also coordinating, of course, with your offices at the federal level, just as you are coordinating with international groups in during these months that will fly ahead as we try to deal with this problem. the current response to the h1n1 strain was coordinated in large part of plans that were developed to deal with the avian flu. in 2006, congress provided approximately $6 billion for pandemic planning and cross agency corroboration. these early efforts and others focused on things to streamline and response to the situation, while our efforts to correct this have been aggressive. we must continue to be proactive and monitor the situation as we hopefully will be able to avoid this, but regrettably we know that it will probably increase in severity. again, thank you, secretary, for being with us, and i look forward to your testimony. >> thank you, mr. chairman, and

thank you, secretary, for being here today to give us an update on the h1n1 situation. when the virus first hit, it was devastating. it caused fear, panic, and many deaths, and there were many unknowns about the virus. we did not know how the disease would prevent -- present itself, or how well it would respond to antiviral medications on the market today or how quickly it would develop resistance to the as drugs, and we did not know if and how quickly we would be able to develop or manufacture a vaccine. while we have learned more on the virus and have done more work on the vaccine, it has spread, and now it is a level six pandemic, the highest warning level that there is, and it has continued to spread during the summer months, which is unusual. we still have to take it seriously. in my state alone, 70 people have died since the beginning of the outbreak, and over 570 have been hospitalized, and we have

yet to see it at its strongest. have died since the beginning of the outbreak and over 570 have been hospitalized, and we have yet to see the disease at its strongest. in addition, the peak of this flu coincides with the normal flu season which on its own can be extremely taxing on the health care delivery system. i'm curious to hear how the federal government is tackling the fact that this tends to hit individuals under 50 years of age, unlike the seasonal flu that hits the elderly the hardest. the younger population tends to not seek medical care as readily. there have been many questions about our ability to respond to medical mchblemergencies. unfortunately, it's hard to justify spending money on justify spending money on programs that are in place in case something bad happens, especially when the programs needed on a daily basis have been kron cally unfunded. at a time when our economy is just beginning to me understand

number of uninsured is rising, we must be prepared for such a situation, and we don't want to add to the health care crisis and we don't want to behindhind recovery. i want to commend you for the work you've done on this. i know you've worked around the clock to provide tests in states to develop the vaccine to aid state and local governments and keep the public informed of the latest information on the virus and how best to protect themselves for becoming sick. i want to thank you for that and look guaforward to hearing more about how the federal government is prepared for this next wave of h1n1. thank you. >> mr. barton? >> thank you, mr. chairman. thank you for holding this hearing, and thank you, madam secretary, for being here. i want to say that this is a very important issue. obviously, america and the world is worried about the pandemic flu. we have begun to discuss this

this year back in april when we had a hearing on the h1n1 virus. i'd like to review some of the recent history. the department of hhs has responded by declaring a public health emergency which has allowed the food and drug administration to approve the use of approved anti-virals and other measures. the centers for disease control has responded by releasing anti-viral drugs from the strategic national stockpile. to date all 50 states have received their portion of that stockpile, which has been replenished through purchases. hhs is working with the department of homeland security and is coordinating response efforts. much of this work has been successful because we're not breaking new ground. this committee and the federal government has begun serious work back in 2004, so in 2009, while we're not totally prepared, we are better prepared than we ever have been. there are still some issues that should be addressed as outlined in the president's advisory

council of science and technology. it's my understanding the administration is actively working to address these concerns, and i look forward to hearing from you, madam secretary, on those issues. i guess that is it. mr. chairman, i have another part of my statement, but it's on overall health care reform, and i understand that you limited your statement to the pandemic flu. so in the spirit of this hearing, i'm going to do that. i want to take a point of personal privilege and say i appreciate all the good wishes many of you have given me about my birthday. today is my 60th birthday, and i feel about -- [ applause ] >> 30 didn't bother me, 40 didn't bother me, 50 didn't bother me, but 60 bothers me. i'm blessed to have a great family, great friends, and i think i'm on the greatest

committee in the house of representatives. >> thank you, mr. barton. i, too, want to wish you happy birthday and tell you you don't look a day over 59. mr. dingle? >> thank you, mr. chairman. the gentleman from texas is spoiled by opening remarks. it was my intention to congratulate him as a fine young man who has performed well in his responsibilities and congratulate him on his 60th anniversary and hope that he reaches many more. i'm sure that at least i am the first in this committee to have the privilege and pleasure of doing that. so mr. barton, all of us on the committee do wish you a very, very happy birthday and many, many happy returns. now, mr. chairman, i want to thank you for holding this important hearing, and i want to welcome secretary sebelius and thank her for joining us this afternoon. madam secretary, you will recall

that your father was a member of this committee, a very distinguished one, and i'm sure that gives you good memories when you appear in this room. you have taken a proactive role in preparing our country for the upcoming h1n1 pandemic by implementing surveillance procedures to attract an outbreak, measures to keep americans healthy, a proper vaccination plan and a strategy to disseminate information of importance. i want to commend you and look forward to hearing your update on the administration's progress in planning for a potential outbreak. at the same time, i want to recall that on an earlier occasion, we made some fine mistakes in dealing with a health problem of this kind on a related virus which led to some splendid costs and some fine earnings for the legal profession. and i want to tell you, madam

secretary, i'm pleased that you have not fallen into any of the holes that your predecessors did on that one. in any event, we have held, as all know, a hearing earlier on h1n1 when there were only the first few people who were infected with the virus. it appears that the spread of the influenza virus that we're discussing did not let up during the summer as some had hoped, and experts predict an increased number of cases in the upcoming months. as of september 5, 2009, my own state of michigan has already seen 3,419 confirmed or probable cases of h1n1. further, 11 people, most with health conditions, have died after contracting the virus. all 50 states have reported now that there are cases of the

virus within their borders, and nationwide about 600 persons have died and 9,000 have been hospitalized. these figures highlight the need for the congress and the administration to work together to prepare for the months ahead. preventing the spread of h1n1 will require collective action not only from federal, state and local governments but also from individuals as well. to address this, it is imperative that we prepare evidence-based programs for parents, children and businesses and also public health professionals on what to expect as the nation prepares for more flu cases than seen in the past few years. i want to applaud the administration and the federal government for stockpiling vaccines, masks, anti-viral medications, ventilators and other things necessary to address the potential, upcoming problems. influenza is unpredictable, and

we must, indeed, be prepared for a wide variety of surprises. today federal, state and local officers are planning on executing multi-media outreach campaigns to arm americans with the information they need to best keep themselves healthy or to address their problems once they become ill. this is imperative because while we wait for h1n1 vaccine to become available, we must each play a part in slowing or reducing the spread of the virus with simple steps like hand washing and staying home when sick. additionally, it's important for families and businesses to prepare their strategies for dealing with h1n1. i have created an h1n1 agenda for my own office and urge other businesses here and elsewhere to do the same. i look forward to working with you, mr. chairman, and the committee, and also with you, madam secretary, as we seek to

mitigate the outbreak of h1n1. thank you, mr. chairman. >> thank you, mr. dingle. mr. stupak. >> thank you, mr. chairman, for holding this important hearing on the pandemic preparedness. ms. secretary, i look forward to hearing your testimony on the health and human services actions getting ready to prevent or respond to the spread of h1n1 flu. when the pandemic began in late april, state and federal officials worked quickly to prevent the outbreak. aen-viral drugs were rereesd from the stockpile and many steps were taken to come up with a vaccine. they spent 1.9 billion for flu response, and that additional 5.8 billion was authorized dependent on a release for the

additional funds. i'm interested in learning how much of this money is actually going to public health agencies. in our communities, particularly world districts like the one i represent, our local public health agencies, hospitals and clinics will shoulder responsibility for responding to a public health crisis. it is vital they receive financial support from the federal government. h1n1 is unique from flu season. unlike the seasonal flu, h1n1 affects a different population, particularly young children, young adults and pregnant women. from all accounts i've read, the vaccine will not be ready until mid-october. i'm looking forward to hearing from you what type of infrastructure the cdc will have in place to distribute vaccines in a timely fashion for pregnant women who live or care for young children, health care personnel, people between six months and 24 years of age and people between 25 and 64 who are at a higher

risk from the h1n1 because of chronic health disorders like asthma. as chairman of the subcommittee, this is a situation i'll continue to monitor following today's hearing. i look forward to your testimony in learning how the federal government is coordinating with state, and particularly local officials, as a nation we respond in hopefully preventing the spread of h1n1 outbreak. thank you, mr. chairman, for your time. >> with a previous understanding from the minority, we said the only ones who would be recognized for opening statements would be the chairman, the ranking member, mr. dingle, and then the chair and the ranking member of the health and the oversight subcommittees, but without objection, the record will be held open for any opening statements from any member that wishes to include them. i want to do this, move on because secretary -- mr. walden,

are you ready for your opening statement? >> you know what, mr. chairman, i'll submit it for the record because i don't want to take too much time from the secretary. i appreciate your offer to do that, and i do hope you'll come back at some point because i believe we have questions on the >> he has recovered and all the families are concerned about this. i look forward to your testimony. >> we are delighted to have you with us. your testimony will be made part of the record and we want to recognize you for the oral presentation. >> thank you very much. >> there is a button on the base of the microphone. >> chairman waxman, chairman dingle, mr. stupach, mr. walden.

it is good to be back. it is it to be back before the energy and the commerce committee and i appreciate the opportunity to give you an update on the public health challenges of the h1n1 influenza. the administration is taking this very seriously. on april 28, i went to the situation room, because this was breaking out, and from the first day this was -- we are working in -- we are working with the government, and the emergency personnel, working with the medical community and the private sector, to actively prepare for the virus outbreak that may develop over the next few months, and to have the

strategy in place in the meantime. since the initial outbreak, since the beginning of the 2009 influenza, not only has the world wide pandemic been declared, this has been the dominant strain in the southern hemisphere, during the winter flu season. we continue to see h1n1 activity, and this has increased now that the fall is under way. we are anticipating a further increase in these cases as the seasonal flu begins to circulate. we have provided each of the members with an update that is in your seat, with more details on the current situation, including an update that is on

the third page of the handout. this is for the center of disease control. handout. dr. ann shooket from the centers of disease control is with me today, and cdc gives us these situational updates on a daily basis, and we wanted you to have the newest information. although evidence to date shows that the virus has fortunately not changed to become more deadly, what we know is influenza is unpredictable and we need to monitor both the impact of the 2009 h1n1 and season al flu throughout the next several months. the virus is affecting more people than we typically see, including children, young adults and pregnant women. and slowing the spread of the virus is a responsibility shared by all of us.

chairman ameritus dingle already said there are some simple steps, washing hands, covering coughs and sneezes and staying home while you're sick is the big step. www.f www.flu.gov has some steps to help prevent it. on that web site, flu.gov are widgets, if any member of congress want to put a widget on your own web site so your constituents can monitor on a daily basis, see the regular cdc guidance, we would strongly encourage you to do that. if i'm speaking in technospeak, a 12-year-old can be hired easily and tell you what to do with a widget.

