facilitators and trainers, etc., but in the last 60 days, those that we have captured or killed here that or some of the facilitators, traders, or main ied leaders, the great majority of those are afghan. . >> has there been any decrease in the cross border activity?

most notably it is coupled with complementary operations and our part along the border. there is not only the operation from package some -- pakistan but our side as well. it had the ability to move fires across the border. we know they have had difficulty supplying those that are deeper into the konar as a result of our complementary operations on both sides of the border. afghan, pakistan, and coalition force operations. in the south, while it is not a full-fledged operation there, on the pakistan side they are operating there. we have seen a somewhat of a reduction of cross-border activity there as well compared to the past. >> thank you very much for your review. but that i'm going to turn back to you for any closing remarks.

>> thank you. i really appreciate the opportunity to talk to you. in closing, thank you again for joining me this morning. i also want to thank all the great supportive families back home for your unwavering support. we are at 23,000 strong and supported by a great family members. what makes our team especially is the professionalism and dedication the soldiers feel and the unyielding love and support a family members and local communities back on the support of so well. we are able to do what we do because of this kind of support and your support caswell. i appreciate the opportunity. airborne. >> thank you very much. we hope to see you soon in this format. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009]

>> up next on c-span, british prime minister gordon brown talks about spending priorities in afghanistan. to him before the house of commons committee last month. then the senate panel is immense public transportation in u.s. cities. -- discuss public transportation in the u.s. cities. an open question journal" tomorrow, we will discuss the economy and president obama's visit to indiana with neil irwin. patrick leahy will take your questions about the sotomayor

supreme court nomination, the economy, and the obama administration. the president of the business roundtable will focus on health care. he will be joined by james frisch to look at the senate and in an -- senate agenda. >> this week, the full senate debate the nomination of sonia sotomayor as supreme court justice, live on c-span2 and c- span.org. coming this fall, for the homes to america's highest court, the supreme court. >> british prime minister gordon brown enters a range of questions before the british house of commons liaison committee. it is made up of the 30 chairman of the house of commons select committee. several questions focus on the british economy, a banking crisis, and foreign affairs.

it is about two hours. >> as usual, you have been told of the things and have not been told the questions. the first theme is the former banking regulation. that will be introduced by john the did the second -- john. the second will be led by edward liddy. the third section has been subdivided. parliament will be led by sir george young. the final section is led by mike

gate. we will go straight into the first section. >> good morning. it is very similar to the first year of the new contract at madrid. is it this case [unintelligible] >> he makes some very clear recommendations which i believe will be adopted. the first thing is that regulation has to beat -- remuneration as to the long term. it is only on the basis of long- term performance that we can guarantee the system that is to be being in the future. he is recommending that bonuses

and remuneration should be over a five-year period. the second thing is transparency. you may have been talking about this. the public needs to be aware of what is happening. that leads to the third conclusion. the regulating system has now have to take into account banks who are prepared to pay high remuneration. that has to be a factor in regulation of the banks. the financial authority will be issuing the revised issue on in the enumeration. the combination of what walker was recommending this morning, he talks about successes in the cities that have to be dealt with. he talks about boardroom failures in the city. the combination of walker and what the embassy is prepared to do, i think fundamentally

changes the environment. there have been excesses'. it is viewed by the public as irresponsible and unfair. we have to take the action. it has been taken to both regulatory -- >> the use of the mark of the bonuses that go -- they had reached half a million pounds for employees. it came before the treasury and was issued at an aggressive trading day. the city has stolen a march on the regulator. it seems to hot -- it seems hard to pull the bank no. >> enumeration has to be based on long-term performance. if it is based on short-term deal making, the life of the

institution is put at risk. that is why it needs to be under the regulator system. there has to be long-term basis for enumeration in the short term deals. the rest of the -- there has to be the regulated system available to take back sets -- action when necessary. it is designed to deal with many of these problems. >> when the governors before the treasury, he stated that did not been consulted on financial regulation and he stated vocally that was a week before it came out. do you have a grip on the situation? >> i've not a member of the apartheid group. the need to be put onto a legislative basis. -- it need to be put on to a

legislative basis. [unintelligible] that is the right thing. these organizations have got to be able to meet together. they have to be able to discuss the issues that come up. they have to discuss immediate problems like the stability of a bank. that is the way we did it when i was at the treasury. to put it on the more solid footing for the longer term, it is the best thing to do. you cannot have one institution only. all three institutions have to work together. >> the governor said a week before this was due out he did not been consulted. the paper then got delayed. has the governor become a this cannon? >> no, he does a good job. people recognize his talents. that is what he was appointed as governor. the important thing to

recognize is that you will always have to have a system -- i am recognizing america as well -- or the revelatory authority -- regulatory authority and the regulators have to work together. otherwise it cannot do with the complexity of problems that arise. some affect the stability of the system and some affect the public finances. you have to have the three together. the basis of our system is the one that will be followed around the world. it is not aware moving from the previous system. we are trying to make it even stronger in the are but five -- apartheid situations. >> i think that to the message. >> as far as the financial crisis is concerned, it is very hard indeed. we have a very strong financial

sector and the economy. i think around the world, people appreciate that britain took the lead in dealing with many problems of the financial system. it was us that recognized the need to recapitalize the banks and providing liquidity was not going to be enough. we recognize the would have to take shares in the banks as well as we are going to be able to continue to keep the financial system moving forward. a think you'll find a lot of countries have been following what britain did. i think we should not get into a debate here. this is a global economy. we have to consult with other countries as well as britain. the apartheid system in britain is one that is relevant to other countries around the world. >> there was a major selling point over the government in 1977. [unintelligible]

>> and not at all. i think we have a storybook perspective. inflation in this country was the major problem that we face for 50 years. every government was bedeviled by the problem of inflation. inflation got up to double-digit figures in many decades as a result of the failure to have a system to deal with inflation. in 1997 when we made the bank of england independent, long-term interest rates immediately came down. the record of the bank of england in the monetary system has been very good indeed. inflation has been half what it was in the previous decade. you know inflation has been far less of a problem than the last 10 years. that is the success of making the bank of england independent in the monetary and fiscal system that is based on the accountability and prosperity and having clear objectives. the bank of england has always had a role in financial stability.

the bank of england is always involved in these issues. the first crisis i can think of is in a career. then they had to do with the russian crisis. the regulation of individual institutions is better done by a regulatory authority like the financial-services authority. in america, what they are trying to do is what we do. and these the operate under one umbrella. -- at least they operate under one umbrella. they can and the self regulation that we have in the past. that is something you can build on. >> are remember the select committee when the first

appeared before the chancellor, having made the bank independent, which you have refused to discuss the previous election. you just announced it was a great success. we have just witnessed the biggest banking collapse since the 1930's. looking for work, the governor has refused to contemplate separating the investment away from high street banking. can you explain to the satisfaction the british people what measures you have now done to stop it from happening again? >> first of all, of talking about inflation. -- i was talking about inflation. remember the problems we had with inflation that was replaced by wage inflation. there were cycles as result of that issue. as far as the regulatory system, the whole of the world has to

change its approach to regulation. i even sang for 10 years to give a global financial system. we have to have a global means for coordinating the global system. you talked about the last people issue. -- glass steeple issue. let's be clear that we have a crisis in retail and investment banks. not one group of banks was immune from this crisis. what you have to deal with is the high impact banks. when a bank has such resources

and such potential risks for the financial stability of the country, the wreckage for measures that you have to take to make sure it is doing the right thing has to be stronger in the future. you have to have a better grasp of what it is doing in other countries. scotland's main problems arose from problems in the netherlands. you have to have a grass so what is happening in other countries. -- a grasp of what is happening in other countries. that is what we are going to do in the future. we will probably have to hold more accountable as a possibility that they are a greater risk to the financial system as a whole. >> that is not part of the answer. you have to provide risk cover and transparency. coming back to domestic, when he wanted to take over, the

government satisfied the competition law. apart from speeding up the takeover to the detriment of csb, do you acknowledge that has led to a severe reduction of choice and competition within banking system which means many businesses are not getting access to finance to keep themselves going? how you respond to the competition commission? -- competition commission saying the size of the royal bank will have to be revisited in britain cannot expect to be immune to competition rules? will it have to be broken up? >> it was officially been stepping them. it would of been the same if we have not seen a bit of what it

was. secondly, there are bound to be fewer banks operating in this country now. the biggest loss has not been the competition. it is the loss of foreign banks who are responsible for about half the lending that has taken place in mortgages and for business lending in the united kingdom and the last 10 years. what he would like you want to withdraw a large amount, irish banks and other banks will offer loans to mortgage holders and businesses and have withdrawn. that has been the biggest lost to competition. what has to be remembered is we have financial stability issues as well as competition issues. we want to see the maximum amount of competition.

that must be our policy. >> whether you are fair or more european or less european [unintelligible] >> i'm not contradictory at all. the competition commissioner has to look at stability as well as competition. we cannot have big banks put at risk of collapse at this particular time. competition has to work effectively. in the banking sector, as result of european supervision, it is under the financial stability -- the irish commissioner -- there will support the new rule book that will be torn up by the european banking system. we will be part of that system.

individual institutions will be regulated by financial-services i think it is right drug the world to seek a common set of global rules and -- financial services. i think it is right to do that in the world to seek a common set of global rules. >> the banking crisis has political and social consequences seems to have been forgotten with the banking crisis. it destroyed the system itself. it beat john barkley before the treasury committee. they are attempting to rebuild a. can you assure the citizens that the banking system will result in one in which people do have trust in funds in the system and also feel they are getting [unintelligible]

