improvement of movement of passengers and freight. with an aviation, i am pleased that the budget request continues the administration's commitment to the faa next generation transportation system. this program will accommodate growth in air traffic and reduce delays by increasing efficienciey and management of e airspace. the department must remain vigilant. the last time highway fatalities dropped below 40,000 was in 1992. that coincides with the last time the country faced a serious economic crisis. . . we face serious economic crisis. however, as the country's economy started to recover, americans saw significant growth in vehicle miles traveled, and we also saw steady

growth in the number of highway fatalities. the latest figures show that i the latest figures show that i would fatalities in 2008 were slightly above 37,000, the lowest level since 1961. americans are driving less because of our current economic downturn. when people travel more, the dot will remain focused on continued safety and improvement across the network. and in particular, the recent transit tragedy's in washington and other parts of the country certainly underscore the need for federal oversight for minimum safety standards. mr. secretary, we all know that you are entering a tough budget year. the infrastructure needs are great. many airports require basic maintenance. many communities are in need of additional highway capacity, and

we must continue to seek alternative solutions such as high-speed rail that have the potential to transform the transportation network. i express my sincere hope that under your leadership, we could focus on comprehensive approaches that reduce congestion and improve mobility a safe next atrek protection system. in the last year, you've taken significant steps in that direction and i look forward to working with you in maintaining that progress for fiscal 2011. now before you had your chance, i will turn this over to my ranking member. >> thank you very much, mr. chairman. i look forward to the hearings this year. we have a lot of work to do. mr. secretary, welcome on this very snowy day. always a pleasure to see you

here at the subcommittee. i am going to keep my remarks to a minimum because we have nearly two hours to cover the $79 billion you have requested for fiscal year 2011 and inquire about plans for the almost $76 billion that you received just a few weeks ago. fiscal year 2010 provide some of our tight -- some oversight, plus about $48 billion received under the stimulus bill. that's $270 billion, or 2.2 $5 billion per minute. so i guess we ought to speak fast to do some oversight. last year we were facing bankruptcy in the high what -- highway trust fund, the lack of authorizations for the service and aviation programs, and a bleak economic employment sigil

-- situation across the country. we have a disturbing level of national debt, which we are all concerned about. i think we are all hoping some of the issues were going to be resolved last year. our states do not need another short-term repaving "stimulus" bill, and these bills will allow states to do the planning and the need for real highway construction and maintenance. i think we need a real bill that would be helpful to get the ball rolling, if the administration would put forth the bill on paper to bring forth to the congress. i don't think we need any more listening sessions. we've all heard from our constituents at home and in the states. so as we embark on a new budget cycle, we look forward to working with you and the department. i had the pleasure of meeting

with a number of your administrators and assistant secretaries, which i appreciate very much. i think we will of a good dialogue and resolve many of these issues. because we have such a short time with you today and a lot of ground to cover, the chairman is working on a schedule on a number of different topics this year. i like to make sure that we can get a commitment from you that we have the appropriate person from the department as witnesses as we look is these different proposals that are out there so that we can do our homework, and if we get that commitment from you, that is important. >> you have it. >> to do the type of oversight that we need. thank you very much, my good friend, secretary lahood. i yield back. >> mr. secretary, the floor is yours. user -- your complete written statement will go into the record but the floor's yours.

>> thank you, mr. chairman, and am delighted to be joined by the assistant secretary for the budget, chris, who has worked very hard with: the input in our budget together. thank you for the opportunity to discuss the fiscal year 2011 budget request. i've traveled to more than 30 states, 65 cities last year, and i have seen firsthand how much our citizens depend on a reliable transportation system to access jobs, health care, and other essential services. the president's request total $79 billion, 8 $2 billion increase over fiscal year 2010. the resources will support the top transportation priorities for safety on the road in in the air, making the community level and sustainable, and modernizing our infrastructure. safety is our number one

priority it be it. distracted driving kills thousands of americans every year, and it is critical we continue to lead the charge. we're seeking $50 million for the national highway traffic safety administration to develop incentive-based grant programs to encourage more states to pass laws prohibiting the unsafe use of phone and texting while driving through the president also asked for 66 additional personnel assigned to highway and vehicle safety issues in the area of transit safety. we're seeking $30 million to establish a new transit safety oversight program within the federal transit administration. this program will carry out a comprehensive safety oversight strategy by establishing common safety standards nationwide as envisioned in the administration's transit safety bill. this is an important step for

for rail transit and industry which has suffered recent accidents in washington, d.c., boston, and san francisco. this is unacceptable and we must put strong remedies in place as soon as possible. i am urging congress to pass this legislation this year. transportation must not only opposite -- be safe but contributed little and sustainable communities. thank you for your leadership on this committee, and its focus on livable communities over the years. the president promises to -- we're seeking $527 million which will help the spirit together we're helping states and local governments make smarter investments in their transportation, energy, and housing infrastructure with better outcome for our citizens. our investment in high-speed rail has generated tremendous

excitement around the country. it will go a long way to enhance mobility in many community. we seek $1 billion to continue the $5 billion, five-year pledge that congress made in this budget. i want to thank you, mr. chairman, and the committee for your leadership on high-speed rail so far. $2.5 billion you provided the department for high-speed rail finance, combined with the $8 million we announced last year, brings us close to ushering in a new era of passenger rail service in this country. we must find new ways to fund infrastructure. we will establish a new finance fund. these first-year funds would be used to invest in multi-modal transportation projects that are crosscutting, based on funding, which will get away from the

siloam mentality that has long hindered our ability to spot respond to local and regional needs. the president proposes to continue current spending with $42.1 billion for highways. this request includes $150 million to enable washington, metropolitan areas of faucets, to develop much-needed improvements. it includes $1 billion for nextgen, to modernize our traffic control system. that is a 32% increase over 2010 levels. these bonds are essential for transitioning from a ground- based radar surveillance system to more accurate satellite-based systems. this is already in use in the gulf of mexico. we look forward to our success in this area. we're seeking $30 million to make more long-term investment

improvements in the u.s. merchant marine academy spirit this has been a goal of mine from the very beginning. i want to make the merchant marine academy and the others, we have wonderful students there, over 900. they work very hard. we want to make sure that the facilities are there for them to accomplish their academic goals. and we just completed a blue- ribbon report which will -- which we will be happy to give the committee which outlines the great details of the needs at the merchant academy, and the reason for the $34 million. a look forward to your questions. >> thank you, mr. secretary. we will follow the procedure of each of us and turned adding five minutes in a round of questioning. we now have one hour and 40 minutes to be able to do it

least a couple of bryant -- round's write down the line. with that, mr. secretary, your budget request includes, as i and you have mentioned, $527 million for the livable communities program. it increases transportation choice to integrate housing and land usage to transportation decisions. i am pleased to see that you were working closely with hud and with epa, and others, i understand. maybe you can say more about that in this effort. but i am curious, how actually -- what is your concept of how the $527 million that you are asking for here, which is a new item, important item -- how that is to be deployed over the period of the fiscal year for

which we are working? >> we had a working group within the three agencies, the staff that his work together to gather to develop plans for the use of this money. we've also traveled around the country and look at places -- look at places were governors and mayors have put together plans for not only livable communities but livable neighborhoods. when i was in one congressman's area and saw that the kind of transportation system that goes through neighborhoods, from downtown los angeles, to connect people to grocery stores and drugstores and good housing -- i mean, that is the kind of approach that we're really looking at in terms of where people want to live. some people may want to like to work. when i was in portland, ore., i saw over 100 people biking to

work that day. there are all forms of transportation that americans are looking for. we know that people are going to have cars. they're going to want to use their automobiles. but we also know that people want to get out of congestion. they want different forms of transportation, whether it is bus, light rail, walking, biking paths, and other opportunities. we're working with hud to make sure that the kind of housing a availability -- i would say that when we were in dubuque, and saw what they were doing in the millworks area, where they decided to come in with 1500 new employees, the takeover and old downtown department store and relocate these 1500 employees, and so what the mayor and the community leaders decided to do is to take this old mill work area and completely redevelop it. they are going to need transit

and forms of transportation, so and forms of transportation, so that people these are the kinds of innovative approaches we need to create neighborhoods and communities so people can attract business, attract jobs, and create the kind of housing stock and transportation forms that people really want. >> do you anticipate a joint nofa for the funds hear from the three departments who have a role in this initiative? >> i think what we will get to is looking at things that have worked around the country and then making opportunities available for communities who want to attract new jobs, attract new business, and really create different forms of transportation. >> i have to comment, mr. secretary -- your finding that

the 100 bicyclist you saw -- probably, there were a few thousand -- but you go to copenhagen, some people here may have been in copenhagen very recently -- mine is a little longer ago -- i very carefully checked into how they were dealing with their transportation system in that roughly 2 million metropolitan area, and about 500,000 come in by bicycle and about 500,000 by cars in their daily use and about 500,000 come in by bus and subway. million by bus and subway. the bus and light rail system. there are ways that their systems were very well. >> let me just say, when i was in detroit on this trip, what congresswoman kilpatrick, we had a meeting with stakeholders.

they wanted this idea of creating more options with transit and bus. we're going to work -- they just elected a new mayor there. again, what -- our livable community would fit in with these kinds of things that they are talking about there. >> thank you, mr. secretary. >> thank you very much, mr. chairman. one issue that has come before us -- the situation with toyota. i am curious as to what -- if you could tell us what the department is doing, are they equipped to investigate and find out what happened? is there a computer problem or do we know exactly? >> as a result of our investigation, we know that

toyota has determined to fix for the pedal problem that has cost acceleration. we also had complaints about the electronics. we will be investigating the electronic components that are in these cars to make sure that they are safe, and if they are not, to have toyota began taking a look at that. we are in discussions with tokyo that -- toyota every day about the safety issues with their automobiles. the reason that they are where they are at today is because of our investigations and at our meeting with them, and one in minister ever went to japan and met with the toyota officials and told them in no uncertain terms, you need to get onto this. we've got a problem. you need to fix it, find the fix. as a result of that meeting, that began to take seriously the

fact that they had some serious problems. . we will be doing investigations and studying the electronic part of it. let me tell you why we do this -- every year, and it's a gets 30,000 complaints, and what we do, we categorize them, and we look at them carefully, and we have had some complaints about the electronics in these automobiles, and that is the reason we are going to look into it. >> are you getting full cooperation from toyota? >> absolutely. that is there any recommendation from the department of something -- we are both in midwest. you know as you get on slick roads, your car starts pulling through on ice whenever you slip it into neutral. is there any kind of discussion about if someone gets into the situation where the paddle the

stick, putting in neutral or applying the brakes would -- why can we not publicly tell people how to respond as they get into this situation? >> i think that guidance has been put out. i have seen where they have recommended that or to disengage the engine. >> then you might lose your braking power. >> we need to fix the problems of people do not have to worry about disengaging the engine or slamming the brakes on or putting it in neutral. that is really our goal. >> i agree, but -- >> my advice is if anybody owns one of these vehicles, driving it. take it to the toyota dealer because they believe they have the fix for it. >> i appreciate it. we will follow-up with you on that. this is obviously a tremendous safety issue for a lot of folks. getting back to the reauthorization, the current

service program expires about 10 legislative days from now. is there a plan for the administration for an extension? >> we continue to ask congress to pass an 18-month -- we continue to try to find the money for that. we believe that gives us time to work with congress. the $48 million that we had starting a year ago has been well spent. it has put a lot of people to work, thousands of people. resurfacing roads and bridges. the president encouraged passing a jobs bill. it is not that the president does not want a robust, comprehensive jobs bill. it is trying to find money to pay for it. it is not that the president

does not want a comprehensive, robust build. it is trying to find money to pay for it. the 18 months gives us time to do that, and as we finish out this portion of our economic recovery and if the congress passes and other jobs bill, we have an opportunity to continue to make progress on these projects around the country. >> i mentioned in my opening statement about, is the administration going to put a bill forward to discuss that? i know last year there were discussions going on just about every day at the white house, this is on the people's agenda. there is a real urgency. obviously we are not there yet. >> we are working on some principles, and we will continue to work with the committee on these principles. we are not in much disagreement with what the chairman has

written. >> apparently my time is up. thank you. >> we will proceed in the order that people, members of the subcommittee came into the hearing room. ñi>> let me add my words of welcome. we are all scrutinizing the budget, and a couple of things caught my attention right away. the department's continued commitment to level committees and high-speed rail development. i appreciate your leadership in prioritizing these items, given the strange physical environment in which we are operating. as you well know, the high speed rail request builds on the finding that the congress provided in the recovery act. i was pleased to welcome our

epa administrator, lisa jackson, to during, north carolina last week to announce a major recovery act awarded to north carolina for further work on the raleigh to charlotte lead of the high-speed rail corridor. we have been laying the groundwork for this for about 20 years, but it has been slow progress. there has not been a substantial federal revenue stream, and we have now changed that. we feel like our own investments, our efforts in building up this route have been rewarded. we are well positioned now to make use of the federal funds to finish the job, to get the raleigh to charlotte corridor where it needs to be. 90 mile an hour speeds, something over just two hours of travel time between those two points.

we look forward to making this a reality. let me turn to another item, and that is the new starts program. this is another area where you have a broad vision and perspective to the department. i was happy to see the announcement last week that the department would alter criteria the previous administration had applied to this program. they will broaden the criteria used to it in by late new starts and transit projects. rather than emphasizing only the projects that would need a minimum requirement for decreased vehicle miles traveled, the department will instead put greater emphasis on other criteria. as one who argue that the prior policy was penny wise and pound foolish, i applaud you for

taking this step. we are all aware that this new flexibility will still apply to a finite resource, and the competition will be quite intense, maybe even more intense. it is still very important for states and cities to understand these criteria and how they can address them. another is an effort within omb to measure and quantify benefits such as environmental benefits. we need to make sure these measurements are as straightforward as possible and are related in the real world to the kind of development we want to incentivize and reward, and that we can undertake. i wonder if you could provide any further clarification this morning regarding these new criteria, the new measurements, and any other insight about the features you will be looking for and the projects that would fare best under these new criteria?

what is the timeline for rulemaking on the new criteria? >> thank you for that. you have said about as well as i could see it. the common complaint i heard during the time was being considered by the senate was, like did take 12 years to get a new start? back and forth on the economic aspect of it, without looking at other criteria. we made a decision that we need to look at the whole comprehensive set of issues, and there will be good competition for this. what will get is a lot of good, creative opportunities, and it will allow communities all over the country to compete for dollars for good projects, whether it is light rail or busts or inner city passenger rail, or whatever. and do it in a way that reflects the values of the community in

terms of move ability, internal opportunities. -- environmental opportunities. we believe it will get a lot of cars off the road and get people out of their automobiles and create opportunities in communities. you restated what we are going to be looking at. we are looking at a lot of different criteria. we think this enhances a lot of opportunities around the country and in a much shorter period time. it will not take 12 years. >> can you give some indication of how you are going to firm these up so the community's know what they are dealing with, and also the explicit rule making that he will undertake. what is the time line on that? >> we are getting started with it right now. we want to implement this very quickly so that when our budget

is approved by congress, we can begin as quickly as we possibly can. you have outlined what the criteria are, the changes we have made, and it is all very accurate. it is just a matter of implementing it as quickly as possible. >> you are doing a great job. just a couple of housekeeping matters. >> the statutory requirement that was in the bill is set february 17. it will probably be a day or two before that. >> i wanted thank you on behalf of the state of ohio for the money for the rail project. in 2008, i was one of the

authors of the rail safety improvement act. in that act, it mandates positive train control, of which i am a big advocate. it also indicates there is a baseline for routes and mileage. it will be effective as of projecting out through december 31, 2015. despite being cognizant, there are@@@@@@@@@@ s@ @ @ @ @ @ @ @ b

>> i would appreciate your looking into it. you indicated there would be $42 billion for surface transportation and $10 billion for transit. the highway trust fund does not generate $52 billion, so i believe the budget proposal calls for borrowing are taking $20 billion from the general fund to fill the shortfall. further, it is my understanding that by taking that money it will also reduce the contract authority to $9.5 billion, which i know has to be disconcerting to mr. obey. just by editorial comment, the

problem with the stimulus bill was that it had some great stuff, but over half the jobs which the administration is taking credit for creating came from 8% of the funding, the stuff under your control. the other 92% of the funding created the other half of the jobs. the jobs bill that is being considered by the senate, in my opinion, repeats the same mistake. has 25% funding for things that will actually create jobs. 30% of the people are out of work, not 10%. with no disrespect to the leadership in california, there are all kinds of things that have nothing to do with job creation. when mr. oberstar was working last year feverishly to figure out a way to get this done, and despite a horrendous whipping

effort by my leadership against the three month extension, they got 85 republicans to vote for the extension and 84 against. on the belief that we need 86- year plan, i have to tell you, even though i have the greatest respect for you and the president, keeking this can down the road to march 2011 is irresponsible. this has to be worked out. it is not like suddenly some light bulb is going to go on after listening for 18 months. we will bring republicans to the table. i get that the democrats are scared because of some of the election results. they do not want to have a tax increase on top of the other things going on, but the fact is, it is time for leadership on this issue. it is irresponsible, in my opinion, to not deal with this.

early in your tenure, you made some observations about vehicle miles traveled, and i got the feeling you were summoned down to the white house and stopped talking about that, but it has got to be done. if we did this in a bipartisan way, will you help us down there? >> the administration is for an 18-month extension. we are going to work with congress on that, and we believe that is the best path forward. i can show you many places around the country where our economic recovery plan put a lot of people to work. a year ago, a lot of those people were on unemployment, did not have jobs, and throughout the summer and fall and even into the winter, they are continuing working on these projects and will continue for the next six months spirit >> despite my fondness for you, i

respectfully disagree. when you look at the jobs created in the construction sector, they work make work. people worked for a few weeks, and then they were out of work again. the unemployment rate in the construction trades is 30%. >> you mentioned earlier your visit to los angeles. i want to thank you for being there and for touring the metro goal line right whallight rail. it began one month earlier than scheduled. it adds to the record that it had of being completed on time and on budget without a loss of any time injury, even though the construction team amassed

the safety record of more than 3 million work hours. we are very proud of that project and we look forward to continuing to work in a strong partnership with you as los angeles continues to expand its rail network. >> is really a great project. it is a great example. i know you all worked hard on it, and it is a magnificent project for the people. >> we worked very hard to make sure that the community was involved in that project. the results were very positive. >> everywhere i go, i talk about that project, how you really put a lot of different neighborhoods together with affordable housing and stores. it is a magnificent project. >> in the fiscal year 2010 appropriations bill, it includes funding for the human

intervention in motivation study, which is a comprehensive education and training program for alcohol and drug abuse prevention in the airline industry. as you know, it was originally a substance abuse prevention program only for pilots. however, in 2010, i was very pleased that at my request, congress increased the funding for this very critical health and safety program to include a program directly for flight attendants. can you give us an update on the status of implementing these two programs? >> i expect to be releasing this very soon. it is being reviewed by my office and we are about ready to release it. >> do you have the idea, will it be this month? >> it will be soon. >> hopefully this month. last week the national transportation safety board held

a hearing on the september 2008 metro link collision near los angeles in which 25 people were killed. at that hearing, the board adopted recommendations that asked the federal railroad administration to require the installation of cameras inside all controlling locomotive cabs in order to verify that train crews are operating in compliance with safety rules and operating procedures. in responseñiçóñi to the recommendation, what are the it plans to promulgate these new u%i ;ors inside locomotives? ñiwhat resources do you expect they will need inñi order toñi y out these recommendations, and how will you ensure the safety and protect employees' privacy? >> we are looking at the ntsb ñirecommendations, and this goes

to our number one goal at the department that safety is uppermost in our minds in all forms of transportation. we will take very seriously the recommendations. i hope congress will take very seriously the idea that we are pushing a transit safety billçó ñith@v wexdñi think is criticalr our agency. the law prohibits us from getting involved in these kinds of safety activities with transit programs. we think we need that kind of çó-/ainvolvement. we are going to review the recommendations. that is the answer to the question. this will be a priority, and we will look for waysñi to make the systems safe. >> as you are well aware, hundreds of transportation agencies are facing an enormous deficit at this time.

