of government and within government that a comprehensive approach is the right way to go. so we're still working through what i hope are the later stages of rule making but i certainly have to respect that process but know that this is an area of great focus for me. >> we have time for one more question. this gentleman at the front table. >> thank you. sam visner with icf international. swinging back briefly to the question of cybersecurity. there is a very complex mixed ownership structure in this country depending on the mode. the president's executive order signed out last month brought forward the idea of stronger information sharing and advisory organizations, isaos, and i wonder what the department might be able to do to build a stronger information-sharing organization amongst all the various modes of transportation for which their responsibility. because i do think the industry is crying out for better

coordination, information sharing, threat information sharing, and information sharing about best practices and best results. thank you. >> yeah thank you. and very quickly we are very open to trying to play a stronger role in trying to assist these conversations across different modes of transportation. i would say that just the first thing we've got to do in each of these modes is get the modes, you know within the modes having the discussion because there will be things unique to automobiles or to rail cars or to aviation that are distinct. but to your point i do think there are cross-cutting issues too. and our department intends to play an active role on the cross-cutting side of the conversation as well.

>> i'd like to thank you for a very interesting and informative session. [ applause ] let's all give the secretary -- [ applause ] >> thank you very much.

tonight on "the communicators," fcc commissioner minion clyburn on their recent net neutrality ruling, municipal broadband and the subsidized phone and broadband program, lifeline. >> what i am proposing that we do is overhaul the lifeline program, make it concurrent and in sync with the information age, challenge those providers to give more to their consumers. the prices and opportunities have gone down -- have been more explosive for the rest of us. it should be for our lifeline consumers, get those providers out of the certification business. that has been the number one problem that we've been seeing with not so positive headlines. it is a vulnerability in the system that we need to plug. >> tonight at 8:00 eastern, on "the communicators," on c-span 2.

>> and a live look at the capitol now. the house today began the week by considering six bills including one to fund trauma care centers. that vote under way right now on c-span 1. on the agenda later this week is a senate-passed resolution disapproving of regulations on union election rules. as always you can see the house live on c-span. and the senate you can watch live on c-span 2. the senate today resuming debate on a human trafficking bill. the measure has been held up because of a provision that blocks federal funds for abortions. a procedural vote on the bill is expected tomorrow. the outcome for that could have implications on the nomination of loretta lynch to be the next attorney general. the senate was expected to begin debate on her nomination this ajority leader mitch mcconnell said over the weekend that consideration of miss lynch would only come up after the senate moves forward with the human trafficking bill.

white house interpret secretary josh earnest was about the delay at today's press briefing with reporters. here's a portion of the briefing. >> good afternoon, everybody. welcome to the white house on this glorious monday. i don't have anything at the top. so we can go straight to your questions. darlene, would you like to get us started? >> sure. thank you. i have a couple questions on the report today on the affordable care act. 60 million americans signed up since the law -- >> good place to start. >> well, i thought you were going to start with that. >> i considered it. but given the late beginning here. >> given all the positive numbers in that report, why do

you think it is that debate over the affordable care act is not settled? >> i think principally it's because we've seen tens of millions if not hundreds of millions of dollars being spent by the president's political opponents to distort the facts about the true impact of the affordable care act. this is money plain and simple. and what we have said is that the more that the american people understand the benefits that are associated with this law the more people will approve of it. at least the more the approval of this will show up in polls. but frankly we're not concerned about the numbers in the polls. we're concerned about the numbers that demonstrate the impact of this law. and whether it's 16 million people being -- uninsured people getting access to health care coverage since the law went into effect, that's a pretty good number. the decline in the overall insurance -- uninsured rate dropping 35%. that's a pretty good number. the historically low growth in

health care costs since the affordable care act went into effect. that's a good number too. so that's what we're monitoring. and that's why the president has placed such a premiums among members of his team on the implementation of this law. and we're only building momentum, and we're certainly pleased by the progress that we've seen so far. but there continues to be a lot of work that needs to get done. and i think probably the best example of that that i can highlight for you is the continued resistance we've seen in some quarters to the expansion of medicaid. there continue to be republicans across the country who are blocking the expansion of medicaid in a way that literally prevents individuals in their states from getting badly needed health care coverage that would be 100% paid for by the federal government. and for the life of me i can't understand why anyone would reach that conclusion but some republicans in this case are quite literally putting their political ambition against the lives of some people in their

state. and that's a shame and that's unfortunate. but it's consistent with the kind of political opposition that we've seen from republicans to what in many cases is a pretty common sense implementation of the law. >> the report showed that those states that went ahead and expanded medicaid are doing better in terms of covering uninsured people than those states that haven't. given what you just said about the medicaid expansion, do you think the report will somehow encourage some of these other states to go ahead and get on board? >> i certainly hope so. and that's certainly what the data would show. that there is a positive impact on the health of citizens in these states when medicaid is expanded. there certainly is a positive impact on health care providers in these states because medicare insures that their uncompensated care costs are reduced. these are individuals who don't have access to health care, aren't able to pay their medical bills. automatically those bills are assumed either by the government or by those of us who are paying insurance premiums. but because of medicare

expansion you have a role for the federal government to step in and take care of some of those costs and make sure those individuals are getting health care before their conditions get too bad. the other thing we're seeing is the cost to states themselves are alleviated by this as well. so whether it's health benefits, benefits for the economy or benefits for the bottom lines of these state governments the impact of medicaid expansion is very positive. >> on another subject we haven't heard the white house respond yet to senator mcconnell saying yesterday that loretta lynch's nomination may be delayed further. >> well, it's certainly a disappointment that after 128 days since being nominated to be the next attorney general that loretta lynch a professional independent career prosecutor has not yet gotten a vote in the united states senate. it's an unconscionable delay.

miz lynch has submit informed more than eight hours of testimony before the senate judiciary committee. she answered more than 600 written questions from senators. to say nothing of the countless other conversations that she has had in more private settings with individual members of the united states senate. she is somebody who has distinguished herself over the course of her career as a tough, fair, independent lawyer. she's developed strong relations with law enforcement because of that reputation. she is somebody who has successfully prosecuted terrorists who targeted the federal reserve headquarters in new york as well as the new york city subway system. she's somebody who has gone after public corruption and has brought charges against public officials in both parties. she's somebody who's secured billions in settlements from some of the world's largest banks, who are accused of fraud. and she's jailed some of new york's most violent and notorious mobsters and gang members. this is someone with a demonstrated track record of law enforcement who is up for the top law enforcement job in the country. there's not a single legitimate

question that has been raised about her aptitude for this job. instead all we've seen is a bunch of political obstruction from republicans that again does not -- does not speak well of republicans' efforts to run the senate in an in effect fashion and certainly not in a way that's in the best interests of the country. >> senator mcconnell laid out a timeline yesterday that suggests it could be mid april at the earliest before her nomination goes to the floor. is that a timeline the white house would be willing to accept? and if not what is the alternative or how do you get her nomination voted on earlier? >> this is the responsibility of the united states senate, to vote on the president's nominees. and as i mentioned before there's not been a legitimate question that's been raised about her aptitude for the office. so the delay is unconscionable. it's unexplained.

and the thing that i will -- that i think warrants mentioning here is you'll recall as i pointed out senator -- ms. lynch has been waiting 128 days to get a vote in the senate. the reason that time period has been so long is because the president nominated her back in november for this job. and at that time we saw senator mcconnell himself say that ms. lynch, a, will receive fair consideration. i think he'd be hard pressed to make the case he lived up to that promise. but b, he also said that her nomination should be considered in the course of -- i'm sorry, should be considered in the new congress through regular order. so essentially huh senator mcconnell in the position back in november telling the president that he should delay submitting her up to congress until republicans were in the majority. now, i've gotten asked a number of times since november about whether or not the president trusts senator mcconnell, about whether or not senator mcconnell

and other members of the republican leadership, whether their word is good with the president. senator mcconnell back in november was saying her nomination should be considered in the new congress. but yesterday when senator mcconnell was asked on cnn about whether or not he was going to act quickly to confirm her and to explain the delay he said the nomination hasn't taken that long if you consider when it was actually taken up which was this year. he continued to say the democrat majority back in december had a chance to work on the nomination earlier but decided to delay it until this year. he failed to point out that delay was at his request. and now he's in a position of delaying it even -- of delaying her nomination even further. despite the fact, and i'll say it again, no legitimate question has been raised about her aptitude for this office. despite the fact she submitted to more than eight hours of testimony and despite the fact she's answered more than 600 written questions.

