to recognize the importance of the government owns programs that help steer people away from radicalization. we do need to make sure that our security zones all over people thinking of traveling to syria and are stopping them taking away their passports and the nationality of necessary preventing them from going and perhaps going back if they have gone to making sure we do everything within our power to keep them safe because there is no doubt this is now along with

the federally administrative tribal pakistan syria is now a bigger problem if not a bigger problem in terms of the threat to our country and it is as simple as that. i've made sure his prime minister i've got together security service experts to look at everything we can do to try to reduce this problem but you know and i know your committees sometimes those involved in this area. this is their major concern. >> i meant to say this earlier. if you make her immigration target i will send you a box of --. >> legal mangoes which i know we are working together. i have that on paper here somewhere. [laughter] he has met the indian high commissioner but you know what's happening. we are trying to help.

>> i them impressed that you had mangoes in your brief. thank you very much. we look forward to seeing you just a little later in the year and probably again later towards the end and we have a range of further subjects we will need to explore. >> thank you very much.chair ine

executives from aircraft ro t manufacturer owing andc-span pharmaceutical company eli lily testified on capitol hill 3 abot economic espionage and the problem of international property theft. the senate judiciary committee is considering legislation to increase criminal penalties for corporate spying. senator shelden whitehouse chairs this hour and a half long hearing. [inaudible conversations] [inaudible conversations]

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

[inaudible conversations] [inaudible conversations] [inaudible conversations] >> the hearing of the senate

judiciary subcommittee on crime and terrorism will come to order. i am expecting that my ranking member senator lindsey graham will be here shortly but i just saw him on the c-span screen so i know that these on the floor and not here. but i have permission from the staff to proceed and he will join us as soon as his schedule permits. i also want to recognize in the audience ed pagano who has spent many happy hours in here when he was working for chairman leahy. it's good to have him back in a different capacity. we are having a hearing today that is entitled economic espionage and. secret theft. our hour-long adequate for today's threats. today the subcommittee is going to explore how we can better protect american businesses from those who try to steal their

valuable intellectual property. american companies are renowned as being the most innovative in the world. companies of every size and in every industry from manufacturing to software to biotechnology to aerospace on large portfolios of legally protected trade secrets they have developed and innovated. in some cases the secret sauce may be a company's most valuable asset. the fact of the secrets can lead to devastating consequences. for small businesses that can be a matter of life and death. the risk of trade secret theft has been around as long as there has been secrets to protect. there's a reason why cola has kept its formula locked away in a vault for decades. but in recent years the methods

used to feel the trade secrets have become more sophisticated. companies now must confront the reality that they are being attacked on a daily basis by cybercriminals who are determined to steal their intellectual property. as attorney general holder has observed there are two kinds of companies in america those that have been hacked and those that don't know that they have been hacked. today the criminal can steal all of the trade secrets the company owns from thousands of miles away without the company ever noticing. many of the cyber attacks we are seeing are the work of foreign governments. china and other nations now routinely steal from american businesses and give the secrets to their own companies. their version of competition. and let's be clear we did not do

the same to them. we are now going through a healthy debate in america about the scope of government surveillance that there is no dispute about one thing. our spy agencies do not steal from foreign businesses to help american industry. while cyber attacks are increasing traditional threats remain. company insiders can still walk off with trade secrets to sell to the highest bidder. competitors still steal secrets through trickery or simply breaking into a factory or office building. it is impossible to determine the full extent of the loss to american businesses read as a result of the theft of trade secrets and other intellectual property. there have been estimates that our nation may lose anywhere from one to 3% of our gross domestic product through trade secret theft alone.

the defense department has said that every year and amount of intellectual property larger than that contained in the library of congress is stolen from computer networks belonging to american businesses and government. estimates of the value of ip stolen by foreign actors are as high as $300 billion. general keith alexander until recently the head of nsa and cybercommand at the pentagon, has characterized the cybertheft of american intellectual property has quote the greatest transfer of wealth in history and of course we are on the losing end of it. no estimate can fully capture the real impact of trade secret theft. when other countries and foreign businesses view our trade secrets they are stealing our

ideas. they are stealing our innovation and most and partly they are stealing our jobs. in my own state of rhode island we continue to face unacceptably high unemployment despite having some of the most innovative business is in the country. if we do not protect our businesses from those who steal intellectual property we are leading innovation go to waste and we are leading american jobs go overseas. in the past some companies were reluctant to talk about this issue because no one likes to admit that they have been victimized but many are now coming forward to speak out because they recognize how important is that we work together to address this common threat. i particularly want to thank the company representatives who are appearing before us today in the second panel as well as many many others who have worked closely with me and with other senators on this issue.

i am encouraged that the administration last year released a blueprint for a strategy to combat trade secret theft. agencies across the government are increasing efforts to address this problem. the administration must recognize that the theft of intellectual property is one of the most important foreign-policy challenges we face and it must communicate to china and other nations that stealing from our businesses to help their businesses is unacceptable. we in congress must do our part. we need to make sure that our criminal laws in this area are adequate and up-to-date. last fall senator graham and i've released a discussion draft of legislation designed to clarify that state-sponsored overseas hacking could be prosecuted as economic espionage and to strengthen criminal

protection of trade secrets. we received valuable comments and suggestions about this legislation and we look forward to hearing from our witnesses today about how to improve our laws and what we can do to help defend our industries and we hope to introduce our legislation in the coming weeks. companies also need civil remedies against those who steal from them. while state law has traditionally provided companies with remedies for misappropriation of trade secrets there is currently no federal law that allows companies themselves to seek civil remedies against those who steal from them. senators coons and hatch have recently introduced legislation to give the option of pursuing thieves and civil court. senator flake is introduced legislation to give courts a

federal civil remedy for trade secret theft. i hope the judiciary committee will act soon on legislation to strengthen the criminal and civil protections against trade secret theft and i look forward to working with those colleagues toward that goal. today we will hear from witnesses from government industry and the nonprofit sector to confront the threat of trade secret theft on a daily basis. what i hope will be clear by the end of this hearing is that we need an all in approach to this hearing. we must strengthen our criminal laws and our law enforcement agencies must prioritize stopping trade secret theft before it occurs and investigating and prosecuting when it does occur. i will add that there remains an urgent need for us to pass broader cybersecurity legislation and i appreciate working with senator graham on that effort. i look forward to hearing from our witnesses today and to

working with my colleagues on both sides of the aisle to address this critical issue. our first witness is randall c. coleman the assistant director of the counterintelligence division at the federal bureau of investigation. fbi mr. coleman served as an officer in the united states army for nine years. we are delighteded that he could join us today.

we ask him to proceed with his testimony. proceed, sir. >> good afternoon. i'm pleased to be here with you today to discuss the fbi's efforts to combat economic espionage and theft of trade secrets. the fbi consider it is investigation of theft of trade secrets and economic espionage the national counterintelligence executive estimated range of loss to the u.s. economy approaching $400 billion. to foreign adversaries and competitors who by illegally obtaining a broad range of trade secrets degraded our nation's advantage and innovative research and development in the global market creates this immense loss threatens the security of our economy and preventing such loss requires constant vigilance and aggressive mitigation. the fbi is diligently working to investigate and apprehend targets pursuing economic espionage against us-based businesses academic institutions and clear defense contractors and government agencies.

