finally was brought inside the crew module, that it was exceptionally tresful for the reconstruction -- stressful for the reconstruction team to see it. anything that looked like it was vaguely recognizable and had anything to do with the crew. we got to the point where typically things would get bypassed or fast tracked and brought in very quickly into the crew module, and the end processing done separately there because it was so stressful for the folks on the floor to see that debris.

and i think that's really, really important. it's something worth considering. there's just no comparison. the rest of the debris was also very sensitive, but it's nothing like seeing the equipment of the crew. one of the very hard parts about doing reconstruction was trying to figure out what things were and where they originally were stored on the orbiter. so the photo documentation turned out to be absolutely critical, and it was surprising to me as an astronaut, i thought everybody knew exactly where everything -- i mean, it was just like magic. if you were on orbit and you didn't know where something was, you had a computer program, you could call down, everybody seemed to know exactly where everything was. in fact, that wasn't actually the case at all, and so that was a very difficult part of that job are. and finally, one of the focuses that i put for the team was to be able to find things quickly. if you wanted to know where all of one type of material was

stored or where it was kept, how much was recovered, we had a database that had all the debris loaded into it. and so we eventually morphed to a system where we used keywords so that you could do searches and find a certain class of deprix or find a location, everything that was recovered from a specific location in the vehicle. and that turned out to be extremely important for the crew survival investigation, and i was glad that we did that. for the preservation team, that was a little bit of a different experience. obviously, at that time deeply invested in the do -- in the debris and very committed to preserving it. but what was really interesting was the discussion about whether we should bury it in a hole like was done for challenger. so challenger's at the the bottom of a missile silo with a big concrete plug over it. and when pieces of challenger wash up on the beach, there is a, basically, a shaft next to

the missile silo, the door is opened up, and the piece is thrown in. of course, after working on columbia this totally horrified me. in fact, there were a lot of us who felt that we should dig up challenger and bring it out can and preserve it just like we did with columbiament one of the things that we tripped up against, though, was that the families of the challenger mishap really identified with challenger being buried. they identified like a crew member. and so the idea of taking challenger out and doing something with it was just as horrifying if we said we think we should dig up the crew members. i mean, they really reacted to that strongly. the columbia families, on the other hand, built the concept of preservation into their grieving process. so the columbia families believed that the stories, the things that were being told from the debris, the learning that

was happening, the fact that the debris went out on loan to students to study -- obviously, not the sensitive debris pieces like tile and so forth -- that was a part of their grieving process to say we continue to learn everything that we can. so what i've found is the most important message is whatever you end up doing with the debris, it's going to become a part of the families' story. so it's really important that you think that through from the very beginning. public display was a discussion that went on for a long time. there are a few pieces at a couple of the centers. that decision was made, actually, several years after columbia occurred. but it is, i think as you've heard over and over again how incredibly emotional people are in the aftermath of the mishap. and people had very, very differing opinions on what the right thing to do with the debris was. and, in fact, we had an opportunity to give some of the

debris to the smithsonian who was interested in it, and we could never converge on that. i'm not sure that turned out to be the right thing to do. columbia is now in the vab, and due to funding cuts and so forth it's been greatly scaled back. the preservation program. and i think sometimes maybe it would be better off if it were at the smithsonian. but it was a very difficult decision. i think we did the best that we could. and finally, the most important lesson to me was how much you could actually learn from the debris. so doug gave a great talk about all the things that the analysis that nasa did looking at the debris and trying to understand the mishap in support of and at the same time as the caib. but for me i was inside the crew module, and it was talking to me, and i knew there were more stories to tell. so the caib actually was interested in crew survival. the, they formed a crew survival

working group to look at the survival gap. i considered this a major advance over what happened during challenger. there were, actually, several pages devoted in one of the appendices to the crew survival investigation in the caib report. and that was a positive thing. i think there was a lot more information there than you saw post-challenger, and that was headed in the right direction. the biggest challenge that the caib had, and it was mentioned earlier, is because of the nature of the commission, everything needed to be made public. and so working through the privacy issues of the family and the sensitivity of of how the crew died, that was really just a road too far for the caib. they had enough on their plate as the it was, and so they left that part to nasa. they did make a -- i'm sorry, not a recommendation, an observation that there should be information incorporated in the future.

the spacecraft crew's survival integration, integrated investigation team did actually form nearly a year and a half after the accident. and it was more than a year after the final section of the caib report was published. i think the comment that i want to make about that is that really that's a reflection of the fact that it was really not desirable to talk about. there was good information published in the caib report, there was a lot more to go on, but it was extremely difficult to get consensus and with all the other things going on with return to flight, to get any focus on it. um, it was just too traumatizing. and so that really hindered the opportunity to go forward with that investigation. it just was not considered a priority. too many people shied away from it. the other really difficult part about this is that in the military when there is an aviation mishap, for example,

which is my background and my assumption, you know, the whole time i was like, really? we're supposed to be doing this. but the flipside to that is you get an outside organization, another squadron, another, you know, somebody from a different unit comes in and does the investigation. because, let's face it, it isn't very pleasant to relive the last minute of the crew's life over and over again. so we have, unfortunately, did not have that option. and i think in this really small community that's an important thing to remember. one of the things that we did when we started with the crew survival investigation was to start with challenger data. and what we found is it was incredibly hard to find. there was, actually, i was taken to a warehouses at jsc and shown boxes upon boxes of papers that were stacked together. and the spread sheet, of course, the time they were cataloged, there was nothing like excel.

it didn't really exist. that was later added in. but to try to figure out which one of those boxes had some nugget in it that i could possibly want was very, very difficult. in fact, the most amount of data that we got relative to the crew from challenger was from talking to people in jsc engineering. they would kind of look pote ways, and they would -- both ways, and they would go, okay. we'd go to their office. they'd unlock the bottom drawer of their filing cabinet, pull it out and hand me pure gold, the best i could get. and it was very, very hard to find that. it was incredibly hard. and that kind of, um, engendered a really strong belief in me that the only way that we were going to get, um, to preserve the information that we were finding out was to get it published. our investigation uncovered five potentially lethal events that occurred including some very serious shortcomings in the crew equipment.

it was very, very hard to get the report published. basically, it was the moral courage of three people, two of whom are in the room -- wayne hale who is the program manager, mike coates who was the jsc center director, and mike griffin. and, yes, after all these years, thank you. [applause] it was really important. [applause] one of the great difficulties was that discussing how the crews died was, indeed, going to be very difficult for the families. we had to consult them. we worked very closely with them. it was extremely difficult for them. they showed great moral courage as well. and the great thing for me now is that i know that a precedent has been set, and it doesn't matter. the next time there's an

accident, people will go back just like we did to challenger and find this data and know that they have to do this same kind of investigation. so there's a lot more information, of course, in the report. i just wanted to kind of give the top-level lessons learned, and that's why it was really important for me to be here today. [applause] >> so we have time for a couple of questions for our panel. and i'm the mic handler at the moment. open the floor for questions. >> i just want to make a comment. pam complimented mike coates and wayne and myself. what people who were not on the inside don't understand is the incredible degree of persistence

that pam showed in pursuing the crew survival issues to the best conclusion we could get. and if you don't do that, what you're doing is you're putting the next crew at risk. and that was how pam saw it. and she pushed through, i will tell you personally, you know, threats to her career in order to see that to a conclusion. so i think, pam, the crew that needs what you did will maybe not know what you did, but they will owe something to you. so -- [applause] >> all right. >> okay. and with that, we can go on to the next panel and really just one more round of applause. [applause]

>> the u.s. senate returns to session today at 2 eastern. senators will begin with general speeches turning to judicial nominations at 5 eastern. the house returns tomorrow. this week they'll consider changes to the welfare to work program and consolidating federal job training programs. we'll have live coverage of the senate today at 2, see the house live tomorrow on c-span. >> one of the things that an early american wife was taught to do, she supported her husband's career usually through entertaining. dolly was both socially adept and politically savvy. so she could structure her entertainments in such a way that she could lobby for her husband under the guise of entertaining. she also thought it was very important to create a setting in

the white house almost like a stage for the performance of her husband and the conduct of politics and diplomacy. >> first lady dolly madison. we'll follow her journey from a young quaker widow into the wife of the fourth u.s. president, james madison. we'll include your phone calls, facebook comments and tweets on dolly madison tonight at 9 eastern on c-span and c-span3, also on c-span radio and c-span.org. >> we continue with lessons learned from the columbia space shuttle accident ten years later. in the next panel, lessons learned from a management perspective with bill parsons, a former space shuttle program manager who led the return to flight operate of the space agency after the columbia tragedy. this is just under an hour. >> so we had a lot of technical discussions earlier, and we still have some more technical

pieces. but what this panel will talk about is sort of lessons learned, unlearned, really more from a management perspective, a little bit higher-level perspective. my purpose being on here is i was deputy chief of staff for sean o'keefe at the time of the accident, so, again, as sandy said at the beginning, all of us kind of lived the accident through our own personal lens. and so i'll share mine. we have brian o'connor who is the former chief of the nasa safety and insurance organization. bill parsons who was space shuttle manager for return to flight who had to incorporate a lot of these lessons and dr. julianne mahler who wrote a nice book between challenger and columbia, lessons learned and unlearned which is where i shamelessly stole the title of this symposium from. so i figured i would start with just discussing some of the

personal observations and vignettes and then a little bit of simple sis from dr. mahler. as i said, you know, these are sort of my personal impressions of the accident. frankly, i was asleep. and when the phone rang and i got a call from a friend of mine who was at kennedy waiting for the challenger, excuse me, for columbia -- freudian slip there -- for the columbia to return can and said that the vehicle was late. just as sandy said, you don't lose shuttles. shuttles on return are not late. something is bad. so i had to get into the office fairly quickly. and on the way there, of course, we had the reports of the break up occurring in the skies over texas. we set up a war room on the sixth floor. deputy administrator brett gregory had come in, a lot of folks, of course, had come in that weekend. and we had a crisis response plan set up for notifications and coordinations at several of

the -- as several of the earlier speakers mentioned. this was something that was created after the challenger accident. and i think something for which we were grateful in terms of providing some structure and organization. for the first few weeks after the event. it, somewhat after the first couple of weeks we were in new territory, so the plan only took you so far. but in terms of providing a structure and organization initially, i think, it was of very, very important to have those contingency plans in place. the next few days and weeks, as people have described, were a bit of a blur. one of the immediate issues that came to my attention and those of us at headquarters was assessing the damage on the ground and the affected local communities. of we had schools that were closed, roads that were blocked for debris, local police forces, you know, guarding hunks of debris sitting in the middle of the streets and schoolyards. i worked with the nasa chief medical officer, rich williams,

who was, excuse me, i thought invaluable in working with some of the fema, state and local authorities. rich was a air force flight surgeon, but he also had a role not only taking care of the crew, not only worrying about, i think, morale and health of really all nasa employees, but it formed a kind of an interdisciplinary function where you had people who were managerially responsible at headquarters working with first responders, working through dave king on site, coordinating agencies back here in d.c. and so you would have these really sort of amazing telecons as everybody was trying to pull together to do the right thing. we were concerned about civilians being injured, removing debris and the immediate risks of hazards. we didn't want, of course, any more harm occurring to people on the ground. and, of course, we were worried about potentially valuable data being compromised if debris were

removed or lost. it was quickly apparent that, you know, if a major break up had occurred sooner or later, maybe more densely populated areas would have been hit, so among the many miracles was the fact that no one on the ground was killed although we did lose two folks in a helicopter accident. we were tied in very closely with the white house, and dave mentioned how that was helpful in clarifying chains of command early on. we also needed to organize, you know, the nasa response team as we moved from a first responder needs to supporting what we knew to be was going to be a very exhaustive and in-depth investigation. admiral gehman, of course, was announced as chairman. again, i think sean's predilections toward the navy were certainly known, but it was also, i think, not an accident that we had a lot of military and aviation people on the board because we were looking for really the best people in the