>> i said the behavior of banks in the way the became speculators would give us money. i said it was irresponsible and unfair to the people of this country. what we had to do was make sure that we protect it the citizens of ordinary families. that i believe we plan to do. equally we have to restructure the banking system for the future around sound principles that assure that what we are part of a global economy, the integrity and trust necessary is there. that is why we are involved in initial discussions. to deal with the excess boardroom practices that have shocked people and let me angry as well, we are bringing in these new rules about the long-

term nature of remuneration and reward and about regulation of the banking system if necessary. >> i was doing well until then. when informing the financial markets, they seem to be branded the authority for financial stability. you have been giving new tools. why do not to follow the governors of buys and create the tools first and then do the institution thereafter? >> this is a way forward. self regulation is out for

financial institutions. that is why a body like the financial services authority is necessary. you have to involve the three institutions. banking has a major role to play. the reason the tripartite is to recognize the importance of the institutions. that is the basis of the next eight of our financial system. i believe that other countries will follow. >> thank you. >> you referred to it in the context of the action we take. does that mean you accepted in its entirety or do you have reservations? if you have reservations what are they? >> the 39 recommendations. you have to look at everyone in detail. the general recommendation, that

the role of chairman and executive has to change. that is one we support for a heart of the. you cannot have non executive directors and do not understand the risks that their company is taking. the tendency would be -- simply because the stability that is involved. the proposal very enumeration be on a five-year basis, long-term that is one we would favor. the greater transparency that is demanded is something that i fully support. >> you referred to call back in the context. is that -- clawback in the context. is that involved? >> we have talked about it.

we can do it. you can hold back the money. it does have an important part to play in something that i think is something that is important to the proper sanctions in the financial system. >> do you see it is being practical? >> yes, i do. in some instances it is already happening. >> thank you. we will now move on to recovery from recession. we all hope that next spring we will be recovering from the recession. there are difficult choices to be faced. we will have a budget deficit of 14%. every 4 pounds we spend we will be barring one count. there are very difficult choices that have to be made. do you not think that we should have an open debate now about what we intend to do with our public servitude, in particular

[unintelligible] >> we have to get back to growth. we have to get back to employment in the economy. the major determinant of our deficits is the level of growth and indirectly the level of employment. the first priority is to get growth and employment into the economy. that is why we are spending additional money now to make sure that we come out of the recession. the additional money is to create jobs. the rate increase of unemployment is slowing. it is a great growth in the economy. what i said everything you are doing on spending is right. we have had that debate. it to be great if there is no proper planning r now proper planningash and hurried

decisions are being made. the sunday times says secret doomsday plans that 20% cuts are being planned by civil servants. [unintelligible] is this going on? >> you must not believe everything you read any newspaper. >> i do not. so it is not true? >> it is quite ridiculous. you cannot in this situation where there is uncertainty of what is one to happen the next month and a year predict absolutely for your level is growth -- what your level of growth is going to be two years from now. we are only 50 months into a three year cycle. the next thing we reviewed was in 2007. we started this spending in april last year. we are only 15 months into.

we have the great uncertainties of not being absolutely sure what is going to happen to the world economy. to ideologically predetermine what is one to be allocated to a particular service now is something -- or seven metal happen in 2011 or 2013 is a mistake. it cannot be done. >> was he wrong when he said there will be spending choices and a growing need across the board and less spending in some programs? he is the first secretary of straight -- he is your secretary of straight. what was he talking about. >> the cannot ideologically predetermine allocations. that does not mean to say that he cannot say we have to spend additional money to take us out of the recession. i think we are having some success in doing so.

the profile public spending will be good in years to come. there are tough choices that have to be made. new choices have to be made about how you get more efficiency. how we can change the balance of priorities. how we enact the program of assets. there are tough choices to be made. it is right to say we are spending money now to take it out of a recession. capital spending will be different in the years to come. you cannot say in july 2009 -- 2009 they know what the level of unemployment will be. it'll be clear over the next few months. the action that we are taking is having an effect. you cannot say absolutely with the right level allocation for a particular service in 2011 will be.

>> and no one to get involved in the strategy of afghanistan. how much are we spending this year in afghanistan? >> i should say we are spending about 3 billion pounds in addition to the defense budget. >> what can we do not do? we bought it the entire poppycock in 2002 with 19 million pounds. i told you cannot buy it only rented. how much are we spending? are we looking at other things like buying up -- i'm thinking of ways, i know you can go into details. >> debate is clear. one is that we are seeking major efficiency from the district apartment. we have identified 9 billion in the next short time a savings we

want the department. that is how battier services can spend money. we have to announce a program of assets. you'll continue to look at what assets are no longer priorities for the government and whether we can pass over it. we are determined to get the money to the front-line services. our tough choices are about how get resources to the front line services. we have already made plans other deficit reduction plan. we of tax rises we are prepared to announce a we can do with the issue of financing our public services and deficit reduction. >> in your own budget, government the year will fall by 1.1%. in your own red book, it indicates a drop from 530 billion to 496 billion.

should we have an open debate about afghanistan? you cannot say [unintelligible] >> our troops are in a very difficult mission in afghanistan this to be the worst time to say let's get out. >> i'm talking about spending in addition. >> afghanistan is important. we need to look into this very clear about what we want to do for the future. as far as the choices that we are prepared to make, we have announced measures to reduce the deficit by half over the next five years. these are measures that include the tax measures. the reason we are able to do that this -- is to build 3000 schools.

we have opened 110 hospitals. we have done a huge amount of capital investment already. it is possible to stage a capital spending in such a way there is more this year to help us to the recession. to ideologically predetermine an allocation is an uncertainty of the wrong thing. >> thank you very much. the wheel as you but the impact on the recession on immigration. >> what the implications of the recession on the government policy economic migration? >> we have a point system. we have announced in 81 -- in tier 1, that countries are coming in to work less this year.

we have looked at tier one aqnd two and by any policy tilt -- that allows us to manage in the interest of the country. what you are confident that the talents will mean that the residents labor market will be [unintelligible] >> that is the agreement. we have taken steps to give migrant workers the first shot of the jobs that are available by working with the department of pensions. we are talking of the resident labor market. the role that the job plays a matching people will reinforce this change. it allows people love skills to be able to get the jobs that are available.

of course we will draw from other countries. that is what the system is all about. it is clear that the changes in the system will have an effect on the numbers of people coming into our country. >> one of the sources of difficulties is [unintelligible] there have been instances where there have been protest outside with people very concerned that this allows companies to bring workers from abroad to take their jobs. what is the governor doing to look at this particular issue? >> it is a sensitive issue. in the case of the construction industry, we did seek an agreement where an employer promised to put jobs they have available from companies that were willing contractors and not necessarily british companies. they make it available to the

job centers. a number of people coming through the union were being introduced equally. let's get the balance right. we want to the country that can draw on the scales. you want those people to come to our country to the contribution that they can make to our country and then to accept responsibilities in our country. that is why we have changed the nature of the test for migrant workers and for citizenship. i think is important to get the rights and responsibilities in the correct place. >> on the website they say it is simple. when the boss's come for your job, it may be too late to fight back. we have to draw a line in the

sand and forced the government to protect our own people now. these protests are spreading. the need to do so. are you clear there is enough clear water between the government's position on this issue? >> the national party is the party that makes discrimination and racism is central part. that is wholly unacceptable. and do nothing it has a place in democratic politics. as far as the issue, what i want to do so i'm not misunderstood the -- in a global economy where companies can go anywhere, where people left schools have the opportunity to work anywhere, i want british people to have the skills that necessary so that we can get these new jobs in the global economy. i want to empower young citizens

with the chance to having the skills to get the best jobs available. that is the heart of our employment policy. i believe that is a very clear dividing line between what we want to do for every purchases in under the situation. >> your immigration and minister says there should be kept -- should be a cap on the number people coming in? to believe it should be put its a 70 million? what's the point system -- >> the point system allows us to be clear about the needs and whether we want them. we can adjust that when it is necessary to do so. anybody who has proposed a cap and the proposals but exclude so many numbers of people and so many groups of people from that

cap but that is not affected. >> thank you. >> what would you say to the public sector union leader who at the moment is expressing concerns about moment -- numbers and recruitment? >> we will do what is necessary to employ the people that we need in our public services. we've got to make sure that all our public services get money and are officially run. then we can achieve efficiency. we are prepared to take the forced predict tough choices that are necessary. we are employing more people than we did 12 years ago. 30,000 more teachers. where we need to people, we want to make sure we get the best

skills possible to do so. where we can make efficiencies by the new technology that is available by the changes in the way the services are run, we will do so. we want the most efficient. >> we now move to the part of the constitutional issues. the former parliament -- not > >> in your statement to the house on june 10, you express support for the establishment of the right commission on parliamentary reform. that was greatly welcomed. we then had to wait for weeks until the government pulled the necessary resolution on the orders of the day. do you think it might be minimized if they have a report by november 13? >> i think people knew of this is now part of the discussion. i think the chairman had already been appointed.

i think the committee is now in position to get done. i do not think they have put it in the report by november. it is not very clear. >> the committee has not yet been established. can you give a commitment that there will have beeped -- that there will have the time? >> i shall look at what he said. >> does and does underline the need for a better way of the house managing its business? depends on the government to said the committee that looks at how the house manages. >> it is scheduling nongovernment business.

be able to give it the same commitment? are you able to accept the proposal so they come up with any government is prepared to bid in which a strangle hold on the business of the house? >> there are a number of issues. by opening up the issue of the appointment of members of the sleds committees, that is the government's getting their view that the live like this to the process that whether by election or members of the house is one that is acceptable to everybody. i hope the committee would come up with the recommendation of the can accept. i'm not one to give a prior commitment without knowing what the committee comes up with. the media variety of ways the we are considering to it -- there might be a variety of ways we are considering to do it.

i think it would not be unsatisfactory. >> can we look at the slightly brighter picture? when he first became prime minister, -- when he first became prime minister, use a constitutional change will not be the work of one bill. i can they make an immediate start by proposing changes. some of the changes were included in the renewal bill. at the government's request, the house of commons rush their consideration of the draft. we finished our work a year ago. what happened to your commitment to constitutional change? the the last 1 months it has been away from the radar. >> in number of the measures i noticed were already the practice of the government.

the renewal bill is to be published. it is important to recognize that it is the results of consultation. i think you understand this. it has prevented other bills coming forward. the constitutional reform bill is at the beginning of next week. >> you have decided to add on to the original bill some additional measures to do the house of laws. we have one less the we had a year ago. are you confident that you can get the original bill plus the amendments to it through by next year? >> most parties are supporting the proposals we are putting forward. most of the work comes from consultation. i think we have built a consensus that to some published

legislation without prior warning and then have a debate for a long time you can have the debate before hand. that is what we have done. most measures are once people know about. >> to you think the house of laws will let all measures -- [unintelligible] >> i hope the house of laws will except a reasonable proposal designed to make progress on this issue where there is no justification in a modern democracy for [unintelligible] >> the speaker made it clear he wants to clamp down on weekly exchange. he said the plunge into the show is boring, races, and this again to retreat factor to the content of bordering on the program. do you go along with that?

