meditation, yet thousands are picked up by the chinese dictatorship and thrown into prisons and oftentimes they never come out of those prisons. and too often we find what's coming out of those prisons where those members have been thrown, what do we find coming out of those prisons? body parts being sold to americans and other people as medical body parts, kidneys and organs of the body that have been extracted from people who are put in jail for religious purposes and murdered. that is the type of ghoulish regime that now controls the country of china and the chinese people. . there are no democratically created environmental standards, there are no concerns about human rights or considerations for the inherent dignity of all

humankind. there is no liberty, no independent judiciary, no freedom of the press, no rule of law, no opposition parties, no right to criticize the nature of their government or to criticize the click that rules it. for these reasons a billion working people are held in bondage so that goods can be manufactured in china for far less than in the united states. and with a one-way free trade that we have permitted and the short-term profit desired by america's corporate elite, our country has been partners in building the chinese economy into a monstrous threat while at the same time weakening and destroying our own economic base. over the last two decades, we have built china from a relatively back wards economy into a frankenstein monster. when i say we, i mean the

policies of the united states government have lifted the economic capabilities of a country that has had no political liberalization. no political reform of their dictatorial system. and a country that, yes, is also engaged in rebuilding its military and, yes, we have built this frankenstein monster. and that monster is slowly turning on its creator. it is turning on us. we find ourselves today in an economic disaster. it is a severe recession. we can all feel it. it is around us. our friends and neighbors and even our families are suffering. it is a depression, perhaps not as dire as the one in the 1930's, but it might get there. it is devastating. people are losing their jobs and

their houses. and who is to blame for this horrendous situation? and what can be done about it? the blame, dear brutus, lies with us. we gave china most favored nation status. even though they have had no political liberalization. despite our better judgment and despite the fact that china is a brutal dictatorship, we permitted them this advantageous economic relationship. we gave them the trading status because america's corporate elites wanted to make a quick buck for themselves with lots of good bonuses for the core the pratt elite and then to sell us goods, us, the american people, goods at a cheaper price that we should have -- we should never have realistically expected to get goods that cheap. but at the same time there was a price to pay that was not being

-- that was not on the price tag. what have we gotten? what was that price that we paid? it's called economic ruin of the united states of america. we have given china everything and we are left wanting now, begging for favors. small and mid level manufacturing bases in the united states are are mid level and manufacturing base, small and mid level, have been virtually destroyed. small and medium size and even large industry is gone. our manufacturing jobs have gone. and where have they gone to? they have gone to china so their people have the jobs and their country is accumulating the wealth. because we have had this most favored nation status and had a relatively one way free trade agreement, the communist bosses have been able to set the rules

and to manipulate the trade so that it benefits their power structure. we were told that if we had most favored nation status with china, and that we had trade, we embrace them economically, there would be political lib braization. for 20 years, for 30 years we were told that. and that has not happened but just the opposite has happened. what we have now is with china a massive debt that can be purchased and is now being purchased by china. we have a massive debt here actually just even this year's debt is going to be $1 trillion hire. $4 trillion budget, $2 trillion in debt. and the chinese are very happy to buy it because they are holding it over our heads and grabbing us by the throat. we have given china everything

and we are left with nothing but ruin and cheap poorly manufactured goods, poisonous toys, and all too often poisonous food. we need first and foremost to demand our policymakers who are negotiating trade agreements with foreign governments, that their primary concern be, and i say this emphatically, the primary concern of our negotiators should be, what is good for the people of the united states? and that those negotiators be patriots in their perspective and not globalists who are tied to some motion of what's good for the world or some philanthropist who wants to help other peoples and other countries at the expense of our own people, the american people. we have not had that.

we have permitted a trade policy with china and other countries that have drained our country of resources with basically one-way free trade agreements. in china we could only export our manufactured goods if they were made in china so our capitalists were anxious to go there, but they could certainly export everything they wanted to into our country. that one-way free-throw doesn't work and it has been major factor in the economic crisis we face today. proponents, that policy was permitted to continue, because people were telling us if we just do this with china, they will liberalize and become a liberal democracy. i call that hug-a-nazi, make a

liberal. that's the theory. no, we can get close to them and do favors for them all we want but we should have demanded the political liberalization which would have opened up a two-way free-throw -- free-trade relationship. they frequently claimed that even the one-way trade as it existed would create jobs in the united states, increase u.s. exports, and improve the trade deficit with china. that's what we heard. not only just it would liberalize china, but it would be good for us in the meantime. president clinton claimed that the agreement allowing china into the world trade organization which was negotiated during his administration, and i quote president clinton, creates a win-win result for both countries. has it been a win-win result?

our countries, as i say, could our country's small, mid level, and large manufacturing units have been decimated. people had good manufacturing jobs now have low-paying survival jobs. their children have no really great aspirations to be industrial leaders or great entrepreneurs and businessmen because the lifeblood has been sucked out of our country as our manufacturing jobs have gone to china. while it's true that exports support jobs in the united states, as we were told, we must now recognize that it is equally true that imports destroy american jobs. yes, that's right. exports create american jobs, but imports do what? i know that because in my two harbors, two ports that i represent, 90% of all the

commerce coming through those ports are containers coming in from china and the east, and only 10% are going out. we are destroying jobs of our people. those jobs that are necessary for people to live in homes, for people to have decent standards of living. the net result of the trade flow on unemployment, it's very clear when you see the trade imbalance that exists why we have an increasing level of unemployment. those people who are employed and have been employed over the last 10 years are getting jobs that are far worse than -- and not as uplifting and not as socially mobile upwards as those jobs that their parents were getting back in the 1950's and 1960's. china's economy and china's military capabilities have been growing and expanding even as our country has been declining.

but the trouble with it is, when you look at the economic and the military capabilities that are growing in china, it quite often is based on the utilization of technology that came from the united states. in fact, some of this technology was actually developed by american taxpayers, not even by these big corporate giants who go over there and set up their manufacturing units, they end up taking technologies that we have paid for the research and doing what? manufacturing it over in china. right now there is a big iss. what is that issue? it's whether or not we should loosen some of the controls on our technology exports. i have just been insisting we do that only to democratic countries. and we especially do not loosen the technology controls on china. it was just about 15 years ago during the clinton

administration when they permitted american satellites to be launched on chinese rockets. at the time i thought it was a good idea. i ever to admit that, i thought it was a good idea. but within a very short period of time i recognized what a horrendous reality was being created. what we were doing were perfecting those chinese rockets in order to send up our satellites at a cheaper rate. thus we undercut the development of our own missile and rocket industry, our own aerospace jobs, and at the same time we perfected the chinese rockets and missiles so they could more easily, what? carry military payloads as well as civilian payloads. no, we shouldn't be loosening any of our technological restrictions on the transfer of technology to china. even to this day as we want to loosen them to democratic

countries, there are moves here in washington to try to take the exemption of china out. it's very clear. i am part of the team that's trying to move forward legislation that to permit our high-tech industries to export to friendly democratic countries. but i have personally put into and worked with my other members of congress to ensure that part of the legislation restricts that loosening of controls to china. so that they won't be able to launch american satellites on chinese rockets because we know that will result in a technological transfer and upgrading ofhose rockets. for example, we have developed a chip that serves as a gyroscope. cost us hundreds of millions of dollars to develop that chip. that was 15, 20 years ago. well, today, of course, because of what happened 15 years ago,

all of the chinese rockets have a guy row on a chip. didn't cost them a cent. all of these other manufactured goods that are being shipped over here, the chinese haven't had to pay for the development costs. we have paid for it. the taxpayers and the corporations. and when a corporate leader sends his company to china, guess what? yes, he gives himself a bonus for a few years and then disappears with tens of millions of dollars of bonus while his own company, the stockholders and especiallyp the workers of that company, suffer the damages when their jobs are eliminated and actually when the company is taken over by the chinese. well, ironically we have liberalized our trade with china but china has not even liberalized its own government. in fact, china has been getting worse over these last two decades, not better.

it was tiananmen that was the turning point. up until tiananmen square there was a legitimate reason for us to build the economy of china to create closer ties because there was a movement on to create a new and democratic china that would be friends of ours in the world. there was a positive evolution going on in politically and economically in china. when it reached its tipping point at tiananmen square, the united states didn't stand tall. . if ronald reagan was president, i can assure you he would have sent a telegram to the gang that controls china and said if you turn loose the army and slaughter the democratic movement in tiananmen square, all of the capital investments and technology transfers, it's off.

reagan would have done that in a heartbeat. but george w.'s father was president and he didn't share that same commitment and no message was sent to the chinese, because they now understand they could manipulate the highest level of people in our government and industry for short-term profit and that our elite did not -- does not give a damn about democracy or any of thealues that we hold dear. we let our corporate elite dictate to us and our government under george herbert walker bush took the easy way out. we acted like tiananmen square didn't count and we let the corporations to make a quick buck so they could give themselves big bonuses and in the end we were sending more jobs and more technology transfer and more capital

investment to china, even though they had just slaughtered the democratic movement in tiananmen square. when we do something immoral, we come back and pay a price for it. and part of the reason we are in economic hardship today can be traced back to the immoral decision that i just mentioned. we permitted this china and author tarian totalitarian china to have an open free trade with the united states but it was only free trade one way and no liberalization going on. they shouldn't be given favored nation status and of course we look at it now, china has been given that. russia can't get anything. russia can't even get the jackson-vanik restrictions to be taken off. the tipping point came in 1991, which obviously caused a massive

economic dislocation in russia as it moved out of its socialist economy. in 1991, the great reforms were happening in china. the democratic movement wasn't slaughtered like it was in tiananmen square but the russian people were suffering hardship. the russian collapsed and there was a national despair in russia, of course. and we watched this. and while we built and fueled and invested in the chinese economic machine, we said no thanks when it came to broadening our relationship with a liberalizing russia. russia's not a little country. russia is not insignificant. on the contrary, in the long-term, and in the grand scheme of history, we need russia, just as much as the russians need us. if we are to confront the men ace of radical islam and the

terrorist threat we are going to have to stop the rogue states that are trying to acquire nuclear weapons. we are going to do that, combat radical islam and combat iran and north korea, we need to be partners with the russians and shouldn't be looking at them as an enemy at a time when they have been trying to liberalize their country and had great strides of liberalization since the stalinnist days of the soviet union. and to be accurate, we did, indeed, start a number of russian-american partnerships in the 1990's. in 1992, senator sam nunn and senator lugar pushed us to dismantle nuclear arsenals in and around the former soviet union. it was brillp yant and -- grill yant -- brilliant.