country we could get for what we knew to be a very interdisciplinary sort of analysis. so other names were added later, as logsdon described, but we were really trying to pull on on the best the country had to offer. in the course of the activities, again, from my particular knot hole, i had the unusual duty of chairing the final approval group for releasing responses to foia inquiries. it's quite a process that worked, i think, quite well. a tone was set early on that we would be as forward-leaning as possible and release all material from prior to the accident itself. materials released would come to a big conference room in binders, and they would get one last look for personal identifying information, you know, people's home phone numbers, social security numbers and that sort of thing. and then we'd insure that the public affairs people, legal, technical and the foia specialists themselves knew what was about to be released. and then with approval, the material would be uploaded to a nasa web site for simultaneous

access by the press. so it was a little sobering to see material that was on your desk one day and, of course, on the front page of "the new york times" the next morning. legally, it certainly could have been argued that we did not have to release as much material as we did, we had a number of exemptions that could have been used. but it was really a top-level decision that sean made that i think was a wise one in setting a tone inside as well as outside of the agency that we be as fully and as bluntly honest with our failings. and, frankingly, we knew that people would see things and connect dots probably faster than we would initially, and that was to the good. the point was to find out what happened and why. a week or so after the accident as we were into this process, the nasa general counsel, paul, was there. he was a lawyer from louisiana with a specialty in education, a longtime friend of the administrator's, a really smart guy. and i remember saying to him, you know, paul, before this is

over you're going to hear a phrase called normalization of deviance, the term from diane vaughn's, i think, masterful book, the challenger launch decision. and i won't attempt to imitate his louisiana accent as he looked back at me and said normalization of what? but at this rather odd sociology term, but it certainly became clear what we meant. and when the first theories about foam shedding came out, you could see the skepticism in this really firsthand. i think on one hand there is a reluctance to embrace the theory because as one of the other charts said, first information is often wrong. and there's this danger in organization in the finding a convenient answer and locking into it soon. because everybody's looking for meaning, to look to impose patterns maybe where they don't exist. and so the point that doug made about chasing down all other possible avenues is really important to being intellectually honest. i personally certainly got the

analogy, it was told to me by a number of people that it couldn't possibly be the foam. it'd be like a styrofoam ice chest palling off the back of a truck, and it hits you and it's scary, but it's foam. what could it do? and, of course, it was more than a maintenance issue. michael greenfield, the chief engineer, was showing me historical charts on the underside of the shuttle, and i was trying to figure this out was it's within a long tile -- it's been a long while since i was a technical guy. and i said do they exceed tolerance levels or margins of kind, and he looked at me and said, well, scott, that's the problem. there was not supposed to be any strikes on the bottom of this vehicle. there's supposed to be zero. the standard is zero. and, of course, where you then have the moment of, oh my god. in short, the orbiter was performing as expected, the

srbs were performing as expected, but the system as a whole was exhibiting a dangerous behavior that we didn't recognize. it was complex, highly-coupled system, and we had failed to listen to the vehicle and what it was telling us. now, failure in such systems occur not just in the parts and components, but most crucially at the interfaces between major system elements. that's first place to go look. now, i was reminded of being when i was a young engineer at the shuttle orbiter division at rockwell in downey when the challenger accident occurred, and my first thoughts were of the ssmes which can had experienced several explosions during testing in the 1970s and, of course, we found find it was the srb o rings, and i remember being surprised at seeing a design that was different from the propulsion systems that i had seen earlier. it's not just ignorance that can hurt it's what you believe to be true that's not that can be even more deadly. so a lesson i would take away from the columbia accident and,

indeed, other major space and aviation accidents is to have a degree of humility in front of the hardware, that is listen to it, listen to others who are paying close attention because almost by definition failures are going to occur in odd and unusual ways when reality trumps our assumptions about what we think is reality. with that, i'd like to pass it to pi yang. >> can you hear this in the back? my name's bryan o'connor, i was the safety and mission assurance officer for the agency when this accident happened. i'd been in that job for about six months, and when i think back on lessons learned, i put them in about four different categories, and they tend to be in the root causal, the organizational, the cultural part of what came out of the columbia accident investigation board. um, i was struck by a quote i

saw once that says do not look where you fell, but where you slipped. and certainly the caib did that. caib looked at where we fell, but they also looked at where we slipped. some of the things they looked at affected my organization and me personally quite a bit. for example, today when i'm watching the movie of leroy cain and the cap comes and the other folks there in mission control, several times leroy asks the question, well, is there something common here? do these failures you've just seen here, these four sensors or these three, these three parameters or whatever, several times he asks the question do they have anything in common, and the answer came back, no, there's nothing in common. in retrospect, of course they all had something in common.

we know that now. .. that i was in charge of are responsible for helping programs deal with. with their contractors, with their engineers. with their se and i people. especially with -- se&i. safety, systems and integration people. that is where a lot of these

things tend to wind up being important. anything that can kill the crew, lose the vehicle, tend to be in my opinion an integration opinion. the cape very rightly had a big section on integration. se&i, had, as someone earlier mentioned had dwindled quite a bit over the years. after all had 87 successful flights. the se&i which shortly after the challenger accident was beefed up to significant levels of effort including those that fell over into the safety and mission assurance, the integration safety efforts out at boeing, or at the time, i guess they were, it was a different company then, but rockwell, but, there was an awful lot of work that was done after challenger to rebaseline all of these analyses and so one of the things i learned from this is that you can't just depend on certain analyses. you need to have a team that's credible and capable

to go in there and ask, why are you sure that this is going to work the way it does? the design engineers toned to like to do things that will work but you do need to have somebody there that will ask why and what if it doesn't? and that's the purpose of the safety and mission assurance team is to get in there and ask those tough questions. you know over time that had dwindled as well not just se&i but also safety mission and assurance and part of it goes into a second bin that put these things in which i call flight test. after a period of time we got into a mode where we considered ourselves operational and, therefore we didn't need to think like flight test people as much as we did before. we could start phasing out of that mentality. we can, we can tell the engineers to put on their, their maytag repairman

uniforms and we'll give them a call if we need them. we sure don't want them hovering around everything because that's expensive and they will find something to work on and, you know, there's a tension there. you don't want to do too much. you got to keep flying. you can't afford to do too much but over time we got to where we were feeling like we were operational and we were no longer in a flight test mode and i'm not talking about the columbia accident. i'm talking about the challenger accident. we were in that mode before the challenger accident. we got into that mode again. sally ride said she heard some things, you know. she had reminiscing of challenger things when she was looking at the accident, the columbia accident. by now, by the time we got to columbia we had flown, what was it, 86 flights since the challenger. 86 or 87. they were very successful

flights by and large. we handled the technical matters of them but by the time of the challenger accident we couldn't really say we were in nearly the flight test mentality that we were by the time we got to the columbia accident that we were after the challenger accident when we said we will never do that again. this thing is not really operational. this is a, this is a tough thing because after a while you get to the that, that bit that says, aren't we finished learning yet? i mean the anomalies are fewer. we're not having these big problems showing up. at some point can we kind of back down a little bit and get the cost down on this thing so we can go do other things in the agency? it is always going to be a pressure but one thing we ought to watch out for is something i saw in augustine's laws. a lot of you read his book, augustine's laws. number 25 is very interesting. he drew a plot in there that showed how much flight test

was done for a whole bunch of missile and rocket systems. he did this back in the 80s. he missed out on some more recent ones. he had rockets and missiles in there down from a little $1.98 handheld rocket all the way up to the titan missiles and there were about 20 or 30 different rocket and missile systems in the defense department and he laid those into his chart, cost of a unit, of a unit, unit cost versus number we of flight tests that were done on those things. the number of flight tests was inversely proportional to the cost of the unit. so there were many fewer test flights done on the titan, for example, than there were on a very small, relatively simple hand-held rocket where they did a thousand test flights before they declared it

operational. now, this is not the way airplanes work. when you go and look at the defense department and the faa they're looking at many, many, many test flights before they approve something for quote, operational use, before it is allowed to actually conduct operational missions. in human spaceflight we were not following and never will follow the airplane mode when it cops to this matter. what we have to deal with is, we can not wait to do the requisite number of test flights for complicated systems to then declare them operational and begin doing operations. what we're going to have to do is fly our missions relatively early in the flight test phase. and we're going to have to admit to ourselves and be very honest with ourselves that we're doing flight tests for the life cycle of this system. this system, meaning space shuttle, for example. we were learning stuff and in the flight test mode

right up until flight 139. and that's good. it's expensive but it's the right mind set. i thought when we wound up this program we had a very good mind set on that. they had enough money to deal with problems that came up. the engineering community was very involved. they, they weren't driving the costs as much as they probably would like but they weren't the maytag repair guys either sitting in the back room waiting to be called up. the reserves at the program manager had by the end of the program were sufficient to do the kind of detailed analysis that he needed when things came up in flight, right up to the end of the mission. when you go back to just before columbia, there was a record low amount of reserves, what they called apa, in that program the day before the columbia accident. it had never been that low. there was very little money for the program manager to use to go chase down problems. i'm not saying that it's the money people's problem.

this is a big problem across the board. everybody shares in that. i touched a little bit on something i will call check and balance. technical authority is the third bucket of lessons learned. the columbia accident investigation board compared with what they saw with the shuttle program with three or four other programs and institutions that were doing a lot of engineering and a lot of programs and they didn't like what they saw when it came to the authority of the technical personnel with respect to the authority of the program manager. that balance had gotten out of whack, even within nasa, i think when we look back on it we realized that that balance had gotten to are with the program manager had a lot more authority than maybe he did early in the shuttle program when engineering was much more involved and much more authoritative on matters dealing with technical issues. so it's very good to get to

where your engineers and your sma folks have authority to do with things. that is not enough. i can tell you that i spent the whole rest of my career in the job of safety mission assurance trying to make sure we had the capability that went with it. there is nothing worse than having people with authority that don't know what they're talking about. it is very disruptive. so if we're going to get this authority and have technical authority we've got to get good people in there. i have to give it to the center he can doctor, to. they really turned to. they got us very good people in human spaceflight and mission assurance organizations and that was very helpful i think to the program managers. you can ask them you about think it was. if they had sma people that knew what they were talking about it was easy to answer their devil's adco vat -- advocate questions. the last bucket is complacencisy. i don't need to say much about it, some of the other things i talked about, not

doing enough analysis, not having the right amount of technical authority on checks and balances, not having anything in your reserve pot to go and chase problems with. all these things are signs of institutional complacency. it is really hard to say that there was anybody in the shuttle program operations or program office itself that you could point to and say that person is complacent but there was an institutional complacency that said again we're not in flight test mode. we're operational. we don't node to have all these people helping us do this job and i think that is a form of complacency you have to deal with for the life cycle of a system like this. those were the general lessons that got out of this business of looking where you slipped, not where you fell. thanks. >> good afternoon. i'm bill parsons and as i said before, i was the shuttle program manager for return to flight.

on that day, that particular day i was the center director at the stennis space center. been there less than a year. maybe less than six months even and it was a saturday morning. i was driving over to pensacola. high school friend of mind had gotten ms. and he was in such bad shape he was in a nursing home. so i was going to go visit with him over the weekend and of course, got a call on the way there because i left pretty early in the morning and i was able to just go in, tell him, hello, watched it on cnn. turned around and go back to the center anding of was in touch with some of the folks at center. they were already being locking down information and start being the process in place for us to be ready for an investigation like we were fixing to go through. i was, i didn't have a clue as what i should do. i picked up the phone and called jay hunnicut. jay was a former center director at kennedy space center and worked on the shuttle program. i said, what do i do?