so there is no question that republicans are playing politics with the nomination of the nation's top law enforcement official, and it should come to an end. all right? julia. >> thanks. the state department is saying after kerry's comments over the weekend that assad should be included in talks to work out negotiations with syria, that they're still keeping the same policy policy saying he has to lead. what motivation does assad have to come to the table if he also would have to leave? and what pressure is being used to bring him into such talks? >> as the state department has said, and i had the opportunity to see some portion of secretary kerry's interview, he was referring to the fact that the assad regime will have to be at the negotiating table with elements of the modern opposition to try to broker an arrangement about the political transition in syria. as far as assad's motivation goes, it's difficult to

understand his motivation. what would cause somebody to drop barrel bombs on innocent civilians? what would cause someone to so disrupt the very fabric of their country that he would allow isil to run roughshod over significant portions of the country that he's supposed to be governing and slaughtering some of the citizens that he's supposed to be serving? so i have a difficult time trying to speak to his motivation. what i can tell you is the united states is going to continue to work actively with the international community to try to bring about some resolution to the political solution in syria. but what is i think understandably at the top of our priority list is dealing with the threat that is posed by extremists that are capitalizing on the chaos inside syria right now. there is no question that assad is responsible for that chaos. it's a reflection of his failed leadership that we see extremists who are attempting to establish syria as a safe haven to carry out acts of terror

around the globe, certainly around that region. and that's why you've seen such a vibrant international response. and ultimately all of this rests at assad's feet. and we are optimist thaik as we move forward we're going to be able to succeed in working with the international community to limit this threat, to degrade and ultimately destroy isil as an organization to take out other extremists that may be operating inside syria and you know hopefully that once we've been able to make some progress as it relates to the security situation we can also make progress on the political situation inside syria too. >> okay. and on the cyclone that hit many south pacific islands, we heard from the president on that. what's his response? is he going to offer any kind of aid? >> let me start by saying that we offer our con don'ted to the people vanuatu tuvalu, the solomon islands and carabas as

they cope with the devastating impact of cyclone pam. our thoughts and prayers are with the victims and their loved ones. in the wake of this cyclone the united states government immediately issued disaster declarations from our u.s. embassies in the region, and we're working closely with our ngo partners in the region on the most effective ways to deliver our relief response. the u.s.a.i.d. has sent an assessment team to vanuatu to coordinate our response. for details on that effort i'd refer to you u.s.a.i.d. and the department of defense that can provide lojsgistical support in these kind of situations. >> i want to circle back on the lynch nomination first. mitch mcconnell said the reason he's holding it up is this human trafficking bell. >> i saw that too. >> yeah. eric was asked about it last week and didn't really weigh in from you guys. so what i'm wondering is whether you guys have a position on whether the bill should be

passed as is. and specifically there's been a lot of controversy over an anti-abortion provision in the bill, whether that's something you guys would veto were it to pass the senate. >> well, right now it doesn't have the votes to pass the senate. over the course of last month we spent a lot of time talking about the efforts of congressional republicans to pass funding for the department of homeland security. and i observed at the time it was difficult to think of a more common sense measure that should be able to get bipartisan support from the united states congress than funding for the department of homeland security. well, sure enough a month later i think i found a more common sense that democrats and republicans should be able to get together to support, and that is an effort to concentrate federal resources to stop child sex trafficking. but you've got to hand it to republicans that they've taken even a measure as common sense as that and turned it into a partisan controversy. that is not a reflection of a

flaw in the bill. it's a reflection of inept leadership. that surely democrats and republicans should be in regular order be able to work together to advance legislation that would allow us to concentrate our efforts to focus on and crack down on individuals who seek to traffic children. but yet mitch mcconnell and republicans in congress have succeeded in turning this into a partisan controversy. and again, i also noted last month that speaker boehner and leader mcconnell got together the day after the election and they wrote an op-ed in the "wall street journal." the headline of the op-ed was "now we can get congress going." well, hopefully leader mcconnell can get congress going on passing a piece of legislation that would stop child sex trafficking. >> how are they turning it into a partisan issue? sn. >> hold on. justin, do you have anything else? margo? >> how are they turning it into a partisan controversy?

>> right now you've got a whole bunch of democrats on the other side of the aisle saying they're not going to support it because of a provision the republicans have inserted in this widely supported bill. if republicans with are going to be in a situation where they want, to to use their words, get congress going surely they should be able to find a way to build bipartisan support for a bill that is going to counteract child sex trafficking. >> why isn't that just democrats and republicans having their usual partisan difference over abortion? >> well, because you have a situation in which you have the republican majorities setting the tone for what bills are going to come to the floor and what bills are going to be voted on and what bills are going to be passed. so the fact that leader mcconnell can't build bipartisan support for a child sex trafficking bill i think is an indication that his leadership here in the majority is not off to a very strong start. >> you can find that entire briefing with the white house press secretary josh earnest online at c-span.org. next a consumer issues conference that was hosted by

the consumer federation of america. the event included keynote remarks from labor secretary tom perez. he talked about job creation and safety in the workplace as well as regulations to protect employees from discriminatory practices. this is 45 minutes. >> i have a feeling -- first of all, barb, thank you for your kind introduction. and barb's the real deal. and she has been a stalwart in so many areas including the retirement space. but i want to thank you because you know success in building an america that works for everyone is a joint venture. you've got to have folks in government like our president who get it and have those values, and then you've got to have folks outside of government like all of you who get it and share our values.

and that is how you define success. and then you've got to have people working at a state and local level who get it and he share our values and you've got to have serial activists who are doing the same. i've had the privilege of working as an elected official in montgomery county, maryland, which for those of you not from around here is oh, maybe seven or eight stops on the metro red line. i've had the privilege of working at a state level as the state labor secretary in maryland. and now i have this job. which is another way of saying the labor secretary gets to hold a job. but we can have another conversation about that. i say all of this because i have a profound appreciation for the role of everyone. if we're going to build communities that work for everybody we need to have those serial activists at a local level. one of the proudest things for me when i was in local government is we enhanced and created an office of consumer

protection. in montgomery county. we enhanced our human rights ordinances so we can build protections in our county residence. at a state level we did similar things. we had the nation's first living wage law. and things of that nature. because i'm a firm believer in what i call redundancy in law enforcement. we need state laws, federal laws and local laws because laws are only as good as the political will of those whoen force them. and at any given time that will may not necessarily be there at certain government levels. so that redundancy in my mind is a good thing. and the constant is all of you. that's why when barb invited me i was excited to be here because i want to start by saying thank you. you fight many uphill battles. the deck is -- the odds are often long. the days are hard. the setbacks feel like many.

but you know what? a week ago, last weekend i was in selma. commemorating the 50th anniversary of bloody sunday. and if there's anything i learned from going there, it's that the people who gave their lives in selma, many whose names you noeknow, many whose names we don't, they were extraordinary people. we have extraordinary people like john lewis who caused what he called good trouble. then we had people whose names -- emilia boynton. you may not have heard of her, but she was the woman in the wheelchair next to the president last weekend. and so many others who are martyrs in that movement. and what that movement was about was ordinary people doing extraordinary things. ordinary people who had a bold vision of an inclusive america

that works for everybody. an america in which we feel the full team. everybody is treated with dignity. everybody has an opportunity to punch their ticket to the middle class. discrimination is a thing of the past. and so i was inspired last weekend to continue to make sure that we put in place that vision of america. and what that vision is about is a movement and then extraordinary individuals. and every issue i work on you need that combination of the movement and extraordinary individuals. and that's no different for any issue that i've been involved in. and you are part of that movement for consumer rights. because you know, i look at the pillars of vital families and vital communities. and you know the pillars are

education security health care security, employment security housing security physical security, retirement security, and that's been really the north star for this president. how do we build an america that works for everyone? how do we solidify those pillars of security? and you know last year the incarceration rate and the crime rate went down in the same year for the first time in 40 years. because this president took a smart on crime approach. you look at health care security, our uninsurance rates have dropped at their greatest levels in 40 years. as a result of the affordable care act. and you know, i got this thing in my office. it's an album cover of ronald reagan in the '60s saying medicare will lead to socialized medicine. actually, if you listen to the album, because i got a little

curious, i listened to the album, it says medicare will lead to socialism in america. he was wrong. medicare led to retirement security in america for millions and has become a staple of who in the process of doing that same thing. thanks to folks in this room. you look at education security. you know, education's the great equalizer. my favorite senator when i was in college was a guy i never met, was a guy named claiborne pell. because without claiborne pell i couldn't have gotten through college. and that education is the great equalizer. and we don't need everyone to have a four-year degree because there are plenty of on-ramps to the middle class. but under the president's leadership, again we're solidifying that pillar of self-sufficiency. and the proof is in the pudding. 60 consecutive months of private sector job growth to the tune of 12 million jobs. you look at the depths of the recession, there were seven job seekers roughly for every job

