>> he asked a very good question, sort of earlier, i don't know if you want -- if you would ask the same question or something else before you head out, that would be great. >> may be two quick questions. secretary lute, how long have you been to the agency? four years.

having been there now and understand the complexity of the 22 different agencies, again this is all hindsight, monday morning quarterbacking, are there any of those agencies you think might've been restructured better someplace else? maybe shouldn't be part of the department? is there any restructuring, just in hindsight, or do you think things are pretty well comprised here? >> thank you, senator. i've been running organizations for a long time. i don't have too many organizational theologies. you can always do things generally to make improvements. if you ask any of the 20 to agencies, the legacies or the offices that have come together, can they find themselves of creating a son, -- yes, they can. can they find itself in the five missions, cybersecurity and building national resilience? yes, they can. so largely for the most part they are in the right place

speaker just getting back to the audit. can you describe the major reason why that hasn't been achievable in the last 10 years? is at the incompatibility of the accounting systems between 22 different agencies? just a complete audit. >> we have made progress over every year. we are focused on property and i think we will be able to resolve it for 12 and certainly going forward. >> so it's really just the complexity of individual issues as opposed to being able to account for that 29% of all land the federal government operates that is now under your jurisdiction? >> it's a committed challenge. it's not that we don't know what to do. it's not that we don't have the tools. it is a tremendous challenge. it's not that we lack the commitment or the help and support of our partners. we have all of those things. we will get it done. >> so it's just a number of things you have to account for? >> it's a big job. >> thank you, mr. chairman. >> banks are sitting with us to

ask those questions. good questions. we will start off with questions if i could for deputy secretary. focus for a couple of minutes on the next steps of the department that will be taken to improve the management of the department. the chair recommends the -- independently validate the effectiveness and sustainability that authority been made. just ask how will you do that? and also what type of reports will be available to this committee so that we can monitor the progress that is occurring and meet our responsibilities for providing good oversight? >> thank you, chairman. we have done several things. one is to launch the management health initiative which is designed to create a dashboard for the look at critical systems and performances. as i mentioned we have for the first time begun to compile a a statistical compendium to give

us visibility into all of the resources that we have and the department had out there a fight against those nations. so building this kind of business intelligence and understanding of our operation is fundamental to be able to report authoritative way on the competence and achievements we have made. we look forward to working with this committee to get that right and to establish regularize reporting to give you the visibility we have. >> we all know that management matters and good management is the platform on which agencies and businesses execute their missions. i hope it's one of the missions that comes out is that good management matters. i'm convinced we're good management. we have some continuity in that management. i think secretary napolitano -- nobody is perfect. i think she's very good administrator and very committed. i think you are, too, and i think the fact that she's going to be staying around for

hopefully four more years, i hope you will be staying around for at least that long, and that lisa plays a very good management team. over your right shoulder is roxio forest. is that the man? raffaello is undersecretary of management. a lot of what -- we want to acknowledge him, the team that he works with, so thanks so much. deputy secretary lute, would you provide us with just a couple of baby concrete examples of in the past were weak management has really undermined the management, undermanned and -- underwent the performance of the department? and conversely where good management has enable the department to better carry out its mission? so a couple of good examples, you know, bad management undermine the department, maybe one or two words just the

opposite. >> thank you, mr. chairman. first if you allow me, you much of me say the secretary is not perfect. she is a terrific boss and a terrific leader -- >> i will say that chairman here is not perfect. i know the secretary for a long time. as good as she is though -- >> leadership and management are things that i paid a lot of attention to over the course of nearly 35 years, working in the public sector, the military, and the international civil service and in the not-for-profit sector as well. what management needs to very clearly is provide people purpose and pride. you don't run organizations and putting people down. you've got to see very clearly what is our job here, and what we try to do in the department of homeland security, four years ago, i stood in a doorjamb of

what my colleagues and said we needed never the purpose of this department in very clear terms. we need to conduct a bottom-up review of what we're doing imbalance that examination against it is important to do. we need to get off jill hybrid and become audible. so those are the kind of examples and we've made progress in every single one of those areas, if i can be allowed. when you're creating a new department and a new enterprise, i've done this down several times in the public sector. this is essential for people understand how what they have been doing now contributes to the purpose that they being asked to perform. it's easy sometimes particularly at the operational level to be absorbed in the day to day and takes a great deal of effort to sit back, develop perspective and a strategic understanding of how those efforts add up to an overarching purpose. so narrating that purpose of homeland security, clarifying the five missionaries as we have

done, orienting people i in the direction of our you perform these missions? are contributing to running ourselves? re: contribute to public accountability? if whatever you're doing is not in one of those three pockets, stop doing it. is a particular leadership challenge when you're doing startups. one, that i think that we have met together with those have gone before us in establishing this department. >> one more for you if i could. secretary lute, when it talks about this going on, continuing resolution, not perfect but it's better than stop and go. fiscal cliff, you know, lurching from emergency to emergency. still a tough environment to be operating for the foreseeable future. you think you will be able to improve upon the final management that has been made in the past five years? the senate version of fiscal year continue resolution that we

passed yesterday in the senate cuts about $17 million from the department's management functions, and just tell us what could be the practical impact of reduction of that nature. for example, does this put in jeopardy to departments ability to do rigorous views of rigorous reviews that gao recommends? >> you don't run an operational department without the bill to hire, retain and manage. without the bill to procure goods and services without the ability run your financial system from and accountability point of view. all of those will be affected by cuts. things may take longer. there may be aspects of things we don't get to as thoroughly as we would like under other circumstances. our job is to limit any negative affect and prioritize, part of the leadership job. >> all right. dr. coburn, please proceed.

>> secretary lute, i know you know i appreciate your work. i hope you'll have some of these -- someone surrender dear is teresa's paper and i think it's unfortunate you haven't read it. it was published january 8. the fact is there some significant assistance that you need to beware of, rather than to dismiss them. especially since it sounds like you or your staff hasn't read his scholarship. so i hope you will leave somebody out to testify to hear his testimony about what his research shows and his their criticism. and then give us an answer to that. spent i did read his paper. >> are you think it's totally off-base? >> i disagree. i disagree with what he finds. i do think we know what our purpose is. i do think we now how to orient our mission of for that purpose. >> that's there. -- that is fair.

a number of recommendations were made by the 9/11 commission, and that's a fairly remote commission. one is the status of tsa's effort on explosives, and i would just like an update of where we are and where you're going to be on that requirement. the other requirement that they had is on the us-visit program. gao found it was 825,000 cases of data that are not matched to the cracked fingerprints. they might be fraudulent, and right now there's no way determine whether or not they are fraudulent. and you don't have to add to the snippet i don't expect you to know that detail and understand that. but to me those represent to the areas where we think substantive recommendations by the 9/11 commission that we've not achieved the goal. and both of them are significantly important to the

nation's of your organization. i hope you respond to me on the. since 2000 for your agency has dispersed $35 billion in grants. what do you know about the effectiveness and the competence of those grants? >> thank you, doctor coburn. we'll have the kind of granular visibility into the accomplishments that we want to have. we do know though if greater a great deal of capability across the country in those grants. and we do know that there is a need for a comprehensive approach to financial assistance that the federal government come in our case, dhs provides. we have written that approach to financial systems. we have taken a look at everything from understanding

requirements into grantmaking area, how to build and work with the communities at the state level and local levels in constructing well-written grants, proposals. we look at the accountability and our ratio of personal to oversight. we've got a lot to do but we've begun to make progress through the financial assistance work under the direction of our cfo. >> do you think fema at the very least shoe track what grants are spent? >> yes, i do. >> are you? >> not as well as we would like but we are improving. >> okay. gao found that fewer than 10% of dhs's acquisition programs fully comply with the new acquisition policy. and i know this is a work in progress so one of actually being critical when i make that note. i know that, your intent and goal was to accomplish that. and they also found that

one-third of the program that should have had approved acquisition baselines actually do. the baselines actually are probably the most important tools for managing individual programs and conducting congressional oversight. having said that, what steps are you taking to hold components accountable for complying with the dhs acquisition policy? i know you put the policy in. where is the management accountability to major the agencies are holding within the acquisition policy? >> as you noted, we have drawn all of our programs under management directive one of two. they submit each of the programs submit to regular review by the acquisition review board. decisions are taken. we will not progress if we're not satisfied with questions and accountability are in line. we have instituted a lifecycle management cost model as well which we are imposing, and we've