my recommendation -- oh, i apologize, ranking member barton, i should have started with a happy birthday. you'll find the 60s will treat you well. it's a good place to be. to date the cdc has issued recommendations on how individuals, skoolsz, child care services, universities can guard against the flu as well as the appropriate use of anti-viral drugs. all of those are on the web site and can be downloaded and shared with constituents and groups if you're going to have some meetings at home. guidance on infection control and worker safety and health care settings is forthcoming in the next few days. as i announced, this weekend we plan to initiate our h1n1 vaccination program in october. mid-october is still the target for the large-scale campaign to

get underway, but we anticipate having limited amounts of vaccine available a week or ten days earlier. i'm pleased to report that today the food and drug administration has approved applications for vaccines for the 2009 h1n1 virus from four of the manufacturers of the u.s. licensed seasonal influenza vaccines. the vaccines for this virus are being produced under careful fda oversight using the same licensed manufacturing process used in facilities used for seasonal flu vaccines that are provided every year to protect millions against the flu. and in response, mr. chairman, to your point, seasonal flu vaccine is now available widely in sites around the country, and again, we are urging people strongly, particularly if they're in the target population for seasonal flu, to go ahead and get the seasonal flu vaccine

right now. we recently just last week had good news from studies being done both by nih and manufacturers. a single dose of the vaccine rapidly introduces a strong immune response in healthy adults. we think that age group could go down as low as age nine, but the clinical studies in children and pregnant women are still underway, so we don't have the full data about whether children will need two doses or not. they do in seasonal flu, younger children. we're still waiting for those results to be back. and, mr. chairman, originally we thought that it would take up to 21 days for the immune response to be robust and it's showing up in eight to ten days. that's very good news. so one dose, eight to ten days for most of the population above age nine, we think, is a very

positive step forward. the trials in pregnant women are underway, as i said, and in children, and our expectation is that the vaccine will be a good match in protecting against these populations as well. once ready, the vaccine will be shipped through a central distribution system and available in up to 90,000 sites around the country. every state was asked to develop a plan and identify the appropriate vaccination sites. our contractor is shipping directly to those sites so there is not a glitch along the way. two types of vaccine: a flu shot made from inactivated virus and a nasal spray made from live weakened virus will be available free of charge, though some providers may charge an administration fee.

and again, congress did authorize funds at the time of the supplemental bill to cover some of the costs, and the department of health and human services has expended on top of that about $1 billion in our funds to get that process started before the supplemental funding was available. cdc's advisory committee on immunization practices recommended that initial doses of the h1n1 vaccine go to people with the greatest risk of complications from the flu as well as those who have frequent contact with those at risk. we're working with states, territories, tribes, local communities as well as the private sector to help distribute and adminster the new h1n1 vaccine. thanks to congress, we've allocated $1.44 billion for states and hospitals for

planning and preparation. the nation's current preparedness is a direct result of the investments in support of the congress and the hard work of the hhs agencies and state and local officials across the country both recently, but certainly over the last several years. so we look forward to continuing to work with congress in the weeks and months ahead. again, mr. chairman, i thank you for the opportunity to participate in the conversation, and i look forward to taking your questions. >> thank you very much, madam secretary, for that update. there are many members here, because this is an important hearing, and i know you have to leave in a couple of hours, in order to accommodate the members, what i'm going to do with mr. barton's assent, is ask each member to ask one question. we will put the timer on three minutes, but we would appreciate it if members could ask just one question, but no more than three

minutes. mr. barton, is that -- >> yes, and i want the minority members to know that i support this. in fact, it's my recommendation, there is a precedent for this. other cabinet secretaries that have been before the panel, we have adopted this practice. i think it's fair so that the junior members have an opportunity to ask a question as well as the senior members. >> thank you, mr. barton. i'm going to start off the questions with a more junior member to me, mr. marsie. >> thank you, mr. chairman. one of the real questions that people have is the safety of this drug, and there was a real concern going back to 1976 and that swine flu epidemic and the diseases later associated with the distribution of that drug.

so just so i can understand this, this drug has not yet been fda approved; is that correct? >> it just was licensed today. >> it was licensed today. that's great news. can you talk a little bit about what is different -- what the difference is between this drug and the drug back in 1976 in terms of what the fda and the agency believe will be the impact on americans? >> well, mr. markey, one of the first steps the president took was to actually gather the experts from 1976 together and ask for advice about what went right and what went wrong. and we had an opportunity to meet with everybody from the then-secretary of health and environment to the surgeon general to some of the scientists who were involved, and they gave some very good

advice. the principal difference may not have been in the manufacturing of the drug but the fact that the flu never spread, so that the outbreak that was initially identified among about 200 soldiers in fort dix never went anywhere. so a massive vaccination campaign was launched. about 40 million americans were vaccinated, yet there was no flu, not in america, not anywhere. so we are in a very different situation today where we know this virus is spreading, and this vaccination -- vaccine is actually being manufactured exactly like the seasonal flu vaccine. it's showing up in the same way, and it's using the same processes and procedures, so in terms of the safety and efficacy, while there are clinical trials under way to determine the right dosage and, really, the efficacy of the

vaccine, is it hitting the right target, there have been years of clinical trials and lots of data gathered on seasonal flu vaccines, so we are assured by the scientists that lots of steps have been taken along the way to make sure that this will be a safe procedure. there has been more oversight than in '76. bett better, made somewhat differently, less oversight in testing and quality. we do not anticipate the same problem. if it was a different problem than seasonal flu, we would have more concerns, but it is similar. >> madam secretary, i may have questions for the record, but my one question is something you may not be aware of. i was briefed this morning by officials from texas a and m, which is not in my district but it is the school that i went to.

they have developed a -- if i understood them correctly, a vaccine that is made from hydroponic tobacco that they can produce up to 100 million doses very quickly if necessary. are you familiar with that, by any chance? >> mr. barton, i don't know about that vaccine. i do know that tobacco is one of the growing agents looked at as an alternative to the egg-based vaccines, but i don't -- >> if i were to get the researchers to touch base with your staff, would you all be willing to be briefed about that program? >> sure. absolutely. >> thank you, mr. barton. mr. dingle? mr. dingle had to i am worried about the emergency room capacity. there was a report from science and technology that said that there could be 1.8 million

hospitalizations during the epidemic, and this could be up to 300,000 that would require an intensive care unit, and this could occupied 100% of these beds during the epidemic. without the epidemic they usually isolate close to capacity. with regard to the nation's hospitals, do we have the capacity to meet this potential of demand and can you tell us what steps are being taken to prepare for this search? >> i think that this is a very important question. palone, i think it's a very important question. part of the planning effort that was launched well before this virus was identified was in

building surge capacity for hospitals and billions of dollars have been invested over the last number of years. in fact, i had a chance here in d.c. to visit the five regional center sites that have been developed to get even increased capacity, and one is here in washington, d.c. and get a sense of what they're doing. so there have been recent dollars put forward but also dollars over the years to have that planning go on for surge capacity. we are concerned that we also try to get information to the public as rapidly and as clearly as possible. the worst of all worlds is to have everybody show up at the hospital or come through an emergency room door. the vast majority of individuals who get h1n1 so far are not

terribly ill, do not require additional treatment and certainly don't require testing to see what kind of flu they have. so that we're trying to assure people the flu is the flu is the flu right now. cdc will continue to test through hospitals and other areas, those who are getting seriously ill so we can monitor the cases, but the testing isn't required. so we have resources to hospitals, we are helping with systems that will put in place additional medical capacity, everybody from the medical reserve corps to additional personnel who we can help with assistance. so we don't think at this point that the presidential advisor's scenario is the most likely

scenario to happen. we watched the southern hemisphere very closely and what they have done with surge capacity, and we'll learn a lot from them, but they had no critical emergencies that weren't able to happen without shifting some space. so i think at this point we're doing everything we can to get people ready and provide for some alternative, but part of it is to diminish, hopefully, the strain on hospitals by encouraging people to go to the web site, call their health care provider and urge them to take steps that they would with the regular flu. >> thank you, mr. palone. mr. deal? >> will the distribution of the vaccine be sent to the states and the states will determine where it will go to within their states, and will there be a determination of how much goes to each state and what will be the factors that will be looked at in determining how many doses a state would be allocated? >> the distribution is based on

a per capita basis, and states absolutely develop their plans, working with their emergency personnel, local health departments and others to determine the vaccination sites. so again, the distribution contract is not going to go to one central site in a state as the traditional vaccine. it's going directly to the sites that have already been predetermined. states were asked to send plans to the cdc. part of the resources by congress helped with that planning effort, and the contract will be up to 90,000 sites determined, so it will be some traditional, you know, providers' offices and health clinics and hospitals but also a number of nontraditional sites. >> could i ask one brief question on that? that per capita amount, is that determined by who the cdc thinks should be eligible for getting

the vaccination or a general per capita? >> it's a general per capita amount in terms of how it rolls out. we will have enough vaccine available for everyone. there is enough on order. we're looking now at the reorders for the one dose versus two -- there will be enough vaccine. what we're concerned about is getting it to the priority populations as quickly as possible. that's what we've asked the states to focus on, how to get, you know, pregnant women, children under the age of 24, care givers of infants, health care workers, how to make sure that those folks get to the front of the line, if you will. >> thank you, mr. deal. mr. greene? >> thank you, madame secretary and i've read several articles in the media indicating administration supports voluntary school-based vaccination to protect our children from, h 1 n 1. i'm a co-sponsor along with my

colleague from pennsylvania mr. murphy with a pilot program. it would allow hhs to per terrible multistate demonstration process to test the feasibility of using schools as an influenza vaccination center in coordination with school nurses, school health providers, insurance companies, private state insurance agencies and private insurance. i'm pleased bill is part of hr 3200. would the administration support a voluntary multistate school-based seasonal influenza and h1n1 vaccination program such as was created in hr 2596? let me say that that version, i know senator reid in the senate is looking to do a national version of that particular provision. >> mr. green, what we're going to have is a demonstration, national demonstration project of the bill you just suggested. going on in the next couple of

months. certainly our leadership at the centers for disease control feel strongly if we're successful as using schools as partners in vaccination that that may be a great way to enhance the vaccination takeup rate going forward for seasonal flu and other issues i'm old enough that i was part of the group with the early polio vaccine and we got that vaccine in school. that was always a partner. we have school districts eager to be vaccination sites and are standing by to do that. we'll know a lot about your voluntary program and we think it probably will be a very good idea. >> being part of the sugar cube generation, also, that i think this important, again, it needs to be voluntary. but we can't have a great deal of more coverage by dealing with

our schoolers, our center and our community and we're talking about our children. >> given the age group this virus is targeting we thought schools and actually daycare centers and others are very appropriate outreach sites to reach the population who we need to reach, so working closely with the secretary of education and his counterparts, superintendents and governors and i think most governors are very enthusiastic of having the schools be voluntary vaccination sites. >> thank you, mr. chairman. >> thank you, mr. green. mr. murphy, you'd be next. >> thank you, mr. chairman. a pleasure to have you here madame secretary. thank you for your work you're going on health care, too. as part of this i'm assuming part of the aal yis you did with this virus, the impact it would have overall on our america's health care system including the costs, one of the issues this committee is trying to grapple with, as you are s the cost of

health care in america. we have an -- time getting information that has to do -- therefore, i'm wonder if your office has gathered some invest, analyzed that as this, for example, as these vaccinations are advanced out there earlier, what we are saving and what is this overall that comes from, yes, the government is spending money to move these out there, but what is the impact on saving money? saving health care costs and i wonder if you have that information. if not, could you get it to us, because this committee really would like to have some of that, if i could say so, mr. chairman. >> mr. murphy, i will certainly look to see what kind of cost effectiveness or strategies we have put together. i'm not sure -- i think we can tell you probably and gather it for you, the cost of what

happens with seasonal flu every year. the 200,000 hospitalizations, the 36,000 deaths, you know, what the impact is. i would suggest, though, what we don't have is then a huge sort of social cost. one of the projections absent a vaccine of this virus spreading even in a relatively mild case which would be 200,000 hospitalizations, 36,000 deaths, that's what seasonal flu looks like every year. if you have a widespread part of the population who misses work, what the impact then is on businesses and trade. whether you can even do continuity of businesses if you have essential workers missing. part of the issue about schools is what happens if half the teachers are sick or how do people go to work if half the kids are sick? so i don't know that we have added those costs but we can try to put together some information