opening. now there are about 1.8 or 1.7. so the odds are better. businesses are bullish. insourcing is the in word. outsourcing is yesterday's word. that jeep plant in ohio that mitt romney said was going to china? well, i've been to toledo. and guess what? he was partially right. the product that they're making in that jeep plant is going overseas. but they've added over 1,000 jobs. because that's what's happening as we see this manufacturing resurgence in america. you know, you look at the housing issue and we see foreclosures are now down significantly. you see what the president did recently for fha lenders to help them be able to get access to the american dream. you look at the work we're doing to make sure in rich cord dray and his leadership in the consumer financial protection bureau making sure that

consumers have a meaningful voice. because you know what? the whole consumer space and the mortgage space is a fantastic example of the world of false choices. when we had the wild wild west of 2005 and 2006 in the absence of regulation there's this notion that you know you either have a sound business climate for lenders or people go in the tank because regulation, you can't have common sense regulation. and i'll tell you having settled the two largest fair lending cases in this nation's history, i had a conversation with a very high-ranking executive who said you know what? in the depths of the wild, wild west in the mid 2000s i was losing my best people to countrywide. countrywide was the industry bottom feeder. they had no rules. you could go there for two years and retire basically because you made that much money preying on

people. so they didn't want to do that because they had ethics. and you know what? there was nobody minding the shop in the bush administration. it was the wild, wild west. and as a result so many people through the corrosive power of fine print and fast talk had the american dream translated into the american nightmare. because they said you've got to sign on the dotted line, sign these 58 forms, and little did they know they were signing the fast track to foreclosure. we must always reject false choices. when we have common sense rules in place that doesn't simply help consumers. that helps responsible lenders. and we must always remember that. we live in a world of false choices. we think about policing. and i spent a lot of time in that space. there's this tendency to say we

either have safe communities or respect for the constitution. that's a false choice. we can do both. and we have done both. it takes time and it takes persistence. and that brings me to the pillar that i want to spent the most time on, the pillar of self-sufficiency, and that is retirement. because i spend so much time and this president sends so much time building middle-class economics, making sure that people can punch their ticket to the middle class, that they have ladders of opportunity -- by the way, not escalateors. there's no free rides. they're ladders of opportunity for people willing to work hard. and there are jobs out there. the report we released three days ago. there are 5 million open jobs right now as we speak. 500,000 of which are in i.t. which pay something like 50% more than the average private sector job. there's a lot of good jobs out

there. and as we move forward as a nation i want people and the president wants people to have good jobs that pay a decent wage. we want to have aggressive enforcement of our wage and our laws so people who work hard can't get bilked. we want to make sure we have safe workplaces so that when you go to work in the morning you have a right to know you're going to come home safe and sound at night, whether it's from a coal mine, whether it's from a police department, whether it's from any business that you work at. those are pillars of middle-class security. and when you reach the end of your worklife all that hard-earned money we want to make sure that you have a good retirement. and you know what? times have changed. we're not in the "leave it to beaver" world anymore. ward and june were together.

ward worked 40 years at the office. ward had a defined benefit plan. and at the end of that career ward got to watch a handshake. and you know what? ward and june didn't have to think about how am i going to invest my retirement? because it was a defined benefit plan. you multiply 40 years times the formula, and it may be 1.5, may be 2, may be some subset thereof. and you got your retirement. well, leave it to beaver land has been replaced by "modern family." okay? and here we are in the "modern family" universe of defined contribution plans. where people reach the end of a working career and now they have to make decisions on how to invest their money. and i have said many times i'm the youngest of five. i'm a lawyer and all four of my siblings are doctors. i promised i'd never be a plaintiff's personal injury lawyer. that's one promise they made me

make. i have kept that promise. and i mean no disrespect to all my friends who are plaintiff's lawyers, they do an important job. but i did make that promise to my family. and so i've tried to do something noble. and i'll let you all decide whether that's the case. but three of the most important types of decisions people make are medical legal and financial. for lawyers and doctors the rules are pretty clear. you've got to look out for your patient. you've got to look out for your client. if i got diagnosed with cancer and i go to the doctor, i don't want her telling me, well, this is a suitable treatment for you, tom. suitability. yes. i want you to tell me what's the maximum way that i can live? okay? and that's what they do. if i got arrested for something and i'm trying to figure out what my best defense is, i don't

want my lawyer to tell me well, that's suitable. you can do that. well, why do we allow this in the financial space? well the answer is actually there are many many folks who hold themselves up to that high standard of protecting and looking out for your clients' interest. we have a financial planner who is a certified financial planner. he looks out for us. so for instance i was in the federal government from 1989 to 2001, and then i left federal service and came back a few years later. and we hired him in the early 2000s. and one of his first pieces of advice was keep your money in a thrift savings plan because it's a pretty good plan. now, that didn't get him any money. but he was certainly looking out for our best interests when he said that.

and so what we've been doing in the consumer space in the retirement space-s is we've got to figure out what's in the best interests of the client. and you know, one of the people that i've met in the course of this journey on this issue and i think this is one of the most important if not the most important thing we can do in the next two years to help consumers in the retirement space is this rule that we are working on. because you know what? i meet people like jack vogel. i think he's been in the business -- i know he's been in the business longer than i've been on the planet because i think he said 64 years he's been in the business. he looks very well by the way. i want his water. and he said something that really kind of simply summarizes this whole enterprise which is you know what? i learned in this business of financial advice that when you put your customers first that's

good for your customers and it's good for business. it's really that simple. and that's what he has done. that's what our adviser does. he's a certified financial planner. and you know what? that's what so many people do. i think it's important in having this discussion not to paint with an unduly broad brush and never to be unfair to these scores of people who are in this space who do fantastic work. i applaud those efforts. and during the course of our outreach, and i'm a firm believer that when you are doing a rule the most important thing you need to do is to construct the broadest table possible because if you are not a good listener you're not a good regulator. and that's what we have done over the course of my 18 months on the job. we deliberately slowed this process down because we knew how important it was. we knew the value of listening.

and we knew we needed to engage a broad array of stakeholders. we knew we needed to talk to the s.e.c. for instance. and we have done that with great regularity and have learned so much from that. and i have great respect for mary jo white and her team and the dedicated career professionals at the s.e.c. who have been very helpful and rich cordray and his team who have been very helpful. and industry stakeholders with whom we have met with regularity because they have been very helpful in enabling us to understand the business model and to understand how you thread the needle. i think you can thread the needle. i think it is a false choice to suggest that the only way to continue the business of providing financial service advice to folks is the status quo. i categorically reject that. and i have heard from some, i don't understand the problem you're seeking to solve.

and with all due respect, i can't believe that you don't understand the problem that we're seeking to solve. i really don't. and i don't mean that disrespectfully. and fortunately i have heard that less and less in recent months. i heard that at the outset. and i hear that less and less. and that is the good news. and so what are we trying to do? with our proposed rule. we're trying to solve the problems that have afflicted so many people. you know, i think about the toffel family, elaine and merlin. they saved $650,000 throughout their career. and they had that nest egg. they did everything right. and they tried to figure out, you know how to save it, how to invest it. you know, because they were -- we're in the new paradigm. and they go to their local bank. and they get put into a variable

annuity. very complex instrument. the fees were something like $26,000 a year. my wife and i, we just bought a car. and we paid $21,000 i think for it. and i'm thinking to myself, they're buying a new car every year. a nicer car than we have. by the way, it's a ford cmx. it's a very nice car. they could have had a car for $5,000 cheaper. they could have had that. you know that is a lot of money. when i reflect on this, i think about some of the concerns that have been raised. well what about the small investor? you know, to me the small investors are the people who are in the greatest need of getting advice that's in their best interest because they don't have margin for error. and so when i hear that argument

i agree with the notion that small investors deserve advice, and we need to get more advice for small investors. but we need to get advice that's in their best interest. you know folks who are wealthy who get conflicted advice, well, that is unfortunate. and we'd like to prevent that. but you know, the consequences for them are less catastrophic than that family that saved $50,000 and is trying to figure out how to spend it. and by the way, that small investor who has $50,000 or $100,000, the vast majority of them need an index fund or something really simple. and that's why business models have already emerged that can help them. we want to make sure we provide education because i think education is power. i think an educated consumer is

indeed the best customer. and what we're going to do in this rule is clarify the line between education and advice. because that's important. and we heard from the industry. you know, you can't ban commissions. that would put us -- that would unduly upset our business model. and we will not be banning commissions in the proposed rule. and now they did that in the uk. i'll note something that's very interesting. and i went to the uk because i told you you build a big table you listen to folks and you learn from them. i traveled over there because i wanted to learn with my own eyes and ears about the uk experience. and what's really interesting is what has happened in the aftermath of their rule,web-based products -- people who don't

