energy cost is going to be. they have no idea. is cap and trade going to pass that would create -- raise, just on individuals, energy costs of about $3,200 a year. is that going to pass? i don't know. are we going to raise taxes on the small business people? are we going to raise taxes on people who make over $250,000, over $200,000, over $150,000, most of these subchapter scorps , fall under that guideline, they say, am i going to end up pay manager taxes? i can't answer that. i can't answer that. what's our health care cost going to be? are you going to mandate health care prescriptions on us? i don't know, i can't answer that we don't even know about any free trade agreements. this administration refused to act on free trade agreements. we need to remove the

uncertainty for business in this country. we need to crank up our economic engine without starving it for the fuel that it needs to expand and create those jobs that we so desperately need. so this health care plan is going to be rammed through, regardless of what you say. the rules are going to be adjusted to fit what they need to do. but i've got something to tell the majority. the american people are not that stupid. . they understand smoke and mirrors and hocus-pocus when they see it. and i promise you, they are not just going to hold the majority accountable, they are going to hold every member ever this body and every member of the body across this capitol accountable for taking this country in a direction that the majority of people do not want to see it go. with that, i yield back my time to the gentleman. mr. gohmert: i appreciate so

much the insights of the gentleman from georgia. you make such good points. and i know, madam speaker, i have heard people say before, well, i see you go down to the well, i see you go down to the house floor and just pour your

really want to know about that, but more and more americans have awakened and are paying attention to what is going on in congress. and i find that people are concerned about the process here because they understand the process is sometimes as important as the substance of what we are doing. the rules committee is a committee here that establishes the rules for debate and the procedure on legislation that's being considered by the house. unfortunately our colleagues will not allow the rules committee to be covered by

c-span. so very few people have seen the rules committee in action. we meet in a tiny room up here that really there are no seats for the public, or almost no seats for the public. there are seats for members. there are seats for the press. and seats for staff. but almost no seats for the public. so very few people have observed the rules committee, but it is doing extremely important work in the house. the rules committee establishes the length of the debate and which amendments, if any, will be allowed to be debated. it has nine members of the majority and four members of the minority. so they have it stacked pretty good against the minority. we meet all times of the day and night. lots of times in the middle of the night. last year on the cap and trade bill we got the manager's

amendment at 3:00 a.m., almost 400-page amendment at 3:00 in the morning. and then we voted on that bill just a little later on that day. what is being talked about to get a health care bill passed is some people are calling the slaughter solution, but i call it the slaughter sleight of hand. ms. slaughter from new york is the chair of the committee and she has come up with a really, really clever way of having the members of this body not vote on a bill but say that the bill has passed. i said a few minutes ago that we are facing a major crisis in this country. a crisis with our debt and

deficit. but the more immediate crisis is this very cynical attempt to pass a bill without having the members vote for the bill. that's never happened in this house before. this is a complete cynical approach to this. and they have to do that because their members don't want to vote for it because they know their constituents don't want them to vote for it. but they believe that they are going to be able to send their members home and say, i didn't vote for that horrible bill. i didn't vote for that bill you don't want. i only voted for the rule. or i only voted for this reconciliation bill and i didn't vote for that bill. folks, as somebody else has

said, we have gone -- they are trying to go from not -- from passing bills they haven't read to passing bills they haven't voted on. and i think any high school youngster in this country who has taken civics knows how a bill becomes law. you pass a bill in one house, you pass exactly the same thing in the other chamber, it goes then to the president, the president can veto it or sign it. but that's not what the majority party is about here. they want a procedural vote that would simply declare the measure to have passed at the moment the senate passes what they are calling a reconciliation bill. as i pointed out also earlier, we have no reconciliation process here. we have straight up or down votes. the majority rules. because there are four

vacancies in the house, and because nobody is in the house of representatives unless he or she is elected, you don't appoint people to the house of representatives, the speaker only needs 216 votes. so what we have again is a sleight of hand going on. i have seen a lot of cartoons representing the president as the wizard of oz. and i think that's a pretty apt description because the president and the people in charge here have been talking a lot about this reconciliation bill, because they want people 's attention on that. they don't want people to pay attention to the bill that has to be voted on in order for it to become law, which is the senate bill. now, a few minutes ago the majority leader said, oh, everybody knows what's in these bills. they have been out there for months. we have discussed them for