shut programs down that were not performing. so we have begun to change the culture. i think we have done a very long way. it's unthinkable we would undertake a major acquisition without a careful review under our direct is procedures of what our requirements are and exposing those requirements to regular oversight to the arb process spend how about the acquisitions that were started before you started? what he doing with a? >> some of them have proven problematic, and all of them we are incorporating into the new process. >> would you submit to the committee the ones that you terminated and the ones that are probably? >> yes. >> thank you. i'm not going to -- my first drink was as an accountant and as an auditor. and i can tell you my expense when i talked to a marine captains and colonels today, they are so thankful that the marine corps is just about to pass an audit. because what it's done is made their job easier and their

decision-making easier because they now have visibility on the key parameters which we judge the outcome of a decision, or directed them to make a new decision. are your people ready to use accounting information to make management decisions, and all the way through all 22 agencies? >> that's a great question, dr. coburn. the answer is absolutely. if i could just call out the men and women of the coast guard as the first uniform service -- >> the first one to do it. >> to achieve auditable status. this is something that we have and the commandant house and the leadership across the coast guard has pushed down. you're exactly right. down to the lowest level possible. the american people of a right to expect that we can't account for the resources that have been given to us, and when you can do itit's very powerful from a leadership point of view. >> let me ask you one other question. you've accomplished, and

actually perform on about 60% of the gao recommendation. i don't expect you to say they are right and every indication. i understand that sometimes they miss it. but there's 40% of the recommendations that you really have acted on. what's the plan? are some of those recommendations that you disagree with? or are they just ones that are do it to implement? and is there a push from senior management at dhs to actually accomplish and meet those recommended accomplishments? >> there absolutely is a push but i think as mr. doug our mission. this is not the first time were sitting to get at a table. would've known each other for four years because we made a commitment early on to get this right. there are a few things we don't agree with. we have an overwhelming bandwidth of agreement between us, what needs to be done. and also -- >> lelet me -- will use enemy ad the committee would you don't agree with?

>> whatever, whatever material we have that we can share. >> are you say here are their recommendations, here's where we think they are wrong. said that to us because we reject it all reports in my office. and we would love to the other side of the issue. 40 thing they disagree, because we get to make, final arbiter is the u.s. congress in terms of making a judgment on some of these things and whether to mandate will be putting an appropriate goal to make it is something that you ask a disagree with and have a good reason or say the gao got it wrong. so if you send this to as i would appreciate it, and i'm sorry for interrupting. >> as such is going to conclude, he also mentioned he has seen from us detailed plans for working through the findings that they've given us. the only way i know as an operator, what do we need to do to know we are done come and we do it. >> thank you. i'm over my time. are we going to have a second have? >> i hope so. the interchange you just had,

might in become a member of this committee has shared with us any number of times something he calls the 80/20 will which describes how they were able to get so much done when they were leaving the committee on health, education, labor and pensions. the 80/20 will means that we agree on 80% of the stuff and we disagreed on 20% of issued we decided to focus on 80% we agreed on, set the other aside to look at another day. that's how they were able to get a lot done. maybe describes what we're doing here. whatever you're doing i think is working, just keep at it. said in a at this next. she stepped out for a moment. we would go to senator heitkamp. if senator -- senator heitkamp, you are recognized. >> thank you so much mr. chairman. and thank you for appearing today. i actually do know janet pretty well, and she's not perfect. tell her i said that.

[laughter] we were '80s together. during my time in public life, i've been a tax auditor, tax commission. i've been and attorney general. so this is an area that a think i've kind of two perspectives on but how difficult it is to do security, how difficult it is to wake up every day and realize primarily your mission is to protect this country and to protect people. but the only we can do it is when we are held accountable for how we do it. and we are in a time of pretty tough budget questions. and when we have 10 years where we are not able to pass audits it gets increasingly difficult to justify to the american public that we are doing the right thing here. now, i'm new to this, and i can tell you maybe if i sat through 10 hearings like this on a gao audit i would be a little tougher. but i want to give you an example of why the american public is frustrated.

recently in north dakota you guys removed three scanners, full body scan is, to move to other locations, to replace scanners that you had to replace because they did not pass privacy measures. minot, north dakota, is a place of great economic growth. in fact, they are airport is experiencing a 49% increase in passengers. we have more airlines flying in there. the airport is understaffed, but yet he removed their scanners, causing the people of minot to think, okay, here we go again. they can't seem to get it right in washington. they can't seem to get procurement right. we see it everyday, and they see obviously we're ex ord nearly grateful in north dakota for all the help that we have received from fema. minot is grateful for all the help, and i think come and all the true compassion and caring that the people experienced. but at the end of the day, yes,

people can like the federal employees who show up, and just come you guys can demonstrate your willingness to be coming into, accountable. but people want their dollars spent in an accountable and efficient manner. their tax dollars. and when we see repeated problems and a lack, what we've been doing today to 60% you can agree with, we are moving on 60% but yet there's been a lot of years to make this happen. and i can tell you as an agency, if i come back year after year with an audit and not have respond to concerns and questions, i probably wouldn't have got an appropriations the next time come and legislature pub would've taken away my responsibility. and so i just have a couple of questions about my scanners and i know that it's in the grand scheme of things it's not the

big issue. but it illustrates concerns that we have about defending and representing the federal government when we go home. and so i've been told by john sanders that the agency is developing an acquisition study for the next generation of scanners that are going to replace the systems that were transferred out of our airport. it's a critical acquisition program which will impact the safety and the security of my constituents. what steps is dhs and tsa management taking to ensure that the acquisition, problems, identify by gao such as the lack of a plan to manage the risk and measure performance are not repeated? and that we are not going to seek -- i have to tell you i was pretty tough when i talked with john, because i said to look, if the next thing is that you move the same scanners back into north dakota, i will have 400

constituent letters about the waste of time. i said, you've got to figure out how you can do this in a way that doesn't disrupt. and the notice was way too short. so that wasn't the ability to adapt. so i use this as an illustration of the frustration. and want to be supportive and want to learn more about what the challenges are of meeting these acquisition policies. but i also want you to know that i'm concerned deeply about irregularities and i'm concerned deeply about inefficiencies and about a 10 year audit where we are still, the response is, we are working on it. we're hoping we will get there. >> so, senator, we are not, when i was in the army, one of the chief of staff used to have the same, hope it's not a message. we were not hoping to get to qualified audit. we are going to get there and we are there. we are at a qualified audit of any. we are auditable.

in less than 10 years. with happening people. so i shared your determination that the accountability and the audit ability and and stability continues and has to improve. we will do that. >> but if i could just make a point, and it's not to be belligerent, but it illustrates, if the bank consistently told the bank regulator after 10 years we're working on it, we got a strategy, it wouldn't have been given 10 years to hit the mark. they would not have been given 10 years. >> i worked in the bank when i was younger. i won't pretend to answer for it now. but what i can tell you is that we take a backseat to no one in our determination to achieve what we said we're going to do which was a clean audit opinion, insisting that. and i believe we will hit that mark. i know we will. i know the effort that is going into this. in terms of the acquisition, i would be happy to share with you

our detailed -- to which no all programs must adhere, and it's a rigorous progress -- process that requires -- >> not to belabor it, every organization has a policy. the question is whether they have the will to him some of the policy. so we will wait and we will see, but these numbers at this point are the numbers that i can defend in north dakota. also have a proven track record over the past four years of actually holding the meetings, canceling programs, improving the accountability and the understanding and the oversight within the department of our acquisition programs, and would be happy to let all of this out for you in as much detail as you would find useful. >> senator harkin, if you haven't take advantage, any of the members of our committee, senator, i know senator coburn has this.

senator ayotte, deputy secretary lewd, has spent a couple hours with me and my team. and is enormously helpful in understanding where they were when they started, and how far they have come and what more did he do. hearings are good, that's even better. i would urge you to take advantage of that. i think everybody would be better for it. so thanks for being with us. >> thank you, mr. chairman. want to thank the witnesses for being here today. and wanted to follow up on i think some questions that you already asked by senator coburn and they've been touched on by senator heitkamp as well. and that is the grand programs and acquisition program. the 20 so gao report found that,

in fact, there were unfortunately the major acquisition programs are continuing to cost more, take longer, deliver less capacity. gao identified 42 particular programs with cost growth or schedule problems, 16 of which found increased cost of 19 points 7 billion in two dozen eight, 52,000,002,011. and according to that report, this is due to the department's lack of management practices and i know dr. coburn touched on that, but where are we on this? and how do we basically as senator coburn said, if we can't measure effectiveness for these and we're continuing to see costs overgrowth in a challenging fiscal climate, how do we justify to her constituents that we should be spending money on these

programs? can you help me where we are on that? and also i would love to get comments from you, on that issue. >> thank you, senator. we agree that we can do better on -- dr. coburn and i discussed this is something we're very -- one of the things we put in place with the national preparedness goal. what do communities need to do? how much of x, y or z to the need to have? how do they know that from a set of judgments regarding what constitutes preparedness that they getting close to the? evaluating the process with a sizable investment like the federal government in that capacity is something that we are intending to do as well, and didn't measuring performance objectives, and we become the performance process with ourselves. in 2009, we had over 182 or from its objectives, some of which were impenetrable.

