>> let's give a huge round of applause to the brave men and women who have told their stories. [ applause ] >> many of them are here with us today. this is the reality, and what's at stake is today, every day this year, 1,200 americans will be killed by tobacco. and for every person who dies, there are 20 more who are living with disease, disability or disfigurement from tobacco. americans, whether you smoke or not, are paying the costs of smoking, not only in the human lives, the productivity that we're losing in our communities, but in $200 million a year -- $200 billion a year, excuse me, in health and productivity costs. starting today, americans will see the reality of smoking as

doctors and family members, patients and loved ones see it. there's good news. most americans who have ever smoked have already quit, so we're making progress. and most americans who smoke today want to quit. more than two-thirds want to quit, and most try to quit every year. ads like these and support services greatly increase the likelihood that they will succeed in becoming tobacco-free. if you smoke, quitting is the single most important thing that you can do to improve your health, and it will also protect the people around you. children whose parents smoke are twice as likely to smoke themselves, and virtually all children who live with a smoker have detectible levels of smoking toxins in their bodies, even if people don't smoke in

their homes. if you smoke, quit. if someone you love smokes, help them quit. while most smokers quit on their own using quit lines, medication and counseling can double or more than double your chances of succeeding. so, again, if you smoke, quit now. and if you want help, you can call the national toll-free quit line at 1-800-quit-now or visit www.smokefree.gov. i want to again thank the department of health and human services, secretary sebelius, surgeon general regina benjamin, and most of all, the courageous men and women who came forward to share their stories with america to protect and help other americans get free of tobacco. we can now, i think, take a few questions? [ inaudible ]

>> tom with abc news, for both of you, please. i wanted to ask you about the states. you've taken a major step forward on the federal level. the states may not be. we've done some looking at the figures, and the $25 billion they're getting from the tobacco only 2% is going to antismoking. is that enough? should the states be doing more? >> the centers for disease control and prevention publishes guidelines for what states should spend on tobacco control in order to reduce the use of tobacco. no state reaches the recommended level of funding, and some of them are at single digits in terms of the proportion of the funds that they dedicate to tobacco control. there are some people who have said, well, the reason smoking isn't going down so much is we've reached some kind of irreducible minimum. that's simply wrong. the states that have continued to invest in tobacco control have seen a continued, steady decline in tobacco use rates. california, for example, is down

to about a 12% tobacco use rate, and some communities in california are down to the single digits. so, more progress is possible. a national campaign does not replace state and local efforts, it supplements it. one of the things that we do at cdc is to host a media resource center for antitobacco othe are so that state and local jurisdictions can choose with their own resources to extend that and run them more. we also have to give thanks to some of the stations that will be running these ads free, in addition to the paid ads. we expect to get at least one for every $3 we spend in donated ads. next question, i'll stop and i'm joined by dr. tim mcafee, directors of smoking and health at the centers for disease control and prevention. next question?

did we answer all of the questions that clear? >> would you remind us a little bit more, should the states be doing more? >> we understand that the states are under considerable pressure fiscally. at the same time, we know that tobacco control is a good buy. there's a good return on investment in terms of driving down costs. so, any state that wants to see fewer people dying and lower medicaid costs should be seriously considering increasing their investment in tobacco control. >> and i would just add that the purpose of the surgeon general's report is to give good science and evidence and facts out so that policymakers, communities, individuals can make good decisions and they can make good policy decisions. and our hope is that the states would try to reach good decisions, and we also encourage them to look at the cdc levels of funding. but it's left up to the states, and our role is to give them that information so that they can make those good decisions.

>> thank you. next question. >> are you going to be able to run some of these ads in spanish and in spanish television stations and radio? >> thank you. >> yes. one of the ads is in spanish, and we, as we do further ads, we will continue to work on providing these for different communities within the u.s. one of the ads that we didn't show is on secondhand smoke, and that is in both english and spanish, and we have the person who taped that adhere with us, showing, basically, that any time people smoke around someone with asthma, they're much more likely to have an asthmatic attack and end up in the emergency department or even hospitalized. asthma is more common in hispanic communities, and so, that's the ad that we targeted to that community. yes. >> what kind of -- [ inaudible ] -- history about this campaign?