it was a joint exercise between the united states and russia and other former soviet states and various military contractors and for a while it went, very, very well and still going well, despite the fact that certain people in the united states are complaining about it. they complain about the cost, but mostly they complain about working with the russians to secure the russians' weapons. well, that makes all the sense in the world to me that we work with them to dismantle nuclear weapons. and that gets to the heart of the problem. the type of people who are now deadly against us, even trying to help the russians dismantle their own weapons. we have a chance and president obama and i will have to say i have been very critical of him and his dealings with countries like iran and elsewhere where he's not being tough, but he has tried to reach out to the russians and i applaud that.

he is trying to find something that is mutually beneficial to us and that would be the reduction of nuclear weapons. nuclear weapons cost a lot of money to both of our countries and we are building them so they can't be used and praying they will never be used. so if we are going to have money for the military to defeat radical islam and confront china, we need to make an agreement with russia to bring down the level, not to eliminate nuclear weapons, but bring down the level of those weapons that we believe should never be used. so if we can afford to pay for the defense that we need to use. and why aren't we doing that? obama is laying the groundwork. we have people on my side of the aisle raising their voices with hostility towards russia on any idea of reducing nuclear weapons. well, how come we don't have

that same antagonism towards china where where we are sending hundreds of billions of dollars to? the united states did withdraw from the anti-blick missile treaty and i supported that and i still do, even though i know the russians didn't like that and thought it was a hostile act. and i believe in missile defense. i believe we should reduce our number of nuclear weapons and build a missile defense defense but i disagree how the bush administration rushed forward to deploy a system in the czech and polish republics right on russia's borders. we should have done what ronald reagan advised and that is if the russians would withdraw from eastern europe and give up this communist attitude of dominating the world that we should make the russians partners in designing, building and maintaining and operating an

anti-missile system. so instead, we set up this system that we knew that would be considered a hostile act and would and tagize the russians even at the same time we were inviting observers to observe our own military operations. we got it totally backwards. the country with no liberalization, a country that imprisons people for religious purposes, that government we are inviting our military operations and cooperate with their military while russia, even though they are imperfect, that country which wanted and would love to work with us on missile defense, we set up a system that is aimed at russia. well, if we keep expanding nato and inching around russia, you can expect them to think we are doing this as a hostile act. we do this even as we try to

open up our relations even further with china. we chastize russia for its imper if he cans but have not made demands on china even as we invited the chinese military to observe our military operations. we keep expanding nato, inching around, but we have a negative word for russia. yet in china, there has been no reform of its tyrannical and oppressive practices. so what else have we done? we haven't offered support for those elements in china that do believe in reform and democracy. we can't get ourselves to have  strong condemnations of the brutal massacres going on of the uighurs or the muslims. we can't get our government to actually condemn china for the massive brutality that they are

perpetrating on their own people much less i might add condemn them for their continued insistence on land and territorial claims. china is not only an economic threat, but china is a massive threat to us as it builds its military, its rockets and missiles in particular as it claims huge territories of russia and india and huge areas of the ocean right up to the shores of the philippines. these are claims that china is making yet the united states is not counteracting those claims, even as we are antagonistic towards russia. if we are to have a free world and combat radical islam, we need russia. if we to combat iran and north korea, we need russia. if we are to leave at peace and thwart these desires by china to dominate the world, we must have

have russia on our side. so far, american policy has been totally upside down in terms of russia and china. we need to make sure that we enter new relationships. instead of taking nato a expanding it, we should show russia we want a new coalition in this world and russia would be part of it. i would suggest as we leave nato that we form a new coalition of interests of security interests with countries like india, japan , russia and the united states. they are the four legs to a table that will create stability for humankind. other democratic countries will join with us. but we need to have a relationship of viable relationship with those countries in order to combat

those challenges that are upon us with radical islam and that threat that looms over us which is an ever increasingly more powerful china. the future is up to us. we have to be realist and we have to remain true to our principles as americans. and when we are not true to those principles, when we close our eyes to the oppression going on in china even as we speak at this moment where muslims are being shut down in parts of china because they aren't willing to accept the repression of their culture or tibetans or those who want nothing more than to meditate and have yoga exercises, if we don't speak up for these people, we will be persecuted and we will suffer as a result.

the economy is suffering because of incredibly stupid policies, economic policies and the china trade policy has been one of the worst. our country will suffer in the future if we do not have a rational policy of security and cooperation with russia and with india and with japan. and with that, i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time.. mr. rohrabacher: i do now move that the house do adjourn. the speaker pro tempore: the question is on the motion to adjourn. those in favor say aye. those opposed, no. the ayes have it. the motion is agreed to. accordingly accordingly 10:00 a.m. tomorrow morning.

>> i think some of it is government. >> it is not public. >> probably donations. >> i will say my tax dollars. >> how is c-span funded? 30 years ago, america's cable companies created c-span as a public service. a private business initiatives. no government mandate. no government money. next, vice president joe biden announce a deal with the hospital industry aimed at reducing medical costs. after this, a white house news conference, part of today's senate health committee markup on health care legislation with the director of the congressional budget office. you are watching c-span. >> good morning, how are you?

i want to -- i apologize for being late. i was at a meeting with senator baucus and senator reid and senator baucus is on his way for this announcement. he -- there is a boat called in the senate so i apologize to our participants. i want to thank everyone for joining me here today. as you know, we have with us today a constellation of people who have been able to put together a great proposals with senator baucus and the president. the president and ceo of the hospital corporation of america and ceo of community health systems, and sister carol keehan, she is the ceo of catholic health association of the united states. and president and ceo of the

american hospital association. i was going to introduce max baucus but he is voting now. our secretary sebelius. i want to welcome the hospital ceos who are with us today. every day you see first hand the impact of the skyrocketing health-care costs and today, they have come together to do something about those health care costs. fox, reform is coming. it is on track. it is coming. we have tried for decades to fix a broken system. we have never in my entire tenure have been this close. we have never been as close as we are today. things remain on track. we have these hospitals working with us and we have the pharmaceutical industry working with us. we have doctors and nurses and health care providers, we have the american public. everyone sees that we need change and in my view, we will

get that change or get it this year. the poet virgil said the greatest wealth is health. we're here today to make our health care system healthy again. a strong commitment from these hospitals represented here and others will be a big part of making that happen. all around the country, people have health insurance still are struggling to pay their bills because they are under in short order. they are out of -- dare out of pocket expenses are rising. for those who do not have insurance or denied coverage because someone in their family has a pre-existing condition are throwing themselves at the mercy of the people who represent the major hospitals in the u.s. as a result our hospitals are cracking under the weight of providing quality health care

for americans who lack insurance. the hospital industry knows and the people who are with me today no and the president knows that the status quo is simply unacceptable. let me say that again. the status quo is simply unacceptable. rising costs are crushing us. they are crushing families and businesses. crushing state budgets. they are crushing the health care industry itself. hospitals have the knowledge that significant health care savings can be achieved by improving efficiencies, realigning incentives to emphasize quality care instead of quantity of procedures. in the last several weeks, they have been working with chairman baucus and are coming forward with a proposal that produces real savings in federal health- care spending. savings that will be applied toward the president's firm goal of enacting health care reform that is deficit-neutral. health care reform that is deficit-neutral.

as part of this agreement, hospitals are committing to contributing $155 billion in medicare and medicaid savings over 10 years to cover health- care costs reform. these reductions will be achieved through a combination of a delivery system reform, additional reductions in hospital and additional reductions in hospitals and inflationary updates. all these savings are based on policies the administration proposed in this budget to fund health care reform. as our system becomes more efficient, thanks to innovation, technology, and electronic records, we will show increases -- slow increases in medicare and medicaid pam -- payments to hospitals. hospitals will bear less of the financial burden of caring for the uninsured and the under insured. we will reduce payments reduce

costs in tandem with that. today's announcement represents the essential role hospitals play in making reform our reality. a reality will be we must enact this reform this year. we must and we will enact reform by the end of august. we cannot wait. i know that the leaders that are up here know that. the president knows that. my colleagues i just spoke to know that. the entire congress knows it. i look forward to hearing how their hospitals are going to be helping and bringing about this reform. that is why they are here today. i thank you again for being here. i think the press for being here and our colleagues and i would like now to introduce sister keehan. >> thank you.

madame secretary. it is an honor to be here today. i am pleased to call my -- join my colleagues today. to contribute to the cost of meaningful health care reform. this is a great day for all americans. as we take a critical step closer to a health care system that officially delivers quality care to everyone. coverage for all has been a goal of catholic health care for decades. we know how urgently change is needed both for moral and economic reasons. in the reform principle cha developed along with our hospitals, we call for shared

responsibility in reforming the system. we have contributions from individuals, employers, the government, and health-care providers. we have a great responsibility to the american people. they deserve health security without sacrificing other important goals such as college, a family vacation, wage increases, we as hospitals must use our knowledge of the health care system to make it better for everyone. we will continue to provide input as this process unfolds and look forward to working closely with every partner including members of the house, the senate, as well as the white house and hhs to make sure we get health reform done with the american people in short order. it is my pleasure to present the president of the american

hospital association. >> thank you very much and i would like to say, mr. vice president and madame secretary, it is an honor to be here with you today and my colleagues. the american hospital association represents the nation's 5000 hospitals and health systems. for decades, the goal of america's hospitals has been covered for all. every day, the men and women working in hospitals take care of far too many patients whose conditions have worsened and become more costly. they have locked -- lacked coverage. hospitals are ready to do our part. that includes everyone across the country. employers and unions, individuals, suppliers, insurers.

practitioners and providers. health care touches everyone. as hospital representatives, we are here to restate our support for comprehensive reform and to do our part as reflected in today's announcement which will lead us to and calls for the coverage of 95% of americans. we believe this step brings the nation closer to the goal of health reform, reform that lowers costs, that provides access to all, and that works for patients and families and the hospitals that are the backbone of health care in communities across america. we have had very productive discussions with the administration and with chairman baucus and we look forward to looking -- working with the administration, the senate, and the house to make reform a reality. thank you very much for the opportunity to be here and now i would like to turn it over to our next speaker. >> thank you.

good morning. it is an honor to be here with the vice-president and madame secretary and key congressional leaders and support important improvements to america's health-care system. i represent hca, one of the largest private health care systems in america and i am representing the federation of american hospitals. we represent more than 1000 in vester run hospitals across america. -- investor run hospitals across america. there is so much that is so good about america's health-care system. there is room for improvement. that is why we're here today. today, we're pleased to be part of the solution that will significantly improve our health care system. we have long advocated comprehensive health care reform to achieve universal coverage

for all americans and we are gratified that president obama and the congressional leadership made health reform the top domestic priority so it is a distinct pleasure to come to the white house today to express our wholehearted endorsement for health reform as reflected in the agreement the vice-president is announcing today which is based on achieving coverage for 95% of americans. as i close out our ceremony this morning, let me say that we look forward to working with all the congressional leaders and the white house on comprehensive reform that will lower health- care costs and see health care coverage for all americans become a reality. thank you. >> thank you very much. thank you everyone.

