thadebt. it has no validity to u.s. taxpayer. [inaudible] . . >> many of those banks have paid the money back with interest. we have got back from several of those banks to hundred billion dollars that was lent.

$75 billion has been returned in less than a year. we insisted on compensation restrictions. we tried to force them to do foreclosure relief. as for bankruptcy, i did favre and the house passed a bill to allow people to declare bankruptcy [unintelligible] unfortunately, that died in the senate. we were not able to get that. i am disappointed on the banks -- with the banks on foreclosure. i have a problem with some of the money that is being repaid as the tarp plan comes back. i want to make that available as a loan to people who had a good mortgages, not subprime mortgages, but could mortgages who have lost their jobs.

you can't pay a mortgage out of [unintelligible] if that is your primary source of income. i will be fighting for that when we get back. >> if anybody has a political stance and not a question, the microphone will be cut off. we want to get to questions. >> i do want to respond because the man identified -- they are the ones giving out the picture with the president with a hitler mustache. it is the strength of the first amendment. yes, sir? [applause] >> thank you for coming. i wanted to mention something

that i noticed. these banks across the country are overvaluing their assets in their mortgages. i have been to a few foreclosure auctions and banks are buying back houses from themselves to prevent themselves to having to mark down the value of their assets and lying to us about their solvency, made possible by the federal reserve lending money to these institutions. [unintelligible] >> in the fall, i completely disagree that the fed is the cause of this. i have been pushing for more openness with the fed. here is what we plan to do. i want to restrict the powers of the federal reserve. first of all, they will be the major losers of power if we are

successful in setting up that financial product protection commission. the federal reserve is charged with protecting consumers. in 1994, congress give the federal reserve to adopt rules to ban the subprime mortgages. alan greenspan [unintelligible] they have the power to ban credit-card abuses. they had the power to deal with overdrafts. under ben bernanke, they started to do things but only after congress started. in every case after we started, the fed did it. that is why one of the reasons why we will take away from the federal reserve the power to do consumer protection. they have had since 1932 a right under herbert hoover until recently to intervene into the

economy whenever they fought. the federal reserve came to us and said they were going to advance $82 billion to aig. i was kind of surprise. under section 13.3, they can lend money to anyone they want. we are going to put constraints on that power. finally, -- i have been working with ron paul. he agrees that we don't want to have the odd it appear that it is influencing monetary policy because that would be inflationary. if it was made instantly public, a lot of people would be trading off of that and that would have too much impact in the market.

that will be part of the overall federal regulation that we will be adopting. the house will pass it probably in october. >>yes? >> [inaudible] >> testing, testing. has anyone in the budget office looked at if we adopted it for reimbursement of hospitals and doctors the massachusetts scheduled for medicare, how many billions of dollars we would save? if you are in florida and need a colonoscopy, is $4,200. in massachusetts, it is called hundred dollars. i have not seen any doctors here

move to florida. has anyone looked at using -- removing the cap on salaries for fica as a way for paying for this? >> there is no cap on medicare. there is on social security. medicare is now not capped. the social security cap fica bill -- that is social security taxation. as we reach -- social security is now in good physical shape. begin to start have to have a problem in late 2013. there will be a need to do some adjustments than -- in late 2013. -- 2030.

there will be some -- there is some free-setting mechanism in here, part of it going back to what the doctor mentioned before. there is an effort in this bill to create attractiveness of becoming a primary care physician. there is a problem with compensation of primary-care physicians. we have a special issue in massachusetts by the way. health care is important because it is a service that people get and as an industry. it contains big employers. in the hospitals in general, it in the greater boston area, they are very important for the state's balance of payments. people come from all of the

world to get care and spend money in massachusetts. we also have a burgeoning medical products industry, which is a high-tech industry less likely to be outsourced. [unintelligible] was a little worried that some of the proposals to cut costs was going to wait too much on our hospitals and our teaching hospitals. i am a little bit cautious about that. >> [inaudible] my name is inviolate. . i am 89 years old. [applause] -- my name is violet perry. there are 300 million people in this country, approximately 250 of which who have health insurance. if we include 50 million more people into the system without

an increase of doctors to treat these patients, how am i or anybody worse than me for that matter going to be able to [unintelligible] make an appointment with a doctor once you add in all these new patients? could you please explain? >> yes. i know some of those people do not have health care co. fishermen in new bedford. i have a problem saying "tough." in the short term, -- for instance, the way we have been doing nursing. [unintelligible] that is a great mistake. it is dealt with by a improving importing nurses, a short-term approach.

i was very pleased when the president announced a greater increase in funding for community colleges. [unintelligible] we have a need for nurses around here. if people become nurses, by the way, we don't have to worry about outsourcing. [audio cutting out] increased funding for this is important. in the short term, it may be for immigration. in the immediate term, i believe we can increase the supply for medical practitioners. some people have left the medical profession because i believe the right kind of approach can draw them back in. i am not comfortable saying that some of us have it and one-fifth

of you don't. i think in the short term, there may be some immigration issues there was people coming here. i think we can increase the supply. yes? >> [inaudible] thank you very much for coming in to give some answers to us in the world. i am the chairman of the advisory board here. i have a quite a few constituents that are worried about their care right now. they are in a special group that is growing quickly because we are doing a very good job out in the field in iraq and afghanistan. they are doing a great job but they have a lot of elements.

you did say you are looking for other sources of revenue. i understand the situation because doctors are looking for other sources of revenue as well. as we introduce this new health care for everyone in the united states, including the extra 50 million that do not have any care, the rationing of resources is going to be very, very tight. how do we avoid the progress that the veterans administration and [unintelligible] have made so far in getting the care that they need in bringing of the level of care that they need and not jeopardize that and robbed peter to pay paul in order to introduce this larger health care program? >> the increase will come -- let me go back a step. when we say people don't have health coverage, that does not

mean they are not getting health care. they are getting care in hospital emergency rooms. hospital emergency rooms are an expensive [audio cutting out] i should have said this first. as far as services are concerned, it has totally registered. chairman of the veterans affairs committee as a republican in the last congress, he offered the amendment in the committee to make it clear that nothing in this bill would change the health care for the veterans affairs department at all. they will continue to get it. by the way, for those of you who think government health care is a terrible thing, i suppose you stay out of government-run hospitals. there will be no change

whatsoever in the v.a. one of the things that has happened is a substantial increase in the level of health care. the president tried to cut back. medical care has advanced. people are surviving terrible wounds today who would not have survived years ago. george orwell, the author that were shot in the neck during the spanish civil war, somebody said he was lucky. there is nothing lucky about surviving a terrible wound. it does put more of a strain on this. that will continue to be a very high priority and there will be a continued increase in resources.

veterans will continue to come first, and that is very explicit in this bill. [applause] i have tootsie russell looking over my shoulder. >> earlier on, you were talking about the state's being in the way of doing reforms that would bring down costs. is there any way that we could let them be the laboratories of democracy and allow them to sit there and see what other states do well and i doubt that as well? >> there is an element of that in the bill that allows the states who want to do something different allow them to do it. massachusetts took the lead in a state program. it won't affect them because massachusetts is already doing

it. there is an effort to give states flexibility. when you will probably see is [unintelligible] >> [inaudible] what about allowing some of those [inaudible] to sit there and move the medical tax deduction to the individual rather than the employer? >> i think you might have [inaudible] that some state came up with a plan that included it, i think it would take some consideration. >> my name is sheila lovett.

i would like to thank him for his many years of service and being a strong advocate. [applause] for medical care of all people in this country. i am a physician. my husband is a physician. my son is a physician in training and hopes to go into primary care i would say one way we could try to make sure that there are plenty of people to serve such as people before the person before me that was worried about getting a doctor is by finding better people [inaudible] making it more financially possible to do this. because right now, the way the schedule is set up, surgeons get paid a lot for doing procedures, and people doing primary care do not get paid very much. that is one thing. my question for the congressman

is this, there was a question before [inaudible] represent the people's opinion in this country. i have been a number to these town hall meetings about health care around the state and i have heard the same talking points repeated over and over again. i had an elderly woman come up to me in tears shaking, saying she did not want the death panels getting between her and her god when it became for her to die. i think this is a heinous abuse of people's -- just a minute please. just a minute. i am going to ask a question if you would just be quiet and let me. >> they have become a convert to that rule. [laughter]

[applause] >> i believe that these poor people are the dupes of peple in the insurance industry and other people who have a vested interest -- just a minute, please. making a lot of money the system is set up now. what i would like to ask is why this was not anticipated and why the administration did not get out ahead of these people. i met the same people at the sarah palin rallies before the last election. [inaudible] guess what? their side lost. it must be that the majority of the people in this country want the democratic agenda which includes serious health reform. thank you very much. [applause] [booing]