and have you thought about how we in the public health community can help? because obviously, they're very important to do and it's possible that the tobacco industry will react in ways similar to the ways they reacted to the later ad of cigarettes. >> we'll see what the industry does. our focus is bringing the reality to the lives of americans who smoke in order to save lives. i think we can expect that some people will say, why are you spending money on something like this when we have such severe fiscal pressures? and yet again, tobacco control is a best buy. the amount we're spending is less than two days of the advertising budget of the tobacco industry for our whole year, and yet, we think it will have a major impact. and where ads like this have been run, we've seen a steady decrease in smoking. so, not only do we think they pay for themselves economically, but more importantly and most

importantly, they save lives, and that, ultimately, is the answer. >> doctor, since so much smoking initiation occurs in the military, will these ads be made available to armed forces network? >> that's a great question. i will follow up on the suggestion. >> and i would just add, certainly, as was mentioned, all of these ads are being placed in the cdc's media resource center. so, from that perspective, they will most assuredly be made available. and we would love the opportunity to make sure that these are seen both by people in the armed services as well as our veterans. >> i will comment that as part of the affordable care act, there is a national prevention strategy for the first time. 17 u.s. agencies have joined together to focus on prevention, including tobacco control, and there has been a real embrace of that within the armed forces,

which is focused on fitness, whether it's smoke-free environments or ensuring healthy foods for our forces. so, it's a good partnership and we'll follow up. other questions? all right. well, i want to thank everyone, and let's have another round of applause for the people who came forward. [ applause ] >> in the past, there's been interest of the media in interviewing some of the people, and we'll make that available. we also will be working with some of the local media outlets from the areas where the people who came forward live to encourage additional coverage. we know that every bit of coverage about tobacco use that shows that tobacco kills saves lives. so, thank you all very much.

[ applause ]

>> as this event comes to a close, there was also a report about tobacco use among youth. we showed a clip of it at the beginning of this event. you can see it in its entirety if you go to our website. go to c-span.org. they would wear garments made of home-spun cloth. and this home-spun cloth would be much more rough textured, would be much less fine than the kinds of goods that they could import from great britain. but by wearing this home-spun cloth, women were visibly and vividly and physically displaying their political sentiments. >> sunday night at 9:00, george mason university professor

rosemarie zagarri on the role of women during the revolutionary war, part of american history tv this weekend on c-span3. if there's anything that concerns the american family today, it's this -- our government hasn't caught up with the new facts of american family life. families have changed, so why can't washington? new facts -- moms working. nearly 65% of all mothers are working, part time, full time, all of the time, keeping the family together, making ends meet, making america more prosperous. working mothers need affordable daycare and the pay they deserve. too often, they can't get either. >> this saturday, maryland senator barbara money kikulski become the longest serving female member in history.

with nearly 1,300 days in office, she'll surpass the record by edith rogers who served in the house from 1925 to 1960. watch senator mie yoor money ku mikulsky's speeches online and searchable at the c-span video library. congratulations to all this year's winners of c-span's "student cam" video documentary competition. a record number of middle and high school students entered a video on the theme "the constitution and you," showing which part of the constitution is important to them and why. watch all the winning videos at our website, studentcam.org, and join us mornings in april as we show the top 27 videos on c-span. and we'll talk with the winners during "washington journal." energy secretary steven chu testified before the senate energy and natural resources committee this week on the agency's loan guarantee program and its recent independent review. he acknowledged that there are improvements to be made and his team is looking carefully into

the report's recommendations. he is joined by former assistant treasury secretary for financial stability who headed up the review and issued the final report just last month. this is about 2 1/2 hours. >> okay, why don't we get started? today's hearing will provide us an independent snapshot on the loan programs within the department of energy that were created in the 2005 and 2007 energy bills. mr. allison's had considerable expertise, both within the government and in the private sector. he's produced a useful review of how the programs are being administered, including his suggestions on how administration can be improved. we appreciate his willingness to come here and share his findings with us. as members of the committee know, the issues surrounding u.s. ability to compete in the international race to develop

and deploy clean energy technology has been a concern to many of us here on the committee for many years. the loan programs, in addition to arpa-e and other efforts to support deployment of next-generation technologies passed in previous energy bills are part of a concerted effort to ensure the u.s. does not fall behind in addressing the critical challenges of energy, economic and climate security posed by our current reliance on fossil fuels for both power generation and transportation. these programs in particular recognize that it's not enough to have the innovative research that our national labs and universities conduct. there also needs to be a pathway to turning those ideas and inventions into profitable companies. i believe it's important to keep in mind, keep this goal in mind

as we look at these programs today. while these programs need to be administered with high standards, professionalism and integrity, i believe mr. allison's report indicates they are. it is also necessary to recognize that there is uncertainty about what technologies will eventually win the day. if we want to be sure that taxpayers lose no money, then it's easy enough to just eliminate government support for american efforts to compete in developing and deploying these new technologies. unfortunately, our efforts to support domestic players in this race through the loan guarantee program have been caught up with many election-year issues. my impression is that overall, the program is doing what it's designed to do, that is, to take on risks that private investors are not willing to take on, not that the private sector has not taken on risk.