>> richard umbdenstock will talk about the agreement on thursday's "washington journal". then tim fernholz about the white house's proposed protection agency. live 7:00 a.m. on c-span. >> also today, the senate health committee met to continue its work on a bill to overhaul health care. in this hour and 10 minute portion, committee members questioned the budget office director. thie report [unintelligible] >> where are those openings?

>> let me -- i have a a couple questions for you. i will be raising and let you make some opening comments. the questions i have are straightforward. talking is through the changes that resulted in the $611 billion core of july 1 which is more than of $400 billion less than the scores of june 15 and we're working to get those numbers down. i appreciate the response to us and would hope those numbers while they are -- they are final numbers but more work has to be done by other committees before -- of the jurisdiction of this committee is limited.

we deal in some speculation. in order to get numbers for committee so we know where we're headed. i found these to be more optimistic than the earlier numbers were. the question is what would happen to the number of the uninsured if the individual mandate is eliminated. that is an important question. what happens to employer sponsored insurance by an absence of an employer assessment bill? we found that to -- the answers are interesting. the cbo estimate of people covered under medicaid and our bill, that would account for 97% of americans with health insurance coverage. even with the medicaid expansion, that is not our jurisdiction. we will have to resolve that

issue. the number has been floated around of 150% but this committee does not have the ability to legislate on the number. we can go up to the lines on certain things and do our job but obviously, there is additional numbers here. the 15 million to 20 million range and i wonder if you can provide a breakdown of who they are and is their proposal in the estimation of cbo would cover that population. those are the questions. let me turn to mike. >> thank you. i have a series of questions. i look forward to getting some answers. i think it is important that we have this session and we get these answers so we know how we're going to be affected as we do the bill. among some of those questions is how much the new employer

tax would actually create and in the table that you sent this analyzing the affordable health choices act it shows a net increase and decrease of employer sponsored insurance to be about zero and it seems that would affect people a little bit differently. i will ask you to unpack that for me. i think it will affect some people and it will not affect others. it comes -- is not zero. -- i do not think it is here. i want to know why the cbo would [inaudible] it seems like if they could pay $750 instead of 5000 that there would be quite a few employers dropping out of buying insurance and sending it the other way, particularly in and under employed market like we have now. i am curious about why the

letter to senator kennedy did discuss the impact the government run plan had on cost premiums and you said those provisions did not have a substantial effect on the cost or enrollment projections. it was not projected to have premiums lower than those charged by private insurance. it is interesting. it is where i thought it would go. i want a few more details on that. i have a few more questions here as well but rather than put them into the opening statement, we need to know more about the cost. 70% of the people who have insurance are happy but they are worried that costs going up it will increase their deductible or drive them out of the market. we have to be worried about that 70% as well as the ones that are uninsured at the moment. we do not get to -- i question

the 97% insured. i do not think we get near that. >> thank you. welcome to the committee. >> i will try to answer a number of questions that have been raised and i will let phil answer the others. a mandate is -- to address the role of the mandate. that makes a big difference in our estimation of a number of people who end up getting insurance coverage who would not otherwise have it. that is partly because the mandate has financial penalty attached to not following it and it is partly because people follow the rules, sometimes even apart from the mandate. people pay taxes. just because they might be

caught. >> the individual mandate. >> that plays an important role in raising insurance coverage as much as the proposal does. secondly on the free rider penalties, that makes an important difference in the cost of a plan. on the coverage you chief. i will let phil talk about the specifics. the people -- the 15 million or 20 million who would be uninsured even with a medicaid expansion attached to the legislation, may be one-third of those people are an authorized immigrants. one could devise policies that would cover them but your committee has chosen not to go that direction unless -- you will not pick them up. another one-third of people without insurance are eligible

for medicaid under the medicaid expansion but would not take that coverage. we see that today. a good number of people who are eligible for medicaid are not enrolled. they have the opportunity to go into medicaid if they end up incurring large medical expenses. many are people who have not been to a doctor or hospital recently. they have not needed insurance coverage and is there if they need. one might think about those people in the current world and in the world under your set of reforms as having the opportunity to get insurance when it is necessary. the remaining people who would not have insurance are those for whom is still expensive for do not follow the mandate despite the risk it will get caught and face some penalties. not everyone does follow the rules even when there is a cost to get caught breaking the rules.

you are right. the net change we estimate close to zero. that is the combination of a number of significant flows of people as was the case for the first estimate we did for this committee several weeks ago when we explain the net change in that proposal represented a combination of a number of different flows and i think phil will have some numbers to offer about the breakdown. i will speak to why a low penalty has the effect it does. the last thing i will tackle is the question of the public plan. as you noted, we wrote in our report that the provisions for the plan did not have the substantial effect on the number of enrolled exemptions. we think that there would be an

effect from the introduction of an additional competitor in some insurance markets that are highly concentrated. that is a little effect. to have a more substantial effect to a public plan on costs, one would need to empower the plan in some way that makes a more distinct from the plan -- insurance plans that are currently operating. a significant share of current insurance is your nonprofit insurers. to be nonprofit does not make it different substantially. one way to empower a public plan that would have more effect on costs would be to write into legislation a public plan that would pay lower rates to providers than private insurers pay. you can legislate the pay rates that are paid under medicare or under medicare plus 5% or + 10%.

if one simultaneously provided -- required providers to participate in this plan to continue participating in medicare, what we sometimes call linking the public plan to medicare, that brings to bear the market power of the government having tens of millions of users of health care. if one brings that linkage, one can pay lower rates and we think still attract a wide array of providers and that would lower costs. there is no mystery to that. it lowers costs by using the government's market power to set lower prices. there are ways to -- one could set rates that are below private rates without linking to medicare. one could say here is the rate of this plan. take-it-or-leave-it. we think a significant number of providers would take that but not as many providers as would

take it if it were cling to medicare. the more you try to reduce the prices you pay to providers, the more providers you would lose and one. is medicaid. it has providers who except it but have -- has providers that will not accept limitations and that is the trade-off you face. you lower the prices. that is the sort of letter that one would need to give to a public plan to have a be a substantial savings and cost relative to other insurers. >> if i could follow up on your question regarding the employer mandate and the issue about why does a seemingly small penalty of relative to the cost of health insurance seemed to help encourage employers to continue offering coverage and people to stay in that coverage.

one way to think about it is the difference between paying the penalty and paying for insurance is when you pay for insurance, you get the insurance in return. there is something of value for money. if you pay the penalty that is from the firm's perspective, money wasted. that is one reason it has an effect. the concern is you are offering the subsidies in this insurance exchange that some workers could get. why what the employer not just say i'm going to stop offering coverage and my employees can get the subsidies in the exchange? one thing that affects the comparison is the offer employer coverage, there is a subsidy that comes from the tax subsidy under current law. people get insurance through their employer did not have to count that as taxable compensation. that is a subsidy of 30%. the factors into the calculus for the employer as well.

for an employer -- when an employer makes a decision to offer or not offer it has to do that for all its employees. in general, firms have a mix of workers. some are lower or higher income. the higher income workers would not be getting subsidies in this insurance exchange so would not be attractive for them if the employer dropped coverage. nevertheless, we do in our modeling as you pointed out, we show a net #, annett to affect in our tables for simplicity, but there are some flows behind that. some people gain coverage and some decide to offer coverage as a result and in particular because of the insurance mandate, we think this will lead some workers to say, we want you to offer coverage that you did not offer before. in some cases, four firms, this

would probably be more true for smaller firms with lower wage workers who could get subsidized coverage through the insurance exchange. they might well decide that they are better off paying the penalty and not offering coverage so their workers could get the subsidies in the exchange. we do have -- that is the offsetting the effect of flows. a few million people who we project would have coverage not having it as a result of the proposal. >> could i follow on something he said? >> i want to maintain some order otherwise it will get chaotic. >> you said that about the tax subsidy to employers and employees for the health benefit. if we were to tax health benefits, that would therefore -- of this is a question, that

would cause more employers to drop coverage and go into the exchange? >> it depends on how you do it. if you eliminated the tax exclusion altogether, that would remove the subsidy from that side of the ledger as the employers and employees decide what to do. if you count the exclusion that would have a more limited effect because that would only affect some workers and some firms. it becomes a question of for the employer, is the employer taking the interest of their workers as a whole into account, would it be beneficial? would enough employees get a subsidy to move the way in this exchange? we do project a modest loss of employer coverage in the million or 2 million range.

this is relative to an employer based system that is covering 150 million people in our projection. the number can seem large and the percent of employers that are responding, it may be relatively small. >> there is a big difference between the employer exclusion and the employee exclusion in terms of taxable benefits? they are both excluded now. if you maintain the employer exclusion, but tax the employee, and you give a tax credit in effect of that, you will have $185,000 of income before you have negative tax benefit on you. there is a difference between the employer exclusion and the employee. it needs to be clear for this discussion. >> depends -- if you could replace it with a deduction.

