>> this creates risks that problems found during testing force design changes so have to be retrofitted to aircraft in production or already delivered at a distant -- additional cost to the government. the current cost estimate assumes annual funding of more than $12 billion on average for development and procurement over the next. . . years and continues to

estimate operation and support cost of over $1 trillion across the f3530 year life cycle. the department has already deemed this unaffordable setting targets to reduce this the congress may want to consider these funding assumptions are reasonable from our environment from our perspective these are the risks this committee must weigh as a program as it stands today the department plans to buy almost 2500 aircraft to replace and improve upon today's fleet and if these risks are not controlled then the cost of f-35 rose much more and the falls in danger of a much too familiar cycle of quantity reductions that is of less buying power of the department also forcing decision makers to consider other options to maintain our tactical fleet and with

that i will conclude chairman and answer questions. >> but just to sketch out the alternative way is how many of you may find the from a premise of the acknowledging that the excellence but the discussion but the pentagon will continue a work on it is a very difficult concept to make it work and all that is challenging with mistakes the route -- along the way but having said that, there was a fundamental assumption the way the overall procurement was sized to put it simply be too much with

the number to redos the core structure with the carrier jet and the f-16 and the fet and several others and said how many do we have those half dozen close to -- 2500 aircraft the assumption that f-35 could be better with a higher rate toward kill rate but nonetheless you essentially are replacing the core structure in the hope was the fall cooperate you bought a lot with international partners to drive negative unit cost but senator durbin i do have 74 your image of creating a program to big to fail. not that i am opposed but i think we have a tremendous -- tremendous number of days

and a basket with the expectation we can drive down unit costs so much as to make the logic work. i would come up with a different approach which is the threat based approach. in other words, what parts of the world or potential adversaries or scenarios would require us to have a lot of fifth generation ground attack aircraft and air superiority? and i think primarily of advanced aircraft made by russia and china as well as the advanced air-to-air and surface-to-air capabilities did we hear about those from syria so i did knowledge it would be nice to have these f-35 everywhere for everything because you never know but realistically speaking, we have a lot of operations around the world over the last two decades with extremely low attrition rates of the airplane with fourth generation and a lot of future military missions will continue in that vein so i would recommend sizing

future purchases of this f-35 primarily to the threat environment and the possibility china could be the adversary. i don't expect that our hope that but a possibility and also of course, the rambos of the the two most prominent. of one to have been of high end airplanes for the scenario i can imagine that for the basis to have available to us thaw in that region to come up with as many f-22 and f-35 we think a proper it is the thread based approach then you can have a more detailed conversation with each of the three variants and with my testimony i spell out one specific proposal that it is debatable that there are different ways to employment and i could go through it but i will save up for discussion. i will point* to i do support the f-35 b the

marine corps of area because they do like a short takeoff people could debate that as well but the overall point* is i will conclude with a simple observation if you were to cut the purchases in have overall to buy about 1250 instead of 2400 you will only save about 20 or 25% of the total program cost because most of the core structure you want to keep which means you have to buy something else or refurbish something else to keep it going. so those will still cost money i don't consider this to be an easy way to lop off hundreds of billions of dollars from expected pentagon spending but could have 20 percent in the acquisition cost of that neighborhood with this approach. thank you. >> this committee has been handed the baton hopefully the last leg of the race and

the question is looking back to the earlier stages how could we have done this better? wes cost the my going back to the beginning mr. sullivan, what we were trying to achieve 12 years ago to anticipate a threat threat, technology changes, how did we miss it so much with the unit cost it is almost double what we thought and what could we have done differently to be in a better place today? >> first of all, this program is not unique in many ways with the acquisitions go down this exact same road and it is very complex why programs get off to the start but if you look at the mechanics mechanics, the best way to set the case i think this program went wrong when it set requirements and did not do enough to diligence up front before it had the

milestone and the requirements were more or less not achievable with the resources they were estimating at that time. so based on analysis quantum leap ability they talk about modeling and simulation to prove you can do things the cannot model some of the capabilities they have so very mature technology and a number of the technology's there eight critical technologies on this aircraft that they knew they would have to have to be capable to meet requirements civic let me go to a the point* that was alluded to. the notion that you put this aircraft into the hands of those who ultimately use it, let them respond to tell you how it is functioning and get really seems to me to be thinking it might have

applied a long time ago when technology was moving at a much slower pace. >> fly before you buy but when you have requirements that are so demanding with mature technologies then you start a program before you understand that, the development program will really be at a loss with as you wait for those technologies to richer sometimes technologies that were concept and did not even have a component. >> dr. gilmore how would you address the fly before you buy verses concurrence a? >> there is always going to be a certain amount in the program this was an extreme case that i think he accurately characterized as malpractice but what caused this to happen again site have a different perspective

i think is simple. the department has a long history of the seating himself about the cost scheduling difficulties and in this particular case there was the number of assumptions made that there is high commonality in the structural parts among the various aircraft that not surprisingly overtime and i was there when the program started and indicating warnings at the time that you are making unrealistic assumptions of commonality to drive the unit cost down in your analysis because at that point* everything was on paper by analysis and it turned to be unrealistic but those kinds of assumptions that carry over when it decides to start production without a flight test that

the simulation modeling of fusion capabilities and how the censors would respond would be so explicit there will be no surprises in the flight test program and of course, that turns out not to be the case and i would point* out up to this point we have not actually tested any combat capability retested the handling characteristics and necessary a precursors but the first time a test flight testing capability is the block to be program then we flight test combat capability. so my perspective is with the onset of the program is what happens frequently everybody got together to deceive themselves how hard

and expensive the job would be and then reality intruded and reality with. >> use the word deception and we've heard the word optimism and ising psychic comes from the same place. briefly, from the industrial base into the bill for what we need next and the capacity to sustain this innovation of creative spirit to keep it in a safe place so we can entrust the people that are doing it, national security which over the last week has been brought into question, how do you view this what we should have done and if we are ready for it? >> one observation is that a want to depend too much on just one company or airplane because i think lockheed has done a good job and is

making a wonderful of 16 that is my alternative i want to make more of those for the united states so i have nothing against lockheed but having more than one airplane in the works is a good one and part of the alternative that i propose is to focus on the naval and may and carrier capable plane that is getting some attention and some resources but they be commended is shaky because the budget is though overstressed by the f-35. one lesson i would try is to make sure you have a few things in the works when it comes to something as important as combat aircraft >> mr. sullivan the gao has noted the performance and outlook of the f-35 program

to continue to identify long-term affordability as a major concern. what worker you doing to identify savings of the projected cost to sustain the f-35 once it is fielded? >> right now as stated earlier the cost referring to the life cycle cost we are reviewing what the program office has now in addition to that we are talking with the cost assessment and program evaluation group to see what kind assumptions with future cost to reduce those so we more or less rely on the

initial data they are providing us. >> would you believe are the key factors that must be achieved to meet affordability targets? >> and to discuss those efforts the reliability is critical to sustain it and not quite meeting the reliability target that they are supposed to achieve in the program and they are about halfway to achieving their reliability growth they have to do with the aircraft. so i think mr. kendall pointed that out and they need to look at fuel costs and how they man the aircraft and i think general

bogdan said with the concept of operations you have to pay a lot of attention how to fly the aircraft. >> what is your assessment of the f-35 manufacturing process? >> right now we actually to word of the process to gather data on a number of different things that indicate manufacturing like efficiency rate -- rates do deliver aircraft and in every case even in the engineering changes with the results it is trending in the improved way and to rethink it will but when it's 40 percent of the flight path to understand the flight envelope and most

of those changes are behind them so we think that manufacturing process will improve. >> comparing that with others, how is it similar or not? >> the manufacturing process? >> the first thing with this one that is not unique it is the fact they have three variants going through final assembly on the same line. it is more complex and i think they have done a pretty good job of working that out. of those acquisitions the f-22 and others said is very similar with the concurrence to the program, i would say the concurrency between flight testing and production does have a cost

of design change to retrofit aircraft but in addition to create a lot of chaos on the manufacturing floor. i know how you capture that cost but it probably has been much less efficient than it could be of less concurrent. >> thank you senator? >> dr. gilmore you have a very important job as director of operation and test and evaluation at the dot. we have talked about the plane today but modeling and simulation are very important or anything else that comes along. is there any real substitute once you pass that testing and evaluation? >> we use modeling and

simulation because we have no choice and in the particular case of the joint strike fighter, it is currently under development the analog for the air combat simulator with the operational testing and also what is half done to improve the capability where you have the effect based simulation and to take operational pilots and to the simulator to have them fly the aircraft as realistically as you can in the simulator. we will do the same thing with the joint strike fighter program however those simulations must be accredited with open-air flight test data. >> they were fooling yourself if you're not?

>> correct so we're pushing the flight test program to give us the data to validate to accredit rigorously the simulation for the joint strike fighter under development that we must get data whether we are doing developmental testing was operational testing that will take a year to validate that model. we can only do a relatively small number of open air sorties to limited editions on the open-air test range we cannot fly the aircraft against the integrated system to penetrate on the first day of for but we can

fly again selected air defense to take the data with assimilations and then fly against this it integrated air defense systems with more simulated flights and open-air thereby getting some difficult -- a decrease statistical data but but also from the open-air flight testing of we don't have that data than the simulation is for nothing. >> mr. sullivan had a we get the cost down? is it the economy of scale?

whereas most people please explain your views. >> you can reduce the total amount of expenditures of procurement by quantities but each one you buy will cost more. there is a difference looking at the unit cost and the overall total. >> on the f-22 program roughly estimated costing about $70 billion to develop and procurer 750 aircraft. they started to cut costs by reducing aircraft with a 180 aircraft so the cost of the program did not go up but

the cost of each aircraft did. that is the one way to save on this program that will cost just looking at the acquisition cost over 12 billion over the next 25 years, you can try to get efficiencies that i am sure they will be but in the end this happens as those programs to reduce quantities. >> this is not new to do in a development. >> as part of this legendary cycle with the acquisition programs they cannot budget and they have trouble meeting the requirements and then they spend too much

money and they cannot buy as much. >> do you believe more competition in the acquisition process will hopes of some of the structural? >> more competition always results in better pricing and responsiveness. this is a soul's thorshavn engine as well as aircraft. there will not be any competition with the engine either in we have seen in the past few have competition with better response than reduce costs from the industrial base. >> we had your vote on that? >> yes. >> when you talk about a fighter like this it is hard to have competition but you can maintain at the start of

the program to compete up to a critical design. >> to mention the f-16 it had a few bumps along the road but that is a current generation but technology moves even with the adversary have you considered that with the recommendation? >> yes senator and i also agree with the earlier point* because to factor this and if you have a smaller pie -- it and that being cheaper you have to factor in the tire unit cost and i a knowledge that in my work that is part of why i

propose a much smaller it is that 50 percent and by the way a compromise idea could see if it comes down the way lockheed martin hopes it will but maybe then to describe my backup plan then if not, i keep that in mind but with capability when i tried to do is to say let me imagine even though i am fairly hopeful we have a number of bases that might be needed to carry out of containment policy and i hope it never has to be. with vietnam and on going capability of okinawa and other parts of japan may be even anti-one itself.