every investment the government has made has followed large, risky investments by the private sector. private markets are selecting the winners, at least the companies they believe will be winners, and the government is stepping in to help these entrepreneurs achieve the scale necessary to give them a chance to compete in the global stage. unfortunately, although the u.s. remains one of the greatest sources of innovation in the world today, it's not clear that we are going to reap the benefits of that innovation or even retain the advantage we have in that innovation. in the ever-changing and highly competitive environment of high technology and the research and development necessarily follows the manufacturing. and before long, the next-generation of technologies are being developed overseas as well as the manufacturing occurring overseas. so, we've seen that scenario play out in such industries as

television, televisions and consumer electronics. in my view, it would be tragic if it happened again in the technology areas that relate to our energy future. i believe that's the important context for our conversation today. both our witnesses today have important insights on how we can best achieve the goal of advancing clean energy in the united states in a way that gives the most value to the taxpayers. this will never be a risk-free enterprise. very few things of lasting benefit are. but i look forward to their thoughts on how we can best balance those risks with potential benefits of fully developing these technologies here and at home. let me call on senator murkowski for her comments before we hear from our first witness. >> thank you, mr. chairman, and i appreciate you scheduling what i think is a very important hearing. i think it's vital for our committee to be conducting

regular and intensive oversight over the programs and the agencies that are under our jurisdiction, especially when we see problems that may be unexpected, or certainly, serious problems begin to surface. i understand, secretary chu will join us later this morning. i think it will be helpful to hear from him directly about what has gone on in this area. and mr. allison, to you, thank you not only for being here this morning, but thank you for agreeing to take on the audit of the department's loan programs. this is one of the more complicated topics that i think our committee will be tackling. these loan-related authorities and the energy department's use of them span different administrations, different congresses, and include three separate programs, each with their own unique attributes. and i want to say that i found the independent audit to be quite useful. it disaggregates the projects based on risk profiles, rather than programmatic origin.

it discusses transparency and reporting shortcomings, reveals the concentration risk in the current portfolio. the audit further highlights the portfolio's reliance on state and federal mandates to force the creation of markets for certain projects and products, and it makes invaluable recommendations that we, and i think the secretary, need to consider. if there is one shortcoming to the audit, it is that it doesn't delve deeply into the history of these programs, which i think is essential to understanding how we've gotten into some of the difficulties that we are now facing. again, we're talking about three different programs here. you've got the first one that was section 1703 from the '05 energy bill. you have from the 2007 energy bill, the atvm. and then you have section 1705 from the 2009 stimulus. and while there are certain similarities between the three, there's some very important distinctions and differences between the three programs. i just will take a quick moment, mr. chairman, to review them.

section 1703 was created by a republican congress, relied heavily upon credit subsidy costs being self-paid by the applicants, made any project using new or significantly improved technologies eligible. unfortunately, is not closed on a single loan guarantee. then you have section 1705, which was created by a democratic congress, accompanied by $6 billion to pay for applicants' credit subsidy costs, narrowly limited eligibility to renewable and transmission projects. this program has closed on 27 loan guarantees worth approximately $16 billion. then you have the atvm, designed to offer direct loans to automakers. over $7 billion appropriated to cover credit subsidy costs, but just five loans have been issued. we've heard concerns raised around this table here about that. the last loan was in march of 2011, and then the one prior to that was april of 2010.

many of the remaining applicants are withdrawing. they're expressing clear frustration over doe's apparent inability to either make an up or down decision on this. more than half of atvm's lending authority remains unused, and the program, as i understand it, is virtually dormant. both the 1705 and the atvm programs are now dogged by questions about political influence, compliance with underlying statutes and sometimes poor investment decisions. i think that everyone here is aware of that fact. some may think that we have called for this hearing this morning to pile on, to add to those criticisms, but i don't want to take my time today to add to the narrative of the scandal and the controversy that the department is already confronting. instead, i would just offer t s this -- hard questions need to be asked and to be responded in full. these programs should be