they were really difficult to understand and do not at all straightforward. we look at every single one of them. we have broken them down if we cut them by more than half. we have put them in plain language so we know if we do these things, these are recognizable steps in the direction of preparedness, safety and security speak and i share an experience i had when i was attorney general? was attorney general? went home and when it in, to the state level, expense i had in our state, good intentioned people but a lot of specific requirements on the homeland money that may be allowed a local agency to buy any tv or particular piece of equipment, but as i saw no connection for the overall plan to homeland security. where are we on that with the state dollars that have flowed down, and rather, what i have seen from a state perspective as a lot of piecemeal equipment here and there, but i couldn't

connected to the overall protection of either the state or the country. >> again, that was part of the purpose of laying out these national preparedness goals so that not just for you to see what the states were doing but the state could further on to see what was going on at the local level. >> and it was all coordinated to some greater plan to protect the homeland? >> so it would be better coordinated to address the risks in a prioritized way. >> i appreciate that. it's something i am new to this committee, but want to hear more about. i've asserted like to hear your perspective. >> i think senator heitkamp really captured the state of dhs's acquisition welcome which is they have a good policy in place. the key is really execution, moving forward. in addition to some of the statistics you mention, our review that we issued late in 2012 identified most of dhs's major acquisition programs lacked key documentation and that's fundamental to managing

those acquisition programs. in fact, half of the programs didn't have any that documentation. that includes new programs and also older programs as well. they predated the new acquisition directive. dhs the number of really promising initiatives that they're pursuing right now that will strengthen their acquisition function. the status is there in a very early stages and i can get a couple of examples. one is that recently developed over requirements, validation function which basically looks at the requirements or new systems and looks across the department and coordinates that and make sure that they are developing more to meet all of their needs. we think that's very positive. it's still very in the early stages. they're just starting to meet as they move forward so we will be watching as they move forward. another promising development is they develop a dashboard to be cost schedule and performance for the acquisition. again, very promising but that

also is in the early stages. and, in fact, there are data issues, managers can rely upon that right now to make decisions. so i think that somehow dhs -- they're absolutely moving in the right direction to the key will be executing on the policy which is a good policy, and in assessing the results as they move forward. >> thank you but i also wanted to ask about just looking at the 2013 high-risk list where the issues that fall under but primarily dhs, the gao issue. and, of course, i think the one that jumps out asked me -- at me, where we've had a pretty lengthy hearing on the cyber challenges, but the associate effective sharing and managing terrorism would information to protect homeland security. this is the key issue folks 9/11. and where are we? is still a high-risk list. what have we done well that you can talk about here, as were other big major challenges that

remain? i visit that there are things you can't share i understand that. >> first and significant progress, the government structure to manage this issue because it goes beyond dhs but it affects a lot of federal agencies that have key leadership roles in this area. so that in good oversight structure. the white house establish a policy committee that oversees efforts in this area. they also establish a strategy of a pretty good metrics. the key right now is for the five major department that have key responsibilities in this area, including dhs, to execute their information sharing initiative and to courtney with one another. dhs has made very good progress in this area. a key challenge that they're facing is other department as well as really resourcing. we think they still have work to do in leveraging efforts of other departments.

and also identify what the resource needs are for all of the various initiatives which are still under way. another big challenge and information sharing area is really the i.t. issue of connecting citizens to enable departments to share information. there's been some frameworks put in place by the agencies are in the arctic stages of that. the key right now before the departments that key responsibilities to move forward in coordinate their initiatives and such as the i.t. initiative, and work together to address these challenges. >> secretary? >> i would just add one thing to what kathy has said in addition to all of that. maybe two things. one is sorting through the roles of information sharing isn't a aspect of this as well. u.s. persons, non-us person, law enforcement sensitive information, et cetera. we've been working through all

about with our counterpart agencies and we think we're making progress but it is something we have to and to pay attention to. the other thing that we have come, begun to come to grips with, and i would say that this is a tremendous challenge is the so-called big data challenge. we have an initiative -- several initiatives again that are across the department of homeland security. i call them the dhs commons. in the comments, what we know is we interacted with the global movement of people and goods. tsa moves 2 million people a day. a million people cross our borders. river to ms. amount of data. how can we minimize the collection of the data so as to not impose an undue burden on the traveling public, for example, and how do we share it in an expedited way subject to rule, protections for privacy, civil rights and civil liberties

that people the right to expect? we are making progress on all those fronts in addition to what cathy has said. >> i know my time is over expired so thank you, mr. chairman spent thank you very much. thanks for being here again. senator baldwin, welcome. great to see. please proceed spent i also want to thank the chairman and ranking member for holding this up and down review of the department of homeland security. clearly what was accomplished back in 2003 was no easy task, and i certainly recognize the incredible progress made in the 10 years since the departments creation. but since we're here today i want to focus in on a couple of the areas in which the department can improve or have been pointed out. fortunately, for me, senator ayotte's last question was the first question i was going to

ask about in terms of the recommendations in the gao high-risk report on implementing sharing across agency so if you like you tackle that. but i also want to look at another area. mr. dodaro, and your testimony you discuss the inclusion of a new high-risk area in 2013, limiting the federal government's fiscal exposure by better managing climate change risk. our country has certainly seen an increase in weather related events that have contributed to the significant loss of life and property. it seems to me that each year the weather related events become coming in, more and more damaging. the level of the federal, level of involvement of the federal government has only increased. one of the recommendations in your test what is for dhs to improve the criteria for assessing the jurisdiction

capability to respond to and recover from a disaster without federal assistance. and to better apply lessons from past expenses when developing disaster cost estimates. of the ago i was meeting with account executive from one of the larger counties in the state of wisconsin and we briefly discussed the need for fema and other federal agencies to be more involved in ensuring our local communities are prepared for the worst. so i'm wondering if both of you could comment on what dhs -- what dhs action items have occurred and will occur in the near future to assist local communities in preparing for the worst? >> first, the criteria issue is a very important one. the criteria was established, and it's the qualitative criteria but they use some quantitative measures.

one is per capita cost per person in each state. and it started out as a dollar in the 1980s per person per state, as sort of a threshold of whether or not the total cost of responding to the disaster would go over that and the federal government would get involved. that was not indexed for inflation for a 13 year period of time, from 1986-1989. our calculations showed that it had been indexed for inflation, the federal, would not have been involved in about 25% of the disasters that occurred in the past few years. and fema did agree with the recommendation to reassess the criteria come and said that they were going to do the. it was a complicated task to be able to do it, but it's very important because of the incentives that provides at the state and local level to make their own plans for preparedness, and where does

accountability law. particularly with state and local governments have his own responsibilities, so they have a lot to say in terms of whether infrastructure is located. and thinks. now, the of the responsibility theme has is to come up ultimately with criteria to determine readiness at the state and local level. and this goes to the grant question as well that were raised earlier but with all the grants that have been provided, at what point, even with, at what point are states capable of responding to these situations. fema is to working on that issue and hasn't really result of the dish as well so there are two issues. one is the criteria for whether the federal government intervenes or not. i think it needs to be recess. fema has agreed. but it will be a while before they come up with the criteria. congress should ask. and second is, when fema comes

up with the criteria for determining readiness as a capability of the state of local level. both are needed to have benchmarks on that area. spent with the senator yield for just -- let me make a comment about oklahoma. i think oklahoma received 11 disaster grants. and it's supposed the combination of overwhelming local resources and -- [inaudible]. if you just look at when we were overwhelmed, we were one of those, and we're happy to take up money. i know our governor is under state legislature. but, you know, i will put us back into perspective. we're going to spend a trillion dollars more this year than we have, and there's come a point in time where local responsibility has to take over and be responsible for their legitimate functions. for a couple of reasons. one is, we can never solve, have

been totally prepared, even if we were the great benevolent figure that we are, and number two, financially we can't afford to do what we said we're going to do now. and so we have to change this, this number at least change it for inflation. because it's a tremendous advantage to a small sticker we have less than 4 million people. it's not hard to get $4 million worth of damage from a tornado in oklahoma. how much responsibility should oklahoma prepare for the? i would say the vast country of the, not the federal government. so i think your point is well made, and i'm sorry i interrupted you, we'll add more time to you. we have to start putting this into perspective. >> i agree. i think a good interim measure would be to index it for inflation over the entire period of time. because it has indicated it would take him it's going to take them a year or two maybe to come up with new criteria and go

