disagree with senator mccain. i disagree with him on the statements concerning the f-22. it concerns me that we keep hearing, well, this is something the military did not want and did not ask for. i go over there and that is not their attitude at all. they say our lift capacity is in dire straits and we're still using the beat up models we keep losing engines on. lost two engines on one not too long ago. the state of the art is still there in the c-17s. we will have to do some surgery on that and some other things when we get together. on the f-22, just yesterday we read about the t-50, a fifth generation the russians have.

i am not as confident as everyone else that the f-35's will be on line when everyone says. online when we say. as senator mccain just said. that we have cost overruns, problems and just recently have surfaced. i'm concerned about this. and i guess, you know, if we're down 187 f-22s, and i think out of that, what, only 120 are actually combat ready and used for combat, and yet as i read this article in the t-50, they're starting to crank these things out, and india, i things out, and india, i understand, talking about 200 of them. who knows who else is going to be buying them. so i am concerned about it, and i guess it goes beyond just that. i look at our committee, the senate arms services committee. now, on these two vehicles i mentioned, the f-22 and c-17, i don't have a dog in that fight.

no prock allinterest there's, but it's the capability we're going to need and i look and see and remember so well testimony that our defense for 100 years averages 5.7% of gdp, it's now down to 3.7 and as you projected by those figures that i'm getting, it will go down to 3% by 2019. this is what really concerns me, is we're just not going the job that we need to be doing to defend america. if you consider that the number one function of government which i happen to. i do agree with senator mccain and his concern over pulling the rug out from under eastern europe on the third site, and i've read something yesterday that russia doesn't want us to have any ground base capability. i don't know. the first thing i'd ask, mr. secretary, and i should know this but i don't. if we're talking about having the capability of the sm-3 and getting that working, where

would it be used? i mean, is this egypt, or where would we have this capability? >> well, in the nirnl phase it would be based on ships, but we have money in the budget for a land-based standard missile, and so it would be deployed in europe, and perhaps elsewhere, depending on the agreements that we reached with other countries. >> you don't think you'll have the, a little bit of a problem in that we negotiated and we went over there and, with the czech republic for its radar and poland for the site of the ground base interceptor? and then changed our minds? is that going to create a little problem in getting -- or have you already initiated a discussion with any of the european countries to have that capability there? >> yes and reached agreements with pols already to move advanced patriots into poland. >> that's a different capability

than getting up to what we were talking about before. >> as i say, i don't think we'll have a problem. >> well, okay. all right. well, army modernization, i've been concerned about that. when you look at the, our capability on enlos cannon. first a crusader. then that was axed by the republicans, by president bush. right when we were in negotiations i might add in the senate armed services committee putting together a program. so i'm concerned about that. now we do have the pen program, good on the pallet end. i got to tell you, the same technology that they had when i was in the united states army. i mean, getting out and so i am concerned about that. and i'm concerned that general casey and general corelli both stated many times we're burning up equipment as soon as they can be procured, yet the army procurement funding decreased in

this budget by $31 billion from fy 08 to fy 10. is that a good idea? >> i think a good part of that was for the army's future combat vehicle, and as you know, we're restructuring that program, and i think that you'll see significant increase when the army moves into production of that vehicle. >> well, i hope that's the case, and i hope that we're here to be able to see that as a reality. my time expired, but one last thing. i've just, one last question, if i could, mr. chairman. on the 1206, 1207, 1208 and so forth, this 1206 is fine. i appreciate the fact we've enhanced that program and some of the other. the 1207, that's the civilian to civilian. that now is going to go back to the state department, and one of the original reasons that we wanted to have this in the d.o.d. was the timing.

so that when a decision is made we'll be able to get it done. do you think that's a good move? or do you think we should try to reverse that on terms of the 1207 and the trainer equip program to bring it back the way it is today? >> well, first of all, senator, i want to thank you for your support and help on 120 of, 1207, 1208, but i think you know, when i testified here last year, the plan was to begin transferring the 1207 money to the state department. i think the plan you have in front of you essentially simply accelerates that process. >> thank you, mr. chairman. >> thank you, senator inhofe. senator ben nelson. >> thank you, mr. chairman, and let me add my appreciation to you and your families for your distinguished service. i've long been an advocate for benchmarks or measures of progress, and i think we need to continue to do so objectively.

so we can gauge our efforts in both afghanistan and pakistan. and i know this administration as well as our nato allies are committed to objective benchmarks for measurement, and we've done so with past strategies and all talked about this many time. most recently in december about both afghanistan and pakistan. during that hearing in december it was noted that measures are progress were being used and evaluated, and i thought at that time that those benchmarks would be forthcoming to our committee, but at least i have yet to see them, and it seems to me one of the most important times to inform the process is at the very onset of any change. and as this mission changes course, so obviously must the way in which we measure efforts, that will change as well. have comprehensive and final benchmarks or measures of progress been developed to

reflect this new strategy? and if so, when will these be made to the committees? to the committee? secretary gates? >> i think they have, and i frankly thought that they had already been provide to the committee and i'll check on it after the hearing. >> okay. thank you. could you talk a little bit about some of the areas of measurement that would be in these measures of progress? >> well, i think a couple that are pretty obvious are the afghans meeting their recruitment goals for the afghan national security forces. are they meeting their goals in terms of limiting fruition? how many are they meeting the number of units being fielded that are in the plan? are they benchmarks -- there are benchmarks associated with their training. so i think those are the kinds of things, at least with respect to the security forces that

we're talking about. >> do we have anything that we might relate to our measures of progress with respect to our particular efforts? >> well, i think in some respects the president's made some, made his expectations pretty clear. he has some clear expectations and is benchmarking us on how fast we can get 30,000 troops into afghanistan. and watching that carefully. i think he has clearly set a marker in terms of beginning to transfer security authority to the afghans beginning in july '11. that's a clear benchmark that must be met. so i think we do have some. another for us is the number of civilians we're getting into afghanistan from the state department, aid and other agencies. >> are you working with the

state department on, jointly in that effort? i know they've set measures of progress of their own. >> absolutely. this is as integrated and effort as i've ever seen the u.s. government undertake. >> thank you. i'd like to talk to you just a secretary about our contractor conversion efforts. you announced in the spring of '09 that the department would scale back the role of contractors and for my sense, too many years we were outforcing too much with perhaps too little emphasis on why and whether it was justify, but regardless of the makeup, outsourcing or insourcing has to make sense and the best utilization of resources both money and people. is there in place a strategic plan for the right mix of contractor government civilian and military personnel, and what are we doing to execute such a plan? >> well, first of all, our goal

is to take the number of contractors in the department of defense as a percentage of the work force back to where it was prior to 9/11, which would mean taking it from 39% to 26%. the plan -- first of all, i think one of the effects of what we have seen in iraq in particular has been the revival of acquisition in a couple of the services where that is a career field had withered, and i think this is particularly true in the army, where a number of measures including the allocation of general officer positions and so on to revive that career field is an attractive career field. some other services have done better. i think that undersecretary carter has a clear idea of the right mix between contractors and civilians, but i think that

the first place we need to look is that we probably shouldn't have contractors evaluating contractors. and so i think that's the first area as we make these conversions, which i might add are on track one year in. >> my time's expired. thank you, mr. chairman. >> just to implement that point, of senator nelson. i believe in this year's budget proposal you are requesting proposing maybe 10,000 contractor jobs be eliminated and changed over to employees of the defense department. i don't have the exact number. but is that not true? it's in the budget? >> our goal is 20,000. to increase the number of acquisition professionals from 127,000 to 147,000. 10,000 of those will be the

conversion of contractor jobs to civil service jobs. another 10,000 will be new hires. >> and that's in this year's budget. is that correct? >> that's correct. >> i just want to implement -- just to clarify that point. >> 0,000 total is over 10 to 14, senator levin. >> over four years. >> right. >> how many in this year's budget? >> for the total is about 6,000 including acquisition and everything else. i'll have to get you the numbers specifically. >> and clarify the benchmark of senator nelson, very persistent on for the benefit of everybody in the nation, the only thing that we've received from the defense department is a draft set of benchmarks, and they were classified. so he is right. we have not received benchmarks, although we were promised them and we need both the benchmarks also in an unclassified way. >> the benchmarks i was talking about where inner agency benchmarks ay greed and those were the ones i thought had been delivered and i'll pursue that.

after the hearing. >> thank you. senator sessions? >> thank you, mr. chairman, and for your good leadership, your excellent chairman. we do have a lot on the agenda today. talking about the defense budget. the quad drinial defense review, two wars, the missile defense report, don't ask, don't tell. terrorist trials and i guess i would just just briefly, mr. secretary, on the christmas day bomber, i thought your colleague mr. mukasey -- they tried moussaoui in federal court, but he pled guilty and the sentencing took a

year. it was made into a circus. he pointed out that guantanamo was created for the purpose of these kinds of trials. when a person like the christmas day ballmer -- bomber leaves yemen with the directions of al qaeda and flies into the united states, i suggest he is an unlawful enemy combat, perfectly suited for detention and trial, if need be, in military custody. i think the defense department needs to know about these things. the intelligence that could be gathered from a prolonged interrogation by people knowledgeable in yemen could have added greatly to this. he has been advised that he has a right to a lawyer. he is no longer going to cooperate or talk. he is entitled to a speedy trial. there are a lot of problems with that.

i hope you will be alert to that as it goes by. i think the military needs to handle the real responsibility. i would just briefly say that i have come to understand and feel more strongly about the concerns senator mccain has about setting an absolute day for beginning to leave in 2011. we will hardly have our troops in place by then. placed by then, and we see things like the, president karzai beginning to talk to the taliban. makes you wonder if he's looking beyond our departure today. i worry about that. mr. secretary, you talk about the supplemental. i've been baffled a bit by that. it seems to me that when you're in a war, a supplemental is an

appropriate way to handle funding for that, and to try to force into the baseline budget funding specifically for these two operations with a couple hundred thousand troops deployed is not a good policy. why do you feel like we should do this only with the baseline budget? >> well, i absolutely do not believe we should do it with the baseline budget. i think that the purpose of providing the overseas contingency operation funding budget is, i think that it is actually in response to considerable pressure from the congress for greater -- >> i know you have gotten pressure from the congress on that. >> greater predictability -- >> but not me. >> greater predictable about how much is going to be spent in these wars, and so that the, those budgets can be considered

with the framework of the normal consideration of the budget. so i think that it's -- it's certainly not a part of the base budget, but it is provided in advance in a way that gives the congress the opportunity to restru in the same way or it reviews the rest of the budget. >> well, i'm not sure. it seems we should be able to review the supplemental as well, but i guess in a way you're creating a discreet funding program that we could review and maybe that's, that would be acceptable. with regard to our procurement of major weapons systems, know that the department of defense, admiral mullen harks focused on life cycle cost, and i guess you would agree that things such as fuel and maintenance are on part of fact to evaluate, if we're going to evaluate the cost of a weapon system over a period of years?

>> yes, sir. >> i know we did that on the tanker aircraft and in fact on fuel and that sort of thing are counted as evaluating that aircraft. are you -- should that be applied to a procurement program like the combat ship that the cost of fuel, should that be accounted for? >> i've long been concerned about life cycle costs. i think senator sessions you know that, long before now, and the secretary pointed out, and i think very importantly in his opening statement, that the programs that he cut last year actually had some life cycle value focused on about $330 billion. as far as what's in an rfp and what it's going to be focused on, that's something i really can't comment on -- >> well, i don't know. we've got an rfn la toral

combatship that i'm told does not have any factor for fuel cost. >> but you know more about it than i do. i haven't seen it. >> well, if that's so, would you be willing to look at it and ask questions if that's a wise decision? >> this -- again, as i said, i've been long time i've been concerned about life cycle costs. actually one of the, i think, weaknesses of the acquisition system is typically the line is not involved in that. the uniformed side is not involved in that. so i'm not involved from that point in view and would under actually no circumstances see an rfp or look at its evaluation criteria in what i'm doing right now. >> well i would think you would be, your ultimate responsibility as part of procurement of the department to see at least basic requirements are being met, and i think i hear you say that life cycle costs, which certainly would include fuel, should be a

factor in evaluation of the bids or the proposals? wouldn't it? >> i've said life cycle costs are an important factor and have been for a long time. >> we'll have to follow-up on that. thank you very much. >> thank you. >> thank you much. senator udall is next. >> thank you for being with us today. secretary gates, we have a proposal from the president when i fully support to freeze non-discretionary spending, excuse me, for non-defense programs in fiscal year 2011. i think we're going face tighter budgets in future years and may have the potential need to trim pentagon budgets as well. could you talk about how you're postures the d.o.d. to be able to react to that potential? >> well, first of all, i think that situation out there in the

world doesn't change, and the world is becoming more complex, and i would say more dangerous rather than less so. and i think that as people think about where we are, there are many reasons for the deficit, and the defense department certainly spends a lot of money. but if you look at the, where the defense department is today, it's very much with historical norms in terms of both gep and a percentage of the budget in terms of what we're spending. that said, i would tell thaw if the department of defense received significant reductions in its budget, that we would have to sacrifice force structure. we cannot do it any other way, and so the result of that would be a reduction in military capability and a reduction in our flexibility. f. i might, let me thank you for

your focus on acquisition reform. i want to associate myself with senator mccain's remarks and i hope this committee will continue to support you as you make some tough decisions so that we extract every penny of value from every dollar that we spend, and, again, i just want to acknowledge the important work you've done there. let me turn to afghanistan. senator sessions expressed some concern, but i would like to comment that you make peace with your enemy, not with your friends, and i've been interested, admiral mullen, in the reintegration at the low-level taliban proposals forthcoming. a recent conference i believe in the uk, some significant monies pledged. could you comment on those plans to the extent that your comfortable? >> the reintegration piece is clearly an important piece of this and every commander feels that way, and very specific the reintegration is really bringing those who are literally the

fighters who are against us right now bringing them into the fold, and, in fact, general mcchrystal is very focused on that. we are in the execution of this strategy, which includes that, and so getting everybody on the same page for exactly what it means and how rapidly it happens or doesn't happen is where we are very much at the beginning, but we think it is an important part, and there is no -- there is no view at this point that it is a panacea, and we just -- because we just don't see that many at this point. the other term that is used that i think is very important to understand is the reconciliation piece, which is a term that is focused on, i would call, the senior leadership of the taliban, or the senior leadership of the enemy. much more complex and, again, president karzai made it clear that e wants to get on this path, but, again, it's at the beginning, we're at the beginning of that process.

i think we have to be clear about the terms and what they mean and also look at a realistic pace in terms of both expectations and actually what's happening. in that regard, we're just at the beginning. >> let me turn to iraq. we have elections looming. there's some increase violence. do you still believe we're on schedule to redeploy as general odierno put in place? >> i do. focused on elections in early march. it's the elections after which we start coming down fairly dramatically. 100,000, 104,000 today is what we have on the ground and we will come down to approximately 50,000 by august. in that time frame, another big issue is, they will be standing up a. >> guest: and it will take them several months to do that. sort of the summertime to stand up this newly elected government. so it's a great time of transition. and general odierno as is

ambassador hill on the civilian side very focused on all aspects of that, but right now overall the indicators are positive. >> i see that my time's expired. i want to thank you again for your lead eship and for this comprehensive set of statements and for a budget secretary gates, that clearly leads us in the right direction. thank you. >> thank you, senator. senator? >> thank you, mr. chairman, and mr. secretary, admiral, thank you for your outstanding service, and for appearing today and responding to some of our questions. secretary gates, what i wanted to take up with you with regard to the recommendations in the budget and the qdr is the going back to 2006 qdr a recommendation in there as you know to develop a follow-on bomber. you've made it clear you support the development of a new bomber. last april opted not pursue a program until you had a better understanding of the need and

requirement of technology as part of effort to better understand the requirement for a new bomber i also understand that you stood up a tiger team to do an in-depth study of long range strike in the new qdr, and in reading the new qdr on page 33, it looks, however, like you still have not made a decision to move forward with the new bomber program but instead commissioned another study. my question, what conclusions were drawn by the tiger team regarding the development of a new bomber? and are those conclusions that would be available to us, at least in writing for the record? >> i will get you an answer for the record on that, senator, but there is, i think, $1.7 billion in the budget for next generation bomber, and long range strike. i think one of the issues we're still wrestling with is, what kind of a bomber would we be looking for? do we want a stand-off bomber?

an attack bomber? do we want a manned balmer or unmanned bomber or variations, where you could have a platform that could serve both purposes? and i think we're still -- we've still got a lot of life left in the b-52s, as old as they r, and in is modernization money for both of those in the budget, and we're talking about a bomber that would probably not appear into the force until the late '20s, and so we're just trying to figure out, looking ahead, a generation, what the right configuration for that would be. >> the 2006 qdr suggested i think fielding a new bomber by the year 2018, and i understand the concerns you raised about what type of bomber that might be, but i guess -- by the way, i

think the $1.7 billion is a multiyear, like a four-year number, but why is it necessary to have another study? the thing has been studied and study and studied and on whether or not we want to move forward on developing follow-on bomber. when would you expect that study to be completesed? >> i have to get an answer for the record. what the stud hey been up to now is weather. and now the study is what? >> the -- secretary gates, with regard to the defense program structure set according to the latest air force almanac, there are 153 bomber aircraft, some of which are dedicated for testing. more than 54 testing seems like a lot. do plan on retiring in the bomber aircraft in the future? it appears to be a substantial reduction in the number of

bombers. >> i am not aware that we are, though i would want to check for the record that i have that right. there has not been any big discussion about the retirement of nebraska bombers -- any bombers. in my viewñi, we have been put n pace with of view that evolves. some of the previous laydowns in the qdr of 2006 were incredibly aggressive. part of my answer to the question of why we're still doing this is because this is a very difficult problem. we want to get it right. it has a huge impact quite frankly on the future of the air force because of the capability requirement. i think what you are seeing is a process led by secretary gates to move us through a deliberative process opuses on getting it right for the future. as he indicated, the previous

study was to whether or not, now the study should be what it should be buried and supportive of that. these are tough decisions that we want to get right. >> could you, for the record, get to the question of the number of -- the 96 bombers that are assumed in the five wings with a hundred and 53 -- with 153 allocated in part to testing -- is there any plan to retire and any assumptions underlying that, what would appear to be a substantial reduction? >> a lot of them will be training, if you are talking about primary aircraft. there are a number dedicated for training and testing. we will supply details for the record. >> if i could, i would like to get for the record, our response to a question dealing with the start treaty.