thousands of hours. that is not true. what's going to happen next week is the budget committee's going to meet on monday. they are going to pass what amounts to an empty vessel. that's going to come to the rules committee and some time next week, we don't know what time of day or night, we are going to execute an amendment in the rules committee that will be seen for the very first time by anybody in the position to vote on it. the staff will have seen it. and perhaps those in charge may have seen it. but my guess is they won't have seen it, either. and we'll be asked to vote on that immediately in the rules committee. that's going to be the first time anybody's seen it. as my colleague from texas has talked about, and i mentioned earlier, we don't have a bill from the president.

he presented an 11-page set of principles, called the proposal, and he's got a 19-page summary of the 11-page proposal. on the website. still no legislative language. and we have to have legislative language. we are -- the democratic majority is engaging in such extraordinary legislative chicanery to get this bill passed that it is a clear indication that they cannot pass the bill without doing that. they doesn't have the votes within their membership to pass that bill. so they have got to do all the sleight of hand to get it passed. these people have exposed themselves as willing to

abandon the most transparent -- the most fundamental element of legislating, a transparent up or down vote in order to achieve an unpopular partisan objective. this is very disturbing and should be an alarm to every american. this is what banana republics do. this is not what the greatest nation in the world does. this is not what the greatest deliberative bodies in the world do. the american people do not want this health care bill. and they don't want their democratic process turned on its head to pass it over their objective. this is the -- i have said it before. i was ridiculed. i was ridiculed for saying that i feared this health care bill almost more than anything else.

and i want to tell you the american people need to fear it because it undermines our entire system of laws. it takes us from being a nation of laws to being a nation of people who will do anything to pass their ideological program. and they will go out to attempt to destroy what is great about this nation. and that is our constitution and our rule of law. with that i yield back. mr. gohmert: i appreciate the gentlelady, ms. foxx, comments really on target. thank you so much. and when you -- she mentions banana republics, i actually had the experience in 1973 of being an exchange student to the soviet union for a summer,

and got to see firsthand how the former soviet union operated before, of course, it went broke, couldn't borrow enough money, couldn't print enough money so it went broke. but in looking at the president's comment in his speech march 3 of this year, it was after the so-called health care summit, and i'm quoting, my proposal would give uninsured individuals and small business owners the same kind of choice of private health insurance that members of congress get because if it's good enough for members of congress it's good enough for the people who pay their salaries. and there was applause on that. but apparently he hasn't read the bill that was passed the house that he's trying to join and match up in his so-called proposal because this is in the first volume, but it says, protecting -- the benefit

package levels, it says the commissioner, this is another czar-type person he'll appoint, shall specify benefits to be made available under the exchenoweth-hage participating health benefit plan -- exchange health -- perpg health benefit plan, and i haven't seen anything in the president's proposal that changes the language. it says in every area of the united states, and there will be cut up into different service areas, in every area there has to be one -- it says offers, only one basic plan for such. this commissioner will designate what has to be in the health care insurance policy. and then their idea of that is, you'll have a slew of insurance companies that will offer the same policy. .

one basic plan. and then, they could offer an enhanced plan. but the big deal is, the same exact plan will be offered by different insurance companies. i had an experience that this reminds me of so much when i was in a city stay in moscow. we had read and heard that the largest department store in the world was in moscow, and it was the russian letters, english equivalent are g.u.m., it stood for governmental universal store, or department store, and i needed some 110 film for my little camera, and there were probably a dozen camera stores on three or four different levels and several different sections, it was enormous. i went to every one of them and every single one had the exact same products, the exact same

