occur if we defer to states for prosecution of virtually all cases that do not have a bonivide federal nexus? >> well, even today most cases the overwhelming number of cases are still prosecuted at the state level. it's more or less on a selective basis that prosecutors pick cas cases. sometimes there are conflicts between local law enforcement people in terms of whether the jurisdiction is fighting over certain cases, high profile cases. other times it's cooperation based on money. when i was prosecuting in new orleans we had longer sentences than the federal if you can believe that. so all of the federal drug cases, the federal agents would steer into our courts because the longer sentences. some states, the drug people will steer the case still into state court if there is a

tougher provision on search and seizure. so law enforcement people are very practical. to give a general answer to it you would have to be specific place by place. would it overwhelm the state is that what you're talking about? >> no. as a general matter, we ought to defer to the states. one of the previous witnesses said in ascertaining, when you go through the list of things that you ought to consider, the differential in penalties was not on their list of things that were legitimate to consider. do you agree with that? >> no. >> that you can pick and choose your jurisdiction based on the -- >> absolutely. we did it. >> well, yeah, did you it. >> we did it. the question was -- >> an we did it in richmond. people brag about the fact that project exile worked.

>> i have an article against project exile. >> without pointing out that the crime rate went down but in other cities in virginia that didn't have project exile, the crime rate went down more. >> exactly. i pointed that out in my article. >> you mentioned a notice. have you have mens rea, obviously you had criminal intent. how else do you get notice out there so people know they are committing a crime? >> well, you make the laws accessible. now if someone wants to determine in advance whether their conduct -- the proposed conduct is criminal, they've got to hire a lawyer to answer that question. and then the lawyer has got to find the statute within the 51 titles of the code. it's nearly an impossible task. that's why we always hedge our bets. few lawyers are going to say you

can do that. it's because the law permits such uncertain. it is so ambiguously written that it is impossible to know even by lawyers whether proposed conduct is truly lawful or unlawful. >> is that why the rule of linity is so important. >> that's exactly why it is so important. >> can you say a word about the overlapping crimes in state and federal and what it does for the so called trial penalty? >> i certainly can. the trial penalty is the penalty for going to trial. meaning, that if you -- let me back up because i think it is a unique and cherished american value consistent with freedom and liberty. that if the government accuses one of a crime and threatens to take away our freedom, we have the right to stand up to the government and not only deny it but make them prove it to say

oh, yeah, prove it. we have completely lost that right because if we go to trial either because we want to make the government prove their allegation or we want to challenge the constitution alt of a dubious statute or because we're innocent. we can no longer do that because if we lose our bid to challenge the government, then we face staggering mandatory minimum sentences that can be stacked by the prosecution to beat us into guilty pleas. that's not how our system was designed. >> are there problems in consolidating all of our codes into title 18 or would it be better to have them spread all around where the subject matter crime goes with the subject matter like the agriculture

code -- >> well, first of all when the proposed federal criminal code back in the 80s came before the judiciary committee, the real problem was in organizing the code. people didn't pay attention to all of the many provisions. in one sense it was a another but in another sense the federal government should not have a code because a code is a comprehensive statement of criminal law. if you believe as i do constitutionally that congress has only limited powers and has to justify on particular en enumerated powers than the idea of a comprehensive criminal code is very difficult to create without in effect expanding federal power. my main concern about a general code like that even with an attempt to limit federal power, it would de facto end up expanding federal power. >> the gentleman's time has expired. the gentleman from michigan mr.