>> we will expect that answer for the record. senator hagan. >> what was the question? >> he will submit that to you for the record. >> thank you, mr. chairman. thank you both, secretary gates and admiral mullen for your testimony today and your dedication to our men and women in the military. secretary gates, i applaud you for the tremendous job the department of defense in carrying out and the relief efforts underway in haiti. the ability for our maritime forces to operate from a sea base while rapidly transitioning personnel from sea and ashore is an excellent demonstration what our military is capable of doing and especially useful in the situation in haiti where there's

limited capacity for air transport. i believe it's important that we maintain our advantage in projecting sea power across the range of military operations from humanitarian relief to combat, and my question, secretary gates, and admiral mullen is, do the military departments and combatant commanders have sufficient amphibious operational capabilities to address the full spectrum of requirements both military and human tear anticipated with the qdr? >> ma'am, as i go back over the last 10 to 15 years and then look at the future, my overall answer to that would be yes. we certainly have, with the department over the years debated and there's been a tension, a tension, i think it's a good tension to get this right and it focuses specifically on the amount of amphibious lift capability that we have. actually, one of my concerns

specifically -- right now, yes. one of my concerns about the future, and i'm certain that the common marine corps shares this, the marine corps has been very heavy and fifth or sixth year fighting a land war. not what it wants to do. a lot of adjusts have to be made. marine corps has to get lighter than it's been in the past. this discussion will continue, but as far as my view of the future, i think we've got it about right as we sit. >> thank you. i know that we've already discussed what the ieds somewhat. i know in afghanistan the mountainous terrain and the limited communication infrastructure certainly poses a distinctly different ied threat as oppose to what we have seen in iraq. and we need additional personnelality the battalion and company levels with the appropriate expertise and technical equipment to detect the icht eds in areas such as

afghanistans where the insurgents utilize the primitive forms with very little metallic content buried into the ground. what type of feedback are you receiving from see centcom with personnel requirements encountering the ieds and wrap do you expect to the do to address shortages that exist? >> a substantial number of the 30,000 troops that will be going are in the category of what we call enablers. and that includes engineers, route clearance specialists. count countercounter-ied specialists, all of whom are people associated with intelligence surveillance and reconnaissance, all part of a counter-ied effort. one of the initiatives that this

temporary task force that i've set up under general paxton and dr. carter is looking at is establishing at the battalion level what we would call a warehouse approach for counter-ieds, which would basically, instead of giving every battalion the same set of equipment, rather rather have an array of equipment available to that battalion so each of the teams going out can select the equipment that seems most appropriate to that mission that day. we have a wide range of these detectors and intelligence capabilities and so on, and the idea is, some of these units are better, frankly, with certain kinds of equipment than other. there's a certain -- there's more than a little art in this. and so what we're trying to do is figure out how at the battalion level we, in essence, could have an array of equipment that a team going out could take

advantage of. so i think that there is an understanding on the part of general mcchrystal and general petraeus that we are pouring every -- every bit of counter-ied capability into afghanistan as we can. >> thank you. my time is up. >> thank you, senator haggan. senator -- >> we do have a lot to talk about, and i share senator sessions view that it would be nice to have you back. i hope the chairman will be able to arrange that. my first question is about the 313 ship navy, admiral mullen. the cbo recently testified the current ship building bchs are not enough to fund the navy's plan to increase the fleet to 313, and i think we all know that. i assume you agree with that? at 283, the service has the smallest fleet since 1916. pre-world war i. we need to build more than 12

ships per year for the next 18 years to arrive at 313. is 313 still the requirement, admiral mullen? and how does this budget, how does this qdr support the goal of a 313-ship navy? t. is still a goal. it is -- it was when i'd led that analysis and generated that requirement as cno and remains the floor. it was a number that was achieved with, you know, an understanding of what the risks would be. we, the total we, that's the services, the department, those that build ships certainly congressional support, had been working for years to get more money into the ship-building account. and i think as we laid out there, some $15 billion this year. it's ten ship, one of had is an army ship. we are, one of the things we're not going toble able to do build

to that number of ships, they keep costing a lot more than they expect they will. that's the acquisition reform is really a critical part of that, and i'll use lcs as an example. that has cost, has been -- while i had expectations the costs would go up, certainly not to the degree that it has. and so that has to be contained. we don't need the perfect ship or the perfect airplane. as we look to the future. so there's -- i argued for years there's got to be a strategic partnership across all three entities in order to get ship building and major procurement right. i think this budget takes steps in that direction, but you don't have to do the -- you can just do the math and see we're not going to get to 313, and i would not want to be satisfied with 283. which is sort of what the projection is right now. given the demands that we have. for our navy, our military and our navy. >> it's going to take acquisition reform to get us to

that floor number, 313. when do you think we might be able to actually make some progress in that regard? >> i think the secretary and many others, myself included, have taken steps to really put our, get our arms around requirements growth. having expertise there. holding people accountable. those are some of the things that are certainly in great focus right now, and there's more to do, but it's going to take -- it will be -- it will about few years, i think, before that really take as grip and starts to have the kind of impact to be able to generate that, the kind of capability you need with cost. i'm encourage by this ship-building program. it's got two submarines in it. the first year it's got. i can tell you, it took almost ten years to make that happen. so we will continue to -- i think it continues to need to be an area of focus. it's a vital capability for our country.

and as you indicated, it's the smallest navy we've had for many, many decades and for a country that is a -- a, know, that has big bodies of water on both coasts, it's a maritime country, that's a great concern. >> would it be fair to say we are short-changing part of the mission? could you -- enlighten us as to -- what aspects of our mission are we shortchanging? because of the lack of these 313 ships? >> the navy is very pressed operating at a very high tempo and i think admiral will have an opportunity to speak for himself would say he sort of is at the edge of being able to meet the commitments in terms of global commitments. heavily focused, our navy is heavily focused in the gulf as well. the sea base just created quickly in haiti is certainly well with what we expect and can do, but given the up tempo that our navy and air force, quite

frankly, sundis under, which sometimes gets lost. it's increased as we. the admiral's concern, we are wearing capability out and not replacing it at a rate that goats ta kind of number that you're talking about. >> i. s see -- i see. let me move back to a point senator mccain was making. i just returned also from afghanistan and pakistan and i agree with senator mccain that this july 2011 date is mentioned when you talk to leaders over there. there was a term that we came back with from our -- with leader mcconnell. a deficit of trust. it's not just a date for the beginning of the drawdown, but also specifically with regard to pakistan, it's the decade of really very ill will between the united states and the government of pakistan. do you agree, secretary gates,

that there is a deficit of trust about the united states ' intention to be a long-term strategic partner with afghanistan and pakistan? and what are we doing to address that deficit trust? >> i think there are definitely, there is definitely a deficit of trust with pakistan and i think it's historical. the pakistanis will speak of three or four american betrayals. only the most recent of which are turning our backs on afghanistan and them after the soviets withdrew, and the other, the implementation of the pressler amendment and cut off of military to military relationships. i think, frankly, the way that trust is rebuilt is with time, effort and actions.

i think that the -- i think admiral mullen at this point has in his 2 1/2 years as chairman been to pakistan probably 15 or 16 times. he has an extraordinary relationship with general kiani. i think there is a good personal trust there. but i think where pakistanis as a whole, it is our sticking with them. it is -- it is our attention to their problems, including their economic problems and so we commend the kerry lugar berman bill, which is very important, but i think being steadfast is important. i was in pakistan just a couple of weeks ago, and spoke directly there are conspiracies over there about us wanting to divide them up, all kinds of things. i spoke to that directly. i think honesty in dealing with them and a long-term effort is

going to be required. in afghanistan, my personal sense is that we have, in the various visits that i have made an admiral mullen and others, they understand that july, 2011, is the beginning of a process and there is no deadline on that process. there is also an acknowledgement by some of the afghans that they needed that kind of wake-up call, in order to begin to realize they were going to have to take responsibility themselves for defeating the taliban, that this was not something permit -- everybody else could do for them. we need to communicate that even as our security forces and drawdown over the next several years, our presence and willingness to barter with them and be a part of their economic and political life going

forward is a long-term, decades- long commitment by the united states as a country. not to having a huge military forces there, but helping them get control of the military situation and them being in charge of the country. i think july, 2011, i know it is controversial. my own view is that it provided the right incentives for them to begin to except responsibility. by having no terminal date, it allows us to do a conditions- based withdraw all that i think makes sense. >> you have seen a portion of the senate arms committee hearing on the budget proposal. you can see the hearing in its entirety on our web site, c- span.org. all look now at president obama's 2011 defense department

budget. he planned on spending $768 million, a 2.2% increase from last year, with nearly $60 billion in mandatory spending, more money for helicopters, unmanned plane, and commandos. it would alçoz support the european missile shield. treasury secretary to indict her spoke to a house panel on the president los's budget. it ends some of the tax cuts ministration. this portion is just over an hour. [gavel]

>> the meeting will come to order. the ranking member and i have been trying to find some way that we can move this forward. the secretary of the treasury has a limited amount of time. we hope that the members would agree to a three-minute limit in terms of questioning, and we will stick to it. we want everyone to have an opportunity to ask a question. we expect a battery of votes on the floor in a couple of hours, and so, i yield my opening statement to the ranking member, mr. camp. >> with that, i will submit meinecke for the record -- mine for the record the f.a.q, mr. chairman. >> mr. geithner, -- i will

submit mind for the record. -- mine for the record. >> is a pleasure to be back here today. one year ago -- it is a pleasure to be back here. one year ago, the economy was contracting at an annual rate of about 6%. the financial system was on the verge of collapse. credit was frozen. the housing market was in free fall. millions of americans have lost their jobs, and the economy was losing jobs at the rate of three quarter million additional jobs a month, and this is very important. when the president came into office, he faced a deficit of $1.30 trillion and projected deficits before a single bill was enacted that according to cbop with more than double the nation's debt in the next decade -- according to cbo. i want to say this again.

in january 2001, cbo, which is your designated, non-partisan, neutral scorekeeper was talking about $5.60 trillion. in january 2009, before the president stepped into office, those projected surpluses turned into $8 trillion in projected deficits, so let me just repeat that. over the course of eight years, we went from $5.60 trillion in projected surpluses to $8 trillion in projected deficits. that is a swing of $13 trillion. now, this recession caused tremendous damage, and today, millions of americans are still living with the consequences of that recession, and we all know that the road to jobs and to economic security and fiscal responsibility starts with economic growth, and today, in

large part, the actions congress took and that we took to put out this financial fire, our economy is now growing again, and in the fourth quarter, it grew at the fastest rate in six years. this is progress, but it is not enough, and that is why we need to work together to intensify our focus together on job creation, on investment, and on innovation. now, when you talk to small businesses across the country, as i know that you do, they tell a similar story. they worry about whether they will see demand for their products and their ability to expand and hire a depends on their access to credit, he and that is what the president in new hampshire yesterday proposed new legislation to create a small-business lending fund. we need them, if we are going to be able to grow and create jobs. that is what the president is

also proposing to substantially expand what the small business administration can do in terms of higher loan limits, lower guarantee fees. we want to build on the provisions. now, in addition to helping small businesses get access to credit, we are proposing tax relief for small businesses. expensing, bonus depreciation, and we are proposing zero capital gains for small businesses, and we want to work with you to design a credit to help small businesses expand hiring. the president's proposal is, and we are open to ideas on how best to do this, is to give small businesses to add jobs $5,000 for each net job they create and combine that with some payroll tax relief. now, in the presence of the budget, we have laid out a comprehensive agenda for innovation and to strengthen our foundation. this budget is concerned to --

is created for the private sector to grow so that business is small and large can create jobs. to do this, we need serious financial reform, to make sure our financial system is taking the savings of americans and financing future growth and innovation, not financing financial and real estate boom is. we want to encourage american innovation. not financing financial and real estate blooms -- not financing financial and real estate blooms -- booms. we are committed to working with this committee and the congress to produce strong trade agreements, because the more american businesses are able to export, the more jobs they can create in america. we want to invest in education. and finally, we need health-care

reform so that we can provide greater economic security for tens of millions of middle-class families and help reduce the extraordinary cost burdens are existing health-care system puts on businesses large and small. now, these are reforms the government has to make. if the government fails to meet these basic challenges, americans and businesses will suffer. the market cannot solve these challenges on its own. the government needs to address these challenges in order to provide a strong foundation for a dynamic growing sector. now, part of this foundation requires returning as a country to living within our means. when we have strong growth in place, we need to begin the process of bringing down our deficits. çóthese deficits are too high. they are unsustainable, and the american people and investors around the world need to have the confidence that we are going to work together to bring them down when the economy is stronger. now, the president's budget

proposes important steps towards that objective. starting in fiscal year 2011, we propose to tax non discretionary -- suddenly, there are some important changes for a tax system to make it more fair and to bring down those long term deposits, so we are proposing to allow the tax cuts put in place for the richest americans to expire, to close what is called a carried interest in the poll, so we are taxing the interest of hedge fund and private equity managers in the same way we tax the incomes of teachers and firemen, and we went to eliminate unnecessary and unfair tax subsidies. -- and we want to eliminate those. we went to extend a tax credit for 95% of working families -- we want to extend a tax credit. we are looking at closing down the tarp.

if you join with the president in passing this, the taxpayer will not be exposed to one penny of loss on the actions the government was forced to take to fix the financial system. third, we have to restore basic disciplines in budgeting that all american families live with by reinstating pay as you go. any new initiatives should be paid for without adding to the deficit. in the 1990's, those disciplines help move us from the deficit that was over 4% of gdp to a substantial surplus in 2000. now, this budget outlined the past to bring our deficit down as a share of our economy to below 4% -- this budget outlines the path. we cannot let our future deficits and debt continue to grow faster than our economy without hurting future prosperity. this is going to be a difficult task. it will require tough choices,

politically difficult choices. but it is important that we work on that, and that is what the president has proposed a bipartisan fiscal condition that will be charged with identifying responsible policies that can win support across the aisle to bring down the deficit. i want to close by saying the following. the united states economy is in a much stronger position today than it was one year ago, but our challenge is not just to repair the damage caused by this recession. we have to make the investments necessary for our future prosperity. we have not been investing and making the kinds of reforms that are essential for a broad-based economic growth in this country, and that is why this budget is so important. now, i know we have got different ideas on how best to get the economy growing again and to make sure we are creating jobs, but i want to underescort where i think you can find some common ground today. -- i want to underscore where i

think you can find some common ground today. deficits matter, and ours are too high. we have to pay for the programs that we have proposed to undertake, but our priority today, our priority today is to make sure we get americans back to work and that we of the conditions in place for a sustainable recovery. -- and that we have the conditions in place for a sustainable recovery. i want to conclude, mr. chairman, just by saying one thing. you read the news today about aig. what happened at aig was an outrageous failure of policy. as a country, we should have never let a company take on a scale of risks that could threaten the stability of the financial system, and we should never allow the taxpayers ever again to be in a position where they have to pay one penny for rescuing a financial system from the mistakes caused by not just

government but the decisions of the people running these major firms. part of what contributed to this was a set of compensation practices that defied gravity. they were deeply irresponsible. in a simple way, what happened was people were paid if things went well, but they were not exposed to losses if things went bad, and what happened at aig is the people running that firm, as they were taking on a level of risk we had not seen ever before, there was the presumption that they would share on the -- in the gains if things went fine, but if things went south, they would be protected from those losses. these contracts were put in before that company, facing collapse, came to the government and said, we need you to help us save us from ourselves. those contracts were outrageous

and should not have been permitted. ken feinberg has done an exceptional job under very tough conditions. i asked him to come and help us work through this. he is a brave, smart, tough man. he did a very good job. he negotiated down those payments and tried to make sure they were -- we did not have that kind of stuff take place. if you join with us in passing this proposed fee on our largest financial institutions, you will know that the american taxpayer will not pay a penny for what happened to aig. if you work with us on financial reform, we can put in place the kind of bankruptcy procedure we have in place for real companies and small banks that allow us to deal with future a ig's without having to face the kind of outrageous things that happen in this process. our job today is to see if we

can find a way to fix what was broken in this economy and this financial system. we're making progress, but we have a ways to go. we're looking for the best ideas that offer the best bang for the box to get -- buck to get people back to work. understand the deep obligation we have to repair the damage that was done and put us back on a path or we can be -- we earn back the confidence of the american people. .

the misery and pain going on is not a democrat, republican, and they're looking for some degree of unified support. we will give it our best try, and we do hope your office would share with us experts to help get through the political problems that unfortunately we face. thank you for your testimony. i yield to mr. camp. mr. camp. >> thank you, mr. chair. obviously, we will do what we can to work on all of the issues facing our country during this difficult time, and i want to thank you for being here, mr. secretary, and the opportunity

to have a hearing on the president's 2011 budget, and it appears that the president is calling for about $2 trillion in tax increases. is that correct? i think it is. >> what we are proposing to do is -- >> i would like to get your comments. >> we are proposing to let expire the tax credits for the 2% to 3% of the richest in the country. we think that is there. we think that is just, but we are extending very important tax cut for the vast bulk of americans. the vast bulk of american businesses, and these are powerful, very powerful tax cuts. they are good policy. we should work together to make sure those happen. >> and i notice that the budget does not factor in the house- past national energy tax, if you did factor that in the budget,

it would be closer to $3 trillion in tax increases in the budget -- does not factor in the house-passed national energy tax. since the democrats came into the majority, the debt limit has increased by 60%, and now, you want to pay for all of that spending and all of that debt with about $3 trillion in new taxes if you add in the two plus the $1 trillion in cap and trade, and those taxes on small businesses and the benefits of working americans, and as i said, taxes on energy. now, i understand the president has called for money to a small businesses, and on the surface, i think that sounds pretty good, but as i look at the president's budget, this would hit small business is particularly hard, because you're increasing taxes on nearly to -- this would hit small businesses particularly

hard. small businesses would pay an additional $10 billion in taxes in 2011 alone, and a total tax increase over a 10-year period of over $200 billion. it seems to me that $30 billion in held pales in comparison to 250 dollars billion in tax increases -- it seems to me that $30 billion in help pales in comparison. >> the tax benefits for small businesses in the president's budget are very, very substantial and dramatic, and, again, one very important point, and these are not our numbers. letting the tax cuts on high- income americans expiry affects only 2% to 3% of american small businesses -- letting the tax cuts on high-income americans

expire. what we will give them is very, very substantial, and we hope you'll join with us in extending as incentives. >> in light of the private- sector losses, further job losses in january, i do not see are raising taxes will have the effect of leading to job creation, and when you look at the turtle tax relief, it is a significant tax increase, particularly on small businesses -- and when you look at the total tax relief. >> could i just respond to that last point? i just want to do it one more time. i have been in public service all of my life. my first job in public service was at the treasury department. first undersecretary jim baker. lloyd bentsen it be my first job at treasury. when i left the treasury, we de la hoya bensen gave me my first job at treasury. -- first under secretary jim

baker. lloyd bentsen gave me my first job at treasury. there was nothing good for business and that swing. -- in that swing. we are trying to dig out of it. we are willing to work with you on how best to do that, but our priorities, again, are to fix what is broken, people are back to work. if we do that well, then we will be in a better position to help dig ourselves a lot of that fiscal hole. >> where i come from, when you're in a whole, you stop digging. -- when you are in ta hole.