have that million-dollar nest egg but have a nest egg that is far smaller. and so you know, they're pretty smart people over there. they had a new regulatory environment. and they've been figuring it out. and innovation has emerged. i think folks around here are pretty smart too. we're no less smart than the brits. and i think we can figure it out too. and so you know the miracle of compound interest is a wonderful miracle. however, the flip side of that, which is not a wonderful miracle, is you know, the tragedy of compound fees and costs can linger like a chronic illness for a retiree. and when you're talking about $26,000 a year for this family do the math. and do the comparison between

that and an index fund or some other instrument that was pretty simple. i think we can do this. i think this is one of the most remarkably important things that we can undertake in the remaining 650 days. i've got 650 days till the weekend. and that's what i'm going to be working on. things that make sure that we sustain the pillars of the middle class and make sure that all the things that we have worked on to help people to save. many people lost so much of their savings in the great recession, they're getting it back now. and this is one of the most important things we can do to help them. and i know one thing. we can't help them without a movement. because it brings me back to selma selma. anything that's important around here, you need a posse to get it done. and i have been so heartened by

the folks in industry who have stepped up and said you know what? we can do this. and it's right for our customers and it's right for our business model. i was in duke law school recently speaking about what i call the stakeholder model of how we build a virtuous cycle in america. there's too many false choices i only take caver my shareholder, i can't take care of my worker, and i can't take care of my customer. it's either/or. that is wrong. i see businesses everywhere that understand that the high road is the smart road. including people in this space. who understand you can take care of your shareholders, you can take care of your workers and you can take care of your customers and create that virtual cycle. so that's what we're going to do with this rule. but i know there are some who still want the status quo. and we look forward to those conversations. we have done remarkable amounts

of outreach to date. and then when the rule comes out we're going to begin another formal process of comment. and i look forward to that comment. and i look forward to continuing to have a big table with inclusive participation because that's how you provide and that's how you produce the best possible rule. but i need your help because i need ordinary people to do extraordinary things. and this is rule that is at the heart of protecting consumers. making sure that retirement with dignity can be achieved, and doing so while recognizing that you know what? folks who are in this space can make a very decent return and make a very decent living.

i am all for that. i think we can have both. i think we can adopt the stakeholder model i discussed and we can put it here. we've got a lot of work to do. we've done a lot of work. and i hope that when you go back to your communities you will talk to your stakeholders and among other things ask them have you ever looked and asked the question of your financial planner, like what standard does he or she adhere to? because a lot of folks -- this is like -- this is a first cousin of what i saw in the mortgage space. you know folks did not know they were victims. because they went to someone they thought they trusted. and turned out that the trust may have been misplaced. so i need your help in raising consciousness because we don't know what we don't know. and i saw this in the mortgage space. we had to go out there and say hey, show me your mortgage instrument. then we'd talk to people and say

do you know that in eight months your interest rate is going to go up 4%? they're like hell, no. you know that's what we've got to do here. there's a lot of consciousness raising that needs to go on. there's a lot of education that needs to go on. and you all are in the front lines. and the reason i was excited to be here was because i know that we can get this done. i know this is good for america. i know this is good for the financial services industry as well. we can thread this needle. we will thread this needle. the president himself has talked about this because he understands that at the heart this rule is about middle-class economics. retirement security is a pillar of middle-class economics. so i want to thank you for listening, but much more importantly i want to thank you all for being serial activists in your communities across this country, for giving voice to

issues that are all too frequently not discussed for empowering communities that all too frequently feel vulnerable and disempowered, and for being those heroic figures who are thinking boldly about an america that works for everyone. an america in which really shared prosperity is what we are about. and shared prosperity throughout the golden years is an article of faith. and so thank you so much. [ applause ] >> so secretary perez has said he'd be willing to stay for a couple of questions. so just one or two. we have microphones here. so -- >> [ inaudible question ]. >> thank you for hosting us. when we rolled it out the other week. >> of course. so this year is the 25th anniversary of the americans

with disabilities act. and despite this groundbreaking law that's supposed to protect workers, the unemployment rate for people with rate for people with disabilities has remained flat for the full 25 years, and i'm wondering if you could tell us what your department is doing to encourage people and often because older workers have disabilities at the heart of their discrimination problem. >> the unemployment rate of people with disabilities is like 19% and the labor rate of participation is in the low 20s if my memory serves me. and i've spent a lot of time in local and state government on this. i think the major piece of unfinished business of the ada is employment. and we one of the things that we did, and it's actually a good parallel to this discussion that

i was just having about the conflict of interest rule is a rule we put in place under section 503 of the rehab act which is a rule designed to ensure that employers are taking best efforts to hire people with disabilities we put this in place about a year and a half ago. when we first proposed it there was an outcry from some in the employer community who said this is impossible to do. we were asked questions like, do i have to hire a blind person to drive the truck? and i'm not kidding when i say that. we were sued. we won. and the remarkable thing about it is this one person who shall go unnamed who led the assault against us is now one of our biggest proponents because he looked at his business which is a fortune 500, probably a fortune 100 company and he

looked at his numbers and said, our numbers are lousy. and once all the litigation was over and he focused on implementation, we put him in touch with our biggest allies who are other employers who are doing it. and say it can be done. you know all of these issues, if you have the will to do it, you find the way. and regrettably, if you look the will to do it you find the roadblocks. there are so many employers like walgreen's and lowe's and others who have made significant commitments to hiring people with disabilities and we're doing our level best to lift those up. we're going to continue those efforts and we're making progress and as we highlight the 25th anniversary, i'm going to be talking a lot about

employment, because that's the biggest piece of unfinished business. i can do these last three, and then i'll have to call it, if that's okay, barb. >> yes. >> i applaud your work to bringing the light to the conflicts in the financial services industry. my question concerns what do you do about companies who claim presently that they serve the best interest, that their advisers avoid conflict of interests and things like that but yet they've never enforced that. are you aware that many sort of institutions have those rules that they do not enforce and what do you think about the idea of sort of second opinions on financial advice? because i see many people who

think they've worked with somebody that they could trust. but that if they'd gone and gotten a second opinion they'd get very different advice. so as i applaud the fiduciary goal, i'm not sure it gets us all the way there. i welcome your thoughts. >> well, we've heard from a number of stakeholders who have said that we already -- we put our customers first, and we will continue to do so. and my response is, well then compliance with this is going to be pretty easy. [ inaudible ] >> but they've had a legal obligation endorsable to do so. and so that will be a different pair -- pair dime. i have a lot of productive conversations with folks, one-on-one, who say, we can do this, we can figure this out.

when you have such a substantial sub set of the industry who already know does it what i hear from the fiduciaryiesfiduciaries, is we need a level playing field. because they don't know whether the person they're talking to is under a suitable standard. they think they're looking out for their best interest. some are and some aren't. i wouldn't want my doctor that i go to today to be looking out for my best interest and my doctor next week to tell me that the treatment is suitable. so that level playing field issue is a big part of what we're doing. in terms of second opinions, one thing i hope is already in place and i've done a lot of work in the mortgage space on this is having internal controls. we do a lot of work to help put in place things like mystery shoppers. that's often a term of consent decrees that we reach in a mortgage space. what that simply is, you say

you're not discriminating in the mortgage space well, test it. see what's happening. and when they do that, you can prevent things that you see emerging from becoming big. and so a big part of this conversation, you know needs to include those sorts of internal controls. >> hi, i'm alexis goldstein with other 98.org and i'm exciting that you're here today, i'm exciting about the energy you're bringing to the conflict of interest rule and you mentioned the president is behind it. that sets up expectations that this is going to be a really strong rule. and you mentioned this idea you've seen less pushback from the financial industry. but i've seen reports in the press from moneyed institutions saying things that they're offended by the tone the white house has taken with its memo. and so my question is that memo, if i recall correctly said that retirement savers are

losing 17 billion a year due to hidden fees. so i'm curious, if you stand by the numbers in that report, if you stand by the tone in that report, and if we can expect a strong rule in spite of this industry pushback by these well-moneyed interests. >> i want to clarify something in your question about what i said. i have spoke to a number of industry stakeholders who have said this is something we could do, and in some cases this is what we are doing. i don't think there's been less pushback by some of the industry. i don't want to give you a mis-impression that suddenly light bulbs have gone off everywhere. i'm not confused by that. i appreciate those who have said, i haven't seen the rule yet and i want to withhold judgment until then. if i were in those shoes, i'd do the same thing. so, you know what i'm not confused about the road ahead.