connyers. >> thank you mr. chairman. i want to thank both of you gentlemen. this is our tenth hearing. both of you have been here before. so this is a good place and a good point to begin is how do you see the cumulative affect and impressions and understanding that we've gleaned out of these ten hearings this year and last year? dr. baker, why don't you start us off on that? >> well, if i compare back to federal criminal trials that i have sat back through when i was a law clerk and federal tries today, the biggest thing that strikes me is the imbalance of power in how the power has shifted so dramatically ford

federal law enforcement that there's a certain arrogance that pervades prosecutors. it goes with the territory unfortunately. when you give anybody too much power they are going to use it. i don't mean that they are using it for what they perceive to be bad things. they believe what they are doing is the right thing. of course when they then resign and become criminal defense attorneys they get a different perspective. they realize that maybe they were too aggressive. i can tell you that i have been on panels with former ausas and they have said that. >> the reality is that there are three perspectives. the prosecutor, defense, judge and jury. there has to be a balance between the two sides. i think at this point the balance is too much in favor of federal prosecution. >> but still state crimes are

far more numerous than federal. >> they do but here is the difference. you know from detroit and i can tell you from new orleans people trying to prosecute an arrest, they are running around trying simply to deal with the violent crimes they have to. very few prosecutors in major cities have time to go look for things. they can't find what they've already done. you've got the defendant. potential target. you figure out what has this person -- what can we nail them on. that's not the way local prosecutors work. >> attorney benjamin would you weigh in on this discussion, please. >> a gri agree with dr. baker i that the most striking facet of

the current state of the criminal justice system and the biggest and most dramatic change from when i first began 35 years ago to defend criminal cases is the overbalance of power. federal criminal defence now is all about negotiating a resolution. >> that's all it is. >> it's no longer about guilt or innocence. guilt is presumed at least by the prosecution. they have the tools available to compel the guilty plea so that that's not even a question. it's all about snitching out, cooperating, doing whatever you have to do get the leniency, the fair treatment that you seek. >> so what then do we bring to our full judiciary committee in the house of representatives in

terms of these ten hearings that we've had this year and last year? i mean, what can we take, i want to commend the chairman and ranking member sensenbenner and scott for having put this together as they have but where do we go from here? >> i think the immediate thing is reform of the mens rea problem. the immediate band aed is a default ruling of mens rea where none appear in statutes and a rule of construction that applies it to at least all material elements. >> a single mens rea standard. >> no, uniformed mens rea standards clearly defined across the board. >> what would you add dr. baker?

>> well, i would agree with that. i've been involved in a little bit of trying to draft that statute. i can tell you it's not an easy statute to draft because of the way the federal crimes are drafted and how differently they are. i would add to those two thing that's i endorse is clear definitions of what's a crime, felo felony, misdemeanor. the way to deal with the district liability is simply to say noncriminal offense. this is in the model penal code but not many states adopted it. i mentioned it in earlier testimony, you have a provision for noncriminal offenses and that strict liability is limited to those. so if you think they need to be prosecuted fine but the stigma of crime is not on there. >> time of the gentleman has expired. the gentleman from georgia mr. johnson. >> yes. as i listened through to the testimony and did a little

reading. i was impressed with the fact that dr. baker in your paper you sight statistics showing that in 1983 it was estimated that there were 3,000 or so criminal offenses in the code. >> right. >> in 1998, you sited doj figures 300 as of 1998. >> these are are three different studies the first one by doj the other one involved the same person but with different methodologies used and that's why the different numbers . i see but that does not indicate that there was no growth in the number of -- >> there was growth but actually -- >> it may or may not have been 300. >> it's more. it was more than that.

>> well, okay. all right. well, so that's a modest assessment. 3300 as of 98. that was 300 more than in 1983. between 1998 and 2008, that ten year period saw a rise to 4,450 according to your -- >> the 1998 figure which i explain in there is not a reliable figure because it did not follow the methodology. >> so you think it was higher. >> it was much higher. >> okay. >> the doj methodology which i used and which has been my e-mail told to me by the person conducted it that i used the same methodology that doj did. we explained it to crs and they followed that. but what happened in 1998, they not break particular statutes down into the various crimes

within one's statute. they simply counted the statutes. >> i see. between 2008 and 2013, you site apr sooit a site aprin additional three. >> well, it puts us according to the reports close to 5,000 offenses. it looks like from 1983 through 2008 was an explosion also in the number of human beings we have imprisoned in it country. then at the same time we've had the growth of what i will say the conservative movement in the country which has called for