for you. >> i would appreciate that. it is a type of modeling which we don't have. not only in terms of scenarios of analysis, now we have something very real we anticipate it could have an impact on workforce, education, as well as direct and indirect medical costs. i'd appreciate if you get that to us. thank you, mr. chairman. >> thank you very much, mr. murphy. i want to call on miss harman. >> thank you, mr. chairman. thank row for holding this hearing and thanks to a very cape l former governor and very capable team for putting in place a plan to prepare, not scare the public. i want to commend you on the tone of this, that has overcome the original hysteria that met the early stories about the effect of this illness. so thank you very much. my question really is taking this to the next level or, perhaps, to the next problem. is this basic set of protocols

we now have in place and the public pitch that we are making quite effectively about this strain of flu, will this be -- could this be applicable to, perhaps, a pandemic that's more severe, a possible biological attack in our country, or other huge health challenges that might arise? and if -- if this set of procedures and protocols and tone that we're using is not applicable, what steps can you take now to be sure it does -- we are -- we are able to adapt it to future problems we don't presently anticipate? >> i think that's a great question, and no question about the fact that congress working with the prior administration put in place steps, really, that have been executed over the last six or seven years of not only

resources that have amplified efforts within the deparent of health and human services including, you know, our own vaccine development operation, enhancements to nih and centers for disease control and fda, but certainly resources at the state and local level and a lot of planning. as a former governor, we went through pandemic planning. i never dreamed i'd be sort of here with a pandemic, but we called together efforts over the years. so i think at a minimum what is happening over the next several months will enhance our entire public health infrastructure. having hospitals look at the spring where the gaps were, re-double efforts to get ready for the fall is enormously helpful, how they direct resources. looking at workforce issues, how to get, you know, vaccinations

to people. a huge challenge and is an ongoing challenge is just information. how to make sure folks can access timely, accurate information in a very transparent fashion and walk that balance between there is no question that what we've -- what we will do well prepared us for everything else, the man-made disasters and the infrastructure strategies, working with a partner throughout government and the private sector is helpful, and that is what you go through in every region. we have not done this nationally in 40 years. >> thank you. >> thank you for taking the time to talk with us. i am happy that you are here and i do not envy the task in front of you. this will be a rough flu season,

from what we are hearing already, and i think that the free flow of information will be an imperative. and we will try to handle this with the districts, with the schools and the public events that are taking place. you have testified before the committee, twice. the first time we were working on the health care reform bill, and now, we are looking at what could end up being -- significant to the constituents, and the impact of that health care reform bill, which is a public health situation that we know is going to be in front of us, now when you were here before, we were talking about the issues in dealing with health care. we talked about this situation,

and i ask you about the issues that were there. the response had time to -- took some time to get to me. this was a single sentence and i have just received a response to the other question. i am thanking you for getting those. i do ask that, as we are moving forward, knowing that this is going to be critical, that we have timely and accurate information, we have the free flow of the exchange on the public health issue that affects the districts and this may be more timely in the response to the question. this was bordering on disrespectful. ittle bit kurt and inadequate and bordering on disrespectful. i do want to say thank you for the widgets. i appreciate that those are on

your website and that we can link to those and i do want to ask you, as we're talking about the supplies and the supplies being let to the states and you mentioned those that are most vulnerable to the flu. are those, the physicians and the care givers that are going to administer the flu shots, do they have a ranking or priority system or will the states work that out? are thaw going to take seniors and pregnant women first or can you give that guidance on that protocol is going to be for who gets to go at the front of the line? >> congresswoman, we have not tried to determine for states the most appropriate way to get to their target populations. we thought that was a local and regional decision. we have done a lot of work with the provider community, outreach

directly to ob-gyns, outreach to primary care docs, health clinics with health infrastructure. states are submitting plans based on their own determination, region by region, area by area, how best to target their vulnerable populations and that's where the vaccine will be -- >> so our best response to those populations when they call our office is consult your local physician? >> in terms of where to get the vaccine? >> and who gets priority. >> well, their local physician won't be determining who gets the priority. again, the state health department has determined that, and that information should be available right now. there will be vaccine for everyone. >> gentlewoman's time -- >> it will roll off the line simultaneously. the state redetermined where the priority areas are. what sites should get it. >> thank you. >> thank you, gentlewoman from

wisconsin. ms. baldwin. >> thank you, mr. chairman. thank you, secretary sebelius, for your testimony. encouraging news in terms of the hope that one dose will be sufficient, that it will be getting the desired immune impact within eight to ten days and that you think you'll have sufficient dosage for everyone starting with priority targets. i have a few questions, very short questions related to that vaccine, the vaccine issue, and then in follow-up we'll submit written questions on strengthening our public health system addressing work force shortage issues. but on the vaccine, three quick questions. of the 195 million doses ordered, is the hope that you can reach everyone through use of that that you've also

ordered. tell me a little bit about the adjavant during this season. second, i know we had shortage of seasonal flu vaccine i think back in 2004 when there was closure of production facility in the uk. we did not have a lot of domestic manufacturing capacity at that point. i believe that has changed. i wonder if you could tell me of the five manufacturers that we're working with for these doses, where their facilities are located domestically versus foreign. i believe you announced in your testimony that four out of the five manufacturers have been appro approved today by the fda. what's the status? is there any reason we should be worried? >> no adjavant is currently anticipated to be used in the united states at all. there are some backup plans if things took a terrible turn for the worst. we have never used in any

widespread area an adjavent of vaccines. the scientists strongly recommended we not head down that path and this time. the current purchases are likely to be enhanced to get to the point, what you've reported is the initial purchases, but as we see the takeup rate, as we get the rest of the clinical trials we will make the purchases based on what is anticipated the takeup rate is for 300 million potential users. as you know, 100% of the people will never get vaccinated for anything, unfortunately. we currently have five facilities in the year that we ran out of vaccine there was one. and -- i'm sorry, we were down to one. there were two bullet one wt on debilita debilitated. i can't tell you right off the top of my head where they are. what i was told yesterday by the

vaccine committee, we fully anticipate all five will be licensed. there were final steps needed to be taken in the final contract. >> on the domestic production and vaccines being made in america, i remember particularly telling hearing during the last administration where if we were having a particularly variant pandemic, the perception was if we were not manufacturing it here in the u.s. it wouldn't be valuable for us in the u.s. >> gentlelady's time. gentleman from georgia. mr. gingrey. >> madame chairman, thank you. madam secretary, thank you very much for being with us again, let me just say at the outset that your efforts along with those of secretary janet napolitano when, way back i guess in june/july when you were

getting confirmed, i think you've done a great job. no question about it. i don't think anybody could ever accuse you about being katrinaed on this issue. you've got b a lot of money appropriated toward this effort. my only concern back then, a little bit lesser now, was the issue of greating a pandemic of fear. i mentioned that to you and you have already addressed that in your testimony, but i want to ask you about particularly -- particularly about pregnant women because that was what i did in my previous life as an ob-gyn physician and i have three adult daughters and a daughter-in-law and nine grandchildren, daughter-in-law just had a baby three weeks ago. >> congratulations. >> thank you. thank you, madame secretary. very concerned was she, though, about this issue of the swine flu and what should she do and

that sort of thing. questions about what if she got it, what would be the risk to her, especially in the third trimester as she was then. and what was the risk to the fetus? and i think that we need to get more information. i noticed on web md, a recent printout from web md, july 29th, 2009, it says, pregnant women even if they are healthy are at high risk of hospitalization and death from h1n1 swine flu, the cdc reports. now, i would like for you to answer that question. are they -- i know they're increased risk over the general population and there are certain issues with decreased lung capacity and not as vigorous immune response because of their pregnancy. it does put them at higher risk than the general population of women, but are they at high risk

of hospitalization and death? i think the answer to that is probably no, but comment on that if you will. >> congressman, what we saw in the spring is that pregnant women constitute about 1% of the population. they were 6% of the hospitalizations and deaths that occurred. a significantly out of kilter population and previous -- with no underlying health condition other than the pregnancy. we're not talking about somebody who had diabetes going into pregnancy or someone with chronic lung condition. >> yeah, definitely at higher risk than the general population, maybe as much as a factor of five. >> six would be the -- so in terms of the outreach we have tried to be -- and that was not only the u.s. data that's showing up around the world, but, again, pregnancy seems to be in and of itself an underlying health condition that

significantly enhances the risk, so i know that for a lot of pregnant women, i certainly did this myself, was reluctant to take anything during the term of the pregnancy, but on talking to a number of ob-gyns, looking at the data, talking to the scientists, there's a great belief that the risk of any sort of event occurring because of the vaccine far is outweighed by the risk that occurs without being vaccinated. in your daughter's case, a new mom, baby's under 6 months old are not recommended for the vaccine. so another of the target population is care givers of infants six months and younger to try and protect the infants. >> madame chair, i realize my time -- can i do a real quickly question? maybe we can do a second round. i yield back.

thank you, madame secretary. thank you. >> thank you madame chair and thank you madame secretary for being with us here today, again. in states and cities across our country, local public health departments are getting decimated by budget cuts. in my hometown of sacramento, the public health department has had to cut 17% of its budget this year alone. these cuts mean in my district alone the public health department will be losing three communicable disease specialists and two microbiologists from a public health lab on top of losses in field nursing staff, bioterrorism preparedness workers and people who work behind the scenes every day testing samples for h1n1 virus and other communicable diseases. the one bright spot in the statistics is my local public health department will be able

to retain some positions thanks to a one-time recovery dollars. what are their plans, do we have at cdc in the department at large to help public health departments cope with the huge responsibilities they're going to have soon and also, too, what is the plan if the virus mutates sometime soon so we have a greater endemic emergency? >> well, congresswoman, part of the planning effort has certainly been to recognize that the situation you're describing in california is nationwide. that public health agencies have been severely hampered by the budget cuts so the resources, the $1.4 billion which was pushed out, hopefully will help enhance that. we've also reactivated the

commission corps, the energy group of retired medical providers and volunteers who came together after 9/11. they're now about 200,000 strong tlouts the country, registered in every state and kind of put them on notice to help with the we have the health workers who can be brought in to supplement this, and as they said that it plans, they recognized that some of the challenges is with a restricted core of personnel, trained personnel. and again, we are not focusing -- we are not telling people to assist with the testing protocol. right now we are moving to the vaccination, to try to diminish the circulation force of the earlier activities.

>> the gentleman from louisiana? >> thank you. thank you for coming before us. the questions that i have regarding the h1h1 situation. with the address to congress, there were some things that were said regarding the new developments on the health-care debate. since the bill that passed through this committee, they said that they would add 279 -- $239 billion to the debt -- to the debt, and the president said that he would not sign a bill that would add to the deficit. would you support the changes that would be necessary to make this pass out of this committee and comply with those of initiatives that he stated before the joint session, to

make certain that the bill does not add to the deficit. and that would make certain that the illegal aliens would not have access to the government plan? >> i am pleased to have any number of discussions about health reform. you know that this is a top priority of the administration, we asked that this hearing would be on age 1 and 1. >> we have never had the opportunity to ask you about this. the only testimony was when you had not looked at the details of the bill -- and we have no chances to talk to you about this. the concerns we have that are in hr 3200. >> would the gentleman yield? would the gentleman yield to the chair? >> i would yield, yes.