>> from the standpoint of the public, part of the problem is that the economy being in bed ship, when the economy is hurting, people are more inclined, i think, to be more skeptical and nervous. with regards to institutions -- i am charged on what i do in them pretty explicit about it. i would say this. there were respected institutions in the country, the financial institutions turned out to [inaudible] this notion that something in this bill would require people who are elderly or are said to

be denied medical care and killed is the single stupidest argument i have ever heard. there is nothing remotely relevant to it. you have the investor's business daily announcing it would have killed stephen hawking when he said no to the country. some of that was delivered misinformation. some of that i think was a sign that people were in bad shape. part of it was that as the economy does badly, it is hard to always anticipate how people react. [many talking at once] >> i think the administration is missing something in these town hall meetings. the economy is collapsing. we have 30% real unemployment. 48 states cannot balance their

budgets, and they are cutting programs to the bone. this is the context under which the obama administration has said it needs health care reform. i am not done. the reason why is that they say they need to limit medicare expenditures in order to do that, in order to reduce the deficits. that is the origin of this policy. this is the t-4 policy of a kepler policy in 1949, where he said certain lives are not worth living. certain people, we should not spend the money to keep them alive, which is exactly what rahm emanuel has said. this policy has been defeated by the british. why do you continue to support eight not see policy as all, has expressly supported this

policy? why are you supporting it? [inaudible] >> when you ask me that question, i am going to refer to my ethnic heritage. on what planet do you spend most of your time? [laughter] [applause] >> [inaudible] >> do you want me to answer the question? as you stand with a picture of the president defaced to look like hitler and compare the effort to increase health care to the nazis, my answer to you is, as i said before, it is a tribute to the first amendment that this nonsense is so freely propagated. [applause]

i am trying to have a conversation with you would be like trying to argue with a dining room table. i have no interest in doing it. [laughter] [applause] >> [inaudible] [audio cutting out] >> it is this thing back on? -- is this thing back on? [inaudible] my home mortgage is about to readjust. there is nothing i can do to refinance my home right now. what will this legislation do to help me with this? i have a follow-up to that. >> i have introduced a bill to

take the profit we have made on the tarp repayments in the form of interest and dividends, which is now abide $8 billion in the first year, and recycle it [inaudible] but also to create a loan fund precisely for people like yourself, people that made it sound decisions to get a mortgage but find themselves out of work. i am going to be pushing for that bill. i am sorry that president opposed it. i will push it when i come back. take the tarp profit and lend them to people that work out of work for mortgage payments that can be repaid once they get their jobs back. >> can i get a follow-up?

my situation is my own. i walked into it, i am responsible for it. what would that obligate the people who are surrounded to pay for my personal strife? the government is not the church. [applause] socialism is taking money that the people do not want to give assuming that you can do better with that money than they can. >> you finish, and then i will talk. are you finished? the answer is, first of all, i differ with you that it is socialism to help people that at no fault to their own have lost their jobs. unemployment compensation is a very important way to get out of a recession. it is a countercyclical policy. as people lose their jobs and

can't make purchases, it drags down the whole economy. unemployment compensation, money from some two others -- if you lose your job, if it does not -- i think it is legitimate to help people out. secondly, i think you can deciding without listening to me. [inaudible] again, you are not listening to me. it does not have to come from somewhere if it is going to be repaid. i think you were prepared to respond without listening to me. it has to be repaid. we are not talking about the subprime mortgage situation. we are telling banks to

imprudently let them the money that they have to accept that. that is not public money. what i said was that we would lend money to people who were in trouble not because they had a bad mortgage but because they lost their job at no-fault to their own. if you were imprudent in your mortgage -- i am sorry. >> [inaudible] [no audio] >> you said you do not see how -- >> [no audio] >> i was quoting what you said. i would differentiate between someone who was in difficulty because he or she was imprisoned and somebody who was in difficulty that lost their job

at no fault of their own. for those people, we do increase unemployment compensation. lending them the money, and i keep stressing that, it would be lent to people who did not take out included mortgages, meaning if they got their jobs back they would be able to repay it. it would be a loan to be repaid. >> [no audio] thank you for taking my question. i believe that this bill, specifically the public option, is the first incremental step [no audio] how well the private system be able to survive under this plan?

>> it will survive and prosper, the private insurance companies, if they provide better service. the argument against the public option is that when the government runs it badly, it would be too restrictive. i think there are counter arguments made. when the government runs it it will deny people rejoice and be too restrictive. [no audio] if you are a lawyer, you can argue two opposite views. you can't really do that in any other case. the answer is, if the private plan provides better, faster service and does not restrict, it will prosper. the public plan is up to the people. people are not stupid. the public plan does not have the profit.

the profit that goes to the private insurers stockholders will be out of there. a public plan will have less of fund expenses, but people fear it will be too restrictive. if it is, rational people will not join it. that is the answer. i am not opposed to a single payer. medicare is single payer for elderly people. >> [no audio] >> when you all yell at once, it is hard to understand. >> [no audio] >> first of all, yes, i am in favor of single payer. that is why i like medicare. you act as if you people have discovered it is august. i have been a co-sponsor of the

single payer bill. i think it would be better. let him yell, please. >> [no audio] we watched tapes of obama and everyone else secretly say they are in favor of a single pay system. >> it has been 21 years since i have had a secret. [cheers and applause] and i do not have one now. i have been the co-sponsor of single payer for years. i am sorry, sir, -- which would you prefer? i don't have the votes. the votes are not there in congress for single payer. once again, people have made the discovery that everyone else knew for a long time.

here is the argument against againstoption. -- against public option. you should not worry that people will voluntarily choose the government option. i think people may because getting private insurance drives up the cost. i have made no secret of this. i do believe that we will have a competition. [no audio] why are you worried that people will voluntarily choose what people will think as the worst plan? [applause] let me address medicare being bankrupt. medicare is hurting right now. i would put more money into medicare. if we could have taken 10% of

the money we wasted in that terrible war in iraq that caused young men to die and political problems [booing] you think somehow that this terrible war that did so much damage is in irrelevancy. it is an example of a mindset. >> yes or no! is medicare bankrupt or not? [no audio] >> it is not technically bankrupt. [laughter] i am struck by those that think laughter substitutes for logic. medicare [no audio] i believe they can come from several places. one is increased taxation on

people making -- [booing] yes? [inaudible] when you are through yelling, call me. people do not like to think -- here is the deal. if i say something that might be popular with the people, they want to get it out. i think taxing people earning over $250,000 in income is a good idea. the proposals in here to tighten up overseas tax evasion are good things. the proposals in here to tighten up -- just because you yell doesn't mean the facts are going to get out. the proposals in the bill to tighten up on american corporations that are shipping

activities overseas and evading taxes that could raise tens of billion dollars a year are good things. they are in this bill. that is what is in the bill to help pay for medicare. it is increased taxation of incomes above $325,000 and dealing with overseas tax evasion. that would bail out medicare very easily and i think it makes a great deal of sense. i am surprised that this defense of overseas tax evasion [no audio] we have american corporations that send business overseas and evade taxes. we could end that and save tens of billions of dollars a year. that is a good thing in it of

its south. >> -- in eight of itself. >> i want to thank you and your office for when i was going homeless, myself and my wife due to disabilities, we call your office and within a week, we were in the subsidized housing, and i really appreciate that. [applause] my question today is, we have seen a pattern since the obama administration. people sneaking in and not making commitments like congressman waxman. the omnibus bill that was passed very quickly without people getting a chance to read it. we finally got a hold on this health care package so people might be able to read it.

we were promised that we would have changed that we could believe in. so far, if we are having all these changes, and i haven't got a clue of what they are, how can we trust the government that is shoving things through without letting us have a reasonable discussion about it? [applause] >> the answer is, we are having a reasonable discussion occasionally interrupted by hooting. this is not being hurried through. it has been debated most of the year. it is being debated now. it is not going to be voted on until the fall so it is being discussed. bills have to be precise. it refers to other sections so it takes a little bit of extra

work, which is why people have been willing to talk about it, to put it up on the internet. i don't understand how that criticism lies to this bill. i am working very hard on the financial regulation to deal with the manipulations that got us in trouble. people complained about too many hearings. we have been debating them for a very long time. we passed a bill on executive compensation. we passed a bill to restrict credit cards over the objection of people on wall street. we are debating those for a long time. with this bill, it is not being rushed through anywhere. it is being discussed very openly for some time. >> [no audio]

that is the only thing that caused it to be held up so there is a discussion. get it done before the recess. my real question is, how do we trust a government that goes ahead and shoves these things through before we have a clue as to what is in them? there are earmarks of being written in and then being voted on the next day. >> that is simply not true about this bill. people don't like the homeless programs we have had. people don't like medicare. people like a lot of things. i am just baffled -- i guess you don't want to take yes as an

answer. people objected this bill to go too quickly. how you can argue this bill going to quickly baffles me. >> [no audio] >> who ever told you to trust the government? you live in a democracy. don't trust the government. use your own initiatives. excuse me, sir, may i respond? >> [no audio] >> some of you object when i answered others of you. you of the second one that has asked me about trusting the government. the government is not your lover, your father, your doctor. >> [inaudible] >> i am sorry. [inaudible]

no one has ever said you should trust the government. that is not an appropriate thing for citizens to do. you participate, you get involved, you vote, you lobby. >> [inaudible] >> who is putting you down? [applause] excuse me, i want to respond to this one. >> [inaudible] >> i have been critical of people who boo and heckle, but what have i said that put people down? >> [inaudible] >> i did tell the woman standing there with a president looking like hitler who compares us to the nazis, i thought she was out of her mind. if you want to be on her side, ok. i am not putting anyone down.

we are here discussing this. the people that are putting people down on the people who boo rather than making a rational argument. that is putting people down. >> [inaudible] >> [no audio] i want to respond, ma'am. i am here tonight. [no audio] i am not putting anyone down. it seems to me you are objecting to something that is not happening here. >> i first want to address something you have been saying all night about the iraq war. [inaudible] it does not give the power to

[unintelligible] [applause] >> may i respond to that? >> i have another question. if you want to respond, respond. >> first of all, george bush -- [yelling] when people ask a question and i respond, i don't understand why i am not supposed to respond. the war in iraq unfortunately was initiated by a president who said it is not up to congress, it is up to me. i was trying to reinforce the view that i should have more of a say when we go to war. i voted against it. he brought it out. the war in iraq was initiated by president bush as previous wars

were since world war two without a declaration of war, and i think that is a mistake. i think you apparently think medicare is unconstitutional. i do not. it has done a lot of good before me. [no audio] you think it is unconstitutional? do you think medicare is unconstitutional? >> [no audio] >> you said that the constitution does not give the authority to do it. do you think medicare is unconstitutional? >> i think medicare needs to be reformed. >> but you won't tell me whether it is constitutional. >> [no audio] what sort of empirical data [no audio] what is your data that health care reform will save americans

money, will not put private companies out of business, and will help us fix the economic crisis that we are in right now? all i am hearing is talking. >> i don't argue that can help fix the economic crisis right now. there are other things we are working on to try to do that. i think it would help us avoid further deterioration in the economy by holding up health right. i don't make that claim. the only claim i would make of the three you ask is that it would not put health care -- private insurance out of business. the answer is medicare. you of the one who said we have no [no audio] i think that is wrong and i cite medicare. the private insurance companies have thrived with medicare.