we want to see where we can find ways to move ahead and get jobs started again in this country. thank you. >> we can start the clock over for mr. lwevin. -- levin. >> i just want to be clear about the numbers. there is a new category now called the democrats' control budgets, -- democrats control budgets. [gavel] >> mr. levin will proceed. >> i think we need to find common ground, but it will not work if people try to escape from the past, and i think everyone needs to remember that the sentence you read simply put over $8 trillion of the projected deficits -- they were due to the fiscal policies of

the last eight years and the facts of the deep recession as president in heritage. i want to ask you then, mr. camp talked about the impact on small business, and when they do that, they talk about the 250 categories. 250 thousand. not maintain the tax cut for those people, and they include everybody, lawyers, etc. repeat for as the impact, if you would, mr. secretary, of not continuing the tax cut for wealthy americans. who is hit by that? >> roughly 2% to 3% of individuals and roughly 2% of small businesses. >> ok, that is a fact. also, there has been opposition to the fee on financial institutions. say a word about why the administration is proposing that. >> the law that was passed to

fix this financial mess require the secretary of the treasury to propose a way to recoup -- required the secretary to propose a way to recoup, so what we did was a simple, common- cents thing. that was to impose a fee on the largest bank -- what we did was a simple common sense thing. that was to oppose a fee on the largest banks. it helps make the system stable if it is designed well. >> i hope as we search for common ground that those on the minority side will indicate their position on that, and the same on the $30 billion for community banks. just some of quickly what you suggest we do that and what you suggest how we pay for it. -- just sum up quickly why you

suggest we do that and why you suggest how we pay for it. >> they need to have access to capital. what we are proposing is a simple thank. that is to give them capital and design it that the more they lend -- what we are proposing is a simple friend -- a simple thing. alongside these tax incentives for small businesses, it is a powerful package of measures. >> mr. chairman, i hope that those on the minority side will expensed -- express their position. >> doctor? >> thank you, mr. chairman. a budget is setting the priorities of how the group spends their money, whether we are talking about a family or

we're talking about the federal government, and as you look at the situation today where everybody wants a job, and all we're talking about is jobs, jobs, jobs, the example of the priorities of franklin delano roosevelt was to create jobs through the works project administration, through the ccc. you see the same thing in the jobs that have been created, and i would like to hear you convince me that putting a tax credit out for small business is more effective than recreating some of the creation of jobs that have gone on in the past. the seattle seawall. if we have an earthquake like they just had it in haiti, the city will slide down into the ocean. -- like they just had in haiti. the one in san francisco went down.

so the infrastructure jobs are everywhere around us. there are human service jobs in schools, in nursing homes, and all kinds of places. convince me that your balance of putting money on the side of small business, hopeful job creation -- because of people do not have money, they do not go to small businesses to buy stuff, so -- >> i agree with you, and that was well said, and that is why we a been so supportive of very substantial investment in infrastructure across the country -- and that is why we have been so supportive. it is good for the economy as a whole, as well, because as you know, there are parts of our nation's infrastructure that have been allowed to decay over time. so infrastructure is very park " and its we will be supportive --

so infrastructure is very important, and we will be supportive. in addition, one of the most effective things we can do is to make sure that at the state and local level, there are resources so that teachers can stay in the classroom teaching, firefighters are able to stay on the job, and those that are first responders, helping state governments avoiding making deeper cuts, that is good policy, very powerful, and can operate very quickly, so you are right to say that tax cuts alone are not going to solve this problem, and you are right to say that we need to do other things are need to do other things are wrong side that but together we think that package could be quite powerful. >> the tax expenditures are balanced, infrastructure ver

sus taxes? >> that depends on what congress ultimately adopts. we propose $100 billion set aside for additional spending right now to reinforce job creation mingo would suggest only one-third of that go for this new hiring incentive. the balance of the rest should go to things we think would also complement that. that is one way to cut the package. >> thank you. secretary gunnar, it has been a year now since the president signed the so-called stimulus bill. americans are still wondering where the jobs are -- secretary tim geithner. in my own northern district unemployment is over 15%. the last thing we should be doing is passing legislation that would make this problem

worse. the president's budget assumes that congress will pass a health-care bill. the house democrats' health-care bill raises taxes by more than $732 billion over the next decade. using the methodology developed by rohmer, president obama's top economic adviser, these tax hikes could cost the country 5 million jobs. it's something republicans find unacceptable. does invite million jobs on top of the current global-digit agglomerate concern you? >> congressman, those are not our numbers or does any reasonable congressman would support. of course, we would not ask you to support programs that carry that risk. s that would carry that risk. >> the methodology by the

president's own adviser, that calculated this -- >> there is not a chance that a reasonable independent economist would look at that package of measures and suggested that would be the effect over time. one thing is important -- and suggest that would be the effect over time. the board and of the current system is not good for business. they normally put it at the top of their basic concerns -- the burden of the current system is not good for business. even the national number does not capture it. there are much higher numbers in many parts of the country. that is why it is so important that we are on this and keep working to reinforce this. the worst thing we can do today is to stand back and say, "all right, we are going to hope that our challenge is now can be best

addressed by cutting these dramatically today -- our challenges now can be best addressed by cutting these dramatically today." it would not be good for the country. >> i would like to ask you about some specific tax issues. the president's budget does not provide any details of what he is asking congress to pass. does the administration supports a new 8% payroll tax on employers who do not offer health insurance that meets the government's standards? a tax that could result in the loss of millions of jobs? and does the administration supports a tax on any american who chooses not to by government-mandated insurance, a tax that would fall on millions of americans making less than $250,000 per year -- a tax on any american it chooses not to buy -- who chooses not to buy?

>> what they would like to know is what the rules of the game will be. they would like to have uncertainty lifted and for the debate to end. and they would like us to lift the burden of cost the chrysostom put on them, so i know you have spent a lot of time on this -- lift the burden of cost the current system puts on them. we want to expand coverage, improve the quality of care, and and the huge hidden cost and and fairness in our current system. -- and anend the huge hidden cot and on fairness -- unfairness in our current system.

>> trying to restore fairness to our tax code. i am also glad to see that the president is taking on to reduce a gap. could you please take a moment to share with us some of the ways in which the president seeks to close the tax gap? and could you please tell us why this is so important? >> we are following the lead of this chairman and many members of the committee. and let me give you an example. this creates a range of incentives that encourages companies to shift investment in incomes offshore. -- investment and incomes offshore. if one of them ships overseas,

it pays less in taxes. -- shifts overseas. we do not think that is fair. they can make the system more fair -- if one of them shifts overseas, it pays less in taxes. we do not think that is fair. we want to make the system more fair. there are subsidies that go to oil and gas, for example. the other is the tax of hedge fund managers and private equity people. these are simple, fair things.

we want to make permanent the middle-class tax cuts that, again, go to 95%, 97% of americans. we want to do this in a way that is there and that is responsible. there are other things we can do, but we are starting with that, and we are proposing have to dig ourselves off of this -- how to dig ourselves are out of this hole we are in. it is fair to the american people. >> thank you. >> it sounds good to me, mr. chairman. thanks, mr. secretary. first, thank you for including my bill in your legislation. i do not understand why there would be any opposition to that. it has been well met by insurance agents and credit unions, as well.

i also want to say, as mr. lewis mentioned ago, i appreciate the inclusion of reinsurance. i do appreciate the simplicity of your proposal, but it might still allow a significant shifting of profits offshore, outside of the reach of u.s. tax system. domestic companies are upset about this. this is not an issue that was brought to my attention by the afl-cio. this was offered by domestic insurance companies who want something done about it. they do not understand why they have to compete with companies that move offshore. in addition, mr. rangel has been talking about tax reform, and i appreciate the time and effort you put into these. recently, the chairman asked me to look into transfer pricing.

i hope that we can were together on these international reforms, because mr. rangel's proposal does encourage companies to stay here and to prosper. now, would you explain briefly the changes and how they have changed since the last budget? >> again, we are trying to balance a simple imperative. we want to make sure there is a level playing field for american companies, so we are not creating an incentive for them to ship jobs overseas. we want to do it anyway -- not creating an incentive for them to shift jobs overseas. we want to do it in a way -- we have for a lot of reaction. we took that into consideration -- we have heard a lot of reaction. we made some additional

suggestions, too, but there are different ways to do this. of course, we will work closely with you on this. we are open to suggestions, and we understand a lot of people think you cannot really do this without doing comprehensive tax reform, or corporate tax reform, and that may be true, but we think these are sensible common sense things, and we would like to move on them. >> i hope it remains a priority with the administration, and, lastly, mr. secretary, could we get treasury to submit to us what the cost of the war in iraq will be? and not just the immediate costs, which are now north of $1 trillion, but just as importantly, the obligation we have to be men and women who have served as honorably -- the obligation that we have to the men and women?

this is part of where we find ourselves, so it is ok to suggest that if we are digging a hole, and we find -- that obligation is a very honorable obligation, to pay for those veterans hospitals for years and years to come, so i would hope that you can give us a cost and what we find ourselves in some measure with these deficits we have today. >> is to be honest and account for the cost of governing -- is to be honest. -- it is to be honest and account for the cost of governing. we want to make sure that we are being fair and honest. i completely support that principle.

>> mr. geithner, i would first like to express my appreciation for the president including something in his budget, which i introduced along with my colleague, earl pomeroy, about removing cell phones from property. that is dumb. >> i thank you for saying that. i think that is something most people are very supportive of. but i would like to begin it. i am -- >> i would like to begin. i do not know if you had a chance to read article in "cnn money." in that article, a small- business owner in my district is quoted as saying, "i need the money before i hire the people, not after i hired them," so according to him -- not after i hire them."

>> the key thing is to make sure there is growth and demand for products people want to buy. i think if you look at what is happening across the country now, it is not just that the economy has stopped shrinking and that a group at the most rapid rate in six years last quarter, -- and that it grew at the most rapid rate in six years last quarter -- as that happens, when this will do is make it more likely that people add jobs in at -- what this will do is make it more likely that people will add jobs. this does not solve all of the problems, but we think it will make a real difference. >> you need to fix the bank problem first. let me ask you question about the president's fiscal condition. our tax increases on the table for social security reform? yes or no?

>> thank you for asking that. . and a model the center gregg and conrad have designed. get a group together, step back from politics. look for common ground to dig ourselves out of this whole. no pre-conditions, come fresh. >> we tax social security? >> part of this is saying the same thing. what you want to do is have people come come a step away from politics, take a cold, hard look, and the side will make sense with a bipartisan consensus. in this commission the interview is if you need to have democrats

and republicans together recommend things that will work. it will not work if you have only republican ideas or democratic ones on the other. these are big problems, got to work on them together. it will take a while. this is one way to do it. >> social security fixed, but does not need to be taxed. >> thank you. i will be brief. i have to run on to the floor and do a bill. i hope you all will talk more about the dangers we face as a country if we do nothing about the structural deficit. in 2000 if you look at the website of the treasury department, revenue expenditures were but the around 19% of gdp. ures were around 90% of gdp, basically breaking even. the sec it worse thing in 2001

happened in february when they projected a surplus. i was wondering what the price of cotton would be in 10 days and they were telling me what the surpluses would be in 10 years. in september, we had 9/11, and every assumption was no longer a valid. the administration had not gone back and revisited the fact that since that time, revenue has never been as much as 90% of gdp, and expenditures had never been less than 20%. in iraq and afghanistan, we borrowed money, never before had been done. it is a structural deficit. and this idea that we can just cut spending here or there, we

all know that it is not possible. to and to do not equal four anymore. i told someone the other day that the way this congress operates, and has since basically i have been here 21 years, no matter who is in charge, we would still have pony express days in wyoming if it was up to congress and we did not have the commission for defense spending. the temptation here is to put off the tough decisions, but we are rapidly reaching a point where we cannot any longer do that. i just want to thank you for what you're doing, but i think the more if this we put on the american people about this structural deficits, and be honest with them, i think this

idea of that you raise taxes -- rich tax is a penny on someone making more than $10 million is a crime, that has got to be addressed. we cannot get along without some acknowledgment that revenue and expenditure have to somewhere equal about the same on this percentage of gross domestic product. i am making a little speech here. i hope that people understand it. >> our fiscal position is unsustainable. we will be poorer as a country if we do not fix that. our priority has to be growth in jobs. without that, you cannot fix our long-term deficits. but even when we're growing again, when everyone is back up to speed, we're still left with

an unsustainable fiscal position. so if we do not commit to bring that down, we face the risks unfair not just a businesses but the families. i agree with you. even though it is a deeply political movement, it is encouraging. people do not say that deficit -- people do not think that deficits do not matter or that tax cuts are too big. we cannot make huge commitments and perpetually -- in perpetuity without paying for them. and that is fundamentally encouraging. to get this economy growing again and job creation up again, and then next year we start the process. that next year is not too late

or too soon to start. but we recognize this. >> thank you, mr. chairman. mr. secretary, i have two questions regarding your testimony this morning. your goal is to get the best thing for the buck to get people back to work. the first thing concerns the comment you made this morning that repeat what the president said in his radio address, that we need to close the tax loopholes that have corp's shipping jobs offshore. i've read your budget proposals and their exactly the ones you a dance last year -40% of the revenues from multinationals who have exported jobs overseas and shelter their income.

set to announce the proposal last year, other than an occasional reference to it, i have not seen anything done to achieve these objectives other than the "wall street journal" report that you assured multinationals that they should not be worried about this. my question is, what reason is there to believe that the administration will do anything more of the 60% of the proposal left to close the tax loopholes the resulting jobs being shipped overseas than they did last year? my second question, mr. secretary, refers to the job tax credit. everyone is for a tax provision that will produce more jobs in a cost-effective way. but there is question about a particular proposal for $30 billion that this administration advance. a former treasury official, and

it -- commented that that tax credit is a stinker. it simply encourages people to do what they would have done anyway. center proposal is retroactive, surely there can be no claim that there is a new jobs added in january or february before this bill was signed which was caused by this provision. it also distorts the market. for my small business in texas hanging onto its employees even though it's painful to do so, they get nothing out of this jobs tax credit. but for those who dismissed employees or a new company coming into town, they benefit. one of your secretaries has said we don't know how effective it may be, but even if we got to% at of this, that would be great because it would ensure liquidity for small business.

surely the treasury can come up with a better way to promote job growth than a proposal that may be 90% ineffective. the congressional budget office has also noted that this provision will be the least used. >> i'll suggest that you respond in writing to the eloquent questions. i would like to recognize mr. brady of texas. >> i am confused. your grip of $1 trillion annual deficit that you were handed -- but congress controls the pocket books, remind us who was in

charge of congress for two years when you're handed that annual deficit? >> you know the answer to that, congressman. but the damage to our fiscal future, the transformation from $5.60 trillion -- >> i just want to make sure our listeners were not confuse by who handed to that horrible deficit. i want to bring up aig. there is common ground. the anger and outrage at the way a i.t.'s bailout has been handled by you in treasury. congress, democrats, republicans, you saw the deal that gave one hundred cents on the dollar to the counterparties of aig.

if they had been trying to advance the public from knowing the details of that. a year later, $100 billion -- $100 million in bonuses come out. the administration handling of aig resembles the keystone kops. it would be funny if it was not the taxpayers crying about it. i do think that you've taken your eye off the ball pursuing an extreme agenda and failed economic policies. the viewers have no confidence in the economy. people are frightened by the thought of health-care costs, higher taxes. but where there is common ground in the president's commitment in the state of the union to double exports over the next five years.

other economies are growing faster than the united states. that is where the customers are at. that will create jobs in the united states. i'm putting up a graph of what our exports are doing. it took 11 years to double the exports during pretty strong -- pretty strong economic times in global growth. my question is, there is common ground for that on this panel and in the congress. so what is the president's plan to double exports over the next five years? >> i am going to ask the secretary to respond, however. i hope that members give time for the secretary to respond within the three minutes. it's not fair to the new our members will not get a chance to ask questions.

please be brief with the secretary so that we can make certain that we get answers. >> i am glad to hear what you said about exports. i think it is a realistic objective. the world is growing fast -- faster, and because companies are very good at competing in a range of things that the world needs, it is a very realistic objective. it requires us to work together to pass strong trade agreements that will expand opportunities in those foreign markets. we cannot let other countries go and compete markets away from us. we need to make sure that businesses are getting assistance where they can, and investing in things that help bring in innovation. helping to put the largest investment in research and development, permanent extension

of the r&d tax credit, those of the things that make a big difference and help ensure that we are in the game, and gaining market share around the world. i think you're right to emphasize it. exports have been doing quite well recently, but we want to make sure that we are reinforcing that. >> our trade agreements part of that plan? >> absolutely, and as the president said, it is not just that. we need to be in the game in asia. they moved to try to negotiate, we want to make sure that the broader multilateral agreements are in place in a way that are going to be good for american companies. >> mr. pomeroy, north dakota. >> thank you, mr. chairman. comments from my friends on

other sides of the aisle about aig and the other regulatory failures from the last and ministration, it seems to me incredibly out of place. we've seen a lot of regulatory resolve. i used to be an insurance commissioner. it does not mean that you don't watch the swindlers and short cuters. people are still picking up the pieces at great expense to the public for that misguided, unbridled faith in the marketplace that occurred in the last administration. the question i want to ask about relates to job growth. in this tight budget time frame, one area where we can have job growth consistent with sound budget principles -- we

played a part in putting into law an extraordinary stringent funding regimen for pensions. i believe that it made no sense. that was before. that was before. we've got low interest rates which further produced a very onerous funding picture. i believe interim funding relief, not to the jeopardy of the solvency of the plan, but bringing funding requirements more in line with solvency principles. if we do that, mr. secretary, we can also have more cash to draw the operation to hire employees. i would like your comment. >> we think you're right, there's a good case for targeted

pension relief for the reasons you have said. we would like to work with you. i'm not sure we have the precise way to do it, but the principle is right. >> thank you. yield back. >> mr. thompson, a california. >> i want to thank you personally for your responsiveness with working on issues through my office. two members before me have talked about this jobs, new jobs credit. i want to associate myself with their concerns. mr. mcdermott talk specifically about projects that generate jobs, and at the same time generate security to communities. and i think it is in congruent that we want to spend money to hopefully create jobs in small businesses. i don't know anyone who hires an

employee because there will get a tax break. people hired employees because they have work to do. at the same time this budget cuts the corps of engineers. there are projects across the country that are critical to the public safety of people. projects beyond shovel-ready which are already going, terribly under-funded. it seems we get more bang we look at that rather than try to put something together on how to hire employees. >> i completely agree. the most important thing we can do is to make sure there is growing demand for the products american businesses are creating. creating. that is a necessary thing. nothing is possible without that. but take a careful look at the way this was proposed. there were a lot of concerns about this. we listened carefully to those concerns. i am not sure we address all of

them, but this is designed to meet most of those concerns. we do not have a monopoly of ideas on this. we want to do things that have the highest prospect for providing a spark to investment, a spark to job creation, and we think that this in play a role alongside what you said. >> another proposal in the budget is the idea of doing away with the lifeboat, last and, first out accounting practices. this is one that works well for some u.s. businesses. if we do this, if we end it, what is going to happen is that u.s. small businesses will take a big tax hit. their competitors overseas are going to have a terrific advantage over us in the

marketplace. there are some industries that have to hold their inventory for a long time. this is a fair and reasonable way to recognize that and i would strongly urge you to go back and revisit that, along with the user fee that this budget imposes. i cannot think of anything that would be more difficult for the small businesses to deal with than this. it charges people who do not use the tv. and gives a terrific advantage to our overseas confect -- competitors of the marketplace. i would urge strongly to revisit these two issues. i yield back. >> the majority and minority make it together in the workshops with your office to thrash these ideas out.

mr. ryan, it seemed like you have been with me all week. >> we should get together more often. first order business -- we've been talking about salary pensioners, and it could get back to me, i would like a response from you. i brought out page 126 in your budget, and when you take a look at this, i just find this amazing. you get your budget totals here, which by your own admission, you're wrong budget director -- you're a smart guy with smart economists over there. all of them say that the medium and long budget deficits has to get below 3% of gdp. but this plan that you are bringing to west does not even get close to it. >> you're exactly right.