>> i would advise the gentleman on behalf of the chairman that he does intend to have further discussions and meetings and hearings and the chairman really has asked the secretary to come and be prepared today to talk about the h1n1 situation and i think it's, you know, obviously members are allowed to ask any questions they'd like, but i think the secretary's really prepared on that topic today and i can communicate to the chairman that he should have the secretary back. i know she's willing to come. >> i mean, i appreciate that. the problem we have is that these substitutions are ongoing every day. there could be a bill on the house floor. we don't have any assurance we're going to have a hearing before a vote occurs. i would imagine the secretary's well-versed in these issues because i know you were in the joint session with us last week in the house chamber when the president made those firm commitments. would no sign a bill that added to the deficit by a dime. would not support illegals getting access to health care. in the cbo testimony, cbo sat

here in the chair you're sitting in and said 8 million illegal alien yns would have access to the plan you supported and said it would add $239 billion to the deficit. i'm sure you understand those issues. you were there at the speech last week. i'm sure you have ideas of how we can fix that. we've got ideas of how we can fix those problem problems. would you support the fixes that would be necessary for the bill the president said before congress? >> as a recovering legislator, i'm reluctant to sign off on legislative language. i would be maep to look at it to see if i could support it. i support what the president stated going forward that he will sign or not sign a bill. i think you can -- >> right, we presented -- you weren't here i know, but we presented some of those here to fix those two problems. >> if you'd send me that language, i'd be delighted to

take by it. >> i'd like a commitment by the acting chair we could get the secretary back before a vote is taken on the house floor. >> gentleman's time is expired. i did give him extra time because of the come comequestion. i know we could work with the secretary. with that i recognize the gentleman from michigan. mr. stupak. >> as far as the last gentleman, section 236 of the bill makes it very clear illegal aliens are not available to get health care under hr 3200. if you remember, the markup with us, the space amendment, schip and medicaid made it illegal, unanimously adopted by the committee, but so be it. let's move on to h1n1. states are expected to purchase a portion of the need needed to vaccine to protect our citizens.

it includes a 25% subsidy from the federal government. a lot of our states are suffering right now because the economic downturn and may not be able to meet obligation because of limited resources. is there some kind of a plan available under dhs to help some of these states like michigan, california, others that are struggling? i don't want anyone not to get it because of state budget concerns. >> congressman, through the resources that congress has provided and through the resources from the department of health and human services, the vaccine will be free. distributed to the states free. they are not expected to have a cost share. i think there has been a cost share associated with their purchase of anti-virals which are in the stock pile but not with the vaccine. the vaccine is free. there may be an administration fee by the provider but there is no fee to get the vaccine. >> what about the anti-viral then? >> states have purchased

anti-virals over the years in a stock pile. those are being pushed out as we speak. the department is continuing to replenish that stock pile. >> no states smould have to worry about not being able to afford or acquire the anti-virals? >> that's right. >> it's traditional flu season and people are getting their shots. is there some kind of waiting period they should have before getting the seasonal flu and h1n1 flu shot? >> well, again, since we don't anticipate the real supply of h1n1 until october 15th, we're saying people get it now. it's my understanding the clinical trials under way right now are looking at whether or not there is any harm to simultaneously getting the flu shot. as we get closer to october we'll have that data available. >> let me ask you this. i'm from northern michigan and we share border with canada. we go back and forth daily. we're doing a lot of preb ration on this side.

is there special situations given to border communities? what are they doing with those countries? places they're moving back? we have a much more robust program in this country. i haven't seen the same in canada, especially canada. >> the department of homeland security looked calfly at that issue and scientistic advice during the spring and it was determined since there was already a robust outbreaking of h1n1 already within our borders that border closings really would harm commerce potentially but not really help with the disease outbreak. so there is no anticipation at this point to do anything with our northern and southern -- >> i don't want to see a border closing. are you coordinating with other country, canada, in particular, to make sure we're doing the same things? education programs? >> there has been a lot of national and international discussions and particularly with canada and mexico. that has been under way since the early spring and we'll continue. >> very good.

>> gentleman from oregon. >> thank you, madame chair. i appreciate the chair's commitment to have the secretary come back before the committee, before we have a vote on the health care overhaul bill in the house. >> i don't have that power but i'm going to talk to the chairman who does have that power. >> if you had that power you'd give us that commitment i know. i appreciate that because a lot of us share that concern. i also want to draw attention to the secretary to a letter that -- bipartisan letter mr. rogers, mr. gonzalez eni sent to you recently regarding the 2010 fee schedule on medicare as it relates to cardiologists and oncologists and proposed cuts that could be as high as 40% in some codes. if you haven't gotten that, i don't expect you to be on top of every letter that comes your direction, but if you flag that one we'd appreciate your response 37 i was reading a story in one of the papers coming out here yesterday from oregon, problem in the southern hemisphere related to h1n1 as it

related to folks in the hospital trying to deal with those who are sick. they raised the issue in the story, at least, that the hospital workers, nurses, doctors, others, did not have a sufficient and early supply of ma masks and other protective equipment to prevent the spread within the hospital setting. are you and your folks confident that in these environments where all of us who get sick are going to rush, that there is adequate whatever we call it, the materials, the masks, the protective equipment, the whatever, so that those we rely upon for our health care will in and of themselves be healthy in the process and not at an unnecessary risk? >> congressman, that discussion is actively under way. as i said, the guidance from the cdc is about to be issued. we -- the scientists have not

been in complete agreement about the right protocol, particularly with the use of res praters going forward. the request went to the institute of medicine to do a rapid response study. they came back with a protocol which i would suggest is the ideal case scenario, a respirator per provider for every patient seen. there are no adequate supplies to follow that protocol. >> so one new respirator for every patient. every time you see a patient the doctor or nurse would have to put on a new respirator? >> that's what the iom suggested. the stock piles in the country, the manufacturing capacity would not allow us to follow that protocol so right now we are working actively with osha and cdc and the health care providers to develop a protocol that actually is more in fitting with what the supply looks like

because iom was told not to take into account what's available or what could be available over the next six months. unfortunately the reality is we've got to look at what's available, so that discussion is actively under way. >> on that topic, the vice president said at one point, probably regretted it, he probably wouldn't put his family on an airplane, et cetera, et cetera. i was on an airplane yesterday and the person behind me was coughing. i directed the air filter to flow backwards. what advance and counsel do you have for all of us -- i realize we have to cover our mouths and all. if you're on the other side of that, should we be wearing those kinds of protective face masks when the outbreak comes? is that going to be helpful or is that just overboard. >> what i've been told by the scientists is that probably not. masks are really not -- if you are in a caregiver capacity and

in a home situation coming in close contact is may provide some protection. basically, no. and if you -- if this continues to present much like seasonal flu and, you know, a number of people get hospitalized with seasonal flu every year, we don't have that kind of rigid, fitted mask protocol under way. so we're trying to balance safety and security. what's most alarming and i think all of you would be great to help with, health care workers right now don't get vaccinated. less than 50% of health care workers ever get vaccinated for seasonal flu, though there are priority groups for h1n1. we're afraid that rate may be the same. i would say that's step one, take advantage of the protection that's there with the vaccination. both with seasonal flu and then with, you know, the h1n1

vaccine. they're at the front of the line and we would hope that they do that. >> gentlelady from the virgin islands, miss christianson. >> thank you, madame chair and madame secretary for being with us again today. individuals 25 to 64 with underlying medical conditions such as asthma, diabetes, groups, for the forth coming vaccine. racial and ethnic minorities are disproportionately affected by these. more, your clinical trial, are the people in the clinical trial, what outreach has been done that is culturally and linguistically appropriate to reach sometimes hard to reach populations often with poor public health infrastructure to ensure they get the adequate prevention, treatment and so forth? >> the clinical trials, it's my

understanding, are diverse and we're aware of the concerns that have been raised in the past. again, a lot of the trials under way are specifically about dosage because the clinical trials have been done for years on seasonal flu which deal a lot with outcomes. the challenge of communication and outreach strategies is one that we're taking very seriously, so tradition media's being used, nontraditional media, ethnic-specific media, translating everything on the website into spanish, into vietnamese automatically then other languages can be requested as needed. looking at a variety of media outreach that reach nontraditional community, working with the faith-based and community -- >> a lot of these communities are also not connected. >> right. so we're using the faith-based

groups to connect. for the younger population, it's an equal challenge, so facebook and twitter and espn@@@@b >> dr. burgess? >> thank you, madame chair. secretary sebelius, i guess i should point out for health care

providers of my age, we were -- most of us in the midst of our training during the last swine flu outbreak during the ford administration, and remember very vividly some of the problems encountered. so as information is gathered as to the safety of this vaccine, i think it is extremely important to get that out and get it disseminated. we had a big problem in ft. worth, texas, with the first rouch round of this in the spring. the school district closed, and i would say, i think appropriately so. they received a great deal of criticism. the school district across trinity river in dallas did not close and obviously there were a lot of comparisons made between the decisions of the two school districts. still i think superintendent johnson did exactly as she should have when she was confronted with a large number of suspected cases and could not get information back in a timely

fashion from the cdc as far as recommendations. to prevent that type of difficulty from occurring again in the fall, i ask and your department was kind to respond. we did a seminar on h1n1 in ft. worth this past august and we had representatives not just from hhs but cdc as well as the state and county health departments. the impression i got from that day's discussion was that the decisions about closure or nonclosure of schools would be left up to the local authorities, but then seemed like less than 48 hours later the guidelines were coming down that your department would decide when schools should close. i simply ask the question, who is going to be making these decisions? is it the local folks? is it you?

is it secretary duncan from the education department? who is going to be making these decisions? because it obviously impacts not just the school year of the kids, the learning curricula of the children, but in texas, of course, we have, like many other states, we have a testing protocol under no child left behind and don't want to see our school districts unnecessarily penalized but don't want our school districts to take on unnecessary risk with the children's safety. >> school closure both in the spring and now moving forward are always a local decision. that's made at the local level. having said that, the centers for disease control has issued school guidance and it's just that, guidance. what they're seeing from the science and what they would remember. at this point the guidance is different than what was being discussed this spring in part because we didn't know how lethal the disease would be and it was very unclear whether or not sending your child to school

could, indeed, cause much more serious harm. we've learned a lot over the spring and summer, learned a lot from the southern hemisphere. the guidance issued by the centers for disease control and put forward by secretary duncan and others in outreach through schools across this country is really leaning toward keeping schools open. having protocols available in the schools to deal with outbreak, isolating kids, sending them home, trying to make sure that teachers and students are vaccinated, but keeping schools open. that could change. the flu could change. we're watching it very closely, but the schools' decision will continue to be made at the local level. >> gentlelady from florida, ms. castor. >> thank you madam chair and madam secretary for all of your efforts in educating the country on h1n1, .