korea. if i do that the couple of swings in these places it is the threat based approach and a fairly rigorous it is not populate the entire core structure. >> i will pose the last question and the chairman has been generous with me. isn't it important to this country funding or not offending not just think about tomorrow or two years from now but 10 years from now coming 15 years from now with the 1 billion weapons systems and we looked around the world and i hope we stay in peace always that china

is a huge economic power and throughout history it has been a buildup of military strength with the notion to establish a head jimmy and to think about weapons not just for the day. >> i can give the one sentence answer to get out of the way which is why i hope we are a strong supporter of the f-35 with the capabilities especially in the western pacific it is important. >> i it agree with secretary to 90 we don't have a dip -- alternative but my caution is at this point* anyone that will project sit-in capability is being optimistic for what i have seen so far and it has improved performance but these are very complex

undertaking is i see a sixers called month window with that is a marked improvement from 2009. so in fact, we're still working on that. that turns out to be capable aircraft metal so a program that was troubled going through the same and this is going through. it is needed. >> i think the acquisition and process that the department uses is broken that when they set requirements for the big bag quantum leap for a project they will take 10 years but they take 15 and the world changes dramatically when of

the things we have look negative is you need an acquisition of process that can deliver much more quickly to have incremental departments with the added capability but in the next block but they make revolutions incrementally over a tenure period but do deliver anything there is electronics out there that just deliver and deliver the incremental approach and you are in production a lot more than development. that would be a major change of the process with a five-year production capability for right now the acquisition process not only

concurrency between testing and production but also technology and product development civic figure very much senator shelby and cochrane and the staff for their preparations on this hearing and the valuable testimony along with the first panel. when it took over as chairman i knew i had a lot to learn in this was one of the hearings that we ask for good of the most expensive acquisition project earlier making sacrifices relating to use the training of the troops perhaps not equipping said guard and reserve unit to rely on them so much and to make hard decisions of

the subcommittee to be different and i wanted to start with a big dog on the block the f-35 and your point* is what i tried to make earlier in the keep returning to is that when we say 12 years ago to talk about battlefield communications and what the troops would need three years still needing that and what has changed in this world in terms of communications in 12 years? it is a challenge we have to me. and then the committee stands adjourned.

>> we have not only a democratic president but a liberal president who has not only been elected or reelected after putting into place ideas and programs and projects that i think our wrong a the public that chance through a thicket of andrea mcdevitt is a challenging time that it is also exciting if what you're trying to do is i would say i try to do modernize conservatism with the challenges that face now and to help conservatives and the country to think how to confront the challenges there is a lot of

opportunity for thinking about what americans and the 21st century need to change to get back to prosperity and a cultural revival so it is challenging.

>> we will come to order. today's hearing was set the proposed merger between u.s. airways and american airlines and the impact of consolidation if the department of justice and approves the merger of the new american airlines it will not only be the largest carrier but the world's largest air carrier per cohousing between merging

airlines and there are important consumer issues at hand. if it is to be approved it will lead to more consolidation of the airline industry and selfless to airlines will control over 70 percent of the capacity and more important to consumers will this mean higher ticket prices more fees and fewer options with flights some passengers have become captive to airlines to experience high fares and reduced services whether direct or the one stop airline hub. the question also ask will it impact employs regional partners or customers in the affected communities the impact on the stakeholders' should not be overlooked.

another consumer issue expect to come up that obviously for some people who may not be familiar as this committee is but a lot of time for takeoff and landing in reagan national that means there are fixed number of openings for airlines is to arrive. airlines can buy and sell and lease these rights at least 80 percent of the time. few years back some delta traded slots between reagan and the korea when the deal was approved in duties set a number of slots for the national airport and i expect the consumer interest because this will control over two-thirds of takeoff and landing at reagan national to be something the department of justice and

the deity must deal with. in the year 2000 airlines control for the 90% of u.s. domestic capacity as a result of 9/11 and the great recession and volatility of food prices the industry has shrunk. what we must do today is a picture we check the interest in the hearing with the proposed merger of the 42 hearing the testimony about the witnesses and point* out my colleagues held a similar hearing for the subcommittee in judiciary on antitrust competition policy and consumer rights so i look forward to her questioning or any thoughts she may have as she conducted a similar review. i would now turn to the ranking member for her opening statement. >> thank you madame chairwoman figure to hold this hearing with the issues with a proposed merger between u.s. airways and american airlines.

i also want to thank but the witnesses for being here and we appreciate your expertise and look forward to hearing your opinions on this subject and we appreciate the importance of this process going forward today. as some of you may know marks my first aviation subcommittee hearing serving as ranking member although this is the first hearing this year the issues under this of committee jurisdiction has been anything but inactive with furloughs and the events clearly demonstrates the immediate connection between washington decision making and the health of our national airspace system. that connection is no more apparent than apply to day looking at the merger. the proposed merger between usair and american should come as no surprise. over the last decade we have certainly had an external

shocks to create a consolidation among the major carriers and that is a consideration as a reluctant the merger it and as the department of justice looks at the merger and in fact, it would mark the fourth merger among major carriers of just the last five years and decrease the number of large carriers from five down the floor that would control 80 percent of the domestic market. of course, the department of justice must approve this $11 billion transaction and under the authority provided by the act the department of justice must analyze to make the determination using the horizontal merger guidelines as to whether or not the combined usair of american airlines' merger would violate the clayton act simply would creation of an airline's substantially lessen competition? that will underlie every issue that is discussed today.

and certainly as we looked at this merger it would result in the airlines to become the u.s. carrier with 24 percent of domestic airline market share in the real question is how will this impact competition and most of for me how does it impact consumers? there are many benefits usair and american have identified as a result including american will now offer more than 6700 daily flights at 336 destinations and 56 countries with 1300 new routes worldwide in domestically over 40 cities that are not currently served by usair and 64 cities the u.s. they're not served by american. as the department of justice looks at this merger as we hear the testimony, i know this will be a careful evaluation to make sure this merger is positive natalie

for our economy but for consumers with respect to the impact on competition. i look forward to the testimony of witnesses today and i appreciate that the chair has mentioned the issue because this is an important issue to provide access to many smaller communities to the capital of this country so i look forward to addressing that issue and what the witnesses think of the impact of that slot issues gimmickry will turn to the witnesses we may end up having boats at 3:00 so you want to get there is much testimony as we can and questions by numbers we appreciate your assistance. we will hear from the department of transportation , and also testifying before us on aviation issues last month

mr. parker ceo of u.s. airways and also american airlines and also the consumer travel alliance, a welcome to all of you and we appreciate you being here this afternoon. >> thank you chairman cantwell and members of the committee i appreciate the opportunity to appear before you to discuss airline industry consolidation and the more of 30 years since deregulation consumers have reaped enormous benefits as market forces have determined fares and services. during this period air transportation was transformed from a luxury few could afford to the indispensable service that connects the families and businesses across america and the globe. but deregulation and brought

the arm as benefits for consumers the results were not as positive for the airline industry particularly the legacy carriers. legacy airline industry has been characterized by a highly cyclical periods of profit and loss in when profits were made day wore on extremely thin margins. with the steep rise of oil prices during the summer of 2008 with a global economic recession that followed, the u.s. airline industry has taken a number of steps to operate more successfully in a seemingly permanent high-cost environment. as a result the balance sheets and bottom lines shows significant improvement. airline management credit merger plays a key role in the industry to sustainability. given the importance of the airline industry to the economy, consumers benefit from having a financially healthy industry.

however the consolidation in the industry restructuring efforts raise questions about the effect on consumers in the short and long term. the department of justice has the lead role to review proposed airline mergers given the statutory authority with the antitrust laws and the dot does have a role to use a special expertise they typically conducts the on analysis and mergers to confer with the antitrust division and each transaction we review concerns have been raised with the effective mergers with service to smaller communities and of the merged carriers' to maintain services others have substantially cut service to choose instead to concentrate on larger markets.

as a result of various stakeholders have expressed concern that mergers can lead to cuts and smaller communities. whenever the area is a is a proposed merger of american and usair ways. small and medium-sized communities is a priority for the department of transportation and and without a vesture we do not believe as their results of a merger should be inconsistent with the airline's ability to continue with these communities and a conclusion we promote air transportation history responsive to the needs of all stakeholders. our goal is to achieve the environment of economic

sustainability for our carriers to coexist with the air transportation system that is highly competitive that continues to serve the need of the committees of the united states. thank you for being here this afternoon. >> thank you madame chairwoman and members of the subcommittee i also appreciate the opportunity to appear before you this afternoon to discuss the potential competitive implications between american airlines and usair ways. this merger follows other airline mergers including delta and northwest, united continental, and most resuming southwest air trans. as you are aware if allowed by the department of justice which has a responsibility to review this merger under the antitrust laws the new american would surpass united airlines to become the largest passenger airline and becky aspect is

the loss of the efficiency to benefit the public the loss to serve the market is most conservative on the basis but nonstop service is preferred by most passengers all the u.s. they're raising american overlap on only 12 nonstop routes there are no other nonstop competitors on seven of those. however because both airlines operate extensive networks the potential loss of competition with traffic is considered to be far more extensive. specifically our analysis shows to combine these airlines would result in the loss of one competitor of about 1600 markets affecting more than 53 million passengers over the last year. the competitive effects could be reduced because at

least one other airline exist in almost all of the overlapping markets conversely the merger could create a new competitor with at least 5% of the market share affecting 40 million passengers will airlines have not announce specific plans for changes of the network operations it should occur if it allowed to proceed the combined airline could be expected to change the structure over time currently american and usair raised do not share any network hubs therefore the amount of market share overlap that currently exist is relatively small but the new american and airline market share could grow or contract at the hub airports and closing or reducing capacity is not

unprecedented of airline mergers in addition many of these are sought controlled they limit access to expansion of smaller carriers therefore they limit competition and have hired airport -- shares to other hub airports it would control one-third of the slots at la guardia and two-thirds at bosch -- boston reger u.s. air raids or the controls over half of the available slots. internationally, both american and u.s. air raids have worldwide networks serving a combined 107 international cities from u.s. airports. the two airlines cannot directly compete on any of the same routes but they will serve 37 hubs as part

of the alliance it is unclear what effect for better service and the deity is responsible for the changes of these alliances. members this concludes my prepared statement i'll be happy to answer any questions. >> mr. parker figgie for being here with a forged your testimony. >> afternoon chairman, a ranking member and members of the subcommittee i.m. at the chief executive officer of u.s. airways group and thank you for the opportunity to testify today of the merger of u.s. air raids and american airlines that is good for competition and consumers and joyce. to a knowledge the employees of u.s. airways and american airlines in the room today they are a huge part of why

we're here today and we're extremely appreciative of your support in thank you for being here. it has transformed with sharper focus with prosperous careers to partnering with airports and communities but only 10 years ago the focus of results were different want to recover from the tragic events of 9/11 at that time i was working at the phoenix-based character -- competitor re-emerge with u.s. airways in 2005 there were very well and we were in a much stronger competitor but the industry has evolved for bigger and better flights as southwest merger is eric tranten we announced a merger review

with american airlines we are excited but that means for it aren't investors and employees in the communities the combination would create a new competitive global airline and the decision to merge is with the unparalleled benefit derived from integrating the two networks once combined american airlines will have over 1500 aircraft and employing more than 100,000 employs and serve more than 300 communities around the world we will expand passenger base of a 2.six travelers -- nine travelers from increased revenues delivered by the enhanced networking cost reduction from elimination of the system. this will not be easy the domestic airline easy is extremely competitive with other network airlines from