it is made significant progress in putting some of the most egregious offenders behind bars. economic espionage and theft in trade secrets are increasingly linked to the insider threat in the growing trend of cyberenabled trade secret theft. insider threat employees may be stealing information for personal gain or maybe serving as a spy for another organization or country. foreign competitors are aggressively targeting and including -- recruiting company's most valuable dietary information. the fbi however cannot protect the nation's economy by acting alone. the fbi counterintelligence division strategic partnership pro-graham oversees a network of more than 80 special agents that are serving a strategic program coordinators who work hand-in-hand with industry and academic institutions across the country. the strategic partnership coordinator's conduct in person classified and unclassified

threat presentations and briefings and it serves as an early referral mechanism for reports possible economic espionage theft in trade secrets and cyberintrusions. working through more than 15,000 contacts nationwide this program helps companies detect, deter and defend against attacks sensitive with proprietary information on a foreign adversary. the fbi takes seriously its role to investigate and apprehend targets pursuing economic espionage and by forming close partnerships with local logical businesses and academic and government institutions the fbi wishes to have a greater impact on preventing and deterring los trade secrets before any loss can occur. thank you again for the opportunity to testify and i look forward to answering any of your questions. >> i would like to talk with you about first of all have you any

specific reaction to the draft legislation please submit it for discussion purposes? >> sir i will stand on this that any legislation that allows the fbi to have a better advantage in going after our foreign adversaries as it relates to economic espionage and theft of proprietary information the fbi is in favor of. >> presumably the people you are working with at the department of justice support the urgency were making? >> absolutely. >> one of the things that i have observed having watched this for a while is the whenever i hear about a case that is brought for it international company theft in every case that i have found so far there has been some nexus to old-fashioned type intellectual property theft.

somebody taking a dvd home, somebody taking a patented item out of the factory. we have seen an explosion in pure cyber intrusion and extraction through the cyber network of intellectual property with no other technique involves to my knowledge there have been no charges brought ever against anyone for that kind of that to the. i understand that these cases are very complicated. i understand that they have huge forensic issues that there is an overlay with national security with the intelligence services that requires a lot of effort. i understand some of the targets are overseas and that creates another array of leak out and issues. trust me having served as united states attorney i can see how very challenging these cases are to make great when you have

general alexander saying we are on the losing end of the biggest transfer wealth in human history they would like to see a little bit more actual hard prosecution activity. can you tell me what you think is behind the difficulty and is there anything we can do? is it just a resource question and what can we do in congress to start putting points on the board against these people and criminal law courts? >> chairman i think he described it to a tee. up is that when you get outside of the borders and united states and many of these investigations where there is a foreign nexus our ability to conduct effective investigations has diminished greatly. i will tell you that we have ongoing investigations that i would first be as having a logical conclusion and i think would you agree that you described? in fact the fbi has actually

placed cyberassets and resources working with the counterintelligence resources that are national cyber intrusion task force that are working hand-in-hand and shoulder-to-shoulder on the specific investigations. so i think technology plays a critical role in the advancement of technology. it makes the threat that much more complicated but i think there has been tremendous progress made by the fbi along with our partners at investigating these types of crimes. i'm hopeful as we go forward that we will be able to demonstrate that we have been effective and will be effective in this arena. >> i would want to suggest that the fbi has not been effective. i have seen what you guys do out there. if i had to pick my concern and

turn it into a single phrase it wouldn't be the fbi is not effective. it would be the fbi so busy trying to keep track of who is coming through at stores in coming through windows and trying to warn the companies that they are hacking into that there simply is a resource constrained in terms of taking all that effort which could be devoted to tracking all these attacks and trying to help our businesses. there just isn't the capability or enough capabilities to sit down and go through putting a prosecution package together working through the intelligence agencies and doing the steps that need to be done. in many ways i'm trying to throw you a friendly question saying let us help you do what needs to be done in terms of the resources. i wouldn't want to take anybody off of what they are doing in order to put a prosecution package together but at some point we have to have a robust

enough response as a country that we are starting to for want of a better example indict chinese criminals and generals who are behind pulling this kind of the very off. >> i think another part of what i think is important and you describe it as the threat is so immense that is what makes this outreach effort so important to what we are doing and bringing in the private sector and the academic institutions to work hand-in-hand with us so we can actually try to get out in front of this threat. you are absolutely right. hand with us so we can actually get out in front of this threat. you're absolutely right. the threat is so immense that the fbi cannot take this on alone. whatever necessary help we can get that the other industries and sectors of great help to us.

there's a provision in the last appropriations bill that requires the department of justice to do a report for us looking forward, looking out a couple of years. thinking about what the structure will be like for addressing this particular threat. it's exploded as you know. it explodes even further every year. it grows just massive levels. i'm not convinced that the present setup makes sense and if you look at what happened with aviation again and what its effect was on it started but the markets with army air effort as some part of

the signal core and then it became a sub part of the army and it wasn't until after world war ii that you had a full-on u.s. air force. until then we've been very successful leader in that theater of military operations. until then we weren't set up right. i'm not convinced that we're set up right. i would invite you to comment on this but ask it as a question for the record that you can take back to headquarters. how does it make sense to have these kind of cases perhaps in your counterintelligence provision, perhaps in the cyber division, perhaps in the criminal division? how do you sort amongst those three divisions to have this be efficient and smooth flowing? i understand that each >> i think the first part of your comment is our restructured right and i will tell you that i

look at this on a daily basis. it is certainly a priority for our director to look at are we efficiently and effectively addressing the threats and i will tell you in the counterintelligence division economic -- economic espionage has become an authority because of expansion of the threat so there are always ways that we are looking to better address this and some of the more significant effort that we have made is to really have outreach and i can't stress how important that is to this process and what benefits we have seen from now. we have expanded our contacts across the country to 15,000 contacts. we are conducting over 7800 presentations and briefings a year. and we are starting to see the maturity of these relationships is starting to pay off in the fact that companies are starting to come to us and academic institutions are coming to us

early on and calling that contact so we can getting gauged in the problem in a very early period versus after a bad accident and the company was two or three terabytes of information azadi left. that is absolutely a victory for us in this process but we have a lot of room for improvement that we will continue to do. we are always looking at ways to improve that. >> in the context of that retain this question for the record and get eggers -- official response from your position. i'm interested in whether you think five years out 10 years out a similar division across all those separate parts of the bureau would continue to be a wise allocation or whether we are in a transient step towards what ultimately will be the way we address this? >> yes mr. chairman. >> thank you for your service. i know this is an immensely

challenging area that calls on all sorts of different resources and i'm proud of the way the fbi conducts itself in this area and i appreciate your service to this country. >> mr. chairman thank you very much for having me today. >> we will take a two-minute recess while the next panel gets itself out and come back into action then. [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> all right the hearing will come back to order. i thank the witnesses for

attending and participating this hearing. we have a terrific panel of witnesses. i'm delighted that you are all here. licensing of technical da images and consumer trademarks and patents. prior to being aappointed to his current position, mr. hoffman served as i director of global research and development strategy for boeing research and technology. which is the company's advanced research organization. we welcome him and why don't you give your statement and i'll

introduce and take the statement of each witness and we'll open it for questions after that. please proceed, mr. han. >> on behalf of the boeing company thank you for convening this hearing and i'm grateful for your leadership on efforts to improve trade secret laws pritzer privilege to be a participant on this panel and provide owings view of the challenges faced by america's innovators. boeing first began making twin float airplanes in 1915 from a small red boathouse in seattle and while much has changed since then our company remains unique in that we assemble test and deliver most of our highly competitive products right here in the united states. the final assembly facility for commercial products are located in the states of washington and south carolina that we have facilities for engineering and manufacturing in major components in multiple states including oregon florida california montana and utah. our defense and space related production is primarily located in the states of california missouri pennsylvania texas arizona florida and alabama.

boeing employs 160,000 people across the united states. since 2005 we have created more than 15,000 new high paying jobs by our record backlog of 5000 marshall airplanes. last year we paid $40 billion to more than 15,600 u.s. businesses which collectively support an additional 1.5 million jobs across the country. boeing's significant cogitation to the us economy today and for the past 100 years is a result of the ingenuity of our highly-skilled employees. innovating each step of the way they developed the most sought after products and technologies in the world. boeing's cutting-edge technology takes years to develop at enormous expense approximately $3 billion of research and development spent per year and the bulk of our innovation have trade secret. because of this trade secret protections are vital to steering boeing's intellectual property. boeing does not have one recipe for its secret sauce.