less governor, less taxes which when you put on top of that, the fact that you're needing more prisons, more jail space and prisons, you've seen a growth in the private prison industry. in fact, 1983, 3,000, 2013, close to 5,000, 1984, it should be noted is when the correctio s corporation of america which is the largest private prison for profit corporation, that's the clear that that was founded. 1984. since that time they have experienced exponential growth to the point where they, along

with -- there's another big one. i for get the name. georgia -- not georgia but gpc or something like that. those corporations are publically held corporations selling stock on wall street. what connection do you see between the growth of the private prison industry and the number of -- the amount of contributions that those meants make to legislatures including on the federal level and the growth in the prison industry? the growth in lobbying and the growth in statutes putting people in prison. what connection do you see? >> well, i can draw a connection between the growth and certain things. i can between all of them. i actually represented at one

point a sheriff in louisiana. the whole thing was funded by federal dollars. he went in the business of taking in federal prisoners because the federal rate was much higher than the state rate. there is a definite connection. on the conservative side especially in taxes and in louisiana they are understanding that this is bankrupting the states. now you have some conservatives flipping and calling for a reduction even in state criminal penalties and state prison sentences but they realize the growth of it is unsustainable. >> mr. chairman -- >> time of the gentleman has expired. >> mr. chairman, i can make one last statement? >> i would imagine we will now see a rise in lobbying costs that are incurred by the private prison industry. thank you mr. chairman. >> okay. the gentleman from new york, mr.

jeffries. >> thank you mr. chairman. >> let me thank the witnesses for your continued contributions to the efforts of this panel. >> you mentioned something that was very troubling and dr. baker agreed with you. the notion that federal criminal defense has simply become negotiation efforts toward resolution. that just seems fundamentally inconstift ekoconsistent with tf the presumption of innocence. if there's going to be a presumption of innocence, it seems to me that it cannot be the case that once someone is being investigated or indicted by our government that the only real option available to someone who in theory should be presumed

innocent is to negotiate the most favorable resolution which ultimately will likely result in some form of sanction and/or jail time. >> right. >> so the question becomes, how do we unpack this dynamic in a way that allows this task force, the house, this congress to make a meaningful impact? i would suggest and i would like to get the observations of both of you that it seems to me that there's got to be some way to reign in the inappropriate exercise of prosecutorial decision making. you referenced a term arrogance that exists perhaps among some prosecutors. i believe the majority are operating in good faith though i may not agree with the decisions that they make but who -- as it currently exists right now who has the capacity to oversee

prosecutorial behavior or decision making and what consequences are there when inappropriate public policy decisions are being made? start with attorney benjamin and we will get to dr. baker. >> well, the power of oversight and the power to reign in federal prosecutors resides in doj or the attorney general or the u.s. attorney for a given district. the reality, however, is that rarely will these individuals want to interfere with the career prosecutor who's have been doing this all of their lives and are on the line. so the answer is to make a look at the tools that are being used to produce this result. i think that the biggest problem is the existence and expansion of the use of mandatory minimum sentences. that is what gives the unfathomable power to federal prosecutors because they can -- in their charging decisions,

threat threaten, 10, 20, 30 lifetime mandatory sentences. that takes the judge completely out of it. if somebody is convicted, what we will see to our clients is yes, sure. i understand you're innocent and maybe you have a triable case but if you lose you will get a life sentence. >> i appreciate that observation. dr. baker, i want you to respond but i also want to add this observation. currently federal prosecutors have absolute immunity as i understand it. >> in the context of -- >> as long as they are not getting out of prosecution sometimes they get involved in investigation -- >> okay. in the context of the prosecution they've not absolute immunit immunity. law enforcement has qualified immunity as i understand it. is that something we should explore? >> i guess as a former prosecutor i liked absolute immunity when i had it.