prices, and that's what we're talking about in this plan. there is no choice. it won't be long, there will only be one insurance company, the federal government. we've been joined by my good friend from california, former attorney general, former member of congress before coming back, who has always terrific insights and i would yield such time as he may use to mr. lungren. mr. lungren: i thank the gentleman for yielding. i came down because i was listening to the debate and i wondered if there would be room for someone who speaks with the absence of an accent on for floor. mr. gohmert: there's knob with an accent that i've heard. mr. lungren: i appreciate that. there's a fundamental proposition before the house that's often forgotten in the procedure. as strange as the procedure might be for consideration of this bill. and that is, if this bill were to be brought to the floor, the

senate version or the house version that already passed, and if we're -- and it were ultimately to be signed by the president, it is my understanding that the first time in the history of the united states we will condition your legal status in the united states that is, your ability to remain a legal citizen in good standing in the united states, on the mandated purchase of a product provided by a private entity but as determined by parameters established by the federal government. now is that the gentleman's understanding as well? mr. gohmert: that is indeed my understanding. mr. lungren: it is sometime stoos called an individual mandate, but no one talks too much about that and where we have the authority to mandate your continued legal presence in the united states. there has been a lot of debate, some even engendered by comments in the president's speech before this -- before a

joint session, on whether or not people who are here illegally will be covered by all of the government health programs that will be established by law. in fact, that has been at least a matter of contention. whether or not the language contained in the versions would have any meaningful limitation on the provision of health care to people who are in this country illegally. and the gentleman is aware of that debate. but here we have a situation where those who were born in the united states would be rendered an illegal status if in fact they did not purchase a product mandated by the federal government. and of course in the house provision, that mandate is enforced by way of criminal sanction. first by way of a fine, then failure to pay the fine could

bring one a criminal sanction. in fact, in one way, they are attempting to get around this question of whether or not the federal government has the authority to mandate this, they have introduced it by way of a section of the internal revenue code. and we know that if one commits fraud in terms of not paying a tax, and they are trying to qualify the definition of the fine as a tax, that you can go to prison. for committing fraud on the government in your failure to pay the tax. so it is not a reach, as some have suggested, that the penalty would be in fact a criminal penalty which includes incarceration for failure to

fool low this mandate. is that the gentleman's understanding as well? i know the gentleman is a former judge of the state of texas. mr. gohmert: judge, and was briefly chief justice of an intermediate court filling out an expired term. that is my understanding. but i also know the gentleman from california was the highest ranking legal officer in the state of california and very articulately has set out his -- well, my understanding -- but i'm curious as to the gentleman's opinion of whether or not this really meets constitutional muster. nobody knows what the supreme court would do. some project five or six years before it got there, since we were unsuccessful in get anything fast track in the house version or the senate version. mr. lungren: in other words,

expedited matters up to the supreme court which we have done on other legislation in the past. mr. gohmert: i'm curious about the gentleman's opinion. mr. lungren: some say these bills are justified under the expansive reading of the commerce clause. it's true the supreme court has found an expansive view of the commerce clause but if one suggests one's own health and decision on how one provides for one's own health, is in fact a part of interstate commerce which then grants the authority to the federal government to act, then the question i would ask is, what is left that is not covered by federal authority? what part of your life is not covered by the federal authority? in other words if we can do this for the purpose, admitly a good purpose, of ensuring that people have health care in this country, but if we can extend the reach of the federal government in this way, would

it be out of the rim of possibility that -- out of the realm of possibility that it would be unconstitutional for the government to say, in lifingt the impact of obesity on certain health conditions, and in light of the fact that when one develops those health conditions, one has a call on medical care in this country and that impacts all of us, because that's the argument being made, would it not then be logical that we on the federal level could mandate that you must belong to a federally approved fitness program? is that so much of a reach? wouldn't that be less of an interference in one's life than to mandate precisely how one has to prepare for one's own health and pay for one's own health and then dictate exactly what coverage one might have, even though you might not want

to have that particular coverage? and so i think it goes beyond the health care question, it goes to the question, and i've had this discussion in my town hall meetings as recently as this last monday where i had 250 people in rancho cordoba, it goes to the question of what is the proper relationship between the individual and the federal government and the greatness of our founding fathers was to say that would be a limited relationship that is the federal government's call on us, because we recognize that government did not extend rights to us, those rights were god-given rights, and we the people, those are the rights of -- those are the words found in the constitution we the people formed a united states of america but we decided what authority we would give that government and they should not go beyond that. mr. gohmert: would the gentleman yield?