their own recent mergers plus a number of fast-growing low-cost carriers. internationally the marketplace is equally competitive with other larger global alliances and host of others competing with government support for a combination of u.s. air and american will allow us to compete more successfully in the international markets and consumers will benefit from enhanced competition a better airline with the expanded network will challenge the competitors with better travel choices and it will join highly complementary networks and enabling us to bring high and levels of service to those communities that neither airline can perform on its own and we will remain committed to small and medium-sized communities and an american airlines will have small and medium-sized communities better options and service

to more than ever before more convenient times where proper we expect to increase service. but our service to and from the nation's capital because of the hub operations u.s. airways can serve for the small and medium-size communities from reagan national that no other airline can or will do. i believe great things are ahead for the new american airlines and deploys the customers in communities are the primary beneficiaries as well as civic business leaders will only benefit if we can bring improved service to customers and we can. thank you. i will take any questions. >> welcome. >> chairman and ranking member and members of the committee figure for the a opportunity to testify today general council of american airlines i have been involved in the chapter 11 restructuring and a proposed merger between the two

companies. i am pleased to announce we are quickly approaching the end of the most successful restructuring and the history of the airline industry. the reorganization based on the announced merger of u.s. air raids is a tremendous success for all constituencies. creditors will receive equity in the new american with the potential of a full recovery of claims the current shareholders will receive a viable equity in the new company it is highly unusual which is in the restructuring but reflecting the value of the merger that we have created. union employees will receive a percentage of the equity in the new company with pay and benefits better far superior from other in bankruptcy and will be a powerful driving force behind an american for years to come and finally the

customer stand to benefit greatly and the new american expects to win across the globe that will allow the company to invest in its people and products all while a starring america's position as one of the roads great airlines. the path of the last decade and a half to bring us to this point* has not been easy. airline industry as a whole has emerged from crisis to crisis beginning with the horrific events of september 11th followed by eva ronsard's epidemic the unprecedented run above the cost of fuel and the worst financial crisis since the great depression it was reflected in a string of filings by our competitors. for most of the past decade america charted a different path and in 2003 became close but we could negotiate

new agreements to give us more time to find a path for word however with the competitive landscape and the macroeconomic environment continued to change its ways the further eroded our position in the financial strength. despite the efforts are losses continue to mount reaching $12 million over the last 10 years and november 2011 became to the painful conclusion we needed to restructure our business under chapter 11 through this process we streamlined our management structure renegotiated obligations to reach a new agreements with unions and one of the most important objectives was to freeze rather than terminate the employee pension plan. as a result american expects to fulfil the obligation rather than unload them as other airlines have done. of course, the exit door from chapter 11 and our plan

which is nothing short of what it accomplishes is a merger of u.s. air raids and a combination puts together highly complementary networks. . .

>> about three years ago i sat here before the full commerce committee to discuss the merger between united and continental. it was the same remarks neal for the merger. this time there are enormous differences. during the previous measure jersey the airline industry was under severe financial stress. today the airline industry is thriving. the two airlines before you are in their best positions in years even without any merger. both can fly on their own wings. their ceo's have both confirmed that. we, the passengers, need your careful examination of this merger from a consumer's point of view.

number one, competition will be clobbered. a study done by the consumer travel alliance shows we the passengers in 38 out of 50 states will lose significant airline competition. the recent gao report released today is even more dramatic. on 1,665 connecting markets, effective competition will be reduced. two. prices will go up. in past mergers, we, the people, have faced price increases three times more than the norm where airlines have any semblance of market control. now with fees, airlines have already acted. only last month the big four airlines raised the change fees from $150 to a whopping $200, even when these two airlines sitting before you were faced with antitrust hearings and one of them was raking in record profits. we, the passengers, have no power to even vote with our

wallets when the legacy carriers raise their fees in concert like that. these are the kinds of fees that require competition, not more power for the airlines. three. airports will suffer. overlapping routes mean airports are in danger. boston, seattle, san francisco, miami, nope, orlando and others, are all in danger of right-sizings. that's airline speak for layoffs and service cuts. every senator here will see her or his state lose competitive airline service. and many airports in the states will face layoffs as the layers -- airlines consolidate. hub airports well be downsized. in arizona, pennsylvania, or florida, i would never vote to approve this merger. under four there are no

significant benefits for consumers. most airline mergers claim big benefits for we, the passengers. this merger does neither. five. passengers will suffer. with every merger, massive computer glitches delay thousands and thousands of airline passengers. this merger will be the same if history is to bear. and on planes, american airlines has already announced they're moving their seats closer together. that's what we can expect. combining american airlines and u.s. airways brings together two of the worst airlines for service. bad plus bad equals worse, not better. finally, on labor issues. they will bog down the merger. any promises about labor peace are pie in the sky, and bad labor relations translates to bad customer service. this merger will see coming

labor unarrest. after eight years, as we set at this hearing. u.s. air pilots are still not integrated, and their flight attendants were only united a couple of months ago. for them to promise anything different today is -- can't be believed. and within american airlines, twa flight attendants have been battling to reclaim their shamefully stone seniority. in conclusion, there are no benefits overall. consumers will dramatically lose competition. air fares will go up. airport service may be reduced. consumers will suffer during the merger integration, and there is no magic union peace. how many times does congress, the government, and the airlines, have to do the same

thing over and over again. expecting different outcomes. it's time to stop this merger madness and do what is best for consumers and the free market. we, the passengers, depending on you, our representatives. i'm ready for any questions. >> thank you. i'll start with you on this issue of slots. do you know how dot arrived at their conclusion about the previous u.s. air delta -- they could own 55%, i think, 55.6% of the 'slots after their swap with delta. answer that question first. >> sorry. madam chairwoman. yes, under the slot-slot transaction proposed by delta and u.s. airways, we took a cave

look at the outcomes at la guard you and afdca and in doing an analysis we came up with the conclusion it would be appropriate for u.s. airways and del to divest of a certain amount of slots. we put them up for auction, and they were obtained by jetblue at the time. so at the time we made the conclusion or the judgment that 55.6%, i believe that ways the number -- was -- we should not -- it should not go higher at that time. >> did you consider dulles or baltimore as substitutes for consumers for that -- or that was separate? >> we took a look at all three markets, and there is not perfect substitutable between all three markets.

different passengers want different things from particular markets. for example, dca, passengers who are interested in being close in to the capitol can the ease of getting to the capitol. you have passengers that are close to dca, so there's not a perfect substitutability between all three markets and all community airports. >> prior to the merger announcement, what were the american slots used for at reagan? large or medium size? >> we serve a number of airports out of reagan, and not as many small and medium size cities at us air because they have more slots than we do. but we serve a number of airports. i don't know the exact number. >> if you could get the number, i'd appreciate it. i understand your focus. and certainly your frustration

with what has transpired in the aviation -- in the airline industry, and you bring up a very, very important point. there's probably nobody more frustrated by airlines dumping employee pensions at the pcbg, only to have employees greatly wiped out a lifetime of earnings. so i understand your frustration and your concern. mr. kennedy has said that in this case, that they're not dumping the doorstep on the pcbb, which would seem to be good news. aim miss understanding something here? >> yes. i'm not talking about dumping things on the tcgb. i was talking more about a specific situation is within the american airlines flight attendant union, where twa flight attendants're put on the bottom of the list, and that's a date of hire issue, and

something i've publish for years i have had friends who went through that and it's something which needs needs to be fixed, i applaud american airlines airlis airways for not choosing to dump everything on the government and find a way to work it out. i was very glad to see that happen and that wasn't their first choice but it was eventually their arms were twisted. >> what i understand, they've also -- do think the date of service issue does need to be fixed, and i think we need to look at this issue of, how does airline consolidation impact pensions and pensions obligations. i also believe when we have had this discussion as it related to u.s. airs and delta airlines, there were a lot of pilots in the back of the room and they were not for the merger. my understanding there are a lot of pilots here today and they are for the merger. so i want to understand that

point, too, mr. parker, kennedy, or mr. leocah. if you want to comment on that. >> yes. >> i was here for that hearing as well. as you recall. so, yeah, the distinction, of course, is, in that case, the employees of delta airline wanted to remain independent, and the distinction here is the employees of american and the employees of u.s. airways understand that the best thing for them, for their careers, for their livelihood, is to have a carrier that can compete with the other large carriers, united, delta, southwest, and have done their work to understand this is in their best interests. they can speak for themselves and they have. and there are various -- we're excited to have their support. >> thank you, madam chairman. i wanted to ask about --

although the new american airlines could potentially control approximately 67% of the slots, as i understand it, their passengers will account for 50% of that. of total passengers serve per airport. and part of that is many of the slots are used by smaller regional aircraft, serving smaller aviation. how does dot tend to ensure access to the nation's capitols to these mall communities. i represent one in manchester that has an airport there that u.s. air will fly directly to reagan, and wanted to get your thoughts on how this -- how do we ensure that the small are airports aren't getting hurt on the bca issue?

>> thank you, senator ayotte. let me start by saying the vision of service to smaller and medium-size communities is a priority for the department of transportation, and in terms of whether or not justice decides that there should be a divestiture or should not be a dives sit tour, we think it shouldn't hurt small communities and the merged carrier would have a slot portfolio that would be sufficient to serve the needs of smaller communities as well. and if doj decides to require the -- some of the slots, -- is there a spelled-out procedure for distributing them? if so, what would you anticipate that being? and is it a competitive auction

process for all carriers that operate at dca or will certain airlines get a preference, for example, carriers with the smaller presence, how would that process work? >> senator, that process is up to doj. i know it's frustrating not to be able to talk about the process. but that is something that would be up to doj. >> would you have input in it? >> we've talked to doj. we advice and provide input, yes. >> obviously this is a really important issue, but i think about it, where communities like manchester, new hampshire, that i represent, so i think this -- i hope your attention will be paid to those communities because it's important obviously for economy in my state, i can tell you, and i'm sure others around the table are in similar situations. i wanted to ask about the impact

on places like boston. can you explain that more? let me talk quickly about the pilot issue. i get phone calls about every week from people, from u.s. airways, pilots association. everybody is not happy. there are still a lot of questions and obviously we -- there may be support for the merger because they're getting rid of someone they don't like or because they're getting paid a lot more money. but that doesn't mean necessarily we're not going to have labor unrest. now, back to the smaller airports. i think that what we did is when we did our overlap study, we found out that airports like boston and bradley, some of the highest numbers of these overlapping connecting routes,

and perhaps american airlines has three or four routes back and forth between bradley and, let's say, seattle, or bradley -- and they might go bradley, chicago, salt. u.s. air would go bradley, philadelphia, chicago. and so as you take this -- as you right-size it, it means we could end up with fewer routes in and out of those airports because they find a way to combine some of the routes. the other thing that could end enhappening is they've have two separate handling agents at the airports, the airport end up with displaysment. somebody is going to lose their job, and that's the way mergers work. the reason for merger is to combine operations and throw somebody out of work. you may not see the airline lose jobs but butt you'll see people -- but ground handlereses and caterers may lose their

jobs. that's where that will work out. there's a series of these towns, seattle is one of them, minneapolis-st. paul, bradley, boston, these are significant nonhub airports that will be losers, or could be losers in this operation. >> could mr. parker or mr. -- comment briefly on that? i know we have other people here. >> sure. the reality -- first all, as it relates to labor issues, i would defer to our labor leaders, who are supportive and we appreciate their support and indeed have contracts in place. as it relates to airports and changes in airports, reduction

in work force, just not the case. it's just wrong. we are going to put the two airlines that are highly complimentary, 900 routes, 12 of them overlap. we have said and believe that we will continue to fly and we need to fly to all the routes, awe the markets we currently serve. that's how this merger is built. not two complimentary networks, and more than just saying that, made commitments consistent with that. we have through the american bankruptcy confirmed large orders for traditional aircraft because we need the airports. we have committed to the employees because we know we need our employees. so we have done thing things because the merger is going to put two airlines together, and having a stronger airline not because of the reduction.