there are some -- and again i had meetings with folks who said i don't understand the problem. and so, you gotta understand that there are some who stated that and that perhaps bespeaks an effort to move forward with pushback. but again, i'm -- you know, when you have the facts on your side and when you have movements on your side and when you, you know, have folks in the industry, this notion that i will go out of business if i have to do this, and i'll stop serving people. when i was in montgomery county maryland, we put in place a rule in the mortgage space to help consumers, and i heard from the bankers saying i'm going to stop lending in montgomery county if you put this rule in place. and i'm thinking to myself, tenth wealthiest county in

america, bethesda and they're not going to be able to get a loan. i'm not sure i believe that. and guess what they're still lending and montgomery county. we're still the tenth wealthiest county or something like that in america. and we were able to thread the needle and i think we can do this here. there's so many good players in this industry and they're smart and innovative and i think this rule that we're going to put out for comment, will enable us to thread a needle. yes, sir, last question. >> i'm bob adner during the obama transition, you were my boss. >> yes, you do god's work there. >> this is a personal note and i want to note that there was a great material in "the new york times" a couple of weeks ago, making the points that you did about the differential that you pay when you have an index fund versus a brokerage account

which was a personal point for me because for years, with my brokerage account, how much am i paying in fees, that he read my incredibly obscure financial disclosure form, which told me how much i was paying which is why i'm no longer with them. but one of the points the article made was over the course of 30 years two investors with roughly the same amount of money, the one with an half-time managed account would reap hundreds of thousands of dollars less than going to an index fund. and the other point most of the studies i'm aware of say over the long run actively managed accounts tend not to beat the market, at times lucky to stay even with the market. so i wonder if you can tell us if there are any studies about an actively managed account versus the advantages of an

index fund. >> you have taken the words out of my mouth. and certainly in our research, the concern i hear the most frequently is, this is going to hurt small savers. i would respectfully assert that small savers are the people who need to make sure that their advisers are working in their best interest, because small savers don't have any margin for error. and small savers, by and large, are going to do the best in an index fund or some other no-load, low-fee kind of fund. so, whenever i hear that argument, and by the way, jack baldwell's company is doing okay, i think.

and he's not the only one in this space. and you look at the aftermath of the uk and you see that there are now new web-based products that are springing up and you know, i think, i don't want to overstate those, i'm intrigued by the fact that innovation has really taken off there. and i think we're a pretty darn innovative world here in the united states. and so, you know i think, again, it gets back to what i said. if you have the will to do something, you can do it you know. i look at the woman who asked the question about 503, no we are not requiring employers to hire blind drivers. okay? i can say that with certainty. and i repeat this because i'm not making this up. these were some of the comments. you know, but now, i go to walgreen's and as a result of the leadership of their

corporate heads, you. >> to their distribution center in connecticut and i been there 40% of their employees are people with disabilities working side by side making 15 bucks an hour or more, with people who don't have disabilities and that's one of the most effective and productive places -- bless you -- [ laughter ] bless all of you. and so they figured it out. other companies are starting to field it out. i feel like there's a little ground hog dog, i heard this in the mortgage space when we tried to regulate. blacks and latinos will no longer have access to the american dream. that was the argument in the mortgage space, and that was wrong. we need to move forward and we can move forward, and the studies are legion.

you've cited a couple but they're legion about how the products that folks are going to get into that are low-cost high-reward products, are exactly what they need. that's why my guy said stay in the thrift savings plan. i could take it and make money rolling it over, but that wouldn't be in your best interest. everybody deserves to get the advice that my legal aid, lawyer wife who works with homeless people and tom perez who's been in public service his whole career. so we don't have -- we're not the rock fellers. okay? our margin for error is pretty slight. i need you all to help in communities to do this. so set up through your networks folks who can provide second opinions for folks. because what's going to happen is that as people become more and more aware, they're going to start asking more and more questions. that's great.

that's what should happen. and you know what the companies that can answer the question in a way that shows i'm looking out for you, those are the companies that have nothing to worry about. >> and the companies that have been getting 24,000 or $26,000 a year from a very annuity for someone -- you know we don't need that. it's like olympic diving. you don't need the two and a half with a twist. the cannonball will do for just about everyone. and so this is doable. so thank you. [ applause ]

>> here's a look at what's coming up tonight here on c-span3. first, a senate armed services hearing on the navy's 2016 budget request. then a look at u.s. policy toward the arctic with a retired admiral serving as u.s. special representative for the region. and later, a group of u.s. mayors discuss transportation policy at a recent conference hosted by the american public transportation association. navy secretary ray mabus and other officials within the naval branch were before the senate armed forces committee to test about the nave'budget request for 2016. they adviced the impact of sequestration cuts and mental

health issues for veterans. this is two and a half hours. >> good morning. i want to welcome the witnesses. i thank you all for being here this morning. the committee meets to receive testimony on the plans and programs of the department of the navy for fiscal year 2016. i want to thank each of our witnesses for their distinguished service to the nation as well as our forces who are serving today. this is admiral's last hearing before the committee today, but his last appearance as chief of naval operations and i'd like to thank you, admiral green ert,

for your 40 years of distinguished service to our navy and i wish you and darleen all the best in the future. in the last three months, some of america's most strategic thinkers have offered this committee a clear, unified assessment of worldwide threats and u.s. national strategy. as dr. kissinger testified on january 29 tth, the united states has not faced aid more diverse and complex array of crises since the epped of the second world war. the actual global challenges we face are compounded by the limitations of the budget control act and sequestration, which were a self-inflicted national security crisis. indeed, all four of the military service chiefs have testified that defense spending and sequestration levels would put american lives at risk. now more than ever, a strong navy and marine corps are essential to our nation's ability to deter adversaries,

assure allies and defend our national interests. from our strategy of rebalancing to the asia pacific region, to conducting ongoing operations against isil to deterring rogue factors like iran or north korea to many other requirements, the u.s. navy and marine corps are key pillars to our national security strategy. yet by any manager, today's fleet of 275 ships is too small to address critical security challenges. the navy's four struct ur assessment requirement is 306 ships. the bipartisan national defense panel called for a fleet of 323 to 346 ships. and our combatant commanders say they require 450 ships. but under sequestration the navy has said the fleet could sink to 260 ships. equally troubling the marine corps continues reducing from 202,000 active duty marines in

2012 to 184,000 today, to 182,000 in 2017. with the demands on our sailors and marines rising, coupled with short falls due to requesteration, our lengthening deployments, cutting training and time at home with families and putting our all-volunteer force under considerable strain. the president's budget request attempts to buy as much readiness as the department can execute for fiscal year '16. and this is yet another reason why we cannot afford a defense budget at sequestration levels. the president's budget also includes significant funding requests for major navy and marine corps acquisition programs in the current fiscal environment, it's all the more important for this committee to conduct rigorous oversight of these programs to ensure that the department of the navy is making the best use of limited taxpayer dollars.

that is exactly what we will do. the combat ship, despite initial cost overruns that more than doubled the cost per ship, the navy appears to have stabilized the cost and yet the program still faces challenges to deliver the promised war-fighting capability. all three of the lcs mission packages still need significant further testing and must overcome major technology integration challenges. regarding the secretary of defense's challenge to upgrade the lcs this committee will continue seeking further information to justify this decision. without an assessment it is unclear the lcs will need, thus how much more lethal and survivable a ship needs to be. in short the navy must demonstrate what plb the upgraded lcs is trying to solve.

we cannot afford to make this mistake again. with the first three carriers, despite cost overrups of more than $2 billion each, this program has not exceeded the cost cap in the last three years. however, the second ford class carrier, the uss john f. kennedy will delivery in niskal year 2022 less capable and less complete due to the navy's two-phased delivery approach. this plan would leave up with an incomplete ship should world events demand an additional aircraft carriers, or if the uss nimitz encounters unforeseen problems in the final years of its 50-year service life. i'm also concerned about the navy's plan to delay full ship shock trials from the second to the third-class carriers. that delay is hard to justify for a new ship that is this complex. this committee also has a duty toe shape the future of our navy and marine corps.

