reading c-span.org/healthcare >> the new york times has official saying the cia hired the security firm blackwater to locate and assassinate top arabs offer this. we will hear from the top cia director next on c-span. after that, attorney general eric holder talks about the release of the only man convicted in the lockerbie bombing. later, president obama on the politics of the health-care debate. . .

from the national press club this is about an hour and 20 minutes. >> we'll go ahead and get started. i want to thank each of you for making your way to the national press club on this hot, muggy morning. you have helped us to answer the question whether washington is empty in august and the answer is, no, we thank you all for being here with us today for this joint newsmaker and book and author committee event. i am chair of the newsmaker committee and also washington

correspondent for workforce management, a business magazine published by crane publications. and the book and author committee chair is andrew schneider and andrew is over here to my right, he's an associate editor at kipling washington editors. this morning we're going to explore the privatization of intelligence, a topic whose news peg was sharpened to my delight by today's front page stories on the c.i.a. outsourcing 2004 operations designed to kill al qaeda leaders. we have an outstanding panel to delve into this topic. general hayden to my left, he's a retired four-star air force general who served as the director for the national security agency from 1999 to 2005, and director of the c.i.a.

from 2006 to 2009. to my right, my immediate right, is another former bush administration official michael chertoff who was secretary of the department of homeland security in president bush's second term from 2005 to 2009. he was the second head of the agency in its history. we also have on the panel with us to my far left jack devine, he is a 32-year-old -- a 32-year veteran of c.i.a. -- i'm not 32 either -- a 32-year veteran of the c.i.a. who is now president of arcan group, a crisis management firm in new york city. and to the far right is our moderator for today, joe findler, a "the new york times" bestselling author who for many

years has written about the inner section of espionage and business and his latest book "vanished" was released by st. maarten press on tuesday and joe is the reason that this is a joint newsmaker and book and author committee event and he'll sign copies of his newest book afterwards right outside. joe will, as i said, moderate and each panelist will give an opening statement and then we'll move to q. and a. during q. and a. i ask that each of you please identify yourself and your organization. we like to know who has joined us for these events and i invite you to go to the microphones that are stationed in each aisle. so i will now turn the proceedings over to joe fender. >> so i hope that you realize that this lead story in "the new york times" today and the whole series of c.i.a. leaks has been

artfully orchestrated by my publisher for this panel to make it work. what actually began as a crass attempt to introduce my novel "vanished" and its hero, a guy named nick heller who is a private spy, has evolved into something a lot more interesting which is a way for me to display my ignorance of intelligence issues in front of people who know a lot more about it and some very, very accomplished people who i want to thank for showing up here. what i want to do is i want to -- i want to sort of moderate the first half and then open it up to questions. i would like to basically serves as not quite a moderator but as an enhanced interrogator you might say. so there's really two parts to this whole private spies issue. one is the outsourcing of intelligence operations and

functions by our government to outside contractors and another one which is a lot less talked about is the evolution of this really interesting profession of private intelligence operatives, most of whom come out of our intelligence community. so what i want to do is start, address my first question to general hayden so as most of you know that there was this terrific front page piece in "the new york times" today reporting that in 2004 c.i.a., before your time, hired outside contractors from blackwater as part of this program to locate and assassinate al qaeda operatives they, quote, helped the spy agency with planning, training and surveillance. now, maybe i'm not a narcissist like all writers but i can't help but speculate that this emanated as a leak by the c.i.a.

and a response to a piece i did on tuesday in "the daily beast" saying that leon panetta's urgent hearing on june 24 to congress disclosing that the c.i.a. had misled congress for eight years was actually based on a mistake, that this was not a violation, that the program was really little more than training and intelligence collection, but i'm wan not goio talk about that piece because i know that i've tried to ask general hayden about it and he won't talk to me but i do want to talk about the use of private contractors by the c.i.a. so the article indicates that the reason panetta briefed congress in the first place is that he became alarmed and here i'm quoting from mark's piece that the c.i.a. had used an outside company in a program with lethal authority which raised deep concerns about

accountability in covert operations, so this tells me that the use of private contractors in this kind of a risky lethal action changes the whole game. panetta thought that the use of contractors meant that he was required to -- that this met the threshold for briefing congress. so i'm going to ask you general hayden without going into some of the stuff that you won't talk about, do you agree that outside contractors shouldn't be used in risky covert operations? >> well, i guess the first thing i'd have to say, joe, as you've carefully pointed out i'm not commenting specifically about any concrete action or commenting on the specific article that mark rhode or the times or was in the "washington post." we use contractors at the agency for a variety of things. we go to contractors because

they possess certain experience or certain knowledge that we don't have inherently inside our workforce or at least we don't have it inherently at that time. i have put stars on the wall during my time as director that were contractors. so i make no pretense that contractors, those here running our fire department and government employees are all over here, it's simply not true. contractors don't run our fire department, those are government employees, and it was one of the questions i asked is why do we have government employees for a service we can obviously -- we can obviously buy? i would brief the hill on a variety of activities, be they foreign intelligence or covert action, and i would occasionally be asked, more than occasionally, particularly as time went on, was that done by a contractor or was that done by a

government employee? and generally my answer was, i don't know, i'll have to get back to you, because in most instances we were trying to use -- to use a football metaphor which my wife warned me not to use so much anymore -- we generally use the best athlete available in the draft. who is the best individual for this task at this moment? ok? we have come into a bit of a spin inside of our broader political culture, contractor bad, government employee good. if you take anything away from my contribution to this morning's discussion, reserve judgment on that. certainly don't make that a generalization, all right? we viewed contractors as an integral part of our workforce and i am going along and i'll say just one more sentence and perhaps someone will follow-on with questions. and all that said, with how

important contractors are, i reduced the number of contractors by 15% and we did that over a period of time, not more than 12 months, but that was far more about the agency than it was about contractors, it was far more about what the agency did in regard to management and far less about what contractor his to offer in terms of accomplishing our mission. why don't i stop there. >> but, general, you haven't asked my question, with all due respect which is, the c.i.a. apparently uses outside contractors in some really high-risk covert operations. isn't that a problem? should that be? >> if you look at current o.m.b. guidance, and this is about as far as i can go in our conversation, joe, the definition of inherently government activity -- and you need to go look at this -- is surprisingly narrow. in actual intelligence, actual

intelligence analysis, actual intelligence collection, our permissible activities for contractors undercurrent -- >> ok. >> no, without commenting on mark's story, what he talked about was planning, training and surveillance which i think i can scoop up into intelligence and analysis and collection. >> ok. but if i can persist for one second. you said that you basically don't -- you're not aware when you were c.i.a. director of the difference between the blue badgers, the outside contractors and the green badgers, right? >> no, what i said on a particular activity, with the team we put together, generally speaking, i may be careful that i don't overgeneralize, for a lot of the agency's activities what we put together is a blended team of government employees and contractors, very frequently the contractors are what we call i.c.s, independent contractors, so

please don't take anything that i said to suggest what the agency routinely does when we gotta a really hard problem is to go to the yellow pages and look under solutions and make a phone call and say, could you guys take care of this for us? ok? what we're talking about are discreet skillsets, usually housed inside an individual, an individual that we want to hire as part of the team and therefore we hire that individual. >> but there's still a big legal problem, i mean, eric holder is considering appointing a special prosecutor to investigate c.i.a. criminal activity involving waterboarding and that sort of thing, and including private contractors, so my understanding, and i want to ask you about this too and then i want to ask secretary chertoff about the legal issue here is that these guys are not endemmified by government, isn't that a huge problem?

>> let me divide your question and give you an answer in two parts, ok? about the endemmity, joe, i'd have to consult a lawyer. what people accuse us of doing, however, and i saw it reflected in "the times" story yesterday is that we go to contractors when we do not want to take responsibility for some activities. let me just yell out loud and kick the podium and say that it's absolutely not true. agency officers, myself as director, for example, have the same moral and legal responsibilities for the actions of government employees or contractors operating under our guidance, operating under our authorities, operating 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. 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 that you might legitimately judge that we should have inside, i got all that, but we do not go outside in order to deflect responsibility from ourselves, period. >> well, secretary chertoff, to directly link to this, it is apparently there's a lot of fear among private contractors in washington because the rules seem to -- there is no law apparently, protecting them from doing things that they did for government, for example, interesting case, boeing is facing a major lawsuit by the aclu, alive today because they leased a plane to the c.i.a. for the rendition flights. there are a lot of contractors who i talk to who say, look, we do anything risky for the u.s.

government in intelligence function, we're not protected. what do you think about that? >> well, you have to separate two issues. one is is an individual contractor protected or endemmified and it's a complicated issue and i don't want to give a blanket statement and that's different from the issue that you raised with boeing which is, is there simply a risk for getting sued and forget in the end of the day if you win the lawsuit, but you have to get a lawyer and you have to deal with a certain amount of legal hassle, is there such a high transaction cost surrounding that that you'll get contractors who simply don't want to do anything because they just don't want to get pulled into having to be in court and getting emmeshed in these proceedings and, by the way, what is interesting about the boeing thing, it shows how far this argument can extend because it's a question of not actually

doing the rendition itself, but simply providing the airplane. i guess that the guy who makes the pencils and the pens that are used to sign a piece of paper that orders something, he could be sued because he's creating pens and pencils. this is actually less to do with the role of contractors in government than it has to do with problems in the legal system which have now become a tool of combat. if you don't like a policy you sue or you try to create legal problems in an effort to raise the temperature and hopefully cause people to shrug their shoulders and say i don't want to help the government because if i engender controversy i'll pay a cost. the guy of whole foods is experiencing a little bit of this, not maybe in terms of being sued, but with the temperature being raised in the public media. so to me this is not really an issue about contractors as much as it is an issue about the legal system. i do think that it is worth saying that contractors may be

in a different legal position than government employees and that's something which i think is a contractor's issue and that's why they need to think through very carefully what they do, what they don't do, and how to protect themselves with respect to things which do create a certain amount of legal risk. >> but it's not just a contractor problem, it becomes a government problem, i mean, when you ran homeland security you were part of the intelligence community. >> correct, yeah. >> you hired outside contractors to do some threat -- terrorist threat assessments, to do some sensitive intelligence, right? >> the government, and, by the way, not restricted to just intelligence, in the law enforcement community it's not uncommon to have contractors perform functions, whether it's a security function, you know, guarding courthouses or analystic function, the idea that there's this clear line between government and non-government is simply not borne out by the reality of a