he said, well get back to the center and wait for the call because things will start happening real quick after this. you know, our relationship, i didn't know the crew very well but i did know mike anderson pretty well. we were on a astronaut selection committee together. we did a lot of interviews. he sat next to me and i got to know him pretty well and it many abouts personal when you have somebody that you're that close to, so i can really understand how some of the other folks that knew the crew much better than i did. i want to go back a little bit and tell you i was the deputy director johnson space kenter when we were human lead center for spaceflight. some of the hings bryan touched on i observed of the as international space station was doing kos over runs and things were happening we were making decisions. i was part of that along with a lot of other people we were making decisions how we could cut costs. the shuttle program became,

looked more operational to other people and we were cutting things we didn't use very often. some of that was the sc & i and analysis we weren't doing that kind of work and well we could let those people go because apparently we didn't need to lose that kind of work. we were losing that expertise in the shuttle program. i don't think we realized but that is what was happening. another thing i would tell you ron ditimore was the shuttle program manager. i was announcing he was going to retire and they were in search after new program manager. as a center director i was consulted a number about times and i'm sure a number of other center directors were consulted with the names on the list. i can tell you my name, if it was on the list it was way at the bottom of that list somewhere but so there were a number of people that were being considered to be the shuttle program manager after ron retired in a few months and he was supposed

to retire i believe just a little after columbia happened. he stayed on a few more months after that but then eventually left. i will tell you that, as i said, i didn't think i was on that list and i'll tell you a story about that in a minute. i do want to tell you one thing bob crippin once said to me and maybe a lesson learned, maybe not, best for you to decide. he said once you've been in a job four or five years a lot of times it is good to move on. at some point you're trying to fix the mistakes that you made. and so that is something we all have to think about. there is a point in time in some of these jobs that are complex jobs that require you to have a fresh look at these things. that maybe we stay on a little too long. we like those jobs. they're fun to do and we enjoy being program manager or chief engineer or whatever but at some point a fresh view, at the program, at the things that you're doing, can help you maybe find those things that are going wrong better than

somebody that has been there and become used to it. and so i just, i just put that out there and something to think about. during recovery, you know, dave talked all about that. i will tell you that every center pitched in and did many things. one of the things that stennis, that i thought of and thought that we should do is the stress on the people doing recovery was great and it was huge and dave didn't touch on it too much but it was huge on dave having it set up on dave king, trying to set up that whole organization and get that thing kicked off and in the meantime he also got very sick and you know, i think he left with a pair of socks and didn't have a whole lot of stuff when he got there. so we, offered up mike and alan flynn. they rotated in and out. i'm sure other people rotated in and out for the recovery because it was long days and a lot of hard decisions and you needed to be as fresh as you could and you needed to have people

that were aware what is going on. that was one of the things i felt like a pretty important thing during recovery, you have to have some backs and have some people willing to get out there. yes, you have to have your point man, point women, whatever, you but also have to have people willing to go in and make sure they can jump in and help you out and give you a break, let you get reesh frommed a little bit and get back in there. yeah. so, how i got assigned to be the program manager, we were doing a lot of the recovery in love kin and somehow -- lufkin, reedy gone down the list and crossed off names and asked a few people. they had said no. one day we were having a little bit of a appreciation ceremony for the people in lufkin that had done the hard work, the community really. we were giving out a few awards and patting them on the back. i was telling dave king, i think you need to be ready because i think they will

announce you as shuttle program manager and this is a tough job and so on, so forth. he was smiling. he didn't let on to me maybe he knew something but, that evening we were sitting over where sean o'keefe had a condo or something. there were a few of us sitting around talking and everybody went out on the porch and i walked back into get a beverage of some sort, probably a beer, and i heard the door open behind me and i felt a presence on me and i turned around there was sean o'keefe. and it was just me and him in the kimmen. he said, bill, are you ready to step up? i said, sure, sir. i was a marine. so i just fell into marine mode, yes, sir, whatever you need me to do. >> have a beer. >> gave him a beer. and he said, what would your family think about it? i still don't know what we're talking about. maybe i'm going to marshall to be the center director because dave will be the shuttle program manager. that is how naive i was at

moment. sir, they will adapt. i'll figure that out. he said, good. he walked off and, i was like, well, hmmm. [laughter] so about two days later i called up bill reedy, i said what was that conversation about? and basically he said, you're the man. that's when i found out i was going to be the shuttle program manager for return to flight. i will honestly tell you, and i just share this with you, i didn't feel qualified. i didn't feel like there was any way in the world i would do this. -- could do this. i will tell you, it was in the my skills and the shuttle program. i know it was not my, i had worked operations at kennedy space center much like dave king but i didn't have a real strong technical background. but i had been a marine and i had done some, been a leader in a number of different places and i was thinking that's why i was allowed to go do this job or

asked to do this job but one. first things that they did for me, they said, you can go pick your team and that's a pretty, you know, when you find yourself in a crisis like this and you will put somebody in a leadership position to give them the full range of, you can pick your team, and you can have anybody in the agency, they're available to you, and, i sat down with then center director at johnson space center, general howell and a few other key people in the agency, and we came up with the names. that's where wayne was picked. jonathan none was pick. steve polis, i can go down the name. nancy currie. mike rudolfi, john cast par. i got, i got the best and i will tell you that that was an extremely important

lesson for me. when you find yourself in a position like this you get to pick your team. i will say there is a bad side of this. everybody in the positions before that had been a part of the shuttle program, that had the history, that had the, they had just learned a lesson probably in the hardest way that anyone could ever learn it, many of those people moved on to go do other things and so we were a brand new team coming in with a brand new perspective and we were trying to get our legs under us and luckily some of those people that were, that were in those positions before stuck around with us and talked to us and kept, and told us what was going on. they did not back down. they did not fade away. they really did help us and we needed their help and that was really important during that time period. there are a lot of other names i could go through and a lot of them are in this room today and, touched on something that was probably the thing that, as i went into this job i had to

change the culture. that was my, you know, it was change the culture and get in there and be transparent, open up, have the conversations, have the tough conversations. as you heard there was still a lot of raw emotion and there were a lot of different agreements and we had to work our way through those every day. i can honestly tell you it pushed my patience to the limit i didn't even realize i even had and yet it was required because we had to work our way through that. a lot of difficult decisions were made. i remember people in tears in our requirements review board. i remember people walking out just, they're done with it. they're not going, they can't stay in there anymore. so we had to go through that process. i'm not, i'm not sure that it was there is nothing to be learned from that other than the fact that you when you put a team together, you

put them in a situation like that, that, they have to go through that process and it just takes time. you're not going to get back. we were saying, yeah we'll go back to flight in december and yet it was not going to happen and the team knew that but that was our messaging that we were doing at the time trying to continue to keep funding i guess or support from congress, not really sure but whatever it was, that was the message but we were having to work through a lot of different issues during that time. one thing i will add is even though we were changing the culture and there were a lot of support for changing that culture i was still under a great deal of pressure to get return to flight, to do return to flight. the message to me was, if you don't get it done pretty soon we're just going to shut this program down. i got that message a number of different ways from different people. i don't think, that wasn't a threat. they really believed it. and i think that, you know, that created a tension in me

that said, i've got, i don't want to be the guy that shuts the shuttle program down but if that's the way it works, that's the way it works. i had great support again from that team i just named off and many, many others that i don't, i didn't name but, just unbelievable, people that just stepped up and did their level best and again, and as you looked at those names who became shuttle program managers later on, wayne hale, jonathan none, they did an absolutely fantastic job. one thing i will say, as many things we got right we did get a few things wrong. that is a lesson learned as well. we rolled out to the pad and we did a debrief summit and we found out the feline bellows need ad heater. it could build up ice. we need to do that modification and that modification was ready to be installed on the orbiter. all the numbers said you

have to install it. we rolled back from the pad to the vab to do that modification. there was another long and hard discussion and about the powell ramp. the ramp that runs down the side of the external tank. it's a lot of foam and it's a lot of foam that could have come off. if you recall during sts-114 it did come of off. i could go through how it came off and why it came off, it doesn't matter. i can tell you we as a team talked long and hard about taking it off and yet it would have been a great, a big delay to the program. and we had a lot of evidence that said that that, it didn't shed foam and that we weren't going to have a problem and we decided to fly. then you look back and you think, well, that was a really tough lesson right there is, we knew the answer. we knew what we should have done and, and yet we talked ourselves into it because we needed to go fly as well and we thought it was low-risk.

turns out it was much higher risk than we anticipated. so, i guess i don't really need to summarize. there's, some lessons in there. you can take them. you can think about them. they may apply. they may not apply but they were things that i took away from that experience and it was the hardest thing i have ever done. i can honestly tell you that i, i grew old it felt like during that time period and at the end it was a really tough thing to bear and i'm just telling that from a personal standpoint. i needed, after it was over, i needed to get away from it because it had taken that much out of me. and somebody else needed to take that burden and carry it and wayne did that and later jonathan none. when you're in jobs like that and they're that stressful you've got to think about, making sure you have somebody ready to take over for the next guy. that's a pretty important thing to do too. so that's all i have.

>> thank you. >> so this is really unusual where the academic has the view graphs and nasa guys don't. this doesn't happen. >> i thought i had to come with something. i thought it was required. i think it was sally ride in the caib who said, that there were eerie similarities between especially the organizational elements preceding the loss of the challenger and the loss of the columbia. that got me thinking about organization learning something dear it me. i'm an organization theorist, a political scientist and it seemed to me that there was, there was a lesson to be learned here. how could it be that an organization like nasa was not a learning organization? that does doesn't compute. that doesn't make any sense. so it, i started to

investigate how this could have happened. what i would like to talk about today is the relationship between, is how unlearning and forgetting, two sort of down soouds of organization learning, might be connected with normal accidents, what charles called a normal accident. most of you probably know that a normal accident is the inevitable consequence of having technical systems that are complexly interactive and tightly coupled. that is, there are unexpected and unpredicted inner actions among parts of the system and that once these uner actions begin the system cascades to failure because there is no buffering. there is no way to stop the process from continuing on. his solution to this is, well, just back away from some of those kinds of technologies. and we see that kind of

normal accident happen in a lot of different settings. katrina is often characterized that way for example. i am suggesting here that normal accidents don't just happen in technical systems. they happen in organizational and managerial systems as well and that's the sort of kind of situation i want to talk about. you can have originalization hal systems complex and tightly coupled and have devastating consequences. there is too much on this view graph, i know, but bear with me here. when we talk about complex interactions in an organizational system, and a managerial system we're talking about policies and standards, procedures, that can become complexly interactive either because they were poorly designed to begin with, or, because bits of them get loss over time. so when organizations unlearn parts of responses

they had in the past, when they forget parts of responses that they had solution that they had in the past suddenly systems that did work, organizational or managerial systems that did work, suddenly become complexly interactive. . . >> in managerial and organizational systems and that what we think of as unlearning and forgetting are major

contributors to these sort of normal managerial accidents. how do organizations forget? by forgetting, i mean the unintentional loss of lessons that we had before. this is going to then create gaps in what we think we know in how to get things done, and it generates these unrecognized complexities. the causes of forgetting you all know in your own lives. how do you forget elements of plead yours that you used to know? well, you reorganize. that's best way to do it. anytime you reorganize a system, you essentially paralyze it at some point for some extended period of time. because most of what organizations do and most of what they know is not written down. or if it's written down, it's not what they really do. what organizations actually do is what's embedded in the sort of knowledge, the tacit, the unwritten, the almost

unconscious sometimes knowledge that people have of how to get things done in an organization. if you followed all of the rules all of the time, of course, that's the way to get around contracts, it paralyzes the organization. so reorganization, simply lack of time and lack of practice -- or time, lack of practice over time. several of you have mentioned today that the shuttle had a long period in which things seemed to go relatively well. so that procedures for investigating what may be near misses or potential accidents were not exercised any longer because they hadn't been exercised for so long. so past lessons can be forgotten simply as a result of missing pieces of these tacitly understood routines that kept things going. and, of course, over the period between the challenger and the columbia there were lots of