i haven't given it enough thought. i think that there is a reason for immunity whether it should be qualified and more like law enforcement. the assumption is the prosecutor is under the control some extent the judge in a way that law enforcement is not. that's the assumption but i think the testimony we've received that that is no longer the case. i'm trying to figure out -- >> the real responsibility is with the president and then the attorney general. >> right. >> the political reality is that i don't care what party you're talking about, that it depends on the particular u.s. attorney and how he or she got appointed and whether they've got a senator protecting them. that's really what it comes down to. one last observation. the problem that we confront both to rectify the damage that has been done but also figure

out how moving forward, we can prevent a learn to just a cycle of endless criminal statutes being added to the books. it's often the case that elected officials reagent to the passions of the public. that's the constitutional charge of the house of representatives but in the criminal context when you respond to the passions the public particularly as it relates to a heinous crime that results in perhaps doing things that in retrospect aren't in our best interest. i would encourage all of us certainly those who are contributing to this effort to think about that dynamic as we move forward. >> thank you very much. the time of gentleman has expired. let me recognize myself for five minutes to wrap up. this will be more of comments looking at the last year and what we've been able to discover. first of all, i want to thank the witnesses for appearing.

the two authorizations of this task force, i think have only scratched the surface of what needs to be done because literally the congress and a lot of the agencies have been putting more and more layers on the onion and we're beginning to start to peel off the ones on the outside. that just means more questions. you know, looking at how we got to this. i think in order to stop this fin order to stop this from getting worse, we do have to very vigorously pursue a change in house rules. some of the lapses that have allowed other committees that really don't know very much about the criminal law to make criminal law is the fact that the judiciary committee has not been very significantorious i,

vigorous in exerting jurisdiction. once you lose jurisdiction it's much harder to get it back. >> so exchanges the letters. further legislation i think is necessary. >> we're going to need help in developing a default mens rea statute. default means when there's not a specific criminal intent in a statute there will be one if there is a specific criminal intent, the default statute would not applied the least you have to have criminal intent as one of the elements in terms of obtaining an indictment or a conviction. now, in order to get at the proliferation of criminal penalties, some of them are statutor statutory. some of them are done straekt

i administratively. i would like to see the judiciary committee draft and get past and enacted into law, a sunset provision of all administrative criminal penalties. it should be a fairly long sunset. the committee can then, i think, ask each agency to come in and justify which of those criminal penalties, i wish to have continued on the statute books and why. if they can't justify that in order to get a reenactment through the congress, then those administrative penalties would simply vanish and we wouldn't are to worry about them anymore. now, i think a way to start in the -- in the anti-duplication provisions of the code is to start scrubbing the bill that i have introduced in this congress and the two preceding congresses which was designed to reorganize

the code and to at least put some sense into it so the people can look and see what opportunities are criminal in nature without having to go to a lawyer who can no longer give them a definitive answer because they will never be able to find no matter how hard they try, which statutes are involved in that. i know that in the few days that we have left in this congress, none of this is going to be a kpli accomplished. however i would hope that as we prepare to start the next congress we will be able to in a bipartisan manner which is certainly permeating this particular task force to pick up each of these areas to figure out what to do and to figure out what we can get enannicted into law. i think while the american public did not see an immediate

change in how we approach criminal issues. that there will be something that we will deal with long term that we will deal with many of the results of our overkr overcriminalization. i want to thank the members of this task force tore putting in a lot of time and doing a lot of good work. remember we got at least the two layers off the onion but there's a lot of lawyers layers to go. with that said this committee is a jurned.