unlike the millions of parents across the country that have been -- we've been teaching our kids, you know, wash your hands all the time, cover your cough, we haven't altered substantially the way we live our lives. so this saturday we had a dozen 9 and 10-year-old over for my 10-year-old daughter's birthday party and they did not protest when i had them wash their hands before snacks, wash their hands again before cake, wash their hands again toward the end of the evening, and -- but wouldn't you know it that one of my daughter's friends got sick at the party. and her mother called me yesterday and sure enough, it's h1n1. now, in the, of course, she's staying home from school and there are a number of kids out this week, but parents want to know, and your guidance is very

good, the cdc guidance is very good, but the question i hear a lot from neighbors and other parents, you know, how long does the child have to stay out of school? this guidance says that -- that a person who has it can infect others up to five to seven days after getting sick. it also says that it's okay to go back to school 24 hours after the fever is gone. so what is -- what is the most consistent answer i can give to parents of a child that has just come down with the h1n1? >> i think the scientists are saying 24 hours after the fever is gone without any medication to lesson the fever, and the problem is that for the kind of average, maybe five to seven days, a lot of kids it may be

two to three days and then 24 hours later they're ready to go. it's hard to give you a date specific. i think it's a child-to-child situation. some have more serious cases. some have lesser cases. 24 hours without any medication since the time you've had a fiver they say is safe to go back. >> even though they could still infect other kids a few days after that? >> well, yeah. the doctor is telling me what they're seeing is the vast majority can't infect at that point and that's why they've arrived at this 24 hours after the fever. >> terrific. okay. thank you very much. >> gentleman from iowa, mr. braillely. >> thank you, madame secretary for joining us and i think everyone is concerned about the public health implications, but there are some unintended consequences of the public health campaign that i think we also need to be conscious of and one of the concerns i pressed at

an earlier hearing when we represented the cdc here was the decision to refer to this virus generically as swine flu despite its origins and the enormous negative impact it's had on our pork industry because of a lot of myths and misconceptions, and, yet, i know public health officials have determined it's easier to get college students attention about the need for getting prepared and exercising precautions when you refer to it as the name swine flu as opposed to h1n1. we've got these conflicting things going on. one of the things i'm very concerned about is how we balance those interests given the enormous economic implications to states like mine when people have half truths and

misinformation and, yet, the reports that i've seen as recently as this weekend in "the washington post," sebelius, news, their choice, not yours. "the new york times," one vaccine shot seen as protective for swine flu. how can we address the enormous public health challenge we're all legitimately concerned about and still address this enormous negative economic impact that it's had on our pork industry? >> congressman, it's a great question and i can tell you it's one we're wrestling with a lot. i hope never out of my mouth have you ever heard that other term and -- or out of cdc or nih or the fda and i have taken it on as a bit of a personal mission when i'm with media reporters and being interviewed

to correct them and ask that they please use the terminology that's accurate because there's a lot of misinformation. we have on several occasions, and i've joined with secretary vilsack and, again, the other side of this assuring people nothing at all in this flu is related to eating pork. you can't get it from pork. there's no crossover. you're -- i know there's been over $1 billion, if i understand it, and that may be very und underestimated at this point. i, you know, we'd welcome any suggestions. i think it's easier to do so they do it, but i would agree it's a huge challenge -- it has an enormous economic impact. i've even suggested and maybe you want to conduct your own media campaign that maybe we should challenge people to use the right terminology and you could send them a pork chop every time you use the right term but take it away. >> or they could come to the

congressional rack of pork reception tomorrow night. >> the chair now recognizes the gentlelady from california. >> thank you, madame chair. secretary sebelius you've been very fasht this afternoon. i hope this won't take the full five minutes. i want to thank you and i want the record to note you really did hit the ground running after your confirmation. you had a lot of issues on your plate. i've seen you everyone on both health care reform in very positive ways and also on this topic. i'm referring to a bicameral briefing you and several secretaries presented to members of congress. it was miss summer, if i'm not mistaken. in between the spring outbreak. my question then was to acknowledge the role that a school nurse played in the first case in the bronx that resulted in massive school closures. as a former school nurse, i sort of emphasized i know why districts closed their schools,

but it's chaotic when it happens. parents have to -- parents don't have backup plans a lot of times and they miss work and all the things that ensue and you find kids on the mall and all kinds of places when that happens. now, to follow the chain of questions that have been asked. i'll -- since this topic has come up, i'm interested in the nuances now that have occurred watching this epidemic as it has proceeded and now adds this school season hit and many of the campuses, a little older, teenagers d i mean, young adults. that environment that can be dealt with somewhat differently because they're not so dependent on parents and jobs and things. still, i'd like to have you address just for a minute for the record, because the relationship between your department and cdc and the local communities is very specific and

i think unlike many other departments with very direct communication, and outline for us a few of the ways that you have been working with local health departments as they, then, are partners with local school districts to formulate and get the right kind of advice tailored to different parts of the country so we behave in the proper way as this comes out both in terms of the immunization plan and what to do. like my friend, cathie castor, her daughter's friend, how do you respond? >> i think that's a great question. since the spring, three cabinet secretaries have been sort of at the forefront of this effort are secretary napolitano with the homeland security and government coordination work, but secretary duncan from the department of education because given the age group of the target population, that has been a real effort.

he has regular calls, regular outreach with superintendents and principals and teachers all throughout. the cdc has specific guidance that's on the flu.gov website which we've asked schools to download and take a look at. what happened to really change the school advice, the guidance that was out from -- leaning toward closing schools leaning toward keeping them open, first realizing it would not present itself as a more lethal disease. secondly, recognizing that there are a whole series of other health impacts for children who are sent home. missing often school breakfast and lunch which has a nutritional impact. become in an unsafe environment which has a significant impact if there's nobody home to take care of them. on balance, given the way the disease was presenting, it seemed wiser that the guidance

be toward keeping schools open, but trying to isolate and send homesick children, urging parents to keep them home in the first place. if they show up at school, send them back home, isolate them until you can find a parent. )@@@)@

my name's john barrow, i represent savannah, georgia, augusta, georgia, and all points in between. our prior response to seasonal flu might not be the best guide for what we should do. it's probably a pretty good guide for what we should do unless we doing something different. less than half the targeted populations we reach out to on a regular seasonal basis get the vaccine that is suited for that situation. so we've got to anticipate unless we do something different we're going to have a rate in response to this new threat. i understand one of the targeted populations we're trying to reach in response to the h1n1 is the population of chin and young adults 6 months to 24 years of age. kind of sets it apart a little bit perhaps from seasonal flu.

i'm having a telephone conference call this afternoon with a pretty influential bunch of folks, with respect to that targeted population. my public health expert, ms. betty dixon, is with me today. she's going to be participating in this conference. we're going to be talking with every superintendent, every assistant superintendent, the principals from every elementary, middle and high school and the deans of students at many of the 18 institutions of higher learning that we have in my district. my question to you is a general one. what can we do, say in the course of that conversation, captive and influential audience to help them get a higher success rate in reaching the targeting population? they have influence over them. what we've been able to do with respect to seasonal flu. what can we tell them that we're not already tell them? >> that they know they have the target population and if it's nothing more than just lots of folks getting the flu, that has

a huge disruptive factor, so having minimizing the spread right now and then vaccinating we know is the best defense against the flu spread. we do have some great information on the website. i would suggest maybe if you put the wijts on your website and urge them to come and download, we've got parent tool kits and information for teachers. >> this is how to. what can we tell them as to why to? what can we do to motivate them to make a gator effort than in the past? >> they can keep people from being hospital iced and dying. if 36,000 children in this country die from this flu, i suggest it will have a huge impact on communities around the country. that's the average death rate for seasonal flu. so even if it's just like regular flu, given the population that basically they are responsible for, that's what

it looks like. so i think you need to convince them that even the regular flu is particularly -- is different because it's kids and it's young adults. they have no immunity to this whatsoever. anybody with underlying health conditions is really at far higher risk. i think just getting them -- their hands around 200,000 hospitalizations, year in year out with seasonal flu. 36,000 deaths. that's what the profile looks like. but typically because of the age of the population who is typically affected and because of typically affected and because of their frail condition, i'm not sure it has the kind of societal impact, community impact. there is, the doctor tells me, a new tool kit for school immunization that will be -- well, that went online on the 13th.

but i just think you know, getting their attention about how even mild flu is very serious. people die, people get very sick, and anything we can do to prevent that, really, we need them to do. >> thank you. >> now recognized for three minutes. >> thank you, madam chairman. madam secretary, what geographic regions of the country is expected to hit the hardest by the h1n1 strain during the winter flu season? any projections that your department has made? seems like the south is reported an increase in cases. that might be just because they start school earlier in the south. i don't know. do you have any ideas on that? >> we really, congressman, have very scattered cases throughout the country over the spring and

during the outbreak. there was no region, one area isolated. we think that the rising cases in the southeast, which showed up first is because of the fact that they did start school earlier and kids came together earlier. we're starting to see cases, though, spread, you know, oregon, kansas. i mowean, so it's spreading as people come back to school, as colleges re-engage. we don't have any information that gives us a regional or local look at what's likely to be more of an outbreak, which is why it's so important that we keep watching it very closely and monitoring what's happening on the local level. >> have all of the states implemented what you consider adequate state preparedness plans for this? >> well, congressman, all states were required in order to access the funding available to help them implement, they were all required to submit plans.

i think that the assessment was that many states are ready in a very robust way. others were in okay shape and some really needed a lot of help. we provided technical assistance, support, on the ground surveillance. we also had teams that did site visits to try and verify what was coming in in the written plan was actually accurate in terms of what was available. so we're trying to provide resources, help, support and get the states ready to go, because a lot of this will have to be -- the shots in the arm are really going to be a state and local effort. >> will there be enough vaccine for all of the states to have -- >> yes. >> and are they adequately stockpiled now? >> well, the vaccine isn't stockpiled because it hasn't been produced. so that the vaccine we hope will begin to be widely available on

the 15th of october, which is the target date. we anticipate having some early supplies, as early as ten days before that, and it will be distributed as soon as it comes off, off the production line. >> my time's up. thank you. >> the lady from california. >> thank you, madam secretary. wonderful to see you, and i want to salute you for your very steady, strong, sensible leadership. whether you're testifying here or i see and hear you on whatever tv program. i think that you speak very clearly to the american people, and i think that we all appreciate that. there are, what, five companies that are making the -- responsible for making the vaccine. >> five companies. >> one of them is med immune and

they are in my congressional district. theirs is a nasal spray. while the others are the traditional injections. what i'd like to know is, is this something that would be better used for children? are you going to make a choice, relative to that? does it really matter? is it good for adults? is it good for children? and how do you think that it might affect the voluntary compliance rate to get the h1n1 vaccine? and what i'm going to do, since we only can have one question is to follow-up on some funding questions relative to this whole thing, but i'll just stick with that for now. >> what the doctor tells me is that it isn't -- the nasal mist is not recommended for the youngest children. >> oh, it's not.

>> 2 to 49 seems to be the chart of population, as long as they don't have underlying health conditions. again, some of the highest risk children would not be recommended to get the nasal mist, but it certainly is a viable alternative for a lot of the population. >> good. well, thank you again for what i think is really special and highly needed leadership. we're proud of you. >> thank you. >> thank you. >> gentleman from -- a question? >> yes. i just want to, again, i was hear for some of the opening statements. welcome, madam secretary here. education, education, education is the key. especially for a couple of thing. obviously, just passing of the flu, the germs and also i we already have a run on emergency

rooms, hospitals, with people just having the everyday flu-like concern, and i know that we have to do a good job calming the public so that they use the services when needed but don't overutilize them when they're not, and i don't know how you -- i'm not a health practitioner, but i don't know how you gauge that, but die think that -- but i do think that education is the key and i would agree with my friend anna eshoo, that your position is going to be required to hold, especially as we come into this season of the year. i have three small -- well i have a junior, a freshman and a fourth grader. so we're all concerned about -- >> that's right. >> we're all concerned when they start closing down schools and maybe before they should, and so i would want to encourage you. i don't have any answers. i would like to defer the rest of my time to dr. burgess.