the shortfalls are often an operating funds, which leads to layoffs in transit agencies at the exact time we are trying to stem the loss of good paying jobs in america. in los angeles county, the metropolitan transportation authority is facing a shortfall of at least 200 victim million dollars in operating funds at the end of 2011. --ñi $250 million in operating funds. what are your views on giving some flexibility to the use of federal funds, at least during this time of crisis, for operating costs for a transit agencies? is there something that you and the administration are willing to consider? >> when you all passed the omnibus, you included a

provision that allows for up to 10% of the transit funds to be used for operating. i believe it is incumbent upon us to try and be helpful in these transit systems. one of the ways we can be helpful is to allow some of the funds to be used for operation. it is silly to provide funds to buy buses and then we do not have the people to driveq them r to operate the system. it is a good use for some of the money to be used for operations. >> mr. carter. >> recently in my office, i have had a parade of people come in on projects that were part of the stimulus, were supposed to

be shoveled ready and ready to go, and they bump up against in purnell studies. -- against environmental studies. half a dozen projects have come in and said they are ready to go, but they cannot get the environmental studies done. they have a deadline have to meet, but in reality, txdot holds back, knowing they are overwhelmed. once you come out with an environmental study, the environmentalists take you to court. by the time you get to that process, you have to have another environmental study. is a circular process that is delaying the construction of highways in my part of the world, and from what i enter stan, around the country.

if we could go to binding arbitration, rather than going to the courthouse to resolve these issues once the internal studies have been done -- once the environmental studies have been done -- instead of bumping up constantly what some would call radical environmentalists. >> if you want to do that, you will have to do it legislative ly. one of the things we have to abide by, under the economic recovery, part of the legislation said we have to follow the regular guidelines

for constructing roads or resurfacing. part of that is environmental impact statements, which many of the states had completed all of these projects, and obviously some did not. if you want to seek that kind of remedy, i suggestion is it will have to be done legislatively. >> i understand that. i ask for your comment on binding arbitration, if we could get a statute written. i would like your comment on whether you think that is a good idea. >> i have not got enough about it, but i will think about it and give you my opinion on it. off the top of my head, i would rather not say something that later on i might not know enough about. let me think about it, and i will get back to you. >> i would like to have some

other folks join me in sponsoring that type of legislation. most of the high-speed rail is at the 110 miles an hour maximum. >> if@ga@ @ we allocated money to 13 regions across the country. in some of those regions, the trains will go faster than 110. it is a matter of using some of the resources to fix up freight rail lines and amtrak lines, but we envision that on some of these corridors, trains will be going faster than 110. >> most of the high-speed rail projects you envision going on existing tracks? >> that is correct. all of the proposals we received were collaborations between freight rail and amtrak. some will build some new

infrastructure, but the lion's share will use existing track. either through the straits or through amtrak. >> is there any money available for high-speed rail studies to be done? >> we will be announcing some study money soon. study money very soon. that was not part of the $8 billion, but we do have some money that we will be making available very soon for studies. >> recent study by a french real company says -- we are excited of trying to get that project going. ñi>>ñr we will be making thoseñy allocations very soon. >> i appreciate your comments. çóçóçó>> thank you for being he.

secretary. çóçóñrthis may be public inform, but we have heard a lot lately about the commuterñiñr airlinesd their safety records and lack of ñiñimaintenance, violations of s and regulations and that sort of thing. ñiñiiçó would beñr surprised ife >> airline safety is a very important priority for us, and we pay a lot of attention to it every day. our faa administrator traveled the country and held 12 safety summit in biting people from the industry to come in and talk about training of pilots hot on

commuter airlines, fatigue issues, pay issues. we have made some very strong recommendations. even before the ntsb report came out yesterday, we also are right in the middle of a rule making, which will require airlines to do certain things in terms of training, in terms of pay, in terms of schedules and those kinds of things. that is our job to pay attention to these things. so we are on this. we know that there is a great concern about -- after the colgan air -- i have met with families on two different occasions, so i know the heartache they are going through. very tragic accident, but since that time, we have taken a number of steps, voluntarily, before anybody told us to, to get on top of this, and we will have a rule making very soon on

this. >> thank you. >> thank you, mr. chairman. mr. secretary, good to see you again, and thank you to coming -- thank you for coming to michigan several times. michigan is the epicenter of much of the economic stress that we find ourselves in, so you're coming has been absolutely marvelous. a year ago, you and secretary donovan talk about rebuilding communities and all of that. i want to say that in michigan, we have been very happy with the support we have gotten. the reason neighborhood stabilization program that came out was announced a couple of weeks ago. 12 cities came together in michigan and are now doing all of those things you asked us to do, so thank you for that. the chairman mitch and the tiger grants earlier. i know they are out. i know you are close to making a decision. >> the statutory requirement is that we make the decisions on or

before february 17. we will be right close to that date, and we are working with the white house on the rollout of those, but let me just say that your leadership in detroit, particularly, at the meetings that we had and since then has been extraordinary, and i want you to know we are going to continue to work with you, your staff, the stakeholders. our transit people in detroit in the next few days meeting with the mayor and others to figure out the kind of things that you all want to do there, and so there will be some good activity and good planning that will continue as a result of the meetings that we had when we were there last year. >> thank you very much. >> on or before the 17th -- probably closer to the 17th, you will be hearing the news about the tiger grants. >> on christmas, a young fellow came on -- with a bomb on a

flight that was about to land in detroit. as aviation manager in this instance, how close are we? i mean, that gentleman was not on any watch list. he is from a wealthy family. any update on that? that might not really. those kinds of activities are done more through homeland security. our job is to work with airports, work with airlines. obviously, tsa is under the jurisdiction of homeland security. we work a lot with: security, but i am going to say this -- flying is safe. there are a lot of people all over this country and all over the world, flying is safe. there are things we need to do. we are going to look at the ntsb recommendations, but we are also going to continue to stay on top

of these things because we know safety is most important, but thousands of people aboard airplanes every day and get to their destinations safely. that is something that i want people to know. thanks, in part, to the fact that there are people looking out after their safety, whether it is third tsa, whether it is through the work we do with airlines, or whether it is through the airlines themselves. >> we appreciate that, those of us who fly twice a week. that is very important to us. my other part is the high-speed rail corridor. $2.5 billion last year was appropriated. you recently announced the billion that came out. our state got a little of that. the $8 billion just recently, and now the $1 billion in the bill. your requests were way higher than the amount of money that we have available. how does that $9 billion fare today?

e of the apple? >> now that we have announced the $8 billion, thanks to your committee, we have $2.5 billion in our appropriation bill. we hope to continue to work throughout the next several months to get that money out the door, particularly for those communities who felt that they were disadvantage because they did not get as much as they wantedçó;ñi. in believe we will be announcing some study money that some states need to do b.g.e. immediately we will be announcing some study money. america is getting into the high-speed passenger rail business, and we take seriously the fact that this committee added $2.5 billion in the appropriations bill. the president is requesting $1 billion in his budget, so we are

on our way. high-speed rail is coming to america. i have had two conversations with the governor of michigan, and we will work with them on this. >> you are way better in that chair at this year than last year. what a difference a year makes. ii commend you on your knowledge of transportation. >> thank you. >> mr. rodriquez. >> let me thank you for coming to san antonio and for reaching out throughout the country. we understand what the situation is in terms of transportation and the lack of it, and the fact that we look at other forms of

transportation. i know you heard about port santonio and the importance of freight coming into santonio. -- into san antonio. ñiyou got a chance to hear from our mayor as we planned for the future. i gather that is the same situation throughout the country. we know we do not have sufficient resources out there. i am hoping there is an attempt by yourself and the administration as we look at -- if it happens or not on a new stimulus package, trying to put these resources and transportation and infrastructure, and i would ask you to comment on that, if possible. i also want you to comment on

the importance of safety on rail. i have a lot of small communities where those trains are going through, and were used to have one train a week, now we have one or two today, and how critical it is to put the resources there, not only in rail safety and improvementsñi. >> safety is our number one priority in all modes of transportation. we have paid a lotúo] attention to what happened in california with the train wreck. some people were killed on the metro system. that is the reason we put forth this transit safety bill that we are asking all of you to pass, so we can really get into the oversight opportunity on these transit systems around america, which we have been prohibited from doing by law. someone needs to provide the

oversight. that is the reason we put forth this bill. we really encourage you -- that steps up and shows that safety is a priority on the rail and the positive train control rule that we have out is another example of how safety is a priority. the work we have done with our faa administrator stepping up, with the recommendations he made immediately after the helicopter hit the small plane over the hudson. the two arab traffic controllers were dismissed. -- the to air-traffic controllers were dismissed. ñiwe are notñiçó going to sit ad on our hands waiting for someone else to do these things. when we see violations, we will step up and take action. we need your help on this

transit safety bill. >> let me ask you to follow up. >> we still have to complete the work that was started with the first stimulus money. we are just about ready to allocate all that money. we were pleased that the president asked congress to pass another jobs bill that would provide us a substantial dollars so we can continue the progress we are making in putting people to work. >> as we talk about port san antonio for air and rail, we have a good number of 18 winners coming through there from mexico, coming and going. the importance of making sure the safety requirements and the resources being put in that

area -- can you elaborate on that? >> every drug that comes across is subject to very tough safety standards. our people are they are checking the trucks and making sure the drivers have the proper licenses and that the vehicles are safe, even though the mexican truck program was suspended. we still are doing our work and checking these trucks that come across the border. but as it becomes important that we continue to do that. >> first of all, i want to thank you for the excellent job you are doing and thank you for the hospitality you have always extended to me. as you know, the 20 miles of light rail we constructed has been in operation for one year.

it has been a success. writer ship has succeeded all expectations -- ridership has exceeded all expectations. . . @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @

tiger brands, and hopefully we can get that accomplished. people are working, and with the additional grant, we will add more employment. i wanted to talk to you about the livable communities that two or three years ago the chairman started this initiative. it is one we all support. every community is different. in the phoenix metro area, will have 20 malls and even within the 20 miles, there are differences. -- 20 miles.

i would ask that you provide money for the planning in studies -- there are areas that have been studied and looked at, but in order to make them livable, we need to provide incentive grants to communities so that the actual -- whether it be the small business that will create jobs along with affordable housing, it becomes a reality. that type of bread, give it -- that type of grant given to the various authorities might be able to make this a reality. i know you will create the office, but hopefully as this is being created, and even within 1 light rail line, there are different economic situations and opportunities, so that there

is flexibility. i will give you example. this occurred in phoenix. there was a large apartment complex, privately owned, that went belly up. working with hud, we were able to have the city of thinks they get up -- is city of phoenix take it up. that particular import -- a portenapartment unit is less th1 mile from light rail. it is projects like that that we have an interest in that we are looking for, that flexibility so that we can maximize the investment, expressly when you have light rail existing that will create the jobs and create the businesses and also make

livable communities, so i make that request. >> first of all, your comment about your a light rail. if you build it, they will come. that is a great example of it. i was there when that system got started, and i know it is exceeding the ridership that everyone thought. they are comfortable and affordable and deliver people where they want to go. on the livable community issue, we will certainly work with your folks to try and do things that will make sense for the neighborhood or the community. >> because of the economic situation at the state in arizona and the metro areas, the use of federal money to continue -- is a great relief.

if you can continue that, we would really appreciate it. >> i think that congress will continue it. it is important when it is hard to operate these transit systems. >> thank you very much, mr. chairman. i apologize that i could not be here earlier. i thoroughly enjoy the time we spent together last year in new york. for you to take that trouble in your first year to go up there was really commendable. you were very supportive of the

long-term infrastructure improvements, and the administration was supportive of those programs. you know that the st. lawrence seaway is important not just to the region but to the maritime ports of the great lakes that depend on international commerce, including home town of toledo, ohio. in the 10 year asset renewal program, i note is not funded at a level necessary to ensure completion of the projects along the seaway. the budget included an estimate for 2011 of 18.4 million to complete the renewal projects.

the submission received earlier this week only includes $15.7 million for 20 projects. there appears to be a gap there, and i have three questions. why did the administration reduced this the way asset renewal program budget by almost $2.8 million, or 15%? 3will the reduction require additional years to be added to the program, and finally, what reassurance is there that similar reductions will not be made to the program? >> my general comment is, when we were together, you know that we have a commitment with the st. lawrence seaway that is very important. i will let my budget assistant secretary answer the specifics, but i want you to know we are

committed to the st. lawrence seaway. it is very important. >> the request is $15.6 million, which would complete the three- year structural rehabilitation of the bridge that goes over to canada as well as upgrading locks, which is what they tell us they need, and that can be accomplished in fiscal year 2011. we continue assessing what they can actually spend, as their construction season is constrained up there because of the weather. mì(lc@&c+ is enough for their needs in 2011. >> the 2010 budgetñr included an estimate of $18.4 million for 25 projects. ñryour but jack -- your budget s

only covering 20 projects. only covering 20 projects. the authority said that they cannot spend it? >> yes. there is a limit to the products they can undertake in 2011. >> so when the department of transportation submitted its budget to omb, that is what the laporte ask for? or did omb cover? >> already asked for. >> i would be very interested in the details your office to provide on which project they anticipated in the prior budget and what has happened in your 2011 budget request. and again, looking down at the

table there, he and i hail from both ends ohio, and i am sure you must have asked about high speed real in your questioning, project identified by the administration. that goes into the northern quarter of ohio, focused across the state. did you cover that, and -- >> i did not. it is the triple-c corridor, the cincinnati corridor. >> we really need the administration's help, if i can take an extra minute, in hiring the corridor for cleveland and chicago, which has to go through indiana. for some reason, and i place this on the record, the state of indiana was not able to provide unmatched for planning in the

northern part of indiana, and that has really put on hold our ability to move that high-speed rail corridor. they clearly did not have to match. perhaps as a buckeye, i feel when i look at the whose years, they have guts to come to the table here. and the higher speed court order could get the same attention as the court or that would go in ohio's situation from cleveland to columbus to cincinnati. but the more traveled corridor would be the pittsburg-chicago, and we cannot do that without indiana coming to the table. >> i would say that indiana is interested in this project. we will be making planning grant awards soon, and we will be working with indiana on this. part of the dilemma in some of these states is that the

legislature is not able to pass the money, that was true about three or four states around the country. i do not think it is through lack of leadership, but the timing was not right. but we are on top of this. we know it is important. i will also tell you that the reason that 3 c's was funded was because of the strong support from the governor and the ohio delegation. >> we understand that. >> thank you. start the second round and continue in the same thing here. mr. secretary, you have proposed one of three initiatives for innovation and financed funds. we have started calling it knife.

i'm not sure if that is a proper terminology or not. but we've mentioned combining the proposal for last year's infrastructure fund, which was proposed at that time for $5 billion, and around to do a bunch of other things, including the 2.5 million that went into the bill. so you -- a high demand for this target program has clearly been established. how do you respond to that set of funding opportunities? it's certainly demonstrating an investment in infrastructure and the process, ports, rail,

transit, air, and the highways. last year, we never got legislation or the infrastructure bank. do you have a sense of when we will get a legislative proposal this year? am i correct that it is a hybrid between last year's infrastructure and the target program? >> i will not refer to it as the knife, because i do not like that trend, i do not think it reflects the value of the program. but i will refer to it as the value of the infrastructure fund, and we will be proposing authorization language very soon, and we envision this, and

when you see the line which as an opportunity to fund multimillion projects that include highway transit, rail, and maritime. >> does it particularly include components for investment that you learned through the process of going through, which is not quite complete? we want to thank you for whatever you have done at that time. that certainly is true. but these lessons that you learned in that process already seem -- >> we received a lot of creative proposals from around the country. we have seen a lot of creative thinking, a lot of creative juices flowing, a lot of creative proposals.

we think what we would propose in an authorization bill is a multi modal system, coming from the things we have seen around the country. >> when people respond to a notice of funding availability, the responses you get depend very much on the capacity for the folks making those applications. some have very great needs and not very great capacity, and others have a great deal of capacity to put forward and maybe even stronger needs. do you have any thoughts about how one takes into account there are places that have great need but not so much in the way of

capacity to accomplish the need, to help them? >> we have relationships with enough stakeholders. we know who these people are, what their capacity as, and how they can really utilize the money. our people work with stakeholders, and people are pretty good at making adjustments about this, i think. >> we have also been good at helping them with technical assistance, really strong needs that are identified by -- >> absolutely. we have got transit people, we are working with highway people. these multiple proposals we have perceived have really allow us

to get out and work together, trying to give good technical assistance to people. >> thank you. mr. lee thumb. >> thank you, mr. chairman. if you hear everyone's questions we're talking about and the tremendous demand for dollars to go through infrastructure for high-speed rail or highway, one of the biggest problems we have is there is no certainty about their, because we do not have a reauthorization. we are looking at your own solvency tables. it will go up $4 billion, and

you have to run a cash management plan. i assume there needs to be another infusion of funds into the trust fund keep out operational. i know in the costume -- the testimony, it did not happen. but how much will we need to make up the difference in the trust fund, and what do we tell our states more than six months down the road? there is no long-term planning, because there is no certainty out there for the states to that -- today.

>> the highway trust fund will require $10 billion. 8 billion would be for hollis -- highways, 1 billion for transportation. as we get closer to the summer, we will have a more precise estimate of that figure. >> our highway people are in communication all the time in terms of what the plans are. so it is not as if we are not providing technical assistance, and it is not as if they do not know at some point congress will pass a transportation bill. we're working with them, and some stimulus money have been

done with authorization. >> i think the problem is the commitment we have at the current baseline levels. but the fact of the matter is, if we're talking about that, the money is not authorized, there is no plan. $8 billion for highways, another building for mass transit coming out of the general fund. it will work with the plan if in fact we have certainty, but i do

not see any effort to do that. >> it does not sound like the fact of the matter. last fiscal year, this fiscal year, they are going into next year, and that was jim filing down outside. how can we move the ball? forward with,(lan. >> the president has asked congress for an 18-month extension in order to --

>> starting when? >> starting with when we requested it, i don't know, maybe six months ago. it was probably, i don't know, i can get you the date, but it was probably six months ago, whenever we asked for it. we're not going to try and start the clock today. we're going to start it from when we made the request. >> and my concern is you're going to start a new congress in march of 2011, that will be a new congress and lord knows what's going to happen. that really kicks it probably another year down the road. that's the problem. and the states are just pulling their hair out. the local communities, there is no certainty, it's just very frustrating to a lot of us who would like to see, who have the great demands for these projects and to be able to plan long-term and you simply can't do it. >> well, having been in the seat that you're all in, if you

can figure out $400 billion to $500 billion how to pay for it, we'll work with you on that, but where are we going to find $400 billion to $500 billion? >> that's why we're looking for your suggestions, also. it's got to come from both sides. >> i think the administration actually should have some proposals also. >> i think the point is made. >> thank you very much, mr. chairman. >> mr. rodriguez. >> thank you very much and once again, mr. secretary, thank you. i have also a great -- probably have one of the biggest rural districts in the nation in west texas and we have a good number of small airport relievers that provide resources and we're trying to enhance it in that area. i would ask in terms of some comments and in terms of the importance of those reliever

airports throughout the community and including in for example, in san antonio, we have a small one that provides 150,000 in terms of the resources that are allocated in that area for you to comment on them. >> sure. those airports are very important and we have a program that can be helpful to some of the smaller airports and that program will continue. they're an important part of it and we know with the downturn in the economy, the use of those airports like every airport around the country has been diminished somewhat. but we will continue to work with the smaller airports and do what we can to be helpful. >> we have asked -- well, we have been looking at moves towards the new technology on airports. where are we at on that? >> well, we have a significant

request in our budget that the president sent up for next -generation technology. we just implemented a next-jen system in the gulf of mexico. i'll be happy to have someone come up from the f.a.a. and brief you on our plan for next-generation technology. we want it implemented. we're working with the airlines. it's going to be very costly for the airlines -- you can put it in the airports, but then the airplanes have to have it, too. we're trying to really mesh the two of these together and so we have had lots of discussions with airlines about this and how they're going to pay for it and so forth. but we think we have an opportunity to really get the next-generation technology sooner than most people think. >> i also wanted to follow up on -- i know there has been a great deal of dialogue and collaboration, and i want to

congratulate ouren that, regarding the livable and sustainable community initiatives. would you elaborate on the mechanics of how this initiative will work and how communities will be able to get access to these resources? >> if our budget is approved, we have shared resources between h.u.d. and e.p.a. and the department of transportation in a program called livable communities. we have a working group between the agencies that have been working over the last year to really begin once the budget is approved, to really begin to work with communities. we know there are neighborhoods around the country, communities around the country that want to do more with light rail, with transit, with street cars, with walking paths, with biking paths and all of these fit into the definition of livable communities. so once our budget is approved, we would be off to the races with these communities and neighborhoods in trying to help them implement the kind of dreams that they have for other

ways to get around the communities and neighborhoods other than automobiles. >> i gather then there will be noticed out later on in the near future how to go about -- >> this is a part of our budget. once our budget is approved, we have relationships, again, with these folks around the country that we have been out and visiting. they have heard about this program. we have talked about it for a year and once everything is signed, sealed, and delivered as far as the money, then we'll start making -- accepting proposals. >> thank you, mr. secretary. >> thank you. >> thank you very much. >> thank you, mr.çóçó chairman. mrniçó secretary, i want toñi commendñi you for the fundñr formerly known as knifed and come up with a cautionary. i think it's agreat idea in the future. we have proposed, it was $17.5

for projects of regional and national significance and the footprint and requirement was that each project had to be half a billion dollars or more. we knew we might not get one. there are 30 or 35 projects around the country that were going to be built and real projects. in ohio, the interbelt in cleveland, the bridge that connects ohio to kentucky, all of those are $1 billion projects. a funny thing happened on the way to the regional project fund. it went over to the other body and they pirated it, they took $200 billion here and there, $50 billion here and there. just to take the one that i'm interested in, the interbelt, it's a $1 billion project. i would hope that and i know that given your integrity that you will protect the integrity of this fund and make sure that it really builds america and

doesn't satisfy a bunch of parochial needs. i am interested in the budget submission and the reason behind the proposed termination of the fund of $161 million. i'll tell you what concerns me. it's a dirty word around here, it's an@@a)e á@ @ @ @ @ @ @ @ @ and we have one bunch in town directing spending to specific areas, and that is did ministration -- that is the administration. >> i will let chris give you the bad news on this.