that is right. >> i will defer to others who have questions. i appreciate the good work cbo has been doing in trying to inform us on these issues. . . >> depends on what one does in that expansion. how eligibility is judge, a

whole number of features about who is covered. a whole number features such irrelevant. there can be a tremendous difference depending on how it is. >> any specific suggestions? >> we looked at -- for this letter, we did back of the envelope calculations for alternatives. we looked at alternatives for other committees over time. we have seen numbers that are a great deal smaller than five under billion dollars and some that are bigger. -- $500 billion in some that are bigger. there are a lot of variables that you would pick that would matter. >> just to follow up on some of the questions that i asked it for -- and the government-run

plan, it does not have any substantial effect, but it could have won on more competition. if we put in some other provisions for competition, that could make a bigger difference than a government run plan. would that be a correct statement? >> it depends on what the provisions are. we believe that competition is important. the way that it would be structured would strengthen competition. by taking off the table some of the factors that insurers now use when they compete about trying to avoid the worst risks, trying not to cover the costs of pre-existing conditions, by taking those off the table, and then by structuring the insurance market so there was an apples to apples comparison of comparable plans presented in an equal way in the exchange, i

think that would strengthen competition. we estimate that would bring down the cost a little bit for all of the insurance areas. >> an important feature of the proposal is that the subsidies are a fixed amount. you do not get more of a subsidy if you buy a more sensible health plan. do you think that would encourage fuel to join lower- cost health plans? -- people to join lower-cost health plans? >> i am more in favor of increasing competition. >> thank you. >> what is the difference between the chip -- the june 15 number and the july 1 #. i read the letter. what did we do differently here that drew you to this theory different number? >> there were a number of changes. a pretty large one that we have liked it was that the subsidies available would be somewhat less

generous. there would be no subsidies for individual families above 400% of poverty at the had been in initial legislation. the subsidies for people below 400% would be smaller. you are bringing down to zero. that is somewhat less subsidy. that pays money for the government. the second important factor was the penalty. it was added for employers that do not offer insurance. the third factor we highlighted was that the new draft let for employees when offered health insurance coverage from their firm would receive subsidies in extern -- insurance exchange. that is a strengthening of what we call a fire wall. we can see that difference in the net number of people

changing from employer sponsored insurance. that save you money. the three changes were some of the most important ones. >> thank you very much. >> do you have any questions? >> thank you. thank you for coming. i know you are probably not getting much sleep these days with all these rapid-fire questions. i think i heard you right. you said that unless the congress "empowers" the public auction does not do much for competition. >> it does not change the cost very much, no. it had little affect in some insurance market sector highly concentrated. that matters a little bit.

>> what it does is change the cost of insurance to the consumer? >> again, not a very much. >> and not very much. >> a little effect. >> we mean a whole variety of things the government might jays -- choose to do, such as setting provider payments, which would give it a competitive a vintage or lower the cost and such a way to give it a competitive edge. >> that is right. what i want to go back to medicate. -- >> i want to go back to medicaid. you wrote a letter to senator gregg --there is an increased cost of the number of people who will be added to medicaid. is that just the federal cost or is that the federal and state cost? >> that is the federal cost. generally speaking, the federal cost is 62%?

>> the average is 57%. the government pays 57% of the average cost. >> the tables we tried to do generally have the federal government paying all of the cost for the newly eligible people at least for a while. i think when we look at had been paying all the new costs for the whole 10-year budget window. we did one that started in 2013. and then have the federal government paying all the costs. we look the one as are the medicaid expansion in 2010. -- look at one that had the medicaid expansion in 2010. >> the five thundered billion dollars includes -- $500 billion includes the assumption that at some point the federal cost is

lowered because of shifting the cost to state? >> we highlighted in the letter that when the key issues that could make this cost change was how much the burden was borne by the state. >> that is what i'm getting too. i'm trying to understand, is the $500 -- five and a billion dollars the shared cost for 10- years? yes another 43% -- you have another 43% that states will be picking up. >> the point we are trying to make is that we did report the federal government costs. >> that is 5 under billion dollars over 10 years. >-- $500 billion over 10 years. >> one should not think that is associated with a standard map or 57%. most of the expansions and medicaid that we had been seeing from different committees and

the ones that we used in estimating this number had the federal government paying a larger share than the usual to the seventh tier. in some cases, 100% of the cost . >> what was that? >> do you have the ability to estimate what the cost will be to states over the next 10 years of a specific proposal in medicaid? have you done that? >> we have been asked to do that. we have been asked by senator gregg and maybe others to estimate a particular medicaid expansion on your legislation as it stands. we have not had the opportunity to do that yet. those full estimates involve a great deal of time. we've not had a chance. recognizing the schedule your honor, we tried to do some back of the envelope calculations to give you orders of magnitude. this is not provide much. >> you have already been asked

by senator gregg and have it in your line of work to do. what a particular expansion of medicaid would cost the states over a period of time? >> it would cost the federal government. the state park is tricky. if there is a certain map, 57% or 100%, and we can calculate the remaining piece of that, say the remaining 43%, but states have a lot of options to how they respond to a change in medicaid rules. what the end of doing turned out to be more complicated. yesterday we spent some time wrestling with just that question. >> what i'm trying to get at. -- to get at is that one of the ways to reduce the cost to the federal government in this bill is to shift some of the burden to employers. this is through the employer mandate.

one thing that nothing is sufficiently understood is how much -- that is not sufficiently in should is how much this will cost the government if we expand medicaid, whether or not we think it is a good program, which i do not. 10% of it is wasted. $32 billion a year cbo has said will solve problems. if i were governor of tennessee, what would i be looking at in 2015 if this bill were to be passed? what i'm hearing is that while it is not written into the bill is that there are assumptions and the finance committee, and you are relying on these, that there will be a shifting of cost to the state at some time. that is the talk. it is all not -- it is not all written down and down. that is the talk. >> there are plans that we have

seen. some examples of we have done, with the government does not pay 100%. there some examples where they do pay 100%. it is not impossible to hit $500 billion. it is possible to hit that with the federal government paying the full 100%, as long as one takes the other variables. >> two more questions. did the $500 billion include any increase in payments to providers? >> no. >> it did not. my final comment would be this, the talk i heard, the assumption that were being made, was that a possible scenario of the combined bill would be dead two changes would be made to medicate. one would be, and now i do -- like you to comment on this, the

medicaid would be expanded to 150% of the federal poverty level. that would be one requirement. the second would be the payment for providers -- there would be doctors to serve the 60 million people who might be added to medicaid. payment for providers will be increased to 110% of medicaid. i called the governors and their own state medicaid office and asked if that were shifted back to us, our share of it, which tennessee is about 40%, what would that cost us? the increase to $150 million, the state share of that, would be about $600 million. the increase in the cost in payments to providers if we cater 40% would be another $600 million.

it -- that is equivalent of a belts -- of about a 10% new state income tax. in other words, these days do not have that money. -- the state do not have that money. i'm trying to figure out whether we are slipping. i want to make sure we go in with our eyes wide open. we are going to expand medicare, there needs to be no possibility that the state would have to pick up any of it or that we say up front with reputable information about what it would cost in oklahoma and tennessee in connecticut if this shifted gradually back to the state by 2015. center greg's letter and ask questions that will produce those answers. allied to frame a letter to you that would. -- i would like to frame a letter to you that would.

>> the finance committee and budget committee are raising probably a whole series of questions that would reflect various formulations of the 100% federal pickups, 57%, somewhere in between, probably tried to get a range numbers what the implications would be. we did not do that because it is beyond the jurisdiction of this committee. we are relying what the committees, with their cells. they are asking for the cbo to score what we have jurisdiction over. we stayed away from that clear question, which is clearly the jurisdiction of the finance committee. it is a good question. but that is a fair point. the fact of the matter is, and the whole concept of the bill depends on a large expansion of medicaid. that is one way to do, although i do not support it. that is going to be the end result. i would like for us to come up was and then that connecticut would nether -- if those seven

the conn never four, we ought to know that before it had sought a bill that assumes we can expand it. >> the burden on state is an important issue. we will try to provide whatever information we can about the effects of that. >> do i need to supplement the letter in order for you to do this or is that letter sufficient? >> you have asked me now. together with the letter -- >> thank you. >> out by my colleagues to be respectful for each other in regards to time. >> my understanding is if you want to accomplish the extent of coverage that we are trying to accomplish in this bill or are headed toward, we want to do it through having subsidies available to more people and have medicaid available to fewer people so that you said in some

of medicaid coverage going to 150%, it was a bad 100% -- it would stop at 100 and. the subsidies was started 100% of the federal poverty level. my impression is that is significantly more expensive to the federal government, because the subsidies are going to cost much more than the federal government's payments under medicaid. i just wanted to get your reaction on that. i know that part of that explanation may be that medicaid does not pay that. i did want to know what is the trade-off is. >> an important difference between medicaid and insurance to me by 3 exchange is the payments that are made to providers. the other crucial issue is how jenner's the package is in the

exchange. -- generous the package is in the exchange. medicaid has extremely low cost sharing. the value of medicaid is in the order 98% or 99%. in exchange depends on how you structure different legislation. the federal government would be paying subsidies that would not take the value up to 98%. it will be a little lower. that provides some offsetting savings in the exchange. more is paid to providers, but generosity of the support for the package is less. there is also the case that it can be state federal issues. states could be paying something amok -- and medicaid be now. there are a number of features that are at work. moving from medicaid and into an exchange tends to raise the cost to the federal government.