>> i only have three minutes. you get the cigarette tax and a magic box that says we're going have commission here. we're going to have a bipartisan -- a bipartisan commission -- a partisan commission, to to one democrat. >> that is not fair. >> we're going to solve the problem that we inherited. >> why don't you put it in the budget? you're the guys that run the government. why don't you do that? why don't you give us a budget that actually gets the budget -- deficit to a sustainable level? [unintelligible] let me quote this from the "wall street journal."

the unusual situation that the government finds itself and will not last. and he adds, how you get ahead of the downward spiral of the plunging dollar and the sinking economy? >> i think that is a good ". >> the american people are going to get hurt. why don't you give us a budget, not pointing to a commission, but giving us a budget that is actually sustainable. a>> a budget that takes the huge deficit that we inherited -- >> you can only blame bush so long. [unintelligible] >> when i left the treasury, it was surpluses as far as the eyes can see. >> you obviously inherited a

tough situation but you are making it worse. >> we're working with you in digging our way out of this mess. we're bringing this down from the ridiculous levels that we inherited. we get down below 4%, but we need more assistance to getting at down further. you're absolutely right about that. it is very good for the country to hear you and your colleagues stand here today and say we're ready to be responsible. it is a good thing for the country and we welcome working with you and how to do that. [unintelligible] >> >> you have just seen a portion of the house ways and means reading. you can hear it in its entirety

by logging on to c-span.org. up next, an update on the possibility of two vacancies on the u.s. supreme court. >> on the phone is the senior editor joining us to talk about a story that the white house is working behind the scenes to possibly replace the two supreme court holes they are looking at over the coming year. guest: i don't think it is a new story. i think there was a big piece on abc at the end of last week saying john paul stevens is 89 and he's only hired one clerk instead of three for next fall. ginsburg is 76. recently recovering from pancreatic cancer. this is a story which says something we already knew which says there are two justices

definitely looking to retire at some point soon. the speculation was it would happen sooner rather than later. as soon as -- maybe as soon as this spring. host: what are the names being floated out there? guest: it is similar to what we had last spring except sonia sotomayor isn't on it anymore. the dean of harvard law school, diane wood, a judge on the district circuit court of appeals. it is a very similar list. one of the things that i think will solidify who is on the liz is if ginsburg steps down, i think obama might be inclined to take a woman rather than a man. host: behind-the-scenes movement accident whether it is old or new, that the white house in the 2010 electrics will try to make the supreme court pick.

a whole issue part of making sure the democrats retain their majority in the house and senate. what do you hear? guest: i think wuvent reasons president obama took a whack at the supreme court last week in the state of the union is he is going to make the court and the composition of the court more of an issue. this big campaign finance decision that came down is sort of mana from heaven for this white house. it is a decision that really riled up a sense of a populous satisfaction with the court a sense that the court was giving corporations personhood. i think you are quite right to say that his -- he's e!ing it up for the elections. he's putting it on so that he can put -- very similar list.

one >> tomorrow, a look at the toyota vehicle recall and the possible impact on auto policy with david shparson. also, a discussion with lawrence yun from the national association of realtors. and after that, julie and with this talk about his book. -- julian concerning his book. up next, march from sarah palin, the keynote speaker in nashville at the tea party. later, "newsmakers" with david axelrod on the administration's policy priorities.

in an interview with the fox news, sarah palin said she would be willing to run. [applause] >> thank you so much. i am so proud to be an american. thank you so much for being here tonight. do you love your freedom? do you want at your freedom? any of you here serving in uniform pastor present, raise your hand. we will thank you for our freedom. god bless you guys.

we salute you and honor you. thank you. i am so proud to be american. thank you. happy birthday, ronald reagan. [applause] well, a special hello to the c- span viewers. you and not be welcome in those healthcare negotiants, but you have an invitation to the tea party. [applause] very good to be here in tennessee to volunteer here. the home of good, country music and southern barbecue. it is great to be at the convention. down here some southern sweet tea end up in alaska we have a smaller version of tea party up there -- we call it ice tea. i'm a big supporter of this

movement, believe in this movement. across the country, knowing this is the movement in america is ready for another revolution. you are part of this. [applause] i look forward to attending more tea party events in the near future. it is so inspiring to see real people, not politicos, not inside the beltway professionals. stand up and speak out for common-sense conservative principles. today i want to start off with a special shout out to america's newest senator, thanks to you, scott brown. ." ." , scott brown represents what is beautiful movement is about. he was just a guy with the truck and a passion to serve

our country. he saw that things were not quite right in washington and he decided he was going to do his part to put our government back on the side of the people. it took guts and a lot of hard work. with support, scott brown carried the day. it is so interesting to watch it is so interesting to watch the aftermath o massachusetts'revolutions. the white house blames the candidate, their candidate. nancy pelosi blames the senate democrats. rahm emanuel criticized upholstered -- a pollster. yet again, president obama found some way to make this about george bush. [laughter] considering the recent concerted

that elections --conservative elections, when you are 043, elections, when you are 043, stop talking and start the only place the left has not placed the blame is the agenda. we have some advice for our friends on that side of the aisle. this is what got you into this mess. the obama-pelosi-reid agenda will leave us more under the thumb of big government. it is out of touch and out of date. if scott brown is any indication, it is running out of time. [applause] becausefrom virginia to new jersey to massachusetts, voters are sending a message. in places like nevada, connecticut, colorado, michigan, north dakota doss the

liberal -- they have the liberal left is running scared. the bottom line is that it has been a year now. voters are going to hold them accountable. out here in the cities and towns across this great country, we have some big problems to solve. we have gotten tired of looking backwards. we want to look forward. the future looks really good. it looks really good, becauseif there is hope in massachusetts, there is hope everywhere. [applause] brown's victory is exciting and is a sign of more good things to come. a lot of great common-sense conservative candidates. they are going to put it all on

the line in 2010. this year there are going to be some tough primaries. i think competition is good. it makes us work harder and be more efficient. i hope you will get out there and work hard for candidates who reflect your values and priorities. despite what the pundits want you to think, this is democracy at work and it is beautiful. [applause] i was the product of a competitive primary where running for governor i faced five guys. we put our ideas up for debate. we allowed the voters to decide. it is a healthy process. it gives americans the kind of leadership they want and deserve. in 2010, i tip my hat to anyone with the courage to throw theirs in the ring, and may the best candidate win.

understand that the candidate is human and they are born to occasionally disappoint. when they do, let them know, but do not get discouraged and sit it out because the stakes are too high. the stakes are too high and your voice is too important. work hard for these candidates, but put your faith and ideas. -- in ideas. in that spirit, i caution against allowing this movement or politician. this movement to be defined by any one leader or politician. the tea party movement is not a top-down operation. it is a ground-up call to action forcing both parties to change the way they do business and that is beautiful. [applause]

this is about the people. this is about the people and it is bigger than any king or queen of but tea party and a lot -- of of tea party, and it is a lot bigger than any charismatic guy with a teleprompter. [applause] the soul of this movement is the people, everyday americans to -- who grow are few, run our small businesses, teach our kids, and fight our wars. çópeople in small towns and cits across this nation. people saw what was happening and were concerned and they got involved. like you, they go to town hall meetings and write op-eds, they run for local office. you have the courage to stand up and speak out. you have the vision for the future that values the conservative principles and common-sense solutions. if that sounds like you, you

are probably feeling a bit discouraged by what you see in washington, d.c. in recent weeks, we have grown even more uneasy about our administration's approach to national security. it is the most important role ascribed to our federal government. it is not politicizing our security to discuss our concerns. americans deserve to know the truth about the threats we face and what the administration is or is not doing about them. let's talk about them. new terms used likeoverseas contingency operation instead of the word "war"reflects a world view that is out of touch with the enemy we face. we cannot spend our way out of this. it is one thing to call a pay raise a job created or saved, it is quite an other to call the devastation of homicide,

can inflect a man-made disaster. -- the devastation that a suicide bomber can inflict a man-made disaster. national security is the one place where you have to call it like it is. [applause] spirit, we should acknowledge that on christmas day the system did not work. umar farouk abdulmutallab passed through airport security with a bomb, intent on killing passengers. he trained in yemen with al- qaeda. his visa was not revoked until after he tried to kill hundreds of passengers on christmas day. the only thing that stopped the terrorist was blind luck and brave passengers. it was a christmas miracle. that is not the way the system

is supposed to work. [applause] what followed was equally disturbing after he was captured. he was questioned for only 50 minutes. we had a choice in how to do this. the choice was to question him for only 50 minutes and then read him his miranda rights. the administration says there are no downside or upsides to treating terrorists like civilians. a lot of us paid to differ -- beg to differ. there are questions we would have liked him to answer before he got a lawyer. before we gave him the constitutional right to remain silent. [applause] our u.s. constitutional right. [applause]

>> >> our right that you've bought and were willing to die for to protect in our constitution. my son, as an infantryman in the united states army, is willing to die for. the protections provided thanks to you, we're going to bestow them on a terrorist who hates our constitution and tries to destroy our constitution and country? it makes no sense. we have a choice in how we are going to deal with terrorists. we do not have to go down that road. there are questions we would have liked to have answered before he lawyered up. who were you trained by? you are writing about these terrorists like you. who are they? when and where will they try to strike again? the events surrounding the

christmas day plot reflect the kind of thinking that led to september 11. the threat then our embassies were attacked was treated like an international crime spree, not an act of war. we have seen that mind-set in washington. that scares me for my children and your children. treating this like a mere law enforcement matter places our country at great risk. that is not how radical islamic extremists are looking at this. they know and we are at war. to win that war, we need a commander-in-chief not a professor of law standing at the lectern. [applause]

>> it is that same kind of misguided thinking that is seen throughout the administration's foreign-policy decisions. our president spent a year reaching out to hostile regimes, writing personal letters to dangerous dictators, and apologizing for america. what do we have to show for that? here is what we have to show. north korea tested nuclear- weapons and long-range ballistic missiles. israel, a friend and critical ally, now questions the strength of our support. plans for a missile defense system in europe have been scrapped. relations with china and russia are no better proof relations are no better. and relations with japan, that

he is an ally, are in the worst shape in years. are around the world, people seeking freedom from oppressive regimes wonder if we are still the beacon of hope for their cause. the administration put forth -- cut support for democracy program. where the president has been unclear, i ask where the strong support is for the iranians who are risking all for the opposition to accommodate -- ahmadinejad -- it is a short list. [applause] it is no wonder that he spent only part of his state of the union address talking about foreign policy. there were not many victories for him to address. there are so many challenges in front of us. it can seem overwhelming. despite these challenges, we have hope that we can do things in the right direction.

it requires the administration to change course. we need foreign policy that distinguishes america's friends from enemies. it needs to recognize the true nature of the threats we face. [applause] we need a strong national defense. i think he would agree with me, as ronald reagan used to talk about that. peace through strength. in that respect, i applaud the president for following at least a part of the recommendations ground in sending reinforcements to afghanistan. we must spend less time according our adversaries, more time working with our allies. we must build effective coalitions capable of confronting dangerous regimes like iran and north korea. it is time for more than just tough talk. you probably get tired of

hearing that talk, talk, talk. [applause] tired of hearing the talk. it is time for some tough action like sanctions on iran. in places of the world where people are struggling and oppressed, america must stand with them. we need a clear foreign policy that stands with people for democracy, that reflects our values and interests. it is in our best interest because democracies do not go to war with each other. they can settle their differences peacefully. the lesson of the last year is this. foreign policy cannot be managed through the politics of personality. our president would do well to take note of an observation of john f. kennedy that all of the all of the world's problems -- they are not his predecessors fault.

[applause] the problems we face in the real-world require will -- real solutions. we better get to it. the risks they pose are great and grave. as barry goldwater said, we can be conquered by bombs, but we can also be conquered by neglect, ignoring our constitution, and disregarding the principles of limited government. in the past year, his words rang true. washington has replaced private irresponsibility with public irresponsibility. the list of companies in -- and industries the government is crowding out and bailing out and taking over continues to grow. first it was banks and mortgage companies,ñi financial institutions, automakers. if they had their way, health care, student loans. in the words of congressman paul ryan, the $700 billion

t.a.r.p. has morphed into crony capitalism and is becoming a slush fund, just as we had been warned about. people on wall street are collecting billions of dollars in bailout bonuses. among the top 17 companies that receive your bailout money, 92% of senior officers and directors still have their good jobs. every day americans are wondering where the consequences are. they helped get us into this worst economic situation since the great depression. where are the consequences? [applause] when washington passed a $780 billion stimulus bill, we were nervous. they just spent $700 billion on wall street.

on the state level, as a governor, we knew that money came with that strings attached. the federal government was going to have more control. there were going to disrespect the 10th amendment of our constitution by bribing us to take the federal money and they were going to be able to mandate a few more things. i join with other conservative governors around the nation in rejecting some of those dollars. legislators -- [applause] it turned out to be nothing to applaud because legislators then were threatening lawsuits if governors did not take the money. i vetoed some of the funds. i knew we could not maintain the programs we were going to pay for with ththese were borrowed p and printed dollars out of nowhere. even in alaska, a republican- controlled legislature, my veto

was overridden. the money poured into those states. the federal government will have taken more control over the people living in our states. i understand wanting to believe this is free money. for some, it is tough to tell people no in tough times. organization promised it would be good stewards of taxpayer dollars. and vice-president joe biden was put in charge of tough, unprecedented oversight. nobody messes with joe. [applause] this was all part of that hope and change and transparency. a year later, i have to ask the supporters, how is that stuff working out for you?

[laughter] i tried to look into that transparency thing, but joe's meetings with the transparency and accountability board were closed to the public. they held a transparency meeting behind closed doors. i do not know if anybody is messing with joe, but here is what i do know. a lot of that stimulus cash ended up in some pretty odd places, including districts that did not even exist and programs that really do not have a whole lot to do with stimulating the economy. nearly $6 million was given to a democrat pollster who had already made billions during the presidential primaries. nearly $10 million was spent to update this the stimulus website. wednesday spent a million

dollars to put up signs that advertise that they were spending the federal stimulus projects. as someone put it, this was a million-dollar effort using your money to tell you it is spending your money. it did not create a single job. these uses of stimulus funds do not sound targeted or timely as we were promised. they sound wasteful. in the case of those signs, kind of ridiculous. i do not know about you, but seeing checks written for some pet projects of congressmen. did you feel stimulated? it turns out that washington got the price tag wrong. these programs cost billions of dollars more than we were told. it is closer to $860 billion. add this to the fact thatthe white house cannot even tell us how much jobs were created. it is anywhere from thousands to 2 million.

whenever we are sure of is the -- one number we are sure of is the unemployment number at 9.7%. that is well above the 8% mark we were promised. under-employment is now 16.5%. people are just giving up and not even enrolling in some of these programs. it is tough to count them. i will not go into all of it, but the list of broken promises is long. candidate obama pledged to end closed-door deals and no-bid contracts once and for all, but just last month his administration awarded a $25 billion no-bid contract. -- $25 million no bid contract to a democrat donor. it is not hope. it is same old, same old. instead of changing the way washington does business,we got cornhusker kickbacks, the

louisiana purchase. millions of tax breaks for union bosses. the promise ban on lobbyists'? they handed out waivers to lobbyists left and right. more than 40 lobbyists work at the top levels of this administration. most members of congress do not get to read the bills before they have to vote on it, but pledged that a bill would not be signed into law until we have a five days to read it online. it is easy to understand why americans are shaking their heads when washington has broken the trust with the people that these politicians are to be serving. we are drowning in national debt. many of us have had enough. [applause]

>> now, based on principles in all of this, it is easy to understand, it really is. d.c. would just love for us to believe this is way over our heads. somebody in tennessee, and alaska, she will never understand what we're talking about here in washington, d.c. this is all pretty simple stuff. when our families, small businesses -- we start running our finances into the red, what do we do? we cut back and tighten our belts. we teach our children to live within our means. that is what todd and i do. we have to plan for the future and use a budget. in washington, why is it the opposite of that? this week, they unveiled a record-busting, mindboggling $3.80 trillion federal budget.

they keep borrowing and printing the dollars and keep making us more beholden to foreign countries. they keep making us take steps towards insolvency. what they are doing in proposing big new programs with giant price tags, they are sticking our kids with the bill. that is immoral. that is generational debt. we are stealing our children's future. [applause] freedom lovers need to be aware that this makes us more beholden to other countries, less secure, less free. that should tick us off. with all of these serious

challenges ahead, we have private sector job creation that has to take place. we have theseeconomic woes, health care, the war on terror. as the saying goes, if you cannot ride to horses at once, -- two horses at once, you should not be in the circus. here is some advice for those in washington, d.c., who want to shine in the greatest show on earth. too often when big government and big business get together and cronyism steps in, it benefits insiders but not every day americans. the administration and congress should do what we did in alaska when the good old boys started making backroom deals benefiting big oil and not the citizens of the state. the citizens of the state -- alaskans put government back on the side of the people. bigwigs started to get in trouble. some of them went to jail over their backroom deals. [applause]

our government needs to adopt a pro-market again that that does -- agenda bad debts -- agenda that does not pick winners and losers but invites competition and levels the playing field. washington as to lower taxes or smaller businesses so that our mom and pop can reinvest and hire people so that our businesses can thrive. [applause] they should support competition, innovation, and reward hard work. they should do all they can to make sure the game is there, -- there -- fair, without undue corrupt influence. they need to get government out of the way. [applause] if they would do this, if they would do this, our economy would roar back to life.

for instance, on health care, we need bipartisan solutions to help families, not increase taxes. remember the red reset button that secretary clinton gave to putin. we should ask for that back and hand it to congress and tell them to start all over on the health care and pass meaningful, market-based reforms that incorporate simple steps that have broad support. the best ideas, not backroom deals. insurance purchases across state lines and tort reform. [applause] the things that are common sense. the white house and democratic leaders -- they do not want to consider those. what is their motivation? what is their intention if they

will not even consider these common-sense, broadbased ideas? and to create jobs, washington should jump-start energy projects. i said it during the campaign and i will say it now, we need an all-of-the-above approach to our energy policy. proven, conventional resource development and support for nuclear power. i was thankful that the president mentioned nuclear power in the state of the union. we need more than words. we need a plan to turn it into reality. we can pave the way for projects that will create jobs -- those are real job creators and deliver carbon-free energy. let's expedite the legal processes for on and offshore drilling, instead of paying billions of dollars, hundreds of billions of dollars that are now being sent to foreign regimes. we should be drilling here and

now instead of relying on them to develop their resources for us. [applause] what we have to do is ask that planned for cap-and-tax, it was going to pass the burden of paying for it to our families. but we are going to get serious about fiscal restraint,we have to make washington start walking the walk. after putting us on track to quadruple the deficit, perhaps the spending freeze is a start, but it is certainly not enough. it is like putting a band-aid on a self-inflicted gunshot wound. we need to go further, cut spending. do not just slow down the spending spree. we have to ask for a second -- axe the plans for a second

stimulus when the first has not even been measured for success yet. kill the plan for the second stimulus. [applause] be aware that the second stimulus is being referred to as a jobs bill. these are not the only ways to reduce spending. they are not enough. they are not enough to tackle the insane debt and deficit that we face. they are a good way to start and show that we are serious about getting our financial house in order. i have spent the last year thinking about how to best serve the and help our country. how can i make sure that you and i are in a position of nobody being able to succeed when they try to tell us to sit down and shut up? how can we best serve. in 2008, i had the honor of a lifetime, running alongside john mccain. i look at him as an american hero. nearly 60 million americans voted for us. they cast their ballot for the things we were talking about

tonight. lower taxes, smaller government, transparency, energy independence, and strong national security. while our votes did not carry the day, it was still a call to serve our country. those voters wanted us to keep on fighting and take the gloves off. they want a common-sense, conservative solution and for us to keep on debating. each of us here today is living proof that you do not need an office or title to make a difference. you do not need a proclaimed leader, as if we are all just a bunch of sheep looking for a leader, to progress this movement. [applause] that is what we are fighting for and fighting about. what we believe in. that is what this movement is about. when people are willing to meet halfway and stand up for

common-sense solutions and values. we want to work with them. in that spirit, i saw -- applaud independents and democrats like bart stupak who wanted to protect the rights of those who are unborn. i applaud that. [applause] when we can work together, we will. when the work of washington violates our conscience and constitution, we will stand up and be counted because we are the loyal opposition. [applause] we have a vision for the future of our country and it is anchored in time-tested truths, that the government that governs least governs best. it is the constitution that

provides the best road map for the more perfect union. [applause] >> only limited government can expand prosperity and opportunity for all. freedom is a god-given right. it is worth fighting for. god bless you. [applause] america's finest, our men and women in uniform, are a force for good in the world and that is nothing to apologize for. [cheers and applause]

these are enduring truths that have been passed down from washington to lincoln to reagan and now to you. while this movement's roots are in our spirit, they are historic. the current form of this movement is fresh and young and fragile. we are the keepers of an honorable tradition of conservative values and good work. we must never forget it is a sacred trust to carry these ideas forward. it demands stability and requires decent constructive debate. opponents of this message are seeking to marginalize this movement. they want to paint us as ideologically extreme and the counterpoint to liberal intolerance.