government activity across the board, not just intelligence. >> but if you want to hire outside contractors on an ongoing basis which seems to be what's going on in the intelligence community, we're kind of -- you know, rent-a-spy, in a sense. you therein have a problem if contractors are going to realize that they're going to face liability, right? >> i don't think that there's any question that it's in the government's interest to make sure that there are the kind of protections for contractors who are operating in good faith that we want to see with respect to government officials, that's why we have the laws always created various kinds of immunities to give people some space in which they can operate without being in legal jeopardy, as long as they're operating in good faith. you know, part of the undercurrent of this discussion is, well, why do we need contractors? and the truth is that we need contractors because as general hayden said, there are skills that we don't have in the

immediate government that we may have a requirement for. and there may be skills that we don't have a continuing requirement for. for example, there was probably not a lot of emphasis in the community 10 years ago for pashtoon speakers and now there's probably a high demand for that. it may be in 10 years that the demand for pashtoon speakers won't be there anymore and we may be interested in people who speak dialects in africa or dialects in southeast asia, so it doesn't make sense to bring people in for permanent positions for a skill that may be needed for a specific period of time at a surge level. so it's very much in the interest of government's efficiency to make sure that you have the flexibility to surge and deal with specialized requirements in a very specific way. >> therefore, the law should deal with this issue if government is going to continue to hire? >> yeah, if you're going to expect the contractors to do the work, you will have to give them the legal protection that is necessary to allow them to do

it. >> i want to bounce one more thing back to general hayden and then talk to jack. so when you took over as the head of the c.i.a., there was a time shortly before you took over that the c.i.a. workforce was close to half, private contractors. you brought it down by 15% to a figure that i have now heard is pretty authoritatively 20%. and the press release said 60%, an error, i'm sorry, don't blame me, but it is 30%, which is incidentally still pretty high, but why did you do that? what was the concern? was it that the c.i.a. was hemorrhaging qualified people? i mean, i think 5,000 c.i.a. officers left the agency, you know, by around, you know 9/11 and shortly after to go private, to be hired back the next day by c.i.a. for a whole lot more money.

>> what we did, joe, number one, keep in mind what i've said about contractors and the important contribution and what the secretary just said that the legal structure has to protect them and i should add too, not just contractors, the american intelligence community gets a great deal of benefit from what we call cooperating domestic entities and they're not contractors, they're just patriotic americans who are willing to help and if the legal system is such or has been misused in such a way that these people feel they are no longer able to assist, that's a blow against american security and against american freedom. ok, so we had contractors and it was clear to me that we had expanded rapidly, the said -- and let me be kind but the set of individual decisions made throughout the agency, i need a contractor here and i need a contractor there, and a contractor there, created a macrocircumstance in which we had too many contractors and we

were probably competing against each other to hire contractors. >> so it was a matter of government efficiency? >> exactly, it was a matter of government efficiency. so i had no sense how much that extra layer was, and so steve capus and i picked a number, 10% and said do 10 -- >> cut by 10%? >> cut by 10% and, actually, we did it pretty comfortably. and we said, great, cut another 5% and at that point i move out of the picture and so there may be no more room to cut the excess that grew out of government inefficiency and not contractor inefficiency. in addition what we did, we had folks who were leaving the agency, who were resigning, not retiring, who were resigning from the agency and turning back and getting hired by contractors and sold back to us by the contractor because we still had needs for the skillset that the government elployee had. i put -- employee had.

i put a stop to that by saying that the agency would not clear a -- a contract employee would not grant access for an employee who resigned from the agency for a period of 12 months. that's not retired from the agency. if you put enough years in the agency to be eligible for retirement i said, god bless you, you've put your time on, you can move on. but for resignations, the one tool we had was the clearance process and we simply said if you left here, resigned in the last 12 months you're not getting a clearance. i did not want to become the triple-a farm team for a bunch of organizations around the beltway and provide them trained personnel to sell back to us. that too is government efficiency and it doesn't say anything about the contractors. >> right, right, so basically you were losing all these people that were coming back and had to pay for them. >> yeah. >> jack, in the old days this idea of retiring from the c.i.a.

and going back and working for them was, i believe, called double dipping, right? it was kind of frowned upon. and now everyone is doing it. what happened? >> let me put a marker down before we get too far into it. i did spend 32 years in the c.i.a. and when an autopsy is done you'll find that part of my heart contains the c.i.a. stamp. but there has been a huge historical shift that i don't think is well appreciated. i ran the afghan program in the mid 1980s and i was the director of operation at c.i.a. and i served abroad in five stations. i really do think that i understand the operational world. i don't know what to tell you, for the last 25 years of my career, i left in 1999. if you mentioned the word assassination inside the c.i.a. you were expected to resign. i remember a d.d.o., one of my

predecessors saying at a meeting i attended, i wanted to fire all the contractors and now that was rather a naive statement, as much as i respected him, but it was the sense of the role of contracting inside the operational directory. and now in the 1990s we brought down and i think that many of us felt that the cold war was over and there was a peace dividend and we brought down the agency by 25%, its budget, its personnel. so when you arrived at 9/11 you were gravely understaffed to deal with it and i can understand the push for contracting to fill the gap. there's two points i'm making and i'll answer your question. >> thank you. >> the first point is i do know government contracting works, ok? just so we're clear on where i'm coming from on this and i'm want

opposed to it at all, it's just that i'm in a different space. the other thing that i would tell you is that i was surprised this morning when i read the "washington post," i had not gotten "the new york times," and that the -- and, again, we get into the semantics of this, that the assassination program was outsourced and i just tell you that it's with my experience and i'll leave it to that. now the question of double dipping which is a phrase that i haven't heard in a long time and i think that mike actually addressed this as well, that he was dealing with a situation where some of his best people were going out the door because there was a program set up that allowed them to return the next day and continue working at their full salary and half of their retirement, and, again, during an emergency situation how long you want to extend that is an arguable point, but i will tell you that it's quite

different from the 32 years, it was the last 25 that i can tell you that the concept was alien to the leadership of the agency. both mikes have made the point that there was a technical requirement. when we went into the internet, and i remember when they actually had index cards with names on it, and we were so proud of the best index card system in the u.s. government. i mean, you really need to understand the impact that -- all of you do because you're in the same information business, what that internet meant, you really did need contractors, ok, and you needed the technical area. but we have had in the history of the agency a paramilitary capability that serves using detailees from d.o.d. and that search capability seemed to work well and, again, i don't know all the ins and outs, i have not been in any program with the agency since i left.

but it does raise for me issues, both historical and the times we live in, and i must say that there's parts of it that make me quite uneasy. >> jack, there's a guy named allen stanford who has not gotten as much attention as bernie madoff, a texan now living in the virgin island whose was charged with running a massive ponzi scheme, sort of a junior bernie madoff. i was looking into this case, it's research for a book, and i discovered that allen stanford had hired a private intelligence firm, crowell, to do what they called in the trade self due diligence, ok? they asked them to -- he hired crowell to vet him for potential investors. the court records that i've looked at say that allen

stanford paid crowell for this self-due diligence on this multibillion dollar fund, $15,000 for a full background check. so what kind of background check can you give someone for $15,000? >> again, let me round the question out for you a tiny bit. jules crowell took the magnum p.i. off the street and creating a professionalization of the p.i. investigative world. and formed the first company in -- it's well known in the industry. i've read the "vanity fair" article and i am a reader of"vanity fair," they have great articles in there, and i must say that i don't think that jules and the leadership were happy with the way that this unfolded, i don't know that firsthand -- >> but for $15,000. >> i'm slowly getting to these points. i live in new york so i have

jules as a friend -- >> i'm sorry. >> let me cut to the chase, if you look at a bernie madoff or a figure of that size and stanford, and, again, remember i'm on madison avenue, $50,000 is a going price to take a really serious look at somebody. $15,000 you're probably looking at a very heavily weighted database research which is a very useful and a basic underlining part of any investigative reporting work, but you really have to get out and tweak it. the one thing that i read in the article that i saw and i also looked at those documents, was that they looked at the company but didn't look at the person. >> so they investigated the company and not stanford himself? >> and the report, which is attached, is more about the company and not about stanford, i think that you have to look at the principles because there's a little lawsuit that came from

this. >> but, jack, the lawsuit is the point here because one of the major investors in this firm, they hired crowell to vet allen stanford whom stanford had hired himself so the reason for the lawsuit is the guy is suing because he lost, whatever, $6 billion, how do you protect yourself in a case like this, and should you be hired to do one job, you know, with dual purpose like that? >> i use it as a teaching tool, this particular case -- >> really? >> because this is a problem having the private sector that we didn't have so much in the public sector at times is that they come in and they say i only want to spend $15 now how to and i want all this -- $15,000 and i want all this, and if the budget is low you'll do it and you'll give them a product that is substandard and you have to hold the line and you say, you want

me to do this, i have to do all this. >> you could be sued, right? >> i could be sued on every report that i make and that's why i want to make sure that i'm authorized and funded to provide the information that the client is requesting. the reason that i like the business i'm in this regard is that it's not that much different than the business i was in the c.i.a., give me information, validate that information, stand by that information, and take the consequences. the difference and one of the things that you learn quickly in the private sector as many of you know is that if you're wrong the results are immediate and accountable, you're fired. or sued. >> are there things you can do that the c.i.a. can't? >> there is a world out there and i've talked to my colleagues and having been on the other side of the table i know when their eyes gloss over and i know that mine would have glossed over as well, and i sat with one of your predecessors and they

took copious notes and i know that i'd have to rummage through the trash and they thought i was trying to sell some product to them, which i wasn't. there is a world out there of talent and investigative skills that is huge. people that leave all the foreign services and leave the police and people that are journalists and not in the united states, of course, but that are out there and available to collect information. and i have everything from psychiatrists to record tollers and how you get in and swim in that water is not rocket science, how you utilize it is a different, a different matter. there are things that i can do that i don't think that the agents do because of its official position. what do i mean? in russia and china it would be very hard for the agency to