with three service combatant classes set to retire soon now in the time to lay the analytical ground work to replace those ships. as the navy develops requirements for the next class of amphibious vessel, we must ensure that our warships are capable of supporting the marines in the manner they plan to fight in in the future. we must also carefully examine the future aircraft carrier fleet and the carrier air wing, $12 billion or more for one ship is simply too expensive. we must do even more to reduce costs and increase competition within the aircraft carrier program. and as challenges to american airpower projection grow we must chart a path to achieve the unmanned strike capability from our aircraft carriers. we look forward to the witnesses' testimony today and hope they will cover the broad spectrum of issues that the

department confronts. >> thank you very much, mr. chairman. let me join you in welcoming all of you to the committee this morning to testify this morning to testify on behalf of the navy and the review of the 2016 budget request. and general mabus joined us last saturday for the ceremony for the uss colorado. welcome general dunford to his first hearing and i also want to join the chairman in commending the outstanding work of admiral grant as he departs, at least this venue. thank you very much, sir, for your outstanding service to the navy and to the nation. our witnesses this morning face huge challenges as they strife to balance the need to support ongoing operations and sustain readiness with the need to marginalize and keep the technological edge so critical to military success. these challenges have been made particularly difficult by the

physical constraints of the budget control act and sequestration. all the military departments have been forced to make painful trade-offs. now the threat of sequestration continues to loom. if congress does not act to end it i believe our long-term national security interests will be threatened. last year the department of the navy was facing serious readiness problems from defrt maintenance, reduced steaming and flying hours and cancelled training and deployment increased emphasis on readiness in this year's budget will address some of the navy's most serious readiness problems, but results in a serious shortfall in modernization fund to meet future threats. i'm interested in your views on this risk because of the short falls. the navy is facing short falls on attack submarines air and missal defense cruisers strike fighters and inventories. they've been operating for two years now with fewer than the

required 11 aircraft carriers. during the next decade, the navy will need to buy a new class of submarines, a very costly venture. i'm interesting in hearing how the navy is managing its operational tempo with these short falls. i'm almost interested in the witness views on how they will meeting competing demands on the budget once the higher cost of replacement begins. the president's budget called for 184,000 marines down from the war-time high of over 200,000 marines. i'm interested to learn how the marine corps will manage mission risk with a force this side, particularly with increased embassy security. the marine corps clearly remains committed to the revitalization to the assault capabilities with a budget request that includes funds for its current family of

armored amphibious assault vehicles and continued a competitive search for new-wheeled combat vehicle. we understand the amphibious combat vehicle program would integrate a number of technologies into a new vehicle. the marine corps has described this program as, quote, non-developmental. which raises questions about what non-developmental means when you're developing a new system. i'm interested in your incitessights on this whole program. all the real amphibious challenge on the amphibious gap has more to do with ships and connectives than air and sea-born assault systems. navy witnesses have testified about the number of ships required to meet shipping goals. sometimes lost in that discussion is the fact that changes in the marine corps, ground or air components ripple through the amphibious ship force requirements. i know that the navy's planned purchase of the amphibious transport is one effort to address the amphibious shipping

shortfall. the defense department's guyance issued in january 2012 followed by the 2014 kdr, and this january, our new national security strategy echo a renewed military orientation on the asiania pacific. consistent with that strategy the defense department has been working to realign forces in south korea and okinawa. with plans for australia, singapore and elsewhere in the region. i'm interested in hearing more about these and other aspects of the deployment. again, there are many questions but i want to conclude by thanking all of you for your

extraordinary service to the nation, to the navy and to the marine corps. thank you. >> mr. secretary? >> thank you mr. chairman. chairman mccain, ranking member reed members of this committee thank you for this opportunity to discuss the department of the navy with chief of naval operations john green ert, joe dunford, i have the great privilege of representing the sailors and marines who serve our nation around the world the civilians who support them and all of their families. as the chairman and center reed pointed out, this is admiral green ert's last posture testimony before this committee. he's been a steady hand at the helm of the navy through the past four years of international instability and budget turbulence. every day his judgment and advice is good counsel it's been arn to serve with him and he will leave a lasting legacy.

today our security interests face an increasing array of threats and demands while our budget situation, as you so clearly pointed out, mr. chairman, grows more challenging. but it's clear that the navy and marine corps team offer the best value to advance both our global security and our economic interests. uniquely, the navy and marine corps provide presence around the globe, around the clock. we're the nation's first line of defense, ready for anything that may come over the horizon. presence means that we respond faster, we remain on station longer. we carry everything we need with us and do whatever missions are assigned by our nation's leaders without needing anyone else's permission. we've always known america's success depending on an exceptional navy and marine corps. article one of our constitution authorized congress to raise an army when needed, but directs

you to provide and maintain a navy. from the first six frigates to our growing fleet of today, from tripoli to afghanistan, sailors and marines have proven the founders' wisdom. american leaders have understood the vital significance of sea power. we are truly america's away team. we deploy in peace just as much as in war and our role in the last 70 years in securing sea lanes and freedom of commerce has boosted our own and the world's economy. nearly half the world's population lives within a hundred miles of the sea. 90% of all global trade goes by sea and 95% of all voice and data goes under the ocean. the shelves of our stores are stocked with just in time delivery with products from all over the globe and some 38 million american jobs are directly linked to sea borne

international trade. for seven decades the navy and marine corps have producted this system. that's why our national defense strategy focused onned on the maritime requires investments. for the past few years, the department of the navy has attempted to minimize the impact of an uncertain budget marked by continuing resolution, and the threat of the return of sequestration. this environment has made it much more difficult but even more critical to set priorities and to make some hard choices. the presence of our navy and marine corps unikly delivers on four foundations, people platform, power and partnerships. these are key to the success of our naval services ask they remain my top priorities. people, our sailors and marines

are well known for their ability to exercise independent judgment and the flexibility to adapt to changing circumstances. we remain committed to providing our sail,ors and marines with the training and support they need to maintain our presence. and we include in this their dedicated families, our injured and our wounded. we've launched a comprehensive approach to assure the world's healthiest fittest, most resilient and best educated force, one which truly represents america's diversity. we continue to aggressively combat sexual assault, abuse, ethical failings, similar challenges. and we're exploring innovateive means to improve the way we manage the force. in platforms, our people as good as they are, cannot do their jobs without ships. providing presence, being where we're needed when we're needed requires those ships. quantity has a quality all its

own. that means we have to have a properly sized and a properly balanced fleet. on september 11th, 2001, the navy's bottle force was 316 ships. by 2008, the fleet had declined to 278 ships. our focus on two ground wars only partly explains that decline. in the five years before i game to this office, navy contracted for only 27 ships. not enough to stop the slide in the size of the fleet. in my first five years, we've contracted for 70 ships, halting and reversing the decline. by the end of the decade our fleet will once again top 300 ships. we've accomplished this with a direct and fundamental busy approach based in large part on the legislation which originated in this committee authored by chairman mccain and chairman levin. things like increasing competition, relying more on

fixed price contracts and thanks to this committee, congress has helped multiyear and block buys. but bauth instability and uncertainty erode our ability to grow our fleet, manage our resources and maintain the industrial base. without a correctly sized and shaped fleet, the navy and marine corps will not be able to meet the demands with the kinds of missions for which we are the best and often the only option. in the face of budgetitary uncertainty, cutting ships is the most damaging and least reversible course of action which is why i'm committed to preserving ship-building to the maximum extent possible. fueling the ships aircrafts and vehicles of our navy and marine in energy.

we believe our national security interest and the ability of the navy and marine to meet these missions must be increased. our ability to maintain presence in advanced global security will be augmented through partnerships. cooperations makes us more effective and reduces misunderstandings. again and again, our naval forces have proven themselves the most immediate, the most capable and the most adaptable option when a crisis develops. overall, the presence fy 16 budget balances current readiness to execute assigned missions while sustaining a highly capable fleet all within a tough fiscal climate. that climate demands as you pointed out, mr. chairman, rigorous examination of every dollar we spend and doning our aggressive efforts to cut unnecessary costs in every

program and shift resources from tail to tooth. when america is called, the navy and marine corps have always been there. in order to assure to provide what the american people expect we look forward to answering your questions and to working together with this committee and with congress to maintain our great navy and marine corps. thank you. >> thank you mr. secretary. and the complete statements have been submitted by all three of you will be included in the record. general dunford? >> chairman mccain ranking member reed and distinguished members, i'm honored to be here today and to represent your marines. we feel that the best trained and equipped marine corps has ever sent to war. i know this committee and the american people have high expectations for marines as an

expeditionary ready force expecting them to operate forward, engage with part nerds, deter adversaries and respond to crises. and when we fight, you expect us to win. you expect a lot from your marines and you should. this morning, you hold this hearing, over 31,000 marines are engaged doing what you'd expect of them. our role informs how he man train, and equip the force. it also prioritizes the allocation of resources that we receive from congress. over the last few years, we prioritized the readiness of our deployed forces. these are the forces you can count on for immediate crisis response. these are the forces that spded the recent evacuation of u.s. citizens in south sudan libya and yemen. these forces currently conducting strikes in syria iraq training the iraqi army and protecting our embassy in baghdad. these are

i can assure you they're well trained, well led and well equipped. but we've had to make tough choices to deal with the effects of two wars, sequestration in 2013 and reduced budgets in 2014 into 2015. in order to maintain a readiness of our four deployed forces we have not sufficiently invest in home station readiness, modernization, infrastructure sustainment, and quality of life programs. as a result, approximately afl half of our non-deployed units, suffering personnel, equipment, and training short falls. this will result in a delayed sfns and/or the unnecessary loss of american lives. over time underinvesting in modernization will result in maintaining older and obsolete equipment at higher costs and degraded capabilities. in many areas, funding levels are forcing us to maintain legacy capabilities instead of

innovating for tomorrow's threats. it will erode our competitive advantage. we don't want our marines and sailors in an unfair fight. we can meet the requirements with the president's budget, you but there is no margin. funding levels will exacerbate the challenges we have today and result in a marine corps with fewer active duty battalions and squadrons than would be required for a single contingency. as we saw in the wake of benghazi, the american people expect tous respond to today's crisis today. we can only do that if we're properly postured today. in closing, my assessment is that funding below the president's bouth level will require that we develop a new strategy. thank you once again for the opportunity to appear before you this morning and for your

leadership in addressing today's fiscal challenges. i look forward to your questions. >> thank you for the opportunity to testify today. it's my honor to serve and represent more than 600,000 active and reserved sailors, our civilians and their families especially the 41,000 sailors who are under way and deployed around the world today. it's my pleasure to testify this morning beside secretary mabus and general dunford. gentlemen, your team is united in fulfilling their long-standing mandate. to be where it matters when it matters, ready to respond to crises. now to that point, recent events exemplify the value of forward presence. last august, the bush carrier strike group relocated from the arabian sea to the arabian gulf, about 750 miles in less than 30 hours and began flying 30 combat sorties per day.