outrageous conspiracy theorists. unethical shameless tactics like considering a candidate's children fair game. unlike the elitists who denounce this movement, they just do not want to hear the message. i have travelled across this country and talked to the patriotic men and women who make up the tea party movement. they are good and kind and selfless and deeply concerned about our country. i ask this -- let's make this movement a tribute to their good example and make it worthy of their hard work and support. do not let us have our heads turned from the important work before us. do not give others an excuse to turn their eyes from this. let's not get bogged down in small squabbles, let's get

caught up in the big ideas. to do so would be a fitting tribute to ronald reagan. he would have turned 99 tonight. [applause] no longer with us, his spirit lives on and his american dream endures. he knew the best of our country is not all gathered in washington, d.c. it is here in our communities where families live and children learn, and children with special needs are welcomed and embraced. [applause] thank you for that. [applause] [applause]

>> the best of america can be found in places where patriots are brave enough and free enough to be able to stand up and speak up and where small businesses grow our economy one job at a time. we know that america is still that shining city on the hill. i believe that god shed his grace on thee. we know our best days are yet to come. tea party nation, we know there is nothing wrong with america that we cannot fix as americans. from the bottom of my heart and speaking on behalf of those who would encourage this movement, this movement is about the people. çówho can argue a movement about and for the people? the political power is inherent in the people and government is

supposed to work for the people. that is what this movement is about. [cheers and applause] from the bottom of my heart, i thank you for being part of the solution. god bless you and god bless the usa. thank you. [cheers and applause] >> run, sarah! run, sarah! run, sarah! run, sarah!

>> i am going to -- are we on? >> god bless you. thank you. >> i could be wrong here, but i think you all like her. [applause] >> let's sit down. >> a few weeks ago, we worked out something where there would be a brief question and answer session. we asked the folks on tea party nation to submit questions to ask governor palin tonight. she has graciously agreed to answer a few questions. we're going to take a few minutes and answer a few questions.

is this your first time in nashville? >> it is. i brought one of my daughters with me. she wants to find miley cyrus. and taylor swift. my first time here. >> miley cyrus lives not too far from where we live. i am sorry we could not work that out. next time. a few questions. these have been submitted by the folks on tea party nation. how do you see the future of the tea party movement? do you see this movement becoming part of the republican party or becoming a third independent party? >> the republican party would be smart to try to absorb this movement. it is the future of politics. it is a beautiful movement because it is shaping the way that politics are conducted.

you have both party machines running scared because they are not knowing what they are going to do if we do not have tea party support. they know they will not succeed. >> outstanding. [applause] at the convention here, we have at least three people who are running for congress. if you had the chance to interview some of these people, what questions would you ask them to determine whether or not you would support them? >> are we taxed enough already? if they say yes, i'm going to ask, what are you going to do about it. we do not want to hear the top. -- hear the talk. we want to know they walk the walk, via a record that proves it to us. i want to encourage people without elected office experience, not some of elite resume in their back pocket, i want them to come out and run for office.

start changing the world. if they feel they have been taxed enough already and they make a commitment that they're they are going to do something about it and believe in limited government -- a lot of things that are detailed. the things on the periphery -- perhaps i would not agree with every single aspect of their agenda. if they have the basics down, it would be wise for us to be supportive. [applause] >> i am going to have to learn to wait to let people applaud. >> yeah. >> yeah. [laughter] it goes without saying, the endgame for the tea party movement for 2010 is a conservative house and conservative senate. i had the chance earlier to tell people that next year at

this time we need to see the title former speaker nancy pelosi and former senator harry reid. [applause] when we are successful and have a conservative house and senate, as soon as that happens, what are the top three things that have to be done? >> rein in spending. we cannot just freeze a couple programs. that does not do us any good. we have to rein in spending, jumpstart energy projects. we have heard so much about them. it is ridiculous that we have warehouses here in the united states of america -- rich resources, oil, gas, coal, we have to actually walk that walk, and allow them to come to development.

it is tougher to put our arms around, but allowing america's spirit to rise again. do not be afraid to go back to some of our roots as a god- fearing nation where we are not afraid to say, especially in times of potential trouble in the future, where we are not afraid to say, we do not have all the answers. we are callable men and women. -- fallible men and women. it would be wise of us to seek divine intervention again in this country, so that we can be safe, secure, and prosperous again. to have people involved in government who are not afraid to go that route. people who are not afraid of political correctionists.

they do not have to be afraid of the media if they were to proclaim their reliance on our creator. >> amen. we know conservatives are never harassed in the media. the following is clearly a hypothetical question. in the instance that there were ever to be a conservative who were harassed in the media, what would you say to them? >> plow right on through it. at the end of the day, who cares what an irrelevant, mainstream media is going to say about you? who cares? the political potshots they want to take at you for standing up and saying what you believe and proclaiming the patriotic love you have for your country. a lot of those in mainstream media,they do not want to hear that. at the end of the day, it really does not matter what they have to say about you. i really believe there are more

of us than they want us to believe. that should empower and strengthen us. plow right on through it, please. [applause] >> we have mentioned today is ronald reagan's -- or would have been the 99th anniversary of his birth. one thing he did in the white house was create this great majority that was based not on republicans and democrats, but he had a conservative majority in congress. what can we do to get conservative democrats, libertarians, independents on board with the tea party movement so that in 2011, it is conservative? >> it is pretty cool to see some of the blue-dog democrats peeking under the tent. they're finding out what this

movement is about. i am scared if i am not a part of this. the nice thing about the tea party movement is that it is not just a bunch of hard-core, registered republicans. i make a confession, my husband is not a registered republican. he is much too independent, but probably more conservative than i am. he is an example of many others who do not choose to be part of a registered party because they see the problems within the machine. they see some of the idiosyncrasies of the personalities who control the political machines and they do not want to waste time dealing with that. they are independent, but they are believers in the movement. i think you'll see a whole lot of independents and more conservative democrats who are emboldened and will say they will come out of the closet. i believe in it, too, they will say. [applause] as i talk about todd, and claim

he is not a registered republican, i need to apologize to the republican party. some people have said, you are a pretty weak republican spokesperson if you cannot get your husband to convert. he is much too independent. >> do not feel bad, my wife left the republican party, too. we hear about the obama plan. what is the palin plan? >> it is quite simple. i get a kick out of that. it drives some of the elitists crazy. i get a ticket out of it when they sang --i get a kick out of it whenthey say i am too simple- minded and too plain-spoken. my plan is to support those who understand the foundation of our country. when it comes to the economy,

it is free-market principles that reward hard work and personal responsibility. [applause] when it comes to national security, as i ratchet down the message on national security, it is easy to sum it up. i repeat ronald reagan when he talked about the cold war. we can apply it blew -- apply it to our war on terrorism. bottom line, we win, they lose. we do all we can to win. [applause] >> for you, national security is a more personal issue. how is your son in the army doing? >> he is doing awesome and i am so proud of him and the decision he made. there are many men and women in uniform.

these people could be doing anything or nothing else in our world, and they have chosen to serve something greater than themselves. they are not just wasting time in the young years of their lives. they get it. they understand the need to protect our security and to really be willing to die for our freedoms. when i talk about my son -- and he does not like me to talk about him. he will chew me out if he hears about this. >> he may be watching. >> i do not think he has ever turned on c-span in his entire young life. [laughter] i am proud of him and the decision he has made. they are serving something greater than themselves. as he would tell me, do not pick me out to thank me. thank those i serve with and those who have gone before me to allow me to do what i am

doing. [applause] >> 2010 is an amazing year. it is an election year. we just got through illinois primaries. i am not sure what is coming up next. are you going to be endorsing specific candidates? >> i will. i will attend as many events for these candidates as possible. i will probably tick off some people as i get involved in the primaries. i want to encourage contested, competitive primaries. this is how we find the cream of the crop. let's not be afraid of contested primaries. i am going to assist in some of those. i will get out there and campaign. i am campaigning for the message -- this commonsense,

conservative message. >> i can think of two words that frighten liberals -- president palin. [cheers and applause] >> run, sarah! run, sarah! >> we may not get to finish this. it seems to be two words that get everybody on their feet. this is going to have to be our last question. if you are president tomorrow, what the three problems would be the first you tackle? >> we talked about the energy projects that have to be introduced.

they need to come to fruition. we're not just talking about them. and we talked about the spending cuts that have to take place and the growing debt we need to get our arms around. i am all for the bipartisan work effort that is needed in washington, d.c. one issue that has to be tackled is to not make the promises about bipartisanship if the promise cannot be fulfilled. if there is no intention to work with the other party -- they are so fundamentally disagreeable. like the takeover of private sector health care, one sector of our economy. do not take it. do not pretend like you want to work with the other party on that. [applause] that this trust that is built -- this is what i would work on if i were in the position -- the

distrust makes us distrust all of the decisions coming out of washington. it makes us a less secure nation. [applause] >> i know that you have to go. thank you so much for coming down here. we really appreciated. you may have to fight your way out of here from all the people who do not want you to leave. >> i appreciate the opportunity to be here. i have to apologize if i had anything to do with some of the controversy the media has spun up. >> what controversy? >> i am happy and proud to take what ever speaking fee and turn it right back around and give it to the cause. this is not about money or a title or a leadership position in this movement.

it is about the people. i will live and die for the people of america, whenever i can do to help. this party that we call the tea party, this movement, as i say, it is the future of politics in america. i am proud to be here today. thank you so much. [cheers and applause] [cheers and applause]

>> fbi director says that a suspect in the christmas day attended airliner bombing as resumed talking with authorities. comments came during the senate intelligence committee hearing on national security threats. other witnesses include the national intelligence director and leon panetta. this portion is about to two hours. -- is about two hours. [no audio]

[no audio] >> the hearing will come to order. the committee today in open session to receive the coordinated analytic assessment of the intelligence community of the threats facing the united states. we welcome our witnesses.

admiral dennis blair, director of national intelligence, who will provide a summary on written statement he has submitted on behalf of the intelligence committee. director of the cia, leon panetta. the director of the fbi, robert mohler -- mueller. lieutenant general ron burgess. and ambassador john dinger. this hearing presents an annual opportunity to focus on the threat our nation faces and provides a rare forum for the public to receive strategic intelligence analysis. right now, the top threat on everyone's mind is a heightened terrorism threat, especially against our own homeland. we have held hearings in the past two weeks to review the

christmas day attempted attack by umar farouk abdulmutallab, and the fort hood shootings by nidal hasan. we never viewed the attack on the base in eastern afghanistan on dec. -- we have reviewed the attack on the cia base in eastern afghanistan in december. these events are reminders of the ongoing threat the nation faces from within and from without. it also reminds us of the challenges and dangers with which the intelligence community must deal on a daily basis. we have been briefed on the continuing terrorist threats. i want to thank director muller for our discussion yesterday. i received a briefing on the status of intelligence is received as part of those investigations. i know this is a very sensitive matter.

i will ask members who have questions relating to counter- terrorism operations to hold them until we can go to a classified session at the end. . end. the written testimony submitted to us today provide an important reminder stating that, and i quote, "the recent successful and attempted attacks represent an evolving threat in which it is even more difficult to identify and track small numbers identify and track small numbers of terrorists recently recru and trained in short-term plots than to find and follow terrorist cells engaged in plots that have been going on for years." our committee stands ready and wlg to provide the tools, gentlemen, you need to make sure our counterterrorism efforts are the very best they can be.

despite the christmas day and ft. hood intelligence shortcomings, the intelligence community has thwarted numerous terrorist plots and apprehended several suspects in 2009. and i'd like to tick a few off. al qaeda operative najibullah zazi was identified through intelligence work as having trained in pakistan and conspiring with other to detonate a bomb in the united states. two of associates were arraigned in january, and his father also has been charged. secondly, chicago-based davidheadly was identified -- david hedly of identified in his involvement in the attacks on mumbai in 2008, and for his connection to a plot to bomb a danish newspaper. three, 14 people were charged in

minnesota this year for recruiting somali american youth to travel to somalia, train, and fight alongside terrorist groups. in october, tariq majana was arrested in boston and charged with plotting to attack shopping malls and seeking out terrorist training. in september, hosam mohar hussein smadi was arrested for plotting to bomb a dallas skyscraper. and earlier in the year, daniel boyd was identified as having traveled to terrorist training camps and plotting an attack on u.s. military personnel at the quantico marine base. he was charged along with six others on charge that include conspiring to provide material support to terrorists. so clearly, there have been both counterterrorism successes and a

few failures. also clear is that the threat to the homeland is high, and the terrorist groups have identified ways of getting operators and facilitators into the country without raising suspicion. let me shift from terrorism to the topic the dni blair highlights in his written testimony. the threat to our government, public, and private sector from cyberespionage, crime, and attack. director, your description the problem is very blunt, and i believe it to be accurate. the need to develop an overall cybersecurity strategy is very clear. this committee has carefully examined cybersecurity through five hearings in the past year. carefully reviewed various cyberattacks and penetrations from foreign actors. and appointed a cybertask force of three members. senators whitehouse, mikulski,

and snow, to conduct a six-month analysis of our government's current plans. the task force will be reporting to the full committee shortly. it is my belief, and i think the belief of others, that certain nations represent serious cyberattack potential to our country. and i believe that robust diplomatic efforts should be made with the goal of effecting international agreements among key actors regarding cybersecurity. the time has come to look at the value of a cybertreaty with built-in mutual assurances of behavior. it is noteworthy and commendable that the state department has for the first time demarshed another country for its cyberactivity. it is also worth noting that this country has stated its willingness to cooperate internationally on these

matters. there are far more developments around the world that threaten the national security interests of the united states. the past year saw a taliban surge in afghanistan that led to the president's decision to shift strategy and increase troop levels. pakistan continues to be an uneven partner in our counterterrorism and counterinsurgency efforts. somalia and yemen are failed and failing states that require enormous attention. these and manier threats are outlined in the dni's testimony. so now let me turn to the vice chairman with whom i have had the pleasure of working this year, and i thank him very much for his cooperation on all matters. mr. vice chairman? >> madam chair be let me welcome our witnesses and thank you for the very open and generous way that you and your staff have worked with the minority.

we believe that this is the way we can achieve what we're supposed to achieve, bipartisan, nonpartisan oversight of the critically important intelligence community. this hearing today comes at a time where the importance of the national security threats are currently highlighted by recent events. from the terror plots disrupted this fall by the fbi, to the deadly attacks at ft. hood and the little rock recruiting station to the failed attack on christmas day, we have seen an alarming number of terrorist threats in particular within and against the homeland and their being carried out. as members and witnesses are aware, this will be my last annual worldwide threat hearing as i intend to depart from the senate upon the completion of the 111th congress. no applause, please.

ironically, i believe we find ourselves today in the same place we were in when i first joined the committee years ago, analyzing deficiencies within the intelligence community to make recommendations for changes that will help us better prevent plots and connect the dots. so as we embark on our final year together, i offer these thoughts for the path forward over the next year and into the future. first, our priorities congressional oversight committee members be and your constant challenge as leaders of the i.c. is to focus on threats to the homeland and to our interests overseas. al qaeda, its affiliates, and other terrorist organizations today have a global reach. in pakistan, afghanistan, algeria, the horn of africa and elsewhere. terrorist operatives train and prepare for attacks against us and our allies. our focus must be on these entities wherever they operate. this is a global conflict and,

yes, it is a war. a war of terror. these radicals have declared on america and the west. the intelligence community must lean forward in this war, and we on congressional oversight committees must back you up. when we ask you behind closed doors to be aggressive and we do that quite freely, it is our responsibility to stand behind you when the doors are open and to support your actions when they are under the spotlight. and i pledge we will try to continue to do so. at the same time, our committees will hold the i.c. accountable, and the i.c. must hold itself accountable because the threats we are dealing with are far too dangerous to tolerate any kind of sloppy work or careless mistakes. as the saying goes, the terrorists only have to get it right once to be successful. you and we have to get it right all the time. we must use all avenues available for obtaining the

crucial information we need to protect our people. and that includes a full and humane interrogation of captured suspects prior to or without miranda rights. and i emphasize enemy combatants must be questioned to the fullest by the intelligence community before -- if they are mirrandized before they are mir an diesed and given an opportunity. treating terrorists like common criminals can cost us life-saving intelligence. while i have no doubt that the fbi obtained useful information from the christmas bomber, we just don't know how many timely leads have been lost as a result of his refusal to cooperate after he was mirandized. this approach gave his terrorist colleagues time to cover their tracks while americans remained at risk. any fbi interrogator or other interrogator will tell you that

50 minutes is not long enough to build rapport and get all needed intelligence. any interrogator will tell you that you study up on your subject and read everything in the file first before you are ready to go in for a full and productive interrogation. that takes time, and that time must be devoted to the preparation prior to effective questioning. we must plan ahead for our we can bring intelligence to bear in interrogation whether at home or abroad. timely action demand timely intelligence, and we must ensure that all intelligence tools are used when we find ourselves in a similar circumstance again. i am frankly appalled. i am appalled that one year after the president ended the previous administration's interrogation program that there was nothing in place, nothing in place to handle the sort of situation presented by the christmas day bomber. i submit to our witnesses today that we cannot afford to make

that same mistake again. i presume that the high value interrogation group that is still coming on line will solve a number of these problems, and rest assured this committee will be following this closely to ensure that it does. similarly, we cannot let campaign promises blindly guide us -- guide decisions no matter the -- what the consequence is to our society. the idea of closing the guantanamo bay detention facility cannot become more important than protecting our american citizens from the terrorists imprisoned there. and we cannot put americans at risk by letting detainye after detainye rejoin the fight. that of a mistake made in a prior administration. that mistake must not continue to be repeated today. the top two al qaeda operatives in yemen today just as one example are both gitmo graduates that have returned to the fight despite the fact they were

supposedly in a rehab program. we also must not let our desire to showcase american justice outweigh the requirement to protect our citizens. terror show trials in new york or anywhere else are clearly not the most expedient way to try the 9/11 suspects. it has taken a while for some to wake up to this reality, but i believe mayor bloomberg's evolution on this topic and his comments from this past week are telling. some in the administration have said they want to try them now in a rural area. well, i'm from a rural area. and speaking for a rirl state, i can tell you that we want nothing to do with those trials in our state. aside from the security concerns and costs, domestic terror trials have exposed sensitive, classified information in the past and have given intelligence to al qaeda. the examples are well-known. i need not recount them. former judge, former attorney general mike mackazie spoke

eloquentably that. some have tried to contradict him but have found no contradiction. it is an unacceptable risk especially since the congress has passed and the court has upheld the military commission process which ensures that even a foreign terrorist/enemy combatant can get a fair trial. now turning to afghanistan. we must win there. we cannot afford to fail. 30,000 troops to implement general mccrystal's counter interinsurgency step was important, and it's the best way to eliminate al qaeda and the taliban insurgency in pakistan. but the intelligence community must rally around general mccrystal's strategy and continue to shift from a ct-only focus to both a c.t. or counterterrorist and a counterinsurgency approach.