conduct surveillance. or to request certain types of information. >> from the secret services? >> from the holders of information. >> ok. >> ok? and in the private sector that actually can be done. i was asked once, i thought it was the most challenge -- i'm always intrigued by how quickly a very difficult task seems to be managable. i didn't execute it so i want to be very careful but someone came to me and asked if i could do a surveillance in iran. >> iraq? >> iran. iraq is easy, in that regard, ok? >> in a denied area then? >> a denied area. and it's interesting how you can put these things together, and it's awkward, i'm telling you that it's a different proposition inside and i understand it, but there's a rich world of capabilities thought that i think -- it's not well enough understood, i think

that there's a growing awareness to it. look, the agency has immense capabilities and they say the services are good as anybody else and mike can attest to this, there's no one that gets close in terms of real capabilities, so i'm not saying this, but there's times and places that there's unique capabilities that can be brought to bear through the private sector. >> but there's technology, right and there was a time when, you know, if you wanted to really tap a guy's phone and you really needed the stuff that only the c.i.a. had, you know, these kind of fancy actuators, right and now i can buy stuff on the internet that is probably as good as what the c.i.a. can use in surveillance, is that right? >> one of the trends is that it's much harder in the intelligence community because 95% of the overt information right now is available instantaneously and dealing with the foreign government we were

the only game in town. and much of our equipment was made in house and it's inconceivable that you could keep abreast of technology from in-house capabilities. i remember, i mean, not to date myself unduly as a 32-year-old man, but the communications, i sometimes slip in my emails and write cable, and instead of saying i will do it you say will do. >> it's called twitter. >> so it's coming back. [laughter] so you didn't have the capability to do that. and i was giving a pen by technology and i was so proud of myself coming out of training, i went out and i paid someone almost half a million dollars when that really mattered and i had an invisible pen to sign the receipt and i brought it back

and it dutifully disappeared and when i sent it to accounting and they didn't tell me that the paper disindisintegrated after . so communication was so hard, and short-range communications and today if you look at your equipment from blackberries and cell phones, i was in the sinai -- >> google earth -- >> there you go, gooke gookel gi can look at your backyard and this is why wherethe law, and a lot of people don't understand the law and there's serious laws involved with privacy and what you can do and it depends on the state and you break a wire and you're violating a wiretap in the state of california if you're taping a conversation between two parties. if one party in new york knows that it's being taped it's legal. i mean there's a whole range of issues that are legal and

there's a lot of people in this space that legal be damned and that means cell phone records and bank records and there are people out there breaking the law and because you as a consumer say, look, i'm outsourcing it, i'm not responsible, you sure are responsible. >> you can do it, you can get it. >> and my partners as many of you know is a top end lawyer and we have legal counsel at our left hand, why? because this is a very hairy business that you're in and i know that both mikes are in it and they'll look at it differently than the private sector in terms of liability and legal exposure. so the short answer is, yeah, technology is huge out there and it's being -- there's a trojan horse and i'll stop on this one, i find it fascinating that here you're sitting on your computer and you can go down to the corner, it was $120, and you can buy something for your kids, so you can monitor your kids' computer but for an extra $100

you can get a package to monitor his computer when he's off at college. now, the problem with that is that it's a nice marketing thing but you're sitting there and saying, wait a minute, why don't i use this not on my kid but use it on someone else. so the capability to monitor your key strokes by people who are prepared or don't care about the law, the capabilities are at our fingertips. and whether it's an audio device that you can put in the lap or somewhere else, there was capability that the c.i.a. didn't have during much of my career and i'm amazed by it and it can be bought in new york or from any major city. >> joe, can i have one point to what jack already made and talking about the c.i.a. being a very competent organization but there's tremendous capability in what he called in the private sector. and let me -- language is important here and sometimes we use words that trap our thinking and drive us to conclusions. let me suggest then a couple other words that we might want to use.

you have inside the agency government employees, the agency routinely makes use of what we call surrogates, ok? these are people who are culturally or linguistically, and access wise and fill in the blanks and i'm not talking about this morning's story, just in general and we use surrogates and they're routinely briefed to congress and much of the activity of the agency is done on our behalf by surrogates. and i would simply suggest to you as you think about what we're talking about here today and outsourcing and so on, keep in mind that surrogates come in a variety of flavors and that an intelligence service like the c.i.a. has the ability to choose among those flavors for different missions. so please keep that in mind. not everything that the agency has done is black and white binary world, contractor, government employee. but i'll end this point by simply saying even when

something is done by surrogates on your behalf you are as responsible for it as if it was being done by a government employee. >> we used to call agents and the world called spies and we never called ourselves spies, we called ourselves spy masters. but there is a trend that is very important, the intelligence community is now looking to try to trans-national issues that require investigative, almost police-type of gritty tactical collections, it's a trend that is changing and we didn't anticipate it, let me put the burden here, as well as we might have. and the private sector world is moving from the investigative world to the high-end intelligence collection and there's these two trends that are running side by side. many of my agents were str strac agents, ok, but they were not in a position to carry out what i

call the get into the police records over here in this barrack. and so there's a change taking place that is worthwhile for professionals to take a careful look at how that's weighted. >> i would like to open up things for questions from you guys. yes. >> i'm wondering if all of you could address this but starting with mr. devine because you might have a different answer. should there be a bright line between what government employees are able to do versus intelligence analysis or support or do you think that it's fair game for everyone? >> i think that you have to start at the very beginning when you take on a covert action program. you know, you have to have a framework and mike and i have talked over a glass of wine and dinner about this, and that is, you know, what are the criteria for action? whatever your action is, and what are the consequences? and i would start with why isn't it done in-house and when you

answer that question, why is it going out? who is it going to? and there's a cycle, and your point about where the red line is, i do think that there are a series of decisions that have to be made but the one that shouldn't be made is here's something that we'll go do it this way and not think through the full consequences. i would always try to get it done in-house and there's a whole set of reasons which i'm prepared to go into but i don't want to monopolize it. >> [inaudible] >> look, one of the problems when i think of contractors, first, you want to build the skills inside, you know. they call it a trade, it's a trade craft. you know, i learned at the knee of a series of people that i was proud to work for, my first recruitment was a set-up, the chief knew that -- sent me out there and i spent all lunch

trying to wiggle into it, yes, i'll do it, just ask me. so my point is that there was a trade, how do you -- how do you do it? so you need to make sure that you're not outsourcing capabilities that you need to develop and it's management training and working with foreign governments and you have to weigh ho how much you're putg out and how much is inside. the second thing is if you're going to take lethal action and that the president must sign and it must be improved by congress within 72 hours and both mikes can correct me on that, but if you have a lethal finding it has to be done in a brief amount of time. and then you have to ask yourself, you know, the question, am i going to take this lethal action? if you say i can't do it, i won't ask my son or daughter to do it, and it's not going to feel right in the "washington post" and "the new york times" and it won't pass the giggle test, you don't want to be outsourcing, you want to be

involved in it. >> yes? >> hi, i'm jim shark, the author of this book "spies for hire" which is the only nonfiction book about outsourcing. i have two questions, mostly for general hayden. you are now working for a company that does contract with the intelligence community, i.s.c., as i understand it. i think that it's natural that you would talk positively about contractors but i think that you would have -- i just wonder about your credibility in terms of since you are a contractor now, working for a contractor and making money from this business, you know, should we take your word on contractors with a little grain of salt? and, second, would you -- when you appear on television talking about intelligence issues, would you identify yourself as a contractor rather than just a former director of the c.i.a. or former director of the n.s.a.? that's part one of my question.

part two is, the inspector general report came out about a month ago about the n.s.a. surveillance program, what i found interesting in that report among many things was that they interviewed 200 people involved in the program, including yourself and the former and current officials as well as private sector people, however, none of the private sector people were identified either by name or company. shouldn't we as american citizens know who these high level people are working for our intelligence since companies like boose allen and so on are doing such very high level work for the intelligence agencies? shouldn't we know who these people are and who these companies are in a more clear way? thank you. >> with regard to your first question, i'm not a very creative guy and everything that i said this morning about contractors i said in 2006, 2007 as director of the agency, and i had to make it very clear when

we were reducing contractors that it was about us and not about contractors. and the story about contractors i have told multiple times as director. my affiliation with the chertoff group was made quite public and, in fact, i do identify myself as a member of the chertoff group most times when i am involved in any public discourse. with regard to the i.g. report, i really take no ownership over that, i was one of the 200 people who were interviewed, there were some people who were not interviewed, that's one class of folks and then i wasn't aware of it but i take your word for it, there were another group that were interviewed but not further identified. it might reflect something that the secretary had said earlier that you have people out there in -- who are taking serious personal and financial risk by doing what i would arguably call

the patriotic thing. in fact, i was surprised as the director of the n.s.a. and the c.i.a. how much american business will put themselves at risk for no profit motive in order to assist the american intelligence agencies. and i think that this -- what you may be 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've said before, the c.i.a. and n.s.a., and the intelligence community, did not live isolated inside the broader american culture. we rely on us as a society to help us achieve our mission. believe me, there's nothing that farious or dark about that, it's something if the story were better known most americans would be very proud of, but there's elements out there who seem to quote/unquote, want to go after anyone that becomes

affiliated with us. and so it may have been that caution that caused what you described. >> [inaudible] >> there is transparency and it's a good, but not an absolute good. i mean, everybody has secrets and i could ask you about your sources and anyone in the room could say, well, why are you using unnamed sources? and i do believe that there's a reason for that and you do protect your sources and no one is asking for absolute transparency from anyone, there's always a balance to be drawn and we could argue if that's the appropriate balance, but i think that there is a balance all the time. >> can you talk about the difference between the clearance process for contractors versus employees for these tasks and do you think that as the community relies more on these contractors that there could be a counterintelligence risk as they get more into collection issues and other sorts of sensitive

areas? >> there is no difference in terms of the clearance. however, by using contractors you do have certain opportunities, let me -- where you can use a contractor with a lower security clearance, when you get a full up round, either in the agency or n.s.a., for example, you're assuming that you've got a government employ and he'll have access to most of the doors inside the agency and special access programs put aside but by and large. frequently the contractor though, you know that you'll only use this individual for this specific task and it's at this classification level and he'll never go anywhere else in the agency and never get access to anyone else and you'll cabin him off for this activity. so very often one of the things that allows you to more quickly surge with a contractor is that you're only clearing him to a secret level because you know that you'll only use him for that task and when that task is done you'll let him go and so in

that sense there's an efficiency with a contractor that wouldn't exist with a government employee. my most knowledge is as a member of the n.s.a., and the only difference was the contractor always took longer because i put the longer priority to clear the government employees first. >> [inaudible] >> if you want to talk about counterintelligence risk, the number of contractors is probably one of them, but if you want to hit the sweet spot for counter-intelligence risk the fact that we want to bring more people into our intelligence community, i'm going to use the phrase heritage communities, first-generation americans, because there's patriotism and wonderful skills and there's an equally strong trend inside the community that once you're in, remember connecting the dots and remember sharing information and

remember not existing in silos, so once you're in any individual has a greater opportunity to access information across the board. if i'm the head of a foreign intelligence service and my analytical shop comes in and says that american security, american intelligence services are hiring more first-generation americans and once you're inside the net they have more access to more information than ever before my eyes would be dilating and my mouth would be salivating, ok? and so, by the way, i'm a supporter of both those trends that i've just identified, but if you're going to go down that path you also have to reinvest in counterintelligence because you have opened up additional vulnerabilities. again, we should hire more first-generation americans and they are patriotic americans and we should share information more because it leads to better product. that said, compared to those things the contractor thing is a small subset. >> jean laczar from cnn and i want to bring you back to that