i think they have been too generous with them. medicare has not put private insurance companies out of business. >> [no audio] >> after 44 years -- >> [no audio] >> yes, it is for people over 65. after 65, most people on medicare do not work. >> i want to thank you for coming tonight. [no audio] it is great that we have the opportunity for you to come down to express our democratic rights in this republican form of government to adjust our questions. in the interest of full disclosure, yes, i am the republican state committeeman from the district and the regional chair. i voted for president bush twice

quite proudly. i am here as a constituent with a personal concern. i haven't read the health bill. i trust that you have substantially. >> don't wait for the movie. it is not coming. [laughter] >> i will agree, i think that some of the things that have gone on, i agree with. i think the pictures of the president pictured as hitler is deplorable. [applause] i am 31 years old. [no audio] let me just say this. i have a fear of health care reform. i think we all agree that health care needs to be reformed. it does not work the way it

should but how to fix it is the question. i in 31 years old. from age 4 to 16, i have had 25 surgeries, non-life-threatening for my hearing. i think it is an important quality for life. >> sometimes i value it more than other times. [laughter] >> i was born substantially death and have had many surgery so i could hear. i have read the bill. could you please address the extent of [no audio] under the reforms. my father is a truck driver and helped me with those surgery's so i could hear today. i am afraid my children and my grandchildren that maybe they will be waiting for surgery's. that is my concern. >> nothing in this bill would in

any way do that. as a matter of fact, what it will do is the opposite. to the extent that there is a government role with private insurance, it will be to do more. there has been an agreement. the health insurance industry has dropped some of the restrictions, pre-existing conditions will not be a cause for exclusion. there is an annual cap on copays. [no audio] the answer is there is nothing in this bill that would [inaudible] the other argument that was made was the woman that was 94, who looks great.

this bill does try to do this, expand the supply. it is not that these people are not getting health care. they are getting it in an efficient -- in an inefficient way. they are getting it in emergency rooms. there are other things in this bill to expand medical education, to try to do some financial intensive -- financial incentives by mary care doctors. if you look at rationing, in my experience, more people [no audio] come to my office and say that they have been denied private insurance companies than from health care. i think under this plan, that will happen last. [applause]

>> i am a little too tall for this. i am 20 years old. i kind of differ from the composition of this room. [no audio] i look at it from a different perspective. i have to deal with this for the next, i would like to think, 80 years for my life. i don't understand, and i understand that george bush passed through the first bailout bill. you like to invoke his name. he passed the first one. obama passed the second one. we are in a big hole that we have to climb out of. i don't understand how in good conscience as the chairman of the house finance committee you can try to push through a bill like this which will add so substantially to our deficit

that i, as a 20-year old person, will have to deal with this for the rest of my life. i will have to pay for this. i don't get it. [applause] >> here is the answer. i don't want it to go through in that form, and that is why i am pushing to pay for it. please finish. i know you have a lot of years left. >> i hope this makes up for my hooting and hollering. >> to be honest, i don't think it makes up for it because i do not think that is inappropriate way to carry on a conversation. -- an appropriate way to carry on a conversation. turn his microphone back on. he is not through with his question. >> i don't understand how you propose to pay for this.

without raising taxes. i understand you want to raise taxes on a portion of people who earned a significant amount of money. i don't understand where you come across saying that people earn under -- sorry, anybody $500,000 -- sorry, you want to lower that to $325,000. [no audio] >> tell me when you are ready for me to respond. >> go. >> i am sorry -- >> [no audio] >> $500,000 is the cutoff in the bill right now where small businesses -- 500,000 others is the payroll. if you are in small business in your peril is under 500,000 others, you are exempt from the tax.

i think it is too low. $325,000 is the income level for individuals. i do think that when bill clinton became president in 1993, i voted to raise taxes on upper-income people. we raised it from 36% to 39%. that helped us reduce the deficit and had no negative effect on the american economy. i am sorry, can i continue? this is a complicated issue. at some point, i have to be able to answer. >> [no audio] >> it is it my turn yet? that is assuming -- i do not think it is 55% for most people

i am sorry. when do i talk proof these are complicated things. here is the deal. it is not going to be 55% for most places. when you are trying to accumulate this taxes, those taxes are deductible your figure is badly mistaken. we then -- george bush asked congress to lower the tax back to 36%. we did. [no audio] abolished the state tax. it only applies to the top 2% of earners. that would cost a lot of money. i do believe we can raise taxes on the wealthiest people, $325,000 [no audio] there is a lot of tax evasion

that goes on from companies that are american to do business overseas. the obama administration just brought up a good case with ubs. i am for doing those, too. [no audio] i believe america is the granddaddy to the whole world of the military. military budgets of germany, france, spain, england -- boo, very sensible. if you want to subsidize the militaries of the western european countries, why not send them a check personally? the iraq war -- i am not talking about the past. i think president obama is wrong to say that we are going to stay in iraq until the middle of 2011. i believe a combination of those things -- i think more americans

are in danger from not having their health needs met appropriately then our danger because there are people fighting in the north of iraq [applause] >> [no audio] >> i just want to make an announcement. we will it take about five more questions. [no audio] we let this meeting go on. let us go an extra half-hour. >> 10 minutes because we started early. >> 10 minutes on our time. five or 10? 10 more minutes. then we are going to adjourn the meeting tonight. >> who pays your salary?

>> how is it going today, sir? the federal reserve is unconstitutional in my opinion. do you take an oath to obey the constitution? shouldn't you resign if you are breaking or both? >> i do not believe the federal reserve is unconstitutional. i do plan to put some legislation through that will curtail some of its powers. no, i do not think it is unconstitutional. . .

instead of laying off anyone to having ends meet, every single manager took pay cuts to keep from having to fire anyone. you build up these huge corporations and they are taking millions of dollars. that being said, i want to read page 5 from h.r.32. initiate shared responsibility among workers, employees, and the government so that [no audio] have a central benefit. the government does not have much. we pay you. if we put tax payers, it said it would be paid for employees, workers, and tax payers, which is the workers. with what my hospital, my question is, instead of the government who has no interest

in this because you are not going to be in the system or put into the system, we as a taxpayer and workers, we should be able to -- this is my question -- we should be able to get the good people who are willing to say people are the bottom line, not the dollar. get together with good people. get together with pharmaceutical companies all over the country and get together with the good people and say we need to cover everybody, we need to do this. how can we do it? can you take a little bit of cuts in work profit? where can we meet in the middle? let the private citizens do this. this is not a federal government issue. [applause] [no audio]

>> we only have 10 minutes. >> first of all, i would disagree with the fact that the government is not involved because then we would not have medicare [no audio]. do i get to respond? i do not think charity would do for medicaid. i do want to respond to your first comment that these people got a big money. i have been fighting deatthe ceo salaries. [no audio] do you want me to respond or do you want to keep talking? no, i do not. you are not listening to me. >> [inaudible]

>> the answer is, first of all, when you say the government should stay out of it, we would not have medicare, and i think that would be a great loss. secondly, the administration has been trying to do what you are saying. how can i talk with you yelling? i do not understand the mentality that thinks yelling like this is helpful? i do not understand this. those of you to interfere with the conversation. the point is this, obama has met with the health insurance industry in the pharmaceuticals and hospitals. i am sorry -- that is what you said. you just said that he should meet with them and try to -- i apologize. this is not a rational conversation. >> [inaudible] to go the other point i want to make is when you talk about the people of the private sector who

got money from the financial rescue program, we have been tough on them. i got a bill passed [no audio] before we left it to cut down substantially on the irresponsible bonuses they are getting. we will be curtailing top executive pay before the end of the year. the other thing i would repeat is this, i do not want the government totally at of health care. in the children's health care program, for example, which i think is a good one, significantly reduce the number of uninsured children. s? -- yes. >> i am here from dartmouth. thank you for coming out tonight. my question is you said we would be allowed under this plan to have a public option as well as the private. i want to know how the private option will be able to compete with the public option when you have unlimited resources of --

[applause] >> because the bill says that the public option will get a $2 billion upfront appreciative for administrative costs and therefore -- and their after will have to be break even. the advantage they will have is that you will not have the profit-making [no audio]. the offset will be well that it will be too restrictive. there will be no ongoing federal subsidy of the public option. >> [inaudible] let me ask you this. are you going to be required to get government run -- >> know. you ask me a question. you say a you do not believe me.

you came here believing what you believed, and you will not believe me. people are entitled to believe or disbelieve anything they want. we are going to pay for it by raising taxes on wealthy people -- [crowd yelling] on people making more than $325,000, and those of you who are the defenders of the people sending money overseas will fight it out on the floor of the congress. >> i am a registered nurse, and i worked in elder care for over 30 years. elder care has been improving greatly over the past 30 years, and we do a lot in advance care planning on an individual basis with people all the time.

i just wanted to say that for everyone here, if you download on your computer, download pages for 24 to route 430, you will get a feeling for what the it. it'-- if you will download pages 424 through 430, you will get a feeling for the advance care planning. i think everyone should do that and see what they are now. [no audio] i have listened to people from the united kingdom, norway, and canada. i was recently listening to dr. mccall, and some of the agreement of all of these countries and the people representing them is that once this is put in place, the administration becomes

extremely top-heavy. there is no way to turn around and get out of it. they are not happy in their countries with this. that is one of my concerns. >> we're running at a time. to go the way this will be paid for it through -- half of it through raising taxes and the other half through cutting medicare by about $500 billion over the next 10 years, and there are about 30% of the population going into medicare into the enrollment of medicare. how will this be paid for it is part of my question? >> people should read the advance care about what happens at the end of life. it is all entirely voluntary. [no audio] it is an entirely voluntary thing for an individual. many people do it. doctors can now not get paid for it.