for 54 days, that was the only thing projecting power against isis. the trucks arrived within a week after russia invaded crimea. and we were among the first vessels to support the flight search in the java sea. we've been where it matters when it matters. as i've testified before the continuing resolution and the see questeration of 2013 degraded our readiness and capabilities and we've not yet recovered. budget reductions have forced reductions generated maintenance backlogs and have compelled us to extend unit deployments. since 2013, many of our ships have been on deployment for eight to ten months or longer and that exacts a cost on the resiliency of our people and the service lives of our ships. this degraded readiness has reduced our ability to respond to contingencies. for example, our commanderers

require three strike groups and amphibious groups be ready to respond within 30 days to a crisis. that's our covenant to them. however, today, on average, we have been able to keep one carrier strike group and one amphibious ready group in this readiness posture. so we're at 1 third of the requirement. assuming the best case of an on-time, adequate and stable budget and no major contingency we might be able to recover from the accumulated backlogs by 2018 for our carrier strike groups and by 2020 for our amphibious ready groups. so that's at least five years after this first round of sequestration. and that's just a glimpse of the damage sequestration would cause if we go back there. we've been forced to slow modernization. the budget short falls -- anti-submarine warfare, air-to-air warfare and

integrated air and missile defense. so we have been compelled to accept significant risks in the execution of two key missions that are specified in the defense strategy. i provide each of you a hand-out that summarizes where the navy stands with the missions and where we stand in relation to those missions under the two budgets, the president's budget and sequestration. the first mission at risk is to deter aggression, which means to win a war at sea while deterring another at sea in a different theater. and the second mission at risk is to project power despite anti-access and aerial denial challenges. when i say risks, i mean that some of our platforms, our people, and our systems will arrive late to the fight. they will arrive with insufficient ordinates and be without modern combat systems sensors and networks that are required and will be inadequately prepared to fight. this means more ships and

aircraft out of action in battle. more people killed and less credibility frankly to deter adversaries and to assure allies in the future. given the circumstances of our submission it represents the minimum funding levels to execute our strategic guidance to bring the navy program, we need to deliver that capability on whatever capacity we can afford. we delayed upgrades in aircraft ships and submarines and took significant reductions in procurement, munitions and infrastructure. so today's world is more complex, more uncertain and more turbulent. our adversaries are expanding and modernizing their capabilities. we need an adequate, predictable and timely budget to remain an effective navy. i thank the committee for what

they've done for us and look forward to working with the congress to make your our forces and their families are equipped. thank you. >> i want to thank the witnesses and these are compelling remarks. admiral green ert general dunford, do you share admiral green ert's concern concerning the effects of sequestration and as admiral green ert pointed out, a significant period of time before we can even recover from the present effects of sequestration? >> chairman, i absolutely do. the sequestration of 2013 has impacted current level of readiness. if we go to sequestration we'll be unable to meet the current strategy and we'll have to reduce the capacity of marines that have forward deployed. >> i believe you were asked by another -- i believe it was senator king. is this sequestration put the

lives of the men and women who are serving in uniform in greater risk? >> chairman, i'll take that. it absolutely does chairman and in this way. with the readiness challenge at home station my expectation is that when marines are called, we'll go either late or with short falls in equipment and training that would absolutely put young americans' lives at risk. >> admiral green ert? >> absolutely, chairman. a lot of people write about today and today's navy this is about the future navy. our benchmark is 2020. if we don't modernize, we'll be lady, we late and won't have what we need. >> is it affecting retention of outstanding men and women? >> it is. the families are angry at the threat of sequestration. we have pilots, a key part of

our ability, our reattention is low on pilots, aegis technician and cyber. >> general dunford, the deployments are longer is that correct? >> chairman, the biggest significance is the time between deployments. most of our fighting squadrons and infantry are deploying for seven months, and they're home for less than 14 months before they deploy and that continues, almost adinfinitum. >> so that's another factor on reenlistment? >> it will be over time. we've not seen the impact on the ability to recruit and retain high quality forces right now, but it does have an impact on two things. it impacts training across the range of operations and also has an impact on the time marines spend with their families between deployments.

>> mr. secretary, we've had conversations about the situations of the cost overruns of the aircraft carriers, of the jerald r. ford and i understand that the follow-on, 78 and 79 they are or will be around $12 billion each is that correct? >> the 79 has a congressional cost cap of 11,5 and we're under that. >> and i hope mr. secretary, given new technology and drones and a lot of other aspects of warfare, including the f-35 capabilities, that we will be looking at alternatives as well to the nimitz class or the latest class of aircraft carriers. is that correct? >> it is senator. i think that as you and i discussed, everything is getting

smaller and faster with the possible exception of the military. >> i guess i'm not quite clear on why -- isn't it true that the major cost overruns, due to advances or new technology in launching and electromagnetic aircraft launching system advanced resting gear, dual-band radar, and advanced weapons elevators, are those still the greater risks on the cost problem with the gerald r. ford and the kennedy? >> mr. chairman, you're absolutely correct that those were some of the reasons for the cost overruns. you and i are in pretty violent agreement that the way the ford was built is not the way to build a ship.

it was being designed while it was being built. too much new technology was trying to be forced in ask that technology was not mature. today the force is 87% complete. the testing on the electromagnetic launch and the advanced arresting gear is where it should be and it's moving along, and the risk of any more cost overruns, as you pointed out in your opening statement, we've had stable costs for the last three years or more now. and it goes down every day. there is still some risk in the testing of those brand new systems that we've never used before. >> general dunford, and admiral green ert, could you give a brief update on the progress of the f-35. >> chairman in our case, the first squadron will be at initial operating capability this summer. that's vmfa 121 out in yuma,

arizona. i visited the squadron weeks ago, i'm confident we're on path to bring that up to ioc and we have a good number of aircraft laid in across the five-year defense plan to bring the f-35 into service. >> admiral? >> we had our carrier test this is past summer. it went great. tail hook was certified. we had no bolters so the avionics for the aircraft itself, the c model that's ours, is good. we have a way to go for the software the 3f software. right now, we're on track for an ioc of '18 or early '19. my concern is that the software is able to integrate all of the weapons systems that we have on the current aircraft on our air wings. this aircraft has to fit into our air wing. but so far, so good. we have to keep really close watch on it. >> thank you. senator reed? >> well, thank you, mr.

chairman. let me first say that the chairman's questions regarding sequestration and your responses about the real and dramatic effects on the lives of the men and women who serve are, i think, another strong indication of the need for collective and bipartisan action to end sequestration. thank you, gentlemen, and thank you, mr. chairman. >> mr. secretary and admiral green ert, last year in the defense authorization bill, we in sect 1022, creating an extra c-based fund which was designed to help you from a department of defense level, to build or replace the ohio class submarine. can i just ask both of you how do you intend to use this fund? and in general, your plans for the replacement of the ohio. and mr. secretary, did you want to begin? >> well we very much appreciate

the establishment of this fund. c and o and i have been talking for some time about when we begin to build the ohio replacement in 2021 if it's a pure navy build, it will devastate some part of the navy either our ship-building or readiness, or something. because of the high cost of these and because we don't recapitalize them very often. if you look back in history, there is -- there's precedent for either making this a national program, because it is the most survivable leg of our deterrence deterrence try yad, or adding funds to navy ship-building to accommodate it. the 41 for freedom and late 50s, early 60s, and the ohio class in the late 70s through '92, both times navy ship-building was

increased pretty dramatically to accommodate these submarines. but to show you the effects from '76 to '80, navy ship building budget doubled to accommodate the ohio class. our fleet still declined by 40% because it simply wasn't enough to do both. >> admiral green ert? >> senator first of all i think it's a great start. i think we need to pursue clarity of the congress. and what i mean by that, the legal ram isks for sources of the fundings we can put in there. is it just other navy ship-building accounts, is it just other navy appropriations, or do we mean the whole department of defense could contribute to this fund? which in my view it would be great. thank you very much. >> in my view it would be great. and that was the intent, i believe. but the clarification we'll try to produce for you, sir. general dunford, in my opening

