>> and whatever income that was left we knew we have to get out of payroll savings. >> okay. let me ask you about the contract. you've already partially touched on this and i appreciate the explanation. just by way of clarification so you know, we have six contract control, i have three my district so we were hit pretty hard by this, three that have been lost, support so to speak. we've been able to provide measure to keep a couple those open locally. but it's my understanding that

we have what, 251 contract towers, essentially defunded, 149 of them, around 60% total. that seems disproportionate in what's a 5% across the board cut, granted somewhat substantially increase because it hadn't been said at the beginning of the fiscal year. so can you explain to me why so much hit that particular program? >> the program projects and activities within the faa are defined by the color of money and then within that by our lines of business. so what that means is that when ppa with the air traffic. that is a combination of contract activities and payroll activities. what we wanted to focus on was first and foremost what could we reduce in the contract area that would enable us to minimize the impact on employees. and as you've heard me say, the

contract tower program represents a very large expenditure within that account. we believe it's manageable because these are relatively low activity facilities, fewer than 150,000 total operations and 10,000 commercial operations on an annual basis. and that all of these towers have experience, or all these airports have experience with the exception of one of operating in a non-towered capacity. they are well-established rules of how a non-towered airport would operate. the trade off is for every dollar of savings that i'm not able to achieve in contracts, that it's the payroll account. now, the payroll account is where we find the employees that operate the large facilities, and that's the trade off we have to look at. as i said, none of these are good choices. these are extreme a difficult

and disruptive choices, but it is the law as icurrly i force and we have to carry that out. >> have you looked at a airport by airport? did you go down to that level of detail? and to you also take into account when you're making these, i've would agree with you, very difficult decisions. some of these things are very close to military facilities as well, ho have a military functi. >> sure. we started with just the traffic counts we talked about, the 150,000, and 10,000. then what we did is we considered what were the impacts of certain of the facilities that were adjacent to major hub airport, do they serve some important traffic function that enables how those other airports operate. then we consult with the department of defense and homeland security. they provided as their priority facilities, and every priority that they identified we elected to exempt. from closure under this

framework. >> i've got some of the questions but i will not have time to pursue them silage is yield back my time and wait for the next round. >> i thank the gentleman. >> i know that this letter questioning will continue. i'm going to take a chance and ask something else. >> okay. >> so general aviation user fees, or fees, i'm actually not inclined to call them the less they are the nexus between the use and the money collected thing goes for otherwise i call that a tax. both administration have proposed them in general over the last several years. this administration now has multiple times. seen this movie before. you all propose it and in congress says no. partially i would assume because of the general aviation committee, community or the industry employs, 1.3 million

people, the 150 billion years economy at a lot of that goes to small business. in my neck of the woods that's what we are, we are small business so it's very important to me. and i guess i would like to ask, it still is very unclear to me, i should preface this. the one responsibility would be appropriate is sequestration. because you've asked for this my before and i cannot explain how it's going to be used and we haven't given it. why do you think, now is a good time for to ask for it again, and what is the nexus? what is the use? can you justify this? >> sure. the faa's budget is supported through a combination of aviation trust fund and general fund resources. and in proposing this what the administration is silly saying is that we would like to place a high reliance on trust fund

activities where fees are paid by the users of the aviation system. we've had this whole discussion about the need to reduce federal spending, and we believe that to the extent that we could raise the significant resources from the users of the system, that that would be a significant, a significant benefit in getting with our larger fiscal challenges that we as a country need to deal with. now, in terms of what the fee would cover, it would reflect the fact that the government provides significant air traffic control services, aviation services for the benefit of the aviation community. and the fee would, for us, whether, no matter what kind of like it is, it costs us the same to operate it with an air traffic control system. so the notion is that there are services that are provided to the aviation community and what we are really looking to do is to see if we can recover that

through user fees. >> in terms of what is paid in general through licensure and ability at certain airports hang us, purchases of planes, all those taxes that go into all that. you're saying that doesn't come close to playing a role in may be combined using this assembly, i'm also paying taxes in licensure fees and so and so forth associate with that? you don't think that comes -- >> it doesn't completely cover the cost of operating the aviation system. >> okay, thank you. i yield back. >> thank the gentlewoman. mr. joyce. >> thank you, mr. chairman. mr. secretary, a few questions regarding nextgen. i was one of them you're spending approximately the faa spending a billion dollars per year on nextgen, which is we would agree is needed to address future air traffic demand.

given that operations are down 12% since 2070 think we should consider differing long-term nextgen plans before implementing furloughs of air traffic controllers? >> there are two dimensions to the response to your question. the first is the nextgen program primarily is funded from our facilities and equipment account, and our research education -- research engine and development account. we do not have flexibility to transfer between those accounts and the operating account which is the account where we are seen significant impacts associate with a fertile. the second one though that i would like to make is that these are investments that have significant long-term benefits in making the system operate much more efficiently, and to handle the expected growth of traffic that we expect without an increase in calls. so i think it is penny-wise and

pound-foolish to delay and defer the investments that we need to make in this long-term infrastructure that are actually going to make a system operate much proficiently down the road. but given where nextgen is funded from, from the facilities and equipment and the research, engineering and development account, we don't have the flexibility to move those funds to our operations got absent some change in the sequester law. >> thank you. and i understand from what you're saying is that you intend on going through with the implantation of nextgen on a timely manner? >> that is correct. we will see some delays that will result from the effects this year. for example, we have collaborative workgroups that involve aviation stakeholders, air traffic controllers, facility managers and airports that have been planning for the deployment of much more optimized and efficient routes

for transit in and out of airports. this program which recall metroplex allows for airlines to use more direct routing, these things called optimize -- they all have the same benefit. reduced fuel burns to reduce emissions and for some communities significantly reduced noise. but we don't have as we are furloughing employees, the luxury of assigning a traffic controllers to be working in these collaborative workgroups. we have instead we called it into the facility so they can work on moving air traffic as we do with the impacts in the sequester. >> the gao has indicated that lack of control training in the new procedures as revenge them from being used. you are not doing anything to grep that? >> we have been doing a lot to correct the. we have had to put on hold to do with the immediate impacts as we're dealing with the sequester. in response to gao have invested a significant amount in ensuring

that we have appropriate controller involved in training, and it has resulted in great benefit in these procedures and these nextgen investments being used by the aviation industry. we've had to cause that while we do with the immediate operational challenges to mitigate the impact associated with furloughing our employees. >> i see that sequestration seems to be edge of the day but what barriers do you perceive out of the sequestration? >> as we look to implement nextgen down the road, this represents significant technological transformation. and it moves us from a system of air traffic control to a system of air traffic management. those are all good things. and that is something needs to be done collaboratively with the aviation industry and with all of our stakeholders and whether workforce.

it is, some have likened it to buying the latest technology and turning it on. i think of it as a significant transformation in how we operate. that means that we have to work as a shared responsibility to maintain safety and operational efficiencies with the users of the aviation system and we are committed to doing that. it also means that led to invest in the things we've talked about, training and operationalizing all these investments that we are making. i think of it this way, we are not investing in technology for technology sake. we are investing in technology to yield benefits, and if we cannot measure and achieve the benefits for the aviation community, then we are not doing our job. >> thank you. >> thank the gentlemen. mr. price. >> thank you, mr. chairman. good morning.

appreciate your being and appreciate the rlier answers you've given, which i won't ask you to go over again regarding the impact of sequestration and the flexibility your agency does or does not have indian with these personnel reductions and the furloughs and reduced service at major airports, things that all of us know to be highly undesirable. and yet, we have to say they are very much in line with the intent of sequestration which was to be unacceptable. the intent of sequestration was to make deep and indiscriminate cuts and to be unacceptable and force everybody to the table to conclude a broader, longer-term budget agreement. sequestration does not touch the main drivers of the deficit but we all know that. it barely touches entitlement. it doesn't touch tax

expenditures. those are the main drivers. it goes back yet again to discretionary spending, and cuts it in ways that as i said were designed to be unacceptable. and so to pretend that it doesn't really need to hurt very much and that the president or the faa with a flick of the risk could make this difference is disingenuous. we need to fix the problem which is to get a long-term budget agreement, as opposed to pretending that damage control, putting out this fire and then that, is a budget policy. it simply, it simply isn't a budget policy and it's not going to work, and the sooner we can get to a long range budget agreement, the better off we're going to be. let me turn to air traffic certification which is not an raise this point and i do want to raise it. you are well aware that aviation manufactured products kind of kind of market once they are certified. you also know that the faa has been unable to support the

current level of industry activity within the current average certification way time is six to nine months, which puts american aviation manufactured at a competitive disadvantage when compared to foreign companies. furthermore the number of new technologies requiring certification is expected to increase as we government nextgen. so in recognition of this under the last faa reauthorization congress include language to identify some needed reforms in the certification process, into focus as they resources more effectively on critical activities, safety for example. while beginning to address the backlog of certification request. i wonder if to give us an update on the implantation of these reforms, what are some the specifics for increasing the time limits and effectiveness of the certification program? what kind of challenges are you encountering? >> thank you, sir. the certification process is something that six-run important for the reason you've talked about. new products cannot come into