>> i would like to see if the distinguished itself by being able to deal with some of the big issues of our time. the question has not ever been advised. i think the sadness about the house of commons is that there are very big issues our country faces and whether it is issues that go right across the system, there are moral issues that people are worried about. we do not seem to be able to find the vehicle by which these issues can be debated in a way that lends itself to the country. >> giving the speaker's views, would you consider a fresh approach? >> every time someone has proposed a fresh approach it has never worked.

i feel that at least whether it is prime minister's questions or other forms the which the house, we can debate, we have to show the country that we can seriously debate in a sensible and reasonable way. this committee is better for it for talking about some of the issues. i think we could do even better. how we deal with some of the great problems of climate change. the house deserves jupiter itself in confronting these -- to do better its help in confronting these issues. >> we said you wanted a serious debate, yet she said their new policies -- use said [unintelligible] is that these sort of breeze of commons that the speaker was complaining about or was this

serious debate? >> i have to tell the truth unfortunately. [laughter] the issue there was -- if you read what the liberal party was saying -- was a we have no policies on this or on that. the big issues of our time -- there will always be banter and knockabout in a place like the house of commons. there is a sadness that we have not been able to, despite all the people, ensure that it is the most effective place to be making the big issues. >> [unintelligible] he talked about this constitution. he did not give a terribly effective explanation. you rushed in the part of this bill.

the rest in when the whole house was entirely happy with the financial aspects. when many people were deeply concerned about the implications of free speech, there was a memorandum, the committee was very concerned. the bill left the commons with two of its major flaws the did the house of loss is set to work and tidy it up. can you give assurance that it will be accepted by the government? >> you have been in parliament longer than i have. you are in a position to know we are not going to [unintelligible] that'll be quite wrong. the house of laws is looking at

a bill that the house of commons has had a chance to examine and to take very seriously. >> that bill was so rigid in left our house was significant chunks not discussed at all. are you unhappy with that? >> we face a choice. the public are appalled and disgusted by how it has been dealt with. let's be honest. all of us here are very saddened to notice some of our colleagues have done things that we thought never happen. >> that is not the point. >> it is. >> there is a complete consensus in the house that the course of what was revealed that the financial aspect should be looked at by an independent partner.

there is no dispute you introduced a bill which had a profound institutional consequences. so profound the committees were interested. so profound that there is the unprecedented circulation of an amendment. we do not need to circumscribe parliament trulprivileged. is it true? >> it relates to criminal offenses. i believe that the house of commons has to be absolutely in line with the public of this country. this is not legitimacy --

i think it is the right thing to do. >> do you think you should be subject to a non elected way in the way which we conduct ourselves? >> what does happen of the last few years, the self regulation that was the future the way the house of commons work cannot be dealt with. we are bound to have some sort of such regulation where we can set that a body appointed by us and subject to statutes is able to deal with some of the affairs. i think that is the only way to do with the problems we have created. >> i think we will find that

there are many people indicating what you have done. you have found the house of balls exceptionally -- the house and -- the house of lawless exceptionally effective. [unintelligible] we have proclaimed your desire to abolish and to replace a with an electrical one -- and not twirl one. -- and electorial 1. >> if it was elected, with hundreds term or majority, ministers could come from that

house of laws but they would have to go through the procedures. the nominated by an election. >i am not holding to that. it is a fact of the matter that the present system has allowed ministers to be appointed and who are part of the house of laws and part of the government. that is something that could change. i am no theological position of protecting that particular part of the constitutional system. we have managed to bring in people who been able to give their public service. we have just seen the professor

was in our health minister for two years to do an excellent job. [unintelligible] >> i think we have benefited from his experience because it was about a year ago you were compared to [unintelligible] >> i never do. >i would not make comparisons now. >> [unintelligible] would you like to increase the number of these meetings? >> these meetings? we had talked about this. [laughter] i think i've been very generous

with my time. one of the things i was noting is that in the last two years i have made it 24 statements to the house of commons. i have been determined to make as many statements on important issues. i think the fact that on an average of once a month there is a statement i have given to the house shows that we are determined to make what we do known. >> we now move on to constitutional structure. >> and take an opportunity to correct the impression that the house has circulated. but committee asked him [unintelligible]

turning back about the laws, you have now appointed 10 people to act as ministers and one to act as an advisor. four have resigned forgiven their notice, but all 11 are legislatures for life. at the same time, you plan to remove the people you did not appoint without as having any say they will be replaced by elected members of the second chamber. are you not creating a more appointed house with very little incentive for future government to carry out the real cause? >> the return of principal -- the hereditary principle has no

real long-term place in the british constitution. >> [unintelligible] >> i said first of all. there is no general agreement. it is amazing the way we have come since 1917. we have gone to the position where people have now agreed that it does not have -- the second issue is how you constitutes a second chamber. i think there is a good argument for a second chamber. i think people want a substantial part of that to be elected. [unintelligible]

>> in practice, you are creating a more appointed second chamber. it the higher portion of the membership is appointed. >> until there is an agreement about the house of law having part of it, it only the means again have an appointment -- [unintelligible]

ve coverage here on c-span. >> how this could result in the continued expansion of public transportation options and facilitate economic growth, improved energy security, lower greenhouse gas emissions and

alleviate traffic. today i want us to look at the investment needed to keep our existing transit systems for writing. the federal transit in ministration released an astonishing report. it estimated that the seven largest transit agencies, there is a $50 billion backlog in order to maintain a state of good report. to address this, spending on these needs would have to almost double from $5.4 billion to over $10 billion per year. the report says if we do not increase our investment in maintaining transit system soon, we will face a crisis. the april report gave us the facts and figures, but we can all agree that the wake up call about the condition of the

transit equipment was the tragic events of june 22. just after 5:00 p.m., the washington metro train hit another one that was stopped on the tracks. nine people were killed and 80 were injured. our thoughts and prayers are with all of those affected. one of the most important things that we can do to honor the memories of those who died is to provide agencies the resources needed to keep this from happening again. the cause of the crash is ongoing, but one of the factors we are looking at closely is the computerized system. we need to make sure this is not repeated. i want to be clear that i believe the washington metro system is safe and we're working

with the safety board and will learn from this tragedy. but as a federal government, we need to be sure we are adequately monitoring and providing resources to keep these systems running safely. we will hear testimony from transit agencies around the nation about how we can do better, but there are a few areas where i hope you can get a -- where i hope i can get each of you to touch on. we need more funding for the rail modernization program. and perhaps fix for emergency spending authority as situations arise that are particularly urgent. i would like to hear your ideas about funding needs. in addition to the finding that may be needed, i think the fda should work with agencies to maurer effectively use the

resources they already have. -- work with agencies to more effectively use the resources they already have. i know there is a lot of interest in and different views on how to modify the existing modernization fund. i don't want this hearing to become a squabble between transit systems, but i would like to have input. there were several agencies that wished to participate but could not. i welcome them to provide input on the committee in writing. we need a better understanding of the definition of state of repair is. we also need to develop a system to report the condition of transit access. we do not want these systems to be bogged down in red tape, but it appears we need more information and transparency.

i look forward to hearing from all of you, starting off with our distinguished administrator of the transit administration. before i turn to the administrator and my distinguished colleague from hawaii, if there was any statement you would like to make at this time. >> i want to thank you for convening this subcommittee on housing, transportation and community development. and to welcome our eyewitnesses -- welcomed our witnesses. we will be increasing the availability of resources to repair, upgrade and expand real transit systems. although a is important to

modernize our nation's existing rail infrastructure, we must also develop rail in areas without systems to improve mobility and promote smarter growth. one city continues to develop its rail system. the local contribution will likely be 70% of the cost, but it will still need significant federal support. i thank the witnesses for appearing today and look forward to working with members of the committee to increase resources available for transit. thank you for conducting this hearing. >> thank you, senator. we will start with our first panel. we will have two panels. our first is the administrator of the federal transit

administration. this is his first appearance before the committee. it has been a pleasure to work with an administrator who understands the senate as well as the national transportation issues. we look forward to a long-term relationship and your thoughts today on the critical issue of what is at the heart of the ability to operate in the 21st century. the floor is yours. >> thank you, it is quite warm to return to the senate and be among old friends. if we are pleased to discuss the state of good repair of the public transportation system. in the interest of safety and reliability, it is imperative that we stay on top of the aging condition. deferred maintenance items, if left undetected, it can become a safety risks.