through a vetting process. that could be some interim changes that they could consider. >> center, just hold your thoughts but none of this counts against your time. but my understanding, correct me if i'm wrong, the last dozen or so years i think it has been indexed for the rate of inflation i think. for the first 12 or so years it was in existence it was not. so i think that's the issue here. the question is what kind of catch up do we do for those first years. senator baldwin, you are on. thank you for bearing with us. >> no problem. deputy secretary loot, i do not give any comments on this question also. >> two things. it's not 60-40. we a great probably 95-5. we agree on most things that need to be done and improve. it's on that basis of common perspective that we proceed. i guess the only thing i would add replace a bit of what, the

point dr. coburn was making which is in the tornado that went through joplin, missouri, not long ago it was an extraordinary demonstration of local capacity and mutual aid from the local community. no federal search and rescue research were deployed to the area. small example but exactly the kind of point i think you're raising and making, and that's where we are headed. >> the other question i had, my home state of wisconsin has an aroma of ports of entry throughout the state that customs and border protection overseas. and the entries as to whether there are any major recommendations that directly involve customs and border protection, and whether such recommendations focus on security at ports of entry. if you could both comment on that and provide contact -- context as to whether the current issues with security at

our ports of entry? >> yes, senator. i'll ask caddied elaborate on it but the one i know of is the transportation worker identification part issued, which we have written about. and the status of that card, part of the problem is not having the card readers available yet, and so that's been one problem. but i'll ask cathy to elaborate on others. >> in addition, i would mention as is our disgust, the us-visit exit system, which is a mandate has to develop biometric executable to track people leaving the nest is to get a biometric entry system, but that is a key area outstanding that they working on. another exit determine the appropriate mix of technology infrastructure to secure different sectors along the southwest border. as is mission, sbinet was

canceling dhs's new approach to determine the appropriate mix across the sector rather than that they one size fits all, and that work is still in progress and gl has ongoing work looking at it. we've also made recommendations related to training for cbp agents, and they need to have recurring training and refresher training after they have been put into place. those are some key ones and we have a number of others that we would be happy to discuss with you. >> i think what i would just say in response, all of these are known to us and things that we are working on. as cathy said there is no one size fits all for the ports of entry at the border. there is a single point solution. just technology or just personnel or just better process. we need all of these things in a sensible approach that the border as we been demonstrating. with respect to training, i couldn't agree more. and i'm -- when the federal

government, people talk about investment. really the only place you invest is in people. that's where you get a return. you spend a lot of money, would place some bets is is going to work on a. the real investment is when you invest in people and that's a dream. we have taken steps taken on leadership training. we've created businesses before, a comprehensive leadership training program for the department of homeland security so young professionals come in as homeland security person can see themselves all the way through and understand that as they progress in their careers, progression and expectation for the responsibilities they will assume. certainly this applies as well. >> one of the recurring themes offer hearing yesterday, oversight on the standard response. recurring themes was shared responsibility. not just the federal government, not just a and local. not and local. notches government. we're all in this together. so that's good.

mr. dodaro, if i could, a question for you. i will try to keep this under four minutes to if you could. if you had to provide us with maybe the top two or three areas that you think are the greatest results -- the department homeless he could, what might those two or three areas of the? >> [inaudible] >> is your mic on quick start over. >> i'm sorry. >> we want to hear every word. >> i will ask cathy -- i will give the first one, and that's and acquisition management. i think the opposition management area is so critical to procuring the types of issues, whether it's scanned, whether its i.t. solutions or other solutions that are critical to implement the departments nation's. and i think that's the important what you're talking about immigration, customs, border patrol or other.

that's why focus. that's an area that we've seen well-established departments, long-established departments, defense, nasa, department of energy, all their acquisition management. they are still on the high-risk list, so that's a tough issue to resolve. and it's all about implementation and having the property discipline in place. >> and just to provide some context. gao has issued over 13 of products looking at every aspect of the justice programs and operations and made over 1800 recommendations. a key looking across all those protestant impact of the departments efforts, trace back to the management of the department. is to put this in context. we have identified this as a crosscutting issue and all the management areas are important, i agree that acquisitions along with i.t. are the two areas that have the most direct effect under the departments ability to secure the border, secure air travel. i.t. is very, very similar to

acquisition. dhs is focus, the report on the initiatives that they are pursuing, and sure they're following their existing policy, not just in acquisition and i.t. but across all the management functions. dhs has good policy in place. the key is really execution, moving forward on this initiatives and monitoring their progress moving forward. >> my last question, on the second panel today, lane duke, former inspector general richard skinner, both caution us on the street that is important not to shoreside with the budget for management. fiscal year 2015, continue resolution passed by the senate yesterday would cut 17 billion for management of the department of homeland security. what areas, what area or areas of progress, measure most at

risk if there are funding reductions and will be the impact of the next five to 10 years? >> we've already received requests from the congress to look at the impact of sequesters on federal departments and agencies. we will be looking at that issue both in terms of how they prepared for this issue, because a lot depends on what kind of decisions that they've made in terms of what impact it's going to be, and once we complete that work we will be happy to provide you this committee. >> there enough. dr. coburn. >> [inaudible] >> i said 17 billion. i think i misspoke spent gene dodaro, the dhs employee morale survey this year went down. why do you think it didn't? >> well, i think there's two reasons. if you look at although the federal departments and agencies, it went down. over all with few exceptions. so i think it's part of the environment and the uncertainty

associate with the environment. beyond that i'm really not sure, and one of the things we recommended to the department is they do a root cause analysis to try to figure out what species it's a pretty depressing place up here, isn't it? [laughter] >> well, this is a tough issue. i know from running the gao, you know, we have employee feedback surveys, too. fortunately, we are one of the top ranked ones but we didn't get there by accident. we worked on this over the years. it'it very difficult to figure t what motivates people and what you really need to do to address their concerns. but you have to try, keep trying hard, keep trying but are defined with some of the root causes are. we've made a recommendation to dhs. they have agreed to do that, and i think that will provide some insight to the recent. you have to study this. a few leapt to conclusions about things you can actually make things worse spent secretary

lute, do think it's any worse in dhs than it is anywhere else in the government's? >> i won't speak for anyone else in the government, dr. coburn, but it's unacceptably low, sorted to the secretary. i've been around a lot of work forces for a long time, and as jeanne said, across the country, the public mood as inflows. had been pay increases, other things going on but also -- i think, this committee has been very helpful in this regard, and helping the american public understand that their red, white and blue collar workforce shows up to work for them every single day. you don't want a workstation with denigration and dismissiveness. you run it with purpose and pride. you run it most effectively when you put that purpose and that pride enhance of your workforce. and you lift them up. our job is to lift them up.

one of the things i also know is that frontline supervisory, matters a lot to you. our front line supervisor the tools to do this job. were trying to give them this with the leadership in program to other things as well. people want to show, connect to the mean that brought into public service. about the tools they need to do their job. they want to add value and field value. that's what we're going to do. >> secretary lute, let me ask you one last question and then i will be fine. we will submit a lot of questions for the record, which we routinely do, and i appreciate you all being timely on the response. homeland security permanent subcommittee on investigations, and my office, did a study on urban area security initiatives this last year and publish it, and we got a lot of low back. but it's a billion of the 35 billion that you spent on the last few years on grants. and secretary ayotte -- with

your, spent hundreds of thousands of dollars on a bearcat for a pumpkin festival. and what senator heitkamp said, it's pretty hard to explain to people why we are releasing people from detention who are undocumented aliens when we are spending two or 300,000 on a piece of equipment that is going to rarely if ever be used for its original intended purpose. what level of specificity are you putting in to the grand requirements when, in fact, we are spending american taxpayer money to help them get prepared? and then they see all these areas were spinning with a snowcone machines or underwater robots were city that doesn't have a leg, or whatever it is. how are we changing that? >> and i agree with you, dr. coburn, that has to change.