there are other tourettes that are serious, and terrorism and the wars in afghanistan and iraq are by no mean the only threats facing our community. for more than a decade, the intelligence community has debated iran's nuclear intent and all the while iran has progressed closer and closer to a nuclear weapons capability. today, iran seems to be capable of producing highly enriched uranium. and that, gentlemen, is the long pole in the tent of a nuclear weapons program. and we are left waiting for a nation that provides support, training, and weapons to our enemies in iraq and afghanistan, along with our allies like hezbollah, hamas,@@@@@@r)dr

turning to how we spend the money to go back to the threats that we face, we must be good stewards of taxpayer resources unless we start moving in the right direction with big overhead purchases, we will continue to waste billions of dollars on one trick ponies, some of which never come to fruition. those of you in the community know the examples of large and openly unsustainable programs that have followed this pat. the nro director told madame chair and i last week that he agreed that the committee's approach to a cheaper and more versatile acquisition that was recommended for years was moving forward to execute the program. that means that we were very surprised yesterday in the

president's budget that this option is not even funded. i believe that that is a mistake that our committee will be closely following and we hope that we will be able to correct that. finally, director blair, i was encouraged. finally, director blare, i was encouraged to see in your written opening statement you spent the first two and a half pages discussing cyber threats. recent cyber attacks against google underscore the importance of sound cyber policies and initiatives. and we know that the intelligence community recognizes this threat as real and of highest importance and goes well beyond what we are discussing publicly. yet, to my chagrin, the administration solution has been to create another position i'm afraid as a figurehead, a cyber czar with less than a half dozen

staff. in a few years, i believe we can lament the fact that more was not done now to confront this challenge when we had the chance. senator feinstein and the chair said and they comprise the cyber working group on our committee and should have much to say on this cyber topic. i believe all on the committee agree that it's very real, very serious and the administration needs to treat it as such. in conclusion, the greatest danger comes from the unknown. the threat not yet on the radar. further threats are unlikely to be repeat performances, so we must create new methods and trade craft to recognition terror threats we haven't seen before. unfortunately, the process of intelligence community reform, legislatively is not complete. congress gave the dni a load of responsibility without the

authority. the squabble between the dni and the cia director which unfortunately surfaced earlier this year over who will serve as a dni representative over this past year is just another disappointing example to me that we don't have the right balance and clear rules for the ic. we must get the balance right if you're expected, mr. director, to meet the challenges ahead. congress still has work to do in reforming itself in this regard. i pushed a proposal for seven years, one that 14 members of this committee signed on to a few years ago that would provide better coordination between the authorization and appropriations process for intelligence in the senate by creating an intelligence subcommittee on the appropriations committee. the 9/11 commission and others have said we have to bring the authorization and appropriations together. unfortunately, there are some who still strongly oppose making these necessary changes within the congress to serve our

intelligence community better. i would hope to see progress on that. i'm not holding my breath. but it still needs to be done. additionally, i would mention that the project on national security forum led by jim lockner had made excellent recommendations concerning long-needed national security reform within the u.s. government. the current administration like national security adviser jim jones, deputy secretary of state james steinberg, ambassador to the united nations susan wright among -- rice -- among others all sat on the guiding coalition of that project before assuming positions in this administrat n administration. the administration has not shown any interest in making the necessary changes that the project rightly recommended. i hope they're listening today because we need some leadership to make sure that we are better

equipped to face the challenges of tomorrow. as we remember the sacrifices made by the men and women fighting these threats on the front lines every day, including those who so tragically paid the ultimate price recently, our primary concern must be to prevent attacks on the united states and to insure the safety of the american people as well as our friends and interests abroad. today's hearing will give us a good idea how we can measure up. i thank you, madam chair, and look forward to hearing the testimony of our witnesses. >> thank you. here's how we'll proceed, gentlemen. director blare if ural begin representing the entire intelligence community. we'll then go to mr. panetta, mr. muller and mr. dinger for five minutes or so each. and then each one of us will proceed with questions. so director blare, we would be delighted to hear from you.

>> thank you, madam chairwoman, bond members of the committee. in providing with you this intelligence community annual threat assessment, i'm proud to represent the thousands of patriotic, highly skilled, brave professionals of the world's finest intelligence team. and we're especially conscious of this as we mourn the recent loss of seven of our officers and care for a dozen others. all intelligence agencies participated in preparing my statement for the record. and i'm pleased to be accompanied by my colleagues here this afternoon. every day as we know information technology brings gadgets and services that make our lives better and more efficient. however, malicious cyber activity is growing at an unprecedented rate assuming an extraordinary scale and sophistication. in the dynamic of cyberspace, the technology balance favors

malicious actors rather than legal actors. it's likely to continue that way for quite some time. the growing role of international companies providing software and hardware for private met works even for sensitive u.s. government networks increases the potential for mischief. the recent intrusions reported by goog rl yle are yet another p call. cyber crime is on the rise. global cyber bank and credit card fraud has serious implications for economic and financial systems. attacks against networks controlling critical infrastructure, transportation, financial networks, energy could create havoc. cyber defenders, just the facts of the matter are cyber defenders have to spend more and have to work harder than cyber attackers. and american efforts are not strong enough in this regard right now. the united states government and

the private sector who are interlinked in this space have to insure that adequate defenses are in place. let me turn to the global economy where the trends are more positive. it was a year ago that i sat here and warned of the dangers of a global depression. but an unprecedented policy response by governments and central banks around the world laid a foundation for global recovery that most forecasters expect will continue through 2010 although high unemployment and pockets of difficulty will still persist. not all countries have emerged through the -- from the slump and several of them are important to the united states. pakistan, the ukraine are still struggling to put their economic houses in order. our allies are trying to insulate spending on afghanistan where they are -- many of them are helping with this from budget cuts. china is emerging with enhanced clout. its economy will grow from being a third of the size of that of

the u.s. to roughly half by 2015 and earlier date than we previously projected. this is assuming it maintains the rapid growth which it appears to have the ingredients to do. last year beijing contributed to the g-20s pledge to incruise imf resources. it deployed naval forces to anti-piracy forces in the gulf, it supported a new u.n. security council sanction resolution against north korea. however, beijing still believes that the united states seeks to contain it, seeks to transform it, and reinforces chinese concerns about internal stability and about perceived challenges to their sovereignty claims. china continues to increase its defense spending, preparation for a taiwan conflict involving u.s. intervention continues to dominate the modernization and contingency plans and china also increasingly worries about how to protect its global interests. turning to a violent extremism, as you mentioned madam

chairwoman, we have been warning in the past several years about al qaeda itself, al qaeda associated groups, and al qaeda inspired terrorists striking the united states. and we've seen the reality of all three of those characteristics in the examples that you cited in your opening statement. the violent extremist threat al qaeda at center is evolving. we have made the complex multiple team attacks very difficult for al qaeda to pull off. as we saw with the recent successful and attempted terrorist attacks, however, identifying individual terrorists, small groups with short histories using simple attack methods is a new degree of difficulty. we did not identify mr. mutalab before he boarded the flight on christmas day. we should have and working to improve so that we can.

on a positive note, only a decreasing minority of muslims support violent extremism according to numerous polls within the muslim community. but even with decreasing and smaller amount, al qaeda's radical ideology still seems to feel strongly to disaffected muslims and suicide bombers and other fighters. and this pool includes americans, unfortunately. although we don't have the high level homegrown threat that faces european countries right now, we have to worry about the appeal that figures like they exert on young american muslims. however much we improve our intelligence, and we intend to improve it more than it is, however, we cannot count on it to catch every threat. so intensified counter-terrorism efforts in the afghan-pakistan theater and around the world like yemen and somalia and elsewhere is critical to further menacing the threat. we have to continue to work without eyes and partners in this campaign.

security measures and visa controls, aviation and border security, all these are important for a multilayered dynamic defense that can disrupt terrorist plans. let me turn to the outlook in afghanistan and pakistan. since january of 2007, the taliban has increased the influence and expanded the insurgency while -- >> director, can you pull that microphone -- >> over here? >> you fade out when you turn your head. >> all right. >> all right. >> thank you. >> as i sense for about two years the taliban has increased influence and expanded the insurgency while maintaining the hold on its tlehresholds. second, improving economic capability so that security gains will endure and

responsibility will be transferred to the afghanistans themselves. early successes in places like helmand where marines are deployed for several months, where excessive counter drug and economic programs are in place and local gofrnsance is competent show that we can make solid progress even when the threat is high. the safe haven that afghanistan insurgents have in pakistan is the group's most important outside support. drupting that won't be sufficient by itself to defeat the insurgency but disrupting insurgent presence in afghanistan is a necessary condition for making substantial progress. the increase in terrorist attacks in that country has made the pakistani public more concerned from the threat of islamic extremists including al qaeda. pakistanies continue to support military action against insurgents. islamabad demonstrated determination and persistence in combatting militants that it

perceived are dangerous to pakistan's interests. but it also has continued to provide some support to other pakistan-based groups that operate in afghanistan. u.s. and coalition success long-term incentives for pakistan to take steps against afghan focused militants. increased pakistani cooperation is more likely if pakistan is persuaded, the united states is committed to stabilizing afghanistan, we will ultimately have success. turning to iran, available intelligence indicates that tehran is keeping open the option of nuclear weapons, being done in part through various nuclear capabilities bringing it closer to nuclear weapon capabilities. they continue to develop their uranium enrichment program. information from the international atomic energy agency indicates that iran has

significantly expanded the number of centrifuges installed in their facilities. they have had problems operating there centrifuges, constraining their uranium base. the united states and other countries announced last september that they have been building secret enrichment facilities. overall we continue to assess that they have the scientific, technical, and industrial capacity to produce enough highly enriched uranium over the next few years if they choose to do so and, ultimately, to produce nuclear weapons, a central issue that is a critical decision to do so. iran also continues to significantly provide their own means of delivering nuclear payload. we do not know if they will eventually decide to build nuclear weapons and we judge

e to build y nuclear weapons. we continue to judge that iran takes the cost benefit approach in its nuclear decision making. we judge that this offers its international communities to influence tehran's decision making. the a rainian regime found itself in a weaker internal position -- internal political situation following last june's disputed presidential election and a crackdown on protesters. reacting to stronger than expected opposition and the regime's narrowing base of support, the supreme leader and president ahmadinejad and allies appear determined to retain the upper hand by force. they're moving iran in a more authoritarian direction to consolidate their power, however, they have not been successful so far in suppressing the opposition. madam chairwoman, this is the top layer of threats and

opportunities, other areas demand continued attention and focus. they include security in iraq on the korean peninsula, weapons of mass destruction, and challenges right here in the western hemisphe hemisphere, especially working with mexico and its efforts against the drug cartels. and i'm also prepared with my colleagues to discuss important transnational issues. really, it's the decree complexity of the issues and actors in state, nonstate that increasingly constitute one of our biggest challenges. the intelligence community is meeting these challenges every day both to policymakers and to units in the field both civil and military. in my year on the job, with an enormously impressed by the abilities, dedication and the results of the military professionals i have the honor to lead. thank you madam chairwoman. we'll be glad to answer questions after my colleagues have a chance to make statements. >> thank you very much, director blair. mr. panetta?

>> thank you, madam chairman, mr. vice chairman and members of the committee. thank you for this opportunity to be able to share our thoughts with regards to the threats both current and future that face this country. i think the director has presented a summary of some of the key threats that we confront. of those, i would share with you that my greatest concern and what keeps me awake at night is al qaeda and its terrorist allies and affiliates could very well attack the united states. that's the primary reason the president provided the mission that we follow which is the mission to disrupt, dismantle and defeat al qaeda and its allies. having said that, the biggest threat i see is not so much that

way face another attack similar to 9/11. i think the greater threat is that al qaeda is adapting their methods in ways that often times make it difficult to detect. we have done a very effective job at disrupting the operations. and i think intelligence confirms that they are finding it difficult to be able to engage in the planning and command and control operations to put together a large attack. what's happening, instead, is that they are moving to other safe havens and to other regional notes in places like yemen and somalia and others.

and what's happening is that they are pursuing an effort to try to strike at the united states in three ways. one is that they deploy -- they have deployed individuals to this country. we've had a series of arrests. i think the headley arrest is indicative of those that have been deployed here and continue to stay in touch with al qaeda. secondly, it's the concern about the terrorist who has clean -- "clean credentials." it doesn't have a history of terrorism that has come to our attention. mut they decided to make use of

somebody like that within a very short period of time that he arrived. i think they're going to be looking for other opportunities like that. and thirdly, there is the loner, the individual like hassan who out of self-radicalization decides that the moment has come to engage in an attack by himself. so it's the lone wolf strategy that i think we have to pay attention to as a threat to this country. we are being aggressive at going after this threat. we've expanded our human intelligence. we are engaging with our liaison partners and other countries to try to track these kinds of

threats. we obviously are checking and reviewing watch lists and other lists to determine who among them could be that potential lone wolf. and we are taking the fight to the enemy. and we will continue to do that. but in addition to the fight against al qaeda, we are also facing threats from other terrorist groups. terrorists like el shaba, hezbollah, hamas, other jihadist militant groups. and a particular concern is l.e.t. if they should conduct an attack against india could very well undermine our efforts in pakistan. we mentioned the directors

mentioned the threat of north korea and iran. we're concerned about the nuclear side. they also continue to export terrorism, providing weapons, providing support to a whole series of other terrorist groups. so bottom line here is that the war on terrorism is not just al qaeda. it is a series of terrorist groups that are basically confronting us. and it is the kind of changes that we see and their method after proeof approaching the united states is a very important threat we have to pay attention to. we are being aggressive. we are taking the fight to the enemy. and at the same time, we have to be agile. we have to be vigilant and we have to be creative in the way we approach the new threats. fundamental mission we have is to protect this country. it's the mission that people at

host gave their lives for. and it's the mission that the cia will follow because we believe our greatest mission is to keep this country safe. thank you very much, mr. panetta. mr. muller? >> thank you chairwoman, director blair and panetta pointed to the global nature of many of the threats we face from international terrorism in pakistan, yemen and elsewhere to cyber attacks to computer crime committed by international criminal enterprises. and what is striking is how many of these overseas threats reach directly into the united states. the events outside the united states often have immediate impact on our security here at home. as i discuss our mission in the overall threat assessment, i do want to highlight how quickly these threats are evolving and

how globalization has often led to the integration of these foreign and domestic threats. over the past decade, the focus of strategic terrorism threats has been south asia. the heartland of al qaeda. but now as director panetta pointed out, al qaeda trainers see the tribal areas of pakistan as less secure and this is led al qaeda to franchise into regional components in places such as north africa and the arabian peninsula. this evolution has been most rapid with al qaeda in the arabian peninsula which has changed from a regional group with links to al qaeda to a global threat with reach in american cities such as detroit. these changes affect the way we at the fbi think about the targets we pursue and what tools we need to pursue them. they also require us to keep changing continuously to meet the evolving threats of

tomorrow. the expansion of ideology has been proven to be consistent and global as demonstrated by the plots we have seen in the past year. those plots listed by the chairman and her opening statement. those cased demonstrate the global diversity of the new terrorism threats. some extremists were radicalized over the internet or in prison. others received training from known terrorist organizations abroad. they were of different ages and nationalities. a number were u.s. born. the targets these attacks range from civilians to government facilities to transportation infrastructure to our military both in the united states and overseas. the threat from cyber attacks as pointed out by director blair reflects the globalization and pace of change. in the past we focused primarily on state actors seeking national security information from our

military for intelligence services or seeking to acquire technology related to defense systems. but as the global economy intergrats, many threats now focus on economic or nongovernment targets as we have seen with the recent cyber attack on google. targets in the private sector are at least as vulnerable as traditional targets and the damage can be just as great. our focus on the cyber threat does not mean that we have seen a decline in classic intelligence and counter intelligence activities in the united states. the presence of foreign intelligence officers in the united states is not declining. and they're increasingly using nontraditional collection methods to gather information. these services continue to pose a significant threat and are counter intelligence mission remains a high priority for the fbi. chairman feinstein and vice

chairman bongd, i thank you for your support of the bureau. on behalf of the men and women of the fbi, we look forward to continue to work with you to improve the fbi and to keep america safe and thank you. i'd be happy to answer any questions you might have. >> thank you, mr. mueller. general burgi snchlt. >> madam chairwoman, thank you for this opportunity to be here today, to present the defense intelligence agency assessment of kunt r current and projected threa -- of the current and projected threats of the united states. >> there is a broad array of similar threats and challenges. as the united states continues to conduct combat operations in several theaters, the nation also faces the threat of terrorist attacks at home. simultaneously, we continue to face risk posed by other nations growing abilities to challenge our equally take theive military superiority in other regions much it's a time to significantly challenges the international system and department of defense.

therefore, our arms force ands dia must remain kog ncognizant. as the qdr states, the united states faces a complex and uncertain security landscape in which the pace of change continues to accelerate. al qaeda remains the most significant terrorist threat to the united states. al qaeda's propaganda attack planning and support of the taliban and al qaeda networks continues. the groups 's affiliate's continue to extend their terrorist groups reach and brand. al qaeda in the arabian peninsula is growing in size and broadening its repertoire of attacks. once focused mainly inside of algeria, it is conducting operations in neighboring countries. rebels in afghanistan increased last year. security declined because of an increasingly incapable insurgency.

the government's inability to extend security throughout the country and access to security in pakistan. originally concentrated in the southeast, the insurgency has spread west and north. afghanistan's security forces are growing and not keeping pace with the taliban ability to support the security vacuum. pakistan's federally administered tribal areas continue to provide insurgency groups with valuable sanctuary for logistics and recruitment. successful strikes against militant leaders have disrupted terrorist activity logistics. successful strikes had a disrupted terrorist activities but the groups are resilient. pakistan's military has demonstrated increased counter insurgency training and doctrinal adjustments but its pry order remains india. we have confidence in pakistan's ability to safeguard the nuclear

weapons. not wi notwithstanding high profile bombings by al qaeda and iraq, the country is on a generally secure path. the group remains the most capable sunni terrorist group though constrained by a lack of safe havens. it regained some freedom of movement following u.s. forces withdrawal from iraqi cities. iraq security forces conduct the majority of security operations independently but still require improvements in logistics, tactical communications, and intelligence, surveillance and reconnaissance. in iraq, iran continue to rely heavily upon the islamic revolutionary guard force and especially operations command to undermine u.s. efforts by providing weapons, money, and training to iraqi shia militants for attacks against u.s. personnel. turning briefly to nations, regions and trends of interests.