the issue of our transit infrastructure are inextricably linked. role in the oversight of these systems is limited. we are prohibited from establishing a national safety standards for a large segment of the rail systems for bus systems. the new in ministration finds this status quo to be unacceptable. -- the new administration finds this unacceptable. we need to address the gap in transit safety oversight. even with our limited state the authority, know that we continue to assess transit infrastructure and encourage best practices by the industry. as we address this issue, it is essential that we remind ourselves that rail transit

remains a safe way to travel, far more than using our highways. teo transit agencies you will hear from have been dorgan -- two transit agencies have endured 13 fatalities. the fact is that highway accidents in the areas of washington and chicago claimed at least that many lives each month. despite the state's record of the industry, we have been called into investigate several accidents in the past. they invested -- investigated the chicago metro rail in 2006. the accident resulted in the failure of a track structure. this screw served as one of thousands holding cta rails to ties in the derailment. it is corroded and the form.

you could pull scores like this right out of the rail with your bare hand. this equipment dated back to the original installation and was never replaced. the ntsb report stated that the derailment should serve as a wake-up call to all transit agencies with equipment that ages with each passing day. the findings speak to the core of our challenge, the infrastructure is aging, but in maintaining a state of good repair, we can not limit our focus just to the aging systems. the washington metro system is a very young agency. many of our new systems are using new technologies for which we don't have a lot of experience.

washington metro years ago was required to replace tracked signaling equipment before the end of its service life. for some systems, the biggest risk factor may be a screw like this one, but for other is the biggest risk could be in the programming of a circuit board that could only be a couple years old. and to ensure safety and good repair, we must take a comprehensive approach that identifies and controls all potential risks. we must have systems that demand continuous improvement where all employees are held accountable for safety. there is also a vital human factor that cannot be ignored. if important witness is deferred, it sends a negative message to employees who must work with those conditions. employees may wonder if they

should continue to report those problems if there is no action taken. we registered a record 10.3 billion transit trips in the u.s. last year. our agencies are working their equipment long and hard to keep up with demand. that pace of activity takes a toll on people and equipment. these factors point to the need for every transit issue to have a program in place and a point of the need for adequate funding from all levels of government. marginal infrastructure conditions persist despite the increasing financial support through the fixed guideway program, as well as increasing support through the urbanized grant program. we find that the systems that are adequately financed are those with a dedicated source that provides predictable revenue stream. it allows for long-term capital

investment equipment. new jersey transit has benefited from its own trust fund. other agencies can draw a designated amount from taxes. other agencies had no dedicated funding source. the solution is not going to be found solely at the federal, state or local level. it will need to be a priority at all levels and insist priority -- insist industry addresses the most critical problems first. they have made state of good repair priority. in april 2009, we published a study that was supported by the senator durbin and other members of this committee. that study assessed level of investment needed to maintain the state of could prepare for

the nation's seven largest rail systems. they carry 80% of the nation's transit@@@@@@@@@ @ @ @ "@ @ @ @r agencies, we will look not just at the same definition of state of good repair, but we will solve the problem of identifying the portion of deferred maintenance that is safety- critical. we will work with industry on trying to better define what this composes. i want to thank you for the opportunity to testify and am happy to take any questions.

>> thank you. you talked in your testimony about held commuter rail systems are regulated -- how will systems are regulated by the railroad administration, while other ones are seen by -- while others are overseen by state agency. should they all be under the federal railroad in ministration? should be enhanced fta powers? what are your views on that? -- should we enhance fta powers? >> we've formed the committee to get to just that. we just gave an update on our work the other day. what is more important than whether the fta does it is that someone does it. it needs to be someone who has

the funding and authority and personnel to compel the attention of the transit agencies. that is the concern we have with the current system. we have a total of 28 of them, the average personnel strength of these agencies is 1.1 fte per agency per year. >> what does that mean? >> slightly more than one person. if you take california out, which has 12 person agency, you actually have less than one person on average for the remaining agencies. what that tells us is this is being treated as a collateral duty within transportation, where many of the departments had stood at the bare minimum in order to reply -- in order to comply with the regulation. when i testified in the house, i testified next to a

representative and they were testifying on behalf of additional authority so they could have is some teeth in order to compel the attention of the agencies they oversee. we also have a concern about the independence of some of these organizations. this is not a situation that we allow in any other area of transportation safety enforcement. >> when do you expect the secretary to issue a report? >> we will be working through august on this. we hope to get it out as early as possible. we have had several meetings already and will have a meeting shortly. >> we look forward to hearing from you as soon as possible. i have a poster here that one " washington post" cartoonist

thinks it may be a good idea to create a cash for rail cars. i don't know if that is a good idea or not, but i do wonder even in the recovery act where we put $750 million, which is nice morton and forward -- which is nice movement forward, but it does not make much of a dent. what is your view as to how we need some of these very significant needs? we want to move people increasingly to transit. we learned in these type of gas prices the consequences of not doing so. americans increasingly move into some of the greatest ridership levels we had seen. they have stayed there because most of these systems are effective.

safety is an incredible part of what we need to promote. as we drive people into these systems that we want them to participate in to have a high speed system that gets them to their opportunities for work or entertainment, at the end of the day we cannot guarantee that it will have the type of system we want to attract the ridership. if we are looking at $50 billion in costs that your agency has documented. what is your sense of this? should we have a large temporary program, should be increased funding for existing programs? as part of that answer, if you can talk to me about -- i have had two arguments about how to reform will modernization funding.

some say the only way to do this is 2/need. others say this gives a perverse incentive for local agencies. -- some say the only way to do this is to divide by need. should we be finding based on objective criteria? how do we need the challenge that we have of $50 billion of your agency's determination of work to be done? how do we go about that and what is the policy decisions to be made, as we meet the financial challenge, how does that get dispersed? >> i think you spoke to one of the solutions in your opening statement. are more resources needed from all levels of government? i think so. we also need to get agencies of doing a better job of targeting the most gullible assets. there are two elements to that. -- targeting the most vulnerable

assets. it is important to point out that certain assets we don't you as safety-critical ashley had a very real impact on ridership. for example, crowded platforms, disabled air-conditioner s, escalators that don't work. they not -- they may not be viewed as a safety-critical, but they can move people out of the transit servants -- move people out of the transit service. you are about 45 times more likely to die from an accident on the highway been in transit. it becomes a safety-critical issue. on the issue of what kind of program should we make, i would say we want to do a link with additional funding to better

asset management. that is not to say the best definition will come out of the beltway, this is something we have been working with our people for some time and plan to continue through round tables and a dialogue. there is a very diverse practice out there among the transit agencies on how best to attacked -- to identify their critical of deferred maintenance and address it. as it relates to the formula, i would make this observation. i would say that the current formula is a bit of a hodgepodge. it is hard to define precisely what the strategic goal of eight is because you have seven different tiers of finding.

i think you do want to define what the goal is and then build a formula around it. as part of that goal, you talked about perverse incentives. you do want to do something about a mandated level of effort on the part of state and local government, because we had examples of certain agencies who fell into more dramatic disrepair due to the absence of attention on the part of state and local government. if you take a snapshot of who is in the worst shape now, you do run the risk of not appropriately rewarding governments that did the right thing. >> thank you very much. senator. >> thank you very much mr. chairman, and welcome.

i know you are familiar with honolulu rapid transit project. let me say that the project has completed its fta compliance analysis study of more than 2.5 years ago, but it has been awaiting approval from fta to interplanetary engineering since then -- to enter preliminary engineering since then. we have been collecting dedicated local tax revenues amounting to more than $300 million to fund its share of the project. before your arrival, honolulu pulse protracted use of getting to pe seems to be similar to challenges that other cities have faced.

recognizing that the administration will have recommendations for statutory changes as a part of reauthorization. this is my question -- are there other actions that you can take in the short term that do not require legislation that could help expedite the project approval process? >> yes, there are, and we have begun to take some. there are three discrete universes' of the changes. one is a change to agency guidance. we just published last week a series of changes that are oriented towards eliminating paperwork burden that has not been in tactful to the process. we hope to do more. -- they have not been impactful

to the process. some of these involve eliminating steps in the process that are duplicative or not necessary. for example, i am not saying we have endorsed any of these proposals, but you pointed out the alternatives analysis that all -- that honolulu went through. there is an alternative process for compliance with nepa. we are figuring out whether we can eliminate a step right there. we are also looking at areas, especially for more experienced transit agencies, that might not need as much technical assistance from the agency in

the early stages. maybe they could come in for a funding determination by presenting a whole package later in the process, rather than having to go through the aape final grant approval process. these are all things we are looking at. this is an area where we hope to come forward with something in the near term. there are many other elements that will have to opine on our ideas. obviously, the level of resources for the program will matter to how many projects we can bring into the system. >> thank you for that. with respect to the administration's proposed 18- month extension of existing highway and transit programs, can you explain how the 18-month extension might impact projects seeking the execution of the

full funding grant agreement during the 18-month extension period? will befda have sufficient authority -- will they have sufficient authority to enter into grant agreements with those projects that will be ready to begin construction during that time? >> what we commonly referred to as contingent commitment authority, it will depend on the duration of the reauthorization. at present, the amount of commitment authority we get is dictated by a three-year snapshot of resources of the program. i understand there is legislation being considered in the senate that might expand that to five years, but the wider the snapshot, the more resources we have. one of the reasons why we did

not put forward and 18-month package was to provide stability to the program, not just n trans itnew starts, but for funding so that the transit agencies can expect what they will receive and what our highway agencies should expect to receive. @@@@@@ be at a

certain number of years that they can inshore it. we have been working with our trades and agencies -- a number of years that they can insure it. sometimes the definitions are about the -- there is room for improvement and plenty of opportunity for more dialogue to

try to coalesce around a single definition, especially when you think about federal mandates around it. . >> as i call you, if you would start coming up, i would appreciate it. carol braun, the chairwoman of the chicago transit authority.