that is what it says. >> [inaudible] >> if you want to give advice about how to plan what people close to you are going to do at the end of life, you can go to a doctor in the doctor will get paid for it. it is entirely voluntary. the doctor does not do anything for it. there is no medical treatment. secondly, i am opposed to cutting medicare that way. many of us on the democratic side have been opposing that. i do have differences with the way they plan to pay for it. i think those will be changed. you are not being fair to other

people, ma'am. i will take one last question. >> we currently have [no audio] it is 14% of our payroll. how do you expect to compete with other companies if there is an 8% option for our competition? you worry about everyone keeping their taxes, their earnings overseas, there is a reason for it, sir. they are being taxed out of control over here. [applause] i would like to know if you would consider what -- doing what all started just did. australia does cut taxes on business is doing less than $2 million [no audio].

this administration has done nothing for small business. we employ 80% of americans, when are you going to help us out instead of taxing us into oblivion? by the way, most of this are sub s companies. it is not because we take the money home, leelee did in our business and invest. [applause] >> the first thing i would say is this, if you leave the money in the business, it will not be taxed. why is it when people get answers they do not like -- > >> people are angry. >> pingree -- eggert in rationality should not be -- anger and rationality should not

be different. here is the point. nothing has been done to raise taxes. you say all we're doing is raising taxes, not a single tax has been raised under the obama administration. >> [inaudible] >> what went up? excuse me. excuse me. wait a minute. i said nothing had been done under the obama administration. massachusetts raise taxes. there is a difference between taxes at the state level and federal level. i will take the last question. >> i am not from your district. thank you for taking my question. my question involves -- how do

you plan on reforming prescription drugs and drug companies? [no audio] >> many things are being done. first of all, there is in the bill a restriction that is being debated on how long they get patent protection for biologics. the bill gives them 12 years of patent protection, less than the present one. -- less than the president wanted. you want to say more? i did not finish answering. what do what? >> [inaudible] >> i am trying to get to that,

sir. >> [inaudible] [laughter] >> there is a lot of that going around. i would say this. if you find me telling you something that is not true, maybe that is justified but you said you came down to talk. i do not understand the person who does not want to talk. i am trying to respond, but before i finish, you want to rebut what i have to said. i was about to say that in the house bill the senate does not have that in the president has been opposed to it. [no audio] there is an $80 billion concession from the pharmaceutical companies that is going to be used to fill the

hole. i disagree with that. i was in favor of both of the negotiation and i have always been for allowing the importation of drugs from canada. we have been told that it is unsafe to import drugs from canada, but i have not seen the number of dead canadians that would convince me that they have unsafe medicine up there. thank you all. [applause] >> as the health-care conversation continues, c- span's health care hud is a key resource. also, keep up-to-date with health care events like town hall meetings, house and senate debates come even at load your opinion about health care. the c-span healthcare have th h.

>> this fall, entered the home to america's highest court. the supreme court coming this fall in october on c-span. >> secretary of state hillary clinton released a statement today expressing deep disappointment in the decision to release the only man convicted of committing the 1988 bombing in scotland. the move was one of the main topics at the state department briefing. this portion is 21 minutes. >> good afternoon and welcome to the department of state. i will begin by reading a statement by secretary clayton.

-- clinton. the united states is deeply disappointed by the decision of this got us executive -- by the decision of the scottish executive for releasing this man who took the lives of 370 persons, including 189 americans. we have continue to communicate our long-standing position to the united kingdom government officials and scottish authorities that he should serve out the entirety of his sentence in scotland. today we remember those whose lives were lost on december 21, 1988, and we extend our deepest sympathies to the families who live each day with a loss of their loved ones to do this heinous crime. before i take your questions, you'll see a median of this afternoon that by executive order, the state department has been delegated authority from

the president to receive applications for the construction connection operation and maintenance of facilities at the border of the united states, including petroleum pipelines. after considerable review and evaluation today the department issued eight permit to a limited partnership for the alberta cliper pipeline. this would advance in number of strategic interest in the united states including increasing trade with a stable and reliable as -- allies such as canada. we will continue to work internationally and with canada to address the climate change problem -- challenge as we leave up to the international meeting in copenhagen later this year.

>> is there a dollar and not attached to that? >> no. -- is there a dollar amount attached to that? >> can i ask about lockerbie. you put a the statement from the secretary, what are you going to do? on tuesday to make your case and they did not listen. what are you going to do now? >> well, first of all this was a decision that came within the purview of the scottish authorities. we raise this at the highest levels going back weeks and months. secretary clayton raised it with a variety of officials of the attorney-general and others with the united states government.

-- secretary clinton raised this issue with a variety of officials. >> does it end here or is there some kind of retaliatory step you might take? >> i would say it is a retaliatory step. in essence, the scottish minister today said that a convicted terrorists has the right to die at home. the united states could not disagree more rigid could not agree more. we suspect walz and the fact that -- we respect laws, but we believe this is a profound mistake to go is there anything more you plan to do? >> in light of the release we had had a number of conversations with the government of libya. obviously he will move back to

libya, and we certainly believe he is not entitled to a shrink as well. >> i mean with regard to the rest. -- he is not entitled to a hearing. >> what had york communications been with the libyans? do you want him to be held under house arrest? are you asking for action from the libyans? they have seen this case quite differently. >> i think there are conditions that the scottish authorities have given to the libyans. we have had conversations, or will have conversations both in washington and over what our expectations are with respect

to his greeting back in libya. >> what are your expectations? to go to the extent that the scottish authorities have sent him home to die with his family, -- >> with the extent that he is returned to scottish authorities, we would expect his return to be low key. i think if the libyans take that action, we would be pleased. >> what is the state of the families who have been very vocal in the past few days that this is about oil and trade deals with libya? >> for that i would a for you -- refer you to the scottish authorities. this is a scottish decision. obviously from the standpoint of the united states, we do not think that justice has been served. we think justice has been undermined.

we understand compassion. but this has always been a special case. we all remember the iconic vision of the cockpit of the plane resting on the ground. and over 12 years, and working with the united kingdom and the international community worked diligently to prosecute and convict the perpetrator of one of the most heinous crimes of the last 25 years. the international community was united in applying significant international pressure on libya to yield the suspect, to create a special tribunal, and it was upheld on appeal. we deeply regret that the scottish authorities have taken this action, but they have. it was in their purview to do

so. >> will this have an effect between future relationships between the united states and libya? [inaudible] >> i think we are disappointed. we think this sends the wrong signal to those who would contemplate acts of terrorism or political violence. as for libya, obviously they have taken steps in recent years to be more responsible and will be watching to see how they handle this particular situation. >> the attorney general holder had made calls to the attorney justice minister. had there been any calls since then? who else did she call and when? >> i do not have a list in front

of me, but we have been deeply engaged with both the scottish government, scottish authorities, and the british government on this question. we have raised in a variety of the news with a variety of officials with the highest levels of all government, and we expressed publicly our firm conviction that this individual should serve out his time in jail. >> has that happened since last week? >> obviously we have had communication in the past 24 hours when we were given a formal word that the verdict comes down to it. we are deeply disappointed in the action they have taken. >> after the libyans settled the compensation case and the deal was done, the libyans retracted their claim of responsibility. and today it was reported that the son of the man who is seen as very close to the government

took him home. what does that say about the fact that the libyans did not played responsibility for this but then are assisting the man -- >> there was a very specific settlement. my recollection is rusty, but libya yielded the suspects, agreed to the trial that was conducted, the special trial conducted in the netherlands. they have the compensation to the victims, but clearly in terms of what happens now, we will be watching closely to see how libya relax to his return. >> what do you say to the fact that a senior member of his family is taking the guy home? >> let's see what the libyans do when he gets back home. >> you have been told by the libyans they will not have any

celebrations? >> we have said two libyan officials quite clearly that he is not entitled to a serious -- to a hero's welcome. >> [inaudible] you have this situation with the libyans now, you are telling that you do not think it is appropriate for any kind of celebration, yet there is a message from the embassy that said there is this big celebration. >> let's see what happens, will have an influence on the future direction of our relationship. we have communicated something clearly to libya, and we will see how they respond. >> you have said that our

relationship will suffer if he is given a big welcome? >> we have given a very direct view. >> they would like to have the investigation reopened. do you see this as a case closed, time to move on? >> i will refer to the justice department. there are probably questions of jurisdiction here. there is also a practical aspect that this individual is in his last days on earth. so i am not sure if that will be fruitful undertaking. and while we're mostly concerned about is the mixed message that this sends in terms of those who have in the past or might contemplate in the future acts of political violence.

that is why we have said barry firmly, very strongly that as a perpetrator of one of the most heinous acts and recent history, that he should start of his sentence and not be released. >> i want to go back to the point that that made about the fact that you were not able to influence the decision. this was not an independent court that decided the government cannot get involved. the justice minister made this decision. the u.k., scotland is a close ally. why were you able to influence the decision? -- why weren't you able to influence the decision? you called scotland a close ally in the past. >> i recall the fact that there was a case in the united states a couple of years ago involving

an inmate in texas who was denied his rights. the president of the united states made an appeal to the governor of texas. the governor of texas that i have the authority to exercise it -- execute this. i think that -- let's except the justice minister's rationale that this was, in his mind, an act of compassion. we are passionate people in the united states, but we just not -- but we do not believe in this case -- let me finish. we are a nation of laws here in the united states, and we do respect the fact that this is an exercise of authority, legitimately and legally by the scottish authorities, by the scottish executive. we just happen to disagree with what he decided to do.