the market without having faa certification. and the faa, and aviation represents the technological frontier is our largest export industry. it is a very significant creator of jobs in the country. and with direction from congress we are focused very much on how can we take better advantage of our certification resources. we've recognized that fundamentally preserving safety is about managing risk, and so, and managing risk involves developing data. where we are likely to problems and how do we focus our inspection and oversight responsibility on the areas that might have the greatest attentional for problems. we have been, we've been passed by congress and we have aggressively moved on relying on designations of trusted agents in organizations throughout the aviation industry so that we can share the responsibility for bringing new products to market. they could do a lot of the legwork but we never give up our

responsibility ultimately to certify and ensure that new products are safe before they come to market. nonetheless, it's an evolution that needs to take place over time. and as we work, what we have seen is a real pickup in the pace of requests for new certification. and i think that reflects the positive economic trends within the industry. but the flipside of it is that the aviation certification workforce is hit by the same impact as everybody else right now. and so that does cause us to focus on aircraft and parts in service at the expense of certification activities for the immediate term as we're dealing with the impacts this year. >> well, and the fiscal '14 request for aircraft certification service is about level. 213 million. doesn't seems to underscore your

commitment to provide funding for stabbing assisted to ensure more timely certification. what about the funding and staffing levels, how is that related to the situation you described? >> the staffing forces something, we have staffing models that look at the full scope of our need for resources in aviation safety. that's proven to be a complex process and we continue to work to refine it. but we are trying to strike the appropriate balance between having a responsible budget request, recognizing that tight fiscal conditions we are in but at the same time providing resources that will support our continued growth and evolution in our certification activities. >> thank you, mr. chairman. >> thank you, mr. price. mr. dent. >> thank you, mr. chairman. just a few things, particularly with respect to the notifications about furloughs and what's happening with air traffic control. i know a lot of those notifications occur this week. i think a lot of the american

public felt frankly blindsided. the airlines, the unions, airports -- compared to the way the contract tower issue was how i get since the faa had in fact consulted with other interested partners and stakeholders like the department of homeland security, and department of defense. you know, why were dhs and dod given that courtesy, as they should have been with respect to the contract towers? prisonlike all the other folks i just mentioned, the airlines, the unions, the flying public just feel completely blindsided by this decision? >> so when we talked about the contract our decision back in february we at the same time did say that we expected impacts on major hub facilities, and that it would be as a result of furloughs of faa employees.

i think it is fair to say that the thing that captured the immediate attention and that was something that became i think a matter of intense public focus was the contract hours and the longer-term impacts, which at the time we said would not emerge until later. i think, i think friendly despite our efforts to talk about them they were things that really didn't sink in with people, that we were expecting to see this. nonetheless when we begun that process we did was we asked each of our air traffic facilities to build schedules based on 10% fewer available hours for each patriot per employee. and those formed the basis for us to use the tools that we use everyday to model our ability to handle aircraft within the air traffic system. and those operational details

were what we provided last week to the users of the system. we are continuing to monitor it, and have been monitoring it since sunday as we worked through to do everything that we can to mitigate the impacts of these, but we been talking about this since february. >> there was an editorial today in "the wall street journal" entitled flying government skies and i realize it's an opinion and you may or may not agree with what they said, but there's one paragraph i thought it was interesting and i'd like you to respond to a. ponder this logic, if that's a great word of the sequestered that's about 637 million from the faa which is less than 4% of the $15.920 billion '12 budget limits the agency to what it spent in 2010, the white house decided to translate this for% cut that has legal discretion to avoid for an traffic controllers. those controls will be furloughed but one of every 10 working days are forever deflect will not arrive on time. so basically 4% after a spending

cut that is translated into delays of 40% of flights. i would like to respond to that. >> what we are responding to is the need to find the savings in half of the air. and so that one furlough day per patriot gets is about $220 million of the total savings i need to achieve of $637 million between now and the end of the year. and these are not great choices. these are all difficult impacts. we have focused first on achieving savings in contracts, achieving savings and non-pay expenses with the idea of minimizing the impact on faa employees. but we had a gap that we needed to close and we had no choice. >> with respect to contract our programs, the administration's decision to close the contract towers has garnered a lot of attention in congress asia. the capital city airport in my district is going to be impacted by the contract our closures.

i've heard from cap city as was the airport council. they cite the inspector general as saying the contract our programs cost effective method of providing a traffic control. my subject is they were based on flight volume. what, if any, analysis was conducted in parallel to analyze the impact of these closures will have on operations and safety of neighboring airports the? >> when we looked at this we focused first on what is the activity level of each of these facilities, and these represent a lower activity facilities throughout the system. we did consider a sex on adjacent hub airports and consultations as you note did wh the department of defense and homeland security on whether they served, whether they wanted us to exempt particular facilities. we did exempt everyone that showed up on their priority list. in terms of the operations of these airports, we are not doing

anything that is not safe, but an airport that is non-towered operates differently. and generally the difference is it operates less efficiently. in order to maintain the highest levels of safety. we did analyze each of these airports, and in looking at each of these airports, one thing that was apparent was that although one of them operate for some portion of the non-towered already. they have well-established procedures of how to operate in this capacity. >> thank you. >> thank the gentleman. you had mentioned earlier contract towers, apparently you contacted our god guidance, direction from homeland security and dod -- who else did you talk to on these decision? >> within the federal government it was those two agencies. we consulted with airports and

with airports to determine that serve impornt function as it related to a hub airport and then our operations teams out in the region. >> did you get any direction either from the department or from the white house as to how to implement sequestration? >> we shared what our analysis showed with respect to the operations of the facility with our colleagues at the department but we did not receive any specific direction from them. >> from the white house? >> no. >> mr. dent was asking about the engaging of the stakeholders, and again, do you want to tell how and when you engaged the airlines as to what your plans were? >> we talked generally starting in february that we expected to sequester, that we expected the sequestered would result in closure of contract towers, and

what identified a level at that point. we talk about the process. we also said that we would be furloughing our employees and that that would have significant impacts as a major hub facilities. on the contract our site, the consultations i reference in my respond to mr. dent. on the air traffic side with faa employees we went to the scheduling process that i -- >> when did you do that? >> when did we do that? started in february, and then into march. where we first had to make a determination of what were the minimum number of furlough days, and that's where we made the decision to plan for one per patriot. that was handed out to all of our facilities, and they did their analysis in the course of the month of march. they need to build schedules that would reflect this reduction in hours.

>> keep talking that february level that you and all the plan in place and why couldn't you sure that earlier rather than just wait until there was no detail as to what your plans were, you just said until last week? >> we did share with you and what we broad systemic impacts to be. we didn't have the information until what had been billed by the facilities, and we understood how it would affect particular rates at each air traffic facility. and we shared that after we're e done the appropriate work on it to make sure that we were confident this represented an expected outcome as result of these activities.

>> so even though you're telling us that we all knew about everything, february 11 you didn't know anybody at the airlines to change their schedules or to adjust to it until last week? they got no detail in the last we come is that correct? >> we told airlines they should expect impacts as a result of reduction in available hours for air traffic facilities starting in february come and we continue to make that case. what we shared last week were specific operational details. >> so they couldn't do anything until last week? >> i wouldn't agree with it. they certainly could plan for a general reduction in capacity. >> but if they don't know what that means, how can they play in? >> the same way that we do, to plan for fairies -- various scenarios. >> without any specifics as to what you're going to do in? >> we have been saying that we were going to furlough employees one day per pay period for a

long time. that's a 10% reduction in available controller ours. >> moving on i guess, class you've been wanted for $9 million in travel. what he done to reduce the steps or what steps should be taken to reduce travel? how much are you going to save this year? >> last year we did spend 100, it was an fiscal 12, $149 million, that record since 2% of the opera and much. we reduce that to 125 million this year and that is limited operational travel. for example, and aviation safety inspector needing to get a particular facility to conduct an inspection or a technician needed to conduct work in repairs at facilities. >> my time has expired. mr. pasteur? >> thank you, mr. chairman.

now that should make a determinadetermina tion about furloughing and the hours and patriots, et cetera, what are you doing to continue to communicate with the airline industry so that they can continue to plan and avoid the problems that they've had in the last few days of? >> we have a twice daily, or every to our operations call with the operations, teams at the airlines. that takes place after command center which is located out in virginia. what we share with them is what we're finding in terms of specific facility impacts as they develop over the course of the day. what airports might introduce such things as gradually programs, where we have to implement activities such as flow control programs we can manage it. and then, of course, you to overlay on top of everything the weather. that will also affect how a

facility is going to operate. have, we want to keep that level of communication because what we need to understand is the network impacts of how all of these combinations of impacts, the different facilities take place. the command center is really where all of that comes together, and these conversations take place every other hour. within the course of a day. >> you had to extend the closing of the towers, the contract towers until june, correct, and that was because of a lawsuit. as i understand your testimony this morning, basically that determination was made because of your pdas -- number to ensure safety with the air traffic controllers who decide when a foreigner and contract towers was the number that you had to eliminate.