>> thank you. >> one clarification on this subject. when you talked to doug about the 10-year window that to projected for senator gregg's request, is that window 10 actual years after implementation of the bill or is that year 2009-2019, with only have a score for 6.5 years? >> what we mean is the 10-year budget window from 2010-2020. >> it was not acted into 2013, the date you gave, you only have seven years of cost figured in at 5 under billion dollars? >> that is right. in the letter we rode several weeks ago, we emphasize that one complication in trying to extrapolate budgetary effects of the first 10 counter years, is

exactly these plans are generally based in -- phased in. >> i just want everyone to note that this action not 10 years wars of cost. gateway of administrative costs an option is mr. the cost -- are disfigured inde those figured i? >> no, in the cost of the gateways are not included for the community plan. >> we are not all the estimating. they should be included and will

ultimately get them there. >> i know you have registered. part of the new component of scoring, we now have an employer mandate that for any company with 25 or more employees, the it full-time or part-time, if they did not offer health insurance as a benefit for full- time employees, they would be fined $750 a year and four part- time, it would be $350 a year. you also have an additional component of an individual mandate that would be a fine on the individual of $100 a year. with those two editions, and now the medicaid expansion it not formally part of the plan, in the claim that this covers 97% of the american people be made or do we fall short of the

97%? >> we think you are not quite get to 97% of the population. without the medicaid expansion, you are well short of that. we have about 90% of 89% of the elderly population covered without the medicaid expansion. their other subsidies for people below 50% of poverty. >> the finest in the chart laid out, in 2015, you predicted there will be 35 million uninsured and that in 2019 there would be 37 million uninsured. there would be an increase of 2 million people. excuse me, that is off of your

june 15 proposal. >> and our analysis, we show the number of uninsured people staying around 33 million for the 2015-2019 time. that is compared to a number that will be rising from 51 million to 54 million without any policy changes. >> the addition of an employer mandate and individual mandate both fined one employer -- only increased insured populations by 2 million people. we went from 35 million to 33 million uninsured. >> and not have the numbers quite confronting me, but it is good to note that about the employer payments, they are designed to keep people in employer sponsored insurance

rather than moving to an exchange. >> i know we have to go to other members. let me ask this. had he modeled what the employer mandate does. have you modeled what the employer mandate does to job growth? >> we are working on it shortly, hopefully. the analysis of the effects of health-care reform on labor markets should not be specific to this legislation. it'll be more general discussion. it would discuss the debt affects -- the effects of employer mandates to make certain payments. the short answer to your question is that we at cbo believe that over time that the burden that employers face for individual employees is passed into their -- gets taken out of

their wages, essentially. this is whether by voluntary choice or by government mandate. the fact that it turns up in wages is why we and others do not think there will be very large employment effects. people with very low wages come close to minimum wage, a mandate of higher payments -- there will be effectively and increase in minimum wage. that can cause job losses that are small relative to the economy, but important to those people. our analysis and will address that. >> thank you. >> just a clarification. if you exclude the elderly, you get to than 90%. if you include the entire population, you are close to 97%. >> in order to get to the 97%

for the non-elderly, have to do some kind of expansion below or provide a subsidy options. >> are you saying with medicaid expansion and the population as a whole -- >> of any closer to the 97%. -- then you get closer to the 97%. >> my point the medicaid expansions of part of this bill. >> not yet. >> that is a legitimate -- >> that is over 10-years. >> do you have a question? >> i was talking about biologics.

your score does not include any savings from fallen biologics and fallen generics. is that right? it is not in the underlying bill, slicing did not score that. >> yes. >> it would certainly bring some significant savings, some kind of falling of biologics. >> you can reach significant savings third change in that way. we discuss that. >> in the length of the period, the shorter the more savings i assume? >> i think that is right. the natural trade-off is that the exclusivity period is designed for -- during that time, companies that make the product had a monopoly and they will charge higher prices. that is the fundamental trade- off in setting patent lives and

explosives today -- exclusivity times. >> do you take into account the ftc report that says a longer period of exclusivity actually means a longer period meaning 12-14 years versus the five we introduce initially and the president's seven years. 12 years acting means less innovation. -- actually means less innovation. you take into account that ftc, the only non industry city out there, says that is not the case? >> i am not an expert here. i may be wrong in my judgment about that. we would certainly take into account what outsiders it. we had a meeting with a dozen people from the ftc last week.

we have an ongoing relationship with them. we take advantage of their expertise. i can check whether miy judgment is correct for people at cbo with more expertise have a different view than i have and we can get back to you. >> can respond to the committee about that? obviously, it is clear that the longer expanded the more money state. the longer expressivity, -- an exclusivity mean the difference between 12 or 14. that means less innovation. if you think that was within the next 24-hours, we can make these determinations. >> yes, sure. >> within the next 24-hours.

i would like to know the follow- up. i would like to get back to this employer mandate. thank you and your staff for the hard work you have done. i'm sure there have been countless hours put into this hours. we may not always agree, but we really appreciate your effort. on the employer mandate, i think we are in agreement that the primary generator of new jobs in america is small business. there are many of those small businesses, although not all of them, that the minimum wage for the that is the nature of small business. according to this, $750 penalty for each employee and $350 for each part-time employees will be lost if there is no health

insurance and provided to employees. i think we very badly need a steady as to what that does to employment -- study as to what that does to employment and small businesses. that is our hope. that is what we really rely on. i can say an employer that has 30 employees saying, i would lay off six people. i think this can have really significant impact. i suddenly hope there is some way that you could ascertain what that impact might be. can you? >> our analysis that we will release shortly will confront the issue squarely. aiding the literature on the -- i believe the literature on the effect of minimum wage on unemployment is controversial but is consistent with the basic

economic logic that higher minimum wage does cause some to implement laws. the effects are small, and our report will talk about the size of the change in the minimum wage that a health care mandate of different sorts might impose. we will review the literature and the evidence on that. >> my evidence is in total. i can tell you from talking to small business people all over my state, they are sure to get dicks -- they are scared to death of this. most small businesses are on the margin are going under. today we see that all over america in the unemployment numbers. obviously, we misread the economy. i think this is a very important and vital issue. have you ever done a study as to the effect of the economic

effect of we importation drugs? >> i think we have written about that. i am not familiar with it exactly. >> we have looked at that in the past. >> if you have, i would like to have that information. had you ever done a study, for example, of the effects of malpractice reform in california? it is an example of significant medical malpractice reform. heavy denny study on that? >> there is some discussion of that on our volume from december. >> do you remember your conclusion? but our assessment -- >> our assessment of the literature is that changes in malpractice in the legal structure would not have a very large effect on the

spending of medical practices. there can be some direct savings from a reduction in the size of the judgments that are rendered. more indirect effects are making doctors less offensive. it could be quite small. that may be because even with reform, doctors will still be reasonably defensive. looking at the evidence, the stores of changes that have been enacted in different states do not change the defensiveness very much. >> maybe you could call out into other states that have enacted medical malpractice reform, because i am told that they have significant reductions in health care costs because it reduces the practice of defensive medicine. perhaps we have different information. if the government insurance option has no enrollment in

fact, then how does it keep insurance companies on this? >> our view is that a public plan would attract and relieve the issue that we pointed to in our letter to you -- we do not think it has a significant effect on the total number of covered people, but it would attract those that would otherwise be enrolled in other insurance plans. >> i thank you. i hope that we will look carefully at this issue of how much cost shifted to the state. i think we ought to realize that we have states like california that are issuing out ious. if we are going to drastically increase their medicaid cost, i frankly do not know how my state can afford a significant increase in those costs. it will be important for us to

know what those increases would be that will be transferred to the state. good week i'm sure it'll only ta couple of hours of questions to predict couple hours to answer those questions. thank you. >> thank you. thank you for your work. i know yet had a lot of pressure and a lot of work to do in a short amount of time. in your letter -- i am looking at the july 6 -- july 2 letter -- the top of page two, the second sentence, you say "about 26 million individuals will obtain coverage with the new coverage."

that is your conclusion based upon the review of the legislation to date. i guess i wanted to get a sense of the new estimates and conclusions verses the one for me couple of weeks -- the one from a few weeks earlier. do you know that number? >> that was one of the factors that led to the substantial reduction in the overall cost of the more recent proposal. fewer people would end up in the insurance exchanges in getting subsidies for the various reasons that doug indicated. the subsidies were made less expensive. it was made more difficult for people who had an employer offers to get into the exchange and get a subsidy. because of the penalty, and made it more likely to offer coverage

and not have those people and debt in exchange. our earlier analysis have anywhere from 39 million or 40 million people ending up in the insurance exchange instead of the neighborhood of 25 million. that was certainly a factor of bringing down the net cost. >> the one question i have, this is a hard one, one of the frustrations that we have is that there are policy provisions or part of our legislation that are not score a goal for a variety of reasons. for the record, if you could just walk through some of that if you can. the reasons why you cannot score particular things or provisions in a lot of the literature and analysis -- there is indication

that there are savings. i think it is important for the record to walk through why you cannot score, for example, helps i.t. i think we do try to score those provisions. not everybody is satisfied with that scoring. the evidence that we can draw on is quite limited. when we scored the health i.t. provisions, we included the effects not just of the direct financial transactions to encourage the adoption of i.t., but also the indirect effect on the number of medical tests order. we concluded that there would be fewer tests ordered and procedures done. you could see -- we incorporated the effects of that on future medicare spending.

we also incorporated the effects of those changes on non-medicare patients. we looked at the effect on cash compensation. we incorporate behavioral responses. >> it is a specific estimate, though, because we do not know how much of the arrival of arrivali.t. -- rival of health i.t. would do. it is hard to judge. the sort of thing is included. we do try 8 to bring all the evidence that we can on health care quality. it depends on what you are

looking for. we do cost estimates and then we try to provide information larry king. we do not agree -- and for a nation where we can. we do not report on how healthy americans will be. that is beyond our scope. the system and the benefits that she may get some quality initiatives -- that is some of the benefits that he may get on quality initiatives. we do not report health. we do try to report on ways that would reverberate back into federal spending. >> one of the key factors is having more information, i information.t. -- health, i.t. --may have to change the incentives that people face. just because someone has that to mean that they will use it in

with a lower cost. sometimes a means of lowering your own income. that is a key factor. thank you. >> i have two votes. i will stay here to finish your question. we will take about a three minute break and come back. we will not try to keep you too long. i apologize. i know you are busy. >> we will try to stay. when the next committee asks me where their numbers are, i will refer them to year. >> i will take two hours figure them out. >> following biologics, the patent protection and that at the exclusivity is not the same intellectual property protection. i cannot understand why we do not realize that it would take away the robust and exclusivity

from companies, there will not be any products. it is that simple. that is why we have to balance that. we worked hard to get that to 12-years. they wanted a lot more than that. that is an important factor that i do not think your data has really done the job on. that is not meant to be a criticism. i think it is true. >> i do not know a lot about this area. we will have to check -- we have a large organization of people that know many things i do not. we will check with them. >> this is a similar bill to hatch waxman, but it is different because of the nature of biologics. you need to look that much more carefully. i can guarantee you that these companies have to raise the money to develop their follow-up on biologics. it is going to cost $1 billion

and take 15 years in many cases to get to hopefully successful drugs. it didn't have enough data as lucidity protection, and there does not going to do. people are not going to risk the dollars to do it. this is an area where we may save more money on health care than any other. all forms of stem cell research, in my opinion. the master of the public plan versus the option. your letter says it will not have a substantial effect on cost or enrollment. am i correct? >> yes. >> how much money with the federal government spending to create and operate the government plan over the 10-year window? >> i do not know if i know the answer to that question. the plan is not receiving subsidies from the government. it is being run on a basis where

it has to break even in its own finances. >> can make an estimate at all? >> i think it would basically incur the costs that a private insurance company would enter an operating the insurance plan. >> my question is if it makes sense to spend any money on an option that will not have any effect on enrollment. >> the statement of enrollment is the statement that the plan had a sick again effect on the total number of people but are injured. we think it would attract its bid again number of people would be enrolled in other insurance companies. it is our judgment about whether that is desirable change. we think there would be a small effect of greater competition in concentrated insurance market. that would have a small beneficial effect.