remarks, i talked about the fighting vehicle program and this has been a interesting and tortured path. the expedition fighting vehicle was canceled. we've had several different concepts and this has spanned the careers of several commandants. now we're into this new amphibious combat vehicle which is described as non-developmental, and i -- seriously, your comments upon -- how do you avoid the preceding vehicles which we spent money on but could never deliver? >> senator, thanks. we've been working to replace the 40--year-old amphibious assault vehicle. and until two years ago, we were trying to reconcile the protection required against today's threat. the cost that we could afford and the ship-to-shore capability. it turned out that we couldn't reconcile those three. so a decision was made to break

the program into thirds. the third is to address the need for ground tactical vehicles with adequate protection for our marines assure right now. that vehicle would be moved from ship-to-shore in a connector. the second phase would be to get our vehicles to at least have the same capabilities as today's vehicle. that is it could self-deploy to an amphibious vehicle. at at that time, we can reconcile the three variables i talked about or to continue to improve the second phase which is a vehicle with at or greater capability to our current amphibious assault vehicle. but the reason why we're where we are, we couldn't reconcile the cost, the capability and the protection required against the current threat. >> so you are focusing first on a vehicle that will have limited forwarding capability to get a short distance in low surf and

then fight on land with all the protections we've seen against the ieds and those things and all the lessons we've learned. that's the first phase. >> that's exactly right. we expect our vehicles to operate 90% of the time so this first-phase vehicle is optimized for ground mokz and mobility assure. >> and the second phase will be a completely different vehicle or you're -- >> no, senator, i was out to the nevada test center three weeks ago to look at the current state of the vehicles. and quite frankly i think in most cases although we've asked for a vehicle that just provides adequate ground mobility and not necessarily self-deploying vehicle, all of the individuals right now that are competitive in the process have a vehicle that actually, i think may get pretty close to the second phase that we require. >> thank you very much. >> and just finally, mr. secretary, the director of operations has raised concerns about the survivability of the

lcs. and also the ones that have been modified to operate as frigates. have you established survivability requirements for the modified lcs? and have you -- are those requirements much different than the initial requirements of lcs? >> the small surface forms, we've looked at that and did upgrade the survivability by things like hardening the area around the magazine, around various combat systems. c & o has pointed out very accurately in the past the best way to survive is not to get hit. so we've upped the defensive capabilities of that ship. and it's also a very fast ship to keep that -- it's important to keep in mind this is a small surface combatant. that is the new upgraded ones

have been designated a frigate. but they are not -- they're not destroyers. they're not cruisers. and they have a very different role to they have a very dempbt role to play. the survivability, particularly with the upgrades, meets our fleet requirements. >> thank you. thank you, gentlemen. >> thank you, mr. chairman. i'd say to our panel we have good attendance up here so we'll be talking about a lot of systems. and i'll kind of start off on one that i think has changed quite a bit. about a year ago, they were talking ant adding 400 or so for the chase house and that was in the '15, '15 budget. i don't remember. what is the current inventory. if we were going to get -- how

many more would that represent when we said 4,400. >> i'll have to get you those numbers. >> is it like 2,000 thou? >> we benchmark against the combat requirement. and, again i've got to get you -- >> okay. that's final. but i guess my point is if we were talking about projecting, in last year's budget 4,432 more of the jsows over the life of the program, which would have included, at that time because we had in this budget 200 to be bought. and then, all of the sudden at least it was to me, the program was terminated. now, i'm just wondering, what has happened that caused that not to be a necessary component as it was considered to be before now? >> well, we had to sake some chances. i'm not happy at all. we don't have enough munitions. i've very concerned about it. but the point is we felt we're

at the boltcombat expenditure. can we reconstitute the line? we felt we could. so we're taking risks. >> that's not a good point. you're adding risk by having to do this. you would prefer not to. >> i'd prefer not to. i have risk in other munitions that are just as bad. it's not a good picture, senator. >> yeah, i know that's right. senator reed talked about the f-35 just to e lab rate a little bit more. that would actually be there in replacing the f-18s, is that correct? and the ea6-bs? >> and the aviation. it will replace three aircraft all of which are over 20 years old. >> yeah, that's right, 23 years old, the f-18s and the e6-b is 27. so -- and you've looked at the missions of all of these and

you're satisfied that these missions are going to be met with this change and getting rid of the older, but 35 is certainly capable of doing that? >> senator it's important to point out that this action doesn't just replace the f-18, the ea-6. it will do everything that those three aircraft will do. burr, also, in terms of information, it will do a significant amount more for the marine ground air task force. >> admiral, you talked act the pie lots. we have a pilot shortage. and you've talked to your -- the airports and the problems that they're having right now. your problems are similar to that? >> they are. what happens is people get deployed, they're flying all the time. in fact they're flying so much working up quickly to go on deployment, some of them say i can't even get a will done. &then, when we come back, they shut down. we sit around here and look out

on the tarmac. there's a super hornet and they'd love to be flying but we don't have the funding to provide that. they're, like, what's up with this? this is not what we signed up for? >> that's the same situation the general talked about. now, tell me, i remember bringing this up kind of comparing the cost training versus retention. as i understand, the ten years of the retention bonus was around $250,000. that's in the air force. is that comparable to the navy? >> it's comparable. >> and then the training, if you take the f-22 capability, it's something like $17 million. we look at the economics of this thing. obviously,it's far better if we can go through training.

have you thought of any specifically that will help you in that respect? >> we have. yes, sir. we use the term -- we want to optimize what we call is our training plan. our fleet response training plan. and you hit the nail on the head. it's getting the flying done more consistently throughout. keep them, if you will, busy, proficient proficient, that they feel a part they have a predictable future of. instead of a cycling process as they get ready to deploy. >> and that's the message i get when i talk to those -- we know there's a lot of competition with the airlines. we know that in the training, that it's a supply and demand thing. >> senator, excuse me. a consistent budget will really help us be able to do that. consistency is key. >> absolutely. i understand that. >> and you said general funding below the president's budget will require a new

strategy. you answered a couple questions about some of the specifics. what would an overall strategy look like. what were we talking about? >> senator what i really meant was on a day-to-day basis we wouldn't have the marines that have fore-deployed to meet the allies to respond to the crisis part of the strategy. and then we would have fewer forces than required to meet the single major contingency. and so in my mind, that does from a marine corps perspective, drive a need for a new strategy. >> yeah, i understand. >> so it's a capacity issue as well as a readiness issue. >> okay, my time is expired but if you want to expand on that for the record, please, do. that would be something that we need to be equipped with here. thank you. >> we'll do that, senator. thank you. >> thank you, mr. chairman and all of you for your service. appreciate it very much. >> i'll take a little different twisz in this. there's not a person in west virginia that's not extremely proud of the 34i8 tear that we

have and have served with distinction and truly is proud to have the great esz military the world has ever recorded. what's the greatest threat that the united states of america faces? i thought i was going to hear in his depiction of around the world terror that we were facing. he didn't even hesitate. he said finances of our country is the greatest threat we face. we're at $18 trillion and growing. we're growing another half trillion this year. with that being said, people back home in west virginia want us to be responsible. they asked the question, they said, you know we hear that our military, our department of defense will spend more than the next seven or eight countries combined. how come we can't do it more efficiently or more effectively. and if money is the problem we've got to make sure that we

have the money to do it. but are we using the money wisely? so, through procurement we're trying to get audits, find out why everyone has a different platform. everything seems to be siloed. i think just from the navy of going from 149 to 161, your request. so they're not going this way. and i know you're saying if sequestering kicks in. sequestering has a real onus i think, kond sags to it. i appreciate that. i know it's hard for you all to make those comments, secretary.

but is there ways that we can do it more effectively and e fishtly and what can we do to untie your hands to let you do more with maybe a little more challenging financial, but be able to have the ability to do more with what you have? >> senator, first, you're absolutely correct that we, as a military, have to be efficient. have to be effective. have to use the taxpayer's money very e fishltly. my father was the cheapest human that god ever put on this earth, i think. and i am his son. we had been using the tools that this committee, this congress, has given us. i'll show you a chart. here's what we have to do to buy anything. you can't read it.

i can't, either, from here. it's spa get fee. it's elaborate. you could help us by taking out some of those things. by -- make us focus on what's important important. and that's the outcome. the navy spends about $40 a year on contracts. and, until a couple of years ago, we could not track that money until we authorized and aproep rated it until we got to the contract. we can today. we're saving, today, 10% a year. so $4 billion a year on contracts. we're going to do better than that. those are hard things.