>> thank you. >> thank you, madam chair. mr. killingham, do you have anything to say about the slot auction? are are you going to be involved in that? >> we won't be involved. we have done some work on slots for last year, and we made some recommendations to faa, d.o.t., to enforce, better enforce, some of the slot rules, particularly the idea of an airline using the 82-month -- 82% rule, you have to use 80% within two months. sometimes what we saw in our work is a lot of frequency just to sort of hold on to the slot where na fact -- where in fact

it could have been better used and there are oversight rules that we asked dot to look into further. the other thing about the slots is that, as we said in our statement, where those slots are, the fares tend to be higher, tends to be difficult for new competitors to come into those airports. i think it's important -- i think what is important -- one of the important things is that even if slots or divested or if they are maintained by the new american, it's not clear that those same routes will be served. if a new competitor is able to obtain the slots they may decide to fly to a more profitable route, or -- although u.s. air and the new american have made commitments to maintain the services of small and middle

communities, that may be difficult when reality takes play. if you're asking an airline to maintain a route that is not profitable, as we have seen in mergers in the past, sometimes it happens and sometimes it doesn't. so, there are two sides to the slot coin. and a lot of what is bring said -- being said is sort of, we have to see. we have to find out what the new american is going do a lot of conjecture but we won't know until it's consummated as a new airline. >> you mentioned still be plenty of, think your word, the slot pore folio would be sufficient to meet the need of small ever communities but you don't negotiate that when you negotiate the slots, do you? >> no. what i was revving to, senator, is the fact that there are two types of slots. air carrier slots and commuter slots, and the commute slots cannot be aircraft that are

larger than 76 seats, and those type of aircraft are particularly suitable for smaller communities. but, again, it's a business decision, commercial decision made by the airlines. >> i thought the senator aot's point was well taken in that over 0% of the flights might be between these two airlines but barely 50% of the passengers and that's a pretty significant difference in looking at how they can compete and where they compete. before i run out of time i too want to mention this topic that has been around a long time, just -- if there's any way to possibly eliminate some of these employee equity issues that have developed. twa was bought by american. and my home town airline was bought by twa, and been issues in the america west and u.s. air

merger. everybody is pretty familiar with these issues. everybody, i think, realizes -- senator bond and senator mccass skoal worked hard to get legislation so a similar thing couldn't happen again, and it never goes back and corrects the old problem. i actually think if everybody involved here decided, okay, we're going to treat other people like we want to be treated, this would work out easily, but i'm in the senate and that seldom happens here. probably seldom happens anywhere else. but it would -- on this committee. under senator cantwell's leadership it always happies and we're always treated fairly and equitably like the likes to be treated. that's pretty true. this may have been answered while i was gone.

i felt like i came in, in the middle of this answer, but anybody want to talk about these problems and how they can be dealt with. miss parker, mr. leocha. >> senator, you're right. having issues in the past. airlines have merged on seniority immigration. in deed those issues are -- i within around for the american ---twa spill integration but the termed not by the country but the union leaders themselves and determine how the workers are integrated and has historically been a problem. thank flit has been addressed with the legislation that now requires if the unions can't come to an agreement, it goes to binding arbitration and that is what will happen here. that's a prospective solution. that is -- as to what happened in the past, it's difficult, if

not impossible, to correct -- to go back and correct things that have happened in the past, by definition. by enhancing a couple point of seniority and reducing others, makes it very difficult to change things that have occurred in the past. that is more of a union to union issue, and in going forward it -- if indeed the unions can't resolve themselves, goes to binding arbitration. >> thank you, senator klobuchar. i want to make sure we get the members in before we have the vote. thank you. >> thank you very much, madam chairman. >> we had a meeting and wanted to make clear we sent a letter, actually yesterday, senator lee and i did together, to the department of justice, highlighting some of the concerns again that have been raised during our hearing, and some of them have been mentioned here, before the the result of this merger and other mergers, the nation's top four airlines

would control nearly 90% of the market. recent concern, within a few days of each other, the four legacy carriers changed their ticket change fees from $150 to $200. elimination of head-to-head competition on seven routes where american and u.s. airways are the only two carriers providing service, and then the concentration of the combined companies with the 70% of the slots that have been discussed by many of my colleagues at reagan airport. so, those are a few of the concerns we mentioned. i did want to first mention, mr. leocha, that minneapolis-st. paul is still a major hub for delta. and in fact we welcome you there because last year travel leisure voted us the most cheerful airport in the country and the most welcoming airport in the country, and so we're very proud of our airport. that being said, at the hearing

i discussed several issues relating to those nonhub airports. what's been happening in pittsburgh and st. louis, cincinnati, the other cities where the results of the consolidation is that they have fewer flights, and we're concerned about that. i thought senator ayotte did a good job of asking questions, and making sure there is divestiture, and be competitively bid, but concerns have been raised about potential divestiture, and if it would lead to the mentalled company having to reduce service to small and mid-sized markets. what's your view of that? >> thank you, senator. as i mentioned, if there or two be a divestiture the merged

airline would have a portfolio made up of air care area and commuter slots and would not necessarily have to hurt small communities. it would be a business decision of the carrier as to which communities they desired to serve. again, the air care area slots are for use by aircraft of 76 feet or less, and the idea is that those are particularly suited towards a maller and medium size communities. >> one other question. inflation adjusted fares may be low relative to recent decades but have increased 16% since 2009 and that's around when the most recent wave of consolidation began. is there a correlation between the price increases and the merger? >> that's an important question, but it's also important to take a look at the economic situation as a backdrop for when thesemer jersey were taking place.

we have the economic downturn in 2008. we've been the a seemingly high situation of permanently high oil prices. the airlines have taken a number of steps in order to achieve profitability. they have become much more rigorous in -- >> how about the fact that a lot of the rates between nonhub cities have gone up so much? does that concern you? compared to other cities? >> yes. i mean, the point -- one of the points is they after the deregulation the government was taken out of the equation of setting rates and routes. it becomes a market decision, a business decision, for the carriers. the only areas we have some ability in that area is the af and -- >> want to comment on that? [inaudible]

>> for american airlines. in danger of that kind of right-sizing from these airlines. plus, when they're face-to-face with another big hub person, like delta, might be in their interests to back away. >> so you are -- one more question -- you're saying the mergers could be contributing to the fare increases? >> absolutely. >> and then last, this issue of change fees on most discount fares going up from 150 to 200. unite raised theirs and american, delta, and u.s. air followed, and increased their fee. i guess, mr. parker, what if anything changed that -- would necessitate the change in the market that suddenly necessitated this fee increase?

>> the reality is these change fees are on nonrefundable tickets. we and other airlines provide non refundable fares that are much lower than refundable fares in order to give us -- certainly the customer agrees to, in that case, give us certain -- they'll fly on a certain flight and a certain time, as opposed to people who want to go tomorrow and we have to have seats available to them. to provide lower fares, if you're willing to lock in your time clock, this is -- we won't sell you a nonrefundable ticket. changing that, making a change to that, is expensive for airlines. >> i'm just again -- we're going to see more lockstep -- >> the fees do. >> go down to three, see more. >> the fees discourage changes. >> thank you. >> senator warner. >> thank you, madam chair.

also thank you for this hearing and acknowledge the fact that my four years here, this issue of slots probably had as much controversy as any single item that i've been involved in. and i guess one of the things i would like to point out, and mr. parker since he is -- if themer gentlemen goes through the beneficiary of this enhanced presence -- as we were having the faa reauthorization, lots of discussions about the age-old perimeter rule and what to do with the slots and there was lots of conversation that say, a few more here, few more there, it really won't make that much difference. the point i say, is that if you think about washington air traffic and also think i can speak from my colleagues from maryland who concurred with me on this -- that there were

agreements made a long time ago that going to have three airports in the region, twa, national, and dulles. financial commitments were made based upon those promises and that is slowly being nicked away. and the question i have is, we were all assured that the additional slots, particularly for the the west coast flights, would not have any effect on dulles and the challenge --s' somebody actually benefits from the west coast flights because i live near to national but the numbers say otherwise. we have seen numbers from 2011 of 16.7 million passengers in dulles, to 15.9. passenger loss, your think about flow-now flights to europe. that has enormous ramifications and has been challenging as we

think about the able of the combined airport authority to jointly bond, which we're not fully able to do. i'd like to make sure as we go through this analysis, and you're role of dot -- i know doj -- my hope is from dot that you will continue to weigh in and won't see further erosion of the perimeter rule and there has to be some recognition of the commitments made to dulles and financial projections based possible a now-changing set of rules, going to be taken into considers. >> thank you, senator. the heart of what we were looking at, what doj looks at, is the issue of competition. with respect to the slots at dca, congress has always taken a very special interest in the number of slots, and perimeter rule, and makes the decision on where -- >> we're all aware of that.

>> but in terms of the competition and the routes and if there's competition on the routes, this is something clearly that doj and dot took a very careful look at as part of the analysis. >> i don't think you -- that didn't answer my question at all. there's a unique relationship of an airport's authority, and a compact between the federal government, the local jurisdictions, and commitments that were made that said, national is going to have short haul, we're going to have a perimeter, and significant major investments from united states government and the region were going to be made at dulles because were there promised -- promises made about perimeter. those are being nicked away. my fear this merger may result in doing away with the perimeter rule. aim very, very concerned if

you're simply saying, on the competition standpoint, that this -- from the dot role, this obligation to -- that the federal government made in setting up the rather unique airport authority, and commitment of dulles is not factorrer in at all? >> what i'm saying is, senator, is that we will look very carefully at the competition among the different airports, and the like, and -- but in terms of slots beyond the perimeter, that is beyond our jurisdiction because that's been determined by congress. but in terms of competition, in terms of the routes that are being served, we will take a careful look and we will go back and take a look at the -- >> you'll look at the numbers in terms of traffic in and out of dulles. >> we will go -- >> let me get to mr. parker.

the chairman rockefeller is not here. he basically wanted to ask similar question that everybody else has been asking. commitments and promises were made the last time around that there would not be this decreased small markets that some of these might be moved into pittsburgh or elsewhere to service west virginia. he feels that is not happening. want to put that on for the record. i'd also like to ask mr. parker, with the idea of moving dca into a hub, how is that -- how are those costs absorbed? passed on to dca customers, absorb erred in terms of the combined airline? where does that shake out as you think about it rethinking of dc. >> the are senator. to address where senator rockefeller's question -- we have indeed heard that others have been here and made promises that people feel as though

weren't kept. and we're highly cognizant of that fact. all i can tell you is what i know. because of that, what happened in the past, because of skepticism about what we're saying we're being extremely careful not to make prom promises but tell people what we believe will happen and we know these two airlines are extremely complimentary, and our tension is to put them together and maintain service to community wes currently serve, and indeed have supported that -- >> my time is -- cue just take the hub issue as well. >> sure. the -- and then as it relates to the hub, the dc hub is extremely important to us, and one that is important, i think, to the community as well. one where we have done at usairways a very nice job of getting service to communities that wouldn't have service

otherwise, by having the hub. the fact is we're able to serve small currents because we do have connecting service there wouldn't be service like that. the costs of an airport, as is the case will off airports, to the extend we have improvements at reagan, which we like to see. we're looking with the authority to get in place. things such as getting rid of the busing service, which would be a great service to the flying public to the extent that those are costs incurred by the airport authority, they'd be passed on to us through rates and charges as is always the case, and we'd gladly pay those charges in exchange for having better customer service. >> thank you, madam chairman. thank you for all the panelists here today and, chairman, thank you for your leadership on this. let me start, if i may, with miss kurland and a little followup on what senator warner

was asking. when you go through something like this will the department of transportation provide the department of justice, say, a list of recommendations on either destinations or criteria that should be used in determining what slots are available for what cities? >> thank you, senator. our discusses with justice are an it process. we'll talk to them about the competition issues, about the service issues, the service at dca in particular. and as i said it will be a process where we'll be -- the discussions will be comprehensive on all issues. >> but you make recommendations on what cities an airport should serve or do you leave that to the discretion of doj or to the airlines?