>> we do not propose funding for that in 2011. >> no money, that is it? i have got it. we will deal with the situation. there is a 30% unemployment rate among civil engineers. g.a.o., almost half of the stimulus funds that went through your department that did in fact create jobs went for repaving projects as i mentioned earlier. in ohio, the paper reported that the stimulus bill created or saved 13,000 jobs. of those 13,000 jobs, 11,000 were teachers. i like teachers. i think it's great, but that's not stimulating the economy. in ohio, it's pretty well

publicized that over $1 million was spent on signs, not saying slow down construction zones saying that this project was paid for by the recovery act. so the signmakers are fully employed in ohio, but the people that build the highways are not. and it was further a requirement that the sign hadçó to be up before you could begin to put a shovel in the ground which seemed a little odd to me as well. we have a problem with unemployment, a job solved that. the president talks a lot about health care. a job can solve that for a family. retirement security, a job can solve that. foreclosure problems, people losing their houses, a job can save that. i just have to tell you that i heard what you said and there are proposals, mr. oberstar has a proposal. we can find the money to fully fund, but it's going to take some tough choices. i'll be a bipartisan barber. this started with president bush. when he said we only had $256

billion over six years, that was crazy. because he wouldn't recognize and his bean counters wouldn't recognize that we had to enhance the revenue to the highway trust fund. it would have taken a nickel then. now it takes a dime. i get people don't want to vote for a tax increase or use the bonding authority of the united states, but if this administration continues to pump out stimulus bills that fund things like treatment for sexually-transmitted diseases rather than dispute putting the operating engineers to work, shame on you. if the congress can't get a bill that gets the bill down, shame on us. i really hope, i went to mr. emmanuel after the state of the union address and said i'm ready to kick this can down the road until 2011 as a political decision, it's not an infrastructure decision that will rebuild america.

>> thank you, mr. chairman. we're going to stick closely to let the secretary get finished here and we're going to hold to the five minutes now quite closely ok. >> thank you, mr. chairman. the stimulus package did save a lot of teachers' jobs and school boards and school districts are very thankful and cities have gotten some firemen and some policemen that stayed on the job and other people are thankful and the district i represent, jobs went for infrastructure and people are working. i was only saddened to say there was not a bipartisan bill, not because of my choice, but because of people that either felt it didn't go far enough, which may have been my

colleagues reason for not voting for it or because they didn't want to spend the money. the reality is we have made attempts to create employment and thank god that people have stayed in a job and will continue to do it. i support infrastructure development and i will join the congressman. we have a friendly relationship that there is water treatment plants and bridges and all that and i agree with it. hopefully in a bipartisan manner, he and i and others can work to get a jobs bill that creates more infrastructure but it's greatly needed. that is the reality today and for the future we need to work together. i guess both of us need to quit looking at the next re-election and look to the nextçó generati as i heard it in the state of the union. we're willing to do that. and i want to thank you for the emphasis on the budget on safety. i have to tell you that

sometimes we overlook it. the whole taxing issue, the dis-- texting issue, the distraction for drivers is very important. adds people are driving and wanting to text and not text, but the whole issue of how people are not paying attention to their driving, it's very important. the issue i have -- it's not an issue, it's just a question, with next-gen. i have to tell you that three years ago i was greatly disappointed because i saw a lot of disarray and confusion in how to get it going and it seemed like things weren't happening because some agencies weren't involved and probable the priority was not there. today you're telling me that there is a project over the gulf of mexico and it's becoming a reality. i can wait for the administrator for more

specifics, but overall, is it underbudget and on-time? i guess that's my main concern because we can't spread it out like we have other programs dealing with navigation in the sky, so this is very important, but it's very expensive and so underbudget and on-time is a very big concern to me. >> well, we have a good plan. we have some very good resources in the budget that's being proposed to all of you. we have people that think about this every day. as i said, we have had lots of discussions with the airlines last year about how they can pay for what they need to implement in the planes. we're pretty far along on this and we think we will have it sooner rather than later and there is a commitment from congress. there is a commitment from the industry and this is, if not the top priority, which is

safety, it's right up there for us to implement this. and the white house is behind us on this also. >> i'm glad to hear that the airlines are involved in this. >> absolutely. >> the other is air traffic controllers. i remember sitting here in heargs when i was trying to discuss the screen and the mouse so hopefully they're involved. the other qui i have -- and i support you for the high-speed rail. one of the disappointments i guess that i heard this morning is that they still will be using lines accommodating most hearings i sat through here, if you try to accommodate three partners or two partners, it's always that you're not going to have that speed that you're looking for above, even to get to 90 is quite a

challenge. and so i just i hope you can resolve that issue. itçóñriñ; +kwú) a problem in current infrastructure, especially the rails. >> thank you. >> thank you, i'll try to get through this in five minutes, mr. chairman. mr. chairman. first of all, mr. secretary, the largest transportation and ohio's history is a federal product, interstate eye-to 80 -- i 280. it looks like a large roman candle. it would be the third largest effort in the united states of america. we would like to have to invite you. thank you, it's taken many, many years. thank you for your openness to that. number two, i have two quick

questions. one is the administration is about to make $1.5 billion in tiger grants funded through the recovery bill. and there is an additional $600 million that we provided in the regular budget in the f.y. 10 bill. do you anticipate recompeting the tiger grants for the new funding, the extra funding, or are you in the next two weeks going to roll out an announcement that spends the entire $2.1 billion. the second part of my question is -- if ajo project scored hi in the initial round of scoring but is not funded, are you going to make those projects compete again? >> we're stat torl to make announcementsñv=9át $1.5 billion by february 17, which we will do. and then we will -- there will beñi competition for the initially -- additional money.

i take your point on programs where we didn't have enough money but they're valuable programs or projects, you know, i'll get back to you on whether they can compete those funds. >> thank you. i will state the record and provide more detail that the top project in our regions which was the modernization of our shipyard was not able to be funded. and i talked with the secretary and you have been great in trying to explain what happened. it was a top priority of our city, county, myself, our governor, everybody else but here is what we ran into. in the recovery act, there is a section, 601 a 8 that defines project if located within the bound "desperate housewives" a port terminal to include surface transportation, infrastructure modifications that are necessary to facilitate direct intermodel interchange transfer access into and out of the port. our state thought that a port project would be eligible, our shipyard would be eligible.

what happened is once it got over to d.o.t., it then got administered by the highway administration. that is where we ran into difficulty. we will explain that, but we're hoping that in the new jobs bill, assuming the senate passes it, that if a project, our state d.o.t. director was in here yesterday and if a project is eligible for any d.o.t. program, it should be eligible for the recovery jobs program. we ought to find out a way to do that and not have any stove pipe inside of d.o.t. tell us we can't do it. it seems there is a conflict in the law. we will try to clarify to the best of our ability, we wanted to make you aware of it. >> thank you. >> the final question that i have is just a request for information and that is are there any programs that usdot, authorities or funding to help urban communities, urban

counties consolidate all of their public vehicle fleet maintenance and management to go green? is there anything in the law, is there anything in what you're doing over there because i think this would save us a great deal of money because we have state fleets, city fleets, county fleets and a transit authority fleets. everyone has their own garage. every garage leaks energy. the vehicles are not that green. so i'm looking for any type of incentive program or demonstration program that might exist through d.o.t. that we might be able to look in, if it does not exist, create an authority to have it it exist. >> we'll get back to you on that. >> i thank you very much. thank you, mr. chairman. >> thank you. mr. lay them for your -- latham for your final round. >> thank you very much, mr. chairman. mr. secretary, there are many states in the country that

don't have large transit system like iowa. in our case we put about $60 million a year into the mass transit account with the gas taxes that we pay. we get back about $35 million in the formula. we still have tremendous needs as far as new equipment certainly as far as the systems we have. is the department doing anything to address the funding inequities for the smaller transit systems and like in the state of iowa? >> well, we're -- our transit administrator is trying to work with states like iowa and why don't i get back to you with some of the specifics that he's some of the specifics that he's been doing. i will have him come up and meet with you. >> as you know, in the fiscal year 2010 omnibus, there is a

provision authorizing the use of trust in interstates, highways in maine and vermont, a chance to have a hearing was not met to debate that, and there is a lot of provisions. thoughts are on a countrywide pilot program, wait on the interstate, and would to be in favor of considering such a pilot? >> our administrator for truck'' safety is working on this. but me get back to you about the specifics of what we're working on. this is a very hot topic, and i

will come up and brief you. we are working with the white house on a proposal. >> with nafta, -- >> right. let me tell you, we are working with the white house on a proposal. >> soon? ok. in the interests of time, we have votes on the floor, so i will give back my time and i appreciate that, thank you, ray. >> thank you. >> thank you, mr. secretary, for being with us. i have a couple of just very quickies and we will close.

if when we get around to passing this bill sometime later, some months later in the process, if it's in regular order, a limited number of months, and the -- if the economy looks like there is need, what would your thought being going above the 10% that has been allowed, several people have expressed an interest of going above the 10% allowance for capital funds that go out by formula going to a higher percentage? >> i think that if you all decide to get into that kind of debate, we'll talk with you about it. i think you know where we stand on the principal of doing it and so if you all decided to do something else, we'll talk with you about it. >> the other thing that i hear several people mentioned it at

one point or another is the steam lining of the processes. it is clearly the processes where one does planning and environmental work and design and finally at some point some 10 or 12 years later get to a construction on a project that people are concerned about. does the administration have any kind of preparatory work to work directly with the t and i, that's an authorizing issue. we have to somehow streamline these processes for major capital programs. >> yeah, i mean we talked to the -- i talk to the chairman all the time and also we're working with her staff and so we'll continue to do that. >> i thank you for that. i just also want to thank you very much for the rail money out of the recent announcement

a couple week ago announcement that involved connecticut and massachusetts and vermont in the connecticut river valley. that's a very valuable program that i think can, much of it can be delivered within certainly 2010 and 2011 and a large portion of the work will be done during this calderon year -- calendar year that we are in. a good deal of time will be saved in the trip for people that are using that amtrak corridor. we greatly appreciate. >> thkts for your leadership in the area and the regions -- thanks for your leadership in the area and the region. >> a lot of members have said that you have come to your states. i haven't been with you in iowa and you haven't been with the chairman in massachusetts.

we would invite you. >> i have been to iowa but i wasn't to your district. >> what? you didn't call? >> i spent a half a day in dubuque and that's when i learned about the new i.b.m. employees and the mill works area. whenever i'm invited, mr. latham, i will be in your district. whenever i'm invited, mr. olver, i'll be in your district. when mr. rodriguez invited me to san antonio, i came. >> we'll see. finally, i just want to thank you for your very strong leadership in this field and really if there is a little bit of testiness that are coming from members who have great concerns, not with you, not in any kind of a personal way i am quite certain and i want to thank you for the steady communication with the subcommittee. it's very much appreciated. >> one of the values i bring to this job is i sat in those

chairs. i know that when the congressman speaks, he speaks with great authority and great sincerity and i wouldn't question his motives at all. i know there is a great deal of frustration being expressed and so we have our job to do and we will continue to work with all of you on the way forward here. >> thank you very much. >> thank you. >> this hearing is adjourned. >> this year, of $787 billion

approved of stimulus, $176 billion has been paid out so far. to learn about products, go to c-span.org/stimulus. still to come today on c-span, remarks from secretary of state hillary clinton on northern ireland. then, the democratic national committee meeting with house speaker nancy pelosi. after that, the 2010 defense review. "in-depth" welcomes called johnson, author of over 40 books. his latest is on winston churchill. join our latest conversation with your phone calls on c-span

two. secretary of state hillary clinton next on northern ireland, talking about an agreement between the governments of the u.k. and northern island to transfer its beliefs and justice systems from local this spring. this is 10 minutes, from earlier today. >> good morning, everyone. today is a very positive day for northern ireland. they have taken a step towards a lasting peace, and political leaders have agreed on a road map and a timeline for the devolution of policing in

justice powers, and taken other productive steps as well. they will help consolidate the hard-1 games of the past decade. this has not been an easy approach. there were plenty of bumps along the way. i've been in contact with the party's over the year, especially with my trip to belfast in october. i know that the way forward was far from clear. so i want to applaud all the parties for ultimately choosing negotiations over confrontation. in finalizing this tale, peter robinson and mark mcinnis displayed the leadership the people of northern ireland deserve. leadership and the patient result of prime minister brown and collins, as well as shaun woodward and prime minister

martin have resolutely focused on moving this forward, forging common grounds, and keeping northern ireland on the path of stability. so far, the evolution process has enabled leaders to enact reform, from housing, to health, to environmental safety. now they have even greater authority, and with that comes greater responsibility. they must continue to lead. the people of northern ireland are poised to build a thriving society on a stronger foundation, where neighbors can live free from fear and all people have potential to fulfil their god-given right. this is a dream that has been for so long and the hearts of people across northern ireland, and a dream that lives beyond borders, in communities where ethnic and religious conflicts persist. this point the way for work --

this points the way forward. despite entrenched opposition and innumerable setbacks, diligent diplomacy and committed leadership can overcome generations of suspicion and hostility. now we joined the world and looking for the leaders of northern ireland to build on their efforts promoting a new spirit of cooperation, and as they do, the united states would help. how are opt what -- our on voigt will continue to work for investment and other institutions will opportunities. we will meet to discuss further opportunities in northern ireland, and ways to build on this agreement. i spoke very late in the evening and congratulated people

and thank them for their efforts, and i pledged continuing support for their efforts. today we salute this achievement. we recognize a new chapter a partnership among northern ireland's political leadership and people can now begin, and i am confident the people of northern ireland will make the most of this moment. i want to reaffirm the commitment of the united states and my personal commitment to support them in every way we can as they continue on this positive path into the future. i will be glad to take your questions. good morning. there comes a microphone. >> what about the elections in

march if the 500 candidates are excluded? a few of state department reporters were told that was the case, and they heard they were starting. >> we are providing counselor services with full access to the american ambassador, seeking with his counterparts in the haitian government. obviously this is a matter for the haitian judicial system. we are going to continue to provide support, as we do in every instance like this, to american citizens who have been charged, and we hope that this matter can be resolved in an expeditious way, but it is something of a sovereign nation is pursuing based on evidence presented when the chargers were

announced. we were heartened by the decision earlier this week to reverse the 500 names from the election last for the upcoming election. we care very deeply that this be free and fair and viewed as legitimate. by all the communities in iraq and the neighbors. this has been an extraordinary opportunity for iraqis to consolidate their democracy. we have not made any decision about reacting to events that might occur within the context of the election, but certainly we were heartened by the decision earlier. >> more follow-up, madam secretary. you said no decision has been made about how you would view the outcome of the election. but are you considering the

option that you would not accept the outcome? >> we are not actively considering any option. we are pleased the decision made by the iraqis themselves opens the way for these 500 individuals to stand for election. we think that is an appropriate outcome, and the rockies made it on their own, within their own legal process. we do very much encouraged all of the parties and leaders of iraq to ensure nothing is done which undermines the legitimacy of this election. we see an enormous amount of political activity. that is good. iraq is engaged in politics, and people are seeking votes and reaching beyond their own community to do so. that is exactly what we want to encourage. .

can we move forward with out china? >> first, let me say we have pursued diplomatic engagement with iran steadily since obama took office. as you know, we have always had a two track profit reprocessed. -- eight two track process. we would hope our colleagues and other members of the p-5 plus

one recognize that because they have been involved. they have helped to enable the negotiations to go forward by joining with very strong language about what is expected from iran. the fact is we have not really seen much in the way of response. sometimes we see response from a part of the government which is report -- which would be retracted from another part. our position is that we have, in good faith, engaged in diplomacy with iranians. we have always had a two track process. we now move towards what pressures and sanctions could be brought to bear on the iranians. we will look to all of our colleagues including, of course, china.

thank you all. enjoy this note. [laughter] -- enjoy the snow. take care. >> here is our schedule. next, the democratic national committee winter meeting. after that, a discussion on the 2010 squad rail defense review. later, remarks from commerce secretary remarksgary locke on obama's plan to increase exports.

all this weekend, live coverage of the first national tea party convention from nashville. starting tonight, a discussion on the movement and issues surrounding its formation. we will hear remarks from a fox news contributor. here's a look at some of the sights and sounds from the convention so far. >> thank you for coming. >> sir, can you show me the gift bag? >> i do not know what it is for. we have a t-shirt. we also have a van deepak -- fanny pack.

here is a megaphone. >> there is not a teacup. >> there's more paperwork on how to order t-shirts. >> where is your ticket? so there is not an actual ticket for difference events. >> no, we have to keep these with us at all times. >> a reminder that all this weekend we will bring you live coverage of the first national convention from nashville. saturday night, remarks from former vice presidential candidate who will be giving the keynote address. after her speech we will take your calls. that began saturday at 9:00 p.m. eastern >> it is easy to complain about the issues. i tried to be entertaining, informative, and relevant in a way that offers solutions.