some live events to tell you about. at 10:00 a.m. eastern, the house judiciary committee will hear from u.s. citizenship and immigration services director leon rodriguez on policies regarding deportation asylum and other services. later in the day ukraine's foreign minister are speak in washington d.c. topics will include the ongoing violence in ukraine. the downing of malaysian airlines flight 17 and the possibility of additional sanctions against russia. that's live at 1:00 eastern. next, a discussion on military personnel costs with former staff directors for the senate armed services committee and the house and senate appropriations committees. topics include military compensation, tricare costs and

military procurement. it's an hour. my name is steve bell. i'm the senior director of economic policy at the bipartisan policy center. i did not come here to here me but i wanted to remind everyone that in front of you you have a joint product of the american enterprise institute and the bipartisan policy center, our team. this is a chart book that is designed to simplify what we think has been a misunderstood issue namely personnel costs. we have an excellent potential today. we're also very lucky to have the bureau chief at the pentagon

and a reporter for the military times. andrew started his military defense reporting in iraq for stars and stripes. he has won a number of awards, including last year being named akiplingel fellow. even though he started with the houston chronicle he ended up in new york at the columbia school of journalism which is pretty good for us guys from texas. one of the reasons we wanted andrew was his story on july 1st of this year in which he featured bob hale saying that personnel costs were declining. since that was opposite everything that us budget analysts have looked at over the last 25 years, accept in the most -- kind of constrained way. we thought this would be interesting to have andrew come here and tell us what his view is after all of his reporting.

our view is per capita costs have gone up dramatically which has led to a reduction in forces and will continue to lead to further reductions. slowness in operations of maintenan maintenance. readiness and a decline in modernization. we hope to begin to show you with this chart book which is a first and several things that most aei will do. we hope to show you why we make those contentions. i will remind you that in 1985 we did something that had a sequester in it. i was staff director of the budget committee at that time. bill hoglan was my deputy who is here today. yes, we invented that sequester. don't blame us. with that i, i will turn it over to andrew. >> thanks very much. i want to thank you for putting

together this very compact chair book. i think it really gives a good summary of a lot of the real basic issues in personnel compensation today. i also want to thank you people because i had two reports in week and also one from the military compensation commission which was 450 pages. so this one was much easier to die digest. >> to my left here is professor linda bilmes who teaches public policy at the harvard kennedy school. charlie houy who is now retired but was the staff director of the senate appropriations committee. scott lily to his left was a former staff director at the house appropriations committee. on the end is ann sauer who was

staff director with the armed services committee. we got a lot of good perspective today. i just want to start before i turn it over to some of them and say i've been covering this for many years. i want to start with a little bit of historical perspective. we're going to talk today about the run up in personnel costs from 2001 to the present which is the window frequently talk about. just a little back ground. as many of you know, the all volunteer force is about 40 years old. in 1973 when it started they basically just ended the draft with the stroke of a pen and didn't make a whole lot of changes to military compensation. a lot of the structures that we have today are carried over from the 50s, second world war and even. when reagan came in in the 80s. it was morning in america. he told him to tear down the wall and threw a lot of money at the pentagon but mainly that was

hardware and ships, missiles, fighter jets. there was not a whole lot of money thrown for compensation that's why when clinton came around, there was the talk about pay gap. the pentagon was starting to worry about a recruitment problem. in the late 90s. there was a number of efforts on the hill to begin to close that pay gab. so although we tend to talk about the window of 2001 to the present, a lot of the things we're talking about really in the run up of compensation really began in the late 90s. such as pay increases that exceeded the normal pay index. things like that. i will also say that i talked to a lot of service members over the core of my job, this is a deeply personal issue for them. this is not just their families financial security now and maybe

in the future that they are thinking about but also it gets to the heart of what they feel is the social contract that they have with the country. this is causing a lot of hand ringing in the rank and file about what may or may not happen. a lot of these guys from ford hood ft. hood. don't understand how it works in washington. all they know is these things are on the table and it's causing a lot of anxiety. with that let me start on the end with ann sauer if i could ask you to give us a brief summary of the period of 20 -- starting in 2001 to the present. as the chart book shows there's been a massive increase in the per troop cost of compensation. that goes far beyond just pay increases. what is it that's really driving some of the charts that we're