we have thousands of trade secret critical to maintaining our success. unfortunately boeing's valuable engineering and business information is at significant risk. once publicly disclosed rights and trade secret may be lost forever. investments along with a competitive advantage those trade secrets provided. of course boeing is on constant guard to prevent attractive -- the threat that are trade secrets but we cannot lock the trade secrets in a business and engineering information is stored electronically. the digital age has brought great gains and productivity but also has through a breach in our network through disclosure by one of our employees or partners or through an escape in one of our many suppliers facilities. free of trade secret thread is not a fear just for boeing. mel and small size companies that rely on trade secrets have as much or more to fear as big companies reticular if there is a --

their survival depends on a single service. given given the rescue as companies face every day more needs to be done to deter thieves from stealing our trade secrets. this theft is a crime and we must send a clear message that we will not stand by as thieves harm our business is hurt our economy and steal our jobs. we strongly support your efforts chairman whitehouse and also the efforts of ranking member graham to call attention to the issue and provide law enforcement with additional tools to deter trade secret theft. uniform trade secrets act provides a framework for state legislatures to adopt trade secret protections but the standards procedures adopted vary from state to state and jurisdictional issues make him but it matters. there's a real concern by u.s. companies that state action under the uniform trade secrets act may not in some cases the immediate enough to prevent the loss of the trade secret. we also acknowledge the need for companies to have the ability to take immediate action of our own in federal court to prevent the

loss of our valuable trade secrets on state courts and federal law enforcement cannot act quickly enough. therefore would also like to thank senator coons and senator hatch for introducing to defend trade secrets act and your efforts to establish the right for a company to file an application in federal district court in order to seize property proprietary property contained in trade secrets stolen from a company. we look forward to working with senator coons and senator hatch on this bill and supporting your efforts to encourage congress to act quickly to pass this important legislation. we are also encouraged that the new laws under discussion this past strength in overseas trade secret enforcement by raising awareness of the issue promoting cooperation between u.s. and foreign law enforcement and empowering our trade negotiators to encourage her trading partners to raise the bar. in conclusion we applaud your efforts to highlight this issue and strengthen u.s. trade secret laws and thereby help protect our valuable assets.

thank you for your time and hearing our concerns. >> thank you mr. hoffman. i appreciate your testimony. our next witness is pamela passman the president and ceo of the center for responsible enterprise and trade also known as create.org. create is a global nongovernmental organization dedicated to helping companies and supply-chain members implement leading practices for preventing corruption and protecting intellectual property prior to founding create in october of 2011 ms. passman was the corporate vice president and deputy general counsel for global corporate and regulatory affairs at microsoft where she has worked since 1996. and i have to say i have as a lawyer i am impressed by microsoft's legal shop particularly the pathbreaking

work they did to go after spammers and people who are coming after them on the net. this civil theories that dated that too probably 15 century english common law was quite impressive to see such ancient doctors applied to such a new problem and microsoft complaints in that area have set a model not only for the rest of the corporate sector of that area of law but even for government enforcement in that area of law. so you come from a good place and welcome. >> the thank you very much chairman whitehouse. again my name is pamela passman and i'm the ceo for the center for responsible enterprise and trade i appreciate the opportunities to testify. create is a nonprofit dedicated to helping companies reduce

corruption at intellectual property theft including trade secret theft. we provide resources to companies large and small that help them assess risks and develop strategies to protect their trade secrets and other ip assets both within their organizations and in their supply-chain. in today's integrated global economy companies that succeed in turning their knowledge and know-how into competitive advantage are the ones that will create new jobs and drive economic growth. increasingly companies rely on trade secret laws to protect this knowledge. through tremendous value of trade secrets also makes them prime targets for this theft. create recently teamed up with pricewaterhousecoopers to assess the economic impacts of trade secret theft and devise a framework for companies to mitigate threat. a copy of the create twc report is attached to my written

testimony. the report makes clear that the problem of trade secret theft is massive and a flex material damage on the u.s. and other economies. if we are to energize our economy by enabling innovative companies to protect their trade secret we need to focus on two key goals. first we need to incentivize companies to take proactive measures and implement best practices to secure their trade secrets on the front end both within their own organizations and in their supply chains. second we need a consistent predictable and harmonized legal system to provide effective remedies when a trade secret theft has occurred. trade secret of theft occurs to many avenues and companies need different tools and strategies to protect against each type of threat after. businesses need to be particular cognizant cognizant of risks that arise in their supply-chain. the growth in recent years of extended global supply chains

comprising hundreds or even thousands of suppliers has brought tremendous benefit and given many firms an enormous competitive edge. companies using extended supply chains often my share confidential and highly valuable business information with their suppliers which may be located in a different country with different laws in different corporate norms. in the face of this reality it is absolutely essential that companies implement effective strategies to protect trade secrets not just within their own four walls but with their suppliers as well. in the create pwc report we recommend a five step approach for safeguarding trade secrets and mitigating potential threats we suggest that companies one identify categorize their trade secrets and two conduct risk assessments. three com to identify the most valuable trade secrets to their operations.

four assess the economic impact of losing those secrets and five using data collected to allocate resources and strengthen existing processes for protection. create completed a pilot program with more than 60 companies and countries around the world that help them assess vulnerabilities and deployment procedures to mitigate threats. based on that pilot program we dislodged create practices a service designed to help companies improve immature their management system for ip protection and for anticorruption. unfortunately no amount of protection can completely safeguard all trade secrets from theft. companies often need a legal system that provides predictable enforcement and meaningful remedies against bad actors. recent high-profile criminal actions are promising and i applaud you chairman whitehouse and ranking member graham for your focus oman enforcement. i'm also encouraged by the

efforts of senator coons and hats to create a harmonized system for owners of trade secrets that will serve as a model around the world. the problem that happens overseas highlighted by senator -- is worthy of further study. governments and companies both play a role in improving protections for trade secrets and companies would benefit from taking more proactive role in discussing vulnerabivulnerabi lities and employing best practices to manage their risks. they also need an effective legal system to enforce their rights when their know-how has been misappropriated. thank you for holding this hearing and for giving me the opportunity to testify and i look forward to your questions. >> thank you. our next witness is drew greenblatt the president of marlin steel while -- steel wire says. he is on his 1998 and company exports baskets and sheet metal fabrications to 36 countries. it's been recognized as one of

the 5000 fastest growing companies in the united states for each of the last two years. mr. greenblatt serves on the executive board member of the association of manufacturers and is chairman of the war to both the national alliance for jobs and innovation and the regional manufacturing institute of maryland. he is also a member of the maryland commission on manufacturing competitiveness as well as the governor's international advisory council. we welcome you here mr. greenblatt. please proceed. >> thank you chairman whitehouse senator hatch members of the subcommittee on crime and terrorism. thank you for the focus on this critical challenge of trade secret theft and the opportuniopportuni ty to testify today. as you mention my name is drew greenblatt and i'm the president of -- based in baltimore city. we are the leading manufacturer of wire baskets and sheet metal fabrications. we make everything in the usa. i'm proud to report that we also export to 36 countries and my favorite country we export to

his china. we cater to the automotive medical pharmaceutical industries. i am here for three reasons. number one trade secrets are important not just for manufactures that are pigs but also small manufactures like myself. number two america's trade secret laws and policies must keep pace with today's threats which increasingly are not only interstate but international threats. number three manufactures need your help to effectively and efficiently protect and enforce trade secrets. we need to secure strong commitments in our trade agreements. like so many other manufacturers martin still competes on a global economy. investing in ideas and innovations in the hard work of our dedicated employees. when i bought marlin in 1998 we were local business and we made commodity gable baskets and