>> since deregulation, it's in the purview of the airlines to decide what cities they're going to serve. at dca, as i had mentioned, there are air carrier slots and there are commuter slots, and the commuter slots, you know, are for aircraft of 76 feet or less and they're particularly suited towards the service at mall communities-but determining where a carrier is going to serve is up to the carrier. >> mr. parker, that leads me to ask you a question, which is, you have a situation at national airport, for example, that you have the state capitol, the national capitol, flights which to me make sense. we have one of those flights threw u.s. air, as you know, and i'm just curious about your cite tier a. i know obviously you have to look at profitability.

i get that. but a few years ago, there were some slots that changed hands, some gates that changed hands out there at national, and look up and whoever the new carrier was, that meant they offered more flights to atlanta. well, people can catch a flight every hour to atlanta, and just curious about the factors you consider when you make those decisions? >> yes. thank you. thank you, senator. first off, thank you for your letter in support of -- asking attorney general holder and secretary la hood to consider small community service as we look at this. let me start by just saying -- explaining -- since this is a business decision, explain first how the business decision is made and point out we have recent history that supports what will happen if we do this going forward. first of, as has been stated.

u.s. airplanes and american combined with that two-thirds of the slot and that's only% of the seats because we fly smaller aircraft, to smaller communities, versus other airlines who have a third of the slots but flying half of the seats with a third of the slots. that -- and furthermore, if you look at the entire market, include dulles and baltimore and washington, we have less than 25% of the seats, fewer than united, about exactly the same as southwest. so it's a very competitive market in terms of seats. so all we would encourage is that the department of justice follow the criteria in senator kobe -- klobuchar's letter. go to work, follow the law, and what we know, if that's the case, there's so much consumer benefit in this merger. there's no law that would come close to suggesting there should be divestiture of slots at dca, but if, despite the fact it's

not law but a choice of policy to ask to us divest slots and give them to another carrier, what will happen is we, as the business decisions is referred to will be definition, with the scarce resource, use -- continue to use the ones that are most -- reduce service to those that are the least lucrative, as we should do as business people. what that means is, we'll reduce service to small and medium size community. the carriers that get those slots won't fly to those communities. they'll fly to large communities, and you don't need to just trust me on this. this happened a year and a half ago when, through the delta-u.s. divestiture voiced upon us, jetblue acquired 16 slots, eight robbed trips -- eight round trips. we were foesed to reduce service to small communities. jetblue took the eight round trips and flew three times to

boston, increasing service from 22 times a day to 25, ten of which are jetblue, two to fort lauderdale, two to orlando and one to tampa, all of which had at least six flight as day already. we, combined delta us airways, ended up reducing service to small k and medium size communitieses and madison, wisconsin, lost service completely, grand rapids, michigan, lost service completely. madison and grand rapids are now gone. we load like to anytime but we can't. so it will affect markets we want to fly to. so that's the policy decision that would be made. it is a policy decision. not a legal question. and i was encouraged to hear that service to small and medium communities is a priority for the dot. this is -- should not be affected. i don't mean to sound

threatening. but i don't want to come to each of you and say we have to reduce service to manchester or little rock. we wasn't to fly to those communityies. the cite tierarch is it profit enable those communities are profitable, because we connect service over the hub. they won't be profitable for any other airline. there are people trying to get to manchester from little rock, and if the flights go away, puts both of them at risk. and if you have a hub and take away spokes it makes it more difficult to maintain the spokes. >> thank you. i'm out of town. one super quick followup. a one-word answer. does the airport have any input in this or is it totally up to the airlines? >> it's an airline decision. the airport can influence the regulator. >> okay. >> thank you. our 3:00 vote hasn't materialized so i intend to have a second round of questions, and so any of my colleagues who want

to ask followup questions, you know, please stay and do so, and i guess the good news from the first round of questioning is, in all the discussion of merger issues the one thing that keeps popping up is slots. i think that's somewhat good news about the overall issue of the merger, but might also not be so good news as it relates to slots. and so -- or the stickiness of that issue. the is is a very important issue to many of my colleagues-as you can see. airports are tools for economic development, and if a community doesn't have air access, it's hard to continue to grow the economic base. mr. parker, when we were looking at the modernization act, the faa bill, there were usairways south to switch slots from

inside to outside you. wanted to take dca slots and say let's service these farther destinations in the west, and at the time a lot of my colleagues raised questions saying, my gosh, you're going to do now what you're suggesting might happen. use basically people say, wait a minute. you'll start servicing san diego or some place else and you'll get rid of the madison, wisconsin, flight or what have you. and at the time u.s. airways said we have the flexibility to use these flights for large hub service and small cities would not be impacted. that's what you told many people on this committee. now seems like you're advocating just the opposite. you're saying, oh, no, no if we have to divest, we will impact those hubs. and so i just want to make sure i'm understanding from you, from what was previously said, what the difference is, because i think there are other economic

issues here about competition that doj has to look at. larger than just the individual hub airport issues, but how much service should dca be allowed to be concentrated under one carrier, and what does that do to impact price and availability? that's where i think the department of justice should be looking. so i guess are you saying that you don't support the issue of divestiture? >> as it relates to this merger? >> yes. >> we don't believe there -- there is no legal reason. it's a policy issue and one we think is bad policy. that's correct. if i can -- you raise the perimeter rule issue and -- >> you had a different -- seems like it's a issue that was looking for a cause. seems like you were -- you wanted before to basically switch out 100 slots and use them for long distance, and when

somebody said you're going to get rid of small cities you said, no, no, we have enough flexibility. now somebody is saying give up slots, you're saying, can't, i can't, i'll cut the service to these essential areas. >> thank you. the answer to your question in short is what is the alternative? the reality is, as in relation to the perimeter rule, what we argue -- >> so you were wrong before? >> let me explain, please. what our position was that we believe -- and that there -- the dc would be better served with more flights outside the perimeter, to provide more service to even more communities than exist today. understand, of course two things. one, the desire not continue crease capacity at reagan, which is fine by us if that's what the law is going to be, that's fine. the -- but needing to stay within that constraint and also wanting to make sure we were responsive to concerns from

small and medium size communities, said and agreed, that what would like to do is in exchange for the ability to be outside the perimeter we divest from larger markets. that's a different question. would you give up one inside to a large community in the answer when asked was yes. a different question. if you ask us, we have to take slots from you. we're going, because of some policy decision, decide to take away slots from you as a combined airline. so your alternative now is you have to cancel something, not swap it for something. the decision will be, as it should be, to cancel the routes that are -- that produce the lowest amount of revenue, small and medium size communes. so completely consistent to me. >> i think your conclusion is the right conclusion that anybody would do something that is in the interests of the business and getting red -- rid

of the less profitable rouths but the reason someone would look at divestiture, it's about competition and about too much concentration at dca and what conditions for the consumers are being unprotected. mr. leocha, did you want to comment? >> i have spent a lot of time on the slot issue -- >> i'm not sure if you have spent more time than senator warner and i but if you have, we're glad to let you join our club. >> i'll be glad to join you. we had -- i met with susan kurland reside staff and talked with doj, and we know the department of justice was not happy with dash at least as i interpret it, not happy with dot's solution the last time. we have a situation where we just can't have competition when almost 70% of the market is controlled by one airline. and basically what u.s. air is

doing even thor they're covering all these small communities they're doing it with very small aircraft. they have the smallest air craft of any hub in america comes in and out of d.c. also, i look at the d.c. slots as a national treasure. they're to bring people their the nation's capitol so that we can -- they can interact with -- here in the capitol of the united states, and almost 40% of the people who fly in and out of dca don't even stop here. they just change planes. and i'm sure that mr. parker doesn't mean that he is going to eliminate all of the service. because they still make money doing that. the service might move to baltimore or dulles. let's say five years ago that would have been a real problem. but today we have great connections between baltimore and downtown. we have mark trains, we have amtrak trains, buses, metro, and

i actually get to take them all, or take-a out to dulles and we'll have the silver line. so a lot of the problems we used to have in terms of you had to be going in and out of dca, otherwise it was too inconvenient, are leaving. what we need to do now is increase the number of people being able to come into our nation's capitol and come here and visit here, spend their money here, and learn about our government. and that is where i think that moving the slots around will really be important. and if the merger has to go through, this is a remedy. there should be other remedies. this only covers one little tiny pocket of it. >> thank you, senator warner. >> thank you, madam chair. let me again -- since 98% of us, last struggle we were arm and arm on this. i guess, the one comment i'd want to make before i get to

mr. parker is, i agree that the sill her -- some of the transportation between the airports will get better but it has a dramatic effect on particularly flow-through traffic international if you don't go through dulles. if you can make that international instead through philly, newark, or wherever else. what i'm -- we've seen that decline, all the promises made, this is not going affect dulles. don't worry, don't worry, don't worry. but the numbers refute that. and now -- i particularly mr. parker, there's been lot office changes and stuff and you want to come forward with not looking back but commitments going forward. if we're going to go forward, and i understand the notion of building up the hub at dca, which would seem to mean that it would be a further investment in having that routing to those smaller communities so that

somebody moving from little rock to manchester, via dra, good for call concern, good are foe market, still get traffic to dca. my concern, though, and i hope you'll assuage that -- with this concentration, as your company did last time, will be leading the charge next round on faa reauthorization to get rid of the perimeter law because -- i can see your business case for that and i just feel that goes against the grain of what the commitments that were made from the federal government with the very unique nature of the airport's authority, and i hope that you can assuage me of those concerns. >> certainly. again, where we ended up last time, fully cognizant of the perspective of you and your constituents that indeed a

desire do have no more increase in flights in and out of reagan and furthermore a desire to not see reduction in service to small and medium size communities. so our proposal, which came in much smaller than we requested but implemented in a small way so along as a carrier already owns a slot and is willing to divest one of the ones to a large -- to large market inside the perimeter you can use that to fly out. urgence airways now flies to san diego and los angeles, and we east reduced one slot each to places like dallas or chicago. i think that was good legislation. i believe that helped dc. didn't increase any flying into d.c. i don't think exemptionsening just adding more flights, is a good idea. and we haven't -- >> sir, that did have a negative effect on traffic through dulles