>> thank you, mr. shimkus. i had a follow-up before the questions with the funding issue, and there was a little over $7.5 billion for the h1n1 flu bill, is that correct? >> that is correct. >> so have these funds been disbursed? are they readily available to you or still being held somewhere in the stimulus pot or -- do you have all the money you need? do you have the funding that you need at this point? >> at this point, congressman, we do. we are drawing that money down. we've made a couple of drawdowns to buy the vaccine and get ready to distribute it now that we have a little more clinical data. we're likely to have a more accurate picture of how much vaccine we're going to need. we've used some of it to replenish the stockpile of anti-virals that we sent to

state to help, as i say, about 1 billion 4, so far as hospitals and surge capacity, buying protective equipment. so we're trying to do this and at this point the funding provides is extraordinarily helpful and we -- >> at the present time you don't anticipate having additional funding requirements that we'll be asked to deal with? >> at this point, i don't have them. again, we are watching this very closely. if this turns more lethal, if it begins to present itself in a different way, if you, you know, things change and the search capacity is wrong -- at this point i think we're on target but it's a day-by-day situation. >> let me ask you one follow-up. alluded to the fact that we've got -- off the subject of the avian flu but so important, the three months' time, cardiologists and oncologists

and indeed all physicians are going to receive 21% reduction in congress doesn't do something. now, we still have a vacancy at the head of the center for medicare and medicaid services. is that not correct? >> that is correct currently. >> how close are we to filling that position? >> we hope very close. >> this is a critical issue and i would encourage you to get that done and, again, congress has an obligation to its provided community to step up and do the right thing as far as the growth rate formula but it's very, very difficult to even get an answer out of center for medicare and medicaid without anyone at the helm. >> we do know, as you probably know, a new leader for medicare and medicaid who are in place. john blum and sydney mann and they are doing a spectacular job, but i share your concern about the leadership, and we are very close. >> thank you. chair now recognizes mr. sarbanes for three minutes.

>> thank you, madam chair. thank you for having all this time with us, you're close to the end here. i know we're all very grateful that you're in this position at this time, because you've handled things so pew beshly and i think with a sense of calm that is contagious in a good way. so just don't get the flu. >> maybe i can walk people through it. >> exactly.

anticipating right now. >> great questions. i think that one of the lessons learned from the '76 experts was that there do need to be points along the way that you make sure you're still on track, because people keep telling me, the predictable batch of influenced is unpredictable. it could change. so monitor very closely what

we're seeing, and part of the lethality is really watching what happens when h1n1 begins to mix with the seasonal flu virus. what we saw in the southern hemisphere is still encouraging. that it did not mutate into a significantly more dangerous virus. that's good news, but can that happen next month, the follows month? yes. so there will be continued monitoring and testing, particularly the more serious cases when they come to the hospital, and making sure that we know that we're on target. the vaccine seems to be exactly what it should be to target h1n1. the robust response is great. the limited time that it's taking is very good, and the fact that one dose seems to actually produce a good immunity response. all of that is very good news, but i think watching the outbreaks, certainly monitoring

very carefully, hospital capacity, how to deal with the more seriously ill folks. we really worry about, right now, anti-viral treatments. we are unfortunately seeing many providers give anti-viral prophylactically, suggesting that people would fill a prescription and take it to prevent the flu. what our scientists tell us is exactly that's the wrong direction, because it actually lowers people's immune response. it could make them far sicker in the long run and it will draw down our anti-viral stockpile. so that is a particular concern that we've put out new anti-viral guidance. we're doing aggressive outreach to the provider community. monitoring, that that really is a strategy, which is very counterproductive in the long run. so i don't know what's the next challenge like that, but we'll have them. >> thank you.

gentleman from washington. >> thank you. do you have any issues as far as prioritization, geographically or otherwise, when we have a vaccine to become available? could you identify any of those issues that the public may be interested in? or we may be interested in? >> there's certainly no geographic priority. we've asked states to present plans, which they have, and the community on immunizations, i mean, the committee on immunizations has developed a priority list based on the science. basically five categories of people who total about 160 million americans. pregnant women. caregivers of infants under the age of six months. children six months to 24, particularly those with underlying health conditions.

adults, 24 and up, with underlying health conditions and health care workers. that's about 160 million people. we still have to figure thousand get those folks to the front of the line. what are the best outreach students and that's where the vaccine lp flow. there will be about 90,000 sites that will receive vaccines based on the state flan plan we have. we're not -- we're just trying to use our bully pulpit in the communications saying that those tart populations, you really need to think about this, and one ever of the challenges, as you all know, will be parents ready to sign consent forms for kids. so information is going home, in the schools, to say to parents, this will be available we think by the middle of october, but here's what the consent form will look like. think about it, get ready to sign it, so if we have a vaccination effort at your school, your child actually can be vaccinated. >> i heard, today, a surprising

comment by an e.r. doc last week when i was home. suggesting that one of the problems may be overutilization of our e.r. room services associated with this. that they're concerned about people coming in -- >> they're worried well. >> they're worried well. we understand worry and would all like to be well. we discriminate information what would you tell us all? may have already talked about this, but it bears repeating in that regard. when should people really feel kpemed to go into the e.r. room as opposed to calling your physician first or nurse? >> i would even back it up a step, that if -- if someone comes down with the flu, either an adult or a child, and there are no serious subsequent, more than a fever and, you know, aches and pains, go to bed. chicken soup. stay away from other folk. i'm not sure you need to take additional steps. anyone with underlying health

conditions. asthma, diabetes, neuromuscular disorders, should contact their physician on presentation of flu-like symptoms. that's the population for anti-virals, that's who needs tam ma flue quickly or relenza. and then center anybody who then is more seriously ill, or a child who becomes lethargic, or there are theories up against tips on the website. you take the next step. but it's really a triage. people who just come down with the flu probably don't need to call a doctor or have an anti-viral or certainly not go to the hospital. >> thank you. thanks for your work. >> thank you very much. the chair will now recognize herself. for the last questioning, and i want to thank you, madam secretary, and also the cdc

staff, again, for the remarkable job all of you have done in getting the information out. in tamping down -- i think that the pub ligs health effort is going really well here. several times in your testimony you referred to the concern that we have that this virus could mutate. we hope that it woen. didn't in the southern hemisphere, but we've had a number of hearings in this committee over the years about various flu strains, and, of course, the avian flaw been a b big -- avian flu has been a big concern of ours. how are we developing a vaccine rather than the traditional vaccine that we're still using for development of the h1n1 vaccine? >> my understanding,

congresswoman, is we're still a come years away from the different technology, the high-tech version. actually tobacco growing is also required, sort of promising, but we are not close to -- i mean the last time i talked to folks it's probably still a couple of years away. >> but are we making a real effort towards these other vaccines? because part of the problem we have, and part of our concern last spring, was h1n1, was that we might not be able to identify the strain quickly enough to make a vaccination, because we do have to produce the egg. >> well, that -- the in -- investing in developing a faster, newer technology is still very much underwiay. it's part of what we're doing on an ongoing basis. so we're trying to accelerate the work, but it's not imminent

that we will have another methodology for developing a vaccine than the egg-based method i. think you can expect more hearings on this topic and we're going to also ask about the experts. >> i would say, i would welcome the -- >> yeah. i mean, because -- because what could happen is, if we have -- if we have an avian flu or some other kind of epidemic that is as -- that is as fast moving as h1n1, then we would have really been in trouble i. think you're absolutely right, and i think this is a you know -- hopefully it won't be more than this, but a sort of wake-up call that up until now it's been hypothetical. it's now very real and we're watching the disease spread enormously quickly. not only in this country but it's now presented in about 120 countries around the world. so we know that this is real. >> right.

and with great rapidity. what are we doing with people who are allergic to the egg-based vaccines with the h1n1 vaccine? can they just not get it? >> i was told they cannot get it, but vaccinated those around them is the best help with that. >> okay. now what is the status right now of h1n1? the avian flu virus? is it still lurking out in in parts ever the world? >> it's still there. it's continuing to cause disease, but it isn't being transmitted very much. >> i have a last question. a 9 and 10-year-old at home. i have the college students. and the college students now, when our kids were little and we had the chicken pox parties. the college students are now having flu parties, where they're trying to purposefully

get -- i don't want to know exactly how they're trying to share the virus, but they are. >> breathing on each other. >> and so she and her friends asked me to ask you, what is your advice about this practice of these flu parties? >> i would say it's a pretty bad idea. >> that was my motherly advice, too. i just want to know from the expert. >> i'm sure they won't listen anymore to me than to you, but, again, this is a serious disease. most people, you know, getting the flu is -- is a problem. you miss work. you mitt -- but for a lot of people, this is deadly, and so doing anything to transmit the disease and particularly i would say to our young and people who think they're invincible, a number of the younger folks may have health conditions that they're not even aware of, and they really could be in serious

trouble by voluntarily getting the flu. >> so -- so, i mean in all seriousness, the advice of the cdc and everybody else is that for everyone they should be taking hand-washing protocol, doing their best, if they feel sick, to isolate themselves from others? to keep this from spreading? >> and 6 to 24-year-olds, including the college age group, are in the first priority to get vaccinated. that's the best way, on a college campus, in a dorm, to keep kids safe. we've done a lot of outreach through college presidents to say, find a dorm, or find an isolation room. you can't often send kids who are away home, but isolating them from one another. don't have them go to the school kaf tier dwroo get meal. fig are out a way to get them meal. keep them away from roommates, because really what we snow that this spreads very, very rapidly. >> and when the vaccine does come out, the college student

should all go get vaccinated, correct? >> yes. >> thank you so much. we've ended and under time and are very appreciative of your testimony today and look forward to seeing you again. >> good to be here. >> before i adjourn,

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[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] >> i am the vice presr"ent -- [inaudible] i am the director of the economic studies program and i am the moderator of the panel part of this. i am sharing a common interest in these issues and we bring an area of expertise to the panel. with a few short introductions, we start with the resident scholar, and the former director of the board. glenn hutchins is the

[unintelligible] we have the head of the brookings institution on foreign-policy and the former white house adviser. and we have the co-director of the economic studies program. we have a professor at cornell university. that said, we will begin with opening remarks, and we will start with vincent. he will share some thoughts on the policy response, with a particular emphasis on the issues of when to rescue and when not to rescue. >> we will meet on the anniversary of a colossal failure. the legislators and their attitudes to reform, and the idea of fairness. the real failure is that we have

lehman brothers. we have a morality tale, about the individual recklessness, for the culpability. we have made thráháhe fulcrum of the financial crisis, this meant -- this misrepresents the event in many different ways. it is hard to believe but 18 months ago, they did not believe that they would lead to an investment bank because they had not done so in 60 years. we do not know why the fed went to bear stearns. and we do not know what they own in the facility that was created for that purpose. where there alternatives short of lending to the non depository? they never said this and what

they did it seems like a twisting of the lending facility that deals with liquidity, into the equity acquisition vehicle. this was no walk down lombard street. big to fail -- -- this ended the idea that they were too big to lenders that would prevent contagion in the credit markets. the problem is that this encouraged another kind of financial run, and knowing the playñook of the government, the speculator is only had to find the next weakest member of the herd. they precipitated the crisis.

this was the hard work of the officials over the weekend. monday never seemed tranquil. the second problem put all of the weight on lehman brothers. as the crisis was wearing on and the bailout's cost larger and larger, the officials recognized the need to get the approval of the congress. since the political system does not get into gear very easily, this requires saying no to somebody, some time. they may have been able to go for a few more weeks, to let this get larger but ultimately they would have to have stopped. and when they did, the expectations would be dashed. the consequences would only be on which anniversary they would celebrate. not helping them shifted the perception about the parameters

of the sfety net. within the same way, the government officials would elevate the uncertainty about a form of intervention. i and the resolution of wachovia, the regulators are arranged that they would be kept together. the different regulators planned for the facilitated takeover of washington mutual. this was well within the regulation and was consequential in the failure in the bank market. the official comments to justify the action and to build support for the congressional action seriously damaged the confidence at the same time. but we liked the stories in a tight timeline, and we are also at the mercy of the advanced studies. if the price of the stocks goes down we will have to find a way

to get back. but lehman brothers marked the culmination of a process involving elected officials. this was not an isolated policy in the staff. we are compounding the costs by increasing the importance. >> thank you very much. . he will offer some remarks on where the markets are standing today. >> he said, if you go too long do you want me to tell you? i will show you my prepared remarks are much shorter. today, i think that he got this just about right. we are experiencing stability with the underlying corporate performance.