now, you are in court right now and we don't know what the decision is going to be but what if the court says your decision was not, doesn't merit closure so you have to reopen? >> i can't comment on how the litigation will come out. >> just a for instance. take that as a hypothetical spent but the for instance, would be for every dollar that i'm unable to save through contact power savings and have to find sitting someplace else. either another contracts or in payroll expenses. so that could theoretically increase the number of days that i would require for furlough. >> as i understand your testimony, that you look at other contract and a determination age you couldn't do it so you went to the furloughing of the air traffic controllers. is it possible to re- look at the contract you have that you

decided not to deal with in this round, and maybe now knowing the problems that we are having with the delays that you might be able to re- look at that and say i'm going to go back to salaries and see if i can bring back more air traffic controllers and continue to avoid not the contract towers but the other cuts that you could make? >> this is something that we are evaluating on a regular basis. taking first the context. yes, we have established targets for savings for particular contracts, and i've talked about some the areas where we are focused. contract towers is one, but we've also focused on training contracts. we have focused on equipment expenditures for spare parts, as well as maintaining inventory so we can respond quickly to things like outages and so forth. what we don't want to do is

cannibalize contracts to the effect that while we might be able to preserve employees if they would not be able to carry out their jobs because they don't have equipment, they don't have the tools they need to actually do their jobs. but that is something that we will monitor and we will continue to monitor very carefully as we go through these weeks and months ahead. if i am able to achieve higher levels of savings in contracts, yes, then we can certainly as we get later in the year consider whether we have the ability to relax the furlough. and that is something we will continue to monitor. >> try to i have a yellow light so i yield back. >> thank you, mr. pastor. mr. rogers. >> went to the furlough policy go into effect? what date of? >> the furlough itself went into effect with the patriot that begin on sunday april 21.

>> when the? >> sunday april 21. the furlough itself. we to notify employees, there were two notifications, ma starting about five weeks ahead of that where we notify them of the possibility of furlough and then the intent that we were actually going to carry it out. speak so that was april when they got the word? >> no, no. they got the detailed word, i will get back to his exact date but we did provide them an official notification that it would start and i think it was a week or two before april 21. >> well nevertheless, it was what, week ago, 10 days ago? did i hear you correctly say that you first gave the airlines and airports and infrastructure notice of how this thing was going to be applied last wednesday? >> no. what i said was we provided notification to them of the

general impact. we provide operations -- >> on the word about your and i. i want you to tell us when he told them the details of which airports, at what times they would have trouble. that was last wednesday as i understand it. >> tuesday. >> last tuesday, pardon me. which was a few days before it went into effect. >> that's correct spirit and we've got hundreds of airports. we've got dozens of airlines. we've got millions of americans wanting to make their plans for travel why did you wait until him that long to tell these, the airlines, airports, the personnel, the detailed impact of sequester? why wait that long? quick you have had this under consideration for several months. but you waited until hours

before it was to be placed into effect, to tell the relevant stakeholders. i find that shocking. a shocking lapse of management. would you comment on that? >> we build detailed schedules within each of these facilities, and we shared this information with the airlines as it happened. >> and that was a few hours before it went into effect. but you've been doing this for months. why couldn't you brought them in earlier so that they could make their plans? >> we have been talking about general impacts. >> general index again. i'm not worried -- they knew the general impact. >> we have been talking about reduction in available controller hours of 10% for months. >> but you didn't tell them which airports, which airlines. we told them they should expect significant impact at major hub facilities. >> well, la dee da. everyone knew that.

that's what the question is all about. but it's important for them to plan their schedulesandthe hours and their planes, and airports their management personnel. they needed to know detailed impact on them as early as could be had. and you had months to do that, and yet you refused. i find that shocking. >> i don't think we refuse to. i would say that what we wanted to do was conduct a proper schedule and analysis of it and then provide them the best information we could. >> how did you informed in? >> we informed an enemy we had at the command center. >> a meeting between? >> operations team led by our air traffic organization. >> wheorganization. >> when did you inform the airlines, the airports? >> we talked -- >> how did you talk to them in? >> we talked in a meeting. we had a number of meetings with the aviation industry's first about contract towers and then

talk about the impacts associated from the furlough. >> you got all the airlines in the room of? >> we get together with them everyday in an operational capacity. >> there's hundreds of airport. did you have them in a meeting? >> the airports, we certainly, not every airport is affected by the impacts of the furloughs, but we certainly identified through their associations the major impact of airports. >> so you did this with a conference call? >> no. with a meeting. >> did you ask them for their input or suggestions or ideas? >> we are continuing to have that conversation. we shared with them this is what our analysis showed and we will continue that discussion every day going forward. >> did you take into account the complaints, the information that they get the? >> absolutely. >> were they shocked when you told them at the last minute of the impact on their airport,

airline? >> you would need to talk to them about what the reaction was but they expressed great concern. >> now, you mentioned i think that there were some long-term projects that faa has invested in, and that you don't really want to take much from those projects for fear of derailing progress. can you tell us what those projects are? >> that's the investment in our next generation air transportation system. >> in light of the current situation, do those projects really have priority over the operation of commercial aerospace? >> there are two pieces to that answer. the first is, i don't have the flex ability to transfer from my facilities and equipment account, which funds those projects, to the operations account. but the second point is these projects will have important benefits for efficiency long-term, and to think that we need to get on with making those investments to ensure

efficiency. >> have you asked the congress for this change is? >> no. >> that's what i thought. i yield. >> thank you, mr. chairman. mr. price. >> thank you, mr. chairman. let me briefly revisit this matter of the contract our closures. in february you anticipated the closures at 149 contract towers. in march you announce that you would delay the closure of those towers until june. so you have stretched out that timetable. and you've already talked some about the kind of consultation that took place at various levels and continue to take place about this. let me ask you about the consultation that takes place with the local communities. the airport, airport authorities. i understand that some communities, maybe 50 or so, are trying to come up with her own resources to keep towers opened

as part of the faa's nonfederal contract our program. what steps would need to happen to make that our reality, how can you facilitate the transition, and let's say the transition does occur, there are various questions one might have about what happens to the faa's equipment in the towers and so forth. can you shed some light on that? >> sure. it is about 50 that have requested the ability to locally fund the federal contract tower that is currently existing within their particular community. and is relatively straightforward to effect, it is simply a change in who is paying for the cost. we have offered that they could simply cover the cost of the faa's contract, or we have put them in contact with the contractor directly in order to negotiate their own agreement and on contract to carry out these contract tower services.

getting to june 15 does enable is the more time for those arrangements to be worked out. as relates to the equipment in the facility, we've adopted a very liberal approach to that. that is a committee wants to take over the use of the equipment, that we will continue to make it available and maintained for that purpose to manage through this transition. >> thank you. so you could make a good use of this time you think in these cases. all right, let me return to another item raised earlier, the nextgen performance-based navigation procedures. you spent a lot of resources to develop this, to develop these new procedures, to streamline the arrivals and departures and airports. the industry supports the in limitation of performance-based navigation procedures. it will reduce the number of miles flown, amount of fuel consumed. just a couple of questions about this. there have been some gao studies that indicated that one gap in

this program may be a lack of control training in the new procedures. that has prevented them from being useful to i wonder what you're doing to correct this, how uss stennis and what kind of corrective measures you have underway? and then here, too, what impact has and will sequestration had on the development of these performance-based procedures, especially in the metroplex environment. you talk about the desire to protect this program. you talk about the fact that you don't have unlimited flexibility to transfer funds back and forth. what i'm asking is what you anticipate the practical effect of sequestration is likely to be near-term, midterm? >> sure. when the ig identified for us the matter of controller training, that is something we incurred with and we have

actually made a significant area of focus. controller training is essential not just an but also consultation with controlled in a collaborative fashion to understand how a piece of tech jobs or new procedure is going to work. and what the benefits were kind of get out of it, all that is excluding important in being able to yield benefit and ensure that thing gets used. that's been an extreme high priority for us. as we focus on the deployment of technologies, systems such as the ram and camera but also the focus on procedures. the performance-based procedures you talked about. there is a near-term impact of our scheduling problem this year because in order to focus on preserving the activities of the operation we have called back controllers to their home facilities. and that is affecting their ability to work in a collaborative workgroups as we work through sequester. the president's budget for 2014

assumes that the sequester has been resolved and it does provide resource to enable us to restart those collaborative activities and to ensure that we have the upper levels of involvement in training. >> thank you, mr. chairman. >> thank you mr. price. mr. cole. >> thank you, mr. chairman. mr. administrator, i want to pick up where you left off because that was the line of questioning i was interested in pursuing earlier. you assume, the budget for fiscal year 2015 sequester will and. what do you base that on? are there, in the budget, alternative revenues or cuts that would justify that assumption? >> well, the entire president's budget is based on a premise that is the question is resolved and we simply conform to that.