seeing in the first few pages of this book? >> better. great. thank you. thanks, andrew very much. happy to be here. thank you all for showing up. i want to say before we get into any of these issues that i think all of the panelists share the view as andrew mentioned the frustration among the active duty military but this is a broad, bipartisan issue. it's a political issue but a bipartisan political issues in washington. we strongly support our military personnel and understand that their job and their sacrifice is nothing that we should take lightly. however, in the longer term, i think we need to look at defense

budgeting as having four levers, four ways of managing defense budgeting. they are structure cuts. modernization. another tuneable lever of defense budgeting. readiness, again, adjustable up or down. kpepsati compensation especially in the last 12, 13 years has only been a lever that tunes upwards. i think the congressional and administration's approaches to making sure our wounded warriors and our active duty military have been well taken care of and are bipartisanly supported. however going forward we need to look at this in a bipartisan fashion. we need to look at the tunability because there are only two solutions to the problem. one is increase the defense budget and allow the costs and

benefits to stay the same. i think in light of the last several years of budget deals, budget agreements, concerns, and continuing concerns about deficits in debt, that's not likely to be the answer. you're not going to see a large increase in the defense budget regardless of how elections go in the next couple of cycles. the other way to approach this is look at broad structural reforms. ed in because of the all volunteer force, and grandfathering in all active duty members even if we enacted tomorrow, broad structural reforms in a lot of these benefits, particularly pension and compensation, you wouldn't see any near term savings. it would be five to eight years before you really saw anything significant in savings. >> i think in order to

accommodate the desires of congress to ensure that our military are well compensated and well taken care of, their families in particular are also. i think that the next step in this approach and it's even mentioned in the interim report of the military compensation mission is to look at domestic entitlements as well as military entitlements. i thi i think politically, we need to have a similar look at the domestic benefits that people are entitled too with deficits increasing, per cbo's long term budget outlook almost -- the debt doubling the share of gdp over the next 25 years. both of these areas need to be looked at. i think that's a potential approach to take to look at both

domestic and military entitlements and manage those in a rare and equitable manner. is that going to happen? talk to me in november or january of 2017. we will see. >> thanks. let's look at this for a few minutes from the pentagon perspective. ann talked about the levers that we have to change some of the these things. right now obviously with sequestration, the budget appears to be capped. although military personnel costs have been a relatively steady slice about a third or half defending on how you want to count them for the past 12 years, everything has grown. the cost of operations hthe cos of acquisitions and personnel have grown. now that it is represent, personnel will continue to grow as it is under the current law and some things will continue to

get squeezed. scott, dod obviously has to work within the law. if they are told that they have to continue to give pay raises and to continue to provide retirement accruals and that sort of thing, yet they are top line budget is capped, what do they do? where do they find that money? >> well, i think people assume that there's a lot more -- there are many more options than there really are. as ann pointed out modernization, procurement is seen as something that you can go up or down on. that's true but the problem is that we have so many legacy weapon systems right now that you can dial that down but you will end up paying more in maintenance on those old ships and planes than the cost of

replacing them. there's a point in time just like the family car that if you don't replace it you're going to have a big cost associated with it. there's an assumption that you can do something on readiness and operations and maintenance but that really is a function of your pace of operations. as the events of the last several weeks have shown us, the congress really doesn't have any way of controlling that. there are going to be things that happen in the world that dictate what we do in that area. so in many respects, as attractable as this issue of compensation and personnel costs seem, and i don't -- i haven't seen one proposal in this area that looks like it's got a ghost

of a chance getting through either house right now. the only thing that leaves is reducing number of people that we have:that's fine as long as we live in a peaceful world but we don't and it doesn't seem to be becoming more peaceful. so i think you know we're faced with a situation where we have very unrealistic projections about how much we're going to have to spend on both the defense and nondefense side of the budget. as ann points out, i think it's the entitlement programs in both defense and nondefense that are driving the increases. so we have to raise taxes to pay for those or we have to find some way of cutting them back.