in terms of its ability, particularly in termed of international long haul, substituting the flight -- i thought there was a logic for swapping. my fear is with this further concentration, the next step will be the basic economic premise that helped build dulles as one over the international gateway airports is going be to dramatically undermined if the deal that was made, long before i serve as senator, is basically reneged on a going-forward basis and my hope is the position, the combined carriers, particularly if out was not forced to divest these slots because the advocacy you made for continuing the smaller markets -- that we won't have the rug pulled out from under us. >> thank you very much. and, again, as we move to whenever that may be, the next

faa reauthorization, we'd be happy to figure out weis, if possible to allow more flights outside the perimeter without reducing service to small communities and without increasing flights to dc and if that has an impact, talk about what we might do and maybe there is no solution to it. those are our objectives. not to see flights from dc increase or see service to small communes decrease but to serve more cities outside -- >> the think i -- i don't -- i just have to say very strong term as i can, you have a very -- you have a very strong antiforce against this if a major calculus of this is not also the effects of these changes would have on the economic viability of the literally hundreds of millions of dollars that both the federal government and the commonwealth of virginia made in the

viability of dulles. >> understand. >> senator warner, your question is prescient because if this goes through, the airport will take another hit. i ham a flier on one airline and that's mr. parkers russ because he is the low cost leader and also i can fly on hi is a filiates, going with united out of dulles to go to europe, and that will be eliminated. so that whole connection, all of u.s. air's connecting flights to europe are now going to no long gore through dulles, they're going up to philadelphia, to new york, to charlotte, or down to miami. so, that is where we're going to find even more things happening. and what that leafeds -- leads me to another point where new debt additions he claims they have by uniting with american are only replacing ol'

destinations where they already have an affiliation co-shared with united right now. so what they're giving with one hand they're taking away with the other. so from a consumer's point of view we end up with no northwest new routes. we just end up with new players and their shuffling the deck and that's why i look at not having good consumer benefits from this whole merger, and won't help dulles one bit if it goes through. >> thank you. i want to continue because your analysis of the u.s. usairways and american, and to these cities there are no other nonstop competitors so the doj has to look at this. but you refer the your study, 761 routes between domestic airports overlap between u.s. and american, and additionally

40% of routes face daily competition from us airways and 30% from us airways and american. can you explain your study, and if you're saying there is a better way to look at this issue on potential merger impact, market by market or some -- >> the way you have -- >> and dr. killingham -- dillingham i want you to comment. >> the whole concept of a hub system is a system that connects you. fly in and flow out. but looking only at the number of nonstop direct -- straight flights and there's only 12 of them, that's not a good way to look at it. you have to look at hugh connecting flights compete, and that's what really works. if you're flying from seattle to austin, texas, you will go

seattle to dallas to austin or seattle to phoenix to austin. but your disiryou're going kayak and you go to your travel agency you're going to get a price and those airlines compete like mad with each other. right now. that competition is going to disappear. so, what we did is we took all of the u.s. air markets and we overlaid them with the american airlines mark and came up with 761 one-stop flights which overlapped. at that time, the gao also did a similar study, and their study was released today and shows even a more dramatic overlapping. 1,600 something. and their study then is based upon more than one stop. maybe a two-stop connection and so on. that's how they ended up with more. so the way you look at how network airlines compete with each other is from destination to destination, not hub to hub,

not nonstop routes, and so when you look at that, and our study we came up with 40% of the current american airline routes or covered by u.s. air routes, and 30% of the current american airline routes -- 0 u.s. air routes are covered by american airline routes because u.s. air has a bigger domestic market. and that is the best way to look at it it. and that shows real competition in the market. not necessarily only looking at the nonstop routes. is that clear? >> yes, yes, yes. dr. dillingham. what do you think about this proven. >> we have not an lied how they did their work but to be clear on what the gao said, yes, we said there were 1600 overlapping routes but we also said there

was a competitor, another competitor on those routes as well. so, i think -- and i think the other point that we would make is that our understanding, as doj and the faa look through the merger, they will have a comprehensive analysis more along the lines of not just nonstop but also where there are overlapping routes. so, i think, again, as we said before, a lot has yet to be determined, but clearly those kinds of issues will be addressed that we believe, through doj and dot. >> okay. i have another question, mr. leocha about ticket price transparency. nothing that consumers carry mere about is the ticket price. over the last few years the fees and charges have increased from 1.1 billion in 2002 to 9.12 bill

in 2012. shouldn't the ancillary fees be a little more in lock step and what do you think doj should look at that as far as the merger. >> i would like doj to look at that as part of the -- the merger but i don't think that's in their jurisdiction. department of transportation has a rulemaking at onb right now, and what -- we have been trying to do and spent even more time doing this than looking at slots -- we're trying to get the airlines to disclose their ancillary fees at the time that we buy our airline tickets. right now if we buy our airline tickets from a travel agency, and that will be from an speed ya or orbits or a corporate travel agency, we don't know how much the baggage will cost us, how much seat reservations cost,

and then there are a lot of other fees in there. but what i'm concerned with are the fees, baggage fees and seat reservation fees so that consumers can compare prices. and especially if we end up with a merger coming through, which is wringing competition out of the system, has to be a way that consumers can at least have an able to comparison shop with tickets and everything together and look at oranges and oranges. so that's what we have been trying to do. i think we're getting close to it. however, it's a long process to bring this thing through to fruition, and that's what consumers really need. otherwise we have no way to really compare the prices. >> miss kurland is this under your jurisdiction or doj. >> part of the general counsel's office but i can get -- >> i know this is of great interest to lots of people and long time in coming. i think we have had an airing of

the issues here and raised some important questions. we'll keep the record open for two weeks so the rest of our colleagues can ask questions and if you'll respond to them. this is a very important issue, and i hope the appropriate agencies take due notice of the issues raised here today and address them before this moves forward. thank you all for being here, we're adjourned. [inaudible conversations] >> next, the senate debates the immigration bill, and then a senate hearing on the joint strike fighter, and the history and future of the national guard.

>> when you talk about transparency to the american public there is -- you're going to give up something. you're going to be giving signals to oureded a adversaries what our capabilities are and the more specific you've get about the program and the overweight and the capabilities and the successes to have people sitting around saying, okay, now i understand what can be done with our numbers in yemen and the united states and consequentsly i'm going to fine another way to communicate. so there's a fries be paid for

transparency. where that line is drain in terms of identifying our capabilities is out of our hand. you tell us to do it one way, we'll do that it way but there's a price to be paid for the transparency. >> this weekend on c-span, robert mueller makes his last scheduled appearance before the senate judiciary committee on saturday. >> one of the sticking points in the immigration bill under consideration by the senate is the issue of border security. an amendment was filed tied that would increase the patrols, sensing, and high-tech monitoring along the border with mexico.

here is some of that discussion. >> to me it's rather astonishing the extent to which we're discussing this historic immigration bill, and how little focus has been on the real impact of it. what immigration means. how to make it better. how to serve the national interests, to do the kind of things the american people want us to do. we really talked about a lot of the hot-button issues, but we have not focused on the substance of what we're doing, how many people the country can absorb legally every year. we do a million legally now. how much more of that -- how many more can we assimilate effectively. have reasonable expectations that they would find good work in america, to be able to have them find work, but not put americans out of work. what kind of skill set do we

need most? will our system of enforce. -- enforcement work and many other questions like that. so i would say to some degree we have missed that discussion. we're told today, now we're going on 11:00, that we still will see today a magic amendment. the amendment that fixes everything, that we can just relax and go home and take a good nap because we have an amendment that is going to fix all the problems in the legislation. well, that's odd because we were told, when the bill was announced, it was the toughest legislation ever, and it fixed everything. it didn't need any improvement. we all okay with it. just all pass it and if you raise questions about it, as i did, then you're not a good fella. you're a -- not being nice. if you point out problems. so apparent my now the sponsors

of the bill have realized that they've got a lot of problems and as the bill has been examined and actually read, the 1,000 pages of it here, it's been read and stud studied, more and more problems have been found with it. now we have had a great deal of discussion about the border. the border security issue is a very, very important issue, but it's one of the issues in establishing a good, lawful immigration system that serves the national interests. it's just one of the issues. and it was nothing like the bill's sponsors promised. it would not have accomplished the job. and those of us who were asking the tough questions, and were -- people tried to dismiss the concerns, finally had to deal with the issue, they didn't do what they promised.

it's a big problem. now they have accepted legislation that it appears would change it would a bit at least with regard to the border. that's always sim symbolized whether we're serious about enforcement and so weak in the legislation. so when the bill first started they proposed to spend $6.5 billion on border security. then, as it went through committee and complaints arose, they went up to 8.3, about a 30-% increase. thin the bill hits the floor and the american people begin to find out how weak it was, and our phones started ringing in almost panic, a group met in secret and announced an agreement to spend $38 billion.

to add 20,000 agents, and now we all -- it's all fixed. vote for the bill now. got excuse. you have to vote for the bill. but if you're holding a bucket of water and it's got a bunch of holes in it and you close one of the holes, all the water still going to run out of the bucket. there are other problems with the legislation. this was just one that was so dramatic and so plainly contrary to the promises that the sponsors had made for their bill, that it was really devastating and now in tight total repeat and capitulation, they talked about 20,000 agents and spending $38 billion on the border. we don't want to have you complain anymore. now just hush and don't talk about our bill, what else is in it, the policy issues raised by the legal flow of immigration

that we have. you just pass the bill now because we answered the border security problem. well, this is not the way it's going to be. i hope -- i'll say this, you should be able to do dramatic things and effective things at the border with $38 billion. but as i point out in a little bit, we are not sure at all that's going to happen in an effective, smart way... repeatedly that plainly require certain things to happen and then they never happen. like fencing. we said last time we passed a bill, build 700 miles of double-layer fencing. well, that was in 2008, i believe. today we've got 36 miles of double-layer fencing. about 300 miles of pedestrian

fencing. so now they say they've got their 700 miles. well, it remains to be seen if that will ever happen, number one. but, number two, it's not double-wide, as we passed in law previously that never happened. it's just a single-layered fence, which is much easier to penetrate. a double-layered -- a double-fence system with a vehicular ability to move between the fences, is very, very effective. it iit has proven effective bef. that's why it was put in the bill. not because somebody wanted to sound tough, because it will work. and things that really work tend to be blocked in this senate. things that would actually make the system transform from illegality to legality have always been blocked, in my experience since i've been in the senate. it's just amazing to me to that regard.

so we haven't seen the amendme amendment. we were told we'd have it last night at 6:00. we were on -- on track to have a series of amendments last night voted on, some important amendments to be voted on. and we were getting ready to do that. and all of a sudden it was announced that an agreement had been reached and a new bill had been offered, new amendment. and this amendment was going to fix the border and is going to spend more money than ever and nobody now had any right to complain about the immigration bill before us, s. 744, we had it fixed. and those amendments evaporated. no votes were cast on them. actually, the night before, a tentative agreement had been reached to vote on as many as 16 amendments and that would have been a nice start to begin to

discuss, allow people to pointed out that there's a weakness in the bill and propose a solution to fix it. and that's the way legislation is supposed to go. you bring forth an amendment, you say, this bill lacks this, this amendment in the bill's wrong. i've got a fix for it. this is my offer. this is my amendment. that's the way good legislation should be processed in the senate, and that was all stopped. so we waited 6:00, 7:00, 8:00, 9:00, 10:00. i think it was 10:30 when we departed. still no magic amendment that's going to fix every problem with the legislation. no more -- no magic amendment. now, here we are at 11:00 and we still haven't seen it. so, frankly, i'd like to read it. i am going to read it. we read this one. it didn't do what the sponsors said. they had good talking points.