iran support terrorist groups and insurge ens in iraq, afghanistan, lebanon, gaza and elsewhere as a means to expand its own influence. frustrate regional rivals and impede u.s. strategy across the region. and invest heavily in developing ballistic missiles with greater accuracy and new pay loads. with more than 8,000 installed centrifuges, iran has enough low enruched uranium for a nuclear weapon if it further enriched and processed. china's military mod eshization continues with the 5:groug numbs of aircraft to employ the capabilities. china seeks military superiority along its periphery with military advantages in nar and naval power projection and in space. north korea remains unlikely to eliminate its nuclear weapon capability for the foreseeable futures. believing the weapons serve as a

strategic deterrent and leverage while also counter balancing the logistic shortages, aging equipment and insufficient training that plague its conventional forces. russia is proceeding about ambitious military reform. the effects of the global recession and asian industrial base, corruption, mismanagement and demographic trends will limit moscow's ability to realize the full benefits of the reform plan. but the sweeping organization will likely increase the military advantage over adjacent nations. in latin america, mexico remains locked in a violent struggle against drug trafficking organizations which pose a grave threat to the state. venezuelan arms purchases from russia continue. colombian organizations have reduced the guerrillas end strength by nearly 50% to approximately 8500 personnel. sustained pressure to splinter it until it poses less of a threat to democratic

institutions though it would remain involved in criminal activities. the threat posed by ballistics is likely to increase and grow more complex over the coming decade as they become more mobile, survivable, reliable, and accurate at great eer range. prelaunch survivability grows as potential adversaries strength their denial and deception methods. while dia's top wartime priority is to provide the intelligence way our kmocommanders. this agency concurrently retains a core responsibility to prevent strategic surprise and be willing to respond to a wide range of contingencies. that includes the most grunt and judicious resources, especially our people. both civilians and those in uniform. in visits with dia's four deployed civilian and army

personnel, i remain impressed by and thankful for their willingness to serve the nation in wartime. many are on their second or third deployment alongside our troops in harms way. some have been wounded by morter afakz. notwithstanding their sacrifices, they continue to serve knowing that the intelligence they provide saves lives and speeds operations. on their behalf, i want to thank this committee for your strong support and continuing conference in the defense intelligence agency and our mission. >> thank you mr. chairman, general burgess. ambassador dinger, if you'd be the wrap-up speaker, please. >> thank you, madam chairman. members of the committee, it's my pleasure to be here today to represent the bureau of intelligence research and state department. one of the smallest intelligence community elements, we consider ourselves to be mighty contributors to the secretary of state.

we're proud of our participation in the committee. >> apparently, you have to speak directly into the head of the microphone. >> i'll do that. >> thank you. >> our principle missions is to provide timely and accurate intelligence analysis that enables diplomacy to address threats and opportunities and to do so early enough so that policymakers can take action. the average analyst in inr has 11 years of experience and allows him to offer what we believe is an uncommon depth of understanding of the characters and issues that play in the world. inr is proud to put its analytical debt at the services of the secretary. through our intelligence policy and coordination staff, inr also insured that intelligence action tis is are consistent. and that other components of the

intelligence committee understand the information and analytical needs of the foreign policy decision makers. inr has other important missions. one is drafts as the executive agent for analytical outreach bringing outside expertise to bear in the most challenging intelligence and foreign policy issues of the day. inr's office of opinion research aims to be the u.s. government's foremost authority in worldwide public opinion. the written staple comprehensively addresses the global challenges before us. i'll take a few moments to highlight two areas that dni and others have already spoken to. and of which inr is supporting the paerlts of secretary clinton and intelligence committee and the united states government. first, counter-terrorism. terrorism remains a key focus for inr's analysts. we have a small but dedicated team of analysts in our office

of terrorism, narcotics and crime. they work closely with our regional analysts to produce all source strategic counter-terrorism analysis with nuance context and perspective. the second area i also want to highlight is cyber. in 2008, the state department sfa established a new office. inr cyber to analyze cyber issues and help coordinate the department -- help coordinate the department of cyber activities. currently inr's cyber collaborate rates across corridors in the state department and throughout the ic to strengthen cyber security. it is also engaging in other nations to establish norms to maintain the stability of and confidence in the internet. inr believes the intel jents community has an obligation to provide global intelligence conference. i want to very briefly mention two items. only one of which has been covered today in today's oral

statements. first, economic and political prokbres in africa sun even. varies greatly from nation to nation and still subject to sudden reversal or gradual erosion. the daunting array of challenges facing african nations makes it highly lukely ly likely in the coming year that new countries will face economic stress and will join on going and seemingly entrapable conflicts such as sudan and somalia. nigeria, for example, faces serious social economic and security challenges over the next year. new guinea can provide an example. many african nations risk humanitarian crisis. in some latin american countries, democracy and market policies remain at risk because of crime, corruption and pro governance. powerful drug cartels and violent crime undermine basic

security elsewhere. elected populous leaders in some countries are moving toward a more authoritarian and status political and economic model. madam chairman, members of the committee, inr will continue to think, analyze, and write strategically to identify for secretary clinton the threats, challenges and opportunities arising from a complex and dynamic global environment. we will work hand and glove with the rest of the intelligence community to insure the community of the united states. inr will strive to put intelligence activities advance america toward our foreign policy goals and protect us from threats. thank you once again for the opportunity to appear before you. i'm happy to answer any questions you have. >> thank you very much, mr. ambassador. to begin the questions, i'd like to ask a very specific question of each one of you if you would

answer it. the question is what is the likelihood of another terrorist attempted attack on the u.s. homeland in the next three to six months? high or low? director blair? >> an attempted attack, priority is certain, i would say. >> mr. panetta? >> i would agree with that. >> mr. mueller? >> agree. >> general -- >> yes, ma'am, agree. >> mr. dinger? >> yes. >> all right. that tells us something very clearly. i would -- there has been a response to the case that all suspected terrorists should be labelled enemy combatants and prosecuted through the military commission system if at all. candidly, my view is that president should have the flexibility to make a

determination based on the individual circumstances of the case, location of the terrorist activity, location of the arrest, the nationality of the suspect, whether fred crimes have been violated, et cetera. i'd like to ask this question, mr. mueller, what is the fbi's track record in gaining intelligence and collecting evidence to convict terrorists since 9/11? >> well, madam chairman, in your opening statement you mentioned many of the cases that we addressed last year. and a number of disruptions from dallas to springfield, illinois, charlotte, north carolina, the case in denver and new york and almost all of these cases, the intelligence we have gathered intelligence. some of that intelligence is evidence so that we could arrest, indict and continue to prosecute those individuals.

the -- since september 11th, we've had numerous disruptions and just about every one of these cases where there are two or more involved. one or more of the individuals have ultimately cooperated given the leverage of the criminal justice system to cooperate not just against the conspirators but also to provide intelligence as to other potential threats. and to the extent that we have had success since september 11th. it has been because we have been able to convince persons to provide intelligence, provide evidence on others who may be involved in the plot and persuade individuals both here in the united states as well as elsewhere in the world to contribute intelligence as well as evidence to disrupt plots and to assure that those who were engaged in the plots are successfully prosecuted and which has not been mentioned.

director, your saying that hezbollah is the largest recipient of financial aid training and weaponry and that the iranians senior leadership has cited them as a model for other militant groups. how has hezbollah increased its military arsenal since its 2006 war with israel? >> let me get some help from the general. overall, hezbollah is stronger now than in 2006 when the last war took place and they have developed politically. >> madam chairman, director, i would agree with this assessment. in fact they reinforced and work we inflate -- replacing quickly what they lost in 2006 in the war with israel. today i think that they are stronger and have improve themselves. . actually stronger and improved z

çóçóñiñiñi>> i congratulate youe excellent work the fbi has done in capturing and bringing to justice the people his captor was announced last fall. i would ask that whether you believed the questioning of an

enemy combat with potential knowledge of battlefield intelligence for the future can be done briefly or within a short time frame needed to give the customary miranda rights of a normal criminal suspect, a bank robber in the united states. criminal suspect, a bank robber, in the united states. do you agree with those in the intelligence community would said the only effective way of interrogating somebody like mutalab would be to spend the time to collect the information. otherwise available in the intelligence community,

background and what other intelligence may be available in order to question him effectively, to be able to ask him questions about issues where we know the answers, to see if he's telling the truth. and to confront him with other intelligence. do you believe that that is necessary in some cases? >> senator, let me talk generally and then also somewhat specifically about the events of christmas day. let me start off with the belief that we in the fbi, as everybody in this room, understands, knows the importance of intelligence. since september 11th, it has been the mission of the fbi to prevent terrorist attacks. not just indict and arrest and convict persons for those terrorist attacks but to prevent the terrorist attacks and

intelligence is key. if you look at the circumstances of christmas day, the plane came in at 12:00. the -- shortly there after we started out pushing out information relating to the events that had occurred on the plane as it went into detroit. we then, as i think everybody in this room knows and understands, he was arrested on the plane and taken to a hospital. we had agents from the joint terrorism task force go to the hospital. they were given an opportunity to talk to him before he went through surgical procedures. he had burned himself in trying to light the explosives. they had a window of opportunity. they exploited that wuindow of opportunity to try to find out if there were other bombs on the plane, whether there were bombs in other planes, who was responsible, and took that opportunity because i was given and there was an immediate need to have that information that

intelligence to determine what the threat was at that time. the doctors then took him in for surgical procedures. during that afternoon, there were discussions here amongst most of the agencies here as to what should occur down the road. although no specific instructions or consultations with persons at this table as to whether the individual should be mile an hour andized. we were then given an opportunity later that night to, again, interview him and after consultation or in consultation with justice department attorneys we determined to follow our protocols, protocols established by the supreme court in terms of how you interrogate and question individuals in custody in the united states. he was -- a team went in to talk with him. he talked for a few moments and then afterwards after he was given his miranda warnings, asked for an attorney and we discontinued the questioning. we felt we had to take that opportunity at the outset to gather the intelligence. it was not ideal.

we did not have much information at 3:30 in the afternoon when the plane came in at 1:00. we gathered information throughout the afternoon to do a better interrogation that evening. we have found over a period of time that the miranda warnings can but often are not an impediment to obtaining additional intelligence. and the story continues. we have been successful, very successful in gathering intelligence over a period of time with teams, persons from various agencies, the most recent example being the intelligence we got from david headley who was arrested in chicago for his participation in the copenhagen plot. but also subsequently indicated his involvement in the shootings. in mumbai. as in this case, as in all cases, we will continue to try to provide and provide -- or obtain, i should say,

information from mutalab. >> we will ask that. i'm asking the general procedure question. you're not saying that an enemy combatant that comes in to the united states has been ruled by the supreme court to be entitled to miranda rights before questioning proceeds are you? >> no. what i'm saying is that if a person is accepted by dod or prosecution before a military commission, he is not entitled under the procedures that are extent to miranda warnings. however, that has not yet gone up to the supreme court. and so there is a difference between having a person and the federal district court and the civilian courts and under military commissions. >> that's -- and that's the point. that's the point. many commentators and i have agreed that treating this person

as a common united states criminal when he was clearly an enemy combatant, i don't know how much more clearly you can be in enemy combatant by the germans who arrived in the united states in the early 1940s, nobody thought they were bank robbers coming in from germany to rob some banks. didn't treat him as such. and from the press reports of what we've seen, this was not your bank robber. he was not a car hijacker. this person was a enemy combatant. how -- who ultimately made the decision to mile an hour andize him? who is the individual? where did that decision rest in the chamber? >> it rested in with the head of our counter-terrorism division along with attorneys from the department of justice. >> so the department of justice decision to mile an hour andize? >> no, it was a combination of

our providing the facts to the department of justice and in consultation with the department of justice making a decision that he should be mile an hour a -- read his miranda warnings. >> while other agencies took part in it, we have heard that they felt that they needed to have more opportunity to question him. >> on that score, i'm as strong for getting as getting as much intelligence remotely connected with terrorism much less xmp that carried a bomb into the country. i'm -- but i think that we need a -- we need to have a flexibility of the tools that we have available to use. i'm not convinced that you can make a -- in fact i'm convinced you cannot make a hard decision that everything should be taken through a military tribunal or everything should be taken through court. there are decision that's have to be made in which you balance the intelligence with.

requirement for prosecution and the sorts of pressure can you bring on to the people that you arrest in either -- in either forum. it's going to be a decision made at the time. i think the balance struck in the case was a very understandable balance. we got good intelligence. >> i disagree very strongly with that conclusion. but i agree with you that there should be -- there should be a decision made after consultation with the relevant agencies and the intelligence community when an enemy combatant comes in before the department of justice gives the order to mirandaize him. he is an enemy combatant. the decision ought to be made by the intelligence with the participation in the intelligence community whether he thinks future safety of the united states would make it imperative to question that enemy combatant before getting

him a lawyer. i see my time is up. >> let me just say that a full member of the intelligence community, he is one of the brothers. >> but he reports to the attorney general and you, mr. director, in my view should be the head of the intelligence community. that's -- we haven't made it clear, we need to make that clear. >> thank you very much, mr. vice chairman. senator rockefeller? >> i don't relevant initial pursuing this. but in that it has become a cause, i think it's important to. i agree totally, director blair, with what you said. it should be done on a case by case basis, nothing should be ruled in, nothing should be

ruled out. the instinct on the part of some that the only way that you can correctly get intelligence and then prosecute the enemy combatant or whatever you want to call them is through a military commission. i think their record is they've condemned three and two of them are gone. on the streets. you, through the criminal justice system, director mueller, have prosecuted hundreds. and they're around or in jail. let me just ask, director mueller, your experience as fbi director in the eight years since 9/11, and you've been there every single one of those days, have terrorist suspects provided valuable intelligence

after they have been mirandized? >> on a number of occasions, yes, sir. >> case by case. >> case by case. there are two cases. one that was already mentioned, david headley out of chicago which is one of the more recent ones. back in 2004 there was an individual that provided substantial intelligence. >> on the flip side, do terrorist suspects always automatically come forth with intelligence unless and until they are mirandized? >> no, it differs case to case. circumstance to circumstance. >> thank you. is it true that depending on the circumstances in some cases the best method for gaining intelligence is by charging the terrorist with a crime, mirandizing them and conducting a thorough criminal investigation? >> we have found that the system of justice and the united states which allows for consideration

for contributing intelligence and information and credit for that is a powerful incentive to persons to provide truthful actionable information evidence and intelligence. you have other countries that don't have the same system of justice. will is no insentive to provide the intelligence and the person stays in jail without any inventive to provide intelligence and without providing ultimately any intelligence. so in case after case here, we have been successful in entering into some sort of agreement with the defendant and having that defendant provide actionable intelligence. >> i don't want particularly an answer from any of you on this. but it is my impression having studied this some that the military commission's process for prosecuting is relatively

unformed. and in a state of plague. it is not an experienced professional process such as you have at your disposal. it may work very well. it may not work very well. i'm not talking about the getting of intelligence. i'm talking about the prosecuting. i'm simply gfg yiving you my opinion. recognizing that the information is at stake here, can you tell me -- you answered this already. i want it on the record, if he ha >> on christmas day itself he responded in permission, answers to questions, and to the extent we go into more detail, i would ask that we do it in closed session. >> i understand.

in your professional judgment, i would say to director blair, and you have sort of answer this, but i would like it again on the record, because i think this is a debate which is spilling most unhelpful lee across the talk shows and beyond. in your professional judgment, are there compelling national security reasons to prosecute some federal -- some terror cases in federal court rather than a military commission? in a military commission? and on the other side, would there be some cases where you i military commission? or are you familiar enough with their processes to make such a recommendation? >> senator, it's not my -- it's not my responsibility or do i have a great deal of expertise in the venue that's chosen for

prosecution. what i'm interested in is getting the intelligence out so that we can do a better job against the groups that send these people. and as i've seen intelligence come for -- from a variety of interrogations, primarily based on the skill of the interrogators and there are good ones in many different -- in many different places. and by the degree to which we back them up and back them up quickly with an intelligence team which can -- which can help them with their requirements. i think that's the key thing from my point of view. >> then i would ask both of you, and actually of all five, it seems to me that what we come down to in this brief interchange is that this should be done on a case by case basis, based upon what seems to be best, according to professionals who carry the responsibility and the judgment for making those decisions. should it be a criminal justice? should it be military commission? would you agree with that?

>> i think that decision is bound up in the interrogation -- in the interrogation which is what i care about. so i think, yes, it should be a rapid flexible case by case balancing. the requirement for intelligence with the requirement to put these people behind bars and not let them go free that is what we need. >> director mueller? >> i think our history has been that the decision whether or not to proceed in a federal district court or in a civilian court versus a military commission is a weighty decision. we've had two occasions where it's happened in the past where somebody has been taking out of civilian courts and put into the military courts and then ended up back in civilian courts. amari and padilla. and so, yes, the differences in procedures for interrogation is one factor, but there probably are a number of other factors

that need to be weighed by the justice department and the executive before that decision is made. and i'm not certain that it is a decision that can be made very quickly because there are a number of competing factors. and one would want to take some time, i think, in order to sort those factors out. >> but in the end, this is a decisions that should be made by professionals, according to their responsibilities and according to the facts of the case. >> yes, but ultimately, it is the attorney general and the president making decisions as to -- >> but what i'm saying is we should not limit the president by saying it has to go here or it has to go there. >> absolutely. >> he should not be limited. >> i thank you both. thank you, madam chairman. >> thank you senator rockefeller. senator hatch? >> thank you madam chairman. i'd like to thank all of you for the hard work that you do do for our country and for our people. you are all great people in my eyes.

the director blair, let me just start with you. a few minutes ago, we received a -- from your office, a copy of a letter signed by john brenen who is assistant to the president for homeland security and counterterrorism to speaker pelosi on the secretary of the closure of guantanamo and the transfer of detainees abroad. now the the second paragraph of the letter states the following. the professional assessment of our military commanders and civilian leaders of the department of defense is that closing the detention facilities at guantanamo is a national security imperative in the war against al qaeda. secretary gates and admiral mullen and general petraeus have all stated closing guantanamo will help our troops by eliminating a ponent recruiting tool. the word imperative implies something that has to be addressed for an immediate

reaction. now director blair, i concur that terrorist propaganda does use guantanamo as a theme. it also uses our close relationship with israel. but i don't think we're going to change our policies toward israel as a result. and by his assertion or this assertion by mr. brennan, let me just ask you these specific questions. is there any intelligence or analysis that you can share here or provide in closed steering that proves, indicates or even suggests that al qaeda would change its plans and intents towards us if we close guantanamo? >> i don't think it would change plans or intent, but it would deprive al qaeda of a powerful symbol and recruiting tool which it has actively exploited over the years. >> well, just because that --

they would have one less recruiting theme is there an intelligence or analysis that the threat from al qaeda would be diminished? >> the extent to which they didn't -- weren't able to recruit people who were -- who the guantanamo symbol helped them to recruit, they would be weaker without it. >> is there any intelligence or analysis that you are aware of that specifically indicates the u.s. forces abroad would be under any less threat from al qaeda were guantanamo closed? to be closed? >> you are a much better lawyer than i am, senator hatch, but what i'm trying to say it's a exactor that helps the enemy that if we can -- >> i'm not -- yeah, i'm not trying to give you a rough time, nor am i trying to examine you. but i am trying to establish that, my gosh, nothing is going to change their attitude towards us. tlair lot of things that we do that they don't like, including our friendship with israel and some other countries in the middle east. arab countries.