i don't think they will probably get cut back very much on either the defense or nondefense side which means at some point i think we will have to face up to taxes. >> thanks. as you point out there's not a whole lot of options. i think there's the general sense particularly with a lot of contracts on the acquisition side being set in stone, that ultimately a lot of this is going to have to in the short term come out of what they call readiness. i know as a reporter i find it a little bit difficult to track readiness across a force so large. it does so many different things. charlie, do you have any thoughts on what does that really mean if they are going to have to face cuts in readiness. how does that translate in the real world. what should we be looking for in terms of a red flag that the readiness is being cut too much.

i think in the next few years we will start to see that. what should we be looking for? >> is it on. oh, it is on. it doesn't light up. readiness is a tough thing to understand. we know what it means when the force is not ready and not able to do the job that it needs to do but in terms of how the budget share works out for readiness is always a tough thing. i all thought it was kind of like a black hole. you put money in and you're not quite sure what comes out in the money end. you can track weapon systems or personnel cost but as far as readiness. ho y how do you track it? it's a very tough thing to do. if we find ourselves in a

situation where we now face where we have the budget control act that's in place, it reduces the rate of growth of defense spending over the next nine years or so from the time it is initiated. the pentagon will no longer an increase. if we don't find some way to get rid of the sequestration burden that's where you will see problems come to the defense department. the 31% for military personnel is not that alarming to me having watched this over the years. but there is an important factor that's hidden in the 31%. that is it's 31% in a period of relative growth. now we're going to reach a period of stagnation and decline. at that point you wonder what happens to personnel cost, they will probably go up.

>> the second thing that goes is the readiness accounts because there's not much you can do about personnel costs. they are relatively fixed. the chickens have come home to roost on this issue. that means you have two types of individuals that have retired and a growing number of individuals who have retired. we have a much higher quality force we have today then when they first started to address the issue of cat four individuals in the army. basically it means the people that scored lower on the army aptitude tests were categorized as cat 4 by the army. >> today you have 98% are graduates. all of that means that you are going to have to pay a price for it. i saw a study done recently that indicates that a high school graduate who joined the military

would make more money than in 90% of the other jobs than they were eligible for. that means we have a large amount of resources are going to personnel costs. is it the right amount? it's hard to say. you have very high technology weapon systems needing to be operated and maintained. the military leaders certainly like a higher capability for it because of what it means for them in their ability to carry out their missions. we know longer talk about a hhow army. we have the most effective fighting force in the world. when you look at this, you see some of the issues that taken place over the years. i think there's a third thing that is deferred compensation. state, local, federal. we have a tendency of kicking the can into the future and

kicking costs into the future. with a robust retirement program and tricare for life. some of the benefit that's are shown here on the last page of this chart. all of those things lead us to this issue where maybe in fact if we don't solve sequestration, readiness, whatever that means, it's going to start to be effected, whatever readiness means. >> the bottom line to me on this issue is we have a very small segment of the american population that are willing to surf. they are willing to sacrifice their lives. they are willing to endure long periods of family separation. they adhere to a strict code of conduct that most of us in the civil society don't have to adhere to. they deserve to be compensated. i thi we need to make sure we're taking care of the men and women

who are in fact willing to serve to protect the rest of us. so -- >> yeah. charlie makes a lot of really interesting points there. one thing i'd like to highlight a little bit in the chart book which i personally having poured over these numbers for a long time. i personally found the most interesting was on page 11 where you start to see most of this talks about the defense budget and how things were changing and shifting defense budget proper. as far as taxpayers are concerned and federal budget, there are a lot of costs found outside the budget that accrue over time. i know linda, you've done an awful lot of research in this area. help us understand a little bit about from a taxpayer's perspective, what should we be