>> your protest notwithstanding, a lot of the family saying that if you wanted to make this an issue you could have made sure that they did not do that. the fact that you did not means that you do not feel that strongly about it, and this is really about issues of libya and oil. >> if you judge the history of this case you will recognize that we have been very diligent since december 1988 working with the united kingdom and the international community. we made it clear we would want to find out who was responsible for this heinous act. we identified the perpetrators. working creatively with the international community sets up eight international tribunal and we supported the tribunal. we put the proper amount of pressure on libya.

we did in fact did libya to yield the suspects. there was a trial. it was a fair trial. to suggest that over the course of 12 years the united states was not determined year after year to see justice done, in fact the track record says we were a determined to see justice done. it is in fact while up until today we -- why we have been clear with united kingdom and scottish authorities that we disagree profoundly with this step. >> white is a case close? i do not what kind -- i do not know what kind of retaliation you can take against scotland, but white isn't there -- why isn't there -- >> again. , the united kingdom and the

united states have a special relationship. that is not to say we will not have disagreements. this is one that is significant. we have tcommunicated with them. we will communicate some more. obviously in our relationship we have a range of interest of cooperating significantly in the war in afghanistan. we are allies will sithin nato. we respect their decision. it was their decision. we disagree profoundly with what they have done. we will continue to talk to our friends in the united kingdom and in scotland about this. >> day you see this as a decision by the u.k. or by scotland -- day you see this is a decision by the u.k. or by the scotland -- do you see this as a

decision by the united kingdom or by scotland authorities? >> we apprised our allies in london of of the importance of this case. >> you accepted the powers that scotland has, but you still consulted with the brits? >> why did you not consult with the british government? >> i think you are mixing apples and oranges. i do not see any connection. >> i am not suggesting there is a connection, other than the fact that there are entities with the come under the responsibility at the british government. bermuda has -- relies on the defense and foreign affairs are done by the british. in this case, you have a situation in scotland where the

justice minister or the executive makes a decision in to consult with the british on that. why would do not have consulted with the british on the case of another jurisdiction -- >> i am not going to draw parallels between the decision between moving leaders to bermuda, which was a decision made by the government of premier death -- bermuda. i do not see that today's decision has anything to do with that. back in the back. to go in ter>> what was the tone conversation? how tough to get? >> and our normal discussions with allies on a variety of subjects and with bricks in this particular case, we made it clear that a decision by the

scottish authorities to release this individual would be something that the american people would have a great deal of difficulty understanding. i think they understood our concern, but obviously the final decision was for the scottish executive. >> [inaudible] >> i am not sure i hear a question in their. >> do you challenge this legally? >> if there is any remaining legal question i will refer to the justice department. >> [inaudible] >> i am not suggesting that there is a legal challenge available for the united states.

>> how is c-span funded? >> the u.s. government. >> i do not know. i think some of it is government raised. >> the public funding. >> probably donations. >> i want to say from me. >> my tax dollars. >> palace c-span funded? -- how is c-span funded? a private business initiative. >> this fall, into the home to america's highest court from the grand public places to those only accessible by the nine justices. the supreme court coming the first sunday in october on c- span. deegan now a discussion on the outsourcing of intelligence gathering to the private sector. the former cia director, michael hayden and michael chertoff, from the national press club. this is about one hour 20

minutes. >> we will go ahead and get started. i want to thank each of you for making their way to the national press club on this hot, muggy august morning. you have helped us answer the question of whether washington is and d in august. -- whether washington is empty in all this. -- in august. the book and author committee chair is andrew schneider. he is to my right. he is an associate editor. this morning's newsmakers we're going to explore the privatization of intelligence, a topic who's news peg was

sharpened to my delight by today's front-page story on the cia outsourcing 2004 operations designed to kill al qaeda leaders. we have with us an outstanding panel to delve into this topic. first i want to introduce michael hayden, who is to my immediate left. he is a retired air force general who served as the director of the national security agency from 1999 to 2005, and director of the seized ise from 2006 to 2009. -- and director of the cia from 2006 to 2010. to my right is michael chertoff. he was secretary to the department of homeland security and president bush cost second term from 2005 to 2009. -- president bush's second term

from 2005 to 2009. we also have jack divine. he is a 32-year-old veteran of cia, who is now president of bargain group, international national -- an international crisis group in new york city. to our right is the moderator. he is a new york times best selling author. he has written about the intersection of espionage and business. his latest book was released by press martins -- martin's press on tuesday. he will sign copies of his newest book afterwards right outside. he will moderate and each panelist will give an opening

statement, and then we will move to q&a. during today i would ask that each of you please identify yourself and your organization. we would like to know who has joined us for these events. i invite you to go to the microphones that are stationed in each idle. i would now turn the proceedings over. >> i hope you realize that the lead story today has been partly orchestrated by my publisher for this panel to make it work. what actually began as a class attempt to introduce my novel, "vanished" has evolved into something a lot more interesting, which is a way for me to display my ignorance of intelligence issues and friends

of people who know a lot more about it. what i want to do is sort of moderate the first half, and then open it up to questions. i would like to basically serve as not quite a moderator, but enhanced interrogator you might say. my feeling is there are really two cards to the pride spies issue. one is that all sourcing of intelligence operations by our government to outside contractors. another one which is a lot less talk about, the evolution of the really interesting profession of the private intelligence operatives. most of them come out of our intelligence community. what i want to do is start, address my first question to general haven.

-- general hayden. ] there was a piece reporting that in 2004, cia hired outside contractors from blackwater as part of this program to locate and assassinate al qaeda operatives. they helped the spy agency was planning and surveillance. maybe i am being a narcissus, but i cannot help but speculate that this emanated from a leaf from the cia in response to a piece i did on tuesday saying that leon panetta's birgit hearing to congress -- urgent cheering to congress that the cia had misled congress for 25 years was based on a mistake. that the program was little more than training and intelligence

collection. i am not going to talk about that piece because i know that i have tried to ask the general about it and he will not talk to me, but i do want to talk about the use of private contractors by the cia. the article indicates that the reason panetta briefed congress was that he became alarmed that the cia had used an outside company and a company with legal authority, which raised deep concerns about accountability in covert operations. this tells me that the use of private contractors changes the whole game. panetta thought the use of contractors meant that he was required to brief congress. i'm going to ask you, without going into some of this that you

will not talk about, do you agree that an outside contractor should not be used in risky covert operations? >> the first thing i would have to say is that, as you have carefully pointed out, i am not commenting specifically about any concrete action or commenting on specific articles that mark wrote and the time -- that mark wrote in the "times." we use contractors for a variety of things. they possess a certain experience or certain knowledge that we do not have inherently inside our work force, or we do not have it inherently at that time. i have put stars on the wall during my time as director that were contractors. i make no pretense that contractors were over to rein in redid running our fire

department and government employees are all over tier inside of a mission and reels. simply not true. contractors do not run our fire department. those are government employees. that is one of the questions that i asked. i would break the hill on a variety of activities, either foreign intelligence or corporate action, and i would occasionally be asked -- for covert action, and i would occasionally be ask, was that done by a contractor or government employee? generally my answer was i do not know, i will have to get back to you. in most instances we were trying to use, regionally use the best athlete available in the draft. -- we generally use the best athlete available in the draft. it was best suited at the moment? we have come into a bit of a

spin inside of our broader political culture. contractor bad, a government employee good. if you take anything away from this discussion, reserved judgment on that. do not make that a generalization. we have viewed contractors as an integral part of our work force. i would just say one more sentence. all of that said, what i just said about contractors, i directed my agency to reduce our number of contractors by 15%. we did that over an amount of time, not more than about 12 months. that was far more about the agency that was about contractors. it was far more about what the agency did with regard to management, and far less what about contractors had to offer in terms of accomplishing our mission.

>> you have not answered my question. which is, the cia apparently uses outside contractors in some really hide this covert operations. isn't that a problem? >> if you look at current omb guidance, which is about as far as i can go in our guidance -- and are taught,-- in our talk, actual intelligence analysis and collection are permissible activities for contractors under current omb guidance. but we leave it there. what he talked about was planning, training, and surveillance, which i think i can sweep up into intelligence, analysis and collection.

>> you said you basically are not aware of the difference between dallas like contractors and the green badgers -- you are not aware of the difference between outside contractors and the green badgers. >> what we put together is a blended team of government employees and contractors. the contractors are what we call independent contractors. do not to take anything i said to suggest what the agency routinely does when we have a really hard problem is go to the yellow pages and look under solutions r us it make a phone call and ask them to take care of this. we're talking about a very discrete set of skills. we're usually talking about an individual. >> there is still a big legal

problem apparently. eric colder -- holder is apparently thinking about appointing a prosecutor looking into waterboarding and that sort of thing, including private contractors. my understanding, and i want to ask you about this, these guys are not indemnified by an outside -- by government. isn't that a problem? >> above the and and the feed i would have to ask a lawyer. -- about the indemnified, i would have to ask a lawyer.

agency officers, myself as director for example, had the same moral and legal responsibilities for the actions of government employees or contractors operating under our guidance, operating under our authorities, under our direction. we do not use contractors to carve out something we do -- we want to deflect responsibility for. that is simply wrong, and you should not believe that. if you can criticize us for not having some inherent skills you may think we should have inside the agency, and we may be vulnerable to criticism because we have to go outside for something we should have on the inside, i did that. but we do not go outside in order to deflect responsibility from ourselves. >> secretary chertoff, directly linked to this, it is apparently -- apparently there is a lot of

fear among private contractors in washington because the rules seem to -- there is no law protecting them from doing things that they did for the government. for example, interesting case. boeing is facing a major lawsuit. because the lease a plane to the cia for the rendition flights. there are lots of contractors who say, look, we do anything risky for the u.s. government, we are not protected. what do you think about that? >> is an individual contractor protected or indemnified? it is a complicated issue, i do not want to get a blanket statement. that is different with the issue you raised with boeing.

or get at the end of the day if you win the lawsuit, but either you have to get a lawyer or deal with legal hassle. is there so much -- such a high transaction costs surrounding that that you will get contractors who do not want to do anything because they do not want to get pulled into having to go to court? by the way, what is interesting about the boeing singing is it shows how far this argument can go. -- what is interesting about the boeing case is it shows how far this argument can go. this is less to do with the role of contractors and government that has to do with problems in the legal system that has not become a tool of combat. if you do not like a policy,

used to where you try to create legal problems in an effort to raise the temperature and hopefully cause people to shrug their shoulders and say they do not want to help the government because if you have the controversy, you will pay an economic consequence. the owner of whole foods is going through this. to me this is not really an issue about contractors, as much as it is an issue about the legal system. contractors may be in a little bit different legal position than government employees. that is a contractor issue. that is why they need to think through very carefully what they do and do not do and how to protect themselves. >> but it is not just a contractor problem. it becomes a government problem.