>> progressive talk radio host and the author of the 30 books is the author -- is our guest on c-span's "q and a." >> now, opening remarks from the dnc chairman during this 35 minute event. >> if i could get everyone's attention? please have a seat. we have an opportunity this morning to hear from the speaker. it will be hard to get her away from the throngs of admirers, but let me do some acknowledgments. a number of the officers and

five chairs are with us today. let me acknowledge them. mike honda, a member of congress from california. i will bring congressman honda back in a second. congressman dan b. wasserman shobes -- debbie wasserman-shu ltz. the chair of the new hampshire party. [applause] donna brazil with voter participation. [applause] she was waiting 8 new orleans saints have. -- she was waving a saints hat. is andy here? our secretary is here. she can deal with 24 inches of

snow. our national finance chair is here somewhere. glad to have you. [applause] we are in a great place this morning to have the speaker come and visit. i went to bring up congressman honda in a second to introduce her because they work so closely together, but before i do let me say a few words before the end speaker comes up here. i do not know if there has been a time when congress has been doing such heavy lifts on such important issues under her leadership. many see the president put out tough challenges, not the small ones but this challenging economy, job news with

unemployment rate down to 9.8% which is moving in the right direction. a long way to go, but that is good. as the president has tried to promote these changes we need to make, the house has been rock- solid. i know you heard in the state of the union how many times he referred to them and encouraged other bodies to do the same. i think it was five. the speaker has done enormous work with the caliber of challenging issues they are tackling and the workload has been super intense. i have been unusually last ever since i got elected to the commonwealth of virginia. i did not know what i did right, but i feel like she has watched out for me in a very special way and i appreciate that, madam speaker. let's give her a dnc round of

applause to speaker pelosi being with us today. [applause] [cheers and applause] someone to stand once more. -- i want you to stand. in a minute we will do that. now, let me bring up one of my vice chairs. there were significantly with the voter outreach within the dnc, congressmen mike honda. give him a great round of

applause. [applause] >> good morning. all right. that is how we start. thank you, governor. i think is safe to say that nobody has as difficult a job as the speaker. no one shows more responsibility in shaping debate and policy. no one else so devotedly listens to and weaves together the needs and demands for a large, diverse, opinionated, and often boisterous house of the democratic caustic critic caucus. -- house of a democratic caucus. nobody does this better. nobody. no one spends more hours negotiating.

no one stays up as late deliberating and no one spends more flight miles than speaker pelosi. a return to cause me on the cell phone she would always be on the phone. -- every time she would call me on the cellphone. it is no surprise that historians, pundits, friends, colleagues, and opponents consider her the most powerful speaker in history. [applause] it is because of her tireless leadership and perseverance to getting things done for the american people, the legislative accomplishments of the 111 the congress are extraordinary. -- of the 111th congress. his recovery act to create jobs

and cut taxes for the middle class, children dovecote -- children's healthcare legis lation, landmark waxman bill to limit greenhouse emissions in america. [applause] so many other challenges from doing reforms on wall street and main street. she never stops fighting for california and for all americans. when this baker said after we passed our jobs bill, she said that she was willing and about to hit the campaign trail. i heard a sigh of relief because we needed somebody with her brilliance and her

legislative know-how and strategies to be out there in the fields campaigning. i do not know of any better campaigner than nancy pelosi. provision, tenacity, patience, and poise -- her vision will lead us into the next november election. i watch her every day and i do not think i have ever seen a look of anchor and her eyes. it is always determination. -- i have never seen a look of anger in her eyes. they ask, what is your problem? [laughter] i know because she once asked me that. [laughter] that was in my first month. i learned quickly. my fellow democrats, it is my distinct pleasure to introduce to you a fellow california democrat, my speaker, your

speaker, nancy -- how do you say that? pugnacios? nacy pelo -- nancy pelosi. [applause] >> thank you all very much. [applause] good morning. and a good morning is as was indicated by the jobs figures. thank you like for your very generous and insightful introduction. -- thank you, mike. let's hear it again for mike honda who is a great champion of the middle class. thank you to our dnc chair who

is a lifelong fighter for fairness in our country. aren't we proud of our chair of the democratic national committee? [applause] we go back over 30 years. we have some history here. donna came along later. thank you to all of you who are here. i want to abolish the california delegation. -- i want to acknowledge the california delegation. [applause] my granddaughter, isabella, is here with her grandmother. i went to a knowledge that a member of our delegation is now going to be the speaker of the california assembly.

aren't we proud of that? [applause] how to balance some of my colleagues in the congress who are here from california and beyond. we are so proud of debbie wasserman-schultz. [applause] an unyielding advocate for social justice. as you know, she's a fighter for economic justice. there are working together are democratic whipledemocratice and waters -- whip. democrats lee and waters lead

the way into haiti. thank you, barbara. [applause] it is wonderful to be here. many of us have been friends for decades, some sort -- some for days. we are all concerned for a better future for the american people. i am honored to have spent 20 years here. we are three generations of dnc knowing full well the important work that the members of the democratic national committee have. i am very honored to be here today as speaker of the house and on behalf of our great majority in the congress.

[applause] i'm here to say thank you. thank you for helping to elect a strong democratic majorities in congress that enables us to make a difference in the lives of the american people i know that senator reid's travel prevented him from being here this morning but may i say what an honor it is to work with him on behalf of a better future. he is a great leader in the united states senate. [applause] i would point out one area of special pride. we're very proud that we have provided greater support for our veterans than in any other time in american history. [applause] as they say in the military, on

the battlefield we will leave no soldiers behind. so, too, we say when they come home we will leave no veteran behind. let us recognize the service of our courageous men and women in uniform and their families. thank you to our men and women in uniform. [applause] with your help, we passed the equal pay legislation the federal hate crimes law, and last week we received the news that obama will repeal "don't ask, don't tell." [applause] i know when you are out there you get questions. what is the difference between the democratic party and the

republican party? during his acceptance speech at the dnc in 1948, truman managed to to say -- "the democratic party is the people's party and the republican party is a party of special interest. it has always been that way and it always be that way." it was true then and it is true today. democrats are the party of the people. keeping in mind with what president truman said about the republicans being a party of special interest, doesn't that with combined with supreme court decisions, isn't that long overdue? [applause] we are the defenders of the middle class and all who aspire to it. democrats are fighting for -- for fairness and justice.

we are leading the fight for main street. never again will wall street proxy recklessness undermined main street's progress. -- will ball street -- wall street's recklessness undermine main street's progress. healthcare is a right and not a privilege. [applause] fairness and opportunity, that is the fire that burns within us. thank you for helping to elect a great president of the united states, president barack obama. [applause] in his inspirational inaugural address, he called for actions old and swift. this was not only to create new jobs but to lay a new foundation for growth. with your help, when we can one

day later the house passed the american recovery and reinvestment act. that will markets one-year anniversary on february 17th and has held the education at our children by hiring more teachers and keeping them in the classrooms. the recovery act provided more police and firefighters in our communities. the transformation through middle class tax cuts was an important principle. before we began the investment to create clean energy jobs and will continue to build on the waxman bill had more clean energy jobs for the future. it is not just about putting people back to work but having a better jobs for the american people. [applause]

there are few things i want you to take home. according to a major economic indicators, we have already seen signs of recovery spurned from this recovery act. first, jobs. january of last year, before we are enacted the recovery act, we lost 741,000 jobs in that month alone. one year later, the job loss to de from january 2010 was 22,000 jobs. 741,000 to 22,000. that is still too much but it is a big difference. 721,000 jobs fewer than one year

ago. second, the gdp. in december 2008, american's g.d.p. decreased by 6%. our gdp grew by 5.7% which is a remarkable 12 point swing and the fastest that our economy has grown in years. 12 points from december to december. third, the stock market. yesterday it still closed over 10,000. when your go around this time, it closed at 7000 which is an increase of 3000 points in the stock market. fourth, american's manufacturing

base grew for the sixth straight month. that me repeat that. the manufacturing base grew for the sixth straight month. now it is at its highest level in five years. five years. [applause] jobs, g.d.p., the stock market, and manufacturing. this was an important part of making that change and we must recognize that in all of our communities. the biggest indicator for us, and the president said this so well, is the progress that is made by american families. we know that far too many americans are still looking for work. it democrats will continue to focus on putting america back to work but creating new, more, and better jobs for the 21st century. we will measure our success in

the progress made by america's working families. central to our fight to create jobs and strengthen the economy is our fight to reform health insurance for the american people. [applause] this is about the economic security of america's family. let us recall the course set by the president and congress last january. with your help, as was mentioned earlier by mike, one of the first bills we send to the president provided health care for 11 million children in america. we were off to a good start. the recovery act invested billions of dollars in health information technology, electronic medical records, so that when we go down the path of health-care reform we are off to a running start. billions of dollars additional

foreign investment in basic biomedical research. research is the power to cure. research paid by the taxpayer benefits should be available to everyone in america. our idea is predicate it that the most privileged person in america has better health care if everyone has health care. [applause] there is more. in a letter to president obama, senator kennedy wrote about the need for health care reform. he said, "what we face is a moral issue. at stake are not just the fundamental principles and details but the fundamental principles of social justice and the character of our country." with the leadership of president barack obama and with your help, we will pass health insurance reform this year.

[applause] while the forces against us spurned misrepresentation, here is what i want you to remember about reform. the bill is about jobs, creating four million good paying jobs in the life of the bill. it is about innovation, using the health information technology and biomedical research on how we deliver health care to everyone in america to have a personalized, customized care to make sure they are getting the right care. this is very important and it is about our future. this is about prevention and wellness. it is about diet not diabetes. it is about how we can make america a healthier. it is not just about health care but a healthier america.

this bill is about fairness. the fire that burns with us, in the spirit of fairness under this legislation you will not be denied coverage because of pre- existing conditions. [applause] by the way, it being a woman is a practically a pre-existing condition for most insurance companies. [laughter] domestic violence is not considered a pre-existing condition. [applause] you will not lose coverage because you come sick. imagine you brought your insurance, pay your premiums, i get sick, and they cancel your policy. that is not an insurance. it may be a diversion they accept but it is not what we except for the american people.

most american families who are declaring bankruptcy do so because of medical bills. a diagnosis of an illness should not be a reason to declare bankruptcy in our country. we will not allow insurance companies to become out -- to come between you and your doctor. it is time for us to end the unfair advantage that interest companies have over american families. next week, the house will repeal the special anti-trust exemption for health insurance companies. [cheers and applause] and from virginia, thomas taking the lead on that.

the bill will increase competition, increased consumer choice, and lower costs for the american people. it must be done and is long overdue. as president obama said during its state of the union address, "do not walk away from reform. not now, not when we are so close." on the campaign trail on official visits across the country, i have seen grown men crying about this issue. people who are on the verge of bankruptcy because of medical bills who had a sick spouse who do not want to tell their children they can no longer afford to buy prescription drugs that their spouse needs. they may have to lose their home and are desperate. the problem will not go away. we must pass reform.

the status quo is unsustainable for individuals, for those who work their whole lives, played by the rules come and do everything right. they say, i cannot make it. health care bills are taking our family down and i am embarrassed to tell my children. they have their own challenges. i cannot call upon them for help. this is happening in the greatest country in the world because we did not have health care has a right not a privilege. we will before too long. standing together and working together, we will pass health care reform for the american people. i will say it again. [applause] recognize your role in this. we can do the inside maneuvering and legislating, but

without outside mobilization, without your participation nothing really great or good can happen. i think you for what you have done and in advance of what you will do. we talked earlier about the difference between democrats and republicans. anyone who wants to see the difference between democrats and republicans need only look at their budgets. president obama said his budget to the congress. president obama's budget is a true statement of our national values, when we believe in and how we allocate our resources. barbara and debbie know that. and mike honda, as well. i was an appropriate, too. this provides a new foundation for economic growth which

creates jobs, strengthens the middle class, preserves social security and medicare and does this in a fiscally sound way to reduce the deficit. by contrast, the republican budget provides tax breaks to the well fame and medicare as we know it's and privatizes social security. here they go again. they are rehashing the same failed bush policy. i want you to take that home. the republicans budget that they presented to the house privatizes social security, turns medicare into a doctor program, and it as we know it today. the word needs to get out. we need you to spread the word. imagine what would have happened if we had put america's

retirement and security to privatize them the last time at the risk of wall street? because of view, and i think you in the effort to save social security in 2006, is a of the social security and elected a democratic majority to the congress of the united states. [applause] urged on by president truman and his definition very succinctly presented, strongly led by president obama, and aren't we proud of our great president of the united states? [applause] harkening back to the presidents who brought us social security, president roosevelt. well, some of the may have heard this speech. most of us have read about it.

[laughter] i was born in his administration. this is who we are. this president identified with the aspirations of america's people. he knew that they needed jobs, a safety net. one of my favorite stories that some of you have heard me tell before is that when president roosevelt died in georgia, he was taken by train to washington d.c. to the white house and then on to hyde park. hundreds of thousands of people lined on the tracks, farmers, african-americans, poor people,

middle-class people, everyone lined up to pay their respects. when the train came into union station in washington, a reporter went up to a mourner who was there with tears in his eyes and the reporter said to him, why are you here? did you know franklin roosevelt? he said? no, i did not know president roosevelt but he knew me. but he knew me. [applause] that has always been what our purpose is in the democratic party, to know the aspirations, challenges, hopes, dreams, fears of the american people. today we know that people need jobs. they always do. that is our commitment to ensure their economic security whether it is through the creation of

jobs, making health care available, the education of their children, pension security. we know them. yeah, again, our our messengers to ensure the american people know that the democratic party knows them. we could not have a better messenger than barack obama, the president of the united states, to convey that message. that is what the congress does every day, to pass legislation, to demonstrate that we know the american people. we just have to convince them of that. you are very much a part of making that happen. i think you, my friends, for your support, encouragement, your work, beginning of the vote, promoting causes and candidates of the democratic party. i want you to know that it really does make a difference. we have two different value systems here.

half of the democrats in the house -- on behalf of the democrats, i say thank you. i look forward to working with you to accomplish the goals we are setting forth in this next session of congress and to say that god has been truly blessed. he has truly blessed america in helping america's working families. god bless you, god bless america. thank you all very much. [applause] >> in a moment, a discussion on the defense department 2010 quadrennial defense review. later, remarks from the commerce

secretary, gary locke, on plans to improve exports. then a meeting on the homeland security travel policies and what is ahead for passengers after the attempted christmas day bombing. this weekend, live coverage of the first national tea party convention in nashville. beginning tomorrow, a discussion on the role of the tea party could played during the upcoming election. after that, analysts examined ways to get the party to grow and organized. in between the panels, we will take your calls and comments. that is live tomorrow on c-span. after the convention, a look at women lawyers and the supreme court. former justice supreme former

justice sandra day o'connor and others talk about the challenges they faced that is tomorrow at 7:00 p.m. eastern >> we know historically that markets do not work but they forgot all of that. >> this weekend, joseph stieglitz -- stiglitz on "book tv." >> here is a discussion on of the quadrennial defense review. it is a congressionally mandated analysis of long-term strategy and resources for the military. from the center for strategic and military studies, this is at 90 minutes. >> thank you all for coming. we are delighted to have you here. this is an important session which is part of trying to fill out the intellectual story around the defense budget and a

the qdr. we're going to talk about a dimension that normally does not get a lot of been rigid attention and that is industrial. -- normally does not get a lot of attention. we made the decision 40 years before the start of the cold war. we decided as a nation that we were going to be building military aircraft in the private sector and not an arsenals. prior to that, we have been building, equipping in an arsenal based system. they have an appropriate role, but when you are looking to really harness the creativity and energy that comes with that, we made brilliant decisions, i think, when we harnessed the

energy of the free enterprise systems and national security. we did that for years before the cold war. we did not win the cold war because we put up a larger military force in the field. we had to put military forces in the field that would offset the superior quantities in the warsaw pact with superior quality. that came with having these partners that gave us that. in every sense of the world it is the fifth service, or six different have the course toward -- or six if we count to the coast guard. it makes it possible every day for us to succeed in the battlefield. now, the problem is we treat this as the neglected stepson of the family and give it the least amount of attention when we are making resource decisions in the

department. i will plead guilty. that is certainly what i did when i was a comptroller. when i was deputy secretary, we did not pay any systematic attention to the role that the private sector played as an indispensable partner. i learned painfully two-thirds of the ways your lifetime that we had, at that time, an industrial base that was in crisis. i would rather think we're coming to that point again. we are going? spend some energy and time thinking about this. now, we're fortunate to have a man with us this morning who chose this over staying home with sick children. i am not sure which is the worst problem, but we are glad he chose to come with us and will share some of his talks.

we have a worthy panel with a bunch of greedy white guys. -- if grumpy white guys. [laughter] these are the best intellects that we have to bring crosscutting perspectives on a shared problem. we are glad you are here. david, did you have anything to say? let's welcome brett lambert. [applause] >> that is the best introduction i have had in a few months. usually they say, who is that guy in the back row? i wanted to start by saying a few general things. i am new to the building. those reminded by a friend of mine who took a job at a big

foundation some time ago and was told by the foundation director that in his new position he would never again get a sincere compliments or a bad meal. when i have learned is that i am worried about introductions because agonize complement's, but i can't accept the meal anymore. naing sorry for the coffee. i want to thank you not only for your time this morning but through the years for being a true mentor to me. hopefully the building will benefit from your willingness to, in essence, share your experiences and insights. i look around the room and they

see about half of you has benefited from his generosity. i appreciate everyone who came down. my grandfather used to say that the value of a man with the local farmers met for coffee and you were not there they would still say nice things about you. i assure you that use -- that we say nice things when we are having coffee. that said, as a midwesterners that you took under your wings, i still want to try to convince you that south dakota is part of the east coast, just so you know. thank you for everyone who tried to brave the weather forecast. it the good news is that i think this will be the last meeting of your day. then everyone can go home. i came from the pentagon, plan to go back, but i realized as i was going there this morning that they do not have a good

understanding of whether we in sourced or outsourced so i'm judy to figure that out. -- so i am trying to figure that out. i want to think david for setting this up. it is a great topic. a -- i would thakn david. -- thakn david. i am humbled i feel like i'm coming home. my first job was in this building. when i was a freshman at kansas state i applied for a position at georgetown university. we did not have the money. i also applied for a stipend. georgetown and the csis for more than generous. even though my mom did not know i did it, i arrived here so i

spent my first entered japan in washington under the famous bill taylor -- so i spent my first internship in washington under bill taylor. yes, i am that old. i appreciate being back. i have been around for almost 20 years now in different forums and it is a wonderful institution. it has given so much to our nation and so much of the interaction would not be possible without the good offices of the csis. i have only been in the department for a few months so i get a little nervous when i speak publicly because i am told to stay away, it is more self regulating at this point.

i am trying to bring to the department a new understanding of the industrial base in an industrial capacity. i am stepping on toes which i did in my previous life in industry and i find the difference is that these toes tend to be heavily armed and dominating in many ways. that is one issue. when i accepted this position, i was asked that one of the things we want you to do is think outside the box, think about industrial policy, the industrial base. in the first few months, and has taken me some time to realize that my boss has five sides and a lead -- my box has five sides and a lid. my transition has been interesting. in the private sector, i spent a

lot of time dealing with intelligence and what the government is doing. i now spend more time defending the skills, capabilities, and intelligence of what we are doing in the government. it is a different dynamic. i would get specifically to some other experiences that i have had that i think are quite positive for this industry and the overall security of the country. i was asked to talk about industrial policy in regard to the qdr. i will try as best as i can to answer specific questions about programs. i would like to set more of a town and the overall context -- more of a tone. i cannot say enough about my

contemporaries and new colleagues in the building. they pushed in the qdr for industrial to be a high priority. we would not be having this meeting today without the acknowledgments of my boss, dr. carter, the secretary, that industrial policy and industrial base issues are serious. they all get this in. for those of you, i can assure you it is not. when i joined the department, i was i test team to lead the effort for drafting the industrial based language in the qdr. it is a born to realize that was not being pushed up for me. it was being pushed down to me. all of these people in the room who have served understand and

recognize the difference of that imperative. the leadership was very serious, committed to understanding sometimes at 2:00 a.m. which was too serious for my taste for getting clarification on these challenges and issues we need to address in the coming years. i cannot say enough about the fact that when i took this position i was warned about the institutional barriers within the department. i was warned about fiefdoms. i cannot say enough about the work, the group in the policy shop, and the secretary. the access they give us, the interactions we have had, it is a true to -- it is a true tribune. the qdr has been one of the more

positive experiences i felt where my organization has been able to move the ball forward with our partners and industry. again, i cannot say enough about the often criticized but too rarely recognized department within the pentagon. i think it is important to put this in a common-sense perspective going back to my kansas routes. no document can answer all the questions or musings of of of the people. if it could, i would suggest that we read brand of this "the nostra dumbest chronicles -- nostradamus chronicles," but that just does not happen. i am a climber. i have learned the hard way that it is necessary to exercise before you climb. the exercise does not climb the mountain, but you cannot climb

the mountain without exercise. the qdr is an exercise that in forms and shapes our vision as a department. it alone does not get us through the summit. it is a tool. for the first time in a long time, i believe is not only recognized the reality but embraced in terms of industrial policy in my things go out to those in the department who asked for our input. when i was first hired, dr. carter related to me a story that secretary gates told him when he assumed the position. the military had gone to war but the department had not. he wanted to change that and i can assure year that this has not been lost on me or anyone in my group. everything i say today should be viewed for at -- through that optic as should the qdr. we are at wars, plural. my job is to focus on those

areas from a policy perspective that we make the right decisions that make the greatest positive impact not just on the fighters in the field but those being deployed in the next 18-36 months and the individuals who will be deployed well after i leave this office. this is truly a high wire act. we are attempting to balance immediate requirements while ensuring a sensible, long term policy that maintains premier, and i emphasize that, military dominance over potential adversaries in the future. this is not a u.s. government challenge. it is not a department of defense challenge. it is a national challenge. we cannot achieve our objectives without the dedication and support of our industrial partners. despite spending almost $2 billion per day, the department does not build that many things.