mr. lungren: of course. mr. king: this commerce clause, i take this to the other side of the scenario the -- mr. lungren laid out, i take it down to the assumption in this bill that everybody in america is engaged in interstate commerce that's relevant to health insurance. i would submit that in texas or california or georgia or iowa, there's likely to have been, i'll say certain to have been, and likely to still be, individuals born in those individual states that never participated in a health care program of any kind, lived within the state, didn't cross the state line to get an aspirin, and died and never engaged in health care that could be even described as interstate commerce in any way, yet this commerce clause would be broadened to the point of being so inclusive that not only would that, by inference, give congress the authority to force a person to join a health

club, but also to show up and exercise, tell us what we can and can't eat and the commerce clause would have no limits whatsoever and i'm going to say that the individual born in one of those states, or any state in america that doesn't participate in a health care program that links the interstate commerce is completely exempt under the commerce clause and therefore that's one of the basis for which i believe this is an unconstitutional bill. i yield back. mr. gohmert: we have our friend from georgia, mr. west morland, you have something to add on that point? mr. westmoreland: i don't have anything to add on the constitutionality of the legislation, i've expressed, i think it is unconstitutional. but i wanted to make one comment before i had to go to my friend from texas. i believe you mentioned that the president had put out an 11-page sum mair, then had put out a 19-page summary of the 11-page summary. so i wanted to quote from the 19-page summary of the 11-page

summary, and anybody within the sound of my voice, madam speaker, if they believe this, then -- they need some help. some counseling. this is the new affordable choices that the 19-page explanation of the 11-page explanation, paper reduction and simplified forms will begin to reduce costs. anybody that has ever dealt with the government knows they do nothing to reduce paperwork. a new website to help consumers compare different insurance coverage options along with state by state health care consumer assistance and assistance for any of their health insurance questions. to my friend from texas, you can't call a government agency now and even talk to a real human being. and now they're going to answer

questions for 300 million people? here's the final one. clear and easy to understand insurance documents to help americans make decisions. when shops -- make decisions when shopping for health insurance. the government has never had any documents that were clear and simple to understand. the majority of americans today cannot even fill out their own 1040 personal income tax. this is a sham. i hope that the american people will wake up and understand that what's fixing to happen to them is not only unconstitutional, but will be something that will not be easily undone. with that, i yield back the balance of my time. mr. gohmert: i yield more time to my friend from california. mr. lungren: i thank the gentleman from georgia made a point about a summary of a summary being larger than the original summary and we're

talking about a 2,000-page bill, at least, in both the house and senate, which will then spawn thousands, tens of thousands, of pages of regulations, which will then be interpreted by thousands of people employed by the federal government, which will then finally get to you and your doctor. and i think that is one of the problems that we have. i would just thank the speaker of the house who recently said in a press conference we must pass the bill so we can find out what is in it. now, i don't make that stuff up. it almost sounds like a comedy routine from "saturday night live," but that was essentially a statement. we must pass the bill to find out what was in it. . i used to think that good legislation was you knew what was in it before you voted on it. and if you had problems with it, you didn't vote on it until you fix the problems, and you didn't say, well, we know we have problems in the bill but we are going to reconcile those

problems later on. and particularly when reconcile is a special term of art in the united states senate and it allows you to fix somes things but not others and those that you cannot fix in the arcane notion of the reconciliation process in the senate, you will then have to take to the floor of the house and that will be then subject to the possibility of filibuster which means essentially you will have to get 60 votes to pass it. i would ask the gentleman on an issue of immense importance to the american people, as they have expressed at town hall meetings and everything else, there has been a 30-plus year consensus in this congress and in this country about the limits of federal funding for the procedure called abortion. that law, that line of laws has been encapsulated in what was