i could have voted for the talking points. i liked what they said, basically, in the talking points. but it wasn't in the bill. that's the problem. you know, i was a -- been a federal prosecutor for many years. it's the law that gets enforced, not some senator's talking point. that is worthless. it's what's in the bill. it requires and directs agents to do this and that. it requires judges to do this and that. it requires law enforcement officers to do this and that. so it -- that's what counts, is what's in that bill. so with regard to this new amendment, i'd like to ask a couple of things to the -- senators hoeven and corker. does your amendment put enforcement before the legality? does it put enforcement before amnesty? before the first legalization is

allowed to occur? or is the amnesty still first? they told us initially that they were going to have enforcement first. by a 4-1 margin, the american people have said they are prepared to treat compassionately people who've entered the country illegally, who've been here a long time and done otherwise right things, and we're prepared to be compassionate and deal with th them. but we don't trust washington, we want to see you do the enforcement before you go and give this legal status, this amnesty. that's common sense. there's nothing wrong with that. the american people aren't mean spirited when they say that. they've seen this game before. they've scene how it's played, been played before. they don't, they don't -- they don't have confidence in us. and i can cite example after example after example after example of laws, rules, promises

made never carried out. and that's why we have such a massive illegal flow into america and how we've accumulated 11 million people, many of them wonderful people. but we aren't -- this isn't the way we want the system to work. so i think that's the question. do we have amnesty first again? as senator grassley, our ranking member on the judiciary committee has repeatedly said, i was here in 1986. i voted for amnesty in 1986. i thought it was going to work and it was a mistake. we should have seen it was not going to work. we had the amnesty first. we promised to do all kinds of enforcement in the future, and that never happened. and this is why we're at this spot again today.

that's the history of it. well, what about this fencing as promised in the bill? does the amendment require any fence to be built before the amnesty is granted? i'd like to know that when we see your amendment. do we have any confidence that we'll ever see the fence built any more than we saw it when we passed laws previously to build fences that never occurred? does your amendment require a biometric exit system as required by current law? under current law, the congress of the united states has required that the executive branch create an entry-exit visa system that's biometric. that basically means you use your fingerprints and your fingerprint read so you can't bring in a document to say i'm john doe and not be john doe.

you come into the country, your fingerprints are recorded. when you come out of the country your if i fingerprints are reco. you're clocked out like many companies do at the workplace. you put your card in and your time is accounted for. we know when you came, when you left, did you overstay, or did you depart as required by law. well, current law says we will do that. you'll be fingerprinted when you enter, and that is done. i mean that's done. you are fingerprinted when you've entered the country. but what's never been done is the exit system when you depart the country. and every kind of excuse has been made for that, but the truth is there's no excuse for not doing that. so does this amendment fix that problem? and the experts tell us, and the

congressional budget office reported just a few days ago that we're going to see an increase in visa overstays under this bill and the trends that we're facing. there are several reasons for that, and one big one is the legal flow of workers into our country, guest workers that come to take jobs, work for certain periods of time will double. and c.b.o. predicts that you're going to have an increase of the number of people who overstay their visas. and since we have no ability to clock in people when they come and when they depart, we don't have any idea and it becomes unenforceable. i think they're exactly right about that. right now entry -- the visa system is responsible for 40% of illegal entries into the united states. overstaying visas is 40%.

i think we can expect with the large increase in guest worker programs, i think we're going to see visas well over 50% in the future responsible for illegality, illegal entry into the country. so does this amendment fix that? senator coburn and corker? that's half of the problem, more than half of the problem, frankly, if this bill passes. i don't believe it's likely to do so. so current law, current law said there shall be a biometric entry-exit at all land, sea and airports. what does this bill say? the toughest bill ever, they say. does it make that stronger? does it fix the weakness in the current system? no. it says you have to have an electronic system. much weaker than biometric.

it says you have to have it only at air and seaports, but not at land ports. so this bill is plainly weaker than current law. i'll ask this to the amendment sponsors. does it actually have a mechanism to require those who receive the amnesty to pay back federal, state and local taxes? is that part of the deal? that's what's been touted for it. we've been told repeatedly they're going to pay back taxes. let me tell you, it's not going to happen under this legislation. there's no way this is going to even create an attempt by the i.r.s. to go back and try to investigate persons to see who owes more taxes. that's just a talking point. that's a talking point. and talking points aren't law. talking points aren't reality. they're political weapons used

to advance the agenda of those who have an agenda. i would ask this question: does your amendment require those who receive amnesty to learn english? they say our bill requires people to learn english. but it really doesn't, as you can plainly tell if you read the legislation. only by the time you've been here ten years and you get a legal status immediately, you want to convert to permanent legal status, and you can do that for some within five years, some in ten. so at the end of ten years, if you speak english, okay. if you're not speaking english and you are in a course, they have to give you permanent legal status. you don't have to pass the course. all you've got to do is in your ninth year, the tenth month sign up for a course somewhere in english and you get your legal

status under the bill. would that loophole be fixed? does the amendment, my colleagues, prohibit people with multiple d.u.i.'s from receiving amnesty? do you do anything about that loophole? does your amendment require that anyone applying for amnesty actually be interviewed? this is one of the big shocking weaknesses in the legislation. when a person is transformed from a person in illegal status to an r.p.i. status, the legal status, which happens within a few months, when you're transformed to that, what do we do to make sure that person isn't a known criminal, that person could be a terrorist. what do we do about that? normally one of the most valuable things that can be done in these processes is to

interview the person. it appears quite plainly this bill -- well, the bill certainly does not require interviews. and what we're seeing now with regard to how homeland security is handling the daca people, they're not interviewing them face-to-face. this is a big weakness in the system. nobody is even going to be interviewed face-to-face. and actually examined to see if the paperwork they're submitting has any validity at all. many times that meeting can identify a weakness in the paperwork and lead to further investigation. but if you don't have interviews and you otherwise aren't smart about how you administer it, large numbers of people can get status they don't deserve through utilizing fake documents. we can expect that to happen. and it should not happen. we're being generous under this bill with regard to the people

who would be given legal status, and they ought to -- but only those who qualify should get it. people who don't qualify shouldn't get it. or we're perpetuating illegality again indefinitely into the future. doesed amendment prohibit -- does the amendment prohibit those who had domestic violence convictions from receiving the legal status? not so in the bill today. does the amendment ensure that those who do not receive amnesty would actually be deported in the future? a lot of people don't qualify. they should not have amnesty. you come -- you find out they have been convicted of a felony, drug dealing, ahe salt with intent -- assault with intent to murder, robbery. should they be given amnesty? no, you say. do they get to stay here if they have been arrested for some other crime?

should they be deported? we need to be sure the persons are going to be deported who are here illegally. i have an amendment that's a serious amendment that would help move us from this present failed system to one that could actually work to deal with internal enforcement -- internal enforcement and deportation in a proper manner. well, i notice, madam president, a letter that just came in, june 19, addressed to senator corker and hoeven from the national immigration customs and enforcement council of the afl-cio -- american federation of government employees, signed by mr. chris crane, their very able, competent president. this is what mr. crane said. he's writing on behalf of the

7,600 agents and officers -- quote -- "according to the national journal you're working on an amendment to the gang of eight bill. your amendment is to help pass the bill 'i am concerned that your amendment as outlined in the article not only provides immediate legalization before enforcement, but also appears to neglect interior enforcement. 744 reduces the ability of i.c.e. officers to do their job while providing legal status of convicted criminals including gang members, drunk drivers and sex offenders. i can assure you these are not the types of reforms sought by the american public. in fact, these are not reforms at all, but instead provisions written by special interest groups concerned only with their own political agenda and future

financial gains." close quote. now, this is a man that heads the law officers association. he's had his officers blocked from enforcing the law by political directors from the supervisors. that's a plain fact. they have negated the ability of the law of america to be enforced. he goes on, "any plan is doomed to fail that does not empower i.c.e. agents to enforce the laws enacted by congress, and that does not put an end to the unlawful abuse of prosecutorial discretion by political appointees." close quote. there's some history to this. the i.c.e. officers are just in an uproar. the morale of the i.c.e. officers was ranked near the absolute bottom of 170-something government agencies.

they're out there risking their lives, dealing with criminals and people in violation of the law, and what do they hear from their political supervisors? don't enforce the law. don't follow through on what you're required to do by congressional inaction. so, they have actually filed a lawsuit against their supervisors because they're being told by the supervisors not to do what they took an oath to do, which is to enforce the law. mr. crane goes on to say this. "yet instead of cracking down on the administration's abuse of power, 744 places unprecedented new restrictions on interior enforcement, making the current situation much worse and much more hazardous. it is as if s. 744 were explicitly written to handcuff

law enforcement officers. " binding their hands while giving virtually unchecked authority to executive branch officials to prevent future removals, including removal of criminal aliens." close quote. these are the people doing the job every day. they were never talked to. they asked to meet with the gang of eight. no, they didn't want to hear from them. the gang of eight wanted to hear from their special friends. they wanted to hear from, on the special business groups who who wanted cheap labor. they wanted to hear from big labor. they wanted to hear from la raza. they wanted to hear from special interest groups. and they heard from them. the chamber of commerce and ag industrial groups. that's who met with them. that's who wrote the bill. that and along with the

immigration lawyers' association, who i will assure you have put in place after place after place in this bill where now they can file cases, appeals and create disorder within the normal operating system of immigration. mr. crane goes on to say, "absence dramatic -- drastic improvements to the interior enforcement provisions, there is no doubt that s. 744 will undermine the constitutional rule of law, guarantee future illegal immigration and place the public at risk." that is a dramatic statement. and i've not seen it anywhere close to being refuted. and as to the question, "does it guarantee future illegal immigration?"

look, the congressional budget office, they did the report for us. they're nonpartisan. they serve all of us. we've got a democratic senate majority that they -- that mr. elmendorf was picked by them but he's a fair man. he said we'd only see a 25% reduction in the number of illegal entries into america if this bill is passed. they promised us it was going to end the illegality, it was going to be the toughest bill ever. the congressional budget office this week said this legislation will reduce illegality only by 25%. that's just not acceptable. that's not acceptable. we've been told so much different. and mr. - chris crane says the same thing. goes on to say this: "s. 744 not only fails to contain needed interior enforcement provisions but weakens interior enforceme

enforcement." weakens it. "this is because powerful special interests involved in crafting the bill's language are opposed to interior enforcement, a fact i.c.e. officers are all too familiar with. the political agendas of these group place the public safety and security of our nation at risk." i believe he's accurate. i know he cares about what he's doing. mr. crane is a very impressive young leader, a marine. he loves his country. he believes this bill is bad for america and he's had the courage to state that and his association has backed him up with it. they're all in it together, i guess. goes on to say this -- quote -- --in addressing the sponsors of the amendment, "as respected political leaders, i'm asking you both to work with me and others in congress and law enforcement in ensuring that

this bill puts the safety of america before powerful special interests." i think that's a very important letter. it cannot be that our colleagues can propose -- promote a piece of legislation as being the most effective improvement in history when our own officers who are out there trying to say -- say -- enforce the law say it makes it worse. that's really, really disappointing. now, well, i wanted to kind of tease my colleagues a little bit about this amendment that we're still waiting to see, hasn't appeared yet. thought we were going to have it at 6:00 last night, then 7:00, then 8:00, then 9:00, then