in part we're changing that to the identification from fema of the national preparedness goal. what you need to be able to do? what to do those are required for that and how do you measure performance going forward. >> and how much i is it is the state of aggressively? >> a great levitt is but also this is as guidelines for them as a further cascades down. in addition to that, we have written in this financial assistance policy which now is companies. it looks a requirements, it looks at grant what it looks at accountability it looks at grant oversight over the course of time this position. and ultimate reporting. we know we can do better on this, and we're committed to doing it. again the proof is not an proof is not in just letting the the following. >> thank you all for being here. appreciate your dedicated service. spent asked do i. before we release you, i just want to mention a couple of things. one, i think was said before,

people say to me from time to time in delaware and across the country i don't mind paying taxes. i don't even mind paying more taxes i just don't want you to waste my money. i just don't want you to waste our money. this committee is dedicated to -- i think everybody is determined to be a good partner, provide oversight and be a good partner with you. the three of you. to making sure we waste a whole lot less but our goal is to be perfect. i'm encouraged that this road of improvement is under construction. we are making some progress. the other thing on morale, it troubles me, i want people who work here with us on our committee, our staff, our colleagues, i want them to be good. one of the most interesting things i've heard lately about morale, what people like about the were, people like different things about the jobs. they like getting paid. they like getting vacation. about benefits, pensions, health care. what people most like about that

work is if you it's important that if you like they are making progress. that's the most important thing. they feel like they're making progress. clearly the work that you are doing and a teenager and secretary napolitano, the work you are doing is seriously important for important -- for our country. you are making progress. you are making progress. gao we look to for enormous help has verified that. i think with the kind of, the attitude you bring to it and over that will provide to help, hope that we can provide, provide even more. we didn't get into the issue in terms of management success and morale. whether or not it makes sense to try to put more resources behind consolidating one location your operation. we didn't talk at all. we will have some questions and follow-up but i think that's an important issue. at times of scarce resources

it's hard to come up with money. what we do come up with it's important we use it in a cost effective way and help us to make sure that the dollars that are available, we're putting it in the right place to help, better managed to debug, and really in a sense, and has morale. anything else? thank you all very much. ms. berrick, if you could stay with us and sit through, remain at the table as another name plate. if he would remain with us. i don't know if we'll call on you but we may. just be helpful if you could be here. secretary lute, good job. general dodaro, as always, thank you. [inaudible conversations] >> president obama is in jordan today where he will hold a joint news conference with king abdullah. it's the president last stop on

his movies trip before heading back to washington. live coverage starts at 11:45 a.m. eastern on c-span. .. [inaudible conversations]

[inaudible conversations] [inaudible conversations]

[inaudible conversations] >> and, again, we are live from the capital hilton hotel here in washington, d.c. this morning. consumer financial protection bureau director richard cordray will talk about auto loans. mr. cordray is expect today highlight the agency's efforts to protect consumers against discriminatory pricing. he was appointed to lead the agency in 2012, he was renominated by the president earlier this year, and he now

awaits senate confirmation. his recess appointment is set to expire at the end of the year. [inaudible conversations] [inaudible conversations]

[inaudible conversations] >> again, waiting for cfpb head richard cordray to discuss discrimination in auto loans. and while we await his remarks, the house not in session today. members left yesterday for their two week easter recess after passing a budget resolution for fiscal year 2014 and legislation extending funding for the federal government through september. the senate will be in today at 9:00, senators will continue debate on a amendments to a budget proposal, votes expected at 11, and at 3 p.m. senators are expected to begin what they're calling a votearama, a

marathon session featuring dozens of votes as they get ready to pass a 2014 budgets that's a counterpoint to one passed in the house yesterday. the house plan approved assumes deep cuts to social programs and no revenue enhancements, pote plans are symbolic appeals to core participants. [inaudible conversations]

[inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> good morning. how is everybody? >> good!

>> how's the conference going for you? [cheers and applause] >> all right, all right. we learning stuff? we creating motivation, activating you, educating you, i hope? because you're certainly doing that for us, and i deeply, deeply appreciate it. i wanted to mention, and, you know, i'm over -- i'm just going to say i'm over 50, and so i had to -- what was that? [laughter] they were my board members, because they know. but i want to, i had to, you know, there's so much great information and great speakers and great work and great conversation going on here that i finally talked to somebody under 30 to find out about this hash tag business. [laughter] now, don't all of you laugh at me, because i know a lot of you don't do it either. [laughter] but for those who tweet, for those who tweet, yes, well,

we'll talk about that. [laughter] for those who use the hash tag world and, you know, if you ever watch msnbc and you see the streamer down below, a lot of that's hash tagging. what happens is when you hear something, when you see something that you think is important for people to know, it goes out to other venues which -- i think it's other venues but definitely tweeter. am i wrong? >> twitter. >> twitter! [laughter] but is the verb to tweet? okay. i would like -- i don't think the other word would really be appropriate. so the verb is tweet, and the noun is twitter. got it. thank you very much. we'll have a workshop on that. [laughter] all right. so anyway, our hash tag anything you hear you like you want

people to hear about, it's pound just economy. so on your cell phones, on your iphones, on your computers, something you hear, something you think that's important, a speech, something from a speech, hash tag just economy. and, c-span, thank you for being here. america, hash tag just economy. [laughter] all right. so it gives me great pleasure -- i'm sorry, my name is john taylor, i'm the president and ceo of the national community reinvestment can coalition. i probably didn't want to say after i did all that tweeter/twitter stuff -- [laughter] but that's who i am. and a great honor to introduce our incoming chair, bob dickerson, from the birmingham business center. and i want to welcome him to introduce our keynote speaker, a good friend of the national community reinvestment coalition, richard cordray.

so, please, join me in welcoming bob dickerson. [applause] >> thank you, john. good morning. >> morning. >> so, you know, it used to be rude to have your cell phones out during a meeting, but now since we're all tweeting -- [laughter] using that hash tag -- what is it -- just economy, you may feel free to do so, okay? well, good morning, everyone. we are very happy to have richard cordray, the director of the consumer financial protection bureau at the 2013 ncrc

>> the cfpb has emerged as a strong protecter for consumers from their implementation of dodd-frank to the agency's enforcement of actions against credit card companies like capital one for their deceptive practices. i thought i'd get something on that. all right, there we go. they had a tremendous year in 2012, and we know that they're going to continue that extraordinary work. so prior to his service at the cfpb, he served as attorney

general for the state of ohio where he recovered more than $2 billion for ohio's retirees, their investors, business owners -- [applause] all right. he's actually argued seven cases before the u.s. supreme court including by special appointment by both the clinton and bush justice departments. he's established himself as a tireless public servant and a defender of the public interest. and for these reasons and more we, the ncrc, awarded him with the henry b. gonzalez award in 2010 for his outstanding public service. and so we're pleased to have him here. so help me welcome the director of the cfpb, richard cordray. thank youment. [applause]

>> thank you. thank you, bob. i could feel your distress as john was up here speaking about the -- i was afraid he might refer to the internets, and we might have to give him the hook. john told you he's over 50, i'm slightly over 50. [laughter] and back in our day between was part of the song rockin' robin, remember little michael jackson used to sing that. [laughter] now it has a much more respectable pedigree. [laughter] thank you, all of you, for inviting me here to be with you today. because of what you do every day, fighting to improve the lives of the nation's most vulnerable and underserved consumers, you are my personal heroes, and you set an important example for everyone at the consumer financial protection bureau. john and the board were asking

me before coming out here for the breakfast what they can be doing to help us do our work, and what i said was you can just keep doing what you already do which is advocating, speaking up and working for the people who need our help the most in this economy, the people who every day are trying to navigate the markets for consumer credit and need someone standing on their side, and that can be ncrc, or it could be the cfpb. it doesn't matter to them, they just need someone standing on their styed to look out -- on their side to look out for them. and if you keep doing that, we'll keep doing that, and we'll keep working together. [applause] so fair and equal access to credit is ingrained in both the consumer bureau's mission and your own mission. all of us in this room know and have seen the price people pay, often unwittingly, when they're victims of discriminatory

practices. when someone is unlawfully denied a loan or overcharged for a loan to go to school, buy a home or start a small business, our nation's commitment to equality shrinks, and the gap for opportunity yawns a little wider. the fact of the matter is that the economic marketplace can be quite hostile to those in poverty or those whom society marginalizes for any reason. in today's economy almost two-thirds of our households of color are liquid asset poor meaning they have little or no savings to fall back on if they have to face a financial emergency. while nearly all americans saw drops in household wealth during the financial crisis, african-americans and hispanics experienced the steepest drops. when this inequity is compounded by unequal access to credit, it's no wonder that communities of corps are struggling -- color are struggling to rebound in the wake of the financial crisis.