instances of reorganization, downsizing and a hot of time -- a lot of time. unlearning is the intentional jettisoning of lessons that were previously learned. they appear to be outmoded. they appear to be not progressive. they appear unattractive. and this generates then, again, gaps in knowledge about how to cope with complexity. some causes of this are the good things, the management reforms. when we talk about faster, better -- >> cheaper. >> cheaper, thank you. [laughter] there's so many different versions of that, i never know which one. >> [inaudible] >> yeah. so those kind of progressive reforms are good ideas. they were necessary ideas, but their effect was to undo the structural changes that had happened after the loss of the challenger. new budgets and new priorities come in that erase, make

impossible to do the kind of redundant organizational structures, the redundant safety structures that had been the follow on from the challenger, the return the to flight after challenger. a new agency administration's come in with new ideas, and they cheerfully and with great enthusiasm undo the things that the previous administration had brought in. and, of course, new contractual relationships, too, complicate this. and so after challenger we see a lot of hits in funding levels -- shifts in funding levels, contracting relationships, the priorities for the space station program. government management reforms, national performance review is a corollary on the sort of national stage of the better, faster, cheaper reforms at the agency stage. so altogether these well-intentioned changes led to losing information, losing

knowledge, losing lessons that we had had from previous, from previous rounds of analyzing what was going on. and i depress i'd leave -- i guess i'd leave you with the issue of what have we learned about forgetting and unlearning, what are we forgetting now as a result of the sort of postshuttle era? what are we forgetting? what lessons that we're putting into practice that we practiced in that era are we not practicing anymore, are we forgetting as a result? what lessons are we cheerfully unlearning? we did, that is saw did -- nasa did after the challenger learn to cope better with debilitating budget cuts and a lot of schedule pressures, slowing down, declaring more firmly what could be done and what couldn't be done. those adaptations were lost. those lessons were lost. as schedule pressures and budget

pressures ramped up again. we're not out of those woods now, obviously. so we have other kinds of management reforms. the part reforms that are examining nasa outputs all the time. so i guess i would just leave you with that. whenever you want to show -- i wish i had the good shuttle launch image that i guess it was ken bowersox showed a little while ago, because, you know, if you want to show, if you want to show an image of culture, you show a french horn. if you want to show an image of american strength and innovation and scientific capacity and the indomitable human spirit, you show an image of a shuttle launch. i mean, you see that all the time. so so whatever we can learn about the program that we can apply to the next kinds of program, um, are important. thank you. [applause]

>> thank you. and we'd like to invite, invite questions or comments from the audience. >> you really brought out something that i i had on my mind that i was going to ask about anyway, but i'm going to ask it. we've been talking a lot about the past, and i'm very concerned about where we're going to go in the future. and we were at a point in constellation, which i had supported also, that we were learning a lot from some of the old, quote-unquote, apollo people and how they did things and lessons learned and that we were getting pretty good about networking with those folks that were still around or that we

could connect with. and then went constellation closed down -- when constellation closed down even though a lot of that was now knowledge capture, i guess my concern is that we don't know exactly when the next manned human mission really is going to be. how, what is your assessment of how well these lessons from challenger and columbia and apollo and the shuttle program if general will be able to be transferred to whatever human exploration program comes next? >> well, you know, in some ways that's a very, that's a difficult question to answer because that's prospective. that's making a guess about where things might go. and so any answer is going to be inherently, inherently speculative. i think what was good about dr. mahler's piece is to say

that the problems of these -- again, using the jargon -- these tightly-coupled, interactive systems, these kinds of problems in learning and unlearning and so forth are not specific just to shuttle. e mean, i could talk about other cases of, say, nuclear weapons design. when we're not doing testing anymore. or what's the role of active design, say, in the 787 aircraft or nuclear power plant certifications. there's lots of things that we do as a society, very, you know, complex and interactive that are prone to accidents. and one answer, as some act dealtics will say, is, well, just don't do that. and others go, no, we need to go out there and do these dangerous things. so part of the question is how well do we set up organizations to capture these sort of lessons learned. and there's a number of different ways i think they can be captured. one of the things i said was have some humility in front of the hardware. but the other thing, i think, is the importance of flight tests not simply as a means of getting

statistics. because, again, i agree with brian, i don't think we're going to get the kind of statistics with launch vehicles that we'll get with aircraft. but it's a way of training organizations, it's a way of driving out, well, who's the view breadth engineer who maybe does the annual budget reports, and who's the question you really want there fixing the vehicle, you know, late at night and making the hardware work? and the problem is you can't tell who those people are from their resumés. that is, there's a skill mix, there's a background and training that they have, and both in their own intellectual capacities and then as the managers overseeing that group, when you go select for people, you have to have these sort of operational experiences whether they're flight tests, experiments, hardware, getting your hands dirty, whatever, that allow you to marry analysis to real world operations. and it's an organization that fly -- not just technology or handbooks that fly, but it's entire organizations that are organized, trained, equipped to

learn and offer to capture that intellectual capacity. so my answer to your question is are we going to give your organizations whether in the public sector or private sector the opportunities to learn and gain that intellectual competence to fly in this and one of my many disagreements -- i promise not to go political or anything today -- but about, you know, saying, you know, we've been to the moon already is to say, well, maybe my grandfather went to the moon, but we haven't been to the moon. there's a whole younger generation whether the moon or mars or asteroid, whatever it is beyond lower earth orbit. so how do we give opportunities to that so they can capture these lessons and not only learn them academically, but give them tacit knowledge so that we fly, but we fly safely? sorry, long answer. >> can i adjust a little bit to that? and that is the importance of --

is this on? the importance of passing on knowledge from one organizational generation to the next. especially when you have these reorganizations in downsizing. you lose so much information. there needs to be a way of overlapping people within organizations to make it more possible for them to pass on the lessons that are never going to make it into a rule book or a standard operating procedure or a policy. and so i think some kind of journeyman system or something that makes it possible for people to learn the fixes that people have found in the past. and carry those on. >> did you want -- >> okay. another question? okay. i can tell we're getting late in the day. with that, we're on time and doing well, and i'd like to

really call up our penultimate panel, admiral gehman and wayne hale. [applause] [inaudible conversations] >> we cannot look back years from now and wonder why we did nothing in the face of real threats to our security and our economy. that's why earlier today i signed a new executive order that will strengthen our cyber defenses by increasing information sharing and developing standards to protect our national security, our jobs and our privacy. >> guest: there are some things that clearly need to be done with an executive order. but some things can only be done with legislation. so part of my reaction is i wish the president had put as much effort into getting some

legislation passed and then come out with the executive order rather than the other way around. >> guest: look, it's been around for a long time, cybersecurity, and we finished talking about it. we've finished kind of wondering what's going to happen because things are happening every single day that are destroying our intellectual property, which are taking away from our future. and people are very casual about it. newspapers are casual about it, everybody's casual about it. but we're not. and we can't afford to be. >> a look at the president's recent cybersecurity executive order with senator jay rockefeller and congressman mac thornberry tonight on "the communicators" at 8 eastern on c-span2. >> next, white house council of economic advisers alan krueger on fiscal policy and deficit reduction. mr. krueger spoke to the national association for business economics' annual economic policy in washington d.c. this is about 45 minutes.

ms. . [applause] >> thanks, lynn, for that very kind introduction. one thing you didn't mention which was fine was that there was a picture of the cabinet meeting in today's new york times, and if you look closely, you'll see the back of my head. [laughter] one of my colleagues told me this morning, aren't you glad you got your haircut over weekend? [laughter] i'm delighted to deliver a lunchtime address here again. some of you may recall that at last year's conference i spoke about the progress that we have made recovering from the worst recession since the great depression. i also discussed the near-term outlook for the u.s. economy. i emphasized several reasons to be cautiously optimistic about the economy going forward

despite uncertainty about government fiscal policy and the lingering effects of the financial crisis that were then and continue to be headwinds for the recovery. i am sure you are all aware our economy has continued to recover over the past year. real gdp has now grown for 14 consecutive quarters. while many developed economies have struggled to rebound from the global downturn, u.s. real gdp is 2.5% higher than it was at the previous business cycle peak. last year i told you that the council of economic advisers' forecast was at two million payroll jobs would be added in 2012. employment actually rose a bit more, by 2.2 million jobs in the 2012. and this increase was entirely

accounted for by the growth in the private sector. thanks to the resilience of the american people, we have now added more than 6.1 million private sector jobs over the last 35 months. since i spoke here last year, the economy has continued to show signs of healing from the great recession. in the past year, the housing market appears to have finally turned a corner with rising nationwide home prices, sales and home construction. and new car sales reached their highest level in five years. all of these gains reflect the determination of american businesses, workers and families in the aftermath of the most painful recessioning in our lifetimes. recession in our lifetimes. never the less, there's still

much more work that needs to be done. unemployment remains too high. the middle class continues to struggle with stagnant wages and persistently widening inequality. our nation's deteriorating infrastructure cries out for further investment. and on top of everything else, political gamesmanship in washington is creating unnecessary uncertainty and inflicting unnecessary wounds on our economy just as the recovery is gaining traction. the prime example of this problem, of course, is the sequester. that's washington speak for severe budget cuts. the sequester officially went into effect last friday.

as goldman sachs' economist alec phillips observed, sequestration is poorly timed, less efficient than most other forms of deficit reduction and does little to address long-term imbalances that stem from demographic shifts in the excess growth of health spending compared to revenues. given the ongoing debates over the federal budget, the main theme of my remarks today will be the economic case for a balanced, responsible approach for deficit reduction which has always been the administration's position. a critical point, one which others have made but frequently gets lost in public discussions about fiscal policy, is that the federal budget is not an end in itself. the federal budget is simply the

means through which we as a nation seek to achieve our economic priorities. as president obama eloquently stated in his state of the union address last month, the north star guiding our course as a country must be a growing economy that creates good middle class jobs. in this requires taking -- this requires taking steps to make sure america is a magnet for good jobs that pay decent wages and that workers have the skills needed to fill those jobs. we must also address the federal budget deficit because if we do not put the budget on a sustainable course, we will ultimately not be able to achieve our objective of growing the economy and creating good middle class jobs. president obama has repeatedly called for a balanced approach to deficit reduction.

his plan for a balanced approach includes raising additional revenue from those who are most able to contribute, reforms to our entitlement programs so that they will be around for generations to come and smart reductions in spending that preserve key investments in education and training, research and national security. one thing that is often overlooked is that before the sequester we have made substantial progress toward reducing the deficit in a balanced way. achieving over $32.5 trillion -- $2.5 trillion of the 4 trillion in deficit reduction needed to stabilize our finances over the next decade. we're more than halfway there, and we have done this in a balanced way. cutting over $2 in spending for

every $1 in new revenue. my theme today is that a balanced approach to deficit reduction is good economic policy justified by considerations of both efficiency and fairness. deaf of sit reduction -- deficit reduction that balances spending cuts, entitlement reform and loophole closing is also in the interest of the macroeconomy and economic growth. economists should project the position that says no revenues can be raised from closing unjustified tax loopholes in order to finish the job of stabilizing our finances and strengthening our economy. and i have to say after i wrote my remarks i saw that there was a survey of nabe members, and to some extent i'm preaching to the converted.