$800,000 a year in sales. leicester realm sales. last year ramos hit $5 million in sales and no have over 24 employees. we are proud member of the national association of manufactures. we average about 40 members -- in employees in the national association of manufacture and we have 12,000 members. i'm also the co-founder and chairman of the national alliance for job innovation. both are working hard to drink than the protection of trade secrets and intellectual property rights. we want to level the playing field for manufactures then businesses throughout the united states. trade secrets are more important than ever. they include things like drawings proprietary manufacturing processing software formulas. all of these things are very valuable to the n

town. now it can be done on a thumb drive and it can be sold to governments or chinese companies across the world. these cyber inkurgss are very threatening to us. we have lasers in our factory and robots. if they can hack into our system, they can manipulate our economy and hurt our employees, that would be devastating to us. the thing i'm most proud about,

we've gone without a safety incident. if some kmchinese hacker could manipulate our system, they could hurt our team. we spend so much money hardening our network that we could hire another unemployed steel worker to fill that job rather than spending all of this money on these activities. the good news is washington is starting to recognize this problem. we need washington to do three things, first of all, we need strong operational collaboration between the federal agencies and cannot have the silo approach we have right now. we need the fbi cooperating with customs and tsa. we need access to federal civil enforcement for trade secrets theft and well conceived legislation like the act recently introduced by senator kuhn and hatch. this will give us the ability to

pursue people in the federal level and not on a state level. finally, we need to meet the global challenge of trade secret theft with global solutions and good trade agreements to stop these thefts. in conclusion, chairman whitehouse and senator hatch, trade secrets are vital for manufacturers small and large of the america's trade secret laws and policies must keep pace with today's threats. manufacturers need your help to ensure that they can effectively and efficiently protect and enforce their trade secrets. i applaud your attention to this critical challenge and your focus on solutions with strong global partnerships and closer collaboration between federal agencies and government and business and with the improvements to these u.s. laws including federal civil enforcement, we could have a real impact. we desperately need it now. thank you for the opportunity to testify this afternoon. i look forward to answering your questions.

thank you. >> thank you, mr. greenblatt, our final witness is douglas norm an, the general counsel for eli lilly and company and serves as intellectual owners association and manufacturers subcommittee for intellectual committee. he served as 2002 co-chair of the intellectual property and antitrust task force for the united states council for international business. welcome, please proceed. >> good afternoon, chairman, mr. hatch and other members of the subcommittee. thank you for the opportunity to testify today. on an issue of great importance not only to my company and my industry, but to all segments of the american economy, eli lilly and company was founded and head quartered in indianapolis, indiana on may 10th, just last saturday, lilly celebrated its

138th birthday as a u.s. company. our mission at lilly is to discover and develop medicines that help people live longer and healthier and more active lives. our major areas of innovation include therapies for cancer and diabetes and mental illnesses. to fulfill this vision, lilly must rely upon intellectual property protection that includes patent and trademarks and trade secrets. unfortunately, like too many of america's leading innovator firms, lilly has recently been the victim of trade secret theft. a cross sector group of companies supports a harmonnized remedy for trade secret misappropriation. we're pleased to introduce the act that would accomplish this objective. we thank senators kuhns and hatch for their leadership and we're also encouraged by your work, chairman whitehouse and

ranking member graham to ensure law enforcement has the tools it needs to prosecute trade secret theft. we appreciate the efforts by senator flake to highlight the continued problem of trade secret theft that occurs abroad. the bipartisan interest evidence the by this committee's work is important to our shared objective of the effectiveness and efficiency for remedies against trade secret misappropriation. trade secrets are an essential form of intellectual property and part of the back bone of our information based economy, whether you're a major pharmaceutical firm or startup software company, your trade secrets are a big part of what sets you apart in the marketplace and protection is vitally important to maintaining a cutting eblg and keep workers on the job. increasingly the target of efforts to steal propriety information harming global

competitiveness. trade secrets are particularly vulnerable to theft given the rise in global supply chains and ram pant tech no logical advances that resulted in greater connectivity. a theft can come through cyber attack, voluntary or involuntary disclosure by an employee or joint venture partner. the act makes a trade secret a crime and the tools thieves use in their attempt to steal trade secrets are growing more sophisticated by the day, however. our laws must keep pace. the eea as a criminal statute necessarily has limitations and what we're very much appreciating the cooperation we get from federal law enforcement and fbi and department of justice have limited resources at the time and never be in a position to bring charges in all cases of trade secret theft. state laws provide an important right for trade secret owners to give a civil action for relief.

state trade secret laws develop and make sense at a time when misappropriation was largely a local matter. for companies that operate across state lines and have trade secrets threatened by competitors across the globe, the state laws are inefficient and often inadequate and consistent with how other forms are protected. trade secret theft is likely to involve the secret across state lines and swift action to protect the trade secret from being divulged. this is true when the theft is by an individual looking to flee the country. once the trade secret has been divulged, it may be lost forever and the harm from disclosure is very often ir rep perable. we're pleased that the act would address these limitations and provide trade secret oerns with the same ability to enforce rights in federal court as owners have. the breadth of support fort legislation from companies

focused on diverse areas such as software, biotechnology and semiconductors and medical devices and agriculture and apparel demonstrates the importance of a harmonnized civil remedy. the companies have already indicated support often disagree on other areas of intellectual property and protect but we're united on this front. we also look foerrward to worki with ranking member graham, for the tools necessary for trade secret theft. we look forward to working with senator flake and agree it's important to study ways for overseas theft. american companies are competing globally and the know-how is subject to theft everywhere. the national solution that provides predictable trade secret is therefore essential to our global competitiveness. the act will establish the gold standard for national trade secret laws globally and serve as an important base for international harm onization

efforts. we urge the committee to consider the legislation and for all senators to support it. thank you again for the opportunity to testify today and i look forward to your questions. >> thank you. let me welcome senator hatch and kuhns for the hearing. let me ask unanimous consent that senator leahy's statements be put into the record, which it will be without objection. let me ask each of you just very simply and quickly using your own words and your own experience, explain what you think the scope is of this problem for our country and its industries, starting with mr. hoffman. >> it is a tremendously big problem for us as a company and i think more broadly as an

industry. because of so much of our intellectual property is protected as trade secrets. and right now a lot of those are considering the changing landscape and sophistication of the means of which our intellectual property and trade secrets can be obtained. so anything that helps to improve law enforcement's ability to protect our trade secrets and allows us to be more secure in keeping those secrets so they are still valuable is very much appreciated by boeing. >> from your experience, the scope of the problem? >> with companies having almost 75% of their value and tangible assets, including trade secrets, the problem is quite significant. in the create pwc report we attempted to put a figure to the

magnitude of a problem looking at the different threat actors that are involved and looking at the fact that u.s. companies other advanced economies rely on distributed supply chains increasingly and looked at other economic activity as a proxy for this. since it's a figure that is very difficult to get one's arms around because companies itself don't know the magnitude of the trade secrets they have and as well as when there is a trade secret theft. we looked at other examples of illicit activity, corruption and money laundering and similar threat actors and came of a figure of 1 to 3% of gdp, quite significant. >> thank you. mr. greenblatt? >> this problem is out of control. we need your help. being attacked daily. what this will have if we can get this legislation enacted,

this will save jobs. in baltimore city unemployed steel workers will be employed. we are getting things stolen left and right and need your help. >> mr. norman? >> top that for clarity by the way. >> i'll try to add clarity myself. the issue is enormous. i can speak on behalf of form pharmaceutical firms that spend billions every year doing research and development. as we move f .. platforms and pharmaceutical platforms in hopes of reaching a site where we can apply for patents. what we're seeing are numerous instances where interlopers are stepping in and trying to steal our trade secrets on our formula prior to the time we can reduce those into a patent application. very often may take two or three