known as the stupak amendment in the house of representatives. we know that the stupak amendment is not in the senate bill. there is another provision which mr. stupak and others have said is insufficient to maintain the current law, therefore meaning that it will establish a new law allowing federal funding of abortions for procedures that have not been allowed that is paid for by the taxpayers for over 30 years. is the gentleman aware of whether the history of the voting pattern in the senate would lead one to conclude there are 60 votes for the stupak amendment in the senate? >> i thank the gentleman for the question. it's a great question because we know when scott brown was elected he said i am the 44 -- 41st vote against this. there are not 60 votes to do what they are saying, which as you are pointing out. the stupak amendment, i mean if

our pro-life friends across the aisle were to get talked into voting for the senate bill as is on the promise that, oh, gee, we'll bring that amendment up and we are sure it will pass, i just don't see how anybody can make that claim because it's already been made clear at the other end of the hall. they are not getting 60 votes to do it. mr. lungren: if you have an animal control officer come to your office and say that your dog or cat hasn't been neutered or spade and you say, well, wait a second, i'm going to let my dog or cat out for the next month but i will get him fixed, do you think the animal control officer would trust you? mr. gohmert: they don't. and there is no reason to believe that anything could happen other than what we have already seen. they are not going to have 60 votes to do this. why they are trying do it on a reconciliation gimmick.

mr. lungren: is the gentleman aware of whether or not the language that arparticular late the stupak amendment or the language that would articulate something close to the stupak amendment would be allowed under the tight controls of reconciliation? mr. gohmert: it's hard to know. i believe if the speaker tells bart stupak we are going to get the amendment -- your stupak amendment passed in the house through reconciliation, we'll get it done, and we should get it done in the senate, i'm sure if she tells him that she'll get it done in the house, then she probably will. but there is no way on this earth that she can guarantee what will happen in the senate because it's not going to happen. i yield. mr. lungren: in other words, if one were to preserve the stupak amendment, it would be to take the house bill over to the senate, have the senate accept

the house bill, and then perhaps try and reconcile it later on. if you were going to preserve the intent of the stupak amendment and thereby preserve 30 years, or 35 years of the consensus of this congress and the consensus of the courts and the consensus of the american people. mr. gohmert: the gentleman is exactly right. i want to emphasize how important the stupak language was. we did hear -- our friends across the aisle say, look, there is no money that will be allowed under the house bill for abortion. and i know they believe that when they said it or they really wouldn't have said it. the trouble is one of the problems in this body is, we have ended up having such massive bills come so fast that people do not read the bills. because on page 110 of the very bill that was under debate, the stupak amendment was to address, this is page 110, section -- subsection 4-b the

subsection titled, abortions for which public funding is allowed. then it goes on to say, the services described in this subparagraph for abortions for which expenditure of federal funds proachted for the department of health and human services is permitted. it goes and sets out conditions. but the point is, they hadn't read that bill or they would have never gotten up and said there is no money in this bill for federal tax dollars for abortion. it was there. and it is there if you don't have the stupak amendment. mr. lungren: if i might ask the gentleman to yield again. the point we are making is this has nothing to do with roe vs. wade, it has nothing to do with a woman's right to choose. it has to do with the question of whether federal taxpayers are required to pay for the procedures and there has been a consensus in this country with the limitation on federally

funded abortions except for the life of the mother, rape and incest. there have been those kinds of limitations on that, and this changes that. changes the consensus that has existed for 30-some years. and again, if you wanted to protect that consensus that was repeated on this floor in the nature of the stupak amendment, you would take that up in the senate, you would pass that -- why are they not doing it? we hear they are not doing it because they couldn't pass it in the senate. so we are supposed to believe that if they can't pass the stupak amendment in the senate, we should pass the senate bill here because then there's a promise that they will pass a virtual stupak amendment with the requirement of 60 votes. mr. gohmert: that they can't get on any other bill itself. it makes no sense.