this nation was founded on the principle 245 if you work hard and conduct yours responsibly, you can get ahead in life. but when you cannot access credit, it can be nearly impossible to move forward. you cannot find ways to qualify for the basic means of self-improvement. at the national community reinvestment coalition, we know you workday in and day out to propel working families forward despite these obstacles. likewise, at the consumer bureau we're fierce advocates for a financial marketplace that allows people to pursue a path to opportunity. we're working to insure that path is not disrupted by deceptive marketing or products that land consumers in a debt trap. we have a new role to play to help consumers avoid dead ends. of discrimination. we want to do what we can to enable americans to live out the fundamental principle of working hard and getting ahead. leading up to the financial

crisis, the consumer financial marketplace was characterized by many irresponsible lending practices, you saw it face to face in your communities. too many borrowers were set up to fail with mortgages they could not afford to pay back. the ensuing collapse of the housing market had broad consequences devastating businesses and causing jobs to disappear across every economic sector and in commitments all through -- in communities all through this country. this nation has a tremendous need the to restore confidence and reliability to the mortgage market which as you know is the single largest market for consumer finance. so congress direct canned us to take action -- directed us to take action, and we have delivered on time and under budget as they might say of the occasional construction project. [laughter] in january we released our ability to repay rule, also known as the qualified mortgage rule. the concept of this common sense regulation is simple enough; lenders must take care to make sure borrows will actually be able to pay back their loans. put differently, consumers

should only be offered mortgages they can actually afford. [applause] it's a strange world, it's a training world, indeed, in which such a rule would even be necessary, but we all know from harsh lessons learned that the mortgage market failed this minimal measure of basic responsible lending. gone now are the no-doc loans, gone are the so-called ninja loans, gone are loans deceptively written only over the teaser rate and much more. [applause] for the most part, those loans are not being made in the current market because the easy money from securitization has dried up. some might say that's the genius of the market at work and more regulation is not necessary. but the kind of extreme disequilibrium that resulted from inadequate oversight in a market that was only partially regulated is nothing to brag about, and it hurt millions of

innocent people caught up in a disaster they could not understand or control which should have been avoided. so we want to be certain that when the mortgage market recovers, as it surely will, we will never see these shoddy practices ever again. [applause] another task that congress placed before with us was to write new mortgage servicing rules to protect consumers from practices that have plagued this industry, and again, we've all been face to face with it. these practices have resulted in profound consumer harm and have brought countless foreclosures and could have been and should have been avoided. although congress only required the consumer bureau to write certain specified rules in this area, we undertook to do more because many of us have seen firsthand the kind of misery that's been visited upon our communities. we saw wrong, and we wanted to write it as much as we could do

so. when we came out with our original proposal, hour, you put your -- however, you put your hands on our shoulders and urged us to consider first refinements, in particular to address the harms of dual tracking for extensively. and we paid attention to your input by taking further action to restrict dual tracking and improve the rules in other ways. importantly, the new servicing rules will cover both banks and nonbanks for the first time ever. i remember that was a source of tremendous frustration. [applause] that was a source of tremendous frustration to me when i was serving as ohio treasureerer and attorney general. and these rules are backed by strong powers that congress gave us to engage in supervision and enforcement, and we will and are doing so. we also wrote new rules addressing loan originator compensation and high cost loans. our challenges in particular include expanding the legal protections for high cost loans to purchase money loans and home equity lines of credit.

on appraisals and other valuations, we've provided greater transparency by making it much easier for a consumer to understand the value of the house being purchased. copies of this important information must be provided free of charge to the consumer before closing. with all a of these new rules, the bureau is intent upon helping to bring more clarity and stability to the mortgage market. consumers need strong protections to refeign confidence and trust, and lenders need to move beyond the uncertain te and fear -- uncertainty and fear. the pend lumbar had swung too far. we believe our mortgage rules will create a more secure market. in our to fulfill our mission of fair and transparent markets, we're working to expand access to credit not only in the mortgage market, but across other consumer financial markets as well. when i spoke to you last year, i announced that the consumer bureau was giving fair notice on fair lending and that we would

continue to apply the disparate impact doctrine before appropriate. we cannot afford to tolerate practices, intentional or not, that unlawfully price out or exclude whole segments of the population from the credit markets. [applause] yesterday we took another step to hold lenders accountable for potential discriminatory actions that can cause considerable consumer harm. here our focus is on potentially discriminatory conduct in the auto lending market. we released a bulletin advising directors that they can be held responsible and will be held responsible for complying with the fair lending laws. when consumers set out to buy a car, they're often unaware of what their financing options are. they may think that everyone like them is offered the same interest rate, and they do not realize that rates may be marked up. indeed, markup occurs, as you know, in a substantial number of

auto finance transactions. this markup is often applied after the lender has already quoted a rate that crrs creditworthiness and collateral. our experience indicates there's a significant risk that this discretion may result in pricing disparities on the basis of race, national origin and potentially other prohibited bases under the law. consumers can easy comparison shop for the price of the car but less so for the financing. if an interest rate is quoted, consumers cannot easily ascertain whether that accurately depicts their position in the loan market. dealers play an essential role for car buyers nationwide. they deserve fair compensation for their work, but renders are responsible -- lenders are responsible for the compensation system they are using does not result in unlawful discrimination. when lenders have policies that charge higher interest rates, it can lead to discriminatory access to credit. we saw similar issues in the

mortgage market with yield spread premiums. it creates a significant risk of pricing disparity, and research indicates such policies may result in african-american and hispanic borrowers paying more for auto loans than other customerses. based on other prohibited bases under federal fair lending laws. such discrimination may not be consciously intended, but for consumers who are disadvantaged by these policies, the result is the same. every consumer, regardless of race, gender, national origin or other characteristics protected by federal law, should have equal access to credit and loan pricing that is free from up lawful discrimination. people deserve the chance to finance a car purchase at a fair price. dr. martin luther king jr. once said the time is always right to do what is right. at the consumer bureau, we're working to promote economic justice, and we seek to uphold the fundamental dignity and

self-respect of every consumer. we've come a long way in less than two years. john, i've heard you say that data drives the movement of social justice, and we believe that too. we're a data-driven agency, we try to take our bearings from the facts as we can best mix them a out. from our sweeping new mortgage rules to our efforts to promote fair lending. we're making real progress to improve the financial marketplace and smooth the path to opportunity for consumers. all of us want, and i think it's true that all of us want to put consumers in a position where they can make good choices for themselves, choices that enhance their lives and empower them to succeed. you are our strong allies in these efforts. we're grateful that we have colleagues like you who are so deeply dedicated to our shared mission. keep your hand on our shoulder or and push us to move ahead. thank you. [applause]

>> i just want to say as director cordray is leaving, what better person we've ever had. what better person to lead this. please contact your congress people and let them know and let your senators know that they should be voting on this, and they should be moves his nomination through to do the job. [applause] >> thank you. let's give him another round of applause, please. [applause] so i need to remind you of two things. first of all, we know we have sarah bloom at 8:45, and after that the interactive session, and that effectively ends this session, and we will get ready

for sarah. [inaudible conversations] >> well, the u.s. senate is coming in at 9 eastern, about half an hour from now. they'll begin the morning with the debate on the budget. votes on five amendments, and then the senate resumes debate on an unlimited number of amendments. we talked with a capitol hill reporter to find out what's going on regarding federal spending. >> host: let's start off by talking about the cr, the continuing resolution. what happened this week, and why is it important? >> guest: well, we've avoided the shutdown which used to take politicians a lot further. there's a lot of anger about sequestration and what that means for furloughs, but at

least for today the congress is saying, hey, we avoided a shutdown, isn't that great? so the senate has passed it, the house passed it yesterday, and it goes to the white house for a signature, and what it does is just continue, basically, what we've seen from government funding. this is the era we live in. we have two parties that disagree on which way spending and taxes should go, so we tend to get flatline budgets each year through the continuing resolution. speaking of the sequester, you know, it keeps the sequester in place, that's an important point to note, although it does give people flexibility which is why you see a delay in the dod furloughs for now. they get to assess is there a way to play with that to make it less painful for workers. but basically, it keeps in place a working government, the sequester and the ongoing pay freeze for federal workers as well. >> host: pete kasperowicz s the sequester here to stay? >> guest: i start to think that it has to be. this is just an opinion based on watching what happens, but it's harder and harder to see how

these two sides reach an agreement t when one side says, the democrats are saying let's replace half of it with taxes, republicans don't want that and say, you know, if you wanted to find waste, we could agree to that, but i don't think democrats want to give in there. so it's hard to see who's going to come down from their position first at this point. >> host: so we see the cr moving this week, but we're also seeing other votes on other budget issues. tell us what the senate's grappling with right now. >> guest: yeah. the senate is -- i hate the name of this thing, but they it the vote arama, and this is where senators will come up and offer any number of amendments to their budget, and it's basically a democratic budget plan, and so as you might expect, it calls for some tax revenue to help reduce the deficit, calls for some more stimulus, more spending that way. and we're in this funny process where today we will wrap up, i think a little beforehand technically, but we'll wrap up 50 hours of debate and then

start the unlimited amendment process. basically, any issue you've ever heard your callers call in and complain about we might see votes on today. it could be stuff like drone strikes against u.s. citizens, and it could be taxes and repealing health care and all these different issues that may come up. the point to remember, though, is this is all adding on to a nonbinding budget resolution. so it's interesting, and it may give people clues as to what appetites there are in the senate to pass or repeal certain elements of policy. but it's not binding right away. >> host: headline in your publication, "the hill," says the senate is poised to pass a budget. do you expect this to pass, and what's the significance? where does it go from here? >> guest: we do expect it. i think the democrats will be able to control the process and get it passed. they do have kind of a smallish window, they can afford five democrats to not vote for it and still pass it. in that case you'd need vice president biden to come down and break the tie assuming all

republicans vote against it. but, yeah, the significance is really, you know, this is the result of -- there's a lot of pent-up frustration on the republican side about having had no real budget debate for four year, and that's why we might see a late night tonight and into the morning. once it's passed, you know, i think a lot of people will feel better. democrats will say we passed a budget, republicans will say we got to complain about this budget as it passed. but from there it's hard to see how the senate budget reconciles with the house budge. we're not aware yet that there will be an everett made to bring the two together, and it's really hard to imagine how they would marry the house and nat budgets because they move in opposite directions. >> host: so what happens after congress comes back from its break? what are you going to be watching for assuming that the budget gets through the senate? what's next? >> guest: we will just look for, um, you know, what's next on their agenda. they get to move back to sort of a regular schedule. the senate may take up a gun bill.