you how your outside contractors -- hired outside contractors to do the sensitive intelligence functions, right? >> in the law-enforcement community it is not uncommon to have contractors perform certain kind of functions, whether it is a security function, guarding courthouses, analytic function. the idea that there is this clear line between government and non-government is simply not borne out by the reality of government activity across the board, not just intelligence. >> if you want to fire -- hire outside contractors, at what seems to be going on, you're going to have a problem with contractors are going to realize they will face liability. >> it is in the government lost

interest to make sure there are the kinds of protections -- it is in the government's best interest to make sure there are kinds of protections for private contractors. part of the undercurrent of this discussion is, why do we need contractors? the truth is we need contractors because first of all, there are skills that we do not normally have in the government that we may have an immediate required for. there also may be skills that we do not have a continuing requirement for. for example, there was not a lot ebner contractors in the community a -- for example, there was not a lot of contractors in the community 10 years ago. it does not necessarily make

sense to bring people into permanent career corrects -- career positions for skills that may be needed for a very specific amounts of time. it is very much the best interest for the government to be able to have the ability to search for required skills in a flexible way. if you're going to expect contractors to do the work, he will have to give them a measured legal protection that is necessary to allow them to do it. >> i want to bounce one thing back to general hayden. when you took over as ahead of the cia, there was a time that the cia workforce was close to half private contractors. you brought it down by 15%. the figure i have heard now is

30%. the press release i believe said 60%. an error, i'm sorry. it is 30%. why did you do that? was it that the cia was hemorrhaging qualified people? i think 5000 cia officers left the agency around 9/11 and shortly after to go private. they were hired back the next day by the cia for a whole lot more money. >> keep in mind what i said at contractors and the important contributions. the legal structure has to protect them. i should add, not just contractors. the american intelligence community is a great deal of benefit from a cooperating domestic entities. they are not contractors. they are patriotic americans who are willing to help. the legal system is such or has

been misused in a way that people feel they are no longer able to assist, that is a blow against the american security and against american freedom. it was clear to me that we had expanded rapidly the set of individual decisions made throughout the agency. this had actually created in macros circumstance in which we probably had too many contractors, and which we were probably competing against each other to how your contractors. -- to hire contractors. i had no sense as to how much that extra layer was. so we picked the number 10% and said do 10. we did a pretty comfortably. we said cut another five.

at that point i moved at the picture. - out of the picture. in addition, what we had done was we did have people who were leaving the agency, who were resigning, not retiring, turning back and getting hired by contractors who were being sold back to us by the contractor because we still had needs for this skill set that the government employee had. . .

we simply said if you left here, he resigned in the last 12 months -- you are not getting a clearance. i did not offer a aaa rating for a bunch of organizations are round the belt way and let them sell back to us. that, too, is a government efficiency. >> so you would not have to pay for them. jack, in the old days, this idea of retiring from the cia and going back and working for them was i believe called "double dipping." it was frowned upon. now everyone is doing it. what happened? >> let me put a marker down for you. i did spend 32 years in the cia.

my heart contains the cia stamp. there has been a huge shift that i do not think is appreciated. i ran the afghan program in the mid-1980's. i served in five stations. i really do think i understand the operations. for the last 25 years of my career, i left in 1999 -- if you mentioned the word "assassination" inside the cia, you were expected to resign. i remember one of my predecessors saying he wanted to fire all the contractors. that was rather a naive statement. it was a sense of the role of contract thing inside the operation of the director. in 1990's, many of us felt the cold war was over and there was a peace dividend. we brought down the agency by

25% -- its budget, its personnel. so when you arrive at 9/11, you are greatly understaffed to deal with it and i'd understand the push for contrasting to fill the gap. there are two points i will make. then i will answer your question. the first point is -- i do know government contracting work. just so we are clear on where i am coming from on this. i am not opposed to it at all, but i am in a different place. the other thing i would tell you -- i was surprised this morning when i read "the washington post." again, we get into semantics. the assassination programs are outsourced.

that is alien to my experience. i will leave it with that. the question of "double dipping ," which is a phrase i have not heard in a long time -- this is dealing with a situation where some of the best are going out the door because there is a program that would allow them to return the next day and continue working at their full salary. again, during an emergency situation, how long can one extend that is an arguable point. it is quite different than -- almost 32 years. the last 25, i can tell you the concept was alien to the leadership of the agency. both mikes have made the point that there is a technical requirement. we went into the internet -- i remember we had index cards and

we were so proud of the best index card system in the u.s. government. you really need to understand the impact. you all do because you are in the same information business. you really needed contractors. what we have had in the history of the agency, a paramilitary capabilities that surged from detainees from the d.o.t. -- dod. again, i do not know all the ins and outs. it does raise for me issues, both historic plea, in the times we live in, and there are elements that make me uneasy. >> jack, there is a guy named allen stanford who has not gotten as much attention as bernie madoff. a texan. he is charged with running a

massive ponzi scheme. all right -- here is what is interesting. i was looking into this case as research for book, and i discovered that allen stanford had hired a private intelligence firm to do what they call in the trade "cells due diligence." -- "self-due diligence." the court records i have looked that say that alan stanford -- allen stanford paid this intelligence firm $15,000 for a full background check. what kind of background check can you give someone for $15,000 tax >> again, -- what kind of background check can you give someone for $15,000? >> again, they did a great job

of taking the "magnum p.i." off the street and reforming the world. i read that article. i am r. reeder of "vanity fair." -- i am i reader of "vanity fair. i am not happy with the way this unfold. i do not know this firsthand. >> but for $15,000 -- >> [unintelligible] >> i am sorry. >> i know. let me cut to the chase. if you look at bernie madoff or a figure of that size -- and again, remember i am on madison avenue. $15,000 is not going to take a serious look at someone. $15,000, you're looking at very heavily weighted data base

research, which is very useful on an underlying part of investigative work. you really have to get out and tweak it. the one thing i thought in the article, it looked at the company but not at the person. >> so they investigated the company, but not stanford himself? >> to report, which is attached, is more about the company and not about stanford. i think you have to look at the principles. there is a lawsuit that came from this. >> the lawsuit is the point here. one of the major investors in this firm hired this company to the vet allen stanford. and he had hired them himself. so the reasonable lawsuit is the guy is suing for $6 billion. how you protect yourself in a

case like this? should you be hired to do one job with a dual purpose? >> i use it as a teaching tool, this particular case. >> really? >> this is a problem you have with private citizens who did not necessarily have in the public sector. a guy comes in with $15,000 and i want all of this. it is a mistake to do it. you are going to do it, you were going to give them a certain product, and it will be substandard. you really have to hold the line and say, if you want to do this, i have to do all of this. >> but you are not protected. you could be sued? >> i could be sued. that is why i want to hold the line and make sure i am authorized to provide the information the client's request. the reason i like the business i am in is because it is not that different from the cia. get me information. validate that information.

stand by that information and take the consequences. the difference -- one thing you learn quickly in the private sector -- if you are wrong, the results are immediate and accountable. you are fired. you are sued. >> are there things you can do that the cia cannot? >> there is a world up there, and i have talked to my colleagues. having been on the other side of the table, i know when my eyes gloss over. i am said when one of your predecessors would take copious notes -- i knew i would have to go through the trash. there is a world out there. a world of talent and investigative skills that is huge. people who leave all the foreign services and police and people who are journalists, not in the

united states of course, but are out there and available to collect information. everything from psychiatrists to record pullers. and how you swim in the water is not rocket science. how you utilize it is a different matter. there are things that i can do that i do not think the agency can do because of its official position. what do i mean? in russia and china it would be hard for the agency to conduct surveillance. or to request certain types of information. >> from the secret services? >> from the holders of information. >> ok. >> in the private sector, that can be done. i was asked once, and i thought it was the most challenging -- i've always been intrigued about how quickly the difficult task

seems to be manageable. i did not execute it. i want to be very careful. someone asked me to do surveillance in iran. i thought, oh, my god. >> iraq? >> iran. iraq is easy. it is interesting how you can put these things together. is a different proposition inside. there's a rich world of capabilities out there, and i think it is not well enough understood. i think there is a growing awareness to it. the agency has immense capabilities. mike can attest to this. there is no one who comes close in real capabilities. there are times and places where there are unique capabilities brought to bear to the private sector. >> but does technology -- right?

there was a time when if you wanted really to tap a guy's done, he needed the stuff that only the cia had -- tap a guy's phone, you needed the stuff that only the cia had. now i can buy the stuff that the cia used on surveillance. >> 95% of the information now is readily available instantaneously. the same thing is true with technology, dealing with foreign governments. we are often the only game in town. much of our equipment was made in house. it is inconceivable you could keep abreast of technology from in-house capabilities. i remember. i'd hate myself unduly as a 32- year-old man, but the communications -- i sometimes

slept in my e-mail's and wrote in cablese. you could only write 100 words. >> we call that twitter. [laughter] >> you are -- it is coming back. i was so proud of myself coming out of training. i paid someone $500,000 when it did not matter, and i had a receipt because the rules said i did not need to receive. in rhode it back and did beautifully disappeared. when i had to send to accounting, they did not tell me the paper would disintegrate after 30 days. i had to go back out and start all over. the technology -- communications was so hard. short range communications, and how you have them today, if you look at your equipment, from cellular phones -- >> google earth.