mr. lungren: people should understand the could he nun drum -- conundrum we are in not of our own making but precisely because of the bill that was brought to this floor and the bill that was brought to the senate and those are basically the two options that are out there. and the question is, how can you get a majority vote in either body while fin necessarying that issue? i -- finessing that issue? i would suggest you cannot do that if in fact that issue is as important to people as they stated it was during the consideration of the bill, both in the house and the senate. and of course that goes far beyond the question we had before, which is, what about the constitutionality of the underlying principle that we will now mandate that you must purchase a product, in this case a health care policy, or if you do not you will find

yourself in illegal status in the united states. we are not talking about you having entered the united states illegally. we are not talking about you having overstayed your visa. we are not talking about you committing some fraud on the united states to come here. we are talking about you already being an american citizen, someone with legal status in the united states, and now you are going to be rendered illegal because you will not purchase a product imposed by the federal government for the first time in our nation's history. mr. gohmert: such a great point. i was talking with some of my constituents this past weekend who are scared to death this thing is going to pass. some of them work for lower wages and they are on their spouse's insurance with their employer, and so they are able -- there are companies that exist only because they are able to hire people who don't need health insurance.

so they are able to hire them without providing health insurance. and under the bill they are going to get hit with an 8% tax. i'm hearing employers say, we can't pay the 8% tax. they have either got to take an 8% cut or i've got to pay people off. there's been one estimate confirmed by a number of people that if this bill passes, if this becomes law, at the worst time conceivable, more americans out of work than ever in history, it will put 5.5 million people out of work. this is incredible. and to think about a body that should -- i have heard friends across the aisle talk about how important it is to help the working poor. the lower middle class. that's where we want to help. under the bill if they can't afford the mandated type of insurance, then they are going to get hit with an additional tax. the very people that can't afford it. in addition to that, they are going to be hit with other

taxes to help pay for this bill. it is not a friend of the working poor in america. i want to yield to my friend from iowa. mr. king: i thank the gentleman from texas. i point out, additional 5.5 million people unemployed over this bill, but it provides access, according to calculations of the congressional budget office, to help insurance policies for as many as 6.1 million illegals. so there is your tradeoff. 5.5 million unemployed americans, 6.1 million illegals having access to their own health insurance policy. and then additionally in picking up on the point of the gentleman from california, not only does it render an illegal status that someone who wouldn't -- could not or would not purchase the health insurance policies that are mandated by the federal government, it levies a fine against them and takes us into the realm of what i think is the definition of debtor's

prison. you levy a fine against someone and if you don't pay the fine and when it gets to $250,000, the original bid had a prison penalty in there. it would be for the first time in the history of this country that the federal government had either produced a product or certified a product to be produced by the private sector required every american citizen to purchase that product, and if they didn't do so, levy a fine against them and have them facing a jail term. that's the kind of debtors prison that our founding fathers rejected. and i -- it's stark terms but that's where it takes us up in our logic. i will say, mr. speaker, that we are at this point now where the nuances of these bills -- we know what's in them. anything that's likely to pass this house and go through the president's desk, he will be sitting there with pen in hand to sign -- he's salivating to sign something that's called national health care that he can call obamacare and does call obamacare. he is for single payer.

he is for socialized medicine. he has said that he's for single payer. so has the speaker and so has harry reid. so this is about whether we keep our freedom, whether we keep the federal government from nationalizing and taking over our bodies like they did general motors and chrysler. i yield back. mr. gohmert: the gentleman from california. mr. lungren: i think a very, very basic question is this. there is a notion of healthy skepticism within our government and our view of government. we grow up with that. that is part and parcel of the constitution. but if you move from healthy skepticism to destructive, not skepticism but cynicism, then you have really ruptured the relationship between the american people and their government. and if we were to ignore the voices of the american people as they have been articulated in town hall after town hall after town hall throughout this country, not just in august, i had my last town hall meeting this monday, 250 people in one

of my communities. overwhelming opposition not to some changes in health care. they are not arguing for the status quo. they are arguing against these two visions of health care reform. and they asked me, they begged me to bring a message here from them directly. scrap what you're doing. start over. give us the right medicine not the wrong medicine. mr. gohmert: i thank the gentleman. time has expired. we yield back. thank you. the speaker pro tempore: the the speaker pro tempore: the gentleman yields back.