10:00, 10:30. now it's 11:00 the next morning, still haven't seen it. presumably it must be okay, though, it's going to fix everything we need to be concerned about. senator schumer at the markup in judiciary committee talking about enforcement said this -- quote -- this was all about senator cornyn, our able senator from texas, who offered an amendment in the markup in the judiciary committee to enhance enforcement at the border, do a lot of different things he thought were -- were important and add 5,000 new border patrol agents. so what did our colleagues who'd written the bill, the gang of eight who said they were going to stick together and fight off any amendment that had any significance to it, and they all rallied and fought off the cornyn amendment, too.

what did they say about senator cornyn's steps to make the legal system work better and to add some new agents to the border? being a texas senator, he's familiar with those issues. senator schumer said this -- quote -- "just on the border alone, senator mccain and i had an amendment a few months ago that -- a few years ago, rather, that spent about $600 million to $800 million on the border and effectiveness rate went up from 68% to 82%. we spent much more than that, as much as $6.5 billion." in other words, they spend in this bill they say $6.5 billion, as i told you earlier. this is what he goes on to say -- quote -- "the border will be effectively closed we believe with these expenditures in the way they will be done." well, if he's going to spend a total on this bill of $6.5 million and effectively

close the border, how is it that he's now supporting an amendment that would add 20,000 agents to the -- to the border? because the bill's in trouble. they're in panic mode, i would suggest to you. a little later in the same markup, referring to the border patrol agents, he said this -- quote -- "their numbers have gone way, way up and most people think they're an adequate number." why, that was just may 9, a little over a month ago. he said they're an adequate number, we don't need anymore border agents and attacked senator cornyn for having the temerity to suggest we needed 5,000 more. and now when the bill's in trouble, in panic mode, they've come in with an amendment i think, maybe -- we haven't seen it yet -- they claim will add 20,000 border patrol agents.

back in the markup on may 9 -- quote, senator schumer -- quote -- "look, our goal is to make the border much more secure and we do. we do it dramatically." well, if it does all that, why do we need a new amendment? the point i'm making here, what i'm saying to you is our talking points of the bill's sponsors have been positive, positive, positive throughout. they say the things that people want to hear. the question is: does their legislation do what people want done? that's the question. mr. sessions: so back then, he said, we're doing all you want. the border is effectively closed. we don't need anymore agents. senator flake, talking about senator cruz from texas, he offered an amendment in judiciary on the border and ably did so.

senator flake says this, "we add in our legislation 3,500 new customs agents. that's at a cost of about $6 billion, 3,500, and what we're talking about here is tripling the border patrol. it's currently at about 21,000. take it to 60,000." he's talking about the cruz amendment. "so 40,000 new agents we're talking about, $30 billion, $40 billion to do that. and i know it's sincere desire to put more resources at the border but we have fiscal constraints." at the markup on -- and so he opposed it, one of the gang of eight members. and senator schumer at the markup said -- quote -- "and so to simply for us to dictate when we are not experts to quadruple border patrol is, in my opinion, something that you might accuse me of throwing money at a problem without really knowing what effect it would be."

so he goes on to say on the floor on june 11, just a week or so ago, "make no mistake" -- he's talking about this bill -- "before the hoeven-corker amendment had ever been dreamed of -- he said. "make no mistake, our border will be secured as a result of this bill. we appropriate $6.5 billion upfront in this bill to bolster our security efforts, that is in addition to the annual appropriations made for each year for border security." well, must not have been accurate, huh? he said the bill is taken care of. they've got an adequate amount in the bill as it is. and senator -- and they would add 20 -- 20,000 more border patrol agents. again, the point is, we get positive spin no matter what the

circumstances are because they're out to sell this bill. they're out to promote their creation. and they've lost sight of what it actually does and really lost sight, in my opinion, of the fundamental responsibility of important legislation and that is not to achieve a political end but to achieve a better america, to serve the national interest. and i'm going to continue to a ask: does this bill serve the interests of the people of the united states of america? not economically and not legal legally, in my opinion. mr. sessions: now, senator mccain, on june 18, just the other day, "for those who think we need more people, we do need more people to facilitate movement across our border." he says it's too slow, we want more people to come in quicker. "but we have 21,000 border patrol.

today there are on the arizona-mexico there are people sitting in vehicles in the heat. what we need is not more people because we've gone in 1986, we had 4,000 border patrol to 21,000. but what we need is the technology that's been developed in the intervening years." so he said, what we need is not more people, what we need is we don't need more border patrol agents, we need some more technology. well, that's what they said last time when they undermined the fence. some of you remember the phrase they used then -- well, we're going to create a virtual fence, we're going to create a high-tech fence. and we don't need to build those old fences. that's not good. we're -- we're going to take care of it with technology. and we spent, as senator mccain said on the floor, i think it was $980 million on a virtual fence at our borders

that utterly failed. we got nothing for it. what else we didn't get? we didn't get the fence. we wasted a billion dollars on a failed technology and didn't build the fence that was promised. and this is why the american people are not confident that anything politicians tell them about immigration particularly will ever happen. and the american people are right. time and again, politicians have promised, promised, promised and never delivered, delivered, delivered and that's just a fact. this bill and these statements say a lot, i think. with regard to senator cornyn's amendment that would add 5,000 agents and do some other thing, this is what senator schumer said back in the committee in may, just last month. "and what we've learned, and it

was hit home to me when senator flake and senator mccain took me to arizona portion of the border, it's vast. we have more people on the border patrol. what's the number? 21,000. i think it was triple what it was five years ago. but you can't have -- if you want to have the whole federal budget, you guys figure out how you're going to spend and get that money, the whole federal budget on just the border patr patrol? you could probably have 100% operational control." so he's -- he was saying then, don't question our bill. it does all you need. we're going to have the money to spend more on it. and now apparently he's trumpeting the great bipartisan agreement that would add 20,000 more border patrol people. now, maybe we need more border patrol and we need to use technology and we need to use fences wisely. but what we really need is a

secretary of homeland security who knows what they're doing and who's committed to ending the illegality and using every resource we have wisely to confront this illegality and end it. and if you'd had that the last four years, we would have had far more reduction in illegality on the border than we've seen. we would be in much better position to go to the american people and say, let's talk about amnesty now because we've proven we've made real progress here. but they have never wanted to do that. they have been listening to the voices out there and the political interests and the special interests. and they have not done it. and so now we have 11 million people. and what's their solution? surrender to the illegality. just give up. we'll just give amnesty to everybody here, and we'll pass a

law, and we'll promise it will fix things, and we don't really worry whether it does or not. and i can tell you it won't. it won't fix it. well, there are a lot of things that are noteworthy, and i would like to talk about as we go forward in this legislation. one of them i think is interesting, and i'm just going to raise it because it's an issue we need to confront. you hear it a lot. people are talking like this out there. bill o'riley's talking points memo is consistently a high-quality memo. it has valuable insight that americans do well with -- would do well to listen to on a regular basis, i think. very insightful individual. but in the regard that he made last night, i got a transcript of it, i think shows some of the

misconceptions about the legislation that we simply have to correct. it's not sufficient to pass this legislation based on talking points, on spin from the sponsors of the bill. we have to say, okay, does it really do that? and how does it do it? and can it be made better? and are there weaknesses? okay, so this is what bill o'riley said last night -- quote -- "senator rubio told me on the phone today that it would be at least 13 years -- 13 -- before people in the country illegally right now could gain full legal working status, and even longer to achieve citizenship." close quote. we'll talk about that. so he goes on to say, "talking

points support immigration reform even though i well understand the new law will be somewhat chaotic and it will be a magnet for even more people to come heel illegally which is -- to come here illegally, which is why we need stepped-up security." let's go back to the first segment, "there would be at least 13 years before people in the country illegally right now could gain full legal working status." not so. not so at all. not even close. within a few months everyone applies for the r.p.i. status, the provisional status, will be given a social security card and the right to go to work and be lawful in the country and cannot be deported unless they commit a serious crime. it's immediately, not 13 years. he says "even longer to achieve

citizenship." well, that's not accurate either. it does take -- this is how the citizenship and green card status works, permanent legal status. within months everybody that qualifies under the 11 million will be given r.p.i. provisional status virtually immediately. they will be able to take any job in america, move anywhere they want to in america, displace workers in america, compete for jobs wherever. that's what will happen under the bill. but for about 2.5 million who are people who came here as teenagers, the so-called dreamers, they get citizenship in five years. they'll have citizenship in five years.

that's 2.5 million. and certain ag workers, those individuals who are illegally here become permanent legal residents permanently. they get their legal right to work immediately. but in five years they get permanent legal status. and the other eight to ten million illegal immigrants would be eligible for green cards or legal permanent residence in ten years. not 13. so there's an immediate amnesty that precedes all of this. the legal status and the right to work is immediate. it's not 13 years out there. and a large number of the persons will be able to have citizenship within five years. 25% maybe will be getting that. so i think our people who are commenting about this need to get away from the spin of the

sponsors and spin of those who invested in trying to pass the bill and get down to what the bill actually says. that's very important. the sponsors of the bill, senator schumer and others, claim that the bill is paid for, and they've got all their money needed to fund the legislation, and they claim this congressional budget office report that came out the other day backs them up. but it does not. it does not back them up. we need to talk about that in some detail because it's a very important matter. c.b.o. does not back that up. so it's just the c.b.o. report

shows this bill reducing deficits in the next decade according to the sponsors of the bill. but in fact c.b.o. plainly states on page 12 of the report that the legislation will increase on budget deficits over that time. increase deficits of on budget accounts. why? because the newly legalized immigrants will be paying some payroll taxes -- will be paying the payroll taxes, social security, fica, medicare taxes that withhold from workers' pay. but they're not drawing social security benefits at this time because most of them are younger than that, and they're not yet past 65. so that creates a surplus flow; right? it creates a surplus flow. of the $459 billion in new taxes and fees, only about half of that comes from the income taxes

that these workers are going to pay. why? because most of the workers are low-income workers. over half of the people who were here illegally do not have a high school diploma and they're just not making real high wages. you have to make a pretty sizable wage before you pay any income tax, although you do pay your social security and medicare withholding, the payroll tax. so the number -- how do they then say they have money created to pay for all of this stuff? they count the money from the payroll taxes. that makes sense, you think, at first glance, which by rights, though, belongs to the social security trust fund. that's not money available for the government to spend on trips to africa or some summit somewhere or for solyndras.

that's social security money. using this money to offset other spending is an accounting trick that was used to pass obamacare. and it's not right. so let's go back over that again. so, the on-budget account, income tax coming in from the legalization, because some beam that are legalized are going to pay more income tax. but there's a lot of expenses out there too. the earned-income tax credit is a direct payment, not a tax deduction, a direct welfare means-tested payment to poorer workers. that is a big cost, and other costs. so the c.b.o. says the income taxes that are paid will be less than the cost of the immigration. therefore, adding $14 billion to the on-budget debt of america. but the sponsors of the bill wanted to claim that their legislation pays for itself, says but they're going to be paying social security and medicare taxes.

therefore, we want to count that money. and that will prove that we pay for the bill. really? aren't the individuals who are now given a social security number allowed to work and pay the payroll taxes, aren't those taxes supposed to be put into a trust fund for their social security and medicare benefits when they do get 65? absolutely. and any surplus money that goes into social security and medicare is not given to the united states treasury to spend to, pay for border patrol agents. that money is loaned by the medicare trustees. it's loaned by the social security trustees. they get a treasury bill in exchange for it. the u.s. government pays them interest on the money that the social secur l