i see in one question when nabe members were asked how should deficit reduction be accomplished, 77% said with a combination of spending cuts and tax increases. that's the administration's position. also when asked about tax reform, should tax reform increase revenues, 74% agreed that there should be significant increase or slight increase in revenues from tax reform. so bear with me as i explain why i think there's a very strong economic case for those responses. as economists, we are naturally accustomed to viewing the world through the prism of costs and benefits and weighing the costs and benefits on the marginment marginment -- margin. the proper approach to deficit reduction would be to implement

policies to the point that they equate the net marginal cost of raising an additional dollar in tax revenues against with the net marginal cost of -- against the net mar gypal cost -- marginal cost of an additional dollar in cuts to programs such as education, research and defense. this is balance. in principle, optimal fiscal policy would weigh the very small cost to the economy of reducing loopholes in the tax code such as the carried interest provision against the rather significant benefits foregone from cutting programs like head start, research by the national institutes of health, border security and other government functions as well as entitlement reform. balance means that we do some of each. can anyone believe that it is

less distortionary to preserve every deduction and loophole in the tax code in order to cut more deeply the number of children who can go to head start or the amount of research that nih can conduct? i don't think there is much question that it would be more efficient if we eliminated some of the tax expenditures that our wealthiest and most well-connected citizens and businesses take advantage of to enable more children to attend head start and to allow nih to conduct more life-saving medical research. compare this approach to the alternative which says that all of deficit reduction must occur from reductions in government programs and that not a dollar more would be raised from closing tax loopholes. does anyone believe that on the margin it is more cost hi to

trim back -- costly to trim back one dime of the trillions of dollars in deductions and loopholes that mar the tax code than to spare one more child a chance of preschool education or spare one more grant to a top medical researcher from being cut or spare one more border patrol agent from being furloughed? a balanced approach to deficit reduction is not only economically more efficient, it is also more fair. as president obama said on friday, it's not fair to ask middle class families, ask seniors, ask students to bear the spire burden of deficit -- the entire burden of deficit reduction when we know we've got a bunch of tax loopholes that are benefits the well off and well connected. the american people don't think it's fair and don't think it's right.

across the political spectrum, economists support policies that will limit the distortionary effects of our tax system. these loopholes don't support economic growth and job creation. so eliminating them is of little, if any, cost to the economy. additional revenues could be raised in the context of tax reform in which certain tax expenditures are limited or eliminated altogether. this would simplify the tax code, reduce the ways in which our tax system distorts economic decisions and achieve that elusive but very popular goal of broadening the base. with respect to government outlays, it cannot be stressed enough that rising health care costs and an aging population are the key drivers of our

long-term budgetary challenges. as a result, to stabilize our long-term finances, reforms to mandatory entitlement programs are needed. these reforms would insure that medicare and social security are solvent for future generations. importantly, these programs can be made solvent through sensible reforms that protect the most vulnerable. for instance, the reforms that were included in the affordable care act which the president signed into law two years ago this month have already extended the life of the medicare trust fund to at least 2024. going forward, the budgetary challenges posed by the med tear program -- medicare program will be largely contingent on the pace of health care costs.

now, a balanced approach to addressing our fiscal challenges must also recognize the importance of timing. the recovery is still fragile. weak growth in europe and asia are limiting our exports. consumption remains constrained as households are still recovering from the has of $16 trillion of of wealth from the financial crisis. despite the rebound in equity markets and firming of home prices, wealth is still -- we haven't regained all of the $16 trillion in wealth that was lost, although we've made substantial progress. in the near term, fiscal policy should remain focused on supporting the ongoing recovery. at the same time, we should take steps to address the deficit in a balanced way in the

intermediate and long term. the sequester is poorly timed and badly targeted. before the sequester i used to say that we faced two risks when it comes to the government budget. on the one hand, we can lower the deficit too much and too soon, jeopardizing the recovery. and on the other hand, we run the risk of lowering it too little and too late, creating uncertainty and requiring sharper adjustments later on. sadly, the sequester adds a third risk. we can cut the near-term deficit in a dumb way that shortchanges the future without addressing our long-term budget problems. that is, the sequester forces us to cut spending that supports key investments in education, research, security and infrastructure without

addressing our long-run problems. as a former republican staff director of the senate budget committee recently put it, the sequester eats into, quote: the seed corn of the future, end quote. this hurts future generations and doesn't ease the burden of debt they will inherit. the sequester was not designed as a means to address our budgetary challenges; rather, it was agreed upon in the context of avoiding national default, you might recall, as a mechanism to force congress to come up with a bipartisan solution to our fiscal imbalances. the congressional supercommittee was supposed to come up with a bipartisan and balanced agreement. unfortunately, the supercommittee was unable to pass a plan even though they had the blunt instrument of the

sequester as their sword of damocles as well as fast track authority. as a result, the sequester was automatically enforced and went into effect last week. these indiscriminate, across-the-board spending cuts pose a threat to the ongoing recovery. you can't take $85 billion out of the federal budget in the remaining seven months of the fiscal year without hurting the economy and job growth. according to the congressional bum -- budget office, the sequester is expected to shave 0.6 percentage points from real gdp growth and lower employment by about 750,000 jobs by the end of this year. most of these lost jobs will be in the private sector as businesses feel the ripple effects of government cutbacks.

now, these consistents may not necessarily be felt immediately and uniformly across the country, but the longer they remain in place, the greater the damage will be to our economy. and they will be felt more profoundly and more quickly in some areas than in others. in northern virginia, for example, it is estimated that federal spending drives 30% of the economy. as federal workers are furloughed a month or so from now and contracts are cut, families will have less money to spend, and that will ripple throughout the economy. as the president said last week, the sequester is a slow grind that will intensify with every passing day. ask what do we as a -- and what

do we as a nation get in return for this self-inflicted wound? yes, the sequester reduces spending. but because it largely bypasses mandatory spending programs and doesn't make structural reforms, these automatic cuts do little to address the primary drivers of our longer-term fiscal challenges. the sequester is the antithesis of smart, balanced fiscal policy. it jeopardizes the current recovery at a time when policymakers should be focused on growing the economy and investing in our nation's future. indeed, bob solo warned last week that instead of invigorating the economy, quote, we're heading into an ill-advised, across-the--board austerity program, end quote. president obama has already put

forward a balanced plan that would not only put an end to the sequester, but also put our country on sustainable fiscal footing for a decade. and we have already made big strides towards achieving that plan. to recap where we are, as a result of the budget control act of 2011, the american taxpayer relief act of this year and earlier actions, president obama has already signed into law more than $2.5 trillion in deficit reduction over the next ten years. most of this deficit reduction, around $1.4 trillion, is from cuts to discretionary programs. more than $600 billion in additional revenue will be raised as a result of the american taxpayer relief act which was part of the fiscal

cliff negotiations at the end of last year and beginning of year. the interest savings from these spending cuts and increased revenue amount to $500 billion over ten years. you sum this all up, and you get $2.5 trillion towards the $4 trillion goal that we need to stabilize our finances. as a result of this legislation and our recovering economy, you can see from this next, from this first slide, from this chart that government spending is coming down relative to the size of the economy, and revenues -- which had fallen to their lowest point since 1950 -- are growing and projected to grow further. now, of course, the difference between the blue line which is spending and the red line which is revenue is the deficit.

here scaled relative to gdp, the size of the economy. this next chart shows you the size of the deficit each year. one of the things i like about this chart is you don't have to worry about baselines. this is the way i think economists tend to think about the deficit, how large is the deficit relative to the size of the economy? and you can see that the federal budget deficit as a share of g,p has already fallen by 3.1 percentage points over the past three years. this is the fastest three-year pace of deficit reduction since the late 1940s, as you can see on this chart. and this next chart shows cbo's projections under current law, and this shows that the deficit will continue to fall at its fastest postwar pace this year and next year and then after

bottoming in 2015, slowly rise to about 3.8% of gdp by 2022. now, the cbo projection is under current law which includes the she questions -- sequester. this path of very rapid deficit reduction over the next couple of years inflicts near-term pain to the recovery and to american families, but it does not stabilize our finances. the to stabilize the debt relative to the size of the economy, we need the deficit to fall below 3% and stay there. that is why we set a target of $4 trillion over the next ten years. so we are most of the way there, but we need to finish the job.

and the sequester does not finish the job. in fact, it makes the job harder by slowing growth this year and next year and distracting from the real drivers of our deficit problems; providing health care costs for an aging population. president obama has offered a balanced approach to get our deficits to a sustainable level. it's frustrating to hear claims that the president hasn't proposed plan to end the sequester and stabilize our finances. he has, repeatedly. in fact, it's posted on the white house web site. you can easily find it by googling white house and sequestration plan. [laughter] this shows you what you get. you could try this at home, you could try this here if you have

a laptop. if you click on the second link there and then click on links underneath it, here's what you come up withment -- with. this is the president's last offer to speaker boehner in the fiscal cliff negotiations. the president proposed a balanced plan that stabilizes the debt relative to gdp, ends the sequester and strengthens the ongoing recovery. on the revenue side, consistent with the administration's fiscal year 2013 budget, the president has proposed to limit the value of itemized deductions to 28% for the wealthiest taxpayers and to close other loopholes. this would result in savings of close to $600 billion over the next decade. last december speaker boehner

said he was open to 800 billion, then a trillion in new revenues as part of tax reform that closed loopholes and deductions. now he says that our nation has gotten enough revenue. not a dime more. if you subtract the $600 billion in taxes that will be collected by allowing the bush tax cuts on the top 2% to expire under the atra, that would leave $400 billion in revenue based on his last offer. as far as spending cuts go, the president has proposed an additional $930 billion in spending cuts that address the main drivers of our deficit. you can see here the president has proposed health care savings of of $400 billion which by the beginning of the next decade is in line with the amount proposed by the bipartisan simpson-bowles

commission. furthermore, the president has offered to use the superlative consumer price index as a more accurate way of measuring cost of living adjustments to federal programs. and the president has offered an additional $200 billion in discretionary spending cuts beyond those required by the budget control act. these are not easy cuts for a democratic president to pose. president obama -- propose. president obama has shown a commitment to doing the hard things that are needed to stabilize our finances. including interest savings, all of these tax and spending changes would result in about $1.8 trillion in additional deficit reduction, and they would stable use our nation -- stabilize our nation's finances in the next decade in a balanced way. the president has also proposed a temporary growth initiative of investing $50 billion towards

fixing our nation's roads and highways to support recovery in the near term. research by ned gram lick and others has found that spending on maintenance of existing infrastructure has a very high return. in addition, it will help to put construction workers pack to work right away. -- back to work right away. pursuing a growth agenda today is important because as we saw in the 1990s and as many countries are learning the hard way today, nothing restores fiscal balance faster than economic growth to which everyone can contribute and from which everyone can benefit. you can see from the next slide that the president's plan would reduce the deficit below the 3% of gdp threshold and keep it there through the end of the next decade.

counting saved interest spending on the outlet side, the $2.2 trillion in deficit reduction that president obama has already signed into law is comprised of nearly 3 to 1 ratio of spending cuts to additional revenue. if the sequester remains in place, in this ratio would be pushed well out of balance to around a 4 to 1. and our immediate and long-term deficit problems will still remain. if congress were to pass the president's proposal, however, the ratio of spending cuts to additional revenues would be brought back into a reasonable balance of around 2 to 1 spending cuts to additional revenue, and we will have stabilized our debt and deficits relative to the size of the economy for a decade and made

strides in addressing the long-term drivers of our budget deficit. let me conclude by telling a story. a long time ago a young president called over to the council of economic advisers late one night. president kennedy's call was eventually transferred to a young senior economist named robert solo. bob solo told me president kennedy said at the other end of the phone, i always forget the difference between fiscal policy and monetary policy. which is the one i get to control? [laughter] solo responded that the fed is responsible for monetary policy and the president handles fiscal policy. in fact, solo being solo told me he said if you get confused, you

can think of m for martin for monetary policy. [laughter] now, of course, the president doesn't have full control over fiscal policy. both houses of congress must pass legislation which the president can sign or veto. this is how our system works. president obama has made it clear that he is willing to work with the congress to find a balanced solution to our fiscal challenges. unlike others at the table, he did not retreat from his final offer in the fiscal cliff negotiations. he has kept on the table a balanced plan to deficit reduction that makes responsible reforms to slow the growth of health care spending for an aging population. the single biggest driver of our long-term debt. and his proposal saves hundreds of billions of dollars by

getting rid of tax loopholes and deductions for the well off and well connected. but he has never said it's my way or the highway. he has kept his offer on the table in the hopes that we can reach a bipartisan solution that reforms our tax code and entitlements and puts us on the sustainable fiscal course. there are many ways to reach a balanced solution. if we follow our north star of growing the economy and the middle class, we will end up with a balanced plan that supports the economy in the near term while we take steps to address our long-term budget deficits. this is the ultimate that we must apply to government policy. thank you very much. [applause]