"the new york times" article, general hayden. panetta said this warranted going to congress and doing a briefing, you made a different judgment. can you explain when you think that the use of contractors warrants a congressional briefing and why the use of contractors in a program that involved assassination, did not? >> i will use my language precisely here, ok? and as jack pointed out we still hyper ventilate in the association when the word assassination is used. no one is talking about assassinations, ok? >> well, if you don't use the word assassination, if you're using contractors in a program for surveillance and training -- >> is exercising the inherent right of self-defense, how about that? >> but my point is, when do you go to congress, when don't you go to congress, where is the line there? >> this is hard for me to answer, one, because we're

talking about it seems a covert action, all right? and number two it's hard for me to answer because if you look, again, just kind of internally at the "times" story and the story in"the post," the timeline for this is 2004 and ended many years before mr. panetta became director, so, frankly i've learned more about what this is in the last six weeks than i did as director. and that should tell you a lot and if you want to be very dark about it, maybe i wasn't a very conscientious director, and i don't think that's true, but this was not a very prominent thing during my time as director. i do not know enough about the details in "the times" story to suggest to you whether or not it krosdzed thresholds and -- crossed thresholds and mark doesn't know enough either and he talked about training and planning and surveillance and he's not sure what the mix was. so somewhere in that mix i

probably would have gone down to talk to congress but i would tell you, jean, if -- the threshold i probably would have first crossed was a political one, not a legal one. not that it was a significant -- anticipated significant intelligence activity which is the legal requirement, but the fact was that this was maybe a bit of a different flavor than the kinds of things that we had gone on in the past so i probably would have gone down there first off, well, this is different, let's make sure that the committees know about it, rather than some abstract clearly defined legal threshold. i will tell you that when i was director, all right, and the press coverage of this is talked about as one continuous program and i would suggest to you that is probably not true, what you had were three separate efforts under three different directors to deal with an issue that everyone understood was a problem and a capacity that everyone agreed we should have. when i was there if congress was

uneasy that i didn't come down and talk to them enough about what was happening on my watch, i would simply tell them that -- whether or not that's true, i didn't tell the president about it, i didn't tell the vice president about it and i never talked to steve hadley about it, and so what was happening on my watch never reached either the political or the legal threshold in my sense. so, i'm sorry, i'm being evasive only because i don't know the facts, all right? >> you know sometimes -- >> yeah, but i don't know the details about what mark wrote about in this morning's papers and there was probably a threshold in there, whether or not it was crossed, i don't know. but what i'm suggesting to you is that it was probably the political threshold, this is unusual, rather than this legal threshold, significant, anticipated intelligence activity. thank you. >> yeah, kevin whitelaw with npr. i wanted to talk about the

difference between the idea of bringing in contractors for specific skillsets for specific periods of time versus what appears to have happened a lot after 9/11 which was bringing them in for ongoing, long-term operations and running them often in place of government employees or because it was easier to do it or that. i think if i understand correctly from what you're saying that is what you as c.i.a. director tried to work at maybe rationalizing and fixing, sort of to the degree that you -- you know, can you characterize how successful you were at that? and i think that the second part of the question is probably to secretary chertoff but to you as well, is the c.i.a. maybe ahead of other agencies? do a lot of other agencies have catchup to do, what is the variation within the full community? >> yeah, what we did, and i'm going to be very quick about this, kevin so i don't drag you into my whole inbox, i said arbitrarily 10, and 10 plus five, but we had signed attached

to it. we did a soup to nuts across-the-board look at all the things done in the agency and divided them into three baskets, core, core support and support, and you can kind of imagine, you know, in broad terms what each of those might include. when it came to core, the core jobs, the percentage of those jobs being done by government employees was in the mid-to-high 90s. ok? core support though actually had -- and i don't remember the number and i'm not trying to be evasive but i just don't remember, it had a disturbingly high number of contractors in core support. >> what is core support? >> again, it's hard for me, joe, to go into the specifics about it, ok, but if you take core functions as being actual collection, actual analysis and then core support would be functions, maybe collection management as opposed to collection, ok? and then you get support which

is like running a small town, ok and all the things. yeah. kevin, a surprisingly high number of contractors in that middle one and then a surprisingly high number of government employees in the last one. as i have said before our fire department was government employees. ... >> this will seem like self congratulation here, but the

model we used was then adapted by the dni and applied more broadly across the intelligence community. for those of you who are concerned about contractors, and i are retold you might believe -- the cia numbers are actually 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 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 "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 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 increased 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 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 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 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, 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 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 -- 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] >> up next, attorney general eric holder talks about the release of the only man convicted in the lockerbie bombing. then president obama on health care. after that, a discussion on the role of government and health care policy. tomorrow morning, college and rear readiness. a conference will examine efforts to prepare students for life after high school graduation. it is hosted by the education testing company. like coverage at and caught 45 on c-span2. the justice department has

announced dozens of indictments for cocaine smuggling against mexican drug cartel leaders and their associates. we will hear from attorney general eric holder and other justice the former officials. reporters also asked the attorney general about scotland's decision to release a man convicted in the lockerbie bombing. this is about a half-hour. >> united states attorney general ben campbell from eastern york, and the assistant homeland security secretary for immigration and customs enforcement, john norton. today we or announcing in a coordinated interaction, a major drug-trafficking charges against 43 individuals, including cartel leaders, members, and associates into federal districts and 12 indictments. specifically, we allege that these defendants shipped multi ton quantities of narcotics into the united states to various

established smuggling corridors and then, through a network of affiliated distributors, dispersed these drugs into cities and neighborhoods around the country. the defendants whose indictments were announced today include alleged leaders of the sinaloa cartel. the indictment unsealed today outlined nearly two decades of criminal activity by these cartels and their leaders here in the united states, as well as mexico and other countries. these cartels are not abstract organizations operating in far off places. they are up multibillion-dollar networks funneling drugs onto our streets. what invariably follows these drugs is more crimes and more violence in our communities.

the audacity of the cartel's operations is matched only by their sophistication and by their reach. today, because of the dedicated work of our dea and ice agents, the diligence of our prosecutors in chicago in brooklyn, and the support of our courageous law enforcement partners in mexico, we are able to charge leaders and members of these insidious cartels for their heinous crimes here in the united states. our friends and partners in mexico are waging an historic and a heroic battle with the cartels as we speak. this is not a fight that we in the united states can afford to watch from the sidelines. the stakes are too high. the consequences are too real for us. we will continue to investigate, charts, an arrest cartel leaders and their subordinates, and we will continue systematically to dismantle and disrupt their far reaching and dangerous operations. i will let the two u.s.

attorneys described the charges in more detail, but suffice it to say that the criminal conduct alleged in these indictments did not take place solely in mexico. rather, it played out right here and our own back yards. an example in chicago, we have arrested and charged individuals who allegedly worked directly with mexican cartels to receive thousand kilos shipments of drugs and then dispersed those drugs into the chicago community and throughout the country. we have learned from previous successful experiences in fighting organized crime that we must not only go after the leaders of these cartels, but also sees the money that funds their operations. that is why these indictments we are seeking forfeiture of more than $5.8 billion in illegal drug proceeds. if we can suffocate their funding sources, we can cripple their operations. wrecking of the mexican drug cartels and stemming the flow of drugs and illegal firearms across the southwest border is a

top priority for this administration. we have made important strides in this fight. earlier this year, an extensive investigation of the sinaloa cartel known as project accelerator led to the rest of more than 750 people in the united states and mexico and the seizure of more than $59 million in illegal drug proceeds. we have directed much-needed resources to break up cartels and to support border related initiatives. just last month, for example, announced $8.7 million in recovery act funds for california communities to use in fighting crime and drug trafficking as part of our southwest border strategy. we have formed an arms trafficking working group to tackle the critically important problem of weapons flowing across the border into mexico. we have formalized agreements

with our partners in the department of homeland security and with the government of mexico to increase cooperation as we carry out our fight on several fronts. and we have brought charges against high level mexican leaders of the gulf cartel, now known as the company, and 15 other top lieutenants. all these efforts have been in addition to the numerous investigations, prosecutions, arrest, and interdictions that are prosecutors and agents carry out across the country every day. today's charges demonstrate that we will not stop until these violent criminal enterprises have been eliminated. we will continue to stand with our partners in mexico as we carry on this vital fight. on that note, i would like to acknowledge president calderon and his administration and all that they continue to a leading mexico's fight against violent traffickers. i would also like to thank the brave agents and prosecutors

here in the united states who have made the indictments announced a possible. their hard work, courage, and sacrifice make all the difference in our ongoing fight. they have shown in the past that we can defeat international narco traffickers. i am confident with their help, we can do so again. with that, i will turn it over to pat fitzgerald. >> thank you, attorney general. the eight indictments unsealed earlier today, as well as seven filed earlier this year, essentially traced tons of cocaine from chicago and other cities back to the groups in mexico to obtain the cocaine by plane, but, submarine, and right into mexico and shifted onto a pipe line in chicago to the united states. it is alleged in the indictments that approximately 1500 to 2,000

kilograms of cocaine and heroin were going to an organization in chicago for a pipeline. that is about 2 tons per month. that cocaine was being distributed in chicago and many other cities in the united states. going in reverse was a flow of cash, hundreds of billions of dollars going in the other direction. what is alleged is that in essence, this organization was receiving the cocaine from two separate streams. one was a group charged in one indictment. the groups that the cocaine together and send it to a group that picked it up in chicago for distribution and the money was sent back together. on the other side is a difference stream of supply. they also said substantial cook came to this group. -- cocaine to the screw.