let me ask you this. have you ever provided any intelligence to our policymakers that supports the notion that the homeland or our troops will be safer after guantanamo is closed? >> we provided intelligence and i assess, senator hatch, that among the factors that weaken weakened -- among the things we can do that would weaken al qaeda would to be close gone town me and diminish the -- and diminish the emotional and symbolic support that that gives them in the pool of people they try to recruit in order to come against us. >> isn't it true that al qaeda used to prosecute -- the prosecution and imprisonment of the blind sheikh as a recruiting tool that al qaeda members have said they were inspired to attack us because of that incarceration. you know that's true.

is there any intelligence that suggests al qaeda would not use a prison located in the united states as a recruiting tool? i've been to guantanamo. it's pretty nice compared to illinois, where they want -- the place in illinois where they want to put them. it will be nice and cold in the wintertime. all i can say is that i imagine there will be a cry that we're not fair by bringing them here. >> yes, i'm sure there will be stories about wherever they are incarcerated, but i'm thinking of books that have been written by former detainees that are passed out, testimonies on the internet that guantanamo has achieved a sort of mythic quality which helps al qaeda. >> well, i think the point i'm trying to make is no matter what we do, they're going to

criticize us. we have -- we've got a very significant courthouse down there at guantanamo that can try these in a military commission. we've got -- we treat them very, very well down there. some of them probably are treated better than they've ever been treated in their lifetimes. no matter what you do, the terrorists and al qaeda and taliban and others are going to complain and say that we're not doing it right. seems to me crazy to, you know, to take the position because guantanamo has been a recruiting tool that we ought to xloes it when in fact it meets basically every need that i think we need in handling these matters. i have a lot of other questions, but i think i'll submit them in

writing. i'm really concerned. we've seen what's happened just this past week with regard to the desire to hold the trial in midtown manhattan. and now there's a great desire not to. as a trial lawyer, i can tell you right now that there are all kinds of approaches that could be taken that would be better than trying khalid shaikh mohammed in this country. and i think of the zacarias moussaoui case. four years to try it, or to go through the whole process. he ultimately gets off because one juror didn't believe in the death penalty. and during that trial, he was taunting families of those who had been killed and using it as a propaganda device to look like

he was a hero when in fact he was nothing but a murderer as the 20th hijacker. and i can't even begin to imagine what khalid shaikh mohammed would do if that trial is within the confines of the united states and not a military tribunal. i know that you have to be a loyal member of the administration, all of you. and i accept that. but i think it's a dumb, stupid approach to take when we have the facilities that are perfectly capable of taking care of these people and doing it in a way with a military commission that makes sense, is legal, after we corrected the military commission statute. and totally acceptable, it seems to me. >> would the senator yield? >> sure. >> that was quite a potent statement you made there. >> yeah it was. >> recognize that these five men

before us are members of an administration and, therefore, the implication they can only talk based upon what they've been instructed to say as opposed to being profound professionals in their field, as opposed to what they might actually feel. so are you saying they're just saying what they've been told to say? >> i've only been here 34 years, but i can say i've seen administration after administration executives support their administration. i don't blame them for that. let's their budgets depend on it. their jobs depend on it half the time. >> thank you. i don't have any problem with that. >> madam chairman, if i could finish. what i do have a problem is i think it's stupid to put the whole country through this mess by -- because the attorney general feels like it might be a better way of doing things when,

in fact, it's the worst way of doing things. >> if i may, now, you know, you're a good friend of mine, senator hatch. and i love and respect that friendship. but i've really god to correct the friendship. first of all the policy was really established during the regime of ronald reagan. and let me quote jerry bremer who was this president's ronald reagan's first coordinator for counterterrorism in 1986. this is what we said in a speech of november of 1987 to the council of foreign relations in tampa. he said terrorists are criminals. they commit criminal actions like murder, kidnapping and arson. and countries have laws to punish criminals. so a major element of our strategy and, remember, he is saying that on behalf of president reagan, that was the policy then. it was the policy of every

president since that time. george bush, and i can go chapter and verse on each individual whenever transferred from one custody to another. he had flexibility. he made changes, and now all of sudden it is a huge political issue. i think it is absolutely wrong to do that. now have had my say, and we can move on. >> i think it is a question of law. it is a question of how you approach the law. whether reagan did that or not, i do not know. all i know is that we did not have 3000 people killed in one day in new york city, and in 3 various incidents that occurred. these are vicious people. as i understand it, khalid

sheikh mohammed said he would plead guilty and that he wanted to be executed so he could be a martyr for his people. even having said that, he deserves at least an opportunity for a trial. i think when you have the capacity of doing it at a place ias good as guantanamo, it ougt to be done there, and should not be brought to our country. this country on our shores. and i think you are seeing more and more people getting upset about this. and it's not so much a political thing as it is just a domestic security thing that people are concerned about. >> thank you very much, senator hatch. >> madam chair, i just have to add, i don't think ronald reagan deserves to be in this discussion. you talk about 1986, that was before the activities of the '90s and when 9/11 brought a

whole new threat to our views. now when 9/11 happened, president bush took a number of actions. there are some that i think where he's been proven wrong, and i would hope we would learn from releasing detainees. that was wrong. he made the right decision when he did treat jose padilla as an enemy combatant and question him. but if we can't learn from our mistakes, no matter whether it's republican or democrat, when we're doomed to commit them again. and i just suggest that we are learning a lot. and i would hope that we would have a different approach next time and an enemy combatant lands on this soil. >> thank you. just for the record, i am going to submit to the record a list of individuals convicted under

the bush administration in criminal court in article 3 courts beginning with richard reed, going to omar abu ali, zacarias moussaoui, nabazul nabazulla zazi charged as well as padilla, lynn, the lakawana 6 and so on and so forth and put these on the record. the point is that a president should have flexibility to cite the venue for trial. all i can say is those of us on this side of the aisle did not criticize president bush for doing this at this time and we view with some suspicion the fact that president obama is being criticized for following policy that had been established since 9/11. >> madam chair, i will add the names of the people, the information released as a result

of these trials where we held the trials. and i will discuss further disagree with your characterization. thank you. >> senator whitehouse? >> madam chair, i have not been here 34 years. i have been here only three years, but i find it extremely discouraging that with these gentlemen before us, the head of the defense intelligence agency, the head of the fbi, the director of national intelligence, head of the central intelligence agency and the acting head of the state department's intelligence service who i would add is the acting head because there is a republican blockade of the person who is slated for that passion here more than a year into the obama administration. that all this committee can talk about is where abdullah

abdulmutallab was miran diesed. there are so many issues that these gentlemen have real expertise in. it's clear that the tradition has been strongly towards civilian trials. there is one person in the world incorserated as a terrorist as a result of a military tribunal right now. hundreds because of the other. and yet this question persists and persists and persists and persists. it seems to be the only talking point on the other side of the aisle. because so much is fallacious, we then have to respond in order to clear up the record and then this whole hearing turns into a focus on a point for which one of these gentlemen would need to

be here and it really does not bear on as significantly as others issues on the responsibilities they have to discharge. i'll say that. i'll move to another issue which is your report, director blair, leads with a discussion to the risk of cyberattack to the country. and i want to read a couple of statements from an article in foreign policy magazine by josh rogan. he reported senior u.s. military officials believe the chinese government is supporting hackers that attack anything and everything in the national security infrastructure on a constant basis. he continues the defense department has said the chinese government in addition to employing thousands of its own hackers manages massive teams of experts from academia and industry in cybermilitias that act in chinese national interests with unclear amounts of support and direction from

chinese people's liberation army. it seems the analogy in cyberwarfare goes back to the ancient days of naval combat when nations not only sent out ships under their own flag to engage in warfare but also offered to private ship owners to pirates, indeed, letters of mark to go out and act in that nation's interest. what do you believe are the most important structural deficits that we have and need to fix in dealing with state-sponsored cyberattacks on our country that

either come through false flags or are hidden behind work stations that are located all around the world in order to be able to deter these attacks. and if it makes a difference, could you distinguish between what mr. rogan referred to as hackers that attack anything and everything in the national security infrastructure on a constant basis and the brain drain that we face from wholesale industrial espionage, stealing our manufacturing and technological secrets so competitors abroad can without paying for the intellectual property they have stolen. >> senator whitehouse, the individual skills of a single hacker, whether he be doing it for fun or paid off by a

criminal or by a criminal service of another country are -- you can have really ace hackers under all three of those scenarios. the advantage of a government or the characteristics of government-sponsored terrorists are more what they do and the ability to put it together with other forms of intelligence, spies and humans that they can use, not just sitting there at the keyboard. criminals can do some of that. so the nature of the threat is pretty much the same no matter who is doing it. it's just the resources they have to put against it. >> those resources can matter a lot when it ends up to thousands or tens of thousands of attacks daily and weekly. >> absolutely.

>> and that brings me to the second point which is that the -- as i said in my statement, the general level of our defenses is just not good enough for either the monetary value or the intrinsic value of what we keep on the net, intellectual property and so on. now our big international central banks that send data across wires in networked systems have developed tough defenses. and they spend a lot of money on them and put a lot of people on. they continually check them and they can have high confidence that they can be secure against outsiders. an insider is still a threat. there are many transactions that involve extremely powerful information which people seem to think a relatively simple password is enough to protect.

and even a moderate hacker can get into files in major companies, in lots of commercial areas that are not protected at all. so i think we simply have to raise the game. spend more money which is proportionate to what we are protecting, rather than just making it an add-on thing. they are making it more skilled and take advantage of the techniques that are available there if we just put them in the plan. i'd say if we do that, we would be up at the 90%, 95% level prove techs. and after that, it would take a very skilled, determined, resourced timely attack in order to get in. but a lot of the -- a lot of extremely valuable things are just available through very unsophisticated hackers who just

do brute force methods and they can be criminals or hackers or they can be government agents. >> thank york director. my time is expired. >> thank you very much, senator whitehouse. senator widen. >> thank you, madam chair and thank you to all of you for your service to our country. we've had a number of closed sessions on the christmas day attack. but i'd like to talk about a couple of issues in public to get actually on the record. when i think the country is especially concerned about. my sense is that the intelligence community does a good job collecting intelligence but does a -- has a harder time integrating it and analyzing it. you all have talked about a number of steps through the course of the afternoon. senator pa net ayou tapanetta, talked about this.

i want to ask this of you, director blair. if the events leading up to abdulmutallab's infect were repeated over the next several months, how confident are you now that a new mr. abdulmutallab would be identified as a threat before he bordarded an airplane bound for the united states? >> senator wyden, i'm confident that someone who left the trail that mr. abdulmutallab did would now be found, even in the month since the 25th of december, we have jumped a series of both human resources. we put more people on the problem. we have assigned them more specifically, and we have made some more tools available that would catch an abdulmutallab.

what i can't tell you is that even with these improvements, we would be able to catch someone who took more care in the -- i'd rather not talk about it in open session. but someone more careful, more skilled, could still leave an intelligence -- >> so you could provide the assurance to the american people because this is why i wanted to ask it in public that with the additional, you know, resources, with your effort to unpack everything that took place, you are now significantly more confident that another mr. abdulmutallab would be apprehended before he got on the plane? >> director mueller, if i could, i wanted to ask you about this home grown al qaeda and terrorist threat. and certainly when you look at some of the

this is something all so very much on people's minds. you touched on it in your statement. how serious do you believe the threat of a homegrown al qaeda threat is today? >> i think it is a very serious threat and increasing, principally because of the enhanced use of the internet to radicalize and to be utilized to coordinate actions. with the growth of the internet, it will grow and spread domestically. the individual in dallas was radicalized by the internet. individuals in springfield and charlotte, the home grown radicalization in the united states by those who have not traveled overseas for trading

has grown over the last several years. >> are you more concerned about alcott a terrorist coming from inside the u.s. now or from outside? >> i am equally concerned with both of them, about the same level of concern. i do think that the tax undertaken b.g.e. the attacks undertaken by individuals who have some association or training overseas tend to be more of a threat in terms of the capabilities and some of the threats we have seen domestically. the training, the enhanced capabilities that come from persons traveling overseas and then coming back would make any terrorist attack more substantial in most cases than undertaken by a lone individual here.

most cases than undertaken by a lone individual. >> let me close the loop on this. so you think it's a serious threat, and would you say it's a significant threat as you see, say in great britain? >> i think to a certain extent in some areas we share the same concerns as great britain. places like somalia and yemen and the ability of terrorists in those countries to identify individuals who can be trained in somali, yemen or travel back to the uk or the united states. we have somewhat the same problems, particularly with somali youth, individuals we found last year who were traveling to somalia and coming back to the united states. on the other hand, the uk has, i believe, a stronger network of individuals who have been

radicalized with close ties to south asia, stronger ties to south asia than you'll find here in the united states which presents a different threat to the uk than us. >> director panetta, do you or any of your associates have an estimate about what it would take to drive al qaeda out of the pakistani tribal areas? i think i want to touch briefly on the issue of pakistan. what is your assessment of what it would take to drive al qaeda out of that area? >> senator wyden, i've asked that question a number of times becau because, obviously, our operations are very aggressive and very directed. and as i said, are very effective with regards to disrupting their operations. having said that, the reality is that they continue to operate. they continue to move within the

fata and tribal areas. and i would just share with you that i think to effectively be able to disrupt al qaeda and to end their threat, we need to have boots on the ground in addition to our operation. >> one last question, if i might, madam chair, what else director panetta could the pakistani government do if pakistani leaders want to provide more assistance on counterterrorism issues? >> just what i said, which is boots on the ground. they, in fact, went in to south waziristan. that was very effective on bringing pressure on these groups. they had to move. they had to scramble. that happened us in terms of our operations. we need them to continue that effort. >> thank you, madam chair. >> thank you, senator wyden. senator snowe? >> thank you, madam chair and thank you all for being here today. i just want to be clear because

i think there's obviously a profound concern. i share the sentiment about the whole issue and issues a miranda rights to a terrorist. on christmas day. i think the american people need to have reassurances as well in terms of what is going to change as a result of what happened? and what is going to be the process going forward because it seems to me in this instance there clearly should have commanded the attention at the highest levels in the intelligence community about whether further questions should be posed to this individual to be certain the questions being posed were based on all of the information regard iing al qaed in yemen, about this individual and putting it all together before issuing his miranda rights. and i think that's what's so

disturbing here because that did not occur. so it didn't seem to me, and i don't think it seemed to the american people that it was a cohesive, concerted effort, determination based on all of the information that had been gather gathered in highly classified settings regarding al qaeda in yemen and, of course, this individual and any associates and whether or not there was vital information that needed to be gleaned. and we won't know that now. and so i am, you know, furthermore, the administration said they were setting up a group called the high valued detainee interrogation group, precisely for this type of circumstance. has that been done? and why wasn't that done. and how are we going forward? how is the intelligence community going to move forward based on this particular situation that really does cast a shadow because we won't ever know about what could have been

elicited from this individual because of who posed the questions, frankly. you weren't consulted, director blair, at the highest levels for any questions that should have been posed of this individual. and it seems to me it should have warranted, you know, consultation with you and others to be sure under this circumstance. >> senator snowe, if we had known all we needed to know about mr. abdulmutallab, he wouldn't have been on the airplane. it was a pop-up. there were extraordinary time pressures on christmas. i've said to another committee that the process of bringing together intelligence and skilled interrogators in the light of how we want to prosecute somebody is the absolute key thing. a form of that was done on christmas day. the joint task force fbi agents asked good questions. i've read the intelligence reports they put out, and they

were good. we have taken advantage of the time we now have in order to bring the full intelligence expertise into the support of the fbi which will, we hope, provide more intelligence which we can use. we have an intelligence team building the files so that when we get somebody that we know about, probably overseas, we can have done a lot of that homework that senator bonn referred to first. so the principle of using intelligence, using good interrogators, making sure that we are taking the steps we need to to get them behind bars in the most effective way are what we need to bring together and we just need to do that fast and the right way. >> i understand the concerns of

the public's understanding of what happened on christmas day. i also share your concern that in doing a thorough interrogation you have input from a number of sources, the background, the preparation and the like. but it also is important to obtain the facts as soon as you can and the time frame is such that you do not have the opportunity to do that background such as you would like. there were very fast-moving events on christmas day. we took advantage. i say, we, the fbi took advantage in my mind of the opportunities to gather that intelligence as quickly as we could under the constraints of -- that we operate in. and the -- with a person arrested in the united states. i am, along with director blair and director panetta, believe that teams of individuals with appropriate backgrounds should be deployed to do interrogations. and the protocol has been established, has been set up, but we have not waited for that protocol. we have utilized those teams already. with headley, for instance in

chicago. we had a team of individuals who were doing the follow-up questioning of him with expertise from a variety of areas, and there we had the luxury of time in order to do it. we have teams established that will be ready to go in terms of -- or in the instance where we will pick up somebody in a particular area of the world where we will have teams and do have teams ready to go to undertake those interrogations. so we have done a lot in terms of putting together these teams to interrogate, but you also have to look at what happened on christmas day in the confines of trying to get intelligence on that day as to what was the immediate threat that the american public faced. >> so what was the -- what were the fast-moving events of that day that necessitated issuing his miranda rights. i'm not clear on that. what was the rush in the extraordinary pressures that were being faced? >> first of all, we had to determine whether there were any -- in the initial interview,

we had to determine whether other bombs on the plane, other planes that had similar attacks contemplated. wanted to understand who the bombmaker was, who directed him, all of that came in the first series of questions. later that night, we had another opportunity to interview him and i believe at that time, not only would be able to interview him, but we had to interview him in a way we could utilize his statements to ensure a successful prosecution. understanding that we have the obligation to take the individual before a magistrate, without undue delay which would mean he'd go before a magistrate within the next 24 hours. we sought to take advantage of that time to undertake the interrogations we could with the evidence we gathered at hand. >> but why wouldn't it have been -- i guess i'm still not clear because i don't understand why we'd want to issue the miranda rights when we're worried about what other subsequent events that might be occurring. >> because we also want to utilize his statements to effectively prosecute him.

>> well, i, you know, i profoundly disagree with that. i think most people do, given those circumstances. it just doesn't seem to me to make sense. and, frankly, i mean, not having the collective weight of the intelligence community to, you know, to really zero in on this particular individual at this moment in time is really disconcerting and troubling. and i think that's the point. >> let me just add one other point and that is it is a continuum. in other words, you can look at it in that day. i encourage you to look at what has happened since then. it is a continuum in which over a period of time, we have been successful in obtaining intelligence. not just on day one, but day two, day three, day four, >> you can see the hearing in

its entirety by logging on to our website, c-span.org. up next, an update on the possibility of two vacancies on the u.s. supreme court. >> joining us is the senior editor to talk about a story that the white house is working behind the scenes to possibly replace two supreme court rules that they are looking at. >> we are hearing that there was a piece on abc that aired last week thing john paul stevens is 89 and he has only hired one of the three clerks for next fall. ruth bader ginsburg is 76, recently recovering from

pancreatic cancer. in some sense, it is something we already knew, there are two justices who are definitely looking to retire at some point soon, and stories are speculating whether it would happen sooner rather than later. >> what are some of the names being floated out there as possible replacements? >> it is very similar to the list that we had last spring, except sonia sotomayor is not on it anymore. diane wood, a judge on the seventh circuit court appearof appeals. it is very similar list. one thing that will solidify it is if ginsberg steps down, i think president obama might be inclined to pick a woman rather than a man. >>