>> has the president put forward a plan as to how it will be resolved? >> i think the president has but for a plan that were present an appropriate balance between needs to make investments but at the same to -- >> not exactly my question. does he tell us how he would replace the cuts? >> welcome i think what the president is suggesting is that there needs to be an appropriate balance of expenditures and revenues. >> are you making alternative plans that if this assumption come it seems to me that's what got us into this problem. i think everybody assumed the sequester wouldn't occur. the president made that commitment in a campaign, his original idea. honestly i think it was probably the consensus in congress as well so i'm not beating up on the president. everyone assumed it wouldn't happen. it seemed to be a pretty dangerous thing to assume it's all going to go away. >> well, as i said, into we have the 2014 budget resolve and issue of the sequester resolved, that does create force a great

deal of uncertainty in our ability to plan going forward. >> are you think about possible scenarios internally if you have to live with the sequester? >> yes. >> could you tell us what some of those things would be? and as you do that, just again can you've operate within the limits of the law now, obviously. if you could change, what ways would you change the law today if you knew you had to operate? whawhat additional flexibility might you like that under current law you don't have? >> i think a policy question that this key step is what does this mean for the national airspace system, and the operation of the education system in its totality. we have put forward a plan that would suggest that lower activity facilities are an area and where we would want to perhaps focus on withdrawing federal resources. the rationale behind that is that these facilities can continue to operate safely and

that they have less of an impact on the total operation of the national airspace system. now, as we know, that is not something that everyone agrees with body that represents certainly wouldn't have forward could be there. >> what about the grants program? that's been one of the sheltered areas under current law. would that be something you recommend changing as we'll? >> we have put forward a proposal to change the structure of the grant program, and for large airports to enable an increase in the passenger facility charge from $4.50, to $8. this is i think widely supported by the large hub airports, and what that would free up is, it would enable us to have a smaller aip program and that program could then be focus on the smaller airports. >> you do that assuming that sequester would go away. i'm suggesting it may not go away, and so given that, would

they be additional, might be more money, i do know what it would be, but do you have other ideas? because i do think it's a long way from certain that the sequester will disappear. >> well, i think there are two dimensions to that. one is the nature of what is the will we all have for where the federal interest is in aviation. is it in all facilities provided at a basic level of services, or she would focus on the larger facilities? and been related to that is the appropriate balance between short-term and near-term investments. you've heard me express the view that we should not sacrifice the long-term, because that's how we get maximum efficiencies and savings in the future. and then there is a balance between operations and infrastructure. the question you're asking is perhaps we need to relook at that balance. and i think that's certain an

appropriate area of consideration for the appropriators, for congress generally, and that is something that we need to as a country figure out going forward if we're going to live with these constrained budgets in the future. >> just as a word to the wise, and again, i'm not singling you out, i think this is a problem we face in every single budgetary department that i deal with, but we assumed this thing wasn't going to happen and it did. i would be very careful about assuming it would all go away. i'm not at all convinced that it will. thank you. thank you, mr. chairman. >> thank you mr. gold. mr. quigley is recognize. >> thank you, mr. chairman. good morning. >> good morning. >> the presence budget allows airports like o'hare to raise their passenger facility charges up to $8. in exchange for the willingness to spread some of those dollars to smaller airports as well to improve facilities. given everything we understand

with tight money and sequestration, i mean, isn't this the only way all of these improvements are going to take place? >> well, the president's proposal would reduce the base aip program, but by allowing the large hub, in fact everyone who has pse, to raise it to $8. it does provide them significant offsetting benefits and they are able to raise local resources to fund very significant improvements. and that is something that is supported for the most part by the large airports. that enables us to focus the aip program on those areas where they don't have the traffic that they would be able to generate sufficient revenues through a pfc. >> so not just the large hubs but all the airports should come you think, support allowing the airport to raise their fees? >> i can't speak for all of the airports, but in general,

airports that have a passenger facility charge like having a passenger having -- electability to generate local revenues, and because for them that gives him a greater degree of certainty and ability to plan for long-term infrastructure programs. >> let me talk, because the horse isn't quite deceased, on sequestration here and what you were doing. can you talk a little bit about how the decision, i believe the expression was it was going to be like a spread so that everyone feels the pain when you have these furloughs. the policy decision to do this across the board versus perhaps taking less strain off the large hubs, i guess the rationale on the one hand would be the volume, this year volume and how many people are connecting through these large hubs. perhaps everyone to minimize the impact we would reduce the

furloughs in those locations. >> we did look at that option, and the conclusion that we reached is that the national airspace system is a much an interconnected network. that aircraft, cruise, and passengers moved through the entire system, and the way that aircraft gets moved to the system as a comish of both large hubs and smaller facilities. weather and other phenomena also factor in and what we concluded was that conducting the furloughs in an equal fashion would actually still produce significant disruptions and delays throughout the system. and things we couldn't possibly completely understand or medicaid. the other thing is -- mitigate. what happens at a particular facility is effected by a number of factors. clearly our availability to accept aircraft at that facility

is one factor but other factors relate to how an airline chooses to build its schedule, how it chooses to manage its traffic as it goes through there, and we concluded that we could not be in the business of picking winners and losers a twin particular hubs, particular geographic locations, or one facility versus another. that the most equitable way to deal with these network impacts was through a universal application of the furloughs equally across the system. >> let me suggest that there's a cactus here that you described that's beyond my pay grade -- calculus. and i respect that. but with all due respect i had a hard time believing that atlanta, chicago, several other hubs impact on the entire system

is, even with conductivity, is a lot bigger, no matter how you slice this, then several of these very small regional airports. >> well, let me just cite examples of the last couple of days. one of the things, network we have an application of the fertile, what we have seen is their differential impacts on different days. based on what we are seeing in terms of actual traffic and weather situations. for example, over the last two days that have not been significant impacts in chicago. we are seeing that today. over, what we have seen in terms of impacts in atlanta, half for the most part not been as bad as what we would have modeled -- >> we are not in the big busy summer travel season yet either. and what we're trying to anticipate as we work through this is what are things going to look at as we get into the busy summer travel season at that's a part of the discussion that we

need to keep going spent and i understand you don't want to pick winners or losers but i think you might want to take volume versus smaller voting. thank you, mr. chairman. >> thank you, mr. quigley. mr. joyce. >> thank you, mr. chairman. following up on my colleagues question, you had mentioned before in your testimony that they were some airports that were not impacted by this. can you tell me which ones those were? >> it's a number of airports. for example, the washington airports. they have a lot of available capacity that they're able to manage. and so the impacts are, we would project, would be less than we would see in some other areas of the country. the major impacts that we see are in places like all three new york airports. it's a complex airspace to operate within. these are very large facilities, and they are complicated to manage the airspace, and

complicated to staff. and so that's one example of where we would see that. i mentioned atlanta. atlanta is one where the impacts could be significant or they could be manageable, and that's a part of the design of the airport. they have five parallel runways so they have a lot of available capacity to operate within, at that airport. so it's the relationship between the facilities but also the design of the airfield and the schedules that airlines have. spent but because she decided to make were uniform across the board? >> because we determined that the network impacts on the entire system were such that if we were to do something, if we were to do anything different, we would still be significant destruction and would put us in a position of picking winners and losers. >> because i'm somewhat new at this, bear with me for a moment. when was the first time you heard the term sequestration? and it may apply to your budget

going forward? >> it was in the whole discussion took place with the original passage of budget control act. >> did you prepare alternative the budgets? >> alternative -- >> budget. money that you thought you're going to get and another with sequestration. >> what we start focusing on at the beginning of the fiscal year was to plan for what would account look like against our budget, yes. >> okay. in that cut did you cut any administration? >> yes. >> could you tell us what you can't? >> we get significant reductions in all of our nonpaid activities along the lines of what i talked about, training, travel. we -- >> you cut it from 129 million -- >> 149. 149, to 125. we also reduced our i.t. expenditures through a consolidation. the savings this year are about

$36 million. and we put a hiring freeze on. we got rid of contracts that were personal services contracts, essentially letting go contract and temporary employees. we have greatly reduced our expenditures in spare parts and equipment, and everything associated with that. and then in terms of the overhead functions, things like general counsel, finance and so forth, you know, i think a disproportionate reduction in those areas, all with the goal of preserving the operating mission of the agency. >> okay, and those preparations took place over months of? >> yes. >> okay. who do you represent the you feel, the american public, the airline industry? who would use you as being your in the climate? >> the american public. >> okay. and it serves the american

public and moves us across the country, why would you think that only last week would be a good time to bring him in an act in concert with them or as you say, you told them what you are going to do. why wouldn't you have engaged in earlier on and ask them for their input so they could do the proper reductions in their schedules so we could act in concert is with the american public? .. >> it's all come into play when you have so many big stakeholders here that should have all been at the table from the get go to make it work.