-- cocaine to this group. both sides are indicted. members of the crew are charged and a number of them have been arrested. as an example of what has been done by the hard work of dea agents in chicago and around the country, during one. in late november 2008, as a result of three seizures in los angeles, approximately 1 ton of cocaine was seized as part of the chicago investigation. over a longer time, 13 seizures in california and illinois, 2 tons of cocaine were seized. $20 million in cash has been received -- has been seized. this case does not get made without tremendous work of a number of da agents, too numerous to name in chicago and elsewhere, working together with the team of prosecutors in

chicago and working with other offices. i take my hat off to the people who did so much hard work. i turn it over to my colleague from brooklyn. >> i am here today to announce the unsealing of for indictments charge in brooklyn against 10 of the most powerful, by and leaders of mexican drug cartels. the first names six defendants for their roles in allegedly importing 127,000 kilograms of cocaine into the united states, much of which originated with one of colombia's most violent and cartels. approximately 22,500 kilograms of cocaine was seized in september 1994 into shipments by the coast guard off the coast of mexico. the indictment alleges the federation is an organized crime syndicate with representatives from several of the most powerful drug trafficking

organizations in mexico. further charges that the indicted defendants included the chief leaders of the federation. the second indictment unsealed allegies the principal leader of a cartel known as the war as cartel. it alleges they received multi ton shipments with a colombian drug trafficking organization. it operates in one of the primary drug smuggling routes between juarez and el paso, texas.

according to the indictment, the cartel maintain its power through bribes and numerous acts of violence. the third indictment charges two men with leading a drug organization of prominence within the federation. one man is currently incarcerated in mexico and awaiting extradition to the united states. the supply route allegedly originated in mexico, went to texas, and branch off to various areas. from 1996 to 2008, they allegedly imported over 100,000 kilograms of cocaine into the united states. the dea estimates between 2004 and 2006 that organization was responsible for shipping truckloads containing over 2,000 kilograms of cocaine into new

york city alone. in january 2006, mexican authorities seized the 200 kilograms of cocaine that was destined for the united states. finally, the fourth indictment alleges importing multiple tons of cocaine for california and texas and transported across the country to cities like chicago, new york, and los angeles. it also allegedly tax as a translator and distributor of cocaine for the cartels. law enforcement authorities in york, chicago, and texas seized approximately 7 600 kilograms of the organization's cocaine. an indictment is simply held a criminal case is begun. all defendants are presumed innocent until proven guilty, but today's indictments are the result of a significant national

and international cooperative effort. we cannot have brought the charges without the hard work and dedication of numerous agencies. we thank them all for their efforts. they are part of a long line of prosecutors who have worked tirelessly in an effort to serve the citizens of our district and our country. we will not rest until the battle has been one. >> good morning. i want to start by thanking attorney general holder for recognizing the hard work and dedication of so many the agents

working in mexico and around the country. many of the case agents on these investigations are here today with us this morning. today's indictments or another strike against the leadership of the mexican drug cartels. our relentless investigation is penetrated deep into these pervasive the criminal organizations, connecting st. operations in u.s. communities like chicago and new york to the top drug kingpins calling the shots in mexico. make no mistake, along with our courageous partners in mexico, we will break these cartels and we will pursue these leaders. in these cases, we documented the direct involvement of kingpins in the sinaloa and more arrestjuarez cartels. they are responsible for terrorizing committees in mexico and for smuggling tons of cocaine, large amounts of heroin, and other dangerous

drugs into the united states each year. specifically, the eight in chicago and dea and ice in new york established direct connections from the streets of chicago and new york to 10 drug kingpins at the highest command and control levels of their organizations. this led to the unsealing of indictments in chicago, including sinaloa and others. we also have new indictments in the eastern district of new york against a leader of the juarez cartel and others. the mexico based sinaloa cartel, also known as the federation, is among the most violent and insidious of these organizations. working closely with our reporters in mexico, we are keeping up unrelenting pressure

on the federation as well as the juarez cartel and the other mexican drug cartels. we are determined to dismantle these cartels. during the course of these investigations, dea and our partners made noteworthy seizures of drugs and assets including more than $22.6 million in cash, with an 32,500 kilos of cocaine, and 64 kilograms of heroin. many of these notorious criminals appear on most wanted list in both countries, mexico and the united states, and many of the cartel leaders, the united states offers rewards up to $5 million each for information that leads to their arrest for capture. there are fewer and fewer places for these criminals to hide. looking forward, we are committed to tracking down these leaders and sustaining the pressure on their organizations

and operations. with our mexican law enforcement partners, we will find them and we will bring them to justice. thank you very much. >> i am john morton, the assistant secretary for ice. these indictments represent years of work by ice and our partners in the law enforcement community, particularly at the drug enforcement administration and the united states attorney's office. ice ages loan invested over 20,000 hours of work in the united states and mexico to make these cases. the drug cartels will bring to justice today are not indestructible. rather, they are made up of men who commit crime. through these indictments, these men will be left with lives on the run, looking over their shoulders, and they should be looking. finally, let me note for all of you here this significance, not only of the indictment of these

individuals, but the reflection that these indictments bring on the growing cooperation between the department of justice and the department of homeland security. it is with great pleasure that i say i have known most of the people standing here at the podium with me for a long time. i came from the department justice, and i can tell you firsthand after a long career in federal law enforcement that the cooperation between the drug enforcement administration and the immigration and customs enforcement is unparalleled. it is growing stronger by the day, and you will continue to see these kinds of cases and joint investigations, the kind of concerted effort in mexico with our partners to hunt these criminals down and work with our partners and charge them and bring them to justice. thank you very much. >> i would like to ask your

personal perspective on this, in light of the fact that you were deputy attorney general 10 years ago. how does the war on drugs appear to you today compared to a decade ago? it sounds like just about everything he said today you could have said in a press conference a decade ago. in fact, if anything has changed, perhaps it is less cooperation from cocaine producing countries in south america. secondly, since we are talking about perspective, it was more than a decade ago that you helped prosecutors the lockerbie case, and just recently you bet the scottish minister not to release the man

who was found guilty, and yet today they did so. i would like your personal opinion about that as well. >> we are very disappointed with the scottish executive's decision to release him. i do not believe that the interest of justice was served by that release. 270 individuals, 189 americans died as a result of his actions. he did not show compassion when he planned and executed that heinous act and has not shown any remorse for what he did. in my view, the release was entirely inappropriate. we communicated this to a scottish authorities previously. is my belief that he should have been required to serve his entire sentence. our deepest sympathies go out to the families and to the survivors' families to continue

to suffer as a result of his actions back in 1988. with regard to the first question, i think that actually things are different. we have a mexican administration that is committed to fighting the drug cartels in a way that is unprecedented. people in mexico, law enforcement officials are literally putting their lives on the line. we see and president amounts of cooperation at the federal level in our government, as john morton was indicating, that has made us more successful in this fight. this is an ongoing struggle. i do not think the fact that it is an ongoing struggle necessary mes is one that we cannot win. we are in a substantially different place than we were 10 years ago, and i expect we will be in a substantially different place in the future. i am very hopeful that as time passes, will ultimately

eradicate these cartels. >> you have invited all these top leaders and the cartels. is it your understanding that the mexicans will agree to the extradition of whatever top cartel leader is caught? >> we are working with our partners in that regard to try to bring that about. as michelle indicated, there are substantial rewards out there for the capture of these people. there have been unprecedented numbers of extraditions to the united states over the past two or three years as the calderon administration has captured these people and made them available to us here in the united states for charges that are facing. that is why these indictments are so important. ultimately i expect they will be here in the u.s. and they will face justice. >> the fact that you are more focused on the sinaloa cartel are the juarez cartel means they

were the most predominant in the u.s.. in this case, what happened to the other cartels? >> we are going after those cartels where we have jurisdiction, where our laws will allow us to reach them. we are cognizant of the fact that there are other organizations that have had a devastating impact in mexico. we continue to work with our mexican partners in mexico to try to fight them as well. to the extent that we develop information and evidence that will allow us to bring further charges against those other organizations, we will obviously do so. >> they are also cartels [unintelligible] >> rest assured, there are major ongoing operations right now against all of the mexican cartels. each one of the mexican cartels

significantly impact the united states, because they are all sending cocaine loads to the united states. proceeds from the sales on the streets of america are headed back to mexico, along with weapons. this is the announcement of the top-10 of a couple of the cartels, but we had project reckoning almost a year ago, and we announced indictments against the leadership of the gulf cartel, and the attorney general and night in february announced other actions against sinaloa. we are after all of the cartels. >> explain to us, [unintelligible] was indicted about 10 years ago in san diego. what is different about today's announcement? what does it signify? >> we are often asked, you can

indict over and over again, and what you do that? it is simple. these indictments now or more recent, and every time we target and go after these cartel leaders, we find out more and more ways to attack them. that is why would continue to do it. what is different now, the big difference which the attorney general already covered, the big difference is mexico. we have a true partner and have had a true partner for the calderon administration. we believe we can go after these cartel leaders and bring them to justice, to include eventual extradition to the united states. >> let me make something very clear here. these are not symbolic acts where taking today. our intention is to invite these people, to get them to the u.s. and to put them in jail for extended periods of time. this is not simply an expression of displeasure by the u.s. government.

this is the result of a lot of intense work by a great number of people in our government, in cooperation with people in mexico. our intention is to invite these people, and as i said, to bring to justice here in the u.s.. this is not symbolism. >> on the way over i heard one of the family members connected with the lockerbie tragedy talking about the lack of compassion. what can be said to those families, and is there anything the united states government can do to deal with the situation? >> i am not sure there is much the u.s. government can do at this point. i want those families to know that the united states government did all that we could prior to this decision being made to make sure that this decision would not, in fact, be made. i had contact with scottish authorities, secretary of state clinton did as well.

we argued as best we could to try to point out the injustice of such an act. the decision was ultimately made by scottish authorities to release him. >> you have any sense of what the rationale was? >> i understand there was a press conference held earlier in the day. >> there is a deadline looming regarding interrogations'. michael hayden said it would be disruptive for their release to happen. where are you in determining whether to prosecute and investigate the interrogations'? >> we are working with our colleagues in the cia to release only the things we think will be consistent with our national security interests, and yet responded to what our

responsibilities are as a result of that lawsuit. we will not do anything that would endanger the american people or less and our national security. with regard to any ongoing decisions, we will speak to that when a decision is made. >> just a question about lockerbie. what are your concerns that this decision by the scottish executive, of the message it sends to people who might consider doing something like this? this meant only serve eight or nine years behind bars. -- this man only served eight or nine years. >> i suppose our counterparts in scotland would say there are extenuating circumstances and perhaps a message should not be drawn from that. we expressed the concerns that we had, that given the nature of the act and the number of lives that were lost, that he should serve the entirety of his sentence and should have died in jail.