or perhaps longer -- two or three or longer years to do enough research to get to the single molecule that we'll be able to carry on into clinical trials. if we lose the trade secrets, and all of that formula, prior to the time we can reduce that to a patent application, the loss is ir revokable. we may spend 10, 20, $30 million building a chemical platform, rich diversity of a number of compounds and if any one of those is stolen from us prior to the time that we can obtain a patent on it, then it is lost forever. therefore the public and those citizens gets to enjoy the fruits of this research once it's gone. >> thank you very much. >> senator hatch. >> thank you, mr. chairman. >> i should say before you got here, your names were sung with

praise over and over again for the legislation, almost as if you were summoned here by those voices. >> that's always unusual. >> we're happy to have all of you here and you're also experts in your field. let me ask mr. norman to respond to this one. under u.s. law, protections for trade secrets are some of the most robust in the world. we're hoping to make those protections even stronger. but protecting trade secrets in numerous countries is a challenge it seems to me. facing many trans national companies, something i'm very concerned about. but now mr. norman and mr. hoffman, how will changes we make to u.s. law have an impact either positive or negative, on what other countries are doing

in this area and do we need to be careful here? mr. norman, you can go first? >> sure, thank you again senator hatch for the legislation that you have introduced. we greatly appreciate it. greatly appreciate your leadership. the instances of what it would do on a positive standpoint is that we believe that the legislation to obtain a federal trade secret remedy, particularly the ability to seek an ex-parte seizure of stolen materials and prevent further disclosure or divestment of that information broadly would be a very positive gold standard for future discussions on harm onization and trade secret laws around the world with our major trading partners. it's important i believe to get beyond the state trade secrets

laws, which are often a bit unwieldy and difficult to enforce across state lines, simply because the procedures aren't always set up to work very well along those lines. with a federal stand dard, with the appropriate type of control, i believe we can show the rest of the world what the goal stand dard would look like as far as giving us the rights on our own to take a private civil action and protect our trade secrets. >> thank you. >> thank you. care to add anything? >> i totally agree with my colleague. any opportunity for our trade negotiationers to be able to point to improvements in trade secret law enprotection in the united states and thus strengthen the laws outside of our borders with global companies such as ours will be very helpful to protecting our trade secrets. >> let me ask a question for the

whole panel. trade secrets also seem to be a lot more difficult to protect than patents. i understand there may be industry best practices and model policies but i imagine these vary widely based on information you're trying to protect. so i'm very interested in as a practical matter how do you determine what measures are reasonable to protect your trade secrets? >> well, we actually base that upon the reverse engineering capability of the innovation but once we decide to go the tad secret route, we have to have the processes and systems in place in order to assure that those trade secrets are secure. as mentioned previously, 60% of what we sell we buy from others

as a company. so the sharing of our intellectual property across our supply chain domesticically and internationally is an area we have to be careful they have the same type of procedures in place and protect our intellectual property at the same level. >> yes. >> in our work with companies around the world, we found this is something that's not very mature. we laid out a five-step framework for companies to begin to get their arms around how to best handle their intellectual property. first being able to categorize what you have and where it is in this is critical. a small company or large company with global operations and also recommend that companies conduct a risk assessment and identify who are the primary threat actors and who's interested in their trade secrets and intellectual property and potential vulnerabilities in their policies and procedures and internal controls really

looking inside of their company and in their supply chain and identify the trade secrets with the greatest impact on the company's operations and business. also looking at the economic impact of a loss of a trade secret, understanding the magnitude that will have on their business. finally taking all of this information and allocating resources to better protect your trade secrets, thinking of it as an investment, not just a cost. >> senator kuhns. >> thank you senator whitehouse, thank you for chairing this hearing and for the great work that you and senator graham have done to make sure that we protect america's intellectual property. we have heard from an array of witnesses today, the compelling picture of what's at stake here of the $5 trillion of value, held in america's intellectual property and particularly in the form of trade secrets. we have criminal law, prosecutions for the protection

of trade secret theft, economic espionage act is a good beginning but as we've heard from you today as witnesses there are significant gaps and i applaud the chair today senator whitehouse and graham for their hard work in improving efforts to deal with that. the department of justice has many priorities and limited resources so it's unsurprising to me that they were just 25 trade secret cases brought last year before he leaves, i need to say my profound personal thanks to senator hatch for being a great partner and good leader on this issue. >> same here, this young man has really done a really great job. >> even got a young man out of that. >> as a former intern, i remember i look forward to passing a bill with this nice young man, when i was mostly

passing cups of coffee. it is a tremendous sense of satisfaction that i've got through working with senator hatch and with eli lilly and number of other companies represented here today and i'm grateful to the national association of manufacturers and the coalition for the protection of trade secrets and protect trade secrets coalition for their very able and valued input as we crafted this bill and tried to get to a place that makes sense and that can help stem the gap in u.s. law to ensure we really vigorously defend trade secrets. let me ask some questions of the panel if i might. first, if i might mr. hoffman, boeg does business, most of the threats original nat from other countries around the world. can you speak to how respect for trade secret theft varies around

the world and how our laws domestically and what we might enact could influence the protection? >> i would be glad to. thank you for the question, senator coons. >> when you look at trade secret theft, it hurts boeing and other companies. but i think the best thing we can do is set the standard and provide the tools necessary for efficient and effective protection of trade secrets and get those standards to our trade negotiators to press the issue with their counterparts. >> i couldn't agree more and appreciate that response. if i might, mr. greenblatt, from marlin steel, a small manufacturer that has grown significantly. trade secret threat can pose a existent shal theft in a thief succeeds in stealing your secret

sauce, it could mean the end of the business, but for a firm like marlin steel, it could mean the end. securing your trade secrets and asserting your rights in court can also be significantly expensive relative to the size of your business. i saw this in my own experience. can you speak to how existence of a federal private right of action would reduce the cost of protecting trade secrets and have woun uniform standard might threat then your ability to go after those that steal your trade secrets. >> the defend trade secrets act is well drafted and will help us go around the state system, which is very inefficient and very slow and it's very expensive. lit companies can't afford having lawyers in five different states on retainers trying to go

after a bad actor. it would be much more elegant if we could have a federal jurisdiction on this matter, and much more efficient. the coon/hatch bill would tremendously accelerate our ability to stop bad actors and get good results. >> thank you, if i might mr. chairman, one last question of mr. norman. >> thank you again for your hard work and leadership and in particular one of the sections we worked on was the exparte injunkive relief. can you explain why it is important to eli lilly or others? >> yes, sir. we often run into situations where we find that an ex-employee has left and is going to work for a competitor and we finds out something such that in once they turn in their lilly issued computer that there's been a download of a

number of documents which contain highly confidential lilly trade secrets. these occurrences almost always happen on a late friday afternoon. and therefore, the best part i believe about the ex-parte seizure aspect of the bill that's currently pending is the fact that we could go to federal court and in one action kick out an ounce of prevention rather than worrying about a pound of cure a week or two later when we can get the indiana state courts involved or new jersey state courts involved or perhaps both indiana and new jersey state courts involved, leading to a whole lot more expense and whole lot more risk because we may not be able to isolate and seize the stolen materials as quickly. and therefore a federal cause of action before we can go to a

single court and institute the power of the federal court system to seize stolen materials would be extraordinarily helpful in those situations and i thank you for your leadership on this bill. >> thank you, mr. norman and miss passman, it's 150 to $450 billion a year trade secret theft is a big deal. your leadership is strengthening the criminal law protections for american countries is adds mirable and i very much look forward to working with you to pass the two bills in tandem in a way that can strengthen for millions of americans and thousands of companies. >> thank you. >> now lindsey graham. >> protecting the nation what i think is an inevitable cyber attack on a large scale, will we do something in time to diminish the effect? that's one problem the nation faces from criminal terrorist