>> you can look at your backyard. >everything was available in the private sector. a lot of people do not understand the law and there are very serious flaws that involves privacy and what you can do depends on the state. if you require, you are violating a wiretap in the state of california. if your taping a conversation between two parties. if one party in new york knows is being taped, it is legal. there is a whole range of issues. there are a lot of people that say a legal be damned. that means cell phone records, records were people are breaking the law. you, as a consumer, say you are not responsible. you are responsible. my partner -- he is the really top and lawyer. this is a very harry business.

i know both mikes are now in it. you have to look at the private- sector and legal exposure. the short answer is -- yes, technology is used out there. there is a trojan horse. i find it fascinating. you are on your computer and you can buy something for your kids that can monitor your kids on the computer. but for an extra $100, you can get a package to a monitor for his computer when he is off to college. the problem -- and that is a nice market -- but you can say "wait a minute. i am not one to use it on my kid. i am going to use it on someone else." the capability to monitor key strokes, the capability is at

our fingertips. whether it is an audio device put in a lamp or somewhere else, it was a capability the cia did not have during much of my career. i am amazed by it. it can be bought in any major city. >> i just have one point -- talking about the cia being an organization with tremendous capability, a tremendous capability in the private sector. sometimes we use words to track our thinking. let me suggest a couple of other words you might want to use. you have inside the agency government employees. the agency routinely makes use of what we call "circuits." -- "surrogates." fill in the blank. we routinely use surrogates. they are routinely briefed to congress. there are no surprises.

much of the activity of the agency is done on our behalf by surrogates. i suggest you think about what we're talking about here today, outsourcing and so on. keeping in mind surrogates, in a variety of flavors. intelligence like the cia has the ability to choose among those flavors four different missions. please keep that in mind. not everything the agency does is it black and white, married -- binary. even when something is done by a surrogate on your behalf, you are responsible for it. >> agents -- what the world calls spies -- we never called ourselves spies. there is a trend that is very important.

the intelligence community is now looking at transnational issues that require it investigative, almost police- type data collection. this is a trend we did not anticipate as well as we might have. the private sector is moving from the investigative world to high intelligence collection. these are two trends that run side-by-side. many of my agents were strategic agents. they were not in a position to carry out what we -- we did in the police records. there is a change taking place in my mind that is worthwhile for professionals. >> i would like to open things up to questions from you guys. >> i am with ap. i wonder if you can all address this. should there be a bright line

between what contractors are allowed to do for the government, say in a lethal covert offs -- ops, or do you think is fair game for everyone? >> i think you have to started beginning when you take on a covert action. you have to have a framework. mike and i have talked about this. what are the criteria for action? what ever your action is. i would start with -- white is it not done in house? -- why is it not done in house? there is a cycle. your point about where the red line is -- i do think you have to have a series of decisions that have to be made. the one that should not be made is here is something. we are going to do it this way and not accept full consequences. i would always try to do it in-

house. i do not want to monopolize this. [laughter] look, i think one of the problems when i am thinking of contractors -- first of all, you want skills inside. we call it a trade. is the trade craft. -- it is a tradecraft. my first recruitment was set up. the chief knew the guy was going to set me up. i spent the whole lunch -- he was, "yes, i will do it. just ask me." you need to make sure that you have the capabilities need to develop. managing, training, working with foreign governments. the second thing is as if you are going to take legal action,

which the president must sign and be approved by congress within 72 hours -- if you have a legal finding -- lethal finding, i think you have to ask yourself the question, "am i going to take this legal action -- lethal action?" if it is not going to feel right in the media, you do not want to outsource it. he wants to involve it. >> guess? >> i am the author of a book, " spies for hire." i have two questions, mostly for general hayden. you are working for a company that does contract with the intelligence community.

i think it is natural that you would talk positively about contractors. i wonder about your credibility, since you are a contractor now, working for a contractor, making money from this business. should we take your word on contractors with a grain of salt? second, would you appear on television talking about intelligence issues, would you identify yourself as a contractor? rather than just former director of the cia, former director of the nsa? part two of my question is the inspector general report came out about the surveillance program. what i found interesting is they interviewed 200 people involved in the program, including yourself, as well as private sector people. however, none of the private sector people were identified by

name or company. shouldn't we, as american citizens, no movies high level people are working for our intelligence -- no who these high level people are -- know who these high level people are who are working for our intelligence? shouldn't we know who they are in a more clear way? >> with regard to your fourth question, everything i said about contractors, i said that in 2006 as director of the agency. i had to make it very clear that when we were reducing contractors, it was about us, not contractors. my affiliation with the chertoff group was made public. i do identify myself as a member of the group most times when i am in public discourse.

with regard to the ig report -- i take no ownership of that. i was one of the to wonder people who were interviewed. there were some people who were not interviewed. that is one class of folks. i was not aware -- there was another group who were interviewed but not further identified. that might reflect something the secretary said earlier, that you have people out there who are taking serious personal and financial risk by doing what i would call the patriotic thing. in fact, i was surprised as director of both nsa and cia how much american business will put themselves at risk for no profit motive to assist intelligence agencies. i think what you are seeing there is a version of trying to protect them from the kind of legal actions, or at least

public criticism that seems to be more prominent in recent times. as i said before, the intelligence community does not live isolated inside the broader american political culture. one the greatest advances we have is to rely upon us as a society to help us achieve our mission. believe me. there is nothing nefarious about that. if the story were better known, most americans would be very proud of this. there are those out there who "want to go after" anyone who becomes affiliated with us. it may have been that caution. >> there is transparency, but transparency is of good, but not an absolute the. everybody has secrets. i could ask you about your sources, and everyone would wonder why you were using unnamed sources. i do believe there is a reason

for that and you to protect your sources. no one is insisting on absolute transparency from anyone. there is always a balance. we can argue as to whether that is inappropriate balance. i think there is a balance all the time. >> can you talk about the difference between the clearance process for contractors compared to a employees for these tasks? do you think as the community relies more on contractors there could be a counter intelligence risk, as they get more into collection issues that there are sensitive -- collection issues? there are sensitive issues. >> there it is no difference with regards to clearance. you can use a contractor with a lower security clearance. when you get a full op around, you have a government employee.

he will have access to most of the doors inside the agency. frequently, the contractor -- you know you will use this individual for the specific task. he is at this level. he will never go anywhere else in the agency. he will never get access to anything else. very often, one of the things that will allow you to go with a contractor is your only clearing them at this level because you know you will only use them for that task and one that is done, you'll let them go. in that sense, there is efficiency with the clearance process with a contractor that would not exist for the government employee. my most intimate knowledge is with being director of nsa. contractors always took longer on clearing contractors because i put the priority on clearing government employees first.

[inaudible] if you want to talk about counterintelligence risk -- the number of contractors is probably one of them. if you really want to hit the sweet spot for counterintelligence risk, the fact that we want to bring more people into our intelligence community -- first generation americans with patriotism and wonderful skills. and equally strong trend is that once you are in -- remembering not existing in silos? once you are in, any individual has greater opportunity to access information across the board. if i am the head of foreign intelligence service, and if the american service is hiring your first generation -- my eyes would be dilating in my mouth would be silent -- salivating.

i am a supporter of both those trends i just identified. if you're going to go down that path, you also have to reinvest in counterintelligence because you have opened up additional on their bellies. again, i think we should have more first generation americans and we should share information more. that said, compared to those things, i think the contractor thing is a smaller issue. >> i want to bring you back to that "york times -- "new york times" article. can you explain to us when you think a congressional briefing is necessary with the use of contractors? why did an association -- assassination not?

>> as jack pointed out, we had proven late when someone uses the word "assassination." no one is talking about assassinations. >> if you do not use the word, if you are using contractors in a program with surveillance -- >> exercising self-defense? how about that? [laughter] >> the point is, when do you go to congress? where is the line there? >> i understand. this is hard for me to answer. we are talking about -- it seems a covert action. it is also hard to answer because, again, just internally -- the time line for this is ending many years before leon panetta became director. i am more worried about what

this is within the last six weeks then the director. that should tell you a lot. if you want to be very dark about it, maybe i was not a very conscientious director. this is not a very prominent thing during my time as director. i do not know enough about the details in the "times" story, i do not know enough to tell you whether it cross the threshold. if you read the story closely, mark does not know if it went across the threshold either. i will tell you -- the threshold i probably would have first crossed is a political one, not a legal one. not that it wasn't anticipated significant intelligence activity, which is a legal requirement. but the fact is this was a bit of a different favor, and i

would first off, i would have made sure the committee's new about it, rather than some abstract -- the committee's knew about it, rather than some abstract. what you had when i was director, you had three separate efforts to deal with an issue that everyone understood was a problem in a capacity that everyone agreed we should have. when i was there, if congress was uneasy, if i did not come down and talk to them about what was happening on my watch, i would simply tell them -- whether that is true or not, i did not tell the president about it, the vice president about it. what was happening on my watch never reached either the political or the legal threshold in my sense. i am start. i am being evasive because i do

not know the facts. i do not know the details written about in this morning's papers. there was probably a threshold in there. whether or not it was crossed, i do not know. what i am suggesting to you -- it was probably the political threshold. this is unusual. rather than the legal threshold -- significant intelligence activity. >> npr. wanted to talk about the difference between the idea of bringing in contractors with specific skill sets compared to what appears to have happened after 9/11, which is bringing them in for ongoing operations, running them off in place of government employees, because it was easier to do it or that. if i am understand correctly, that is what you tried to work

at rationalizing and fixing, to the degree that you can characterize how successful you were at that? the second question -- is the cia ahead of other agencies? the other agencies have a lot of catch-up to do? what is the variation in the community? >> what we did -- i will try to be very quick about this. when we did this, i set arbitrarily 10 and 10 + 5. we actually did it and across the board look at everything we did in the agency. we divide them into court, core support, and support. you can imagine what each of those might include. when it came to core, the percentage of those jobs being done by government employees is

in the mid to high 890's -- high 90's. we had a disturbingly hard -- high number of contractors in core support. >> what is court support? >> i cannot go into the specifics actual analysis. core support my the collection management, as opposed to actual collection, ok? [inaudible] kevin, a surprisingly high number of contractors in the middle one and a surprisingly high number of government employees in the last one. our fire department is government employees. what we began to do is to begin a migration, ok? the number in core seemed pretty