>> when you first learn that this was possible? did this come up in your trip to england earlier this year? >> we had conversations over the past few months. i am not sure exactly when it first came up, but we have made our feelings known about this in a variety of ways over the past few months. >> if i may ask about the decision of president calderon to remove all custom officers at the border. what would be the impact for the joint operations? were you aware of this decision? you are putting together a joint task force as far as i understand. >> let me answer that one. it is important to note that this is part of a professional ization of the customs service

by mexican authorities. we have been working very closely with our counterparts on this issue, both at eyes and cbp. we have been -- both haveice and cbp. i do not think this is going to harm our existing relationships. on the contrary, i think it will strengthen them considerably. the customs authorities in mexico have slightly different powers that we do here in the united states, and in particular, they do not have a strong criminal investigative powers. we tend to work with other parts of the mexican government, but a long and short of it is that this is a welcome step. we have been working with them to help them as they go through with it, and i do not think it will hurt our relationships at all. >> it isn't worrying -- it

doesn't worry you, the fact that they are moving or replacing them? >> it does not. i think this is the right move, and we are trying to support them with all the training and assistance we can. >> you mentioned that he had not expressed any remorse. reports out of britain is that khaddafi's sun is flying back to libya. khaddafi is coming to the u.s. next month. u.s. officials in this administration as well as the loss would have been embracing khaddafi, trying to improve relations with libya. from the perspective of justice, should the u.s. stay on the course of improving relations with colonel gaddafi and libya? >> given some of the actions the libyan government has taken in the recent past, there is a

basis for us to try to improve our relationship with libya. obviously, what happened today with regard -- is regrettable. whether it will have an impact with our ongoing relationship with libya, i am not sure. the concern i have is with the decision made by scottish authorities to release him. >> you are watching public affairs programming on c-span. up next, president obama talks about the politics of the health-care debate. after that, and discussion on the role of government in health

care. and "washington journal" tomorrow morning, we will talk about health care costs with dennis smith from the heritage foundation. professional paul light of new york university will take your questions about the obama administration's policy initiatives and we will look at the relationship between the u.s. and cuba with lars schultz. >> now, president obama talks with party activists about health care legislation. this is being hosted by a group called organizing for america, a span of organization from the obama presidential campaign. from the democratic national committee headquarters in washington, this is about an hour and 10 minutes. >> i was a volunteer during the campaign last year.

this spring, i started volunteering with organizing for america. i got involved with the campaign and have stated ball because i believe that we must change this country. -- i have stayed involved. i continue to find barack obama the one public figure in my lifetime who has the vision, ideas, passion, and commitment to bring the change that we must bring to this country. i was trained as a community organizer, and now i am one of 13 lead volunteers in my state. i got involved in the campaign because one man's vision restored my hope for this country. my involvement in health insurance reform is the personal. right now, our system works better for the insurance companies that it does for regular people. that is why i have been organizing people in my community to get health care

insurance reform passed in 2009. i am proud to be doing this work. thousands of people in my area have signed on already, and we will keep working. person by person, block by block, until we get it done. [applause] and now is my incredible honor to introduce to do the president of the united states, president barack obama. [applause] >> thank you, everybody.

thank you. yes, we can. please, have a seat. this looks like a casual crowd. i am going to take off my jacket here. let me begin by thanking beth, not just for the great introduction, but for the unbelievable dedication that she has shown throughout the campaign, but more importantly, trying to actually get some things done. i want to thank congresswoman debbie wasserman. i hear you are on a scooter. i want to see that. [laughter] that is pretty cool. always stylish. i want to acknowledge my great friend tim kane, who joined us earlier by phone. he is doing a great job on behalf of the people of

virginia and be on -- -- and on behalf of democrats all across the country. to all my volunteers, thank you so much for your unbelievable dedication. [applause] . .

and describe what america is about and forge together a world of common interest and common concerns. that is change that you believe in, that is why you work so hard knocking on doors and making phone calls. sometimes having somdoors slammd in your faces. your parents were telling you, why are you doing this. this man has a chance. -- no chance. i mentioned that winning the election was just the start during the inauguration and on election night. the change has to manifest

itself in the real day-to-day lives of ordinary americans across the country. i know that people like beth and all of you have been working to make that change. you have been going block by block, neighbor by neighbor, having doors slammed in your faces. just so you don't lose heart as we enter into probably our most difficult fight, let's recall what we have already gotten done. not one month into the administration, we responded to the worst financial crisis since the great depression by putting in place a sweeping recovery program that has already made a huge difference in people's lives. you have millions of people who have unemployment insurance and have cobra so they can keep their health insurance.

states having to lay off teachers and firefighters. thousands of people are being put back to work all across the country rebuilding our roads and bridges and hospitals. as a consequence of everything that we did just in the first month, we have been able to see a stabilization of the financial system where a lot of economists thought we would be dipping into a great depression. we are not out of the woods yet and we of taken steps to address the housing crisis. we made some steps to keep the financial and auto sectors from collapsing. that is on the economic side. in the meantime, we lifted the ban on stems of research. we extended health insurance programs to 11 million more children across the country. [applause]

we passed in national service bill that will give thousands of americans opportunities to serve. [applause] i get all choked up just talking about it. [laughter] we passed the fair pay act to make sure that women are treated the same way as men. [applause] we passed legislation to keep unfair rate hikes and some of those rules went into effect today. we passed laws to protect our children from marketing by tobacco manufacturers. we have prohibited torture. we have begun to leave iraq to its people. we have taken the fight to al qaeda income afghanistan and pakistan. we have started to rebuild our standing in the world. not a bad track record.

we should be proud of what we have accomplished. we are not satisfied. we should be confident but not complacent. we have more work to do and we have more promises to keep. one of those promises is to achieve quality health care for every single american and that is what we intended duke'to do. [applause] we all know that this has been an emotional debate. we have seen tempers flare, accusations have been hurled and sometimes it seems like one of voice can drowned out all of the civil voices -- seems like one loud voice can drown out all of the civil voices. since we launched our health

campaign, you did 11,000 events in more than 2500 state in every single state in every single congressional district which is remarkable. [applause] the television cameras are not there when you are doing all of this. when you notice that no one is the intention, just remember that we have been through this before. some of you were involved when we were in iowa. it is over, the tanangst and teh gnashing. you remember that the republicans just nominated their presidential candidate and the

media was obsessed with it. 24 hours a day, they said, "obama has lost his mojo." [laughter] do you remember all of that? there is something that happens from august going into september that everyone gets all wee-weed up. [applause] [laughter] instead of being preoccupied with the polls and pundits and with the cable chatter, what you've consistently did is that you kept on working, steadily, deliberately, sensibly, knocking on doors, talking to people, talking to your co-workers, giving people the facts and talking about how we will move forward. that is what we're going to have to do today. we will have to cut through a lot of nonsense, a lot of the absurd claims that have been made about health insurance

reform. there was a poll done, "the wall street journal-nbc" poll. it turns out that a huge amount of americans are convinced that somehow health reform means that illegal immigrants will get health care. that is a government takeover. that all the money will be funded abortions. -- funding abortions. deaf panels, we are all point to be pulling the plug on grandma. -- death panels, we are all going to be pulling the plug on granma. come on. [laughter] [applause] we can have a real debate because health care is hard and there are some legitimate issues that have to be sorted through

and worked on. what we will have to do is cut through the noise and the misinformation and of the best ambassadors for true information, factual information is all of you. you have more credibility than anyone on television when it comes your family members and friends. i don't tell you why this is so important for those that don't have health insurance but it is important that americans do have health insurance and they understand what health reform means for them. let me just make sure i can give you some bullet points here because right now, the system works very well for the insurance companies but not so well for the american people. first, no matter what you have hardifheard, if you like your

insurance plan, you can keep it. no one is talking about messing with that. if you don't have health insurance we intend to provide you with high quality affordable options. a lot of poor americans have health insurance under medicaid. mostly it is working americans who don't have health insurance, small-business owners, or people that work for small businesses. but we want to do is give you options that you can choose from and then a little bit of help in terms of making the premiums more affordable. that is critical. one of the options we want to provide is a public auction and this has been a confusion. [applause]

there has been a lot confusion about this. i think that a public auction is important. we will have a marketplace where people can select thathe plan that works best for them. a lot of those choices will be private insurance options just like members of congress have. they are allowed to choose from various proposals and plans that are part of the federal employees' health plan. what we do think is that if we have a public auction in there, that can help keep insurers honest and keep a benchmark for what in affordable plan should look like. even though we have a whole bunch of insurance regulations that ensure that every private insurer that is participating in the stench is giving you a fair deal, this is like the belt and suspenders concept. it means that not only do they have to abide by the regulations

but they also have to compete with someone whose interest is not just profit but instead is interested in making sure the american people get decent health care. [applause] the public often is just one option. it will be voluntary. -- the public aoption is just one. we want to expand your choice. we think that is a good idea. there are many other aspects of health insurance reform that people have to understand. we want to make sure that, for example, insurance companies cannot prevent you from getting health insurance because of a pre-existing condition. that will be a lthe law. you should be able to keep it or