>> i've been talking about it since the start of the year. >> i understand that, you said that a couple of time, but you just told the people who were servicing the american public about it last week. last tuesday. >> no. we have talked about what they should expect in the way of impacts, what the impacts on our budget was. last week what we were talking about was specific operational details. >> last week? >> they that's correct. >> last tuesday? >> that's correct. >> and you never forget you should talk to them before that? >> we engage on a daily basis, but what we shared with them was specific schedules that we had built based on the impact of the furlough. >> gentleman's time has expired. i tank the gentleman. we're going to, hopefully, have a quick last round here, and i know you're scheduled for about noon to e -- to depart.

a couple questions that i have yet. there's a rot being made about -- a lot being made about the fact that domestic flights are down 27% from 2000 levels, and yet the budget's grown 109% since 1996. can you explain the path on this and why the operation budgets are up that much but operations are down? >> well, simply put, the nature of the system has changed quite dramatically. the biggest increase has been consistent with the economy as a whole, an increase in payroll. wea people-driven -- we are a people-driven organization. second, we have made significant investments in new technology since that time. and that's with the long-term goal of transforming from a radar-based system to a satellite-based navigation system in the years ahead. we have also introduced significant new procedures that are intended to yield benefit

for the traveling public through reduced fuel burn and greater efficiency in the system. but we're in a period of time where as we introduce the new technologies, we need to continue to maintain the old technologies. long term there will be significant savings. >> yeah. you know, when we went through the process of doing the continuing resolution, omb sent up a list of hundreds of anomalies to address individual funding problems and mandatory that you had to pay raises to some people, so we had to fix this, or we congress continue. or we couldn't continue. did you, was there a anomaly request to fix the furlough problem? >> i can't comment on what omb might have sent up, but we were

certainly discussing within the faa and the department of transportation what this impact was going to be. >> so you never talked to omb about an anomaly to fix the problem 124. >> we shared with them what we expected the impacts to be. >> i thought you said you didn't talk to them. >> no. we had discussions about how we were going to manage and what we expected the impact to be. >> but you request that they -- you didn't request that they bring an anomaly on the list of a hundred changes they needed on the cr? >> i'm not familiar with the list of 100 changes -- >> be it's far over that. it's government wide. they had a list of things they needed in the cr to address certain problems. >> yeah. >> but, apparently, but you didn't tell them you had a problem? >> oh, no. it was well known that we had a problem, sir. >> so they didn't respond to your request? >> i can't comment on those discussions that might have taken place. >> you don't know if there was a

request? >> i can't comment on how priorities were established within the continuing resolution. i really don't know. >> but you're not aware of their or having any request to congress to fix this? >> i'm not aware of that. >> okay. so they insisted on the sequester back with the budget control act k can ten when you have this -- and then when you have this problem that's very disruptive to the american people, they made no effort to fix it, no request. >> as i said, i am not familiar with what might have been sent up on behalf of the government as a whole. >> okay. can you just -- i'm going to quit a little bit early here, but can you, again, look the american people in the eye and say the sequester will have no effect on safety? >> yes. the um pact will be -- impact will be on efficiency, but we will not do anything to

compromise safety. >> okay. mr. pasteur. >> i'm going to follow my colleague, congressman coling, - col, in that this budget is sequestration being removed by 2014, or the 2014 budget. but i have to tell you, my expectation is that as i said in my opening statement, 2013 we had sequestration, and there's great likely hood that 2014 i think we're going to be at least part of the fiscal year in sequestration. i hope that regular order comes about and we have chairman rogers here, and we had ranking member lowy who i think would do it if possible. but i would join congressman col to say sequestration probably

will continue into 204, and we should all -- 2014, and we should all be prepared for it. >> thank the gentleman. mr. rogers. >> no questions. >> mr. col? [inaudible] wow. [laughter] >> maybe i should run the -- [laughter] furlough. obviously, there's a lot of frustrationing in a lot of folks can be frustration in a lot of folks, and you're keenly aware of that. i would hope that as we go through this process for next year that we keep open communication line because we've got some real tough decisions to make, and there's a lot of concerns that we all have about going forward, certainly, emphasis on safety. but let me just say we want to

continue that relationship. you're in a difficult situation, obviously, but i wish you had come to us to actually let us know what we could do to fix the problem. we've heard nothing before, and that is the frustration, i think, shared by chairman rogers and aot of us here, that these are not insurmountable problems if, in fact, we cooperation and work together -- we corporate and work together. with that, thank you very much for your testimony today, and the hearing is adjourned. >> thank you. [inaudible conversations]

[inaudible conversations] >> arizona senator john mccain told relaters today that president obama said in a letter that syrian president assad likely used chemical weapons on a small scale against people if his own country. senator mccain says he hopes the president now considered establishing a no-fly zone over syria and providing weapons to the syrian opposition. his comments followed a senators-only intelligence briefing on capitol hill. >> clear the podium, please. >> just received a letter from the president in response to

the, our question about whether bashar assad adieused chemical weapons -- had used chemical weapons. and i will quote from the operative part. our intelligence community does assess with varying degrees of confidence that the syrian regime has used chemical weapons on a small scale in syria, specifically the chemical agent serin. it goes on to describe that. the president of the united states said that if the -- bashar assad used chemical weapons, it would be a game changer, that it would cross a red line. i think it's pretty obvious that red line has been crossed. now i hope the administration are consider what we have been recommending now for over two years of this bloodletting and massacre, and that is to provide

a safe area for the opposition to operate, to establish a no-fly zone and provide weapons to the people in the resistance who we trust. everything that the noninterventionists said would happen in syria if we intervened has happened. the jihadists are on the ascendancy, there is chemical weapons being used, the massacres continue, the russians continue to be assisting bashar assad, and the iranians are all in. it requires the united states' help and assistance. it does not mean boots on the ground. finally, we have to have operational capability to secure these chemical weapon stocks. we do not want them to fall into the wrong hands, and the wrong hands are a number of participants in the struggle

that's taking place in syria. there's three primary goals i think that can be achieved if we act quickly. number one, secure the chemical weapons before they fall into the wrong hands. that's the great threat, that's the big prize from my point of view. the international community should be working with the syrian opposition council the day after assad falls that we secure the weapons and dry them forever so they can't be -- and destroy them forever so they can't be used against us or anyone else. secondly, contain this fighting so that king of jordan does not fall. 400,000 refugees have streamed into jordan with no end in sight. jordan is under pressure from the effects of syria. to me, the third thing is to control the inevitable second war. we've let this go so long, and if we'd listened to senator mccain a couple years ago, we wouldn't have problem.

there are up to 6,000 al-qaeda-type fighters now in syria. the country is fragmenting along sectarian lines, and chaos is reigning. the day that assad falls there will be as surely as i'm standing here a conflict between the majority of syrians who want to move forward and live in peace and a small element of radical jihadists, and that conflict needs to be planned for and brought in. so the sooner assad leaves, the better for the world. >> questions. no questions? >> what about -- [inaudible] >> what about what? >> what about -- [inaudible] >> we've got a -- we had a briefing on that. >> north korea? >> north korea, the chinese still hold the key to north korea. there are some signs that they are getting a little weary of the antics of this young man,

but still it's a very dangerous situation. >> [inaudible conversations] >> let me point out again, the situation in syria is unacceptablee president of the united states said that this would be a red line if they used chemical weapons. the president of the united states has now told us that they used chemical weapons. those stocks of chemical weapons, some of which are in disputed areas, must be secured, and we must give the opposition the capability to drive out bashar assad once and for all. and our relations with russia should be directly related to their assistance the bashar assad which is significant. [inaudible conversations] >> do you have any idea if the administration plans to do anything in response? >> we have not. >> senator, what is the additional assistance that the united states has already given that was announced -- >> we haven't -- it's nonlethal. it's nonlethal. it's a half measure.

you win or wars by havin erelmingforce. the situation on the ground today is stalemate with the iranians and the russians all in and the united states of america gives them flak jackets. that is not comforting when scud missiles are hitting you. >> senator, is there anything new on the boston bombersome. >> can i say something about boston? boston is becoming, to me, a case study in system failure. just rook at it from -- just look at it from a 30,000-foot point of view. you have russian intelligence services contacting two agencies within our federal government responsible for our national security. the fbi and the cia. they tell us we believe you have a radical islamist in your midst. we do interviews, we do some things that i think are pretty responsible. however, this suspected radical islamist is able to go back to russia without the fbi or the

cia being made aware of it even though homeland security was. that system failure almost 12 years after 9/11. and it gets worse. the suspected radical islamist, the people we got warning letters about, is openly on the internet for months talking about killing americans and engaging in radical jihad against the united states, and we were unable to connect the dots and pick that up. the rest is history. between men benghazi and bostonr systems are failing, and we're going backwards. we need to understand that bin laden may be dead, but the war against radical islam is very much alive. radical islam is on the march, and we need to up our game. >> senator, do you have anything to say on boston? >> with no.