-- carol brown represents one of the most active agencies in the country. it proves helpful as the chicago transit authority meets its challenges and we learn -- we are anxious to learn about how they are utilizing existing funding. john catoe is the general manager of the washington area metro authority. it serves the federal government and has recently suffered from tragedy. the subcommittee appreciate you taking time to appear before us during these challenges -- during these challenging times. we look forward to your testimony. please accept our condolences for the tragedy that happened in june and our willingness to work constructively to help move it forward. richard sarles is the executive

director of new jersey transit and has a compelling story to tell about its efforts in repair efforts. my home state system has efforts to share. we look forward to hearing those. dr. beverly scott, the general manager and chief executive officer of the metropolitan atlanta rapid transit authority and chair of the american public transportation association. she will bring the perspective of an agency that was not in the april 2009 fta study that has substantial needs. we readily recognize the rail modernization needs exceeds those stated in the study. she will be able to give some thoughts as the chair of the american public transportation association. we want to get you all up, we

are going to shortly be having votes, so we will along as far as we can and recess when we are compelled to go to the floor and have three votes which will mean that when we recessed, we will be about half an hour in recess. i would ask you to limit your testimony to 5 minutes so that we can get to questions. your full statements will be included in the record. with that, why don't we start with this brown. -- why we start with miss brown. >> thank you for the opportunity to testify today and talk about the needs of the chicago transit system. to buy and chairman of the board of the chicago transit authority, the second-largest transit agency in the country. we carry nearly 1.7 million riders a day.

on to under 42 miles of track throughout -- on 242 miles of track. we are the primary trend the system in eastern illinois. we operate the elevated train system that has become an odd -- that has become an icon system -- iconic symbol of chicago. sadly, that system is aging and in poor health. the oldest rails were built between 89 and 1900. the oldest subway was built during world war two. our oldest railcar dates to 1969. it has 1.7 million miles on it and our oldest bus drivers was built in 1907. -- our oldest ourgarage was built and 1907. this is in addition to the fully funded capital plan and it does not include expansion products that total over $4 billion. $6.8 billion is a shortfall

needed to bring the system into a set of good repair. if the largest maintenance need is about $4 billion. this includes rail stations, rail structures, track work, power substations, contact rail and cable. we need $1.2 billion to repair and replace our rail fleet. it travels 225,000 miles today. 20% of our feet -- of our fleet is over 30 years old. the standard useful life is 25 years. our rail stations average age is 24 years. we need to replace the system, and with $1.2 billion, we could replace two-thirds of the fleet. we are very thankful for the federal rail modernization funds levers seat. we have are against those funds to reduce our 15 minute per mile slow zones on our blue line 27%.

we completed the repair work in 2008 just as rider ship had increased by 5% due to a sudden spike in gas prices. at the same time, vehicle miles traveled on the road test client. the good news is even after gas prices were cut in half this fall, if the people who had switched from driving to transit continue to ride the trains and buses rather than return to driving. had we not fixed these loans, those people made to transit would have be -- what have become frustrated with the unreliable service and quickly returned to commuting in their cars. the whole point of my being here is to stress the importance of maintaining the nation's transit system. like my counterparts, i believe the help the transit system will help to alleviate congestion on the nation's road and a sustained investment is critical to our nation's well-being. that is why i am so pleased that 12 members of the senate, including the chairman and other

centers asked for the report on the rail modernization needs. the share of the state of good repair highlighted in this report is over $4 billion. that means the rail contract, and railcars have passed their useful life, leading to an increase in slow sons to ensure safety in the system. we are in dire need of modernization. your leadership in redressing this issue will go a long way to fix the problem. fta report provides a blueprint for modernizing the system by refining the modernization program where funds are allocated based on age, type of system, and maintenance needs. realignment of the program will likely lead to an increase in funds for agencies fundscta and new jersey transit and others. thank you for leadership on this issue and i asked you to consider the recommendations as

a deliberate the transportation authorization bill in the coming months. thank you again for the opportunity to testify. i would like to answer any questions you might have. >> thank you, mr. chairman, and thank you for the opportunity to testify before you today. i would like to thank you for your leadership on transit issues, especially in regard to legislation dealing with the lease-back arrangements and climate change. sometimes we are called america's transit system or america's subway. metro is the largest public transit provider in the national capital region treat nationally -- capital region. nationally, we are the sixth largest bus station in the united states. we provide service to 1.3 million customers a day and provide trips to hundreds of millions of riders each year.

those who reside within the washington metropolitan area, as well as visitors from all of the nine states and across the world. metro is now beginning to feel its age. to use a comparison that any house honor would relate to, our crowded house is now 33 years old. our need to go far beyond the spring cleaning and a fresh coat of paint. we have a wet basement, rusty pipes, cracked tiles, old electrical wiring, and the equivalent of a 1976 model car in a 100 year old garage. our capital needs over the next 10 years totaled more than $11.4 billion. these needs include replacing our oldest railcars, including those involved in the tragic accident from june 22.

we need money to replace leaking tunnels and crumbling platforms, upgrading our tracks and associated infrastructure, to this escalators and elevators, and replace about 100 buses each year. replacing old bus utilities is also a need. especially the ones that are over 100 years old. we need to update critical software. we also need power and control system upgrades, additional railcars to run longer trains and reduce overcrowding. as you stated in your comments, metro experienced a tragic accident on june 22. two red line cars collided outside of our metro rail station. i and all rail employees are terribly saddened by the loss of life and injuries that occurred that day.

while the national transportation safety board has not yet determined their cause of this accident, it has refocused attention on the state of rail infrastructure around the country. there is clearly ample demand for many transit systems for additional federal support to sustain the safety and reliability of their system. the work we have done to keep transit systems in a state of good repair might not be exciting at times to hear about. but without it, service and safety will suffer. there will be more delays due to failing infrastructure. that means lost time for customers and lost productivity for the region and the nation. the funding provided by the federal government is critical to our ability to keep our systems running safely and reliably. if we do not receive sufficient

funding now, service as well as safety will decline. i want to raise an additional issue before i conclude. as more people are riding public transit, metro is already reaching capacity on many parts of the system. as i have stated on several occasions, with this region and nation witnessed on inauguration day, january 20, where 1.5 million people crowded into the system will become a daily event in the very near future. we need to make investments to expand the capacity of the system to accommodate the rider ship growth such as purchasing addition railcars and making the upgrades in power and in its facilities to accommodate them. as the subcommittee considers ways to meet the infrastructure needs of the transit system, i encourage you to develop a source of funding at the federal level for this project to expand

capacity on existing systems so that we may meet future writer should demands. in@@@@@@$ @ @ @ @ @ @ @

director of all mature transit agencies across the country to a state of repair. when it comes to a state of good repair, new jersey transit is a success story. we inherited in the structure and equipment from predecessor bus companies and railroads like the pennsylvania and erie lackawanna, dating back to the early part of the 20th-century. unfortunately, public transportation under private ownership throughout much of the mid 20th-century suffered from significant disinvestment and lack of maidens. from its investment -- from its in segment -- from its inception, we have focused on

restoring the equipment and facilities to a state of good repair. it has taken three decades to bring new jersey transit to a state of good repair and we will need to continue to concentrate efforts in this regard to maintain infrastructure and equipment. in fiscal year 09 alone, we spent two-thirds on repairing capital maintenance. during the '90s, we expensive and -- significant resources on the connectivity of the system, including midtown direct service to montclair and the construction of the frank lautenberg stations to secaucus. new jersey transit expanded the light rail systems in the 1990's. the hudson bird and light rail lines. had this -- as is public -- as those projects were completed, we emphasize the word in a set of good repair. that effort has reduced -- has produced tangible results. new jersey transit is in the middle of the largest rolling

stock upgrade, providing the relocation of 41 pieces of equipment. we invested over $100 million in four critical mobile bridges, replaced by ducks, replaced wooden ties with concrete ties, and completed a automated upgrade. we declared in may of this year, the new jersey capital transit programs have forced the state of good repair to the system. continuing this success will require renewed enhancement of federal funding and adequate funding for reaching a been to prevent premature degradation of equipment and infrastructure. how did we get here? it started with the bipartisan support 30 years ago and was recently, our focus on the state of the repair was reinvigorated by the governor, directing the authorization of the state transit trust fund and a jersey transit produced an annual investment in the state legislature. that strategyromotes a set of

good repair as a top party followed by core capacity improvements and expansion of the reach of our system. new jersey has consistently provided funding for the trust fund, the new jersey transit capital expenditures. the governor has allocated more than 40% of new jersey's transportation capital funds to new jersey transit. these funds are matched 141 by [unintelligible] from the federal government. -- these funds are funds1 for 1 federal funds. what to do to maintain good repair? i urge this committee and kong -- and congress to increase funding for public transportation through the rail modernization formula and the urbanization formula. as aging systems expand to meet demand, i would caution there are things congress should carefully consider. any kind program that

distributes money in a way disproportionately decreasing funding to transit agencies in states of the repairs is problematic. i would suggest and the -- [unintelligible] another situation congress is considering is anything that proscribes which projects advance ahead of others. it would not be prudent to determine which bridge should be fixed first. those decisions should be made by this closest to the infrastructure and equipment. we have made significant dance -- significant advances by making our top party and pushing decisions on how to spend good repair money down to engineers and eight nuns staff to evaluate and the structure and equipment. i have concerns related to proposals that suggest information about if the structure conditions should be collected on a federal level, put into a database where an algorithm would produce its list of what should be fixed. i want to reiterate that a state of good repair has been our top

priority from its inception and i appreciate this committee allocating valuable time and resources to consider time and resources to repair the nation's transit agencies. >> thank you. dr. scott. >> thank you for the opportunity to present testimony regarding the state of good repair and rail transit modernization needs. as we begin, i would like to also thank you for your extra night leadership on the issue which continues to haunt a number of transit systems like my own. just a few facts and perspectives about our transit rail modernization needs. candidly, the big ugly and the room, the state of good repair. we're the ninth largest in the united states and one of the future one transit stations designated by the degree of common security. we were created in the 1970's and funded locally by 1% sales tax.