purchase it. there should not be lifetime caps or yearly caps. we have to make sure that there are basic consumer protections. you should be able to keep your health insurance if you get sick or you lose your job or you change jobs. all too often, when you need insurance must, that is when the insurance drop you. -- when you need insurance most, that is when the insurance drops you. this will save us money. we will make medicare more efficient. we will guarantee seniors better benefits that they have will be better. we want to make sure that the doughnut hole is closed. we want to make sure that seniors who are already living

on its fixed incomes are not having to digging deeper to increase drug company profits. i want everyone to understand that in addition to providing health insurance for people who don't have it, even if you have health insurance, you have a stake in this debate. millions of people are vulnerable to exclusions because of things like pre-existing conditions. millions of americans have experienced the fact that premiums have donald kohn three times faster than inflation -- that premiums have gone up three times faster than inflation. there will be families to make a decision think cannot afford health insurance because the costs are not sustainable. if you are a deficit hawk, you should be especially concerned about health care reform because

at that pace that we are on right now, medicare will run out of money in a years. it will not be totally broke but it will be in the red. the costs are going up faster than the money coming in. when you talk to senior is out there, no one is talking about cutting their benefits. medicare is already a government program. when people say to keep government out of health care, make sure that they know that medicare is a government program. also explained that what we want to do is strengthen the program so it will be there over the long term. we don't want a situation in which medicare runs short of money because we did not make the changes that were needed. i am absolutely confident that we can get this done. i want everyone to remember that this has never been easy. this has never been easy. when fdr proposed social

security, all across the equivalent of today's internet kampala's controllers and the radio shows, he was accused of being a socialist. he was going to be bringing socialism isleto. everyone said this was going to be a government takeover of health care. this will destroy health care. the same arguments that are being made now are made th every time we try to improve our quality of life. we cannot be intimidated by the scare tactics. we have to understand that there are many people who are invested in the status quo. we have to understand that

people are understandably nervous and worried about significant changes. people trust you, your neighbors, your friends, your committee neighbors. they trust you, they know you. if you are presenting the facts clearly, i am confident we will win this debate. we have a lot of work to do. i'm grateful you are willing to do it. let's go get them. [applause] >> thank you, mr. president. thank you for taking the time to

talk to us about this. you can sign up either at home or at work to participate or host a health care event. we collected thousands of questions from across the country and we will take three, one from e-mail, one from a telephone and another one from twitter. then we will open it up to your volunteers to have to call on them and ask a question. >> our first question comes from julia in colorado. she writes "i'm a volunteer community organizer. this summer, our volunteers have called for the hundred members of our community and gathered declarations of support from

over 2600 people. what do you think is the most in compelling argument we can make for health reform?" >> thank you for your question. the first thing that you have to explain to folks when you're having a discussion about health care is that the status quo is unsustainable. -- what do you think is the most compelling argument we can make for health-care reform? >> unless we make some changes, you will not have what you like. health-care costs are going up so fast, three times faster than wages, much faster than inflation in every other area of life, it will take up a higher and higher percentage of your income in terms of premiums and

out-of-pocket costs, more and more employers will say they cannot provide to afford health insurance are if they do, they will push more costs on to you. you will lose more and more of your paycheck even if you don't know it. in the 1990's, wages and incomes flat land and part of the reason was because a lot of the company profits that normally would have gone to salary increases or wage increases ended up being taken by health care. if you have a private plan, you have something to worry about. if you are on a public program, you have something to worry about. we will be running out of money. the status quo is not sustainable. you have to make sure that you explain that to people. it is not as if you stand still, everything will be okay.

the second point, if you do not have health insurance, we are not forcing you to go into a government plan. we just want to set up a system similar to what members of congress in joint where you can have a menu of private insurance options and we are going to give you a little bit of help so you can afford the premiums. that is all we're talking about. one of the options will be a public auction. we think that that could be a better deal for consumers. no one will force you into that option. it will, however, keep private insurers on is because of fear charging a lot more, higher profits, higher overhead, the worst deal in terms of insurance, a lot of people taken to ensure the public option. -- a lot of people will take the public option.

a lot of people have insurance. the people who don't have health insurance, they are already in favor of reform. most americans have health insurance. this will be a set of consumer protections that provides you more safety and security. you know that you will be provided for if you get sick. what we're going to do is say to insurance companies, you have to do certain things like admit people if they have pre-existing conditions, you cannot hide under the fine print, a lot of terms that allow you to drop people when they get sick or exclude them from care. in fact, the house bill has a provision that says that insures companies, if they want to participate, they can only charge 15% in profits and

administrative cost. the rest of the care has to go to making people well. that will be a cost control element. the point is that all of these forces taken to get there will help people know that when they paid their premiums and they have health insurance, in fact it is there when they needed and they can count on it. over time, because of the cost savings measures we are putting in place, for example making sure that prevention and wellness is covered, we will actually reduce the cost of health care overall in the long term. that will be equally important because that will show up in your paychecks. right now, americans are paying 5000-$6,000 more per person in health insurance costs than any other advanced nation. not only do these other countries have universal care

but they're paying less per person. we are not getting a good deal. no one is talking about a government takeover a health care, we're talking about people getting a good deal for the premiums that they are already paying. i think that that argument most of the time when the day. i was just on a conservative talk show this morning and a woman called in and she said, i have to estimaadmit, i'm glad yu talked about how this plan work because i thought that your whole plan was just a public auction. and many people have a lot of misinformation partly because healthcare's complicated. it is subjects to a lot of misinformation. that is why your input is so important. thank you, cindy.

>> we have our second question. this comes from the telephone. >> she's a volunteer jurors from florida. go ahead. >>-- she's a volunteer from florida. >> hello, mr. president. good afternoon. i would like to thank you for taking my question. i live in the state of florida. i live in the district of congresswoman wasserman schultz. i am a retired health-care mr. ritter. i was a team leader during your campaign. -- i am a retired health-care administrator. are we winning support from members of congress?

do you think we're making a difference? >> the fact is that you already have one of the best members of congress, if you talk to her, you are preaching to the choir. she is sitting here right now. even if you live in a strongly democratic district where there is a strong progressive member of congress who is already in favor of health-care reform, convincing people more broadly about the need for reform still makes a difference. unfortunately, washington is assessed with a snap poll. they are obsessed with what is played on talk radio or what is said at a town hall meeting.

you can have 20 really simple and sensible town hall meetings but if there's one that gets someone screaming, that will be on television. -- you can have 20 really civil town hall meetings. there are many senior citizens in your district. seniors, right now, are the most worried of any population group about health reform. they are the most nervous and this is understandable. this is because they need more health care than anyone else. they are ready have health care under medicare. their general attitude is that they don't want change, i just wanted to make sure that you're not taking away what i have. it is important to emphasize to seniors that you're talking to that we are not reducing benefits under medicare, we think that medicare is a sacred

trust. in fact, part of what we want to do is strengthen medicare by closing the doughnut hole that is making prescription drugs really costly for those that need them most. and extending the life of the medicare trust fund. 17 billion a year is taken out of medicare to give to insurance companies because they are running a part of medicare called medicare advantage. if we have competition for participation and even if you concluded them, that alone would save us $17 billion a year. that would extend the life of

the trust fund. you really have to emphasize to seniors that no one is talking about messing with your medicare benefits and reminding them that at the same time, you have kids or grandkids, they need to make sure that they have the same security that medicare provides seniors. there are many people who are 50 who did not qualify for medicare and they may have lost their job that used to provide health care, it is almost impossible for some of them to get health care because they have already had made the heart attack, maybe they have had an incident of cancer, maybe they have had some kind of weather condition that makes insures one to shy away from them. -- insuremaybe they have some kd

of pre-existing condition that makes insurance companies want to shy away from them. we just want to expand the security to more people. great question. >> this comes from an organizer who submitted her question over twitter. she writes, there are too many lies about health-insurance reform. where are these lies from? >> we know where they're coming from. [laughter] i don't think it is any secret. if you just changed channels and you stop on certain onces -- [laughter]

[applause] you can see who is propagating these things. i said during the campaign that the best offense against allies is the truth. -- lies is the truth. all we can do is push the truth. the truth is, there is no plan that has been considered that covers illegal immigrants. no one has proposed that. yet, a huge percentage believe that that is the case. anyone listening, let's dispel that myth. there are no plans under health reform to revoke the existing prohibition on using federal taxpayer dollars for abortions. no one is talking about changing

that existing provision. let's be clear about that. that is not true. let's be clear about the fact that no one has proposed anything close to a government takeover of health care. none of the plans out there. the most liberal and progressive plans that have come forward and come out of committee, all of them presume that if you have private health insurance, you can keep your health insurance. no one is talking about getting between you when your doctor and interfering with that relationship. what we have said is that we don't want government bureaucrats interfering in that relationship and we also don't want insurance company bureaucrats interfering with the relationships. [applause] the death panel idea some of the genesis of this, this is an

interesting example of how this misinformation spread. there was a provision in the house bill that very sensibly said that many people towards the end of their life, they have not prepared with a will, they don't understand what their options are in terms of hospice, we should reimburse people if they want the counseling. this is voluntarily. if they want it, that is what we should reimburse for. it should not just the wealthy people who get good counseling and information. so, that volunteer provision that permits reimbursement, which, by the way, republicans had supported previously. this was previously considered a bipartisan concept. a republican senator, a former republican house member

introduced a much more aggressive bill on this issue. the prescription drug bill was passed by the member of congress, they had a similar provision for terminally ill patients. this used to be a sensible thing that everyone could agree to and suddenly it became deaf panels. -- death panels. and it scared gramndma. that is irresponsible. the way that is spreads is that if someone puts out misinformation, the way that the news report comes across is " today, such and such accused president obama of putting forward that panels. the white house responded that that is untrue."