>> now, we do have some time for questions so, please, write any questions you have on cards, and we'll answer as many as we can. all right. thank you very much, dr. krueger, for your very insightful comments at this critical time. i might start out with asking, we've heard from a lot of budget experts including the congressional budget office that the middle class will ultimately have to pay part of the cost of reducing our growth of our debt. you've indicated a focus on the well connected, i guess it depends on how you define the middle class, but can you clear up perhaps some discrepancies on those two views? >> i don't think they're necessarily inconsistent. if you look at who bears the bankrupt of the spending cuts -- the brunt of the spending cuts already put in place and that the president has proposed, they

fall largely on middle class families. and that's one of the reasons why i think the american people think it's fair to ask those in the top income groups to contribute more. if you look at what's happened to income inequality in the u.s., if you look at the rise in incomes to the top 1%, 2% of americans even after the tax increases that congress put in place by the american taxpayer relief act and the further loophole closings that the president has proposed, after-tax income for the top 1% will still be at historically extremely high levels. i don't think anyone would say that the problem our economy faces now is that people lack incentives to be successful. so this is an example of the kind of balance that the president has proposed, that the middle class is already struggling with lower income

growth, stagnant wages and spending cuts that have already taken place. so that's why i think balance does add to fairness. >> one of the elements slightly off the budget issue was the state of the union address the president recommended increasing the minimum wage. with your background in economics, how many income brackets do you think that might affect? what impact would you see on groups such as teenagers and part-time workers? >> the president proposed, as you mentioned, raising the minimum wage from its current level of $7.25 to $9 an hour over the next few years. that would bring out back up in real terms to where it was when ronald reagan took office. it's a range that we've seen in our not-too-distant past.

research is somewhat mixed on the minimum wage, although i think most of it is concentrated around finding very little, if any, effect of modern increases in the minimum wage unemployment. the president's proposal is for a 24% increase. in the clinton years in the mid '90s, the minimum wage increased by 21%. that's the last time i did research personally on minimum wage, and that showed hardly any impact. i was struck by the way if you look at the ibm panel of expert economists, they by a fact or after about 4 to 1 favored an increase in the minimum wage and split about evenly about whether there would be a noticeable effect on unemployment. so i think that's within the mainstream view of economics now that the minimum wage does not have much impact on employment if it's in the range that we've seen historically in our data,

and the economists in that survey thought that whatever effects it may have in terms of employment, if any, would be outweighed by helping the lowest income earners in our society, those who have the least bargaining power and those of who have done the worst over the past few decades. >> with you've spoken about the importance of reducing the growth of entitlement programs. any specific measures besides using a different inflation index measure? >> yes. part of the president's proposal as i showed on the slide is to switch to the superlative cpi which a lot of research suggests is a more accurate measure. partly because of what we saul substitution bias, but also because of what we call finite sample bias. the way that the cpi is

constructed because of sampling variability in the estimation of prices at the lower level, that causes the index to slightly overstate inflation. is so if every price were measured as opposed to drawing a sample, we'd actually have a lower rate of price inflation, kind of a fine kind of metric point. so that's one of the president's proposals. that would raise about $130 billion in additional revenue. we would set aside money that helped protect most vulnerable and the old of the old from switching the index. but equally important, in fact, more importantly if you think about the size of the budget, the president proposed $400 million in med cower reforms, many of which -- medicare reforms, many of which have been outlined very explicitly in past budgets (and on the medicare specifically, the raising the retirement age, increasing the deductibility over time, any other areas of medicare?

because as you point out very correctly, health care is where the problem really is going to -- is in. >> well, raising the age doesn't really solve the problem. raising the age just shifts the burden. and that doesn't seem like the right solution. so the president has opposed raising the age of retirement and medicare eligibility age and has instead proposed means testing, medicare benefits, making other changes to providers so that we're spending money as effectively as possible. >> and in terms of a so of called -- so-called tax loophole, would you entertain, for instance, looking at the mortgage deduction? and how how would you address t? >> the president's proposal is to limit deductions for more gang, for state and like taxes, for other deductions to 28%.

so right now the way the tax cold works is warren buffett gets a much more generous tax advantage from deducting his mortgage than his secretary gets. because warren buffett will deduct at the 39.6 of % rate, and his secretary at a lower rate. doesn't seem that warren buffett needs more help buying a house, and i'm sure he would agree with this than his secretary. so the administration's proposal and i think economically makes a great deal of sense is to give the upper income groups the same tax advantage from tax expenditures as middle class families and lower the deductible to amount to 28%. but there are other ways. as i said, there are other ways of closing loop hoes. we think the this makes a lot of economic sense, but we're willing to discuss ways in which we can improve the tax code and eliminate or reduce the distortions. >> i think we have time for one final question. that would be, where would you

see as the on optimal shares of, gdp, of revenue and tax and spending in the budget? >> i don't have a precise answer for you on that. i think what we want to do, first of all, we have to recognize that because of commitments we've made as a nation to older populations and because of demographics, we have, we face rising costs. that's been known for a very long time. at the same time, i think we're at a critical point where we want to make sure that we invest in research, that we invest in our infrastructure so that america is a magnet for jobs. other countries are -- they've learned from our success. they've learned that education is a good way to strengthen your economy, and they're investing very heavily in education and research. so in a globally competitive

world, i think it's extremely important that we also preserve space in the budget for these critical investments. when businesses come to talk to us, they talk about the importance of having better infrastructure in the u.s., and that will help them to bring more jobs back to the u.s. so i can't give you a precise number and, of course, it depends upon whether it's done in a smart way or in an efficient way. >> well, i think you'd all agree that we're very fortunate to have someone who appreciates the importance of cost benefit analysis and is in the white house. so thank you very much, alan, that was terrific. >> thank you. [applause] >> now please proceed to the luncheon which is just a floor away. thank you. [inaudible conversations]

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

[inaudible conversations] [inaudible conversations] >> the u.s. senate is about to gavel in. senators will begin the session with general speeches, and at 5

eastern they'll begin debate on two judicial nominations with a vote scheduled for about half an hour later. and now to live coverage of the u.s. senate here on c-span2. the president pro tempore: the senate will come to order. the chaplain, dr. barry black, will lead the senate in prayer. the chaplain: let us pray. immortal, invisible god only wise, all your promises prove true. you gladden us with the glory of your handiwork, for your splendor surrounds us.

empower our senators to give their best to you and country, rising above obstacles with faith in the power of your providence. may they serve this land as your obedient servants, refusing to become discouraged because of the daunting challenges they face. lord, use them to make america a refuge for the oppressed and a bright beacon of hope for those who dwell in darkness. we pray in your great name. amen. the president pro tempore: please join me in reciting the pledge of allegiance

to our flag. i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. the president pro tempore: the majority leader. mr. reid: following leader remarks the senate will be in a period of morning business until 5:00 p.m. today. following that morning business the senate will proceed to executive session to consider the nomination of gary taranto, to be united states circuit judge for the federal circuit and the nomination of andrew gordon to be united states district judge for the district of nevada at 5:30 there will be at least one roll call vote on kweurgs of taranto. we hope the gordon nomination will be confirmed by voice. we hope to work on the continuing resolution bill received from the house. we need to complete action on the bill by the end of the week.

i'm told s. 505 is due for second reading. is that true, mr. president? the president pro tempore: the majority leader is correct and the the clerk will read for the second time. the clerk: s. 505, a bill to prohibit the use of drones to kill citizens of the united states within the united states. mr. reid: mr. president, i would object to further proceedings with respect to this bill. the president pro tempore: objection is heard. the bill will be placed on the calendar. mr. reid: mr. president, this evening the senate will vote on two judicial nominations. richard gary taranto of maryland to be united states circuit judge for the federal circuit and andrew patrick gordon of nevada to be united states district judge for the district of nevada. andrew gordon, las vegas, graduated from harvard law school, clairmont college in southern california, the so-called harvard of the west. he's a partner of the law firm mcdonald taranto where he began practicing many years ago

and is now a partner in that law firm. he handles as a member of that firm, complex commercial disputes, they focus on internal conflict resolution as an arbitrator and mediator. he performs pro bono work including handling adoption proceedings. for example, he represented an inmate on death row in a habeas corpus proceeding. he has been named one of the best lawyers in america. i had the good fortune to practice law that his father hanked practiced law in las vegas. hank was a well-known lawyer in las vegas. there is no doubt in my mind that andy gordon will serve the court well and be one of the great judges in las vegas. we're going to take up this week legislation to fund the government at the end of the fiscal year. i applaud the work done by chairman mikulski and ranking member shelby. these two individuals are

seasoned veterans. they have worked hard to get this legislation done, as only they can do. they are two of our most senior members and two of the most respected members. the measure that we're going to work on starting today was passed by the house of representatives last week. it's not perfect. we hope to improve upon that. there will be amendments offered. we're working on a process to consider those amendments. this week we'll offer another opportunity for the senate to return to regular order, an opportunity for this body to legislate through cooperation, through compromise, as we used to do. this legislation will be a test of the senate's goodwill. america's economy is poised to grow and expand. the last thing it needs is another manufactured crisis such as a government shutdown to derail its progress. mr. president, for some public servants, the political fires lit by their first trip to

washington, whereby -- being moved bay memorable party convention speech. for others, the history of military service leads to a career in public service. for still others, a single issue such as a vibrant community propels them into community. for senator carl levin, serving michigan families is something of a family business. his father worked as a corrections commissioner. his uncle theodore was chief judge for the district court in the eastern district of michigan for many, many years. i was elected to congress in 1982, the same year that senator levin's brother, sander, was elected to the house of representatives. he has been ranking member of the house ways and means committee. he's a distinguished member of the house of representatives, having served that body for going on 31 years. mr. president, the first time i

met carl levin was over here when i was in the house, going to run for the senate. we met in his office and the first thing he said as i came to washington a few years ago, he said, he's my brother but also my best friend. mr. president, how about that? that's something i have never ever forgotten. these two brothers, natives of detroit, have done much for the state of michigan. carl levin is truly an outstanding senator and even a better man. the senior senator from michigan is the longest-serving senator in its state's history. he dedicated his life to michigan families before elected to the senate. he served as general counsel to the civil rights commission and assistant attorney general to the state commission. he served two terms in the detroit city counsel, one as president of the city cowan sefplt as a senator, senator

levin consistently advocated for michigan families, whether that meant supporting the auto industry, protecting lake michigan, holding credit card companies accountable or securing funding for our sons and daughters serving in the military. as chairman of the armed services committee, carl levin is the nation's most respected voice on national security and the most powerful advocate for men and women of the united states armed forces. as chairman of the permanent senate committee on investigations, he sought the truth on behalf of american families time and time again. he's led investigations for the 2008 financial crisis, abusive credit practices and abusive credit card practices and a long extensive, extremely enlightening bit of work on the enron collapse. his dedication to the senate, is matched only by his dedication to his own family. he and his lovely wife barbara have been married for more than