>> the senate thursday night passed a bill to allow the faa to shift money in order to end the furloughs of air traffic controllers that are contributing to flight delays. the house of representatives will take that up on friday. >> i went in, i walked into the little kiosk, i said i'm here to report. guard came up, as we walked down, he said, oh, i knew one of your campaign managers in ohio. i said, okay. got down in there, the guard said, here, you have some hate mail. of it was from california, i remember, and massachusetts. you have some hate mail waiting on you. they gave me the mail. you go through the most embarrassing part of the stripdown, and then i got into the intake, walked into prison down into the courtyard. the warden, i won't use the language i do in the book, but the warden told the man who's supposed to take me around get away from him, he can find his

own way. and i'm standing there not knowing what clothes to get, new by clothes they call them, and one of the other prisoners told them where's your escort? i said, i don't know, some little guy in a suit yelled some foul language. he take me in the back way of the laundry room, i walk in, and a man is sitting there, and he said are you the congressman? i said, used to be. he said, are you a republican, aren't you? >> i said, well, republicans put me in here, you know. i have to pull up some humor. he said i was the mayor of east cleveland, i'll get you some clothes. [laughter] >> with sunday on c-span's "conscious and a." >> senator charles schumer of new york and john mccain of arizona spoke thursday about their joint immigration bill in the an interview with the christian science monitor. here's a look at what senator schumer had to say about the

path to citizenship provision in the bill. you can see the spire -- entire event at c-span.org. >> of getting this job done without giving people a path to citizenship. and a lot of our friends in the hispanic community when they look at what's required along that path to citizenship, they're not very happy. and we're talking about 13 years, when we're talking about a $500 fee at first and another one after five years and all of the hoops that are required here including border security, there's going to be pushback from that side as well. so all i can say is that it's -- illegal status is not something someone should have to remain in unless they want to. and to say that you can have illegal status but you can't have ever a path to become a citizen of this country, i just

don't think -- offends our fundamental principles of fairness in our society. so i understand -- i don't understand. [laughter] but i know that that opposition is there. i don't think it's valid, and i don't think it's held even by a majority of republicans, certainly not in the senate. >> it's a knop starter. and for a -- nonstarter. and for a few reasons. first, the sub instant i have reason. in the european countries where people have done this and feel they don't have a chance to become part of society, a huge discontent. and we've seen that in the results of economic unrest in terms even of terrorism and things like that. the american dream is you can become an american. you have to follow certain rules, you have to work hard, you have of to pay your taxes, you have to obey the law. we even say for the be first time you have to learn english. but you should be able to achieve that american dream, you know, symbolized by the beautiful lady in the harbor of the city in which i live. so it's fundamentally important

not for any political reason, but for a substantive reason. and most -- mittically i'd say two things -- politically i'd say two things. first, a majority of americans support it. >> as wrong as -- >> there's a path. you earn it. >> right. >> okay. as long as you earn it. second, i would say this: for the hispanic community, it's a nonstarter, i'd say for most democrats it's a nonstarter, and the one thing that the four of us insisted on, there has to be a path to citizenship. now, john and all the other three said it's got to be a qualified, earned path to citizenship. they insisted that people go to the back of the line, not gain my benefit from crossing the border, and can we've achieved that. but any -- >> and our effective control of the border. >> and effective control of the border. but any attempt to say in the house that you will not have a path to citizenship will be a nonstarter, and i say that unequivocally, it will not pass

the senate. i don't think it would get a democratic vote. >> she marries at the age of 16 and helped teach her husband to be a better reader and writer. during the civil war she sneaks supplies to the unionists in the tennessee mountain, but by the time her husband assumes the presidency, she's in poor health and secludes herself to a second floor room in the wife. meet eliza johnson as we continue our series on fist ladies with your questions and comments monday night live at 9 eastern on c-span and c-span3, also on c-span radio and c-span.org. >> gary cohen, the head administrator in charge of implementing the new health care law, testified before a house oversight panel on wednesday. mr. cohen testified that the house insurance exchanges will be ready to begin enrollment on october 1st with full implementation of the health care law on january 1st. in this hearing is just over two

hours. [inaudible conversations] >> good morning. i convene this hearing on the subcommittee on oversight and investigation to examine the department of health and human service's management of the affordable care act as we approach the january 1, 2014, deadline for full implementation. mr. gary cohen, director of the center for consumer information and oversight or cciio is here to testify on behalf of hhs. good morning. cciio is responsible for implementing the ppaca, he knows they certainly have their work cut out for them. at beginning of the next year, full implementation will finally take place, and on that day americans have been promised the ability to purchase health insurance plans through new

exchanges. the american people have been promised good coverage that is also affordable. we all remember the promises made that if you liked your coverage, you could keep it, yet we see many stories about impending doctor shortages, and companies facing decisions on whether to continue to provide coverage. that's related to another promise that will surely be broken, that the law will lower costs. one large health insurance company ceo has already noted americans should get ready for premium rate jumps. a school district in my district has said they're going to see their costs go up by a million dollars. yet there is another promise we are hearing from the law's defenders that the exchanges will be ready for enrollment october 1 and full implementation on january 1. isn't only 18 -- since only 18 states elected to establish their own exchanges, cciio will cover 26 other states.

i hope we will be able to hear about the progress being made in building those exchanges. recent news reports have indicated and even president obama's budget has confirmed that the administration is seeking additional funding to operate the exchanges. this is troubling considering that a stamm amount of funding has already been given. today i expect the witnesses to provide a full accounting of where cciio stands and those that will be run in partnership with states including where cciio is obtaining funding for these programs and will they ask for more. since passage of ppaca, this committee has had many questions about the law. most recently we have heard stories about the public health fund. most notably, that money is being utilized to hire thousands of health care navigators who will assist the public in signing up for obamacare. considering we have also order that funding is being used on many different projects, we're

concerned it's being raided as an ever of of -- ever-ready slush fund. i hope that mr. cohen will be able to address the overutilization that has become so common that "the washington post" has dubbed it as the incredible shrinking pension fund, unquote. we have many concerns about those navigators. cciio is actively soliciting navigator ors yet those who get any compensation are prohibited as becoming pennsylvania gaters. of the realities of the insurance market also indicate those who have been selling insurance for many years may have some expertise or value. furthermore, we have questions about what standards will be put in place. in other words, someone with experience and training is not qualified where someone without experience stands if front of the line for hiring.

but this only scratches the surface of many activities and responsibilities of cciio. today i hope we will also be able to determine whether health insurance premiums' increase are legitimate and before when large health insurance companies already warned of rate shock. obamacare has promised lower cost, and now we hear from sporters of the law that are -- supporters of the law that there are subsidies available, but research shows only 8% of the public will qualify. i hope we can hear what the other 92% of us can expect. now i'd like to recognize the ranking member's opening statement. >> thank you very much, mr. chairman, and welcome to you, mr. cohen. thanks to the affordable care act, tens of of millions of americans who would otherwise be uninsured will receive health insurance for the first time. americans enjoy protections from the abuses of the insurance

industry that cruelly cut off coverage for folks when it's needed most. these are all big changes, can and the time -- and the time to implement them is coming up very, very fast. in just over five months, citizens will be able to sign up for health insurance through the federal or state marketplaces. now, while signing up for coverage should be easy come october, implementation's going to be a complicated process over these next few months not because of any flaws in the law, but because this is a new approach to providing coverage nationwide, and these things are always difficult to implement. and by the way, cbf has predicted that overall consumer costs will go down once these marketplaces are implemented. there's no reason to think it won't work. it worked great in massachusetts under mitt romney. but we have to educate millions of people about the marketplace in advance.

cciio and the states have set up complex data systems to manage the process. so, mr. chairman, i'm super glad that you're doing this oversight. and i think we need to hear from mr. cohen probably not just today, but as we go through the summer about what cciio is doing, where there are challenges and how the agency seeks to greats those challenges -- greet those challenges. i wish, for example, that when the naysayers raise the specter of a potential increase in premiums for some young healthy people particularly young men that they also put that into perspective by understanding that the tax credits and caps on out-of-pocket costs will sharply lower overall costs for these individuals and millions of other americans. and i wish that folks raising the specter of high premiums for young men in particular could add to that perspective the millions of women of all ages who will pay lower people yes, ma'ams and who -- premiums and

who won't be discriminated against by insurers simply because they're female or the millions of americans who will receive dramatically better and more dependable insurance coverage. when people complain about the fact that the obama administration is spending money to make sure that citizens understand the new law, i wish they would take the perspective to to remember that the bush administration did the same thing even hiring blimps to spread the word about medicare and spending $300 million on a public relations campaign for medicare part d. and, mr. chairman, i will say i voted against the ped care part d -- medicare part d bill because it didn't allow negotiation by the secretary of hhs to lower prescription drug costs. but even though i voted against it, i had, i had town hall meetings all throughout my district. and i had internet training to help my constituents figure out

how to sign up for it. and i think we need to have that kind of bipartisan cooperation as we implement these changes to the national, at the national and state level. so i hope that we take that appropriate perspective, and i hope that we can develop that perspective as the affordable care act is implemented over the coming months. in january 2006 when we implemented the medicare part d program, "time" magazine described the, quote, initial nightmares of implementation noting snafus that have resulted in many low income seniors being turned away by the compounding new prescription drug program. in vermont the implementation of the law was described as a, quote: public health emergency. now, those problems are almost forgotten until today. ultimately, the part d program got off the ground, and each those who initially voted against the bill, like me, took

a take in the it and worked to fix the problems. the biggest problem, the doughnut hole, was eliminated by the affordable care act. so i think, mr. chairman, as usual there's a lesson to be learn inside history. i hope that the implementation of the affordable care act goes smoothly. i certainly hope it goes more smoothly than the implementation of the medicare part d. but i'm not naive enough and no one should be to think it will be complete he wrinkle-free. what i do hope is as problems arise,, we can work together to identify and fix them instead of using them to score political points, because we all have a take in providing quality, affordable health insurance coverage for all americans. i hope hearing represents an effort by everybody to truly work together to implement this law. i thank you for having hearing, and i yield back. >> gentlelady yields back. i now recognize the chairman of the full committee for five

minutes. >> thank you, mr. chairman. rigorous oversight of the obama administration's implementation of the health care law. since the law's passage, we have had cciio three times, and during this we uncovered that the promises made didn't match up with reality. 2011 with we learned that cciio, was granting waivers to individuals and companies that would face large premium increases because of obamacare. we also found that true the implementation of the early retiree insurance plan, cciio had happenedded out millions of dollars -- handed out millions of dollars to unions and state governments. the early retiree plan burned through the $5 billion allocated to it so quickly that it actually stopped accepting applications in may of 2011. more than two years before the program was supposed to end. yet this is the same amount of money that was given to the pre-existing condition insurance plan.