but the overwhelming sense of the participants in the market is that this is a very low-level market and this does not show the sustainable gains. and this is for a further shot. and another thing that was not quite like leave -- lehman brothers, this could be part of a significant downturn. this is stable but weekend vulnerable. there is the creation of low- level activity and how long this will be before we get to the underlying conditions for suáupr'ed growth. can the speed -- can we have the relatively flat issues, with the unemployment.

these are the political concerns, my general personal view is giver take six months in 24 months away as we work through the imbalance. this is what the chairman referred to. the question is whether the u.s. consumer -- there are some significant issues. people tend to not think a lot about the human and social consequences of the rising unemployment and poverty. the decade of the stagnant medium income -- this is enormous and is having a great social cost. this is important. the big question for the financial markets as how this returns to the status as the

locomotive for global growth. i say that the baby boom has lost 30% of the net worth, and it is unlikely to go back to the borrowing incentives that they have had in the past. for the economic recovery, there is the domestic manifestation at this location. what will replace the united states consumer? there is really only one pathway for this, and this is innovation. to go to the savings and the investment society. the good news is that there is enormous strength in this sector of the economy, and they have been struggling with the technology companies in the united states and across the world. you see some manifestations in the economy, but there is also an massive amount of demand, in

the industrial economy. the big issue is going to be to look forward to the economic and social conditions, for the engine growth to replace the consumer. something that they have not yet begun to focus on. the final thing, the final thing if you are a global investor, looking at the economic activity, is if you are reaching for the dollar in the interest rates. with the massive amounts of savings the building up outside the united states, and the need to do with fiscal responsibility, to sustain this, means that the implication for the value of the dollar, all

of this is on everyone's mind and it makes the global investors very concerned. was that too long? >> that was perfect. >> that was looking ahead, in terms of the economy. now we will look about the terms of the -- we will look at the terms of the financial system. this was mentioned by the president this morning, that we need a significant change to the financial regulatory system to avoid this crisis in the future. he will offer some thoughts on this topic. >> this is bad planning. i just realized, i said i would talk about this but given what he has spoken about, i want to talk a little bit about what happened in the policy.

>> we will come back to this. >> we will come back about what to do. many of the things that we have in this country henge around a failure of the private sector and the government, and this is affecting how we think about what happened, and what solutions that we should take for this. we actually put a paper out, that we wrote on the origins of the crisis, and this is a plague on both their houses. people who should have known better, people who have their own money, they made very foolish decisions, and they lost a lot of money. the regulators, there were rooms full of regulators that did not

do their jobs and they contributed to the failure of this crisis. bernanke and tim geithner were put into the middle of this common his -- into the middle of this. there were some things that he could have done to avoid this in the first place, but he had not been there very long. he was faced with a massive crisis. i think that they should give him applause, and it sticks in my throat, but maybe he did some good things as well. he did not mess up what was happening. and he can speak in defense of that. the policy makers prevented a

much deeper crisis, and without the prevention we would have had a much deeper crisis. when the markets start to go into a panic mode, the government policy is to step in, and prevent this from happening to stabilize the system. i think it is remarkable, that people like him to came from here and spent time in this community have handled a very stressful situation. they are making the right decision and this is a matter of interacting, with other people to make certain that the right decisions are carried out.

and congress does what they need to do. the consequence of the severe crisis has been laid out very well, by those who were part of this severe financial crisis, and it would have been a mistake for them to let this play out. that does not mean that they did everything right. it is possible that they could have been allowed to go down. i think that it was a mistake to let them go down, they said they could not do anything about this but a few weeks later they were able to find a lot of money to help aig. i think that this should have been done.

one thing that i was surprised by, -- you remember he was advocating nationalizing at that time. he was the chief leader and he had a lot of experience dealing with the financial crisis, and that kind of background that the international monetary fund has on this crisis. this was an even deeper intervention. it did not surprise that he wanted to do this -- they were going not too far, and we did not end up nationalizing the banks. we were able to restore

confidence, and one issue that is raised by people who see this as a policy failure as opposed to a market failure, much of this is caused by a moral hazard. if you have these institutions that are saved, and people realize that they will be saved again, they will take excessive risks the next time. i agree that we have created an additional moral hazard. i do think that this has been overrated. the fact of the matter is that the shareholders have lost a huge amount of money, and the executives have lost their jobs. there is a lot of private money that has been lost. no one who knows what they were

doing at any of these places, they say that they think the government will come and tell them out. they did not realize what they were doing. they did not do this without going under. i do not think a bailout is what precipitated these risks. this is how they trigger the excessive risks. i do not think the big banks are failing because the government was standing behind them. this is where i agree with them. the creditors have been protected, and not all of them -- when they took over fannie mae and freddie mac they made certain that china was paid off.

and that the european central bank was paid off. many of the banks were holding the liabilities of fannie mae and freddie mac, and they have actually weaken this. i believe that protecting the creditors and as we think about the resolution mechanism, so that we do not do this again, we should find a way that they should do this when the creditor goes down. i do not blame them for doing what they did, because there was so much concern that they have -- that it would be impossible for the existing institution to borrow money.

this is something that we will have to change going forward. this may be through a special bankruptcy process and this will require a lot of international cooperation. you cannot just close down the united states. my final word is that there was an interesting officer -- an interesting article talking about the failure of the economic stimulus. this may be crazy macroeconomics. i think that he was right in saying that this went haywire. i think that a lot of people -- they are looking at real

business cycles, with the natural explanations. this did not help them and i think that he was wrong in thinking that this was part of the policy debate. i do not remember anyone speaking about the business cycle. this was a pragmatic consensus in the policy debate. i do think that he is right in one respect. that this provided a rationale, for a matter of economics and i think that we ended up with of .

two slight regulations. it is important to start thinking affectively, with what we have seen. >> we are going to turn to him, and he will discuss the housing and mortgage issues. >> an anniversary is a way to reflect with the staff and to look ahead. as an economist, i will keep a cautious tone. it is important to look ahead, as we speak about this. as i was prepared to leave the treasury, i had been speaking to the secretary at the time, and my paraphrase was, i do not think much else will happen between now and the end of the

administration. i was getting a lot wrong on the production side. you can probably get a lot of bucks on those months. in the. rationalizing, my prediction was not entirely ridiculous. we had a good understanding of many of the policies and the trade-offs, that were part of the public debate. we focus on the housing issues and what we knew, what we did not know and where we are right now. i will talk about foreclosure prevention. we knew that foreclosures would remain shut -- would remain very high. this was in late 2007. what we did not know and we still do not know is how the government will prevent foreclosures.

the price. ratio and the market were all looking to a decline in housing prices. these were the kind of inventory that we had to work through. this adjustment appears to be coming to an end. this is so high and 7.5 and this is down considerably from the 12th or five months in january. there is this an increase from past june, and there is a 30% decline from the high level. we knew that the underwater people who were borrowing, resulting from the underwriting of the loans, were the driver of the high foreclosure rate. any modification program only have a modest effect on the foreclosures. in 2007 and 2008, we have the

fast-track program. treasury was playing a very important role. they were not meant to address this with the foreclosures and the people being under water. the only way for a more substantial increase with financing was if the government was in the game. the plans that we considered where a temporary government program. a temporary government subsidy, to reduce the interest rates, or an aggressive refinancing program, paid in part by the government and the lender. the obama administration has adopted a temporary rate subsidy program. the program was not designed to take on the problems of people who were under water. they cannot spend the elevated

number of foreclosures. the last report from a few weeks ago said that they have started 360 modifications and it is not clear how many will make this. let me talk about this, with fannie mae and freddie mac. we thought that the subsidy was a bad idea. we believe that the liability is something to fear. by the summer of 2008, the political ideal was to lift the loan limit. what we do not realize is how long and to what degree to separate the public from the private role. fannie mae and freddie mac face criticism about being too high leverage with the portfolio and the underwriting stand. but with the class of the

securitization in 2007, this meant that they were the only game in town for the housing market. we should not immediately change this as we are working out of the housing slump. as the housing market recovers and given that they are in a long time out -- we should start planning for the future and think about what role the government should play, if any, in providing liquidity to the mortgage market. i will go to my conclusion. with many of the fed programs that he mentioned, i worry that the government backing is seen as a free lunch. now is the time to eliminate the supporting role of the government in the housing market. the government support against the defaults, comes at a price to the taxpayers.

under normal conditions this distorts the market and could create the conditions for the next crisis. we need to move away from incentives to purchase a house. this means ending the first-time home buyer tax credit, and the favorable tax -- the favorable capital gains tax. none of these moves will be very popular. the change will be difficult and will require very effective leadership. >> thank you. as the chairman emphasized this morning, there are many will aspects to the crisis. they will spend a few minutes on the global aspects >> before lehman brothers and fannie and freddie, there was china. this was really the fault of

the other. in east asia, and the surplus in many of the oil-producing economies, would lead to reserve accumulation that went to the united states and this was financing the consumption. this was allowing financial shenanigans to take place. fortunately, this has passed by. the blame lies on both parties, so whatever the view about the economic imbalance, the fact is that they have allowed the problems that already existed in the financial system and the failures in applying the system to turn into a problem that dropped on the house. what happened in terms of the reality is that the normal mechanism in the united states

did not begin because of a lot of money flowing in from the rest of the world. there is some feeling that the crisis may not have been the crisis that this turned out to be, if we did not have the imbalance. we have the very difficult issues of how to set the financial system right, and how to set the regulation system right to prevent this from happening again. at some level in the united states things are improving. this has began -- begun to rise with the share of income. they are more than making up for this. what will happen to the united states is difficult to predict. we can start bringing down the deficit -- and the u.s. share could start to decline. but the rest of the world has a problem.

in china, the recovery has been fabulous. the economy seemed to be hitting a wall at the end of last year. but this came back very strongly. but things do not look quite as good. the growth surge is driven by the banks and the financial investments. and this economy had a fair amount of capacity and this was part of the employment growth, that was part of the exploding sector. china is leading the exports to maintain the growth model, and the employment growth in the absence of show soil -- social stability. even the major economies like japan and germany are still depending on the exports. and we can lead to the other side about where they may be exposed. that looks like the coattails of the united states on the coattails of the rest of the world.

there is the accumulation of the foreign exchange reserves that may have been part of why the emerging markets worth -- were willing to finance the u.s. consumption. they are experiencing the effect of the crisis if this did take place. how have these circumstances changed? the increase of the emerging markets increases the reserve. we have seen this crisis has been so vigilant, that what we thought were strong reserves, are not that strong anymore. india and russia lost a fifth of their reserves in half a year. the international monetary fund could have had a much deeper resource base, but they continue to have a stigma in the emerging markets, and they do not have much of a voice.