we've heard news of that. the house will be looking at more job-related programs. we've been told that the house will look at a bill to make it easier, we're not sure what the bill does yesterday, but something to do with making life ease consumer for hourly mows if they get sick or if they have a child emergency, a way to give themselves time to take time off from work and deal with those family issues. but from there, you know, a lot of the big stuff will go away right away, and then we'll be left with sort of, i think the next looming thing will be what do we do with this new debt ceiling. that's an issue that's on the horizon for may. they'll have to figure out how to do this. >> host: pete kasperowicz, thanks very much for talking with us. >> guest: sure. anytime. >> and president obama continues his trip to the middle east with a stop in jordan today. the prime minister's meeting with king abdullah, and he'll talk with reporters after that meeting. you can see their comments live at 11:45 eastern on c-span.

>> monday night on ifs first ladies," called a bigamist during her husband's 1828 presidential campaign, rachel jackson dies of an apparent heart attack. his niece, emily donaldson, becomes the white house hostess but is later dismissed as fallout from the scandal. and during the next administration, angelica van buren is the hostess for her father-in-law, president martin van buren, who is a widower. we'll include your questions and comments by phone, facebook and twitter live monday night on c-span and c-span3, also on c-span radio and c-span.org. >> coming up next, a panel looks at how the small business community has been affected by obama administration policies. this was moderated by carly fiorina. the forum is part of the annual conservative political action conference held in maryland. we will show you as much of this

as we can until the senate gavels in this morning at 9. [applause] >> well, thank you and good afternoon to those of you who are hanging in here. thank you for hanging in here. of we have a really exciting and fun panel for you this afternoon as the title suggests. we are not here to discuss the future of the republican party, actually, we are here to talk about the state of american business. [applause] thank you. [laughter] last year when i addressed cpac, i actually talked about technology, and i talked with you about technology because it has fundamentally altered the pace of change for our communities and for our nation, because technology empowers the individuals in truly historic ways, and technology also overwhelms large, centralized

bureaucracies -- think our u.s. government -- rendering them over time increasingly incompetent even if they repain powerful. and, of course, as we will hear from at least one of our panelists, technology is also a tool to enforce transparency and accountability. as i mentioned, today's topic is really the state of business in america today, but i start with technology because it sets the frame for everything we need to do. and it limits the time, frankly, in which we have to do it. i want to start, if i may, with two anecdotes. recently i was on a sunday morning newscast, "this week with george stephanopoulos," and i had the opportunity to debate paul krugman. you know paul krugman. and in the course of this debate, i made what i thought was a pretty basic statement. i said, you know, when we think about the health of the u.s.

economy, we have to remember that a private sector job and a public sector job are not the same things. a private sector job pays for itself. a public sector job is paid for by taxpayers. i thought it was a pretty obvious statement. but later my staff was contacted by a reporter who felt that he needed to fact check this statement. [laughter] seriously. it was interesting to me because it said how little so many people understand what makes the economy go. and i think one of our fundamental issues in this country is we have a lot of people setting policy that impacts our economy, but they don't understand how the economy actually works and the impact of that policy. my second anecdote is this: in a recent poll, fully 70%, 7-0% of

small business owners said that they thought the federal government was hostile to them. not neutral, not negative, hostile to them. remember that figure and remember that statement. here we have the stock market achieving record highs day after day after day, we have large companies in many, many industries reporting record profits, and yet the state of our economy is not good. we know these statistics, but they are worth repeating. there are 12.3 million who are still up employed. -- unemployed. one in six americans lives in poverty, and that burden falls most heavily on women and their children. there are 48 million americans living on food stamps. we have lost 6.4 million full-time jobs in this country,

8 million americans are working part-time and they would rather work full time, and 10 million americans have dropped out altogether. why? because small business and entrepreneurship is the engine of growth in this american economy. we know and you will hear inspiring stories from some of our panelists today, we know that every american gets their first chance in a small business. we know that wave of after wave of immigrants get their firsthand hold on that first rung of the american ladder by opening a small business. i started out in a little business with nine people as a secretary, and my story is not unique, it is the american story. whether it is the deli on the corner, the auto mechanic, the i.t. businesses service, the oil services business, small business is the engine of growth for this economy. small businesses create over

two-thirds of the job ands in this country, small and new businesses employ over half the people. i was privileged to be the chief executive of hewlett-packard for six years, but do you know that small businesses innovate at a rate 31 times -- 11 times that of big business? it is small businesses that are the engine of growth in our u.s. economy, and today remembering all those terrible statistics i just covered for you about the number of people unemployed, the number of jobs we have lost, why? because today fewer small businesses are forming, and more small businesses are failing than at any time in the last 40 years. why is that? if you ask them, they will tell you it's just too hard. we have

today a 2,000-page -- 27,000-page federal tax code. hundreds of new federal regulations are enacted every single year and virtually never is a single regulation repealed. this represents a thicket of complexity that is simply impossible to navigate. a big business can navigate this, big labor can navigate bug government, but small businesses cannot. we need fundamental, simplifying tax reform. we don't need to tweak our tax code just to get a budget deal, although it's important to get a budget deal. we need something fundamental that is vastly simplifying. my answer? lower every rate, close every loophole. but the fundamental truth is that we are literally choking the life out of the american economy. and we have the numbers that prove it. in order to get this economy back on its feet, in order for this country to be the beacon of

hope and the shining city on the hill for so many both those that are already here and people who dream of coming here someday, we need three other things as well, fundamental reforms. we need fundamental education reform. we've talked a lot about that in this conference, but let's remember what's really needed. we have spent, we spend more money per pupil in this country than virtually every country in the civilized world, and yet our results are poorer. we have increased the budget of the department of education for virtually every year in the last 40 years, and yet the quality of our education continues to deteriorate. why? because it isn't about how much money you spend. it's about how and where and on whom, and we know that the most important thing in order for a child to learn is a good teacher in the classroom. which means we must push for the opportunity for every parent to

have a choice and every child to have a chance. we must -- [applause] we must deliver fundamental immigration reform. we need those high-skilled workers with a great degree, but we also need those folks who maybe don't have a higher degree but who have huge ambition and big dreams. we need a legal immigration system that works in this country because this is the century of brain power. and finally, we need fundamental innovation reform. perhaps we'll talk about that with our panel, but it means that the government has to decide to play the right role in encouraging and fostering innovation. creating an environment where people can take a risk. and the right role for government most definitely is not to pick winners and losers and to try and act like a venture p capitalist. they do a lousy job. this is the century, the 21st century is the century of brain

power and innovation and small business and entrepreneurship is where starts. and so it is fundamental that as we look at the state of our economy going forward that we think about small businesses and entrepreneurs fist. that is why i'm so delighted to have the panel that we have here with us today. i'm going to invite each of them to come to the podium and give brief remarks, and then we'll engage in a conversation. so i will start by asking susan combs, our comptroller from the state of texas, to make a few remarks. susan knows a thing or two about using technology to enforce transparency in government and to accelerate accountability. so, susan, please. [applause] >> well, hearing a familiar name recently, john galt, and i downloaded atlas shrugged about

six months ago and reread it, and i'm pleased to tell all of you that john galt is alive and well, and he's live anything texas! [cheers and applause] the book seems, actually, very modern and timely, and if you take a look at where we are with the economy, washington is telling businesses everything they do is bad, they're causing harm, they need to be reined in and, of course, please leave everything to government. now, i thought that when we came to this country several hundred years ago, we left the king behind. we certainly thought we did until king obama started his rein. two thing -- reign. two things that i took away from the book that i think are important. number one is some parts of the federal government hate successful businesses, and they show it through tax or regulatory policy or extortion. look at the epa, the endangered species act and, of course, the nlrb dealing with boeing. in the book, the best steel, the best railroads, the best of everything was torn down and

given away to the worst and most incompetent. they had to turn over the fruiteds of ingenuity and imagination to those who can't do as well, and in the book, finally, atlas shrugged. atlas being the wonderful giant who kept the world going, they went on strike and changed the world. secondly, government is incapable of managing success. it's been four years since congress passed a budget. what would happen to your small his if you tried that approach? and by the way, can you imagine the white house trying to run disney world? well, let me retract that. it's certainly true that joe biden is out of central casting for goofy. [laughter] if we had the hall of presidents would be shut down due to sequester if the feds ran it. so why is john galt happy to be living in texas? three reasons. we diversified our economy, and now we've opened it up to lots of entrepreneurs.