can you give us some estimate of what it will cost? i would like to have an estimate. >> we can look into that for you. >> i think it is important. let me just say this, you talked about the 15-20 million people who will remain uninsured. what is the typical income category of these individuals? would you consider them low- income? >> i think many of them would be. maybe 1/3 of them are eligible for medicaid. another 1/3 with the unauthorized immigrants. >> what you mean by an authorized immigrants? what people who are in tour country on their own motivation but not in connection. >> people better in here illegally? >> tha is interesting. -- people that are here

illegally? that is interesting. how do you encourage these individuals to take of coverage under this circumstance? how much money should we expect to spend encouraging them that what that is your decision. the more that you try to get from 95% to 99%, the more expensive it will be per person. they have party resisted the subsidies and mandates and so on. they will be increasingly hard to get. >> one last comment. as a person who actually at one time in his service as an attorney did try medicalize -- medical liability cases, i can tell you that when it the things we told every doctor is that you better at the history completely filled up with every possible examination you can possibly

make, if that is the only thing that'll save you in court. we all want necessary defensive medicine, but there is a whole smorgasbord of on defensive medicine. it amounts to a lot more than i think your analysis -- and not try to be critical, but i think you ought to reconsider the. doctors are terrified. these have been over valuations are not necessary. >> question is the extent to the changes in malpractice law can reduce it. >> we do not have been in this bill. that is the problem. that is very difficult to come to a conclusion with regard to medical liability law. >> we have about two minute. >> have a lot more questions. >> you can call us.

>> i personally appreciate the work you have them. you have tried your best to do this. it is a very difficult area. it is almost impossible to get right. at this one to parsley thank you for all the hard work and long hours that you are putting in. -- i just want to thank you you personally for all the hard work that you are putting in. >> i want to ask the remaining members to limit to about five minutes or so. i would really appreciate you staying a few extra minutes. there is a lot of interest. we will get back as quickly as the camp. i'll ask those members to come back right away and limit the times a week nike the longer the mahan -- amid the times they speak so would not be any longer than we have to. we have done a lot of legislation.

you are doing terrific job. we brought the number is down substantially from the june 15 number to the delight to numbers. that is great news. although we have a lot of work to do, we are heading in the right direction. we cannot have dennis about your analysis and advice and counsel. we ought to be grateful for what the congressional budget office has done to guide us through these waters. that is a valuable contribution. we are deeply appreciative of you and your staff. >> thank you. >> stand to recess for 30 minutes. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] >> you can watch more on their website. you also find a link to the congressional budget office report on the cost of the bill.

that is that c-span.org. >> the senate health committee continue their work on health care markets tomorrow at 10:00 a.m. eastern. we will bring the proceedings to you live on c-span3 and c- span.org. >> ronald and alice 3-on president harry truman and his decision to recognize the state of israel. >> no one knew what truman would do. there is a press conference a day before about what he would do. he said, i do not know, you will have to see. he had already decided. he said i'm going to support this creation. >> ronald and allis radosh, sunday at 8:00 p.m. eastern. you can also listen to the program on c-span radio. you can see it online as a c-

span podcast. >> today state for permanent treatment including the cyber attacks on u.s. government agency website and speculations that north korea may be behind the attacks. ian khalid speaks with reporters for 20 minutes. >> there were a number of activities that were closed to the press. she hosted a breakfast this morning for congressional leaders. it gave her an opportunity to preview her trip to india and get some feedback from the senior congressional leaders on our the use -- our views of

india. it was the opportunity to highlight the growing strategic partnership that we have with india and our broad, strategic, bilateral agenda. by now she is having lunch with a member of senior policy experts. they are all from think tanks and related academic institutions for an exchange of use -- of views. as you know, at 230 -- to cut 30 today, we are going to have a official briefed you all on a background of recent agency delegations went to china and malaysia to discuss the implementation security revolution. with that information, i will be glad to take your questions. >> what senior leaders from the

health were at this press? >> we had both chairmen from both houses of congress of the foreign affairs committees. you had carian firm burhman -- e the complete list here. >> fannie mae put it out later? -- can you maybe put it out later? >> it is a broad exchange. >> on the spectrum briefing, -- back from briefing, why did some background and what cannot be on the record? >> we want to give the briefer and opportunity to talk more freely about the discussion. >> it has been a pretty much universal experience that people do not release the more freely

on background than they would otherwise. >> i anderson and a point of view. that is the decision that we made on this particular thing. >> i would like to ask that you reconsider putting up the list. >> we will see what we can do. >> did to raise issues like nuclear arms and defense contracts that are coming up? secretary rice talked about both of these things. >> i think it was a pretty broad discussion. i'm not prepared to talk about details of besides previewing her trip and talking about a number of issues on the bilateral agenda. >> this may be the first time ever that the secretary of state have a high level of meetings

with congressional leaders before traveling to india. was there something important to discuss that she had to make aware of to the national leaders? some from a major effect that will happen in india? >> as she said yesterday, she is looking forward to retract -- to her trip. we have an important relationship with india. it is a strategic partnership what she wanted to do is have an opportunity to share with the senior leaders in both the house of representatives and the senate, senior leaders to deal with foreign affairs issues, to give them an idea of what our latest thinking is on where this

relationship is going. she wanted to talk about her trip. she wanted to get the benefit of their views as well. >> [unintelligible] it she pushing him to resign? >> i am not aware of exactly what paper you are referring to. >> it is still pending a final agreement. >> i do not have the details right now. let me see if we can find something out. >> can you tell us about how the, computers were affected by this? where they originated in north

korea? >> what i can tell you is that the attack against our state.gov website started on july 5. it is still ongoing. i am told that it is much reduced right now. the u.s. computer emergency readiness team is working with the state department's office of the chief information officer comedy cio office, and also with our computer incident response team. the state department was not the only target. >> how badly did it affect the service? >> i think that -- as i have said comedy atta, the attack isg but it is much reduced. i use state.gov several times a

day. i have not noticed any real difficulties in accessing it. that is just a personal thing. what do you believe is responsible for the attacks? >> we are investigating, but we cannot confirm. >> was the embassy affected or any other u.s. missions abroad? >> i think a number of other sites were affected. i am not sure about our site in south korea. but you are not certain? >> i just do not have that information. >> did affect anything else? >> i know it affected a number of agencies. >> within the state department? >> as far as i know, it was just state.gov. >> we now have full details about a an exchange between the

presidents? >> and do not know full details. i do have some follow-up that i can get you. secretary carson and madonna had a meeting. this was in -- and mousavi had a meeting. it was a bilateral meeting. he expressed our desire to come to zimbabwe political agreement. he did express our concern continued problems with respect to human rights and the rule of law in zimbabwe. >> can i? >> that is it. >> considering that he came out of this and said that john carson was an idiot, that is an

awfully bland description of this meeting. was he forceful? . >> as i said the other day,

johnny carson is one of our best diplomats. he has very strong feelings about the development of democracy in zimbabwe. johnny carson is a very strong in committed advocate for u.s. policy. >> this exchange between mr. carson and mr. mugabe, do you still see mr. mugabe as a partner for implementing this global agreement? >> well, what we are focused on is getting this global political agreement fully implemented. we know that the secretary and

the president met with mr. [unintelligible] the prime minister. we are looking forward to getting that cpa agreement implemented. >> do you think that mugabe can be a partner in that? >> we're looking forward to having this fully implemented. >> there are news reports that the israeli government and the u.s. government have struck a deal which would allow the construction of 2500 more settlements in the west bank accounk. is that report true? >> no. there were good productive

discussions but our position has not changed. this is the position that all parties have the responsibility to create the context that would support the renewed negotiations towards a comprehensive peace in the region and our bottom line is the same and it has not changed. the reports are not accurate. >> when will she meet with mr. netanyahu next? >> i am not prepared to announce any specific date but i do believe that senator mitchell plans to go to israel.

>> some senators were questioning whether the u.s. was ahead of the process in honduras in the change of power. with more information coming to light, any change in position? >> well, you heard the secretary yesterday. we are very encouraged by the fact atkins the president of coaster rica has agreed to act -- we are encouraged by the fact that the president of coacosta rica has agreed to act as a partner. we think this is appropriate for him to serve in this role. he is a nobel peace prize winner. you have seen reports that the first meeting will take place

tomorrow. >> are they waiting for more developments. >> we are very encouraged by this development. we have a dialogue in place that has a real promise of getting a dialogue going between the conflicting parties. >> the cyber attacks were aimed at a large number of government parties and they're coming from abroad. what is the u.s. government's posture? >> it is the department of

homeland security that has a lead on this. >> the state department would react as a hostile action from the government? >> we are coordinating with dhs in dealing with this. in terms of how we deal with this, this is a question for dhs > >> today, president hu jintao returned because of the continuing rights. they are trying to sort out the facts. has there any beebeen any sorti? >> we remain deeply concerned about the situation. we are very concerned by the amount of violence we have seen and we continue to call on all parties to use constraint.

we have not gotten any reports of large-scale violence. we have observed that the police are maintaining a high security profile. we think that all sides should refrain from violence. while it is important but the chinese authorities act to restore the quarter and prevent further violence, we hope that their actions will reflect the respect for chinese citizens. >> the doocy the deployment of chinese troops as a way to stabilize the situation? -- do you see the deployment of chinese troops anas a way to stabilize the situation? >> we want all sides to exercise

restraint. as i say, we hold as this goes forward that the legal rights of all citizens will be respected. >> you don't want to comment on the deployment of troops? >> well, i don't want to comment. obviously, the chinese authorities have to act to restore order but i don't have enough information to be able to comment on the quantity of troops on the ground. >> on the subject, what level of u.s. [inaudible] might be on the ground? >> we have someone from the embassy on the ground there. i am not entirely certain. i know yesterday we have someone on the ground. >> is this a conflict?