this bill has been the law of the land now for some three years, and we are just eight months away from the full implementation, and by all accounts the administration still doesn't have its act together. doesn't bode well when just last week a top supporter of the president publicly warned the hhs secretary that he sees a train wreck coming. will the exchanges be ready? how will families be able to prepare for it? will they be able to rely on the promises that if you like your coverage, you can keep it? will young adults be able to afford higher costs? the alarm bells are getting louder by the day. costs are going up, insurers are warning about premium increases, and small businesses are, indeed, struggling with the choices about whether they can provide employees with coverage. patients need certainty. employers need certainty. i hope that hhs and cciio will always show us what they are doing to implement the law by the deadline.

finally, last week this committee marked up a bill that targets the prevention in the public health fund to give that money to those who need it most. americans with pre-existing conditions who are promised coverage by supporters of obamacare only to find that the program was closed to new applicants a few weeks ago. the pre-existing insurance policy plan has been an unfortunate example of the problems of obamacare. the promises don't match reality, and i think it's unacceptable that this is going to happen and look forward to the vote this afternoon to fix it, and i yield the balance of of my time to dr. burgess. >> i thank the gentleman for yielding. mr. cohen, thank you for coming back to our humble little subcommittee. of course, my interest in cciio actually predated cciio when you were osiio right after the affordable health care act passed. i didn't get a hearing, but mr. an golf was good enough to talk to me at least. mr. larson has been in a couple times, and you've been before us

at least one time before. but i've got to tell you, it's been very, very difficult to get information out of the center for consumer information insurance oversight. now, the ranking member says we all ought to be in a posture of working together. it's difficult to do that when the most basic questions are, remain unanswered. so we've got october 1st, it's coming fast. five months away. and it seems like there's more and more questions about the readiness of your office and, indeed, the administration to get the answers that people want. i mean, you yourself went to the insurance, the american health insurance plan's conference this month, and, quote: it's only prudent to not assume everything is going to work perfectly on day one, closed quote. i agree with that. but i think we at this committee need to aerofrom you -- hear from you where are the concerns, where do you see the lighting blinking on the dashboard, what are you doing to prepare

yourself and your agency and your center for that day in october that dawns and everyone goes online on the federal hub that may or may not exist to be able to sign up for these programs? senator rockefeller actually said it pretty well the other day. people are going to get a bad impression, and it's going to stay with them. i think the references to part d are reasonable to make, but remember that day happened after two years of preparation. you've had three years of preparation. the six weeks of turmoil with part d could likely turn into many more weeks and/or months or even years of turmoil when this program is unfolded next year. so the application process is lengthy and complex. people are asked to estimate whether or not they think their employer will provide insurance next year, what their earnings are going to be next year. i mean, these are tough questions that need answers, and we hope we get some today, and

certainly we'll be adding additional questions in writing in the period that they're allowed. so i thank you for being here today and look forward to your answering questions. >> gentleman's time has expired, now recognize the ranking member of the full committee, mr. waxman, for five minutes. >> thank you very much, mr. chairman. the republicans on this committee and our health subcommittee have held five hearings since december on the affordable care about. and each of these five be hearings e peat -- five hearings repeats the themes that they express when they oppose the bill. and they certainly never expected this to become law. republican members can't accept the health reform is working, and it is now the law of the land. they opposed it from the beginning, and until the day the president signed the bill into law, they insisted it had no chance of passing. until the supreme court ruled it

constitutional, republicans said, oh, it's not constitutional. until the day president obama be was reelected, they insisted the person people would vote him out of office to they could overturn this law. none of that happened. and now they call this an oversight hearing because they predict all these terrible things to happen. they're not predicting, they're wishing bad things to happen. this is not a hearing to be constructive. it's a hearing to attack the law and hope that it doesn't work. well, the affordable care act go fully into effect, and americans will never again have to worry about their ability to get affordable, high-quality health insurance. so the republicans are saying, well, the implementation's not going to go smoothly. well, implementation of any new big program has its kinks, but the affordable care act is

proceeding on schedule, and it's done a remarkable amount of good for people. over three million young adults now have health insurance. over 100 million americans have received free preventive health benefits. more than six million seniors have saved $6.1 billion in the medicare part d drug program. and begins next year -- beginning next year, tens of millions of americans who would otherwise be out without health -- without health coverage will have depend bl, quality health insurance. my republican colleagues say people want certainty. well, the certainty they would have if there was no affordable care act is that millions of people would be discriminated against because they had pre-existing health conditions. because they offer a rusk to the insurance -- a risk to the insurance companies to have to pay more money for their care. they have the certainty of

knowing that insurance companies would do everything they could to keep them from getting coverage if it's going to cost the insurance companies main. and that's what we wanted to change. republicans still oppose the affordable care act. they are not taking a constructive approach and not saying what can we do to make this law and its implementation work more smoothly. they're saying what can we plame people who supported this law about problems that may come up. well, i'm pleased that we have at this hearing today again gary cohen who was here in december answering many of the same questions i'm sure he'll be addressed today. the center for consumer information and insurance oversight has made huge progress in implementing the affordable care act. success doesn't change the opinions of my colleagues on the

republican side of the aisle. it makes them even more determined to look for something they can criticize. and today on the house floor we're going the vote on a bill that they've produced because under the affordable care act we had a high-risk pool for people with preexisting conditions. who are waiting until january to be able to buy health insurance without being discriminated against, without being charmed more money because of those -- charged more money because of those pre-existing conditions. we have spent $5 billion on a program to proceed that to help people with pre-existing conditions to be in a high-risk pool. and we ran out of money. republicans don't mind that we run out of money for everything that the government does, because hay supported the idea of -- they supported the idea of sequestration happening. and we're running out of money if all sorts of places where the government has an obligation. but we've run out of money for

that pre-existing pool, pre-existing medical problems pool until the last few months of this year. so the republicans suddenly concerned about people with pre-existing conditions decided to make sure that fund has enough money to go on for the rest of this year. but they fund it by taking away the public health prevention funds until 2016. makes no sense whatsoever. we're happy to support the continuation of that pre-existing pool til the end of this year, but certainly we could are found a better funding source, and the republicans have denied the opportunity for any other source to be offered on the house floor today. you have to question how sincere they are about wanting to help

people with pre-existing conditions, how sincere they are p wanting to see a smooth implementation of the bill now that it is law. they want this bill to fail. they want to go back to the time when millions of people had no chance for insurance. that's the certainty they want to offer. and it's the certainty that led us to have the affordable care act passed into law. i congratulate mr. cohen and his agency for doing all that they're doing. the it's an important service to make sure the law succeeds, and that's what we should all want to see happen now that it is the law. and they lost the last election and their last chan to repeal it. -- chance to repeal it. >> gentleman yields back. all right. for our witness, mr. cohen, you are aware that this committee is holding an investigatory hearing and when doing so has the practice of taking testimony under oath. do you have any objections to testifying under oath? >> no, sir. >> the chair then advises you that under the rules of the house and the rules of the

committee you're entitled to be advised by counsel. do you desire to be advised by counsel during your testimony today? >> no, sir. >> if n that case, if you would please rise, i'll swear you in. do you swear the testimony you're about to give the is truth, the whole truth and nothing but the truthsome. >> i do. >> thank you. you may now give a five-minute summary of your written statement, mr. cohen. >> thank you and good morning, chairman murphy, ranking member degette, members of the committee. i appreciate the opportunity to tell you about cciio's accomplishments over the past year. a lot has happened since your last hearing on implementation of the affordable care act, and i'd like to describe some to have progress we've made and explain how i know we are on track for this october. we achieved a major milestone earlier this month when we opened the window for issuers to begin submitting plans to be sold through the

federally-facilitated marketplace. .. to frequently asked questions. there were over 200 answers to frequent asked questions connected with a process that has been provided to issuers. i'm proud of the work the team is doing to make sure that we will have products on the shelf by october 1. another key element of this

process is the federal data. as you know, consumers will be providing certain information in order to determine whether eligible for tax credits to help nader premiums to the commercial health insurance that will be offered in the marketplace. this will be transmitted to the data of in real time to be checked against information that is available regarding income, system chip, incarceration and so forth. the hub will not store any individual data. it is a conduit from the agencies where this data is kept such as the irs, social security and department of homeland security. this will enable real-time electronic verification of information needed to determine eligibility. states that operating their own marketplaces will have access to the data out. we have recently begun testing the connection between state systems and hub and have succeeded in transferring data back and forth. is another major milestone that has been achieved on schedule. testing will continue and the

hub will be fully operational in time for open enrollment this fall. another key element of the single streamlined application that consumers will use unordered to find out once they're eligible for medicaid or chip on the one in our tax credits on the other. we have gone through an expensive consumer testing process since the draft of the application was published and will continue to work to make it as simple as possible to the results of encouraging. highlighted messaging will help answer questions, elite concerns and direct consumers to where they can get additional help. we found most applicants will need to complete less than one-third of the total number of items included in the form. no matter how simple and straightforward able to make the application process, we know that buying health insurance is not like buying a book on amazon. many of the people coming to the marketplace will never have had commercial health insurance before and will need help in choosing the plan that is right for them and their family.