we pay others to provide the goods and services for our fighters. we pay someone to design, test, perform quality assurance, assembled, test again, then support hundreds of thousands of parts. we count on our partners to make it fly, make it a sustainable, and make it perform the missions we expected to perform. i use the phrase "partner" because we as a department cannot function alone. both the department and industry for better or worse are codependence. we're not going back, in most cases, to an arsenal system that he described because we realize it does not work. we cannot sell our responsibilities without industry partners. even with this recognition, the

pentagon as a whole needs to do a better job of understanding the true industrial base. i wish i could stand here and say that the decades-long primary hands-off approach could be remedied quickly. unfortunately, i cannot. the problems we say -- we face and the solutions we seek will take time to recognize and address. as we have in the past, they will continue to rely on market forces to shape and sustain our base whenever possible. with that being said, the department must be prepared and must retain the ability to intervene when necessary to create and sustain innovation, capabilities, and skills that about our national security. this means that a greater understanding of the industry is needed. the industry as a whole is a complex web of ad hoc agreements, shifting stock symbols, and company mergers. keeping track of this is a job in and of itself.

on a side note before anyone just to the conclusion that we are seeking to become something awarding over industry, i want on my tombstone -- something lording over the uindustry, we need more insight before we offer more advice on oversight. we need to know the facts so that problems identified are not gunslinging but gun sniffing. . . smithing. and dr. henry, i stole that line from you because i was quite taken with it sometime ago. @@@ 2dá@ @ @ @ @ @ @ @ @ @ @ @

the ability of the primes to su battle is the ability of the primes to jeopardized. i realize that the effort we're undertaking is complex. but we believe it's necessary. many of the defense industries jobs that require the most perishable skills reside with the smaller, non-prime suppliers. their survival is dependent on factors largely out of their control. they're small, highly specialized companies dependent on the primes and their unique requirements to fund the continued existence. the cascading effects is one of the primary reasons we need better understand the structure of this industry and the

situations that subtiers face. this will help us understand potential impacts for programmatic decisions and understand critical lower tier providers that we ensure that they have the capacity to respond to these immediate needs to get systems to the battlefie battlefield. that the continued supply of critical subcomponents to our base will not be jeopardized. and to ensure that the critical skilled jobs -- and i want to emphasize that, skilled jobs are not lost to this nation. i'd like to cover one other area that i have long believed was far too overlooked and that's the financial community. and i thank byron for his years of wisdom for making -- getting me smart on this. from small technology start-ups, which the venture capital funding to debt markets that provide the capital support as programs mature and evolve, the department must simply ensure that we don't take the access to

capital for granted. and we must work to form a more transparent view of our requirements and investment plans. in that vein, we recently conducted a round table with wall street analysts to give them more transparency, more vision, more understanding into what the department was planning. there are no shortage of other issues that our office has been engaged. from the defense production act to conflicts of interest to rare minerals to biodefense, to export controls, export promotion, solid rocket motors. next generation bomber. so that's what our folks here we did this morning worked on those issues. the bottom line is i firmly believe we simply need an industrial policy more wholistic approach. and it'll be led by three goals. getting our office in front of issues instead of chasing them, striving to adopt rules of

reason in all things related to industrial policy, and reestablishing a true partnership with industry and the financial community. finally, i want to make clear that we should not confuse support for the private sector as advocacy. the department -- the department's renewed engagement with industry doesn't mean that as the qdr says we will support sunset industries or prop up poor business models. as secretary gates has clearly demonstrated with the past two budget submittals, he is determined to terminate programs that are not needed or not performing. i'd like to conclude on a personal note, and although it may sound somewhat hokey to those who haven't had the opportunity to be in public

service. in the short time i've been in the building, i've learned that industrial policy, and particularly my bosses, this is not an academic exercise. this is not a 9:00 to 5:00 job, as my wife and children have learned. if we want to maintain a competitive industry in an increasingly restrained environment than industry and government must work together to stick to those requirements and to keep the skilled jobs necessary to bring those programs to fruition. the bottom line is, i wouldn't come to work every day if i didn't firmly believe that industry and the department have at this moment in time with this leadership team an opportunity to get in front of many of these key issues before they become problems. and i hope my office has a small role to play in that endeavor. we must open and keep open honest, transparent, clear lip understandable lines of communication. and i believe that the threads

and that vision is pulled through the qdr. and it's a good start for that climb. i appreciate csis hosting this event. i think it's very important. and i particularly appreciate everyone coming out. hopefully the cars -- hopefully the plow won't go by your cars before you leave today. thank you very much. >> we'll take a few questions. if you want to take a few questions from the podium before we move on just an opportunity to get questions in before we move on to the additional comments. seeing only one, terry murphy in the back row there. identify yourself and your affiliation as you ask your question. >> i'm terry murphy.

i have the honor of being with csis. a comment to a couple of midwesterners. and that is it's not just the cold war. i think we went to ww ii with countless -- i can't begin to tell you how many bombers in ten minutes. and the kaiser shipbuilding produced ships once a month and everything else is amazing performances when that was done. so i would only simply remind the reel of one war back. nice job. >> i appreciate those comments. that's an important thing. it's also important to understand the transition i think the qdr points out quite effectively. in all lines, all manufacturing lines eventually come to an end. we -- that's just the nature of commerce. we at one point in time were manufacturing two aircraft per hour. out in california.

had 150,000 employees. doing great work in world war ii. and that was because the nation and industry responded to the call. and as we look at forward challenges, different challenges, it doesn't make sense to try to preserve in my mind that historic base if we're not also addressing and not possibly address the future requirements. the defense department despite our budget is a zero sum game for everything that we spend on programs and platforms that we don't -- we no longer require to address the threat, those are resources we are taking away from innovation and from technology. so i certainly understand. i think what we need to do in the department is to better communicate to both industry and frankly capitol hill where it is

we're headed and what type of investments we need to make in manufacturing and in technologies. but there's no shortage of stories of the ability for our government and for the nation to surge in times of need and their true and their great stories. my officer is focussed on thinking more forward about what's the next thing we need to surge on. >> and we've got a couple more up front if you'll wait for the microphone. and we'll do a couple more of these and move on to the panel. >> i'm just curious. we had secretary gates announce a major $614 million against lockheed martin. they're not earning that award fee. same day the mda had kind of a tirade about lack of quality in the products that mda is

receiving from its contractors. do you think those issues are issues that are indicative of an industrial base that is atrophy. on part of the pentagon or the contractors, is it poor contracting? does that have anything to do with this industrial base issue? >> i'd say no, no, and no. next? no, i'm not qualified to talk to that point. that is dr. carter has been following this issue closely. what i can say is that the department has been working closely with the contractor. it's obviously very important program for us. we think it's going to be successful. we understand what the base required to support the program is. and i think we've taken, again, this is way out of my lane. and others here -- actually byron probably might know more than i do about this. but i'm encouraged by the

interaction between the department and the contractors. it's a good thing to see. it's been honest and open dialogue. and i think all parties are on board with where we need to go. >> i'm sorry, i didn't mean to focus, but just bigger picture. is there an overall quality problem that's making the industrial base situation worse? if companies aren't earning award fees for poor quality or poor performance, that's hitting their bottom line, which is hitting their right-hand available dollars. >> sure. again, i wouldn't be qualified. i've only had small insights in that and i haven't had enough time to make a judgment. >> let's do one last question and then we'll have another question session after the panel has their remarks. >> how concerned -- what's the level of appreciation of a policy problem around a shareholder arsenal developing in the next decade? essentially having companies that are down to one product line on some of the programs

like aircraft? >> well, i think it's a concern. we're -- we are -- my office in particular has been asked to address some issues in that regard. everyone remembers, of course, the famous last supper that took place in '93. and my boss, dr. carter was at that meeting. so i think we're -- we're cognizant of that issue and whether it be in shipbuilding or aircraft manufacturing. we understand that. and we're trying to get our arms around it. we have not come to any decision about what the policy should be. as i said right now, we're trying to get more insight than oversight. so i wouldn't expect to see any -- i wouldn't expect to see any kind of prescriptions for any potential issues in the near term.

>> all right. thank you. if you'll hold the rest of your questions, we'll now turn to our panel of experts have that joined us this morning. starting immediately to mr. lambert's left is jeff. he had the same job brett had in the administration twice removed, the clinton administration to jeff's left is byron kalin who here represents wall street here today. and it is noteworthy -- >> and has not yet been arrested. >> only in his -- it is useful to note that there has not been a qdr before that even had the phrase access to capital in its text. and so there's a change just in the recognition of that dynamic as important to defense and to the industrial base. to byron's left is alan. alan is here because, in fact, half of our industrial base now,

half of the money that d.o.d. spends under contract is with services rather than for platforms and systems and research and technology. and a recognition of that, i think, is something that is important for us to focus on today and to look at the qdr through that prism and lens. so he is here representing that side of the equation. and then finally, bill greenwalt who was also a previous secretary in the bush administration. so we've got a group here who is proild proid a variety of perspectives on this qdr itself and on what it says and what it doesn't say. i'll ask that they'll each provide some remarks. you hold your questions when the four of them have finished, we'll open the floor for questions. but i am reserving the first question for brett lambert who has graciously agreed to s with of that, jeff, you have the

floor. >> [unintelligible] [laughter] >> [unintelligible] it helps to turn it on. being here with john made me think about the changing errors that we face. we have been in a bull market in defense for the past seven years to eight years after 9/11. it does look what we are at something of a crossroads. what john touched on is are we back to the late 1990's? he gave a speech where he bemoaned the fact that the capital value of major defense

contractors was less than martha stewart and her enterprise. as budgets flatten, is in our industry able to weather the storm? period, is our industry able to weather the storm? and i would submit. i didn't come here to have this discussion per se, but i would submit our companies are better equipped today to weather a flattening of demand and maybe even some declaration. it points out the need for vigilance in an era where we're going to see potentially some flattening and declination of demand and you're apt to say concerns about the industrial base. and i think john's point was we have to watch out for the frey ji fragilities. we're here to talk about this in the context of the qdr. let me make a general comments and talk about the defense industry. first of all, this qdr, it's

evolutionary not revolutionary. and that's to be expected. we have a secretary of defense in his third year in office. and this qdr is entirely consistent with, by the way, quite good. entirely consistent with the speeches, actions, and budget decisions over particularly the last year and a half. but really the whole tenure of office. it would be shocking at this point if it was a radical departure. i think continuity was good. but in that continuity is change because he's effectively say let's shift the focus, let's shift the balance towards the wars we're fighting and this pertains to the acquisition community and the comment that brett made that the defense department and atl isn't. let's shift the balance towards the wars we're fighting. it's very hard to disagree therefore with the vectors in this qdr. a few other just general points of things that i think are noteworthy in this qdr that relate in general ways to the

industry. one is fore structure. if you're going to shift the balance, one thing to think about is to make adjustments to the fore structure. we have an army under stress. we have an army that has shifted its focus toward the continuum of conflicts, fighting. but there are two questions going forward. which is, one, is the army really institutionalizing this change away from the concept of fighting the big one to essentially becoming in some respects a large special operations force? and two, can we shift the fore structure, the active army force and the reserve in a way that takes the stresses off? and i think these issues were not addressed in the qdr, but my impression is they're going to be addressed going forward. i think it's hard to restructure the force when it's at war, frankly. but i think it is an important issue as you go forward. second, which again relates to the industry, a little

discussion of int intraoperatability. but i think there's not that much focus on less focus on europe and the role of europe in our defense. in part that's probably deference to the nato strategic concept has not come out yet. but i would say there were two points here. one, if you look at who it is we fight with in expeditionary warfare, who goes to war with us, it's our european brethren. and my own view is we need to do much more things now, more robust agenda to maintain operatability. two, i think that -- and so we need greater forces likely at different levels of capability for years to come. two, the reality is europe has

large lly -- most of europe is focussed on low intensity war effort. and we need to encourage that. because we need to have that burden shared. and all of this points towards some degree of more cooperative defense programs with europeans and more efforts to ensure that we can work with them in an eccentric environment. and i think those to me should be priorities and i would hope as we go forward, not mentioning the qdr, they become greater priorities. i was heartened to see a mention of the eu at the qdr. i didn't go back and look, but this was the first qdr that mentions the european union. and it reflects the fact that the eu was taking on a more prominent role, particularly in the low intensity side and put directives out there to open its internal defense market. and one point, i think, it's not quite mentioned in the qdr, but an important point, i believe the defense department needs to

engage much more deeply with the european union on a range of issues from civil military collaboration to defense market. we just finished a study at john's hopkins and that was one of the key findings in that study. i think there has been movement in the pentagon from this to the point where you hear people on the policy side of the house saying we're open to engaging with the eu. i think we have to move beyond that and develop a robust agenda with our most important partner in these areas. now, let me turn now to the defense industry. as i said, as i kind of jokingly said, there is not much in the qdr specifically, but what there is quite good and i think brett has laid out a very good vision in this area. and i think the qdr's properly focussed on both the demand and the supply side of the equation. if you will, and the question is what are the acquisition system

deficiencies on the demand side? and what do we do? and this is really the question to ensure we have the industrial capabilities to meet our national security needs for the future. and particularly as i said, how do we do this in an era of potentially declining demand. we're back to that era potentially where it's flattening and potentially declining. and how do we make sure that we address the fragilities of the industry in effect as they happen. on a demand side, the qdr, i think ask the right question. which is how do we institutionalize the rapid wartime acquisition capability? there's been really for many years two acquisition systems at the pentagon. there's the long-term one we all know with large programs that start with requirements. and that's the bulk -- been the bulk of the spending. the second is one that wasn't all that big until after 9/11. and we started fighting these wars. and now it's become much larger.

and that's a short-term acquisition system driven by the needs and the field of a combatant commander. and it's sprung up in the pentagon, committees, approaches, and lots of money. you bring it to aberdeen and test it. and if it's good, we'll use it. there's one extreme. and things grew out of that. they didn't grow out of that long-term system. and the question is, really, the qdr asked the right question, doesn't really give a solution to this. should we do something to institutionalize -- this kind of a wartime system. do we reform the big system? or do we do something to give us the standing, if you will, authorities and moneys to better organize our efforts for this sort of more short-term base system. i think that's a fundamental challenge going forward not addressed, and you know, i think that's a challenge for this group, brett and his colleagues in the pentagon. on the supply side, again, i

think the qdr does suggest, it hints at a more robust -- not robust, that more interventionist tilt, if you will, in terms of industrial policy. we've always had industrial policy at the pentagon, but tends to be program specific. and i think what brett has sort of suggested and the qdr hints at is creating a more wholistic approach to industrial policy across the board. a few comments on the framework for this. fundamentally demand drives supply. that is to say, you know, you're not going to buy things largely because of industrial needs. you're going to buy things because we have national security needs for those things. but that said, supply has to inform demand. and the capabilities the industry can offer get taken into account in shaping the defense demand. i think within that framework, there are a number of steps and tools that have to be taken. and some of the tools have

fell -- i don't think there's any magic to these tools. monitor, assess the supplier base particularly relative to the priorities set forth in the qdr. take industrial capabilities into account in shaping acquisition strategies. when we work on the demand side in the pentagon, taking the defense industrial capabilities into account. considering sources as supply, establishing some conflict of interest rules, adding commercial suppliers, making it more sensible for commercial suppliers to play. merger reviews, maybe we need some guidance here as we go into this new era, and some ensuring better stewardship by primes of the defense supply base. i want to touch on a few. look, on monitoring the supplier base, that's what brett's office and brett are about. and that's the historic responsibility. what you need to do here is matrix demand of supply. the qdr lays out a bunch of

priority areas and what i would urge them to do is go sector by sector and look at each of these sectors. the issue here is resources. poor brett's office has atrophy over the years, i don't think by intent. but he today doesn't have the resources to do this. and i would ask the pentagon leadership to bring more resources to the task. because without more resources, he can't do much more than react. and so that's point one. the second point. they need to do -- >> i think that was a good point. >> shaping acquisition strategies. we began to do this in the late '90s and it fell into abeyance. we need to look at the industrial capabilities and bring it into play. again, that doesn't mean we decide on -- we make source selection decisionsis of we need this industrial

capability, therefore we're going to do it that way. it does mean as we shape long-term acquisition strategies in a capability area like radar or what not. we need to look at industrial capabilities as part of that equation. and i would favor a more wholistic capabilities. on sectors like radars. you look at the acquisition and the community and you essentially do a set of trade-offs to -- in a wholistic and coherent way. and that's not really done today. and i think that's the way to bring industrial capabilities into account. and if you begin to shape acquisition strategies that way, you can do things like address supplier-base issues. you can say aha, let's have some competition at the substance level. we can eliminate some program redundancy if we do that too. foreign sources of supply. the qdr mentions foreign sources of supply. i think we need to look at our

defense industrial base and in an expanded way. and indeed, we have. in the last eight years as the study we did showed farmers have gotten a good portion of the uptick. and most of the major foreign firms have secure facilities here, a ticket to the dance. and i think we need to take more steps to encourage more globalization with our industrial partners in support of that. and my second to last point is on export controls, which is the issue of globalization. i was heartened to see the qdr and in the president's state of union the export controls which is the key impediment to this kind of globalization and collaboration. i just came back from a trip to the uk where senior officials are talking about programs. when our closest ally starts talking about those programs, we need to listen. it's not the root of all evil. to be sure and we need export controls, but we need to listen.