looking at that's outside the defense department's budget proposal? >> sure. thank you for inviting me today. i also wanted to shout out a few of my students who are in the ad audience. robert, stand up. you can be on cspan. i believe robert is the only person in uniform on here in the room today. robert is 19 years into the navy. so he's exactly the kind of person that we're talking about theoretically here. some of you are journalists might want to talk to these people afterwards with a very specific per spespective on the issues. for all of you not so young people how wonderful the kennedy

school is if you're thinking about hiring young people. i wanted to take a couple of points. i will get to the important point you're asking. first of all i think it should be noted that this situation is under large part due to the wars in iraq and afghanistan because during these wars and i've written extensively on the linkage here. i have pentagon those who made up so much of the force. we've increased compensation and benefits to troops particularly in changing the way pay scales. we've made some of the highest profits in the war to the companies that manage tricare in my own analysis where did the money go. if you actually look at what earned the highest profits, it

wad not the haliburtons but it actually was the tricare companies. we've also had a huge serge in the number of claims within tricare. the number of troops and families who are having medical visits. for example, a 65% increase in children or mental health care counseling. a 150% increase in family members seeking counseling of various kinds. huge increases of muscular skeletal issues and other things related to the war. the cost -- the price of health insurance in the private sector during this period for family of

four has doubled from about $2,000 a year to about $4,000 a year. at the same time, the price of health care tricare for a family of four has stayed the same. the different in a that differential has not surprisingly driven a very high increase into tricare for those who are eligible. so over the period, the percentage of people who are eligible to go into tricare who actually are in tricare has gone up from 29% to 52%. the percentage of those people who have private health insurance has deceased from 44% to 19%. we're seeing all of these trends that are putting enormous amounts of pressure. all of this has been paid for up until now opt national credit card because all of the iraq and afghanistan expenditures have been paid for through debt.

it's as if we had a giant credit card and we've maxed out and reached the limit and the issue is the ending the massive war expenditures which have been massive and not terribly thoroughly vetted which have enabled us to really pass through and fudge and have a lot of money washing around the pentagon which could be used to pay for various kinds of things. sequestration could be considered on top of that as if we now have a payment plan and a cap because of all of the debt that we racked up. i think it's important to think about it in that way. secondly to your question, i think we need to consider the increases in military personnel and particularly tricare costs together with the increases that we've seen in the department of veterans affairs and social security and elsewhere. the va has increased in real

terms in the period from $60 billion a year to $160 billion requests this year. that is an enormous increase and yet problems abound as we're familiar with. some of the proposals on the hill right now would add up to another $50 billion a year. yesterday, or two days ago the new secretary was requesting another $17 billion for next year. we've already spent 10s of billions on trying to harmonize systems on the disability claims process and health care system between the alta and vista and va systems which still has not worked. i can talk about this all day and night. it's important to see these things together. in addition, the social security disability budget which has also increased significantly is also related to these wars.

the number of veterans from iraq and afghanistan is over 130,000. these individuals are automatically eligible for social security disability insurance. those who have 90% disabled are probably eligible for that as well because it's a binary system related to whether or not you can work. >> so all of these things, the health care system, the try care system, the va claims are all part of a massive cost. a hang over legacy cost from the iraq and afghanistan wars which we've not figured out how to pay for which leads me to my third point which in my ways is the most important and the most boring is the accounting system. as charlie mentioned, we have a way of kicking these long term costs down the can and not actually accounting for them.

if this were private sector company and i work with both public and private sector organizations, all of these benefit that's we have promised and that are accrued would be written up in the financial statements as deferred compensation. most of these costs however are promises that are accrued promises in the military and in the va don't appear anywhere on the financial statements of the united states. the actualarial capacity to even estimate some of these things is pretty week but when you compare the amount of time and attention and effort and knowledge in the social security and medicare systems to what we know about the accrued liabilities for personnel, health care in the va and particularly in the pentagon, it's extraordinary how weak -- weakly we really understand the liabilities and

have accounted for them. it's difficult -- i mean i've argued for years that bad accounting actually matters if you don't know what it is you know, you can't even begin to come up with a sensible way of financing them.