enterprises and potentially nation states and the other is the private seng tore trying to do business in an inner connected and complicated world. one of the things that america has had going for her is that we're pretty innovative and always thinking outside the box. and other people pretty good at copying. from a criminal point of view, we're trying to put teeth into this area of the law. mr. hoffman, when you're overseas representing boeing on trying to do a joint venture, what do you worry about the most? if you're going -- some countries require you to have a 51% partner. is that correct? >> it varies by country. but in some cases you can have a majority share and some cases you can have a minority share. >> but you'll have a forced partnership based on the host country's laws. >> whatever the laws are, typically it is some type of partnership, yes. >> these partnerships are created by the host country, not

of your own choosing, to do business you have to have a local partner for lack of a better term. >> in general, yes, sir. >> how does the private sector and the government interact when there's a trade secret theft or intellectual property theft in a foreign country? what more can we do and how does that system work? >> i'm not an expert in those areas but i can tell you that we are very globally spread company and when we make the decision to go into a country and do business, we study the laws and how we need to establish ourselves as a business and are prepared to defend our trade secrets as best we can, knowing it's going to be a different environment than we have here at home in some cases. >> mr. norman, when you do business overseas and have a local partner, what is your biggest concern? >> the biggest concern of course

is losing our trade secrets and losing the value of all of the investment that we put in -- >> having a company across the street from where you're located doing exactly the same thing you're doing? >> right. that's always an issue and therefore we're quite sir couple inspect about the type of research and development or disclosure we make in many of the partnered institutions where we do business outside the united states. >> if we had laws on our books that would hold a country or individual acting on behalf of af nation state liable for engaging in that theft, do you think it would make business easier for doing overseas? >> i believe it would if we can use that by the standard in which we could get other countries to change laws and harmonnize them with the way we would like trade secrets protected, yes. >> is it fair to say in the international arena, when it comes to protecting trade

secrets, many in countries it's a wild, wild west. >> there's definitely a different threat levels out there and i agree with my colleague that we choose carefully what type of work and intellectual property we do outside of the united states. >> the more we can get this right, the more opportunity to create jobs here at home and abroad. is this an i am pediment to job creation? >> i believe any time we lose the fruits and labors that our scientists and engineers put into developing drug products it is a huge jobs issue. we employ thousands of scientists and engineers who work years trying to develop a drug product and if a competitor can take that away from us right before we cross the finish line it's devastating. >> i want to thank chairman whitehouse, never known any one more knowledgeable. i look forward to see if we can get our bill finished.

>> pleasure working with senator graham on a variety of issue and thank him for his leadership. senator flake? >> thank you for being here. i apologize for not being here earlier. i hope i'm not plowing old ground here. but i'm concerned about the rate at which trade secrets are being stolen internationally as opposed to domestically and trying to get some sense of that. i've introduced legislation and future of america innovation and research act which allows the owner of trade secret to bring action if the bad actor is located abroad or acting on behalf of an enty. miss passman, there was a recent rereport that cited a survey that was asked to comment on attempts to compromise trade secrets information or the

nationality of the primary beneficiary of the theft was known 70%, foreign individuals firms or government that were those beneficiaries. do you see this as a growing problem that the foreign nature ever the threat? >> certainly in an integrated economy, we're going to increasingly see the challenge for trade secrets. you know, american companies benefit from having participate in these global supply chains and as they move their business overseas, whether it's a supplier overseas or a customer overseas, they need to understand the global environment in which they are working. we're working with companies around the world, including with companies in china and other emerging markets that also want to mature their systems and better protect intellectual property. but we advise companies to understand the environment that

they are entering and to put business processes in place to better protects and manage intellectual property inside of their business as well as with their supply chain. >> thank you, mr. hoffman, your testimony you note that one of the fi cases doj prosecuted under section 1831 was against the defendant who stole trade secrets from boeing related to the space shuttle and the delta 4 rocket to benefit a foreign entity. you also seen an uptick in this foreign activity? >> well, that particular case the gentleman was charged with stealing our trade secrets, there was no particular focus on what happened to those. in fact, once it leaves, of course the damage has been done. i might defer to our department of justice colleagues regarding those issues. >> all right. what is boeing specifically doing to combat this? what measures have you taken --

sorry if i'm plowing old ground here. >> in terms of our overseas presence? >> yes. >> we hold our subsidiaries and our relationships with partners to the same level we have in the united states. the complexities are that we're in a different country and we have to adhere to their laws and they may not be as harmonized and effective as ours. >> do you think it's important to have legislation that protects both domestic and foreign trade secret theft, do all of you agree with that? good. we'll proceed with the legislation. i appreciate -- >> everybody nodded for the record. >> okay, good. >> if you can do that more awedably next time that would be great. thank you for your testimony. >> let me ask one last -- maybe two last questions of everybody. there's been some reluctance on

the part of corporate victims of trade secret theft to engage in the criminal law enforcement process, one of the things that we've heard has been that taking that step rather than simply trying to bury things could actually make matters worse as the trade secret rattled around through the case and became mor secrecy and its advantage. is that something that is a real concern? are there any other concerns we should be looking at in terms of things having to do with the process of a criminal case that are deterring criminal victims from taking advantage of that means of redress?

mr. norman? >> yes, chairman whitehouse, that is very much a deep concern we have as we look at the ken of criminal prosecution arising from the disclosure of trade secrets outside the bounds of our corporate entity. and i applaud you particularly for the language that you have in your legislation concerning the ability to protect the trade secret, even during the time that the court is reviewing. because it is often difficult to question witnesses. it's very difficult to come forward with documentation. it's very difficult to seek expert testimony that can help prove that a theft has occurred if you can't talk about specifically in open court what the means of the disclosure was

or what the subject matter of the disclosure was. because once it's made its way into open court, it is no longer a trade secret, and you lose it anyway. and so, many of the mechanisms that have been proposed and the mechanism in particular that i have seen in your legislation i believe is a great leap forward in helping us move into an arena where we could help prosecute these cases much more readily than we've been able to in the past, and i thank you for that. >> final question for mr mr. greenblat. you indicated earlier that one of the things that we as senators should focus on is improving coordination among the agencies. you used the term silos. when i go out to the unofficially termed fusion centers, if you will, where the fbi, for instance, leads one, and homeland security, and they've got all the agencies

there, they've got everybody represented, that's all up on screens, it looks like a model of interagency cooperation, at least at that level, obviously you had a different experience down at the level of the attacks on your company and the experience that you had. could you articulate more specifically exactly what your concerns were about the silo problem and the problems of coordination? >> so, for example, if we identify -- if the fbi identifies a bad actor, we would like that that company can't import things into america and the customs, you know, agency halts their products from coming into america. the only way we're going to get their attention is by the wallet. and if we could stop them from shipping into the greatest, biggest economy in the world, we'll get their attention. >> okay.

so you're not -- your experience wasn't that on the investigative side there was discoordination. rather that, when a case is done, you should be able to have as a remedy that the company doesn't get to import goods? that's an additional penalty for them? >> precisely. we just want everybody to work together and quickly resolve these top ticks, and we just can't have each agency in their own little zone. we have to have everybody working together and collaborate as much as possible, and then we have to stop these bad actors from bringing their parts into america. >> all right. well, let me thank all of the witnesses for coming in. this is a very helpful process for us. we have a lot of things going for us with this legislation. for one thing, it's a real issue. it's causing americans to be hurt in very concrete and meaningful ways. second, as you've seen today,

couldn't be more bipartisan. so i don't see us getting dragged into the partisan turmoil. we're following regular order and having proper hearings and so forth so that we can pull this together and move it forward. but i hope very much that we'll be able to make progress, and the advice and the counsel of all of you who are here -- some of whom have been very helpful in the preparation of the legislation as well as in testimony about it -- is something that we're all very grateful for. i think senator flake, senator hatch, senator kuehne, senator graham and myself have put effort into addressing aspects of this problem, and i'm confident we'll work together to solve this problem so that you have one less thing to worry about, and you can focus your considerable skills on making the best products in the world and expanding your businesses. thank you very much. the hearing will stay open for an additional week for anybody

who wishes to add anything, but subject to that, we are adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