50 years. they have three daughters and six grandchildren. i'm confident carl is looking to spending more time with these grandchildren, taking long walks through his, his and sandy's tree farm. it's a wonderful place they go. they don't harvest anything. it's just a bunch of trees. and they love that tree farm. i so admire senator levin. clearly when he retires in two years, the united states senate will lose his powerful voice for military families and investigating things that need to be investigated by this body. michigan is a much better place because of carl levin. our country, the united states, is a much better place because of carl levin's service. would the chair announce the business for the day? the presiding officer: under the previous order, the leadership time is reserved. under the previous order, the senate will be in a period of morning business until 5:00 p.m. with senators permitted to speak therein for up to ten minutes

each. the clerk will call the roll. quorum call:

quorum call:

quorum call:

quorum call:

quorum call:

mr. hatch: mr. president? the presiding officer: the senator from utah. mr. hatch: mr. president, i ask unanimous consent the quorum call be dispensed with. the presiding officer: without objection. mr. hatch: now, mr. president, there is no -- it's no secret that our tax code is in dire need of reform. although there are differences of opinion about how best to fix our tax code, i don't think there is anyone in this chamber who would argue in saver of keeping our current code as it is. as i have said before, i believe there is for the first time in many years real momentum to get

something done on tax reform this year. the leaders of the tax-writing committees on both sides of the aisle have expressed a desire to move forward on tax reform and there is real bipartisan support in both the house and the senate. this is going to be difficult, mr. president. there's no question about it. it's going to be very hard to form and maintain a coalition in favor of a set of reforms that will simplify the current tax code and promote economic growth. it's going to take a lot of hard work and it's going to take people from both parties to get it done. but i think we can succeed. however, last week it was disheartening to hear the chairperson of the senate budget committee talk about the possibility of including instructions for tax reform in a budget reconciliation package. this news was discouraging for a number of reasons. first and foremost, reconciliation is by its very nature a partisan process.

in the few instances in recent history when reconciliation resulted in bipartisan legislation, there was bipartisan support at the outset that simply is not the case with this proposal. if the budget committee goes this route, it will needlessly inject partisanship into a process that if it is going to have any chance of success must be bipartisan. there is simply no way to pass a purely partisan tax reform package with the current makeup of congress. make no mistake, mr. president. if the senate majority pursues this course of action, it will poison the well for tax reform, it will -- it will make it all but impossible. i would urge my colleagues on the budget committee to resist this temptation. if they really want to see tax reform succeed, they should let the tax-writing committees in both the house and the senate do their jobs. another concern i have is that the statements by the budget

committee chairwoman make it unclear whether she is arguing in favor of tax reform or simply in favor of raising taxes. my suspicion is that she is talking about the latter. it has become more and more common for my friends on the other side of the aisle to argue in favor of simply eliminating so-called tax loopholes in order to raise revenue and then calling the process -- quote -- "tax reform." unquote. indeed, the president used this very same tactic in the state of the union. he stated his support for -- quote -- "comprehensive tax reform" but he talked almost exclusively about using the process to raise more revenue. some of my colleagues have made similar arguments here in the senate. well, mr. president, that is not tax reform at all. tax reform as it has been traditionally proposed and understood is a process of eliminating certain preferences in order to broaden the tax base

and lower the rates. this is how you simplify the tax code. this is how you make it more efficient and fair. and most importantly, it is how you make the tax code more conducive to economic growth. if you are eliminated select deductions and preferences only to pocket the revenue for future spending, you're not reforming the tax code. you're simply raising taxes. so if the budget committee is about to reward a budget that includes instructions for tax reform, i can't help but assume that the process will be more about raising revenues than it will be about actually fixing our broken tax system. once again, mr. president, if that's the case, the budget committee would be injecting partisanship into what has up to now been mostly a bipartisan effort. at the same time they would be perpetuating the myth that our tax code is full of so-called loopholes that benefit only the

rich. i've spoken about this at hr-pbgt on -- length on the sene floor. the term we use most often to describe deductions in the tax code are called -- quote -- "tax expenditures" which many plies by allowing people to keep more of their money the government is en gauging in spending. the government has gone so far to infer that deductions that reduce an individual's tax burden as, quote, spending in the tax code. unquote. when many of my democrat friends talk about tax reform, they talk about raising revenues so they can spend it. far too often they refer to these provisions as loopholes. for example, the budget committee chairwoman was quoted last week as saying that her committee is looking at closing loopholes as a means of reducing the deficit. let me make one thing clear.

describing tax expenditures as loopholes is simply and deliberately inaccurate. a loophole is something that congress did not intend and in general we would eliminate loopholes once we learned that were being improperly exploited. tax expenditures by contrast are place bid congress into tax code deliberately. the largest tax expenditures, the exclusion for employer provided health benefits. the -- whether these expenditures benefit someone in the middle class or one of the so-called rich, they are not loopholes. these are not tax schemes that some lawyer or accountant concocted to help his clients game the system. these are broad-based tax

incentives used by many americans. favorable tax treatment of tuition expenses could be labeled spending through the tax code or a -- quote -- "loophole." but you don't hear many people using those terms to explain them. rather, my friends on the other side of the aisle use the term -- quote -- "loophole" to describe things they do not like and -- quote -- "investment" to describe things they do like. that is about picking winners and losers and not about tax reform. even if you disagree with a particular tax expenditure, it is simply dishonest to refer to it as a loophole. an honest debate requiring recognition that all of these tax expenditures were designed by congress with economic or social goals in mind and are not tax escapes created by accident or sneaky abuses of the tax code.

furthermore, if we're going to talk about eliminating tax expenditures, we need to be clear about who benefits from them. if you look at the list of the largest tax expenditures, you'll find that the ones most often cited by my colleagues on the other side, like bonus depreciation on corporate jets or tax breaks for oil companies are not among them. what you'll find is a list of deductions that disproportionately benefit the middle class. that being the case, if my colleagues are serious about significantly reducing the deficit by eliminating deductions and so-called loopholes, they will necessarily be talking about raising taxes on the middle class. indeed, if they only focus on those provisions that benefit the so-called rich, they will not be able to raise enough revenue to make a serious dent in the deficit. for example, let's take a look at the mortgage interest

deduction. according to the joint committee on taxation, only 35% of the benefit of the mortgage interest deduction goes to taxpayers with incomes over $100,000 per year. actually over $200,000 a year. the remaining 65% goes to taxpayers who make less than $200,000 a year. so by a ratio of almost two to one, the mortgage interest deduction benefits the middle class, is not the so-called rich. we can also liked at the earned-income tax credit, another large tax expenditure. this is a fully refundable tax credit meaning that taxpayers can receive it whether they pay income taxes or not. high-income earners receive no benefits from the earned-income tax credit. the story is the same about the child tax credit, which is limited to lower or middle-income earners. none of it goes to taxpayers

with higher incomes. likewise, all education credits go to taxpayers making less than $200,000 a year. the list goes on and on. deductions for real property taxes, medical expenses, child care and student loan interest, all of them predominantly if not exclusively benefit people making less than $200,000 a year. benefits from some other large tax expenditures are distributed almost proportionately between higher and middle-income earners. one such provision is the state and local income and sales tax deduction. according to joint committee on taxation data, 55% of the benefit of this deduction goes to taxpayers making more than $200,000 a year and 45% of the benefit goes to people making less than $200,000 a year. this expenditure accounts for about half of the revenue loss attributable to itemized

deductions. and since the benefits are slightly more in favor of those with higher incomes, it would likely be a target for a -- quote, unquote -- tax reform exercise designed to raise revenue. however, much of the burden of limiting or eliminating this deduction would fall on the middle class. it's interesting to note this past december "the new york times" editorial page, which is usually very much in sync with the philosophy of the democratic party, recommended caution when considering limits to this particular deduction. yet, it's one of the hrarblgest hrarblgest -- largest tax expenditures in the code. i ask unanimous consent that a copy of the "new york times" editorial from december 6, 2012, entitled -- quote -- "keep the state tax deduction," be entered into the record at this point. the presiding officer: without objection. mr. hatch: once again,

mr. president, when my friends on the other side of the aisle talk about eliminating so-called loopholes for the sole purpose of raising revenue, they are either talking about raising taxes on the middle class or they are proposing changes that will have no meaningful impact on the deficit at all. if the goal is to construct political talking points and raise relatively insignificant amounts of revenue by going after politically convenient targets -- jet owners, oil companies, private equity firms, and the like -- you can do that by eliminating a handful of so-called loopholes. but that isn't the stated goal of the president nor is it what my colleagues on the budget committee talk about when they say they want to pursue -- quote, unquote -- tax reform through reconciliation. instead they talk about reducing deficits and debt and attaining fiscal sustain ability. they cannot do that by focusing efforts on tax provisions that only benefit the wealthy.

the money simply isn't there. so if we're not going to cut spending and if our deficit-reduction efforts are only focused on eliminating so-called tax loopholes, then the middle class happens to be the target. we need a different approach. we need tax reform that focuses on eliminating preferences on the tax code, not for the purpose of raising taxes, but for lowering the rates and encouraging economic growth. this, unlike the idea of tax reform advanced by some of our friends on the other side, will benefit the middle class. that, mr. president, is what tax reform is all about. anyone talking about raising taxes or closing loopholes for the sole purpose of generating revenue is not talking about tax reform. for these reasons, i hope the budget committee will go a different renewable portfolio. -- different renewable portfolio. i hope they will let the tax

reform efforts underway in the house and senate run their course. if they don't, if they hijack the process in order to once again raise taxes on the american people and to vilify republicans as being the -- quote -- "party of the rich," we will not see tax reform happen this year or quite likely any year in the near future. mr. president, our nation is facing a number of challenges. in addition to mounting debts and deficits, our economic recovery remains on a slow and tenuous path. we need people who are willing to make the difficult choices in order to solve these problems. that will mean structural reforms to our entitlement programs which are the main drivers of our debts. and once again, that will mean real, meaningful changes to our tax code, which continues to be an obstacle to sustainable economic growth.

as i stated, i do believe that there are people on both sides of the aisle who recognize these needs, particularly when it comes to tax reform. sadly, there are also those who would rather campaign on these problems, attacking anyone who proposes real solutions while offering only political talking points in return. that, mr. president, is not what the american people deserve. mr. president, i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

quorum call:

mr. mcconnell: mr. president? the presiding officer: the republican leader. mr. mcconnell: i ask that further proceedings you should the quorum call be dispensed with. the presiding officer: without objection. mr. mcconnell: mr. president, next week marks the third anniversary of obamacare, and i'll remind you that leading up to its passage in march 20610, republicans warned entsdzlessly that the bill would cost too much and wouldn't work the way the president and other washington democrats said it would. then speaker pelosi famously said we needed to pass the bill to learn what was in it. well, nearly three years and thousands of pages of regulations later, we've learned a lot about obamacare. it looks like our worst fears are coming true. right down the hall president obama promised that if congress would only pass the kind of health care takeover he was after, it would slow the growth of health care costs for our families, our businesses, and for our government.

today the facts tell a very different story. according to congress's own nonpartisan budget experts, obamacare will increase federal health spending and subsidies by nearly $600 billion, and that's only projected to get worse over time. just a few weeks ago the same nonpartisan experts told us spending is set to -- quote -- "grow rapidly when provisions of the affordable care act are fully implemented by mid-decked." end quote. their words, not mine. so when the president tries to convince americans that washington doesn't have a spending problem but a health spending problem, what he's not saying is that his own health care slaw actually making things worse, not better. and that's to say nothing of the devastating effects of this law for american families. then-senator obama promised to lower premiums by at much as