-- is this a contact? >> all of our contacts have reported in as safe. >> has the embassy asked for some clarity of what is happening? are the chinese blocking social networks to prevent the spread of information? >> in the first part of your question, we have been in contact to try to get more information. we raised this with the vice foreign minister a couple of months ago. on the issue of restriction of

access to the internet and other information sources, we have seen reports of this. we're always concerned about any restrictions on the flea flow of information. -- free flow of information. >> [inaudible] restoring order by force [inaudible] does the u.s. government support democracy in china? >> we support democracy everywhere.

we want to seek a restraint exercised by both sides. >> the people are seeking freedom, the support freedom? >> we will stand with >> [inaudible] >> do you have anything to say about the freedom of religion in the province? >> i don't have any information. >> if criticized it in a reporya

report. >> i don't have any information. >> to you have ando you have an information on the under reporting accounts deaths? >> i don't have any information. >> [inaudible] >> we have a very broad agenda with india. her trip is about 11 days. we will not predict what is when to come -- what is going to come. >> thank you. >> thank you, sir. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] >> coming up, the chairman of

the joint chiefs of staff talks about u.s. security. then 8 goa sting that discovered the security lapses at u.s. buildings. then a discussion about creating a consumer financial protection agency. >> tomorrow morning, richard um bdenstock on a recent deal with the federal government to cut health-care costs. the president of the national association of manufacturers. then we will have a discussion on the proposed consumer financial protection agency. "washington journal" is live at 7:00 a.m. eastern on c-span. >> now, mike mullen talks about

increasing troop levels in afghanistan, north korea, and iran's nuclear program. from the national press club, this is 50 minutes. >> good afternoon, welcome to the national press club. i am a reporter with vote usa today" and i am the president of the national press club. we're committed to a future of journalism by performinfoster ie press worldwide. for more information, visit our web site. on behalf of our 3005 funded members worldwide, i would like to welcome our speaker -- on behalf of our 3500 speakers worldwide, i would like to welcome our speaker. we are looking forward to today's speech. afterwards, i will ask as many questions from the audience as time permits.

please hold your applause until after the speech. for our broadcast audience, i would like to explain that if you hear applause it will be from members of the general public and not necessarily from the working press. i would like to introduce our guest. melissa sharpebeno, lida

baldour, mark raymandi, josh rogen and finally, eli lake. [applause] the u.s. military has been at war for 8 years and for six of those years it has fought on two fronts. in iraq and afghanistan. all along the way, u.s. forces have seen success, most notably the reduction of violence in iraq but irepeated deployments have taken a toll on military readiness and the mental health of military families with suicides on the rise. many ratmust feel like they are

running a brutal marathon. the chairman of the joint chiefs of staff is acutely aware of the issues and has made a dressing and a top priority. looking across the globe as he does every day, he sees a host of challenges. in iraq, most troops are scheduled to be out by august, 2010, but others are expected to remain. in afghanistan, the u.s. is sending in thousands of additional troops with the possibility of more to follow. back home, robert gates is trying to reshuffle the pentagon's priorities often facing stiff resistance from congress as in the effort to end

certain high-profile weapons programs such as the f-22 fighter jet. add mollethe chairman of the jos of staff has served under president bush and president obama. he is the chief military adviser and he is the 17th person to serve in this position. he was born in los angeles, he graduated from the u.s. naval academy in 1968, part of a class that included oliver north, senator jim webb, and the director of national intelligence. since then, he served in a variety of command positions at sea and ashore. he served as the chief of naval operations, the navy's top officer. we wanted to make sure we could hear directly from at ramallah

about the many pressing security challenges -- from admiral mullen about the many pressing security challenges. he is going to dover, delaware to receive the remains of those soldiers had died in afghanistan. we stand our condolences to those families of those who died. please join me in extending a warm welcome to admiral mike mullen, chairman of the joint chiefs of staff. [applause] >> thank you for that warm introduction.

the challenges that are out there are very very evident. i literally just returned from moscow yesterday evening. i had been there once before in a counter visit with the head of the russian military. our plans for the future and the engagement and our military to military discussions were part of the outcome of the summit. i will try to put my remarks in three different categories, three different areas and an open it up for questions. first, focusing on the middle east, the broader middle east, and specifically the challenges that we have both in iraq, which remain, and afghanistan and pakistan. clearly, we are at a point down in iraq where the violence level is down dramatically. is the lowest level of violence since 2003-2004.

we are at a point, we are on our plan to support the drawdown which will start significantly, really early in 20,010, next year. our ability to do all of this is in great part attributable to the 2.2 million men and women who serve and to those who paid the ultimate sacrifice. there is not a day that goes by for very many issues that i am dealing with where our young people in the best military i have ever seen are not very much on my mind. i am privileged to be with them. we have many challenges. most of the challenges right now our political challenges, economic challenges.

heavy focus on those areas is critical. elections which come up next year, or early next year, are vital. after that, my expectation is that we will draw down rapidly to get to about 35,000 to 50,000 troops in the august of 2010. at that point, we transition our combat forces totally to an advisory and assistance forces. as you know, significant date last week was the 30th of june where we pulled out of the cities, the last two big areas were mobile and baghdad. that has gone very well. -- the last two big areas were mosul and baghdad. i am confident that we have a strategy correct. we have shifted our main effort now to afghanistan, we are adding additional troops.

recently, we commenced an operation in one province. this has been widely reported. what this represents, the marines there are the additional forces that we needed to put in place to support the strategy that the president has laid out with respect to fully resources counter insurgency plans. we have additional troops there, we have new leadership there. it comes at a time where the violence level in afghanistan has gone up each year over the last three years or so. the violence level is a problem but we are focused on security for the afghan people. i believe that the center of gravity in afghanistan is really the protection of the people. the people of the afghanistan.

the afghan government can supply goods and services to their people at every level, not just the national level, but to the region. i've been to pakistan or for the past year and a half and this presents the engagement and the importance of the country and the region to try to create

stability. clearly, the top priority is to defeat al qaeda whose leadership resigns in the federal area. it is a totality of pakistan and afghanistan that we need to move forward on. the assignment of ambassador holbrooke and the civilian team is critical in how we move forward. there are other challenges in the middle east, least of all is iran. it continues to move forward on the nuclear weapons development plan. that potentially is incredibly destabilizing in that part of the world. not least of all because they would have a weapon but what i worry about is the beginning or the extension of a nuclear arms

race to that part of the world as well. i am encouraged by the intent to both in gauge and have a dialogue with him on the part of president obama. i think that the window of opportunity is narrowing as time goes on. they still resources, have been asked about the elections in iran and that is not really my purview. from a military standpoint, they still moved down the road of terrorism and they are a destabilizing influence in the region and still are in both iraq and afghanistan. i spent a lot of my time in the middle east and have been gauged the leaders there in addressing the issues and challenges so significantly in the part of the world.

the second area that i would like to spend a couple of moments on is our people. i am very concerned about the stress and the pressure that our people are under and 32.2 million men and women, roughly half of those our reserves and a guard. they're the best i've ever served with. when i was commissions, my first war was vietnam and i remember that and i remember the things that were so important as we learned our lessons there and critical to that has been the support for our men and women who serve. i have found that in this eighth year of war and the sixth year of fighting two wars, the american people have been spectacular in supporting our

men and women in uniform. i'm grateful for that, and so were they. they're the best i have ever seen. we have asked them to deploy multiple times and for longer amount of times and there is a lot of pressure on them. not just on the members but on their families. we spend a lot of time in gauging military members, their families, trying to understand what their needs are, where the pressures are. we have traumatic injuries,

posttraumatic stress. for our force, stresses the enemy. we are addressing those needs and the key is leadership focus on these great men and women. we toured diturn it around in iq because of these men and women. we have met so many of our people both in the fight you want to be engaged and make a difference. as i indicated, they're the best i've ever seen. as a country, i would hope that we keep our focus on our people, particularly those that have been wounded and their families and the families of the fallen. these are people that have paid in many cases the ultimate price.

we, as the country, must repay that debt to. their dreams have not changed. they would still like to raise a family, they would like to go to school, send their kids to own a home and h family. i think that the way that this actually able to occur is the department of defense and the va and community is reaching out to those who have given so much and touched them where they need support and make a difference that sustains their lives over a period of time. again, they're the best i have ever seen and they have done exactly what we as a country have asked them to do. i will just a couple of things about the rest of the world.

there are challenges throughout the world, i could specifically know clearly the challenges we have had with north korea. -- note clearly the challenges we have had with north korea. i am actually encourage by the unity of the international community with respect to continued isolation of the leadership. i think that is important in that we need to keep the pressure ouup. i am focused on other parts of the world where we have challenges. in the pacific, it is not all about north korea. we have great relationships out there that need to be sustained such as with japan, south korea, australia, and other relationships which are emerging. we have a rise in chining chinah

is peaceful. they are continuing to raise their investment in their defense. where is that going? clarifying that intent over time is important. we also have our forces deployed in places like latin america, africa, and in gauging other parts of the world that are very much in focused on engagement, trying to see challenges from their eyes, from the people live there, how they look at things is very important, to understand this and in that regard to become preventive in nature so conflicts don't break out and we

have a sustained relationship. most of my challenges right now for my forces just on physically what it takes, most of the numbers aren't central command. i do this with a very small percentage of my force as well as a very active navy and air force which is not as committed as our ground forces are. there are lots of challenges coming from lots of directions and i am sure you want to ask me some of those. with that, i will take your questions. [applause] >> we will start with north korea. their denial of the cyber

attacks, is this a big deal for business as usual? >> this is an issue of growing concern. i did not say anything in the budget. i don't think that strategically that this is the best budget, this amendment, which is currently being debated as a part of the fiscal year 10 budget. this was a very comprehensive approach to the future. we are trying to move away from conventional but also towards the cyberworld. i am increasingly concerned about this and the attacks, whether they are from individual hackers or from state entities.