examined, and i think that they should be improved. that's an appropriate role for congress, and more specifically, this committee. we didn't expect every single project of the department supported to be a roaring success, but we also didn't expect to see an accumulation of failures so quickly. there are clearly problems that need to be sorted out and worked through. your audit, mr. allison, i think is a good first step, and i think that this hearing moves us in the right direction. doe's loan programs can serve a valuable purpose. i have said that repeatedly. but right now, we need to know if the loans and the loan guarantees that have been issued through them are as effective as we had all hoped that they would be. we'll still have some tough decisions to make going forward, and i hope that we learn enough this morning to make sure that those decisions are fully informed. i thank you, mr. allison, and i thank you, mr. chairman. >> thank you. mr. herb allison is the author

of the report of the independent consultants review with respect to the department of energy loan and loan guarantee portfolio. we appreciate your good work on that report and we look forward to your describing it to us and making any other comments you would like before we ask questions. thank you. >> thank you, chairman bingaman, ranking member murkowski and members of the committee for asking me to testify today. last november, i was appointed by the chief of staff of the white house to study the department of energy's portfolio of loans and guarantees to clean energy projects. i was asked to perform three tasks. first, evaluate the current status of the portfolio. second, propose ways to strengthen management and oversight of the program. and third, recommend a system to provide early warning of problems that might harm the portfolio's value. the scope of my assignment did not include investigating past decisions and actions, because

several independent investigations are already under way. given a tight, 60-day deadline, my team and i relied on readily available information. the department of energy, or doe, rapidly provided documents and arranged interviews that we requested. we conducted our review and developed our recommendations independently of the white house and the doe. we chose two methods for estimating future losses in the portfolio. the first method is the one that the d.o.e. must use to comply with the federal credit reform act of 1990, or fcra. our second method, called fair market value, or fmv, is used in the capital markets to estimate the discount from a loan's face value that investors would demand so they could receive an acceptable return if they purchased the loan. the fcra and fmv methods have fundamentally different purposes, so their outputs

aren't directly comparable. fcra, the government method, estimates the credit loss on the fmv, the market method, estimates a broader set of costs and provides information useful in managing the portfolio. but fmv doesn't estimate the cost to d.o.e. if it holds the portfolio until the loans are paid off. using the fcra method, we estimated that the credit loss on the portfolio will be $2.7 billion, about 7% less than the d.o.e.'s recent estimate of $2.9 billion. using the fmv method, we calculate that investors purchasing the loans would demand a discount of $5 billion to $6.8 billion from face value. importantly, neither fcra nor fmv, nor any other financial model, can reliably predict the eventual loss of the d.o.e. portfolio for several reasons. first, these loans won't mature for up to 30 years, well beyond

the limits of forecasting. second, most projects are still being built and some rely on unproven technologies. their performance won't be known for some years. third, as projects prove themselves, their risks and expected losses will diminish. fourth, the estimates of loss assume that all projects will be fully funded and that d.o.e. will be a passive bystander, unable to influence the portfolio's risk over time. but so far, d.o.e. has funded only a third of its total commitments. d.o.e.'s loan agreements allow it to stop further funding and demand more credit protection if projects don't meet targets. some of the riskier projects haven't received any funding, and others have been funded only partially. if those projects don't meet conditions in their loan agreements, d.o.e. could cut off more funding, and the forecasted loss could decline substantially. for all these reasons, our focus

should be less on these unreliable forecasts of losses and more on assuring effective management of the portfolio going forward. d.o.e. must be an active manager, continuously monitoring the projects, spotting risks and limiting taxpayers' exposure to loss. the report romecommends ways to strengthen management and oversight of the program and provide early warning of potential problems. in brief, our recommendations include, first, assuring adequate funding and staffing of the program. second, protecting taxpayers by strengthening d.o.e.'s position as a creditor wherever possible and having a clear policy on funding projects that aren't meeting targets. third, determining whether to hold or sell the loans over time. fourth, strengthening internal oversight by forming a risk management department and combining several committees in d.o.e. that now oversee the program. fifth, establishing a high-level

advisory board to consult with the secretary of energy on policy matters. sixth, creating an early warning system covering market conditions, performance of all projects and loans and internal operation of the program. and lastly, improving public reporting about the program. thank you, and i'll be pleased to answer your questions. >> thank you very much. maybe i can ask you to elaborate some. your report indicates that changes were made in the program to better control risk, both before the program review, or the review period, and also during the time that you were doing your review. and i guess i'd be interested in any comments you could give us on the effect that these either personne