second point, it is true that capital will flee a hostile environment. capital has a fear of risk, the regulatory rug being pulled out, and in texas we have a sharp eye on new regulations and policy, and we love to sue. we love to sue epa, we love to sue the obama administration on health care, voter id, and we hope that keeps them on their toes. we certainly want the -- [applause] pro-business climate to be the engine of growth. and it does pay off. the federal reserve has a chart showing 22 years that texas is leading the country. third, rational government spending policies you don't have to keep going back and extracting more taxes. our state debt is the lowest of the ten most populist states, our rainy day funds allows us to even out our spending, and we've cut our expenses. now, the absolutely strong, empirical proof of our success is what i call the u-haul test. a u-haul from texas to california costs $1,693 one way.

going the other way from texas to california -- i'm sorry, going to california is no market demand, it's double that, and so that's why we are looking at california as d.c. in waiting. in texas we have tried to apply the lessons of business to managing the state rather than as this administration does applying lessons of government or doing things badly to business. the feds can and do keep putting, cash. when, not if, they get it wrong, they hire more people, administer rules, tighten the noose and market forces drive out incompetence in the private sector everywhere except for washington. so the lessons learned are big government is not your friend if you are a risk taker, what works in the spirit of entrepreneurship, innovation etc. , and people ply grate to success. number two, put as light a hand as possible on the government tillers. this applies to all levels;

cities, counties, school districts. and number third, engage in partnership with your citizens. keep your books and your minds open, be sure you don't fall into the d.c. trap. so come join all the oregon galts who have made -- john galts who have made texas their home. by the way, the operators at u-haul are waiting for your call. thank you. [applause] >> thank you so much, susan. and now i'd like to ask congressman pearce to take the podium. he is fighting the good fight on capitol hill and is a small business owner himself. congressman? >> thank you, carly, and appreciate it. i'm steve pearce, i represent the 2nd district of new mexico, 34% republican, 52% hispanic, and they're hungry for the conservative values that we represent. you heard susan describe atlas, and the question for us today is has atlas shrugged? now, to have a significant discussion about that we first of all need to think about the two terms potential and kinetic

energy. you all know what potential is. we have all seen these kids at school that excel in athletics or maybe in the classroom, and we hope they live up to their potential. actually, washington, d.c., the redskins are home to one of the stories of potential versus kinetic energy. a kid that grew up in my hometown, timmy smith. we watched as he electrified audiences with his running ability in football through junior high and high school, actually came here to play professional football, and in his rookie year had an outstanding year, culminated in the super bowl by setting a record, the all-time record for rushing in the superpole by a rookie from my hometown. he demonstrated potential his whole life, and yet he went home two years later unable to capture that potential because he didn't have the kinetic energy to fulfill it. i just recently came back from south sudan. i sat as the president slumped in his chair saying we're starving as a people. it's the newest country on earth. the country is broke.

they're sitting on the potential of 350,000 barrels of oil a day, yet they have no modern-day outlet, no business other thans, no one to come forward and say we'll get that oil to market, and so they sit there starving on abundance because they have no kinetic energy. is atlas shrugging? have they shrugged? have the business owners and the entrepreneurs and the developers stepped back because the government is too strong? i'll just tell you a couple of stories from my district. tom hutchison runs a local restaurant. almost 100 years in the same family, it's paid for, it's solid. 110 employees, and he recently told me after obamacare comes into full action, i'm not sure that we're going to be able to keep all of our employees. 110 families depending on a small businessman who is being crushed by the regulations coming out of this town and by this president. in new mexico we have navajo coal miners making $60,000 a

year. but under president obama they are being sent to the house to live on government subsistence-level checks. $60,000 a year taxpayer gone coming from the epa, and the epa admits the rules they're implementing to silence those coal miners will not impact the environment enough to be soon by the human eye. we used to have 123 timber mills in new mexico processing timber from our national forests. matt allen was one of the 123, today he's the last one standing. he's down from 96 employees that have dropped to a low of 12 because of government policies. i will tell you that the american government is crushing american businesses. they're crushing the middle class. the genius of america is being silenced. our best performers are giving up. the hardest workers are walking

away. businesses are our hope for the future, they're our hope for a healthy economy, and they're looking at a government? and wondering what's going on. businesses are the thing that separate us from being south sudan. of we have had all the potential in america, and our kinetic energy has realized it. and yet that kinetic energy is being silenced by a government. has atlas shrugged? i can't answer that. i can say that atlas is shrugging. god bless you all. thank you very much. [applause] >> and last but certainly not least we have jeannette hernandez prenger, she is a entrepreneur, a small business owner in the i.t. services business, a space close to my heart. jeannette, please. [applause] >> thank you, carly. well, it's kind of daunting to be standing in front of you and the two people in front of me,

the first part of their names started with "honorable." and why am i standing here? because i'm one of 23 million other americans who own a small business. like many of you and other stories that we heard, i am the product of a immigrant, a father who is mexican, a mother who is portuguese. the staunchest conservatives you will ever find who believed if you worked hard, you did the best that you could, you can be anything you want to be. as a small business other than, i take great pride in offering benefits to my employees. over the years i've grown year after year doing the right things. i've grown organically, i didn't take on debt that i couldn't afford, i provided great benefits for my employees. this panel is so important asking, has atlas shrugged? are we producing the right type of rewards for the risks that we take? how many business other thans wonder why am i doing this?

my parents had a dream that their children would have a better life than they did. that dream came true. each and every one of us six children have college educations. i have a sister who's a doctor. i have a business headquartered in kansas city, missouri, with an office in d.c., i end l ploy over -- employ over 150 people nationwide providing technology services. i love what i do. i love seeing people thrive, be successful, be able to provide for their families. but i have three issues that all business owners are facing. has atlas shrugged? when we produce so much and work so hard and take so many risks to have it taken away, i can talk about the taxes. might be who has a pay stub in december can take a look at their january pay stub and see the difference. i won't even begin to tell you what it means to a small business owner where the s corporation flows into their

personal income, and instead of being rewarded for saving, for operating reserves, for putting aside for a rainy day, those are taken away. health care, i have over 150 people working across the country. to compete with the big companies who also do what i do, i have to provide very good services, very good health care and benefits so i can attract talent, a work force that is going to compete with the big boys. today my checks for my premiums out of my company is $21,000 a month. january of 2014, three days ago, i sat down with my health care benefits provider, and he told me that checks will go from $21,000 a month to $58,000 a month. no more additional revenue. that is all going to hit the bottom line. has atlas shrugged? taking away those profits and imposing regulations, taxes,

additional policies that stifle creativity, that don't reward the good behaviors. i could go into bankruptcy, go into debt, overspend. i'd get a bailout, and in seven years i could start all over again. i don't think those are the type of things that we want to reward. we want to be able to have those 23 million small business continue to thrive and create jobs and keep america strong. thank you. [applause] >> so i think it's fair to say if you listen to everyone up here, i think it's fair to say that we are concerned that atlas is perhaps in the process of shrugging. and so i want to ask each of our panelists the following question. one of the things that always impresses me about washington, d.c. is that it's designed for

organizations that are big. you know? big business can navigate through all of this. big labor can navigate through all of this here we're talking about entrepreneurs and small business owners who are the lifeblood of this economy, and they can't navigate through washington d.c. so i want to frame this question, what do we think it would take to reorient the mindset here in washington from let's talk about everything big to let's talk about what it will take to unleash the smallest of our businesses. what would it take to change that mindset? and i'm going to start with the congressman, because he is fighting the good fight and just -- >> we will leave this event from cpac at this point. you can see it in its entirety and all of our cpac coverage online at c-span.org. the u.s. senate is about to gavel in.