that is something that we need to be concerned about. i'm not going to go into great detail about this. this is a growing concern. there has been a specific investment. it has become an issue for all the leadership, not just for specialties. we need to raise up more people who are capable in this area. this is a growing concern and we need to have this as a big part of our focus with respect to the front now and in the future -- the threat now and in the future. >> was the defense department a victim of this? >> we are constantly probin \een this world and we have been for some time. we are alert and we recognize

these and we are responding. this is an area of growing concern for all of us in leadership positions. >> movie on to afghanistan, with u.s. forces fighting in afghanistan for 8 years, why should americans be persuaded that the latest military push will be the silver bullet? when will this war and and exactly what is our long-term objective? >> i don't think that there are any silver bullets with all of these major challenges, including in afghanistan. it has been under source effort for a significant amount of time. from what we have learned, specifically with respect to counter insurgency, what we have learned in iraq and we apply these lessons in afghanistan.

from a counter insurgency standpoint, we have the best counter insurgency force in the world. drawing on those lessons, being able to make a difference and understand from a shortage standpoint that this is the right way to go is where we are. we are now researching it to the needs of the commander on the ground. we have not done that before and we are just starting to do that this year. it is those resources combined with the civilian team. this will allow us to move forward in a very positive way. the focus is on security right now for the afghan people and that is in fact where our military forces are very much

focus. >> how long do you expect u.s. troops to be in afghanistan? >> my expectation is that we will have a long-term relationship with afghanistan. when i get asked about time, i think the best number that i can give you is that i believe that we have to start to turn the tide with respect to the taliban in the next 10-12 months. the approach that we have will allow us to do this. beyond that, we would be able to give a much better assessment of duration after that, but i am not in a position to be specific be on this. >> what are the major differences between the current strategy and the previous strategy? >> the current strategy is a

regional approach. i had been to pakistan almost one dozen times in the last year, year and a half. it is my belief that we needed to have a regional approach there. there is broad responsibilities not just for those two countries but for other countries in the region. i am very encouraged by the regional approach and on the focus on building civilian capacity. you have not just a new military there. we have a new ambassador there and a new embassy that is broader and deeper crossing number of areas. there's focus on development, agriculture. there needs to be a great focus on governance, not just at the national level. these forces we are putting in there now, along with our coalition partners, are focused

on the elections which are coming as well. there is a very comprehensive approach that covers all of the areas that are required to move this in a positive direction. i am encouraged by the strategic approach. now we are in a position where we have to execute. >> commanders say they need more forces, d.c. any morthe you seee forces to be used besides those that have been announced? >> our idea was to go in and come back in 60 days with our assessment. everything that you need from the military side, we are going through this now. that clock started about the second week of june and he is basically at the beginning of

that assessment. i really look for him to come back and tell me what he needs. my guidance was to tell me what you need, bring it back to washington. i have had discussions foreigwie national security advisers and the president clinton we are committed to properly resources in this endeavor. there are not any specifics with respect to this. all of us are concerned about having the right level of footprint but not getting to a point where it looks like we are an occupying force. if we get to that point, it is not going to work. it is focusing on the security for the people so that we can turn a -- we have about 4000 additional trainers which will show up later this year. the fourth brigade of the 82nd division, this will fulfill a

significant gap we have had. the main effort becomes training the afghan army and police so they can provide security for their people >> what is the biggest threat our troops face in afghanistan? >> the biggest threat is really from ied's. these have become more sophisticated. that combination with more and more sophisticated attacks from the taliban where they use them to a conflict or to fight our troops. we have come a long way with respect to that. this is an enemy that is very attractive and very capable. as they adapt, we did that, they adapt again. we are focused on this in terms of support for both intelligence

as well as capabilities to counter this threat. that is the number one threat. >> fact military casualties spite during a surge in iraq. how great of an increase are you bracing for? >> as i indicated, we have put some 10,000 marines in southern afghanistan. we know that 4000 launch an operation a few days ago and that will be a very tough fight. my expectation is as we add more troops, there are tragedies and there will be more. i think the fighting for the next 12-18 months will be very very challenging. with that comes to casualty's that along with that again, that

is back to starting to turn the tide against what has become a more sophisticated threat over the last two or three years. my expectation is that we will spike but i don't know how long it will last. we are aware of that, we are very focused on that. again, the expectations by adding these troops in a much tougher fight is that those numbers will go up. >> what is the status of providing troops with equipment? we have had more armored vehicles literally since obama came into office. add to the end of this year, we will have a new lighter weight

vehicle that has armor. we expect this to ride in december. theit is not the same terrain as iraq. we are working hard to get this samthe right vehicle. there is no higher priority than to get these vehicles in theater as quickly as we can. there are about 2000 that we have in afghanistan. the >> would you describe your top priority to improve support for seriously wounded service

members? >> the area i worry most about with respect to wounded, their families, is the stress issue. the whole issue of post- traumatic stress. we are on average for a major ground unit in the army on our fourth deployment. most of those deployments has been 8, 12, 18 months. we have reduced those deployments to 12 months maximum. the repetitive deployments are the most challenging. when i visit troops, there is a skit in this step because they know they have made a difference and they've turned it around in iraq and they are confident that they can get the job done in afghanistan. that said, those that have

sustained the the kinds of wounds, the traumatic brain injury, the post-traumatic stress. we are at the beginning of understanding how to deal with that. we are under resources nationally in mental health. that basically has done the affect on under resources and the military in terms of mental health. i am anxious to have communities throughout the land to reach out to these young people who are the best i've ever served with and who have made such a difference in serving our country and work with them as they look to a future. their dreams have not changed. we want to address some of these challenging issues. it is probably in the mental area that i am most concerned about. >> what impact have you seen from the policy change to allow

the press to cover the return of the bodies of fallen soldiers? >> less impact than it has been. it has been very well done. i have been up there and observe the process. on a personal belief that it was a very important decision. that is the most difficult part of the war, those that we lose. we know the kind of dignity that th-- delong we owewe oewtheowe e dignity and respect. we see that dignity and respect has been very very much

supported in the time that the press has been there. i am very encouraged by that. i think it is important that all of us understand the sacrifices that these young men and women make. this is a positive step. >> what is your assessment of the cooperation that the u.s. military receives from the pakistani military. it is suggested that this is not so good at the border. >> part of why i have been to pakistan so often is to be engaged their military leadership. -- is to engage their military leadership. when i have been to pakistan, the question has been again and again "are you staying this time or are you leaving."

we actually sanctioned pakistan from 1990 until 2002. they are very wary of what will be our sustained position. it is important to in gauge at every level and that is was going on. -- engage at every level and that is what is going on. we have very challenging circumstances. part of this is support for the pakistani military. we have can significant support for what they have asked for. this is a military that has focused on two different fronts, whether it is kashmir in the east. there is a significant internal threat in their country that they are now attacking and dealing with and it is very much counter-insurgency based.

a year ago, not many people would have said that the pakistani military could have pulled off the swat offensive. that effort and cooperation that we are trying to generate through our engagement, in the long run, with the development of the afghan security forces and the pakistani security forces, puts growing and continued pressure of the threat that i talked about earlier. this is not perfect. we have a way to go in terms of those relationships between pakistan and afghanistan. that is historically known. obviously, we have a way to go. i think we need to stay engaged. we're moving in the right direction. >> you have expressed some concern about high levels of

civilian casualties jeopardize in your work in afghanistan. what about the drone-fired missiles in afghanistan? >> let me talk specifically about civilian casualties. i don't think in the history of counter insurgency you can win by killing civilians. generalthe future measure of success in afghanistan will not be the number of enemy that we killed, it will be the number of afghan citizens that we protect. i don't think that i could say it any better. civilian casualties, when they occur, set us back. the current general issued a new directive last week that very specifically focused on this. we will do everything we can and

everything we have to to protect our own troops. leaders need to be focused on on all the steps in an engagement. -- leaders need to be focused on all the steps in an engagement. the leadership is focused on right down to the most junior level of soldiers, sailors, airmen, marines who would be in combat to understand that. that is really where i am with respect to civilian casualties. >> how about those drones? can you talk about how well those are working for you? >> i will not talk about

operational details. >> the secretary of defense says it is time to reconsider the policy of using the u.s. military to fight two conventional wars. it is believed that the strategy should be jettisoned. what is your personal opinion? >> i believed that the focus of was secretary gates has put in front of us, which is to continue to shift the pendulum from a conventional capability to on the regular warfare capability is absolutely crucial. the pentagon does not move quickly. we still expend a lot of our budget on conventional capability. secretary gates and i want to move the pendulum and focus on these capabilities that we have

learned so much about in the wars we are in. this is not just for me, focusing on the wars that we are in. they have great applicability for the future. for me, this is all about balance. this is not about moving from one side to the other, it is about balance for the future. the fiscal budget which congress is currently debating it is very much a step in the right direction. we are in the middle of our quadrennial defense a review and we are dealing with one of the issues of the sizing our force for the future. what kind of conflicts we should prepare for in that regard. that covers the gamut of what kind of people skills, what kind of equipment, what kind of training that you need.

this will get us to the sizing, struck for the future. i am pretty comfortable it will not be two contingency operations. >> the navy and the air force have told congress that they face shortfalls in fighter jets. the budget spends less than has been planned on f-18 for the navy and would terminate production of some projects. has the pentagon downsized its required number of fighters? >> it depends on whose planes you're talking about. i've seen for the last decade and tactical aviation.

for the next seven years, i am comfortable with the investment. i'm supportive of this, we need to close out the f-22 and we need to invest in the joint strike fighter for the future which is a jet which will go to the air force and the navy and the marine corps. that investment is about right. we are at a time where there is some risk because this is a new program. from what i've seen, i'm comfortable with where we are with respect to that right now. there are discussions about a strike fighter shortfall in the future. i am not unaware of that. i don't think that it is as extreme as some of the numbers i have seen. we need a strong tactical aviation capability. where we are right now, this is one of the things that secretary

gates has directed us, to review in detail to make decisions about where we go in the future. >> over the next few years, what a major systems and programs are likely to be planned for reduction or elimination? >> actually, when you look at the decisions that secretary gates recommended to the president and the president sent to congress. focusing on programs that have gone very expensive and were out of control. focusing on programs that were in some ways looking back and not looking forward. programs that were very late in their delivery and programs which were expected to be al