>> glenda greenwald is the reporter who broke the story of the nsa domestic surveillance programs with glee -- leaked information from and where snowden. tomorrow he will be our guest on washington journal to talk about the story and his new book, no place to hide. edward snowdon, the nsa command u.s. surveillance state to live and call in at 9:00 a.m. eastern on c-span. >> convergence. you use that word throughout your book. what does it mean? >> it means that throughout the country they're is a convergence of left right agreement on very important things. that is being pushed down by their corporate group on both the democratic republican party and their leaders.

we start, for example, with public opinion around the country. does not matter, red state cobblers state. they are upset with the patriot act restrictions on privacy and civil liberties and free speech. they're is a big convergence. they don't like subsidies, handouts, giveaways to corporations on the backs of tax, especially the wall street bailout type. no crooks were prosecuted and put in jail. they want a crack down on court -- corporate crime. big business gets away with a lot of stuff. is the kind of main street versus wall street nexis. they don't like empire. right, left, they do not like empire. they do not like is pushing around all over the world. losing our soldiers. they come back traumatized and wasting trillions of dollars while all these people around the country see crumbling public-works. america needs repair, and we are blowing it up oversees the trillions of dollars and not

repairing. that is a convergence issue. >> ralph nader on creating left- right alliance is the battle wasteful government spending some and added:00 on c-span q&a. >> today center marco arubia made a proposal to help younger workers save for retirement including making their retirement savings program for government workers available to anyone , raising the retirement age for younger workers, and eliminating payroll taxes for those over the age of 65. senator rubio outlined his plan at the national press club in washington. this is an hour. >> good afternoon, and welcome. i am an adjunct professor at the george washington university school of media and public affairs, a former international bureau chief for the associated press and the 107th president of the national press club.

the world's leading organization committed to our profession's future through our programming with the events such as this well fostering of free press worldwide. for more information about the national press club, please visit our website. on behalf of our members worldwide i would like to welcome our speaker and those of you attending today's event. our head table includes guess of our speaker as well as working journalists or club members. if you hear applause in our audience, not that members of the general public are attending, so it is not necessarily evidence of a lack of journalistic object to the. i would also like to welcome our c-span and public radio audiences. you can follow the action on twitter. we will have a question and answer that will ask as many as

time permits. it is time to introduce our head tables. i ask each of you to a stand briefly as a name is announced. from your right, jonathan sunland, political reporter for bloomberg news and a former national press club president. pomelos sanchez, washington producer, correspondent for univision. robbers schlesinger, managing editor, opinion, u.s. news and world report. andrew bakes, resident scholar american enterprise institute and a guest of our speaker. marilyn thompson, washington bureau chief for thompson riders a macias sun says, partner and co-chair, government affairs practice group. a guest of our speaker. vice chair of the npc speakers'

committee, a correspondent for "usa today" and a past president of the national press club. skipping over our speaker for a moment, the speaker's dining member who organized this luncheon. thank you very much. senior research fellow george mason university. chief correspondent "washington post". betsy fisher martin, senior executive producer and managing editor of political programming for fec news. susan page, washington bureau chief, "usa today". larry lippman, executive editor for state news at the aarp bulletin and passed in pc president. [applause]

marco rubio has served as florida's junior senator since january 200011. a native of miami, he previously served in the florida house of representatives from 2000 until 2008 to during which time you serve as majority whip, majority leader, and speaker. first term florida senator mark arubia is one of the many republicans positioning themselves for the presidential primary. this past sunday when asked whether he thought he was ready for the presidency he said i do. analysts point out an obvious advantage. his potential as a son of cuban emigrants to appeal to hispanic voters who. he was involved in passing

comprehensive immigration legislation in the senate. the immigration bill did not endear arubia to the tea party line of the republican party. he has been outspoken in issues that are important. for instance, arubia declared the war on poverty and failure. he would subsidize private businesses to pay higher wages and do away with the earned income tax credit. internationally he supports an activist u.s. role, stark contrast to the isolationist view point of another potential gop presidential contender, senator rand paul arubia said he should be more involved in china, north korea, venezuela, cuba, more involved in the obama administration. and he said the united states should punish russia for its actions in the ukraine. today he will discuss retirement

security, including his suggestions about changing social security and medicare and how to make it easier for young americans to save for retirement . please join me in welcoming to the national press club senator mark arubia. -- marco rubio. [applause] >> thank you for having me. it's my first time here in the three and a half years i served in washington. all of you would be here to talk about initiatives. let me begin by speaking about the night i was elected. the culmination of a year-and-a-half. a was a pretty difficult campaign. from my mother that i wasn't

really just an election. as a promise of the country should come to love. when she and my father came to america and 1956 the camera a little more than the dream of better life. but even with the constraints this rural often on. the service jobs they took were not glamorous, but their artwork was dignified. the love my parents turn what they wanted most, life of security and a great american middle class. that night as she stood on the stage of me what she saw was the promise of america. just a few decades removed from our party struggle her son had been elected to the senate of the most important nation in the history of the world. the number of never been possible without america and ordered iran possible without the years of sacrifices my parents made for me.

sacrifice that allow me to pursue my dream. because he sacrifice some much i could pursue my dreams. my father still worked late nights a first job as an attorney. and even then he still wants to work. significant savings our pension. it was social security and medicare that allowed them to retire with comfort and security . the pity of care he needed to die with dignity and surrounded by the people of. my mother for chile is still with me, but in recent years for health has declined as well.

not only extended her life of preserve its quality. social security continues to provide for financial needs, as she now lives with my sister and her husband and the very house my parents moved us to almost three decades ago. my mother was blessed to of come to a country where a life of hard work could be rewarded with a dignified retirement. now almost four years and my service in the senate is a question and enters my mind from time to time. what would like to have been like for me before,. in 2006 rather than 1956. get paid or committed to the middle class. i believe the american dream my

parents lived still possible. but among too many of our people there is now this nagging sense that achieving as become more difficult than ever. the hope of a stable and secure retirement. the troubles of the last few years have forced millions to build retirement on hold indefinitely. it has even forced some to cut their retirement short and re-enter the workforce. each of the three legs of our traditional retirement stole, personal savings, pension, social security is wobbling. and if we do nothing each of the three will likely cease to exist as we know them well before my generation retires. the instability of each is caused by a variety of factors. they all share one common cause of the gay. the lack of sustained economic growth this prevents wages from

keeping pace with costs affecting the ability are middle-class to save. it also affects the ability of states and companies to fill the pension problems. as earnings stall and unemployment and underemployment spreads it contributes to the erosion of the tax revenue needed to finance social security and medicare. economic stagnation, and especially staggering blow to the retirement prospects of those middle-aged and younger. americans born after 1955 have a good deal more debt than that generations before them. late bloomers and generation actors who already have low levels of assets suffered significant losses during the recession. now, we hear financial experts talk all the time about how we should save for retirement. people were maxima out their retirement and savings for the

future that wonder how the afford to do. my car mortgage payment costume loans, the grocers in the kid school tuition, at that summer living paycheck to paycheck and the smile was rising in value and we could one day selig and use the profits to provide for us in earlier years. now we have also have lost much of their value. even for those a will to put much some money aside for retirement persistently low interest rates, about as useful. our only hope is a social security will give them enough to get by. this charlie truth of that with an aging population, a chronic fiscal responsibility, social security trust fund is driving

out. we will be insolvent by your 2033 taken together these factors have created a real and looming crisis. for my generation and especially for my children's generation the future retirement in america is very much in doubt. i turned 43 years old later this month, although i feel 44. if nothing changes by the tar reached for retirement age for social security and medicare was been solved years. not a doomsday scenario concocted to spur action. a mathematical certainty if things remain unchanged. along the way to address this the harder it will be a fix and the more destructive those fixes