good. you like that number of the top to give you flexibility. you had to try to my great reliance on contractors into ross support functions. that was the broad trend line -- you had to try to move relies on contractors and to -- into broad support functions. the model used was broadly applied across the intelligence community. for those of you who are concerned about contractors, i think the concern may be over- emphasized. the cia numbers are better than the communities at large. >> general hayden -- >> the dhhs -- i think you will

probably lose the higher number of contractors than you normally find. i think that declined over time. one of the challenges is it you can hire contractors relatively quickly. the process of hiring, training employees is relatively slow. that creates a bottleneck through the u.s. government and is an imperfection in the hiring system, as opposed to the contract in system. >> general hayden, two questions. you think a down economy could affect surrogates? also there was an op-ed in the "times." you talk about consequences. can you talk about what those consequences are? >> jack devine brought up the

idea of private companies and how that is tied. do you think a down economy could affect the quality of their work or the need for them? >> i have not thought about it in that sense. there is a positive effect to the down economy though. when i was director, we were getting 130,000 operation -- applications a year at the cia. that is higher now. if congress gives us additional strength -- one problem we had was that we had mission and money, but we did not have ended strength, which is legislated by congress. if congress allows the agency to hire to greater numbers, particularly with the macro economic situation the way it is, a lot of these situations, the proximate need to hire contractors begins to go away. i think that maybe a more

powerful effect. with regard to the article in the "times," the basic thrust was looking forward, not backwards. the united states government's interrogation and detention program. that is what that was. i almost said americas. -- i almost said "america's." looking back will teach people never to play to the edge. will teach people i know the president wants me to do it and the director says it is a good thing and i am capable, but i do not think so. we will teach to mitigate. to a workforce that we need to be vigorous and active. no matter how narrowly defined,

this will start pulling threads. you'll have a significant number of agency folks being pulled through this process, in my mind, to no good. the article being released next monday is a 2004 report. i simply make the point that one agency contractor was prosecuted and convicted for his treatment of a detainee, and that career prosecutor is in the district of virginia. career prosecutors in the eastern district of virginia reviewed the report and concluded no further prosecutions are indicated. after that was done, he returned to the agency and we took disciplinary action. one final point i make is that report has been at the hill since 2004 to the senior members of the committee since 2006. why would this report promised to have a special prosecutor or any other kind of -- prompt us

to have a special prosecutor or any other kind of activity? i think it is unfair to the people who did what they did out of duty and they did what the nation ask them to do. >> i am national press club member. did you cover the impact of the reduction of staff members used on the community -- in the administrations of president carter and to a lesser extent president clinton and i would assume there is some relationship with increase contract thing as a result? -- increased contract thing as a result? -- contracting as a result? >> there was an explosion after an 9/11 because the work force had been reduced.

i became director in 2006. it was prudent to go back and changed -- check our homework and figure out where were the inefficiencies. that is what we did in 2007. >> this has happened over and over again in our history. under the contractions, the other thing is the hiring freeze -- however it may be cast. you have the bubbles that are created in terms of leadership and it creates a spin-off effect 15 or 20 years later. so with carter -- i say carter, but it was really a broad based decision to cut back the budget -- it has an impact 20 years later, in terms of missing generations of officers. >> this is more of flavor thing

than a syllogism, right? if i told you more than half the agency's work force has been hired since 9/11, that gives you a sense of the experiential. that might suggest why we have an open mind about hiring retirees as contractors to come back and try to leaven that fairly inexperienced work force. >> "washington post," for general hayden. a follow-up on the op-ed. do you think the report will show on balance that the program was effective in getting good information from detainees? that the program worked? >> if my memory was that there were half a dozen paragraphs that talked about the success of the program. one section was quoted, and the

talked-about -- and that talk about imminent attacks being stopped. that has become the end of term grade for the entire program. nothing else has been available. if my memory is correct, there will be half a dozen aircraft that actually talk about the significance of the program in terms of our learning about basic infrastructure of al- qaeda and enabling the agency against the infrastructure and leadership of al-qaeda. in that sense -- although i would say no, i do not like the report in the least. in that sense, not unlike the release of the first memos, it does bring more balance to the discussion. when the 13 techniques were first put out there, again, i strongly oppose that. i cannot tell you the number of folks who said that there must

have been more. i said, "no, there were not." there was a memo on which i relied as director, and yes, it was a much narrowed field of techniques available, too. again, that may bring balance into the public this court -- discourse. but on balance, i pushed back on this release. >> i am with abc. going back to your comments, you said you were more concerned with the advance of the last six weeks -- >> no, no. i knew more about the details during my time as director than the last six weeks. >> thank you for clarifying. do you believe the political discourse on the hill the last couple of months, as the program is revealed, has taken a new

level and warrants going to where it has gone right now? >> when i first was told that director panetta had gone up there and read, my first response was -- what are you talking about? what programs? >then when i found out more details as to what had been briefed, my response was -- why are you briefing this program? keep in mind. i am focused on the program i knew. everyone talks about this seven and a half year program. i would characterize it as recurring efforts to deal with the problem that is well known in a capacity we needed to have. they were separate efforts.

why the urgency? why the excitement? yes, i think the agency has down our report. i can only tell you what i know. several directors went in and talked. i think this is a very balanced product. when it read, read carefully, it will return a certain calm to the discussion that seems to have been absent. >> can i follow up? have you had any discussions with director panetta regarding this program? >> no. >> exercising the prerogative of the chair, i have my own question for secretary chertoff. what organization is most dependent on contractors? to what extent do used contractors in worksite

enforcement? >> i have been out long enough that i complete memory lapse. i would say probably, if i had to guess, it was and the management and detention process. most of the people who are detained as emigration violators wind up in detention. that is for a couple of reasons that we use private contractors. there is a time lag in the process of building a federal facility. it more to the point, the location and the flow of people who are going to be detained is a very depending on a whole host of circumstances. it would be foolish to invest in building a detention facility in western arizona and then the flow stops there, and we see a greater flow in southeast united states. you're going to have a lot of

people you have to have in the eastern u.s.. i would venture to say that is probably an area that in terms of dollars, there's a lot of contract in dollars. i do not know if it is people as much as dollars. in general, you will find contractors in various places in the agency. i believe that has declined over time as the agency has matured, particularly with the emphasis that we have put on to try to get people to to acquisition and career people involved in the acquisition process. here is where congress tripped over itself. they complain about the fact that in terms of the people who perform the managerial function, that we are using too many contractors. we go, okay. that makes sense. we will hire more people to manage acquisition. then congress cuts the budget

for management. wait a second. you want to do more management with people in-house, but then you cut my budget for hiring those people. i think this is an area -- and the administration adds to the budget for a budgetplus up on management, and it got very significantly cut by congress. if you want to do these things, you have to pay for it. once you hire an employee, the fact that the work force changes does not mean you get to fire that employee he in the federal system. you have the cost of having that person in place for 20 years or more. budget issues tend to not be very glamorous, but it is a very real factor to determine what is contractor compared to what is internal.

>> secretary chertoff, hello. i am from "the congressional quarterly." >> i thought that was going to get a question [laughter] ] >> the report takes dhhs for its reliance on contractors. it says that for some reason dhhs has a higher reliance on contractors and is not cutting back on them. can you explain why that is? can you explain why is in that position? >> i cannot validate that, but i cannot disputed either. one thing is the agency stood up very quickly. organically, as some parts of the agency began, you had some parts that moved.

you had a relatively mature function. intelligence analysis was built from scratch. this is very cumbersome, the process of hiring people. as general hayden said, the competition for people with skills when the intelligence community in general was dramatically increasing, all of these things are hard to hire organically. the second thing is a lot of these functions are performed by intelligence functions and are analytic as opposed to operational. although there are operational elements, it will not necessarily be intelligence and analysis. analysis is a problem in the area were contractor makes a fair amount of sense. there, you are drawing on the skills that are pretty well developed in the civilian sector. some of the sensitivities that

occur when you use the contractor operation, you are not really present to perform analytical work. -- they are not really present when you perform analytical work. there are language issues. in that sense, it makes sense to have all larger role for contractors than you would if you had a harder -- higher element focused on operational activity. i would spend time, as the agency matures, the balance will move organically to in- house capability. if you do not want to fund people, you cannot complain when we use contractors. i think general hayden said it earlier. you give us a mission, but you do not find slots, then that

mission will be performed by contractors. this is an area where congress could take a big step forward in achieving a balance on this if they were prepared to fund it that function. >> speaking of double dipping, general hayden, you just said that when you heard mr. panetta briefed the hill, the reaction was "why this program?" which makes it sound like there were other programs. [laughter] >> i get word that there is a covert operation under way to brief the hell -- my first reaction was what could he possibly be talking about? we were very aggressive in briefing the hill during my time there. i will take that much credit for. also, 2008 was a leap year.

we will have the olympics and the presidential election. even if you put aside noble motives on my part -- i actually think there were and are at the agency consistently -- to hide the ball from congress on anything during this timeframe would have been suicidal. our threshold for going out there to brief was incredibly low. really. we went out there with things that we did not have to pass on. "go tell the hill." >> so there are not other programs you think will be briefed to congress? >> no, no. i went to congress and briefed some stuff, and i was asked if there was anything else. i said that they knew everything i know. >> when you said "why this

program --" >> my first reaction was what could this possibly be? when i found out what it was, i thought why was that meeting at this description? again, my field of view was focused on what happened during my tenure. >> all right. i have to wrap this up. i want to apologize to my panelists for bringing them into the line of fire. that was not my initial intention. you are used to this, i guess. thank you for taking the time and breathing mess, and jack and general hayden and secretary chertoff. thank you to the national press club for putting this together. i'm going to turn it over to our host. >> i would like to thank our panel on behalf of the press

club. thank you for taking time to be with us today. as i said, most people are out of town, except for those with us in this room. thank you for attending. as a reminder, this is a joint news makers, book and author committee of them. this will commence afterwards. joe will be available to sign his book just outside the doors. thank you for joining us today. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009]