oci is an important issue going forward. i know the roles in coming out. it is not directly mentioned in the qdr. but i think the rules in implementation of that reform act is a critical issue for the industry going forward. and i think there's some things that need to be done here. and i do worry here that we need to set a rules that provide greater certainty to industry. we need to carve out the most sensitive task from these contracts on the demand side and lay out a policy that says while it's good to have ominous contracts on the support side, those ominous contracts are creating these conflict situations. i think we need some merger guidance here on what happens when you have a company with a lot of support services buying a company with products. and i believe w finally, i think we need to

create safe harbors. i do not think it makes any more sense to give all of the discretion to the program managers to carve solutions that when they affect the structure of the industry. i think we have to create some broad safe harbors and clear rules. for example, if the answer is that the separate subsidiary will procure those things, we need to lay that out specifically and not leave those parameters to a program officer. finally, on the merger review, as we get into this era of flat in the demand, you are apt to see more consolidation. we need some guidance on a couple of points. i would like to see some guidance on distinguishing innovation markets from legacy

markets. i think we probably should be more willing to except consolidation in the legacy area. i think we should be more willing to accept consolidation in the legacy area in markets like uav market. two, i think we have to think about the role of private equity. and what is the feeling in the pentagon and the role of private equity as a steward of a sector where we really would prefer stewardship with a long-term vision in mind. and so, let me close on that. but i think the question is brett needs the resources, and can the pentagon give him the sources to take the set of tools i just outlined and use that to implement division? thank you. >> thank you, jeff. now, we'll turn to an exploration of what is perhaps one of the most complex dialogue arenas in western civilization. and that is the dialogue between

wall street and washington. and for insight on that and the industry base views of qdr, i'll turn to byron kalin. byron? >> thanks, everybody for coming here this morning. i want to try and keep my thoughts fairly brief. and, you know, start out with the financial market's perspective. i guess the first thought is just as the qdr talked about, a nuance defense industrial base, the financial markets are obviously very nuanced, as well. we tend to think of wall street as, you know, maybe akin to the very large defense contractors. but the financial community is also very nuanced. it's not just the large sell side research analysts that are quoted in the newspapers. it's a whole range of institutional investors both here in the united states and frankly globally. jeff just mentioned the private equity community there have been

a very important player and i think will continue to be a very important player in shaping the industry of venture capital is important at sewing the seeds for the young emerging companies. and clearly commercial banks that provide credit lines and assist in the merger and acquisition activity are part of this broader financial community too. so i'd expand that notion it's not just wall street, it's the financial markets in general. i do think, you know, it was very significant that the qdr chose to acknowledge not just the defense industrial base and approximately two pages, but that paragraph about the acknowledging the role of the financial community and basically maintaining and shaping the industrial base was unique. it's not just the united states, it's something i haven't seen in the white papers that have come out of australia or the french white paper last year. the uk papers, the green paper

yesterday and i think there was one yesterday, an acquisition paper that just came out. so the capital markets have been a key strength in shaping this industrial base. and i think that role and that acknowledgment is very significant going forward. you know, my perspective right now, the large public companies are in fairly good shape financially. but the small to mid-sized companies are going to continue to tap capital for their growth needs and for consolidation. and i think it's going to continue. there will be restructuring of the industry going forward. and really, you know, kind of across the spectrum for the publicly traded companies, at least. equity's going to be important component to retain and attract people and provide stable career paths. i know boeing, for example, recently did an equity contribution, their pension plan that provided security for their people going forward.

so this isn't just about mergers and acquisitions or divestitures. it's also about a component of compensation of the defense has to compete against the private companies or public companies outside the defense, as well, that i think is important. there was a lot in the industrial part of the qdr about dialogue and transparency. and i think, you know, this administration's really gotten off on a good start. brett mentioned the meeting recently with wall street analysts. but i think that's extended to ceos and industry, as well too. i think those are important means. they're not ceos and industries, too. those are important means. they're not obviously ends in

there' theirself. it's going to be risk and return from my perspective. the nature of the beast inherent in the defense sdrip as it is in other secretary perps investors inevitably will want predict and and stability's the future is set to be unpredictable and, you know, stable. that's always going to be that tension. this dialogue and openness and transparency i think can help that but other parts of the qdr suggests there's going to be continued uncertainty and opportunity in things like the aircraft modernization programs. you know, what happens to spare parts managing flush out older generation aircraft? those are parts of the financial community, they're going to work through. there was language about fixed priced contracts and alignment of profitability with performance. those issues are going to continue to weigh on how investors look at the sector.

i think in the past where capital has really been spooked by what's happens in the defense sector has really come from a big surprise, sudden surprise as abrupt changes. the pbd 75 decision in 2004 were we saw a number of programs cancelled abruptly. the f-22. c-130 caused surprise and had people pull back from this sector. another area where it appears investors shied away from the sector have been where the risk has overwhelmed a particular company. lockheed in the early 1970s with the c-5 program, mcdonnell douglas with the c-17 program in 1990. so i think this dialogue and transparency addressed in the industrial base, i think it it's very important that a good part

of that is going to acknowledge risk and returns that are on both sides of the fence. finally, you know, the qdr can't encompass all the issues. we can have a 1,000-page document pretty quickly and maybe 200 or 300 pages on the industrial base, but there were things left hanging and maybe these will come up in the q&a discussion about the qdr and industrial base. i think brett mentioned the comment about sunset industries and poor business models. i don't really know at this point what is a sunset industry. i've got my own ideas, but we could argue 10 or 15 years ago maybe track and wheel vehicles might be something of a sun vette industry, yet a program like mrap has proven how important those shifts and changes could be. there was a comment in the back of the room about willow run, and it's just a reminder that

it's not just the defense industry. it's the broader economy and the skills and capabilities of the broader economy, that they bring to the defense, to the national security of the united states. so thinking of this about how do we sustain a quell quell quell tavtive, that's going to be critical going forward and something that we could write a book on easily. >> thank you, byron. thank you very much. we'll turn now to the surface side of the equation. defense now spends about as mum money under contract services as it does in procurement and research and development. that's a side actually to call it an industrial base prime as level of inprecision in the term, but as some of you know, we here at the center for

strategic international studies for a number of years spent a good bit of analytical time wloon we call the professional services industrial base. those industries campaigneds and workers who do provide those services to national security. so now we'll turn to alan for his reflection in the news. alan? >> thank you, david. good morning, ladies and gentlemen and thank you for the invitation and opportunity to be here. the professional services council is a national trade association. we represent over 3w 40 companies all of whom sell tech tickle services to the government and focus on the way the defense department buy and sells goods and services and services in particular. i was struck by the qdr because it starts with a description of some changing department missions, and, of course, from our perspective, the industrial base exists to support the department's missions and the recognition of this evolving agent in emissions is important,

because the industrial base has to exist to support that. the qdr talked interestingly about a whole of government approach reiterating from of the secretary's views in support of the president's views of a 3d strategy of defense, diplomacy and development but then went on to raise concern answer the quality of the inner agency coordination's i think we have goals set out yet challenges ahead. it talks about the importance and in the industrial base of a total defense force which recognizes the contributions that the active military, guard and reserve can make along with the defense civilian employees and the contractor community and the contributions that each of those make. yet it proposes to reduce the amount of support contractors working for the defense department. so i think there's some questions about priorities and signals. it recognizes that the industrial base is not

monolithic. i submit it's not even very well organized, and so as we look at differentiating among the many suppliers, i think it it's important that at some point and this qdr isn't the place to do it or it would be 10,000 pages not simply 1,000 or 160, but to look at the contributions and the role of domestic versus foreign. almost no mention of small business, but the role of the small mid and large firms we're looking at. the differentiation between platform companies and byron talked about the role of financial institutions. secondly, there was a discussion of work force, although not a very elaborate discussion of the work force. repetition aimed at clear departmental policies already in place to grow the size of the

federal work force and the defense department work force in particular, and that's a goal that we support. unquestionable that defense departments work force is atrophied not only in the areas of acquisition but in technical skills as well, and it's fortunate approach, to greek row some of that, but it has to be done strategically. the guy who has the deputy department of defense issued some statements that under secretary carter has made, and the office of management and budget discussed focuses on that strategic major, identifying key skills and how to accomplish growth in the work force in a strategic manner. unfortunately what we've seen so far is growth that is opportunistic rather than strategic and some of the insourcing and i can take the rest of the time to talk just about insourcing, but i won't, we see much of the insourcing activities taking place in the defense department today being

driven by the budget rather than by any overall strategy. to the extent the work force issues can be addressed as part of a four-year strategy, the department has to come to the recognition of how it wants to address the insourcing issues. and baked into that budget are some arbitrary savings from this insourcing activity and i think that needs a little more inspection as well. so if we've got a new strategy for the department missions and we look at an industrial-based capabilities, we have to look at how the government buys goods and services and what the aq acquisition service is that links these two to support the department's mission. i think brett mentioned in his remarks in the the qdr talks about agility in the acquisition. but there is little indication

to me that there will be changed at the core system. i see several references to develop ways to circumvent the current system. these are recognitions of the challenge of the court systecor. if we have that at the edges, we should consider doing so at the core as well. we need to look at the techniques available. i mentioned some of the techniques available. i thought the q qdr did a good job with some of the acquisition techniques. that is to be used only where appropriate. i think that is a signal to folks that and this is not the only policy to be available.

in fact, a recent report from the defense business report highlights findings that fixed price contract and in terms of development are rarely appropriate. i hope with the department would take a look at that in a slightly unrelated context. look at that in a slightly unrelated context. saying that the areas unblemished by success and i think he could talk to us specifically to fixed price development as that poster child. finally, if we understand that we have a work force available and an acquisition stham system that can asport how the service buys it's goods and services and are using the right techniques to do that we have to look at a conflicting set of policies and priorities that have been addressed and jeff mentioned

some and brett mentioned some, but i think the qdr doesn't really talk about how to balance some very significant challenging priorities and policies from competition to the role of organizational conflicts. how do we handle job retention and creation, particularly at the technology level with issues about buy america? particularly in contingency contractsing? so there's a whole list of policy issues that i think are touched on, because of the strategies and the qdr, but certainly not resolved. i think that gives brett and his colleagues in the department plenty of opportunity for more work. i'm hopeful that the partnership will exist, will bring us lots of opportunities for dialogue. but these are just a few of my favorite things. >> thank you, alan, very much. now, our final panel member,

bill greenwald, also served as the deputy under secretary foreindustrial policy during the second bush administration, and here to reflect on his views of the qdr, bill. >> thank you, dave. it's actually kind of nice to go last. i can say, everything they said and they touched on most of the issues, but this is, i think qdr is extremely important for the first time institutionalizing industrial base considerations into the, in the qdr. i think that's something that a lot of outside observers and industry has been hoping to see and i think it's a very positive first step. i think we've heard a number of things that are in there, and the qdr, industrial base sections really asking the right questions. so i might take this to the next step and say, well, how should that be implemented? and what are the challenges to

implementing it? i think the first issue to do is to gain visibility of the supply chain, and to do that, i think i have to key off on jeff bialos' point. you need the capability in the work force to do that, and since the reduction in the acquisition work force over the last 20 years, industrial base analysis has not been as -- is not as strong as it used to be, and to build that up, it's hopeful of the 20,000 acquisition work force positions that the secretary would like to get, hopefully a few of those happen to be industrial based analysts who can really cut across and look at the industry. brett has some tremendous staff, and some tremendous capabilities there, but they need to clone

them. and, you know -- they're so good even david's hired one of them. so i mean, it's -- >> insourcing or outsourcing? >> that a good question. we have to look into that. so i think the work force is key, and therefore, not just the work force that's hired. it's the, getting into the peo and the capability managers to have them start looking at what is it we need to cut across these programs? and getting into ddr and the s & t community to look at and institutionalize, these are the type of industry base and partners we're going to need in the next decade and beyond. once you have a visibility into the supply chain and into what -- you need a criteria for intervention, if you're actually going to intervene, and that -- that is going to be one that is going to require a lot of

thought and a lot of analysis, but you can break it up into various time frames. like, what is it you're going to need to do rapid acquisition? what do you need support of n raps and how is that looking? looking into the midterm, how your typical n apps and smaller programs and out into the future as far at future technology? i know your ofrlts office started developing that criteria in a number of studies dealing with the s & t base and going into the future nap criteria might be good to apply to the various segments. what are those technologies and what are those areas where we need to be ahead of the world? what are those areas where we can partner with our european

and other allied industrial bases? and what other areas that we're happy to be dependent upon, the commercial industrial base. so that's getting that criteria for intervention will be key. i think the third area to be successful here is going to be funding. and there are a number of programs designed to, how to intervene in the industrial base and to support the industrial base whether it's dpa title 3 money or man tech money, but the problems that one faces in these are more near term than that. in other words, you're faced with how do i intervene? i've got a supplier that's going out of business. what do we need to do here? and where do you get the money? well, if it's a program, the program's going to deal, but if it cuts across a multitude of

program, it's very difficult to get the resources to actually help to intervene there, and i think congress tried to set whaup was called the industrial innovation base intervention fund to do that, and the issue is whether that is the appropriate mechanism. something like that is probably needed. and then if you -- the department is going to continue to partner with the commercial industrial base. an industrial based policy needs to really look at the acquisition process and the acquisition system, and the incentives and disincentives to non-traditional commercial contractors, continuing to be in the industrial base. and this is a long history, acquisition reform of the mid-90s essentially tried to bring these companies in.

it was very successful. some of that is, that consensus may be under threat at the current time. so this is a good time to ensure that those companies and those process and those barriers are maintained, and then obviously, there are a number of areas where there are still barriers to bringing in non-traditional contractors, which could help, help the base. and obviously looking at whatever incentives for future innovation again. with that, since jeff pretty much did all the rest of my topics, i will key it over for questions. >> all right. thank you, bill. let me give you an administrative announcement before we proceed into the questions. at 10:00, and it's right now about nine minutes after 10:00. at 10:00, another event began in, here in the basement on the other side of that back wall, the philippine foreign minister is giving a talk. so -- no.

we're not going to go over, but i want to alert you to that. i don't actually -- we won't take a poll on which one you'd rather attend, but i do want to alert you to that, because there may be some -- they've been asked to be respectful of our needs for noise abatement and we've been asked to do the same. particularly when we wrap up and get ready to leave, i'll ask you to exit with the quietness of new fallen snow. i am also here to tell thaw it is not yet snowing. so we're all still fine in that regard. let me now open up the floor to questions. we do have staff with microphones. i would ask you to raise your hand. i'll recognize you. you wait for the microphone. identify yourself and your affiliation then direct yore question to one, two or all of the panel here. let me start over here on the left, science i ignored thince

during the first round of questions. here comes the mike. >> bill, cic. the last summer was referred to how did the consolidation after the last summer work out on balance? were there any lessons learned that will be helpful for what may lie ahead, if there is flattening and perhaps decline in defense spending? >> well, i don't think we truly know the answer to that. i think what i take away, this is a personal view, having been in the industry when it occurred, was that it was necessary. it was the right thing to do at the right time. i think what we struggle with is from a business point of view, largely consolidation of stock symbols. not necessarily capacity. and we perhaps overlooked as a department the need to promote

the consolidation at the capacity level. so we weren't working at 20% or 30% of the factories capacity and the taxpayer was paying that overhead rate. so i think, again, i think it was the right thing to do at the right time, and i have tremendous respect for everyone involved in that process that they lived through it. i think if there were to be another last surp, because i don't think that's going to happen, maybe a first breakfast at some point, that we would try to think more about the business implications, the financial implications, and what incentives and disincentives we would look to. i actually would be interested in everyone's comment on that, particularly byron's, because they see this in the financial community all the time. the implications of that consolidation. so -- >> i think you certainly crea d created, you know, maybe jeff

mentioned it, and i alluded to it, i think, for a number of the company, the large companies that were at the forefront of the consolidation, you have a much more financially stable industry right now. the large companies, some have more cash in their balance sheets than they do debt right now. so with whatever comes out of the budget in the next couple of years, i just don't think -- companies should be able to work through this without the kind of perils of pauline drama we've seen in the past. lockheed, in the '70s or mcdonnell douglas in the '90s. from a financial perspective, that's probably the most significant change. >> if i could just add one of the other implications is the way the department approached the marketplace. so the growth of large idiq contracts, large in the multiple award contracts, the growing the size of procurements in part is a result of the shrinking of the

acquisition work force, those two factors i think both have to be addressed. one on the industrial side and one how the department goes to market, and thus over time we've lost some of the agility and flexibility that the department has, and i think both from a capability standpoint as well as a contracting standpoint, we're now seeing the results of that consolidation as new markets and requirements are emerging, and compromising a little bit on the flexibilities. >> i mean, as i alluded to at the outset, i think will are lessons learned from. it -- as we go into it and as we go into a declaration period and consolidation we need to be more vigilant about the affect on the industrial base. the have a jilty emerged in the

this goes back to the monitoring point. it was an inevitability. do we have a sufficient amount of robust competitors in the core sectors in the industry? with special exceptions, the answer was by m. large as it. we had enough competition as we could afford. >> i am having trouble seeing hands. the lights are more bright than your faces. i think there is one in the back and then we will come over here. >> my question is pertaining to some of the issues surrounding bringing in third tier and fourth tier suppliers or attracting new suppliers that are capable of addressing

some of the emerging needs and suppliers that are bringing new and emerging technologies. could you speak a little bit about this? we wrote a paper about barriers to entrance to the market. what do you see as key barriers to entry and key barriers to attracting those kinds of companies that are developing emerging technologies? . types of companies that are developing in the emerging -- >> i guess i -- start by saying, having spent my previous career working with many of those companies, you might want to switch your question to, what isn't a barrier to entry into the federal marketplace? and this is why i think the qdr was hopefully effective in at least illustrating our least illustrating our commitment to begin to nd the complexities of that issue, because everyone up here has a different take on it. there's a financial take.

can they get access to capital? byron alluded to the fact any of our primes have two-year backlogs at least. our second and third tier may have six months. some 12 months. the restriction to access for capital for them and the procurement process we have and how we pay them and how they can get paid from the primes has a tremendous affect on their capacity for both innovation and growth. and we have not, i think, adequately addressed the complexity of that issue. there will always be barriers. we can't rewrite all the defares. that's not going to happen. we have to rule with reason do what's practical and in the best interests of the taxpayer and the war fighter. one of the vehicles that has been quite effective is this rapid acquisition process. and to the points that were made earlier, there's always a danger of that process, and, in fact,

i've seen it. with one program where i was looking at something got into a rapid acquisition process with an ioc i think of 2018. so you know, as the system adjusts, you know, the systems, the building will adjust. so that's always a danger, but i think -- it's a serious question on a whole bunch of different levels, is how we promote this innovation and i think what's exacerbated, at least in my concern was exacerbated the issue is the collapse of access to capital. and i see this quite often at the smaller firms. and it's not just the firms that are trying to offer innovative solutions for rapid deployments. it's the second and third tiers providing to programs of record that can't get access to capital. that's forcing the primes to actually make investments that are, in fact, unnatural acts.

and so i don't have an answer to that question, and i think we don't understand the intricacies of that question well enough yet. >> let me add, two seconds. historically, the concerns have always been around by commercial firms, intellectual property rights. the issue of what to do with the technology, whether -- what the export control process is going to deal with and general, unique, acquisition rules and regulations and auditing and financial burdens they have to place. and historically, there have been a number of ways to allow those companies to participate. whether it's commercial item exemptions or other transaction contracting authorities. and the issue, i think in today's environment is, we can easily buy commercial off the shelf, but can we actually get modifications to those, and what

are those rules having impact? i think it's -- kind of in that transition, but it's a number of issues that historically the congress and administration is trying to address and bring access to these. so we'll go from there. >> and it's probably worth noting that that's an issue that you never actually get to the end of and say, okay, we got that one fixed. now what? because it will constantly evolve in that way. i think i saw a hand up or a couple over here. the guy at the middle table. we haven't had a middle table question. >> joe from atk. in the context of the insight before oversight comment and as well as information from second lynn this past fall, framing the issue, which is operating a railroad at the same time you're laying the track. a lot of good ideas came out here today from the temporal nature of looking at the industrial base in addition to

the intertemporal time way to look at the industrial base. how do you intend, mr. lambert, to prioritize these great ideas that are here in getting that insight at the same time that some progressal decisions are pending and industries are changing and forming, reforming and restructuring very quickly at the same time, which will ultimately impact defense capabilities? >> well, of course, i constantly and fervently agree with secretary lynn. he has -- i mean, i've known secretary lynn for some time. he has a unique perspective having been in both industry and government, and i think his insights as well as those of dr. carter frankly bring, again, a

kind of new paradigm for understanding these industrial kplesties. in terms of priority, i have to say it is -- everyone said this when i came in. you'll be drinking with a fire hose. i had no idea what the challenges that the department faces. across the services and across policy. you know, we immediately set out to understand iteming better. we've met with your ceo. we've met with most of the companies ceos in here, and that's new. what we can't figure out and i've had this discussion with dr. carter, we don't know when and why the departments stopped having these meetings and stopped dating the insight and creating the transparency and dialogue. so we are, we're learning in realtime. i think that's goes to secretary lynn's comments about trying to run a railroad while you're laying the tracks. in terms of priorities, i can

only say that i have now learned from microsoft office how you move tasks to 8:00 a.m. but it is difficult when you get calls -- because our office as all of our folks up here know and have had to deal with you know we have to have a reactionary portion, which is siffous and where we're on clocks, that are not of our own making. so a lot of the priorities are not of our choosing, they're dictated to us by law. and so our priorities literally shift daily, in terms of the tactical priorities. what i'm trying to do and i think what everyone has reinforced here is that the office of industrial policy should be thinking ahead. we should be thinking about not solving yesterday's mistakes, but trying to address tomorrow's problems. and i'm desperately trying to get our office oriented in that direction. we're not there yet.