today, that sales tax generates over $300 million, down significantly over the last 18 months. annually, we invest over 50% of that local sales tax generated in the capital. every day, we carry more than half a million passengers. we carry more people in our region on monday then reside in this it -- on one day than reside in the city of atlanta. we have had much welcome federal participation. this year, we celebrate 30 years of transit rail service in the atlanta region. our rail system includes 48 miles of double track, 38 stations, 330 real cars, 104 miles of mainline track, three railyards, 20 miles of yard track, 109 elevators, thousands of cameras, call boxes, vital really switches, and just to give you a sense of the

magnitude of the operation trade the best but admittedly incomplete information protect at -- projects instead of good repair requirement of about $5.2 billion over the next 20 years to preserve the existing system. today, the share of real modernization is on annual basis at of about $37 million. in a nutshell, we are representative of an important and growing slice of transit systems in the country. all, like us, or modern -- were modern, but are aging and just beginning second generation plants to the system. in a matter of speaking, we are the baby boomers of the transit industry. 20-35 years old, no more than new kid on the block, but just all too often, it seems like we looked up one day and suddenly we were middle-aged. largely operating in high-growth

areas of the country like the atlanta region with continuing demand for rapid service expansion while we don't expect the same explosive growth we experienced in the '80s and '90s, another 3 million people are projected to come into the atlantic region by 2015. you find staggering concentrations of physical infrastructure rehabilitation and replacement needs coupled with a devastating turnover of experienced personnel at all levels resulting from retirements that are understandably very -- but understandably clustered. finally, not a fully appreciate organizational steps -- organizational shift from being a building organization to operating organization. having been in the industry for 30 years, this requires a very different skill set, competency, and organizational focus. in closing, i would like to stress the point that the challenges confronting us in addressing the issue of state of good or fair are industry-wide.

virtually every community and transit operating is -- operator is [unintelligible] i applaud the serious focus in this area and strongly support the expansion of the april 2009 state of good repair report to conduct an industry assessment of state of good repair beyond the seven largest systems included in this report. it is my belief that investment coupled with real programmatic restraint, a level playing field, outcomes based, meaningful reforms metrics, strong federal oversight, in- depth technical assistance and serious incentive for local investment are key elements to the prescription needed to help us move forward. i believe that ultimately there must be consequences for those systems and communities that are not truly [unintelligible] of the federal investment. our industry is so behind in the

state of good repair and class asset management and large measure, that's attributed to under investment. many transit system managers really don't know what they don't know, or more importantly, should know about the state of the repair in their system. while it is not right, human nature being what it is, all too often they melees sets and overtime and when you continuously defer projects and don't have the funding 80 two -- funding needed to replace in the structure. before you know, it becomes ok to be ok. then after another seven, 10, 20 years, it becomes ok to simply get out the door without an obvious safety defect problem. for an industry clearly depending on big things that move, moving safely and efficiently with precision, is a glide path to mediocrity when our core servicing system

expectation and standards [unintelligible] this is the real challenge that faces our industry and communities we serve in our nation. if we continue to neglect the real and systemic issue of state of good repair. at the end of the day, what is the overall transit vision and expectation? and national transit system of first choice or one of last resort? thank you for the opportunity to share my thoughts. >> thank you very much for these very honest reflections. we will start a round of questioning with the distinguished ranking member of the full committee, senator shelby. we appreciate and being with us. i appreciate mr. catoe and dr. scott, you're mentioning our testimony about the legislation -- i know how important that is. i hope our colleagues from virginia, maryland, and georgia

would join us in the process of cosponsoring legislation that would help us move along. i do know how consequential it will be if we don't get some relief therefore transit agencies across the country. mr. catoe, i know the investigation is still going on and i don't expect you to comment about what the results will be. we will wait for results, but have you as an agency from that experience learned anything in the context of what we're talking about here that is of value to the committee and would be of value to other agencies? >> let me tell you some of the steps we have put into place. the mattress system, as i the mattress system, as i mentioned, is over 35 years o prior to the accident, we were

running various tests on our system once a month. since the accident, we run test twice a day and based on the recommendations from the national transportation safety board, we are in the process of developing a real-time detection system. that will take time to develop, but it is under way. the other aspect of looking at the system and what we have learned, something we knew and had planned for, the need to replace cars once they exceeded certain life expectancy. the issue the ntsb discussed with us which did not cause the accident, but has an impact on the amount of impact it can be done as the crash were thinness for vehicles -- crash worthiness for vehicles -- we have talked about that today. in addition to those actions

from the investigation, it is to from the investigation, it is to look at the sibling s to make sure that the system that you are using is up to date and you are using the best possible technology. this is part of the investment in capital dollars. >> let me ask you, your testimony highlights that even a successful agency may have a performance that will suffer. i think that the chicago transit authority has effectively used some of the challenges, if i am not mistaken. if you do not get an increase in rail funding, what does your system look like? >> yoon no, -- you know, we have

an $8 billion need. if we do not get the significant investment you will see a smaller system. and as the number of writers -- riders is increasing -- where we could not guarantee safety we would not have this. the system as small and does not carry the numbers that it does today. >> you probably will have to reduce service? >> we will reduce operations and we are heavy rail and bus, and the investment that we need is what we need to continue to put the equipment on the streets. routes -- that would reduce the number of routes we serve and would reduce either the frequency or had way of the trains as they continue to age and we can replace them, we would have to increase the

headways on the rail system because we would have to operate your trains. >> mr. sarles, in much of your testimony, you have a caveat and i would like to dwell on that caveat. you allude to the fact you are worried about too much federal oversight of how agencies keep themselves in a state of good repair. my question to you is do you oppose any requirement to report the state of repair information? where are the bounds? i know you all want money from the federal government, appropriately so. but it seems to me we have responsibilities for safety, so what is the right balance? >> we're happy to provide all the information we have on the condition of our system. what concerns me is when i hear discussions of decision of rhythms which means that you take the informations and -- decision algorithms, which means

you take the decision and animation and spits out the most important priorities. that type of decision making needs to be made by the transit authority, in our case at least, by the engineers and maintenance and operating people know the system best and can decide where we go first in terms of spending money and providing an formation, where -- in terms of providing information, we're happy to provide it. >> i am not a bigot algorithm guy. we depend on them to hope for -- i am not a big algorithm died. my personal view is there is a need for the fta to have a sense of what a state of good repair is and what the inflation is to make informed policy decisions and allocations as well. to some extent we can get together and work with the added a trader -- work with the

administrator, is very important. >> and we will work with them. >> senator shelby. >> i was not here when the administrator was here, but i have a number of questions i would like to submit for the record. to all the panelists -- have we added to the overall problem by allowing systems to continue to expand and grow without regard to their ability to maintain what they have? i know is a mixed bag, but if you don't grow, he can finish the system. i know that. but at the same time, maintenance and safety is so important, is it not? >> i would like to note that even the aging systems continue to grow because of demand for

ridership. the more people we can move to public transportation, the better. i think growth is good and we need continued investment in the system as well. there is not a public transportation system in the world that is not subsidized by the government. i think the investment needs to be increased so we can encourage people out of their cars for a cleaner, safer environment and on to public transportation. this is to be for all systems that are middle-aged. we are senior citizens, on our last breath, we need health -- need help. but for middle-age systems, it's important as well. >> but whatever systems we operate, they have to be operated safely. they're moving people with as

much speed as we can put together. >> if i could respond a little bit to the question. in my testimony, i talked about the balance. sometimes it is not as pretty to come to a repair of a rail line, but it is absolutely critical. there needs to be a balance of a state of good repair and maintenance of an existing system but, as we observe from the country, specifically here in washington dc, our system assumed it would carry 300,000- 400,000 people. it now carries in excess of 800,000 people. in the case of the inauguration, 1.5 million people. there has to be a balance of safety and the state of good repair and the money, when necessary, to expand capacity. that is what i support as part

of the position this group is taking in its testimony. all that relates to safety. the state of repair means that you have a safe system. >> i would echo those comments. it is an issue of balance. balance and additional funding. we have another 150 million people that will be added to the system in the next 40 years, so we have to do expansion. at the same time, we cannot let that go at the risk of not running safe systems. the challenge that faces us is that we have to significantly increase the funding on both ends of the spectrum for a set of good repair as well as expansion. alternately, i would call a more with a velvet hand, we have gotten ourselves into this quagmire and we have to have an immediate infusion that is focused on the issue of state of the repair.

i understand we got what we got and then ultimately, federal funding decisions in terms of expansion to the least being able to show a modicum in terms of which got in terms of satisfactory use of that investment. i would be supportive of that. but we are in the mess we are now, candidly, putting a hammer down and saying there will not be any growth until we wind up taking place of that would be shortsighted on all our parts. >> i just want to go back to a little bit of what i said earlier. our first priority has been a state of good repair. we took a system that was totally disinvestment in part of the last century and created one that is in a state of good repair. we always look to spend money first on a state of the repair. but when we look at capacity expansion, one that we are

required to do is demonstrate to the fta that not only could we take care of the capacity expansion, but that we have the money to maintain a state of the repair for the existing system. >> is the primary problem lack of funds? the lack of planning? all that? >> thank you. the first thing is a lack of sufficient funds. there is funding, but the needs are grading -- the needs are greater than the amount of funding. if you look at the historical perspective and we talk about balance, we could probably look back and say maybe we did not have the proper balance of expansion and maintenance of the system. overtime, the amount of dollars for maintenance crew at a higher rate than -- grew at a higher rate than what had been allocated under the federal

program. from planning perspective, that needs to be part of the knicks going forward whenever there is appropriations for a new start that we need to build in the formula, what it cost to maintain the system over the next decade or century. >> i would just add that in the case of cpa, our funding problems are also operational. as we try to straddle the operational funding shortfall, we tend to use capital dollars for preventative meighen's which exacerbates our capital needs. -- preventative measures which exacerbates our capital needs. >> your ridership is 800,000? >> it averages slightly under

769,000. we have had the 25 highest -- >> how much money does that bring in per year? >> roughly about four hundred billion dollars. we recover about 80% of the operating costs. >> so you recover 80% through the cash flow. >> through the fares. operating costs, not capital costs. >> is that basically what the others do more or less? >> i think it is the second- highest in the country. >> i am at a 20% recovery and with rail, about 35%. >> new jersey, overall we are between 45% and 50%. buses are a little bit lower. >> we are roughly 50% this year.