will be. there appears to be no urgency. to many politicians, quite frankly in both parties lie in wait for their opponents to raise is true so they can pounce, so they can accuse them of wanting to take away medicare's of security. i have no doubt that my suggestions here to there will be used against me to try and convince seniors, contains the benefits that works hard for. it would not be the first time that such attacks and then hurled in my direction. let me take a moment to address those year now. first my mother depends on the social security. i would never and will never support anything millard my mother retirees. second, anyone who is in favor of doing nothing allows social security and medicare, i have

come here today share a few ideas about what can be done to reverse our retirement crisis. an agenda that cuts government spending and spurs economic growth is the single most important step toward stabilizing the three legs of the retired tool. we aim to create economic growth and as such combined to form step one of my plan. what these reforms is done as a target of federal anti-poverty program, higher educational system, the factors inhibiting a secure retirement and the policies keeping us from innovating modern jobs will all lead to growth which will help americans earn more and save more. no plan to avert a retirement crisis will work without robust and sustained economic growth in the years to come. but while growth is essential

growth alone will not be enough. for the retirement system we have in place simply does not line up with the needs and the reality of our modern postindustrial economy. in this new century most people will live longer and voluntarily work longer, and many people will change jobs countless times, often in business for themselves are working for companies that did not offer retirement savings plans or pensions. their retirement programs must be modernized and restructured to address the new economy that is here to stay. today am proposing we do so by three broad reform goals. the first is to make easier for people to save more and work longer. the best way for americans to guarantee security and retirement is to gradually build a nest egg of savings. plan carefully, starred as far enough in advance, simply no substitute for this method in

ensuring a comfortable retirement. social security was never designed to be the sole source of retirement come. it was designed to be a supplement. for people in my generation, it will be the really. that can be tricky. the start putting a web money can be check your. and as growth has slowed in 97 left to languish saving a started to look like a luxury rather than a standard practice. instead of -- in fact, 36 percent of americans of less than a thousand dollars saved up for retirement. this problem, by the way, is especially prevalent among african-americans.

one study last year found that 76 percent of americans are living paycheck to paycheck. making matters worse, the nature of work in america is rapidly changing. yet our retirement programs and savings plans have failed to address to adjust accordingly. drop most of the last century you can leave school, go work in a local company factory, stay there for 50 years and then retire with the pension. our retirement programs originally built with this sort of reality in mind. * unchanged. today there are 75 million americans working for employers that an offer retirement plan. those that to have access to an employer plan probably won't for their full career. that is because the average worker's stays at least up for only about four and a half years let's call him the average worker. 91 percent of the money and

generation says the unexpected stick around each up to three years. this means that they can have 15 to 20 different jobs over the course of a career. many americans figured the unpredictability of modern careers is made employer sponsored plans a thing of the past. even with these plans many employees and not made aware or choose not to go. given this is no surprise that a burst into people ages 3254 believe that won't have enough of the bank. ironically and unfairly they have to worry about this retirement savings and investment plan. additional employer sponsored 401k allowing federal employees to save pretax money for retirement. one of the most efficient saving

plants in america. it charges fees which are a fraction of those in most private defined contribution plans. that allows beneficiaries to save more. here's the twist of irony, members of congress who are employees of the citizens of the united states have access to a superior savings plan. many of the american people who are often left with access to a planned all. i propose we give americans to do not have access to an employer sponsored plan the option of enrolling in the federal thrift ratings plan. opening congress's retirement plan to the american people will allow us to bring the prospect of a secure, comfortable, and in the pen of retirement to the reach of millions of people. at after dealing with the savings crisis way to ensure that older workers have the ability to work as long as anyone without being punished for.

as the tax code currently is written those it keep working past retirement age continued their pay social security taxes. this encourages some seniors to put the work force before they would otherwise. in order to remove this disincentive we should eliminate the 12 percent social security payroll tax. the seniors have already paid their fair share, and we should not punish them for choosing to keep working rather than immediately cashing in. a salary savings by letting them keep more of their own money. could also make older workers more attractive to employers. eliminating the social security payroll tax for seniors will likely result in older americans choosing to work wonder.

seniors who choose to keep working will improve their personal retirement security and decrease dependency on federalist programs. this payroll tax on older employees is not the only way we discourage seniors from voluntarily continuing to work. those who choose to claim the benefits early while they keep working are subject to what is called the retirement earnings test. under this test benefits are reduced to approximately $0.50 for every dollar a person turn the ages of 62 and 65 burns in excess of $15,000. this essentially equates to a 50 percent tax on benefits on top of all other taxes being paid to its is the payroll tax budget. americans were credit until the age of 62 and then into retirement before the start incurring this panel that. it does not save us any money

because when a senior hit by this tax finally retires, the benefits are hiked way up to make up for any loss, as. the benefits in the being mostly the same with or without the retirement earnings test avoid paying the 50 percent tax on their social security benefit. we should eliminate this test altogether. early retirees by 5%, a significant increase for reform that has no long-term budgetary cost. why should we be pumping the labor force of more workers? the reason that a senior stops working, we won't have enough

jobs for young workers. it's an interesting theory, but it's not our works out and practice older workers actually boost the number of jobs for younger workers. the employment rate for older workers rises these reforms will help more people save for retirement and allow more seniors to choose to work on the this will foster a balance retirement and the fewer of america -- your american sole dependence of security. all social security should not be our only source of retirement income, it must remain a significant supplement to our post-retirement income if we are to prevent their retirement crisis. our second reform goal for guaranteeing a secure retirement is to enact reforms to save

social security for future generations. the basic rules of failed to adjust accordingly. rather than pastor for many in washington think the answers to double down the current program. simply confuse more money into the. but failing to modernize social security is eventually going to lead to an outcome we cannot buy our way out of. my answer is to build this outdated system in the substance wordy of the 21st century and that's designed to sustain all seniors and last for generations this requires taking into account modern realities may now choose to work well past the age a return. if you have any doubts about that i encourage you to come see the united states and of work. that's not going to go over well

. people are working longer because people live and want it. if he turned 21 and a hefty 40 a chance of living up to the retirement age is only about 55 to 60%. she turned 21 today your chances of reaching retirement age around 80 percent. this is good news, what this means in practical terms is that whenever a record number social security beneficiaries. for his beneficiaries are living in another five to ten years longer the social security release recipients. increasing the retirement age by two years from 65 to 67. in the long run this simply won't work. the answer is to gradually increase the retirement age for future retirees to account for the rise in life expectancy. if reaction we can do this without changing the retirement age for people who are currently over the age of 55. we also need to look how we

calculate initial benefits. we need to provide a stronger safety net for those of the bottom of the income scale. they leaned heavily on social security to help the through. grandmother still does. many to make sure the seniors like my parents who work low-wage jobs will lives aren't confined to poverty in old age on the other end of the spectrum are retirees with very high incomes. for wealthy retirees month in social security benefits is a less significant portion of the monthly finances. the answer is to reduce the growth of benefits for those upper income seniors while making the program even stronger for low-income seniors. this is the cut. it is simply a reduction in how fast the benefit will increase for wealthier retirees. it is one of the best ways to

save the program. her third and final goal was a most difficult, saving medicare. as i stated earlier medicare is deeply personal to me. when my father got sick medicare pay for his numerous hospital stays. in his life in comfort and dignity by paying for a sauce is care. like most 83 year-old mother has several age related elements, but without the quality of care that medicare paid for i simply cannot imagine what her life would be like. ..

>> talking about medicare reform was a third rail of politics. it seems more people were willing to discuss serious ideas about having to save medicare. any serious effort to save medicare needs to first take a hard look at recent reforms and