they go on to the neck story. they don't want to say that it is in fact not true. -- they then go on to the next story. [laughter] [applause] it is fine to have a debate back and forth, he said, she said, except when someone else is not even remotely telling the truth. you should say in your reports, by the way, that is not true. that doesn't happen often enough and that is why it is so important that all of you deliver that message and you have to be able to back it up. all of you are receiving materials were is not just us saying it, these are third- party the elevators to are out there and can set the facts straight. -- these and nothird our third- partare third-party actors out

there and they verify the fact. -- these are third-party actors out there. there are some people who don't believe in the government getting involved in anything. that is a respectable tradition. there is an american tradition of this. those people are consistent and they were critical of bush when he got involved in government and their critical of me in terms of being believing that te government can do some good. we can have an honest debate. the majority of americans understand that we don't want the government in all of our business but there are sensible reforms that we can pass so consumers are protected and the

markets work the way should so the american people are getting a fair deal. those of the people we're trying to persuade. i think if the american people have the facts, they will be on our side. the next question. >> mr. president, i'm from north carolina. thank you for turning north carolina bellue. [applause] i have two wonderful children and four grandchildren. i'm working for them and i'm working for people who, unlike me, don't have health insurance. it is unconscionable. you have been outrageously good

in trying to get a bipartisan bill. you have three wonderful republicans willing to stand with you. american needs this to happen and you know that. where we going to go from here? >> we don't know yet whether we have any republican support. we have three republicans who have been working very diligently -- charles grassley, mike kinsley and olympia snowe. they have been working with max baucus to see if we can craft a bipartisan bill coming out of the senate finance committee. i give those three republicans a lot of credit because they are under pressure not to engage any kind of negotiations at all.

in the current political climate, they are showing some significant results. i don't know if in the end they can get there. i hope they can. we are going to continue to wait to see if they can get a product done. at some point in the process, there will have to be a conclusion that either they can get a bill done or not. my commitment to the american people is to get a good product which will include republican ideas. i have no control over what the other side decides is their political strategy. my obligation to the american people sense that we will get this done one way or the other. [applause] you have been to my town hall

meetings so you know that i always go boy, girl, boy, girl. >> good afternoon. i am from virginia, another state that went for obama. [applause] i live in a rural county but when i talk to people as a community organizer, it all comes down to money. i may suggest, there are benefits and quality health care but they come back to me and say, what is going to stop people from being in their employer based health care and is quickly moving over into the government health care. who was calling to pay for it. what do i say?

-- who is going to pay for it? >> the first issue is how we pay for this. one thing that is important -- there has been a talking point from opponents, they are repeating that this is a trillion dollars health care bill. it is important to remind people that they're talking about 10 years. we're talking about $100 billion a year which is still a significant amount of money. just to give you a sense of perspective, the amount of money we're spending in iraq and afghanistan, what is the latest figure? $8 billion-$9 billion a month. before about the same cost per year -- for about the same cost

per year that we've been spending over the past six years, we could have funded this health care reform proposal. that is the first point. the second point, about 2/3 of the costs are actually going to be paid for from money that is already in the health care system, the taxpayers are already paid for but it is not a good deal. it is reallocating money that is being wasted right now, taxpayer money that is being wasted, and using it in a way that makes people healthy. that is the second point. remember i told about the subsidies that they were providing the insurance companies? that isn't ais an example. the way we reimburse hospitals, we don't incentivize them to get their patients the best treatment the first time out.

if a patient is remitted, we pay them the same rate as the first time. think about if your car needs repairs. a week later, the same thing breaks down. when you went back to the automobile shop, you probably want to them to give you a discount on fixing it the second time. we don't do that right now with respect to hospitals. those of the kinds of changes that we can maker that would pay for about 2/3 of the cost of health reform. that leaves 1/3. we do have to pay for that. i actually think that we will get even more savings with prevention and wellness but unfortunately, we cannot count that. that is not i scorprovable.

everyone understands that the investment we're making intervention and wellness and health i.t. will make a difference. a third we will have to pay for. what i proposed is that we will pay by having people with over $250,000 a year have their itemized deductions go to the same rate as everyone else's, 28%. right now, they get more because the marginal tax rates are higher. and mention the tax cuts that were created by ronald reagan. we could pay for the health form. there are other ideas out there both in the house and senate.

what we're really talking about is about $30-$40 billion a year we will have to come up with. i am absolutely committed, the president is committed to making sure that that is not funded on the backs of middle-class families. we are trying to help middle- class families and give them additional resources to get health insurance. we are not trying to add to their tax burden. that is very important. how do i know that my employers will not just to dump me into the public plan? there are provisions in a law that say if your employers are already providing you with good health insurance, you cannot just send your employee over to a public auction. it is called a fire wall. there are provisions to prevent the kind of shift. there will be a lot of employers and small business

owners who will qualify for signing up for the health insurance exchange. right now, they cannot afford to provide the health insurance to their employees at all. we want to make sure that they're getting some help partly because small businesses don't have any purchasing power when it comes to insurance companies. if you only have five employees or 15 employees any good to insurance company and he say that you want to get a good policy, they are not willing to give you a great deal compared to its xerox shows up with their thousands of employes. -- if xerox shows up with their thousands of employes. under this plan, they can pool their purchasing power with other businesses. that will help to drive down cost.

>> i am the co chairman of your health care committee. all of my volunteers say that they are behind reduce costs, a guaranteed choice, health care for all. we believe the only way to do this is to guarantee a public option available to anyone who wants one. my question is, if that is a solution that you believe in, why are we pushing this harder and fiif not, what of the solutn will accomplish your goals? >> that is a great question. this is a controversy that has been somewhat manufacture this week. let me be clear, i continue to support a public auction, i think it is important and i think it will help to drive down costs and give consumers

choices. the only thing that we have said, this continues to be the treetroops, is that the public auction -- this continues to be the truth, is that the public option is just part of a bigger plan. the first part is that we want to make sure that insurance companies are treating their people right. we want to have insurance reforms. we are saying that you have to take people with pre-existing conditions, you cannot have c aps that people bump up against. we are putting in place a whole bunch of insurance reforms that regulates the behavior of insurance companies.

if there's a public auction that is offering a good deal to consumers, then the insurance companies have to look over their shoulder and they say, if the public option is providing that could deal, maybe we cannot just charge exorbitant rates and mistreat our consumers. it gives them a benchmark from which to operate. my point is that this is kind of like a belt and suspenders concept. the insurance reforms are the belt. the reformsoptionthe public opte the suspenders. if the debate ends up being focused on just one aspect, then we are missing the boat. if all we're talking about is the public option, then the 80%

of the people i have health insurance, they wonder what is in it for them. they start getting scared thinking about what it is that you are going to force me to give up my current private insurer and going to a public auction. that is what those that are opposed to reform have been counting on. they're trying to twist the debate and feed into the natural suspicion about government and use this to cloud the fact that right now people are not getting a good deal from their insurance companies. i just want to make sure we are focusing on all the elements of reform, what will the benefit small businesses, people with health insurance, so we can build the largest coalition possible to finally get this done.

>> i was a convention delegate. hello, mr. president. i have been two part question. one is choice. the choice that we make to eat the foods that we eat and the lifestyle we choose to engage in and the second part, your family is very fit. what do you do to encourage physical fitness and what can we, not the government, not private corporations, due to encourage activity in the public school system. >> this is a great question. this is an interesting statistic, if we went back to the obesity rates that existed back in 1980 cost the medicare system over several years could save as much as a trillion dollars. that is how much our obesity

rate has a difference in terms of diabetes, heart disease, and other diseases. what we want to do is to -- in health care reform, we want to encourage prevention and bonus programs that say that any health care plan out there has to provide for free checkups, prevention, and wellness care. that would be part of your deal. part of your package. that way, no one has an excuse not to go and get a checkup. now, even if we do all that and there are a lot of businesses out there that, on their own, are already providing incentives to their employees. safeway, for example, is a company that has given financial incentives to employees to make sure they're taking placcare of themselves. it has saved them a lot of money.

there is a financial incentive for a lot of businesses to get into the prevention and wellness business. you are right, even if we got legislation, even if companies are encouraging come when we have to do is teach our children early the importance of health. all of us in our communities, places of worship, school systems, encouraged attrition programs, provide young people outdoor activities that gives them exercise. we always talk about the fact that when we were kids during the summer, basically, mom said, see ya, after breakfast. during that time, everyone was

moving. there are safety concerns which prevent children from doing that. sometimes, many kids just don't have a playground. little leagues may be diminished. we need outlets for people to get exercised into one of the things we're doing is working with school districts. -- we need all this for people to get exercise. one of the things we're doing is working with school districts. let's figure out how to get some fresh fruits and vegetables in the mix. sometimes you go to schools and you know what the menu is, french fries, tater tots, hot dogs, pizza. that is what kids want to eat anyway, let's face it. it is not just the school's

fault. it turns out that the food is a lot cheaper because of the distributions we have set. what we have to do is to change how we think about getting local farmers connected to school districts. that would benefit the farmers, delivering fresh produce the right now there are no distribution networks. michelle, she wants to get a farmers market set up right side of the white house so that -- that is a win-win situation. it gives washington, d.c. more access to a good fresh food. there's also a revenue maker for local farmers.

those kinds of connections can be made all throughout the country and has to be part of how we think about health. >> sir, we have time for one more question. >> thank you, mr. president. there is a large number of young adults who are trying to figure out where they fall into the health reform plan. many of them are too old to continue carrying on their parents' insurance plan. yet, they might be under employed and cannot afford the health care. how does your plan account for these on people? >> first of all, one of the things we have proposed is to extend the number of years that young people can stay on their parents' insurance plan.

that fills the gap between college where typically they can get health care and those first few jobs they get. i remember my first few jobs, you are broke. if they offer you health care, you are opting out because you're trying to buy food which you think is important for your health. being able to stay on a parent's health care plan and little bit later. you have a more stable jobs, that can help pull in a lot of young people. it turns out that people are actually relatively cheap to ensure. them being part of this pool, part of the exchange where they can go directly and by health insurance, they will be able to

get a premium that is price comparable to if they work for a big company. it will still cost some money and there will be some young people who would prefer just not to get health insurance. this is where there will be sub who are frustrated because they will have to buy some minimal coverage just let you do with automobile insurance to make sure that you are protected against some kind of catastrophic illness and you are able to get some regular checkups. it will be affordable based on a sliding scale. there will be hard should exemptions, there'll be some people who fall in a different category. they might be a little bit older, they're quite for but even with the subsidies, they cannot afford health insurance. we might have to give some

hardship exemptions. you have the option to purchase health insurance at 10% of your income but if you are in such a tragic situation and you cannot afford that, you are exempt. the easiest thing to do as a politician is to do nothing. you don't offend anyone, you say all the right things, you don't rock the boat, your poll numbers go up, everyone in washington says, that guy's a great politician. you can get away with doing that for years. that is not why i came