they are reluctant to go to the international monetary fund. even if the country's leave with conditions, they do not follow the loans, and all of the incentives are there for the insurance, and we have a system that, because of the crisis, many of the factors that led to the global imbalance become managed so what are the possibilities right now. one possibility is to go back to the global macroeconomics in balance, and the u.s. consumer goes back to how he was behaving before. and driving the rest of the world along. this may not be very likely but -- they may not be too anxious about this in the short term. there could be a larger investment in the long run. the second possibility is that

the other countries take on a larger part of this in the long term. this may be accompanied by concerns about the safety of the investments in the united states, leading to a decline in the dollar that may not be as bad for the united states as the rest of the world. if you did this you would get closer to the end game that many have been thinking about and they would have to reduce the deficit and have to think about exporting to the rest of the world rather than just a lot of importing from the rest of the world. this means an adjustment in the rest of the world. the more likely scenario is that we have this in the short term because of the tension in the global system. we have seen this with the trade disputes between the united states and china. you can expect to see other

forms of tension coming up. what is of concern is that the crisis that many of us were worried about, the increase in the global imbalance leading to the higher dollar and the problems with the rest of the world is still a major possibility. >> i want to give him a chance to react to this, and after he goes, if any of the other panelists wish to speak in favor of this, against his view, that would be great. >> i did not want to say that this was a moral hazard. he mentioned that the titanic and that reminds me of the speech, he called the tragedy of

the titanic. he explained the tragedy of the titanic was that this was followed by a consortium that lesson that the individual discipline, and left the resources devoted to looking for icebergs, because the government stepped in. if you believe in that than you believe in moral hazard. the real policy failure, is inherent in the political system. this is the congress -- it is very difficult to turn quickly. that is a bipartisan statement. in 2007 and by 2008 there was an economic law that markets and financial institutions seemed unlikely to absorber very

easily. in the absence of timely action by the appropriate officials, unelected -- unelected officials created a response using the tools at their disposal. that is what they had to do but there are real consequences. this was the same sort of policy action that was done during the crisis in 1994 and 1995. funding was used in a way that nobody ever thought. and they were using the discount window in ways that no one else would have thought of. that said, where i am remaining troubled is the mechanics of bear stearns. that was the decision that diverted this to a channel that we had no experience with. even right now we do not really

understand what happened. >> let me ask something -- the economic recovery is a rotation from the wealth driven construction. we have to basically say the prayer of st. augustine, made me chase, but not too quickly. if the saving rate is at the long-term level in a hurry, that represents a drag on the u.s. economy and those investments driven forces will not be in place. that is why a durable economic recovery is still a question. >> are you skeptical, that any redesign of the regulatory system will affect this crisis in the future? >> with the complicated systems

-- remember what the rocket scientist dead, was taking advantage of the tax system. this presented an opportunity. we got into the business of issuing individual securities to solve the problems of a few firms, for the people who did not have any markets, and this involved fracturing the balance sheets. we created the complicated structures with three consequences. the regulators cannot understanding of this firm, the markets cannot enforce an effective discipline, and management finds it difficult to run in the firm itself. and in that circumstance you have the ability of use, and this is helping to fuel the crisis. we should be looking for

opportunities to make the system simpler. including by consolidating the regulators. not elevating the role of creating -- of rating agencies. forcing higher capital. >> i think that you had something that you wanted to say? >> i think that you are both right. i think that this is the prospective -- the imbalance was built up in every sector, from the households to the government. this was over the course of a very long time. there was a large amount of debt outstanding. and the failure at a policy level, and a social level to prevent this. this led us to where we were. the failure of lehman brothers did not cause this.

if it did not, something else would almost certainly have happened. the one thing i will say is in the context of bear stearns -- we did not have a panic situation following that. this stop what happened with lehman brothers. the problem with lehman brothers if you are at the public policy perspective, when you are coming out of a time of unbalance, you want to create a path to a softer landing. this is to prevent the panic that happens at the economic problems caught -- that happen with this. he really had almost no choice, following the consequences of the lehman brothers failure to act aggressively. the concept of moral hazard had to be thrown in because the man

smoking and this has long since been incinerated. the issue right now -- >> that is the deal maker. >> the issue is how we create the political circumstances, to take the imbalance out of the system. this is a very big problem. >> i will follow this up a little bit. i have a failure -- i have an idea that he has gone unrecognized, and i think there is an issue that he is getting at, and i have asked a little bit about this. this is to lend freely at a high rate, and no one is arguing against this. the question that he spoke about, we do not know what is on

the books. the question is, did we do that with bear stearns? can we except quickly if a firm like bear stearns, if they are suffering from a lack of liquidity, in a panic or if these assets are toxic? and if they are, how do we respond? much of what they have done with the lending facility is based on this, and providing liquidity. i think that this is rather sound. the question is what to do in a panic. they say that this is fuzzy, and i think a fair reading of this -- we will see how the portfolio does. the chairman and the fed leaders have recently been talking about this and i think that this is right.

but this does not explain the whole story. >> to many analysts want to jump in with reactions? i have one more issue -- do any analysts want to jump in with reactions? i have one more question. you seem to be cautioning about the dangers of the broad subsidies of home ownership. i think that this is fair. but this is only one role that they have. they also played a role in providing meaningful support to the low income households, and recently they have played the role of the mortgage in times of crisis. do you have an idea about how we would displace the initial function? >> i was speaking about this in the paragraph about what we do not know.

there is a public role of providing affordable housing, with the mortgage finance and creating liquidity for the mortgage finance. and then this will break into the question of securitized in and guaranteeing with the portfolio. i think that what we all agree is that the public role does not work when combined with the private profit entity. with the implicit subsidy on the back end. what i would hope, this is a little bit closed, but this is the agreement that these things do not mix very well. and they weren't a flawed design from the get go. on which public roles to maintain, the long explanation is on affordable housing. we have something called the fha, and we can talk about the reform on those.

and that is where you have the affordable housing. with the market's liquidity this is a tough question. well what they look like without this? now the rates would be higher, but this is not to say that there would not have been a private market in the first place. and if you have that with finance and a crisis, you would find a very creative way to provide liquidity. and that is not at this is a public entity or not. there are options in the private world. in my mind this is not a resolve the issue. -- resolve the issue -- resolved issue. >> my mandate was to talk about policy going forward, but i will not make a long speech about this. looking along with aei as part

of the task force, and this is also supporting this with the other foundation, to keep their names out of the discussion. this was not very helpful for us. i want to talk about a couple of things. many of the people on the task force are supporting this in terms of what we should do going forward. we think that there is a lot more appetite on the hill, and the senate, for more regulatory consolidation, then the treasury has put forward. i spoke to the macro economic advisers, and i thought that the proposal was pretty good. they talk about things that i thought should be done differently. i do not think this is something completely different. i think that treasury has

political cold feet, thinking that they could not get enough consolidation. they went to the consolidation and they obviously, as he described this, is toast. they were regulating aig, and all of these others so that -- they are obviously going to go under and be part of the occ. i think it would be much better to have a single, strong, financial regulator. and that would mean including taking over the activities in this area, with the federal reserve and the fcc, and we think that the regulators failed miserably. there is no guarantee that they will succeed in the future. by having a well consolidated

entity, with a strong leader, who is able to pay well and hire good people, you would do something that we absolutely have to do, improving the quality of regulation. and you can also improve the information that is available, which is now done in a very primitive way. and this would help us to avoid this kind of crisis. and i will -- taking away the federal reserve continuation, one issue that is there is if the fed can continue to do the jobs on monetary policy. we believe that they should have access, even if they are not doing the provincial regulation. and we think that they should be

given the ability to be a cases -- a systemic regulator. there is council, but this is really the fed that is going to do this. the fed is the agency that has the high quality economists, and that is where you send the people who are managing the business cycle, these -- we are now recruiting them, this is the natural place to put the regulators and this is not a good place to have the provincial regulation. >> we have some time for a few questions, from the audience. this is right there in the second row.

>> first, i was surprised that the chairman did not talk about one of the causes of the problems. we had two presidents, bill clinton and george bush, and both of them insisted people to sell housing, at less than what it normally was. and that is one reason why we have the problems that we had. i was also disturbed that you did not recognize that when the crisis started, that the secretary got the money and he worked with him to make a difference. i also think that you have to recognize the other reasons why we have the problem. one of them is a japanese automobile company that decided to work in the united states.

he went to the government of tennessee and gave him a profit of almost zero, and prevented him from building. they hired the employees at 35% less than if you worked in detroit. this certainly made a difference. i also think that we need to begin to look at this, even as we look at the company's, we have to look at the companies that worked their way out of this. goldman sachs declared itself -- they are like a bank. there could be ford motor co. for when general motors said no to this. i think that we should look at the whole thing, and decide that, and i will be glad. i think that all of us should

talk about the general employment interest in the money. there is a recent biography, and perhaps we should get back. there is a judge in the fifth or sixth circuit, that says that he has been converted to this as i have. >> temporarily, anyway. >> in the back of the room, the gentleman in the green shirt. >> something that has not been mentioned, what do you people feel about the consumer protection financial agency? >> i was going to ask that myself. are you on this? >> clearly, something needed to be done. we had one of the failures that

happened, was the mortgage brokers and the originating bank did not pay enough attention and there was not enough incentive to make certain that the people who were borrowing had a chance to repay. some of the failures came on the fault of the borrowers. people were not always filling in their forms correctly but this is a consumer protection problem that was done. i have also heard that some of the practices by the credit-card companies really amount to very sharp business practices, like moving the day that this is going to be due, giving this to you on saturday morning and you have to rush to the post office. this was happening all around. there was a failure to protect the consumers, and in some cases a failure to protect

against people who should not have been quarreling in the first place. the question is will you make this a separate agency, or have this become part of another agency. the system of regulation, that has done best is in australia. this is where they use the twin peaks system, they have a single provincial regulator, which i support, and they conduct of business regulator. we have one of these at the fcc and they failed miserably so it is strange to recommend that they get another function. we have a new administration in the fcc and we had consumer protection in the federal reserve. this is now staffed by some very good people. i would like to take the people who are now have the federal reserve to why things are doing

a good job, and move them into the sec and have them get a business regulator to go along with the provincial regulator. i think that we will get a stand-alone cpa this is not always for the regulations that do not make much sense. i agree that something will need to be done. >> you mentioned earlier the article, whether it is fair to question the economic professionals at this time and i think that one line -- it is fair to assess the economic profession. one area is that we lack a full understanding of the limitations of the households and the business. this is for the new financial products. and this is part of the protection rights. >> we have the behavior

economics that are trying to fill the gap. we hope that this will be ready in the future. >> i do not know if this speaks against this agency, i do not know that they would have changed very much. to go back to the question that is here, if you think the housing prices will go up by 3%, the smart assumption is that this is where the bubbleheads. if you start with the assumption that this is perfectly good -- from the borrower. of view -- by in the complex securities were you do not know the underlying characteristics of the borrower, it is actually making good sense as long as you're not appreciating the underlying assets. from every other policy maker -- who are under the perception of a 30% increase, promoting the home on a ship for people who do

not have a sizable down payment is a good idea. we should be lending freely. somebody mentioned before, this is a pox on their houses. but this can explain a lot of things, but i do not believe that the agency would really change that. >> the second to last row? in the tan suit. >> we talked about how this was unsustainable, to have the trajectory -- before the 140% household income. he mentioned that the transition to the innovation based economy. how far back do we have to go to see where we were, with the

savings based economy. >> i think that the best analogy that i can think of, was in the early 1970's. they had a very similar form of circumstances. this is in the college or graduate schools. this is downwardly mobile. this will be downward and mobile. what was replacing the decline in this -- they have gone through 25 years. with the capital formation and the job creation, and the growth. i think that we are at a very similar kind of inflection at this time. for instance, given the example, there is the mobile broadbent wireless. this is much larger than the underlying conus