[unintelligible] >> is my understanding federal transit administration does not currently defined state of the repair. do you believe there should be a uniform definition for a state of good repair and should be specific measures and requirements tied to such a definition? is that right? the state of good repair is not defined? >> i don't mind responding. i think there are various definitions in the industry for state of good repair. what we need t do, working with the federal transit administration, is to ensure we have the same definition and the same measurements in place to

ensure the systems are there. the answer to your question is i support a common definition and common standard of measurement throughout the industry to determine status of the repair. >> part of the problem has definitely been under investment. the other issue is that we are all over the map in terms of structure on state of the repair. what that means, having the appropriate for nation and tools, there is rigor required in that area. i join with my colleague, i don't want to wind up seeing something that becomes a cookie cutter that spits out numbers and all the sudden -- but some discipline is required. >> thank you. thank you for holding the hearings. >> i want to follow up with a couple of last questions before

we start this series of votes. we have been fortunate that we got all this testimony before the votes start. senator shelby raises a good question. correct me if i'm wrong, but should not be considering one we are extending service as opposed to capacity to maintain in good condition the existing service we have? that is a challenge to agencies. if there is a demand for greater service and you not meet the demand, there is the flip side of a consequence to that. obviously, ridership goes somewhere else and the farebox goes down. that has a consequential effect. is that a fair assessment? >> if you don't provide it quality service and enhance capacity, the writer should will drop. drop. -- v. ridership will dro

i support the concept -- if you are going to build a system you are out from the year and there are provisions to do this. and we're looking at the authorization, how is this broken up. if you get 80% back of your operating costs in your case, which means used to live a 20% shortfall, what you get on your capital costs? >> from the fare box recovery standpoint, there is a zero on capital. that's local level as the federal government. >> the bottom line is that even one of the most highly efficient operations -- operating systems

as a 20% shortfall in its operating budget. it's that thing in terms of its ridership as relates to capital needs. this is a fundamental reality of mass-transit system. our colleagues in congress have to understand that, as one of the fundamental issues in whether or not you want and effective mass transit system. my other point is that, in my view, as someone who previously, before coming to the senate, represented a congressional district that was right across from midtown manhattan. on that fateful day, september 11, came to a very hard way of understanding that in a post- september 11 world, having multiple modes of transportation is critical for national security.

on that particular day, when the train stopped, when the bridges were closed, when the tunnel for closed, having another form of transportation, in that case was faeries, bringing people out of downtown manhattan to get treatment in new jersey. while that is different than the type of transit we're talking about now, it highlighted the importance of a post-september 11 world where multiple modes of transportation, in addition to getting to a place for job and economic opportunity, in addition to improving the quality of life we have as far as sitting in traffic less time and having more quality time with families. in addition to prove -- in addition to improving the air we breathe where respiratory ailments are still too high in this country, in addition to

environmental issues, and the addition to planning it in a way you can create bases around transportation systems through transit villages, there is a security component to this. when something happens, god forbid, and i hope it never happens again, that is why we work every day to make sure that, but if it were to happen, we need multiple modes of transportation to get people out of the area of incidents into a place of safety. that's another component we lose sight of along the way. with that, thank you to all of you for your testimony. the record is going to remain open for one week to allow senators the chance to ask follow-up questions in writing. for those of you who received questions, we ask you to respond to them as promptly as possible. thank you for the dissipating

and helping the committee prepare for the upcoming reauthorization legislation. with that, the hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] >> this morning, we will talk to "washington post" writer neil irwin about the economy and obama's trip to indiana. then patrick leahy talks about the sotomayor debate. then john castellani on health care legislation. then james risch joins us for a

discussion. >> this week, the full senate deabebates the nomination of justice sotomayor. then this fall, tour the supreme court. >> now, the commander of nato forces discusses the ongoing security operations in afghanistan. this briefing is 25 minutes. >> we have a good picture of you, let's hope that we can hear

you ok. >> i can hear you just fine. >> thank you for joining us this afternoon. and thank you for being so flexible with the schedule. this is [unintelligible] from the netherlands. he is the commander of the task force in southern afghanistan. his soldiers are responsible for the security operations and the regional command. he took command in february of last year and is finishing his time in afghanistan. he is speaking to us from khandahar -- from khandahar. thank you for joining us.

>> thank you, it is good to be here. we had a change of command yesterday. this was in the provinces and this is one of the most poor countries in the world. this is like the old testament. the chief of the taliban -- this is not unimportant i was here two years ago, and there is a major difference. this is the security situation with the developments, and when i was here two years ago we had a lot of fighting to do, and the resistance of the taliban seems to now be broken.

but are looking at roadside bombs and mount attacks. we can provide the security and the security forces can now take over. we almost have a full brigade and this is taking more and more of a security role. we are assisting in the efforts of training the police and overall, we now have about 75 or 80% of the population and within this area, we see development and there is an increasing number coming into the province. this is now about 50 organizations, that find it safe enough and secure enough to do the work there which is a good sign of progress.

i am very positive that i can look back at this. >> thank you for that overview. and we will take some questions. >> can you give us an overview of the security situation and how many instances there are, daily or weekly on a monthly basis, and how has this changed over your time in command? >> it was two years ago -- we have about 8000 in contact over the next few years. if we look at this over my time in the secure area, we hardly have any contact. we only have the incident with

the roadside bombs. this was frequent, one or two week. we had some strikes that we had to suffer but the big change compared to two years ago is that this is hardly affecting us anymore. we were guaranteed to be in a contact situation but now they do not attack us. we do have to be careful. >> and how do you get to the next phase? what are the steps that need to be taken for a lasting security to allow the soldiers to go home? >> what is very important is the population centric approach. we did not want to call for the whole province.

there are the main villages and we made certain that these people felt secure, that they felt confident in the security forces. we thought that they could take over within a few days and we began to expand. i am the last eight months we were able to double the size of the secure area. what seems to be happening is that the afghans take charge, of the security. i am happy with the progress that they have made. we will witness the progress and we will have more visibility. and they become more capable to takeover within the secure area. they are expanding these areas

to the outer district. >> what are some of your greatest equipment needs in terms of helicopters and greater with -- greater lift, m-wraps and what are your major needs? >> the enemy is the roadside bombs. there is a constant bell going off to defeat that threat. we have several capabilities and we do more targeting, to get behind this and we had some great capabilities in this region. we brought the aviation

battalion, and this gives more of an element of surprise. this is exactly what we needed. >> another question, do you need more transport helicopters rather than simply united states assets with the nations to bring in more of a left? >> there are never enough helicopters. we have a dutch transport helicopter, but they are never enough. we have the traditional -- we are now sufficiently served. >> do you have the capability to go after the networks because of the targeting on the ground?

>> to fight the networks, the intelligence is of the essence. if you have great intelligence then you can target them. you need the units that can go in and take them out. these plays a crucial role because we have succeeded in separating them from the population, and the special forces can take out the leadership and the logistics, and they are doing a great job in this. they have about 50 leaders of the taliban taken out. >> this is right in the center of the country, and the

operations in those provinces are squeezing the taliban. does this make your problem that much more difficult? >> i am very pleased about the progress that has been made. the increase in u.s. forces mean -- means that we can cover more of these provinces and we can predict the lines of communication and this makes it much harder for the taliban to change leadership, to provide logistics and they have to concentrate the air force and the main effort is can the heart -- khandahar. they are setting the conditions for success and i am happy to be in this region with all of the work that is done there. they take away the intention of the taliban and i can make more

progress. >> what are the nationalities in the task force? >> the main players are the dutch, but next to that there are the australians, and they will focus on the mentoring and you have the combat teams going with them, that will enable us to further build on this, and the french units, and you have the australian special forces and the american special forces. we had to a time to -- i have seen how much this reality can work.

>> given how obama has had support from nato, what kind of a positive experience could he bring with your continued support and involvement? >> can you repeat the question? >> given your comments about all that he did in afghanistan, what kind of a reflection can you take back in whether they will be involved in a war in the future, were not?