$2,500 per peopl family when hen for president. three years after obamacare's passage, premiums have actually risen by nearly that same amount. and that is before the most expensive new rules, taxes, and mandates kick in. after that, the experts tell us premiums could increase by $2,100 per family. tragically, obamacare will place the greatest burden on young americans, those just starting to build lives of their own. this is a time in their lives when every dollar counts. yet three years after obamacare's passage, experts say that premiums for mental health healthy young people could rise by 169%. part of the reason costs are set to increase so dramatically is because obamacare levies so many new taxes and fees but that's really only half the story. it's also because the law imposes so many onerous

regulations. just look at this stack right here. this is one day's worth of obamacare regulations, one day's worth. 828 pages in one day. now, overall there are nearly 20,000 pages with many, many more to come. but this is one day's worth, 828 pages. this law is a disaster waiting to happen. imagine the burden we're placing on a single mom who wants to open her own store, or the young entrepreneur who wants to sell some new idea or the business sewn owner we all know from back home who employ so many of our constituents, instead of encouraging them to create jobs and grow the committee we're mitting them with a brick of regulations. last week, the federal reserve said what many of us have been

predicting all along, obamacare is also costing jobs. recent polling bears this out, too. one survey said more than half of american small business owners are worried health care costs and taxes will hurt their operate operating environment -- quote -- "a lot" -- end quote. another small business survey recently identified these issues at the top two concerns among eight tested. there are countless real-world examples of how this is hurting the the folks we represent. let me give you just one example. one of my constituents is junior bridgeman. he was once nor known for his stills on the basketball court. today louisvilleians know him as the owner of a restaurant franchise chiez who employs a lot of kentuckians. he wrote to say that obamacare is a serious impediment not only to hiring but hiring low-income employees in particular. here's what he had to say. "it does not consider our

ability to afford the mandate. under our current labor model, it will increase labor costs whether we offer health care or pay the tax penalties. this creates in essence a disincentive to hire low-income employees. that's junior bridgeman. the president's allies are worried, too. we've seen the stories about democrats who voted for the bill now having second thoughts about specific funding mechanisms for it. but now union leaders are even expressing fears about the law driving up costs of their own health care plans, making unionized workers actually less competitive. this is the worst time to be imposening tens of thousands of pages of new regulations and onerous taxes on the very families and businesses that can least afford them. we owe our constituents better. particularly those who are struggling the most. look, obamacare is just too expensive. and it's not working the way washington democrats promised.

that's why obamacare needs to be repealed. that's why i will continue to push for its real re-peel. -- for its repeal. mr. president, i yield the floor. i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

quorum call:

quorum call:

mr. coats: mr. president? the presiding officer: the senator from indiana. mr. coats: mr. president, i ask unanimous consent that the call of the quorum be vitiated. the presiding officer: without objection, so ordered. mr. coats: mr. president, a few weeks ago u.s. immigration and customs enforcement otherwise known as i.c.e. initiated an unexplainable order to take action to reduce the population of detained illegal aliens. and they said it was for budgetary reasons. and i quote a spokesman for i.c.e. who said "the decision was made because fiscal uncertainty remains over the continuing resolution and

possible sequestration." well, we've had fiscal uncertainty for now for four years. and -- but the decision to release these detainees was made before the sequestration even took place, and the procedures put in place under the continuing resolution and the resources for covering the cost of detaining these illegal immigrants until they could be brought to trial and sent back home, funds for that were put in place by the funding that we provided for them in september running through the end of this month, or to march 27. and so a lot of questions were raised that i think needed to be answered, because there was a furor over this idea of why are we releasing and putting back out on the streets in america -- a lot of this was in arizona -- why are we putting these people

back out on to the streets when the law didn't require it. the resources were there to keep them there. they were put out before the sequestration even took place, before across-the-board cuts even took place. i just wanted to get some answers. and so i wrote secretary napolitano a letter asking her to provide answers to a series of questions which i'll state in just a moment and have had answer to me in my office by friday, march 8. i returned today to find that that answer was not there. i could give the secretary the benefit of the doubt, saying it's in the mail. we know that that doesn't always guarantee next-day delivery. nevertheless, i think the american people, and particularly those impacted, those communities impacted by these illegal immigrants, not

knowing who they are, not knowing why they're released, not knowing whether we can bring them back to stand before a judge, plead their case or be processed for return to where they came from, but roaming the streets. law enforcement officials in these communities are up in arms saying they don't know who they are. they don't know whether they're criminals, don't know whether they can ever bring them back into the i.c.e. system and be detained and ready for processing. that is why i asked the secretary to respond to my letter. now, subsequent to that, officials at i.c.e. have denied recent press reports regarding plans to release even more detained illegal immigrants. but just last tuesday an internal i.c.e. document obtained by the house judiciary committee revealed a plan of

i.c.e. to continue reducing detention center populations each week while the sequestration was in place. and that document shows one scenario where the number of illegal immigrants in custody could be reduced by more than 1,000 a week between february 15 and march 31. initial reports, that was just a couple hundred. i think 300 was the number given. only to find out it was more than 1,000. and now we find out it will be more than 1,000 each week for about a six- or seven-week period of time. what we're trying to do is get the facts here and get an explanation of what has happened, why it took place in the manner that it did, what's the administration's plan for going forward with this. i'm doing this because as ranking member on the appropriations committee for homeland security, i'm getting all kinds of questions from people, not just my colleagues but others across the country

basically saying what's going on here? and i would like to be taoeubl respond to -- i would like to be able to respond to those questions with answers or have the department respond. as the head of the department, secretary napolitano needs to provide information on who made this decision, why this decision was made, why was it made before the sequester -- sequestration even took effect. why was the number of released of around 300 when it was well over 1,000? and a whole number of other questions. thus, release of this detained information and denial of that has the potential to put these communities at risk, which they already are, and sends a message to those who come here and break the law as illegal immigrants, that our government's not serious. i'm sure word is spreading through mexico and other parts of entry for illegal tkpwrepbts tkpwrepbts -- immigrants, don't

worry, you may get picked up, put in a detention center, they'll provide bed and food and so on but they're releasing 1,000 a week. i can see the traffickers pitching this to tens or hundreds of thousands of people, taking their money, getting them across the border, breaching the fence or tunneling under the fence or climbing over the fence, or any of a number of other ways that they are bringing illegals into this country. i spent three days down at the border. while we are making some strides, we've got a long way to go to stop this illegal immigration. so we need clarification and we need an explanation of what is happening here. let me just state some of the questions that i've raised. to the kraeur and why we need -- to the secretary and why we need this information. why did the federal government release detained illegal immigrants one week before the sequester took effect and blame

it on budget cuts, when those cuts have not gone in place? why didn't i.c.e. take the proper steps necessary to manage its resources efficiently to manage the various programs? as i said earlier, congress itself provided them with adequate resources to maintain a level of 34,000 illegal detainees and not go below -- they did not need to go below that number because they had the resources to pay for that. we provided that by law, and they were required by law to do that. what triggered i.c.e. to instruct field offices to reduce the detainee population a week before the sequester hit? how many illegal immigrants were hit during that time? exactly how many of these individuals were released solely due to budget reasons? how many of the released individuals, if any, were designated as criminal? law enforcement people, obviously sr-rbgs to know that.

-- have to know that. have instructions been given to field offices to reduce arrests of illegal aliens and taken into detention? these are some of the many questions i asked secretary napolitano because i think the congress and the american people deserve answers to these questions. as the head of the department, secretary napolitano has the ultimate responsibility to oversee the decisions and management of agency resources. she said this decision was made at a level below her. we hear a lot of that from administration officials. it's not my fault. it's somebody else's fault ultimately. that is why they rise to the position of secretary. that is they are the ones that ultimately oversee the program and need to take responsibility, or at least need to answer a question posed by a member of the senate taos why they did -- as to why they did what they did and how we're going to fix this. failing to respond to the congress and to our requests and failure to provide the american

people with more information behind this decision is something we should not accept. and i will keep pressing for these answers. mr. president, i yield the floor and suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call: quorum call:

a senator: mr. president? the presiding officer: the senator from west virginia. mr. manchin: i ask this the quorum call be dispensed with

and ask to speak for up to ten minute pz. the presiding officer: without objection. mr. manchin: i rise to bring ateption to a recent decision by the department of defense to authorize a new military deck acres the distinguished warfare medal, as a way to recognize the contribution of silent warriors such as drone pilots and cyber warriors. i have absolutely no objection to the creation of the medal. every day our silent warriors use modern warfare technology in ways that have had an impact on today'today's battle field. saving the lives of countless men and women and enhances the national security of our country. however, mr. president, i adamantly oppose the decision by the defense department to elevate the distinguished warfare medal above the bronze star and the purple heart, which are awarded for acts of heroism on the battlefield and above the soldier's medal which is given for acts of gallon antory beyond the -- gallantry beyond the

battlefield. i believe that medals should maintain their presence above noncombat awards. placing the distinguished warfare medal above the bronze star and purple heart diminishes the significance of such awards earned by risking one's life in direct combat or through acts of heroism. i'm not alone in my opposition to the precedence of the defense department's plans to give the distinguished warfare medal. a group of 21 other senators has joined me in a letter to defense secretary hagel irking him to econsider the department's decision. the veterans of foreign wars in my state and in your state, mr. president, has also asked secretary hagel to reconsider and while the secretary has told the v.f.w. that he has satisfied with the criteria and placement of the distinguished warfare medal, i believe that we can still make the case that combat awards and medals for gallantry

should remain the military's highest honors. in his response to the v.f.w. defending the new medal, secretary hagel assets that that are numerous medals that may be available for achievements higher than the bronze star. that is true. there are medals such as the legion of merit, not directly linked to a single act of valor, but these medals recognize distinguished service often spanning several generations of service. these awards are given for vastly different periods and different types of service. comparing awards for lifetime achievement to the distinguished warfare medal, which even secretary hagel's letter states is awarded for a single -- and i repeat, a single extraordinary act, is not an appropriate justification for its precedence above the bronze star and purple heart. veterans groups are understandably upset.

the new distinguished warfare medal appears to be a wartime medal boyfriend of bay on a single event that trumps acts of valor on the field. in this dispute i think it is instructive to consider why the bronze star and purple heart were created. the bronze star was conceived by colonel rustle red reader in 1943. he and other military officers felt there was a need tar a ground combat medal equivalent to the air medal which was awarded for meritorious achievement to our pilots and flight crews. in fact, originally the award that became the bronze star was proposed as the ground medal. the award was created to boost morale of american ground forces during world war ii, as general george c. marshal explained to president roosevelt in a letter, "the fact that the ground troops infantry in particular lead miserable lives of extreme discomfort and are the ones -- and are the ones -- most close in earn pal combat with the

enemy makes the maintenance of their morale of great importance. the award of the air medal has had an adverse reaction on the ground troops particularly in infantry riflemen who are suffering the heaviest losses. air or in frowned in the earp and enduring some of our greatest hardships. the purple heart, of course, is one of our country's oldest military decorations. originally instituted by george washington, then the commander in chief of the continental army in 1782, to reward troops for what he called "unusual gallantry" an essential service. the purple heart was revived as a military decoration in 1932 on the 200th anniversary of george washington's birthday. and in 1985, by an act of congress, it was given its current precedence just below the bronze star and directly above the meritorious service

medals. a clear recognition of the special valor of those who receive it. mr. president, i recognize that military awards should be updated as the tactics of warfare change. drones and cyber warfare play a role in the defense of this great country, and there is no question that each member of our military plays a crucial role in protecting our nation and every american. but i've listened to west virginia renters and agree with them. our brave service members who face life-and-death situations deserve the most distinguished medals the united states military awards. again, i support the distinguished warfare medal. i want to make no mistake about that. but i do not believe it should be given higher precedence than awards for those who have faced the enemy on the battlefield. awards earned for heroism, patriotism, and a willingness to make the ultimate sacrifice for the freedoms that we all enjoy

every day should not be ranked below a medal earned in relative safety. i agree with vints who have expressed their concerns about the precedence the defense department intends to give the distinguished warfare med african-american i share their belief that combat awards are sacred, fliecting the special bravery of americans who are willing to sacrifice all for their country as well as their brothers and sissers in arms. and i join them in urging the defense department to preserve the legacy of these sacred awards by leaving their precedence undisturbed. mr. president, i thank secretary hagel for his courageous military service to our country. through his combat spears in vietnam, he knows all too well the clash and the heat of battle, and he shares a special bond with generations of americans from concord to kabul who have risked their lives in the defense of this great country. many of whom have paid the

ultimate sacrifice for our freedom. i hope for that reason that he reconsiders the precedence of the distinguished warfare medal and agrees that combat awards should remain our military's highest honors. mr. president, thank you.