i have to be honest, and it's going to take some time to get there. >> let's see. let's go to here and then up to there. thank you. jesse. >> bill with iss. on the question, this is probably more for the panel, no offense, mr. lambert, given that -- >> he used to work with me. so obviously -- >> yes. in that i would never want to set you up in that respect. if it ever comes back, in that respect -- around the partnership, i'd be interested in your thoughts about the impact, particularly as you look at developments in the uk on the, on the east pacific rim, asia, in terms of acquisition procurement policies. if you're gone the public, private policy and with the partnership industry and burden sharing driven heavily by the investment in these areas, is that a role looking forward

particularly with austerity in the economy, around the budgeting right now and looking how do you balance, then, the investment for the two wars and still keep the long-term investment going around strategy, and if so, or if not, rather, you know, how does that then affect the transatlantic relationships when the criteria for the businesses in europe we want to integrate are changing against the fiscal course and the budgetary constraints they're under? >> i'll try the first question then maybe jeff you can go for the second. i don't know. pfis and such and the partnerships that are going on around there rely on a long-term contracting arrangement. and now there are energy savings performance contracts in the u.s., which are ten years long. a little longer, then others, a few others like that, but in the last few years what we're seeing is the link to contracts

actually going down. so that's -- so you're going to have a hard time getting industry to make the type of investments that they're making in the uk long term, because they need to know what the return is going to be in five, ten years. if you only have a three-year contract you're going to have a hard time having those kind of partnerships. in one sense the acquisition system is moving away from that here while our allies are looking for cost saving ways to partner with industry and having a lot more longer term contracts. so i don't know about as far as the latter part, as far as how that mish-mash will occur. i think industry will kind of just you know, adapt differently, and while our partners overseas may have a different perspective and ability to do that, the question is whether the department of defense will want to do has or not and if they do, obviously there might be opportunities for them, because they have experience. >> well, i don't have a lot to

add. i agree with a lot of what bill just said. i mean, i do think you know, an unfortunate set of circumstances arose over a period of time when you know, the other transaction authority here sort of withered under the line, so to speak, under political pressure, and i think that's unfortunate and i think in a period we're entering again here you would like to see more creative uses, that kind of authority. you would like to see models like leasing in some context. like pfi-type models. i've heard a laugh over herish b, but the environment has not been great but it may be as numbers flatten, these types of things work. i could give you one example. there is a program called nextview i believe it's called that's a good example of the kind of future we ought to think about in some of these areas. i mean, this is a program that's designed by the defense agency

that buys imagery and in the past the idea would be, let's build a satellite system. build a satellite system for this kind of imagery data. they did it in a different way. rather, a long-term contracts to buy imagery data. here's what we want. we'll sign a longtime -- the winner. the winner signed the contract and took the contract to the bank, got the project advance add went and built the satellite system. that's the kind of model you would like to see, particularly in the areas where you know, there is some commercial market going on and companies can sort of value the service and figure out how to do this. and you get the government out of being a program manager. out of building satellite systems, basically, and i do think it would be great to be able to see more activity in this field. as i said, unfortunately the political overlay has made this

very hard. >> we're reaching the end of our time. i anticipated actually the time for another question, but i didn't anticipate the time for the answers. and i think actually -- no. that's not a slap, because i thinkically think was was a serious question and deserved a thorough answer, as did all of them. clearly, we have only begun to scratch the surface of the issues here this morning and could go on another hour and a half, and move forward. i want to do a couple of closing remarks. we do try to end these thing on time, because we recognize people have other commitments as well, but we're happy to stick around and take questions after the mikes are turned off and help you out in that regard. these are clearly critical questions that have been raised by everybody up here this morning. csis is going to continue to analyze and report on these and 408 events like these to further the public debate, because this has been a neglected area for many, many years here. what did we hear this morning?

we heard brett lambert describe as we move forward collectively across the government, it will take all of our efforts. where do we go from here? we cite a number of additional areas in need of study. from space, access to forces, manpower, it is not clear what the impact of those studies will be. the contracts are going to depend on the outcome. i think we're beginning to recognize it as a result of the hearing this week. is the first information we would get with the budget. it shows up in the budget. we will see that public over the next few days and weeks. it will give us the details to

provide judgment. finally, as most of you know, there is a congressional mandated panel to review this review. earlier this week, it was announced that the panel would be cochaired by the former secretary of defense and former national security adviser. former secretary of defense bill perry and former national security adviser steve hadley. i commented and i think everyone here would commend that that panel would in fact pay some attention to these industrial based issues as it undertakes its review and reports out to the congress in late spring and early summer. so i think that this is going to be an ongoing series of discussions. my final thing is, i would like to ask you to join me in recognizing and acknowledging the csis staff who made this event possible. i'd like them to please stand and let's give them a round of applause. those of you who -- so before we go, i want to

remind you about the philippine foreign minister next door. i want to thank you for coming. i wanted to thank you even more for your attention and support on these issues. have a great snowy weekend. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> coming up on c-span, remarks from commerce,gary locke on president obama's plan to update exports. and after the attempted bombing of the christmas day flight to 53. in the discussion on the impact of president obama's budget on the future of nasa.

now for educators, c-span offers the new c-spanclassroom.org. we have made it easy for you to use in the classroom. the confined the most watched video clips. the latest in education is. and the chance to connect with other c-span classroom teachers. watch c-span's "washington journal" for conversation and your calls about the de's public affairs. cover and washington like no other. now, remarks from commerce secretary gary lauck -- locke. from the national press club in washington, this is an hour. >> in his 2010 state of the

union address, president obama identified a trade promotion as a key component of this strategy to setting the country on the path toward long-term economic growth. he set a goal of doubling exports over the next five years, asserting the action would support 2 million jobs. he followed this with a call for stronger enforcement of existing free trade agreements. the message was calculated to appeal to bipartisanship and find common ground between business and organized labor. as with any effort, it is easier said than done. growing u.s. exports to more than $3 trillion by 2015 will require a significant investment of resources by governments as well as the private sector at a time when those resources are under tremendous strain. it will take breakthroughs in diplomacy equal to, and perhaps >, anything the world has seen since the birth of the wto.

it will sustain a broad based recovery to provide the man for the goods and services the u.s. produces. translated ambitions into reality is a task that falls on the shoulders of today's speaker. gary locke came to washington, d.c. just a year ago, after decades as a county executive, lawyer, and the first chinese- american state governor in u.s. history. his responsibilities ranged from trade to overseeing the 2010 census to warning against blizzards and hurricanes. please welcome to the national press club secretary of commerce gary locke. [applause] >> thank you for the introduction. i assure you the blizzard is not happening today, or at least not right now. enjoy your lunch and coffee and desserts. i want to thank you all for

coming today. thank the press club for hosting us and recognizing some of our guests. i want to indicate that a senator was here earlier who had to leave for a vote on the hill. she left her father here who is going to report all we say and do here. the senator is a great proponent of helping the economy export around the world. in the state of the union, president obama announced a series of proposals that will put americans back to work and our nation on the path of sustainable economic growth. a key element in helping to meet that goal is a new national export initiative. that aims to double american exports over the next five years and support 2 million jobs here at home. there have been previous endeavors by the government to elevate the importance of

exports. what sets this effort apart is that this is the first time the united states will have a government wide export promotion strategy with focused attention from the president and the entire cabinet. this initiative will correct an economic blind spot that has allowed other countries to chip away at america's international competitiveness. for all of america's economic strengths, we stand out among developed countries as one of a few whose government does not have a focused and comprehensive export strategy. at a time when traditional drivers of economic growth, like consumer and business spending, are strained, we simply must elevate exports as a key part of our economic recovery effort. that is what the national export initiative does. i am here today to tell you how.

first, the national export initiative, or nei, is going to provide more funding for export promotion and more coordination between government agencies. secondly, it will make sure that advocacy objectives get wide government support and that we do a more effective job of advocating for u.s. products and services in our interactions with foreign services and government officials. the initiative would create an export promotion cabinet reporting to the president that will consist of top leaders from commerce, treasury, and state departments, the secretary of agriculture, the office of trade representatives, and the small business administration. to put it another way, prior to the nei, export promotion may have been a some of the time focus for many agencies and

departments. the nei makes it and all of the time focus. -- makes it an all of the time focus. all agencies to the cabinet will be responsible for submitting a coordinated plan to the president for how they look collectively enhance u.s. exports. the mandate is broad. it will address key issues affecting the ability of u.s. businesses to export. here are some of the steps we will be taking to improve our export promotion performance. number one is a more robust effort by the administration to expand trade advocacy. that means educating u.s. companies about opportunities overseas, directly connecting them with new customers, and advocating more forcefully for their interests. no. 2 is providing access to

credit in the wake of the financial crisis, especially for small and medium-sized businesses that want to export. number 3 is expanding trade laws to remove barriers that stop u.s. companies from getting open and fair access to foreign markets. before i detail the specifics of these efforts, it is important to talk about why president obama has put exports front and center. today, too many americans are having trouble doing things like sending kids to college and saving for retirement. the fundamental assumption that our lives will be better than our parents', and our children's lives better than ours, has been shaken. in the last decade, most families have stagnated or declined. that was true even before the

recession began. meanwhile, the same families have seen the cost of health care and tuition skyrocket, in the case of health care 155% since 1990. it is time to get back to the basics that let this country build the strongest middle class in history. from the advent of the phone to the automobile to new drug therapies to the internet, america's strength has always been its ability to create and sell products and services that help others around the world. even amid the last decade of speculative mania, exports have remained an integral part of the economy. last year, they accounted for 11% of our gdp, which is three times more than it was 50 years ago. exports support nearly 10

million jobs in america and almost 7 million jobs in manufacturing. manufacturing jobs pay, on average, 50% more than the average wage. for every $1 billion in exports, 6250 manufacturing jobs are created or supported. while the u.s. is a major exporter, we are underperforming. u.s. exports as a percentage of gdp are still well below nearly all of our international competitors. less than 1% of america's 30 million companies export. that is a percentage that is also significantly lower than all other countries. of u.s. companies that export, 58% export to only one country. with our increasingly interconnected world, where 95% of consumers reside outside our

borders, there are opportunities american companies and farmers cannot afford to miss. the national export initiative will help our country to seize this opportunity. i would like to further explain the key areas where this initiative will have the most impact. in this globalized economy, companies from every corner of the world are competing like never before for business in foreign markets, especially in emerging countries like china, india, and brazil. american companies need advocates on the ground that will fight for their interests. that means leading trade missions and working to educate companies in the united states about opportunities abroad. it also means the government pounding the pavement alongside u.s. companies to drum up business. for example, even large u.s. companies with well-developed contacts in foreign countries

are finding that procurement decisions are increasingly being impacted by political factors. with massive infrastructure plans all around the world, this represents billions of dollars in potential business. let me provide a quick example of the u.s. government advocacy done right. in 2009, in april, general electric requested support for its campaign to provide the kuwaiti ministry of electricity and water with a combined cycle power plant. at stake was a $2.60 billion contract g e was battling for against european competitors. staff working in kuwait, with their colleagues in the u.s. embassy, began an intense round of engagement on behalf of ge. there were 20 meetings, dozens of e-mail's, and dozens of

telephone calls. telephone calls. a contract to provide 80,000 megawatt power plant. what is crucial is that this plan will contain approximately $1.1 billion in american export content. some 240 suppliers located in 24 states. we need to see a lot more stories like this. it the export initiative will help give senior officials traveling abroad a second job description. advocate and salespersons for u.s. companies and funds. ge is a major multinational corporation, and their challenges are different than those of small -- many companies export less than they could that

have the necessary context. this is an area where the commerce department will be escalating. ita has a global network of trade specialists in the hundred nine u.s. cities, 128 embassies and consulates. in some 77 countries around the world. as part of the national export initiative, the 2011 budget is requesting a 20% increase for ita. with that, ita to bring on 320 new trade experts, mostly in foreign countries, to advocate and find customers for u.s. companies, allowing its commercial service to assist more than 23,000 clients to begin to grow their export sales

in 2011. the budget increase will also allow ita to put a special focus on increasing by 50% the number of small and medium-sized businesses exporting to more than one market. 58% of all u.s. companies that export export to only one market. we have to drive that number up so that those companies export to two or three markets. the budget increase will allow ita to increase their presence in emerging high-growth markets like china, india, and brazil. the budget increase will enable ita to develop a comprehensive strategy to identify market opportunities in fast-growing sectors like environmental goods and services, renewable energy, health care, and biotechnology. ita is not waiting for extra

funds to step on the gas pedal. next month, we are launching a 12 month program to help create jobs in america by identifying new markets for existing exports, increasing the number of foreign buyers at u.s. trade shows, and working with private sector partners to increase exports. finally, by getting more clean energy markets -- -- by getting more clean energy companies involved in foreign markets. we will work with companies that have a proven track record. our commercial service staff go out and find buyers and distributors for american products and services. if you are an american firm and want to sell your goods or services abroad, all you have to do is call 1-800-usa-trade. commerce experts will do at an international search for customers or distributors

overseas. they will work with you to design and implement a market entry or expansion strategy. think of it as matchmaking or speed dating for exports. we will search and find partners and customers for you until you find the right fit. that is a toll-free number -- 1- 800-usa-trade. gold key is just one of the services we offer. like many ita's efforts, we're going to focus on small and medium-sized businesses that represent the biggest source of untapped export potential in america. last year, ita helped nearly 5600 companies increase their exports. 85% of those were small and medium-sized businesses. a new commerce department initiative this year will enable ita to connect with even more of those businesses.

in the coming months, we will be launching a web site which will serve as a portal for businesses to access the full array of commerce department and other federal government services that can help businesses and entrepreneurs. for small-business owners, many of whom are not close to an international trade office, or who previously did not think they had the time or resources to partner with the federal government, this will be a particularly viable tool. the commerce department is not the only agency focused on export promotion. key to the national export initiative is the department of agriculture, which will redouble its efforts to help american farmers and ranchers sell abroad. the president has proposed an additional $54 million for the agency to enhance its export promotion activities. that will mean more to help farmers sell specialty crops, more foreign country promotions

installing u.s. commodities, and more direct assistance to farmers to develop new foreign markets and to increase market share in existing markets. helping american farmers sell more simply means more jobs. american agricultural exports totaled nearly $97 billion last year and represented nearly 9% of goods the u.s. ships abroad. agricultural exports support about 1 million jobs. these jobs are both on the farm and off, in urban and rural communities, and across communities and professions. everyone dollars billion in agricultural exports supports over 9000 jobs and generates an additional $1.40 billion in economic activity. as we were to export to customers abroad, it is crucial

to address the second priority issue we tackle. that is access to credit. although our financial says -- our financial systemñr has weathered a crisis, lending is still restricted for small and medium businesses. the president has called upon the export import ban to support financing of customers when private banks are unable to. the president has called upon the export import bank to increase its lending to small businesses from $4 billion to $6 billion next year. during the last six months alone, the bank has authorized $1 billion in small business financing and has added small business clients, many of whom were first-time exporters. these companies are selling

everything from nanotechnology based cosmetics to date palm trees to sophisticated polymers. they are exported to countries around the world. to make businesses better aware of these funding opportunities for international sales, export import is expanding its work, growing its road show to 16 cities across america, and deepening its partnership with the small business association of america. export import's increased activity will dovetail with the administration's other credit expansion efforts, including president obama's recent proposal to redirect repaid tarp funds to boost lending to small businesses. finally, the national export initiative is going to sharpen the government focus on the barriers that prevent u.s. companies from getting open and fair access to foreign markets.

the office of the united states trade representative is working toward an ambitious and balanced way to provide new market access opportunities. the office is going to be opening markets in key growth areas such as asia 0 with the trans-pacific partnership, which could set new standards in trade agreements and market access. we will improve enforcement of existing international trade law and address outstanding concerns with pending free trade agreements. the united states is the most open major economy in the world and that is not going to change. but that commitment is coupled with an ongoing focus to ensure that competitiveness of u.s. companies in foreign markets. free trade only works in a

system where all parties live up to their obligations. the united states is committed to a rules-based trading system where the american people and congress can feel confident that when we signed an agreement that gives foreign countries privileges of more access to our domestic market that we are treated the same and to the same level in their countries. that means of forcing our trade laws, combating unfair tariffs and barriers, cracking down on practices that harm u.s. companies, like the theft of our intellectual property. despite america's dependence on innovation for future growth, the current system for protecting u.s. intellectual property is fraying at the seams. every year, american companies in fields as diverse as energy, entertainment, and pharmaceutical, lose $250

billion a year to counterfeiting and piracy. this theft -- outright theft, is especially damaging for companies selling abroad, as 50% or more of our exports depend on intellectual property like software. that is why commerce and our partners at ustr, as well as the justice department and homeland's security, are committed to remedying this problem and securing i.t. enforcement -- securing ip enforcement. this drives ambitious goals, a doubling of exports in five years supporting 2 million jobs. the broad scope and urgency of this mission demand that we scale up our activities quickly. i am confident we have the infrastructure to do so. when i came to the department of commerce, one of my goals was to

improve interagency cooperation. we revitalized the trade promotion coordinating committee, which in many ways have been ignored in recent years. the coordinating committee brings together 20 federal agencies and departments to work on export expansion efforts. it will now help operational lies -- it will now help operationalize, at the staff level, these initiatives. for all the different economic challenges our nation faces, our ultimate goal will be pretty simple. we want to help write more success stories, like the one we saw in texas. working with the export import bank and the export assistance center in fort worth, air tractor required -- a tractor

relied on growing foreign sales to survive and thrive during the recent recession. the company has seen its exports grow from 10% of its business to 45% of its business. they have doubled their work force from 100 to 200. this small company in a rural area of texas is now selling its crop dusters to countries like spain, brazil, and australia. along the way, they have relied on the export import bank to support financing for their customers that may be sales possible. today, export import has assisted with the completion of the financing of some 70 deals. if there tractor can do this there is no reason other companies across america cannot do the same. they can grow their sales abroad, create new jobs here in

america, and get our economy moving. the message a want to send to all the company's struggling to find customers or to hire people, or to increase the hours of their current workers, is this -- look abroad. there are opportunities in other lands. the national export initiative is a clear signal that president obama and his administration are committed to helping you find those opportunities. thank you very much. [applause] >> thank you for your time, senator. we have a stack of questions. if you are watching this on c- span, you can go to www.press.org and submit questions. when you are speaking of your doubling of exports goal, is that a doubling across all

sectors or are there some you sectors or are there some you expect to carry more of the >> that as an aggregate goal. there are great opportunities in different sectors, not just agriculture. that is why the president has proposed the export promotion budget. but also whether it is in green energy. technology to help combat global warming and provide energy efficiency and clean energy. there are a whole host of sectors that we know of, exports that support 7 million manufacturing jobs. we're not focusing on any one particular area, but there are unique advantages of u.s. companies that we must capitalize. there is great demand for products and services around the world. we need to put a lot more effort

into matching that need, that desire, that demand for grain products and services. u.s. companies. >> with the goal of doubling in five years be aspirational, or do you have a sector by sector breakdown? >> we do not have a sector by sector target, but we are confident that we will reach that goal. part of that depends on the success of other efforts by president obama and the administration on strengthening our economy and rebalancing the global economy. we are confident we can reach it. we are now waiting for 2011. we're not waiting for the budget increases proposed by the president in 2011. as i indicated, the president has directed the export import bank to provide more financing for small and medium-sized companies next year. we at the department of commerce are prioritizing our programs

and funds to focus on export promotion. >> both the imf and the world bank project slow-growth of global trade over the next few years. to double u.s. exports, exports would need to grow more than 40% per year. is this a case of growth being slow early with more later, or is it going to be about growing in contrary to the world trend? >> part of the strategy of achieving the doubling of exports depends on the growing world economy getting america back on its feet economically. other agencies focus on this as part of the president's agenda. strengthening our economy and having growth will also provide export jobs. actual commitment to advocacy, helping find companies customers for our u.s. businesses as well as working on

trade barriers that our companies face around the world -- and financing, using the great work of our bank or the small business administration -- we can make loans to help companies expand and grow. the department of commerce will help them find customers and take advantage of manufacturing of products and services with finances from the sba. it is a holistic approach, using the state department and others to serve as sales people on the ground. >> how dependent is the administration on depreciation of the dollar against east asian currency? >> our goals are without any regard to the currency issues.