>> they were going to ease their contribution in the south, this is good because we can take all the fruits of the heart work -- hard work and we have to decide if we want to finish the mission. >> can you tell us, as the election approaches, what are some security challenges that you are facing and since you have some perspective over time, what is your impression of the attitude of those that you speak to, and what are their

perceptions? in some parts of the country there is a pessimism or resignation, or a lack of enthusiasm. >> this is very different for every district. you have the voter registration, that was quite successful. and there are a lot of additional voters who have registered, compared to the elections four years ago. if you look at all of the preparations, not everyone is aware that the elections are upcoming. there is a growing attention for the elections. what we did is we spoke to the leaders, the governor and the chief of the army and the police, and the intelligence service, and the independent election committee.

we looked at the map to find out how we can cover most of the population and how to cast the votes. we made a good cooperation there. the cooperation between the polling centers and the security that can be provided by the security forces and i think that we now have a position that will cover at least 85% of the population and all of the polling centers can be involved. we sat together in many sessions, and developed a plan to do a close protection of the polling centers and we have a wide area of protection and this means that we have the reaction force but we really do not want

to create the impression that this happened in any way so this is afghan doing this as much as possible. >> i wonder if you could tell me the attitude of the people of afghanistan that you are speaking to. >> they are not all aware of this, and you can see the fever rising to the elections, and several people are campaigning in the province, they have people who do this for them. and there is an increasing awareness that the elections are coming. >> the development effort that you spoke about, that opened

up, is this an effective? we have not heard very much lately. >> he was here to open it and a few months ago -- they are getting this up and running. i see that they are taking over the accord nation in this area, with good cooperation. there is the provincial reconstruction team and we see where they will take over. they lived between the population and i am very pleased with the people leading this agency because they are very cooperative and they are very willing to do this on the development side. i think that the security

environment has changed in such a way, and these organizations find it clear enough to come. they can take a role and they can take charge in this. >> you spoke about the fever for the elections are rising. what are some of the local issues? you spoke about the representatives and these personalities -- the your campaigning. what are some of the distinguishing issues? >> the main candidate is president harzai -- karzai because for him this is the easiest place to do is campaigning.

to what extent they are aware of the others is hard to understand. this is harder to answer. but what i do see is the attitude of the population is changing, to the government. two years ago they were very reluctant to make contact with the government, and there was a literacy of 90% so this is very basic, what you are doing here and they have had 30 years of conflict. they will make a choice and if this is wrong they will be punished. they are making the choice is very carefully and after a few years now, they will start to make the choice.

they are getting the taliban out of their area and they are less receptive. i see a change coming up. >> you spoke about how the taliban has been pushed to the edge of the province. do you think you have successfully separated the population from the taliban and how long do you think this process is going to take? >> that will take a long time. when i have learned is that there is no quick fix. if you hold the area, it will take time to hold this. after the operation, these are successful but then there is the hard part, to maintain a presence in the area and gain the trust of the population. you can see the population where

you can make a choice, and the afghan security forces takeover and the development organizations are moving in. and they move to expand these areas. this is a process of gaining trust of the population and many interactions, and this is the process of being there, day and night. we moved to a sustainable presence all over the area, covering the whole area where the population lives. and this is the area that we patrol every day. we do many small operations. we are there during the night, and we patrol and get out of the vehicles, and the population can see your presence and they can feel the security and if you do

this over a long time they will trust you. but this takes time. there is no quick solution. >> we do want to thank you for taking the time, particularly at the end of the torah, to give us insight into the southern region and this is a perspective that can only come with the amount of time that you spent on the ground. let me just ask and see if you have any final comments that you would like to make? >> i think that the general -- he is a great choice. he chose a population centric approach. this is all about the population. we have taken this approach in the last few years and we have seen how this works.

if you look at the number of taliban forces, less than 1% of the population are related. 99% are not related and we should not treat them as the enemy. we should start to gain their trust. that is the way that the general has chosen, and that is the way that i am prepared to go. >> thank you, and we wish you and your soldiers and safe and speedy -- a safe and speedy redeployment. >> thank you very much. >> this morning, the young america's foundation conservative student conference continues in washington.

we will hear from tony perkins and herman cane, the former ceo of godfather's pizza. later in the day, the head of the federal aviation administration will talk about safety and the challenges that the industry is facing. that is live at 1:00 eastern. >> frank rich will reflect on 15 years of political columns, including his look at the future of the internet in 1995, and his column after 9/11. >> now, an event with newt gingrich, who spoke at the conservative young america foundation in washington. this is about 55 minutes.

>> thank you very much. i want to thank the young americans foundation -- young america's foundation for letting me come to speak to you. we spoke about developing a movie, ronald reagan, rendevous with destiny. this showed why he was so great and turned things around in this country. if you see the movie and you look at what we are living through, this is eery. when he ran for office we had a liberal democratic president, with a program for a much larger government and an economic program that was not succeeding

and he was concerned about foreign policy. and you watch about six and a half minutes of jimmy carter, you understand how he got to be president. we are back in a similar environment. i want to talk about what you will be involved with, and i want to do this in a way that will encourage you to go back to your campus to be directly involved and turn around the country. one of them is to encourage a debate in your campus. when we can give the conservative principles and liberal principles on the same platform, the better off that we are. if you look at what we are doing with american solutions,

you can see the proposals that will give you a chance to go out and talk to people across the board and offer a better future. having people provide activism is a very important part of this. i think that the most important political government slogan in the next 10 years is very simple. two plus two equals four. that may seem obvious for many of you but in politics this is not. the first time i heard about this was when the polish people revolted against the soviet dictator's. this comes from orwell's torturer. he said if it is two plus two

equals three, then it is three. they say, what if this sis four? the polish resistence said that there is an objective fact that is true no matter what the government tells you. and it says to the people of poland that it is time to be honest about the history of poland. and the soviet dictatorship cannot do this. we need an american analogy to this. i want to give you the first half of the equation. you can tell me the second half. if you cannot afford to buy a house, there seems to be a general consensus. if you cannot afford to buy a

house, you should not buy a house. you are now in fundamental conflict, with the last 20 years of american politics. in the last 20 years, we have said, what if we give you the opportunity to move into a house before you go bankrupt. buying a house is a lot more than being able to move in. this is maintaining the house and fixing this and there is a lot that is involved. let's take this a stage further. if you want to take this argument, one of the most expensive school systems is in detroit public-school. they got -- a graduate 26% of

their people on time. and meiji the rest out of what they need. as a result of two plus two equals four, you could say that the purpose is to learn at school. this would be bold and on the edge, but this will allow you to contrast this with the bureaucracy where they try to get money from the public. so they can get money from the public no matter who is learning. [applause] let me give you an example of this. we want to celebrate -- accelerate learning and reduce cost. we want to give them the fourth

year as an automatic scholarship to go to college or vocational studies. if you can earn the cost of going to a graduate school, if you graduate in three years, how many of you could have graduated in three years from high-school. how many of you think you could ever graduated in two years. i want to ask a student -- he said, how big is the reward. i am trying to drive at a fundamental point. if we want to maximize the learning, we should have the awards mechanisms for the people who learned. a fundamentally different model. the president of the school of the ozarks is here. to go to school in the ozarks

you have to need student aid, and if you apply they have no student loan program. you are working 15 hours a week, and this will pay for the tuition and a bonus. if you work 12 weeks, this will pay for room and board. 92% of the students graduate with 0% debt. 8% to know about $5,000 because they buy a car. one proposal i have is that every governor should be able to find -- fund one work study college so you can say to everyone in the state -- if you are willing to learn and study, we guarantee that you can get a degree. but this is a fundamentally different model. this is not slightly more or

slightly less. this is fundamentally different. you have the same challenge with the economy. it is fascinating that obama was the winner of the election with the support of people under 30 years old. and if we continue at the current level, this group will have the hardest time finding a job. all of your friends and neighbors have an interest in figuring out how to get the economy going again. i believe that this requires a fundamentally different approach. i do not think having the federal government spend $770 billion in a bill that nobody read will get the economy going. what this will do is borrow from your generation, to try to transfer the money to state and local governments to avoid change. if you look around the country, this is what happened.

where the declining economy led to a decline in tax revenue, this led to some serious decisions. these were all postponed until next year because there was a big check from the federal government and they did not have to make a decision. not only did they not make any difficult decisions, they added to the size of the government. new york state will have the worst budget that has this year. this poses for your generation a real challenge. here is what i want to encourage you to do. if you go to american citizens, you will see for tax cuts for economic growth. you can talk to people around your college, and you will find it interesting reaction. the first tax cuts is to the

social security and medicare tax. we want to get the economy going again, and we want to have a 50% reduction for the next few years for the employees. the reasoning is very direct. if you want to stimulate the economy, do not give the money to the bureaucrats. allow the working americans to have the money for themselves. it is very difficult for people to get a pay raise, it is not difficult for people to get a pay -- a take-home pay raise. every working american will get an increase in the take-home payment. if the employer will keep their match, you will help every small business in america have more money in the cash register, and the money to hire more workers. three out of every four new jobs are created by small business.

they are not created with big business. they are created by small business. [applause] so here is a simple first project. go back home or to the school, and go to five or 10 or 15 small businesses and say, if we cut the social security and medicare tax, will your employees have more money and be more happy. and if we let you keep the 50%, how much more money will you have to create new jobs, to buy new equipment and be more competitive, and you will suddenly be having a practical and down to it -- down-to-earth conversation about these opportunities with the largest range of small businesses, whether you are a latino small business or an african american

small business, a female owner. i do not care what your background is. you have an immediate interest in a program that stimulates the economy by cutting your taxes and giving you the money to make the decisions. you do not have to apply to any politician or bureaucrat, just by the act of changing the irs, you will put this kind of cash in the economy for people who were working and hiring. the second change in the tax policy relates to all of you. the number one competition that you will have is with china. the chinese are legitimately working hard -- they have every right to pursue happiness, and they can go to work as well. we propose that we match the chinese capital gains rates which are zero. and with no capital gains tax,

the level of investment and the creation of new jobs and the investment in new technology, we would guarantee that your generation would have an explosion of opportunity, both to create businesses and go to work for this business. we want to match this with the current tax level. this is 12.5% of the current tax level. in some states we charge over 40%. i said that this really matters, some imagined you are a ceo. you are trying to build your next factory. one of these will take 12.5% tax, the other will take 40%. which will you invest in? this is not complicated. the fact is that no liberal likes to do math. [laughter] if the liberal asks why this

business is going to ireland or china, this is because liberal taxes are driving them out of the states. so if we repeal -- [laughter] [applause] >> if we repeal the liberal law and the taxes, this is the most desirable country in the world to be in. this is the most complex economy and this is larger than china but we're making this prohibitive to compete. when i was turned on to the irish tax rates -- the head of intelligence save -- told me that microsoft files in ireland because they are not stupid. why pay 40% when you could pay 12.5%? and we would abolish the death tax, on the moral ground,