during the past year we have been putting in place a variety of ways for people to get that help. on healthcare.gov people can learn about the affordable care act, review health insurance bases in order to understand whether coverage cost and interact with the checklist on how to prepare for shopping for coverage in the new market place. there are short videos explaining how shopping for qualified health plans will work. in addition healthcare.gov will have a tracking capabilities of people into the questions answered quickly as they use the site. the call center will begin operating in june and during open enrollment there will be answering questions 24 hours a day seven days a week. on april 9, we announced a funding opportunity to operate as navigators. navigators will provide fair, accurate and impartial information to help consumers use the marketplace. meanwhile, licensed agents and brokers compensated by the issuer and regulated under state law may enroll consumers through

marketplace in every state. as you can see cms has been hard work over the past year in improving health insurance market for all americans. this work and these achievements make us excited for the future health insurance market. soon consumers want better access to health coverage that best fits their needs. i thank you for all under holding this hearing and i would be happy to answer questions. >> i thank you very much, mr. corn. -- mr. cohen. regarding the navigators, i believe the la law says if they have received a session from an insurance company they are not eligible to be employed as a navigator, is that correct? >> that's what we've said in the regulations. so let's say mary smith is an insurance agent in pennsylvania, 20 years and if you. she received a license to sell insurance instant pennsylvania. she had to have 24 credit hours of training. then she takes a test, she

passes the test. must continue to take 24 credit hours occurring every two years to maintain our license. let's say she has sold a wide range of insurance for companies, nonprofit and profit to perhaps thousands of individuals. she would like to apply for a job as an advocate. there's also john doe who is applying for job as a navigator with the highest -- high school degree. who is eligible speak with i think it's important stands there is a difference between what a navigator does and what an insurance agent does. >> i understand but mary smith is not qualified? >> mary smith is qualified to offer insurance in the marketplace -- >> but not as a navigator? is she discriminated because she has experience in the field am i correct? >> she is welcome to help clients obtain coverage in the marketplace as an agent. >> someone who's done this for a living is prohibited from being hired to advise people to buy insurance under the exchange, argued advice on how to buy

insurance? >> she could choose no longer to be selling insurance and be a navigator. that's her choice. >> so if she has had, as long as you know we'll take any money from insurance companies -- >> she is eligible, correct. >> in terms of the timeframe here, a lot of employers are saying to me i've got to make decisions now. they're not going to start budgeting on december 31. want to make decisions now. how soon will the information be available to them in terms of what is going to be in these exchanges? >> yes. the plans are being submitted now. they will be reviewed both by us and the state insurance regulator that have to approve the plan, and then issuers will have an opportunity to make any changes speed just give a date. >> september. >> the navigators was completed final training in august that seems a bit odd accord to your calendar. they can't get more training before they see the exchanges i

hope you would adjust that date. >> the primary function of that in the early. will be out of reach and the roman and then once open enrollment starts in october that's when he'll be helping people. >> these will be available in september but these plans will start in october, one month later? >> correct. >> you feel you will be ready with everyone fully informed on what is available in that month? >> yes. >> i want to ask you with regard to navigators. there's some concerns i've heard that people, are people who are involved in community groups or political groups, they can apply for jobs as navigators? >> the requirement for applying for a grant are set forth in the funny -- >> i wonder if there's prohibitions and other activities? >> we're hoping the groups that have demonstrated history of serving their community and serving the people in the community that we're trying to reach will apply. >> so acorn members could? >> i can't speak to any

particular group spent but they wouldn't prohibiting? >> they can apply. their application will be reviewed. >> given that their community groups, i'm concerned about data confidentiality if they're discussing their own health was navigators. what assurance do you have in place and what penalties will be to make sure they do not keep that data, only for example, on government computer systems, they can't use for any other purpose. could you address that? >> thank you. navigators will be trained on the importance of privacy and security and will be subject to all of the laws and regulations that protect people -- >> are there other criminal and civil penalty? >> there are. >> are they allowed to accept donations from insurance companies and other private groups of? >> the prohibition is again receiving compensation for enrolling people in coverage. >> understand that if they get donations and a general sense, are they permitted to do that? >> i think i would understand

better what type of donation and -- >> could you look into that and get back to his? i understand your concern, that's an important concern for all of us. final question with regard to do you think you have in a funding at this point, enough fun at this point, not future budget, to take care of your enrollment of people in these exchanges? >> for fiscal year 2013 we have enough funding and the president's budget requested additional funding for fiscal year '14. >> i now recognize ms. degette. >> thank you very much, mr. chairman. mr. cohen, the chairman talk to you about this hypothetical person, mary smith, who is a registered insurance broker, and she can't be a navigator while she selling insurance. that's because his it would be a conflict if it is, correct? >> that's right. >> but if she with all her qualifications decided not to represent any insurance company and not to do that, she could become a navigator?

because then she would have a conflict of interest? >> that's right speak what about the community groups? on the community groups, as i recall when we did the medicare part d prescription drug benefit we also had a number of community groups helping signed seniors up for that, is that right? >> correct. >> that was a similar situation because it involves asking citizens, in this case, senior citizens to sort out a number of plans and then apply online, right? >> that's true. >> so really you did have to have trained individuals, whether from community groups or other places helping folks do this, right? >> you did. >> okay. now, i'm glad you have a lot of confidence that on october 1, 2013, consumers are going to be able to sign up for these exchanges. i want to ask you about the states, including my state of colorado, which are going to

either run their own market places or their marketplace in partnership with the federal government. there's 24 of them. what's your view about the state market places, howard becoming a long? >> i'm very encouraged by the process states have been working -- making. we been working, close contact with the people at the exchanges, and also at the state medicaid agencies because that's a very important part of this as well. i think it's fair to say that there are some states that started earlier in the process, and some states that started a little bit later. so we are looking very carefully at the progress that each of the states are making, and our commitment is that there will be a functioning market place in every state on october 1. so we have been working with states to make sure that we provide a sport that is needed to make that happen. >> what about the states they got a late start? are you giving them extra effort to help them get their exchanges up and running? >> that's correct. >> now, can you give us a sense,

the chairman and i've talked a lot about the importance of doing this oversight. what are the milestones and benchmarks we should be looking at to measure progress over the next few months of? >> we provided you i think with the timeline for what is supposed to be happening and what will be happening over the next several months. i think the keys that we are on schedule and on track with i.t. build we're doing which include an important part of this, and as i mentioned we achieved a big milestone earlier this month with the submission process, federal data hub is going to be moving, is in testing out the continuing testing through the summer. and so i think it's just important to take a look at each of the steps along the path and make sure that we're on track. but i'm very optimistic and confident of where we are at this point. >> a couple months ago you got a question, at a conference you said quote, it's only prudent to not assume everything is going

to work perfectly on day one, and to make sure that we've got plans in place to address things that may happen, end quote. you also said that as we get closer to october 1, quote we will be in a position to better know which contingency plans we have to implement, end quote. that seems a little in contrast to what you're saying this morning. can you explain what that comment meant? and if it means that a just isn't going to be rich and the low? >> i would be happy to. i think sometimes when things you report the context gets lost. >> i've never noticed that before. >> i was speaking specifically about not whether we be ready in operation october 1. i was speaking really to some of the comments that you made in your opening statement, that we know that when big programs begin, sometimes things are not perfect on day one and you have to make improvements. and it's only prudent to be prepared for the things that might happen that you could do better. and we are like all federal

agencies subject to guidelines that are published by the national institute of standards and technology for when you do an i.t. project. and so you have to be prepared with mitigation strategies in case something doesn't work exactly the way you expected. but we will be up in operation october 1. >> can you tell us about how you're developing those mitigation strategies and are those coming long? >> yes. so it's really a constant process of, as you to the bill, i'm not expert on i.t., but as you do the bill you to testing, you see how things are going, you come up with strategies to how you're going to do with, for example, suppose you get a lot more applications that come in on day one than we planned for. so you have to have redundancy, you have to be prepared for that eventuality. so those are the types of things we're doing. >> thank you. >> now recognize the gentleman from texas for five minutes, dr. burgess. >> thank you, mr. chairman. mr. cohen, let g