it is a given. we need to focus on advocacy, promotion, contacting, matchmaking, and distributors around the world. we're focusing on overcoming barriers that companies might face as well as financing. our goals are respective of the value of the dollar. -- our goals are irrespective of the value of the dollar. >> if the dollar were to fall, that would be the equivalent of giving a subsidy. would it be helpful to have a substantial decline in the value of the dollar? >> that is something you will have to take up with secretary of the treasury geithner and others dealing with monetary policy. [laughter] we are focused on better matchmaking of the great

products and services made by american companies, offered by american companies, which the great demand that is out there. there is a home or for american products and services. unfortunately, we at the department of commerce must do a better job of matching those opportunities, advocating on behalf of u.s. companies. this is true of the state department and all arms of federal agencies. we have to serve as salespeople and promoters of u.s. products and services. initiatives the president has laid out -- and the work of the export council, the national export initiative -- will be focusing on things we can control here and now. >> what would you say are the biggest obstacles to increasing exports? >> i think that obviously it is access to credit. a company that wants to purchase

more equipment is having difficulty finding financing. that is why the small business a ministration is more engaged. the president made some announcement on greater support for the small business administration. if look at it from a holistic life cycle of trade, you have to have the product in the services. that might require financial assistance. banks are slow to lend. credit is tight. that is where these sba is stepping up its efforts. we have to find customers for increased output. that is where commerce and agriculture departments come into play, as well as the state department and other agencies. we have to finance the deals. that is where export import comes in. we are focused on greater coordination directed by the president. this is the first time ever

that this has had the support of a president, a presidential lead effort. >> one concern is the difficulty in bringing foreign customers to u.s. trade shows because they cannot get visas on time. what are you doing to ease the says -- to ease visas? >> that is something the commerce department along with the state department and homeland's security have been partnering on. it is one of the early tasks of the trade promotion policy coordinating committee. we are making good progress there. it has been very collaborative. we are encouraged. we know it is an issue. the state department knows it is an issue. trade groups have brought it to our attention. we are working to speed up the

process. >> there is a business concern about bringing in foreign workers in high-tech industries. how important is immigration reform toward the goal of increasing exports? >> obviously, the greater degree to which u.s. companies can innovate and continue to engage in research and development to produce higher quality and more advanced products and services -- that will be more attractive around the world. getting skilled workers into the country that can help lead this innovation is very important. i think brent scowcroft issued a report last year, a recommendation to presidential candidate mccain and obama.

he called for the sec control as part of an export strategy -- he calls forvis visa control as pat of an export strategy and to allow foreign workers into the country. he said it was an issue of national security. the president is looking at that and addressing that. >> we had several questions about what is to be done with the exporting of u.s. jobs. do we need more punitive legislation for companies that offshore? >> the key is to focus on helping american companies export our goods and services. the president does not believe and protectionism. he does not believe in creating more walls. that can lead to a trade war. the answer is not to restrict imports. it is to increase exports.

that can be a rebalancing of the global economy. that is why american companies need to export more. the world economy should not be based on consumer driven that -- on consumer driven, debt driven consumption in the united states. companies need to start relying more on exports. we need to export in exchange. the president has issued some proposals to try to insure that companies are not simply going offshore to avoid taxation. he is trying to close a variety of tax havens where people are moving money offshore and jobs offshore simply to avoid taxation. even people in the business community agree that these

loopholes and mechanisms need to be closed and stopped. >> the administration has proposed to cut tax breaks to multinational corporations that transfer patents to foreign affiliates. a large proportion of u.s. exports are between u.s. companies and their foreign affiliates. how can you pursue tax law changes without discouraging foreign investment and the exports that depend upon it? >> i am not very familiar with that type of u.s. tax law. i would have to defer to the treasury department and the irs for an answer. >> just before the copenhagen climate change conference, there was a program announced by which the patent department would a accelerate examination of green patent applications to more quickly bring those to market. how will the government deal with the increased risk of

giving patents to ideas that should not receive them? >> we know that a lot of these innovations have the potential to create good paying jobs, a lot of good jobs. we need to get these ideas commercialized as quickly as possible. that is why we have an express line for patent applications dealing with certain sectors of green energy, not all. they are very tight areas and very narrow areas. we are on a mission within the patent and trademark office to substantially speed up the review process of all patent applications. right now, it takes more than three years before an application is granted or denied. that is unacceptable. that is unacceptable. having patent pending is no great comfort.

it is like saying you have on clear title to your house or to your business property. how are you able to get financing with unclear title to remodel or expand your home or your business? we are on a mission to reduce that process in time to a year. at the same time, we need to improve quality. issuing a patent that is subject to litigation over other issues is of no benefit either. the focus has to be on speeding up the patent review process and improving the quality. >> in korea can -- if korea can reit -- can reach a decision on auto concerns, will it go to the president?

>> there are specific issues that have to be addressed. they are being addressed by u.s. trade ambassador kirk. as soon as those issues have been resolved, including automobiles in the korea agreement, they will be brought up. >> canada is the largest customer of the united states and the top export destination for 35 states. how would the measures announced today affect the trade that crosses the border of canada every minute of the day? >> can and that is a major export destination for the united states. for many states, it is the number one export destination. we depend a lot on goods made in canada, could we take for granted in our daily lives. -- goods we take for granted

-- goods we take for granted in o a lot of our u.s. companies that do exports in canada. we need help all american companies that export only one country, be it canada or mexico. these are companies that understand international trade. they understand border issues, legal issues. that will be one of our areas of focus. helping those companies that already export to an additional, tree -- an additional country. most of that is canada. we want to help build on the good experience is exporting to canada, exporting to other parts of the world. >> in addition to manufacturing, travel and tourism -- what can be done to encourage foreign

visitors to travel to u.s. cities such as las vegas. [applause] -- [laughter] [laughter] >> what is wrong with disneyland >> what is wrong with disneyland . . in my home state of washington state, climbing mount rainier. disneyland, you name it. foreign tourists are considered an export. that is classified as an export. it is an export at which w positive trade balance. . . it is one that needs to be encouraged. congress is working on legislation that would raise fees to support its public-

private partnership promoting these exports. me are very supportive of that and are the concorde to working with the congress on this eventual legislation and the implementation of more advertising in the united states and the opportunities, whether injuring outdoors, whether, camping, they guess, disneyland, disney world, you name it. by america has raised provisions about whether america is engaged in protectionism. the president very much opposes protectionism because we know and he knows that once countries engaged in protectionism that can lead to a trade war.

in that, everyone loses. there is a lot that is misunderstood about the buy america provision. it does not apply to goods and services coming into the united states with which we have a trade agreement. we do have disagreements with so many parts of the world. there is a lot of misunderstanding about the buy american vision and we need to get that message out. provision and we have to get that message out to a lot of our trading partners. >> what steps does the administration propose to take to counter efforts , cleaning up the

environment, and there are enormous opportunities for u.s. companies, farmers, ranchers that excel in this and it can help the people all around the world raise their standard of living and so that's what we seek. at the same time, there are great opportunities for collaboration on innovation and research and development.

we also believe that focusing on enforcement of intelligence property and having a strong intelligence property regime is beneficial to other countries, because as they also begin to innovate and invent, they will also want strong intelligence property protections for their own creations and inventions. working with other countries to develop a rule of law, transparency, enforcement of intelligence property rights, not only benefits our companies but will benefit the innovation of other countries. >> the u.s. has a manufacturing goods agreements with his partners. what other countries may be possibilities forxd free trade agreements? >> as the president indicated he very much wants to try to conclude an ambitious and balanced doha round. we recognize that a lot of the

poor developing countries of the world can boetsch economically and raise the standard of living for their people if they're ablexd to sel some products and services in the united states. but at the same time we want to make sure that in other more vandalsed developing countries that there's true open fair access for american products and services and that's what the president is trying to asheevep and what the u.s. trade representative ambassador ron kirk is trying to achieve. at the same time i mentioned that in asia there's the possibility, and the president has indicated a desire to be part of the transpacific partnership, which would be a new multilateral, multicountry trade agreement where the united states is being invited and has an opportunity, and the president has committed to participate, where we can actually set new higher standards in labor, environment, and market access

that could then serve as a template and model for future trade agreements. >> our discussion today has been dominated by trade issues. a couple of questions on other topics. what areas of government oversight are you prioritizing and what programs do you feel have been most vulnerable to fraud and abuse in the past? >> i only oversee the department of commerce so -- >> we can keep with that context. >> we at the department of commerce have some 50,000 employees and other than about 130 or 150 of that that are appointed by the president, the rest are career folks. these are highly dedicated great professionals with great pride in the organization and the department of commerce runs the gamut. we're like a holding company. we have a census. when you get your form in the middle of march, please fill it

out. only 10 questions. very easy, mail it back because we want an accurate portrait of america. and we also have patent and trademark we talked about. international trade administration, helping promote exports and also the bureau of industry security, which restricts exports so that we're note infringing upon national security. to noaa and the weather service and prediction of hurricanes and monitoring the health of the oceans and our fisheries to our national institute of standards and technology, which has several nobel laureates, devising standards by which industry can create products for use. to our economic statistics bureaus and also to ntia,

dealing with telecommunications and the allocation of spectrum and providing grants for broadband high speed internet. if there's one thing that unifies us all as a common theme, we are agency promoting innovation, all to ultimately hire more people. that's what we're focusing on. job creation and business competitiveness. we're finding that we have a great group of people here but we can certainly always prioritize. we need to be much more effective, efficient in how we're doing thing, whether it's speeding up the patent process, to making sure that we keep the cost of administration as low as possible so that we're able to pass on more dollars, whether it's for infrastructure and job creation in our

communities. >> the constitution requires a census count of all people in each state. given the current political climate, would you expect any illegal immigrants to participate in the 2010 sen issues? >> the census has been tromblg from its very beginning. 17 0, the first was conducted under president george washington. the first veto by a u.s. president was by president george washington dealing with information obtained from the census and george washington at that time thought there had been an undercount. so we have these issues since the beginning of this great democracy and this republic, but the u.s. constitution requires a count of all people in the united states. it does not say a count of only registered voters, not a count

of only those who are u.s. citizens or those born here. it does not distinguish between those who are naturalized citizens or people here on a green card. all people living in the united states of america. and so that is our mission, we will do that. we know that because of immigration fears, for those who are here without proper document tation that there might be an inclination not to participate, but we urge those to participate because all the information in the census form is absolutely confidential. we do not share it with any other federal state or local agency or any other arm of government. it is confidential and it is a crime, a felony for any census work tore divulge information. but the questions are only 10 and take only 10 minutes to answer and not a single question asking if you are in

fact a voter or what your citizenship or immigration status is. we don't know whether a person is here legally or illegally. nor do we care. so fill out the question and if you don't want someone knocking on the door ash a government worker -- all the more reason to fill out the sen issues questionnaire, the form. 10 questions, 10 minutes. mail it back and again, no one will know anything. [laughter] can be >> before asking the last question, first, a note to our audience on future speakers. monday, february 8, we'll have secretary tom vilsack of the u.s. department of agriculture who was hilet the obama administration rules on the health of america's children. on friday, february 12, we'll

have admiral ted allen of the coast guard, who will discuss the state of the coast guard, and on march 5, mitt romney, former governor of massachusetts, will discuss the case for american greatness. second, we would like to present our guest, the man of the moment, with the traditional national press club mug. >> thank you very much. [applause] >> for our last question, going back to your introduction, one of your duties as commerce secretary includes blizzard warnings and my question for you is, do you believe that low pressure coming from canada could lower temperatures to the point where the storm would be sent further south or that current weather forecasting

models would go forth, leading to 24 inches of snow in the washington, d.c. area, leading to havoc and canceling a lot of people's weekend plans? >> well, just be prepared. [laughter] >> watch the news and all the information that you're getting from your weather forecasts on radio, television, newspaper -- all comes from noaa, the national weather service. thank you very much. [applause] >> and that's weather on the eight's at the national press club with commerce secretary gary locke. i'd like to thank you all for coming. i'd also like to thank menda cook and pat for organizing today's lunch. the video archive of today's luncheon is provided by the national press club's broadcast operations center. nonmembers may purchase

transcripts, a and videotapes. for more information about the national press club, please go to our website at www dont --.press.org. >> of this month marks one year since the passing of the economic stimulus bond. just over to record of $30 billion has been committed. $176 billion has been paid out. to learn more, go to c- span.org/stimulus. next on c-span, a hearing on the homeland security department travel policy and what is ahead after the attempted christmas day bombing.

after that, a discussion on the impact of obama's budget and the future of nasa. after that, live coverage of the first national tea party convention live from nashville. we welcome british historian and former adviser to margaret thatcher, paul johnson, an author of over 40 books in his latest over winston churchill. join our 3 our conversation of live from london sunday at noon eastern noon "book tv." house homeland security subcommittee hears what is ahead for passengers after the attempted christmas day bombing of flight 253. this runs just over one hour.

>> the subcommittee on investigations and oversight will come to order. we meet today to receive testimony on furthering the mission and relaxed travel policies which cause -- which cost millions. i would like to thank everyone for joining us today. in addition we will examine the lack of internal controls, governing policies, oversight, and conference planning and spending practices which prevented the department from being transparent to congress and the general public. during fiscal years 2005-2007,

the department reported the spent $110 million on conference related activities. $50 million of that was the salary expectancy for employees attending the conference. i will be interested in hearing today whether conference spending and attendance at these events was a prudent use of taxpayer dollars. i would also like to stress that i, as well as all members of the subcommittee, understand government travel including the jobs supported by this trouble. as a representative from pennsylvania, i know how to important travel and tourism are to our economy. we need to make sure the department can account for its travel spending. a report on spending and oversight, dhs officials were unable to produce concise

numbers on conference spending. information relating to spending was not documented in a way that allowed for easy examination. most responses received from the dhs had missing data and. most alarmingly, the reports say that a dhs official said, "there is no reason to track expenditures because there are no spending restrictions." the inspector general also found that, "components are planning conference without any consistency in approval when combined with the attendance numbers, dhs needs to develop better management controls to ensure that conferences are funded and attended for only mission critical purposes and that costs are minimized to the greatest extent possible." the department needs clear and

consistent planning and guidance. they must define terms such as conference, retreat, and training, and outside activities in a uniform manner so that all of the organizational elements are on the same page. limited department wide procedures to exist for determining or minimizing the number of employees attending conferences or for standards justifying attendance. the only test that appears to be in place would be determining the necessity of travel. this must be fixed. according to the secretary of homeland security, the department has one mission -- to secure the nation from the many threats we face. fulfilling his mission requires for a dissipation in many of site activities throughout the country and the world. notwithstanding this fact, must exercise oversight, accountability, and transparency regarding the amount of taxpayer

money spending on conference related activities. i want to think the witnesses for their participation and a look forward to their testimony. the ranking member is not here at the current time. he gave us the go-ahead to start. the chair recognizes for an opening statement. >> thank you. it is nice to see the witnesses. as you both know, we requested the inspector general to look at the practices of the department of homeland security as it relates to conferences, retreats, and similar of site activities. i was concerned about spending patterns that had been really a vote -- revealed and wanted to see how the department compared.

the last month, they released the results of its audit and it revealed an extremely troubling picture of not only the amount of money spent but a lack of internal controls, minimum over -- minimal oversight, and a lack of spending. according from airport from the school year 2005-2007, the department spent approximately $100 million on conference related activities. this was a spend on sending employees across the nation and around the world in 43,980 instances. is that almost $30,000 to spend -- to send 150 employees to a

conference in georgia. but also spend over four murdered $70,000 on a three day event in dallas, tx attended by over 30 employees0 . further, 320 tsa employees attended a conference in texas also. these are just a sampling of the 8359 conferences attended by department employees during the relevant time frame. then me be clear. by no means am i've reporting that personnel should not attend conferences or outside training. during the inspector general's investigation, it was determined that in the vast majority of these instances that the department had not performed

cost comparisons to make sure it was getting the best price available. they did not try spending to make sure it was on par with other budgetary needs or require justification that it could be shown that legitimate purposes were fulfilled. this was leaving congress and the public with the question about what they would receive for their money. the deaths of mismanagement of taxpayer money that was discovered by the inspector general was very troubling. according to the report, the data received from the department was unreliable, and verifiable, and contained little assurance that components were properly tracked or accounted for these conferences and related costs. i informed the inspector general that neither wason nor extravagance by the department in performance of this critical

role should be i expect -- accepted or condoned. i continue to stand by the statement now. at the conclusion of the investigation, they made 12 separate recommendations including increased department wide oversight and the development of internal controls to increase accountability of conference activities. i intended to monitor progress on these important recommendations. i look forward to receiving witness' testimony on this important matter. i yield back. >> other members are reminded that opening statements may be submitted for the record. i welcome both of our witnesses. our first, elaine duke, who currently serves as the

department of homeland security policy undersecretary of management. she is responsible for the management and administration and the department of homeland security which includes management of the department's $47 billion budget, appropriations commerce ventures, accounting, and finance. she is also responsible for personnel programs for the departments to madrid 23,000 employees. she administers control over their enterprise architecture through strategic use of the intermission technology and communications systems and is responsible for oversight of their facilities, property, equipment, and other material resources. prior to her appointment as the undersecretary for management, she served as the deputy undersecretary for management and was the chief procurement officer from january 2006 until

her appointment as undersecretary in december 2007. choose the debris chief procurement officer from december to thousand four until 2005 were she championed rebuilding the work force which is something a personally applaud. she spent a great deal of her career with the u.s. navy where she held various acquisition positions of progress responsibility. she began her career as a contracting officer for the u.s. air force. she has a -- bachelors in business administration. our second witness currently serves as the assistant inspector general for inspections for the department of homeland security of the inspector general.

he has served in a number of managerial positions. he was appointed assistant inspector general for the office of inspections in november to thousand six. mr. mann is a charter member of the department of homeland security and served as the chief inspector for the department's inception in 2003 to his present appointment. prior to coming to dhs, he was a senior criminalist with fema's office of inspector general. the department of health and human services' office of the assistant secretary for personnel administration, a technology consultant for the general services administration, the faa, and the department of labour. he is a graduate of the virginia

state university where he earned a bachelor's and sat rigid of science in business administration. without objection, their full statements will be admitted to the record and i now ask them to summarize the statements for five minutes beginning statementsmr. mann. -- beginning statements beginning with mr. mann. >> thank you for this opportunity to discuss recommendations for improving the department's spending practices and oversight. i would like to focus my remarks on five areas for improvement. clear and consistent conference plan guidance, reliable and verifiable data, sufficient supporting documentation, compliance with applicable travel regulations, and departmental coronation for sponsor conferences. dhs conducts conferences for a number of services including employee and stakeholder training, information