the speaker pro tempore: under the speaker's announced policy of january 6, 2009, the gentlewoman of nevada, ms. titus is recognized for 60 minutes as the designee of the majority leader. ms. titus: mr. chairman, i would ask for one hour of debate to discuss the issue of health care.

the speaker pro tempore: the gentlelady is recognized. ms. titus: thank you, mr. chairman. we've heard a lot about health care today and for the past month and actually for the past year as this issue has been debated as one of the most important things facing this country and the people in all our districts. we know that we need better access to health care. we need more affordable health care. we need to protect medicare as we move forward with meaningful reform. these reforms need to include issues involving the insurance company, the insurance companies that are today advertising on television against reform, are sending their lobbyists to the hill against reform, who are resisting any kind of meaningful reform in hopes of protecting their bottom line. i welcome additional comments from some of my colleagues and i will reserve my time for a

few minutes.

ms. titus: i yield back my time, mr. speaker. the speaker pro tempore: under the speaker's announced policy of january 6, 2009, the gentlewoman from california, ms. watson, is recognized for 54 minutes as the designee of the majority leader. >> point of order. the speaker pro tempore: the gentleman's inquiry. mr. king: under the rules of the house under special order, is it appropriate for a member to yield to someone else when they've been recognized for 60 minutes? the speaker pro tempore: the speaker's announced policy

allows for the hour -- the leadership hour to be subdivided. the gentlelady from california is recognized. ms. watson: mr. speaker, i'd like to extend our time to one hour for -- 54 minutes. the speaker pro tempore: 53. ms. watson: thank you. ms. watson: madam speaker, i would like to yield time to congressman garamendi from

california. mr. garamendi: thank you very much, congresswoman. as you recall you and i have had a long, long experience of dealing with health care issues. i was chair of the california health care committee, when i left that post you took it over. in those many, many years we have worked together on health care, we are now approaching the final moment in which this nation will take up an extraordinarily important task, moving toward providing health insurance and health care for all the citizens in this country. it's going to be a very, very busy week next week. over the last hour or so, i've heard from our esteemed colleagues on the republican side talk about a rush to judgment. i was not -- it was not a rush to judgment if you consider the 30 years you and i have been spending trying to provide health care services for all the people in california and

now we have this opportunity to deal with this issue here for the entire nation. it certainly wasn't a rush to judgment in the early part of the 20th century when in california and across the nation men and women were being injured on the job and to deal with that, the worker's compensation programs were create. even teddy roosevelt back in that period said we needed to have a health care system for all. it didn't happen then during the world war ii period and before it, the blue cross blue shield programs were developed by the medical communities to provide coverage. again, it wasn't universal or available to all. later, during world war ii, i remember in california and the west coast, kaiser industries found their workers were getting sick. actually, it was during the depression, when they were build og the dam on the colorado river.

so they started what has become known as kaiser perm nene tee to provide health care to -- kaiser permanente to provide health care to their workers. in the 1960's, we made a major step forward with medicare and following it with medicaid. enormous debate erupted but progress was made and a universal program was made available to every person, every legal citizen, legal person in this nation who attained the age of 65. i noted with some humor the period that the president's summit, just, i think 10 days ago, sitting around the table were men and women, nearly all of whom, excluding the president and i think just two others who actually belonged to a single payer, universal health care program called medicare. yet many of those people said

they wouldn't want anything to do with a universal single payer system, yet they were participating in such a system. so we have been at this a long, long time and in this house, the debate on how to finish the process began one year ago. so there's no rush to judgment here, nor is there a rush to judgment. i yield back. ms. watson: mr. garamendi, if you'll yield for a moment, i want to add to this, i request a colloquy so we can speak back to each other, madam chairman, madam speaker. one of the things i'd like to make perfectly clear in this debate, i was listening to the former hour from my office and i heard over and over and over again how we are cramming the unknown through. now, prior to this whole new concept of reconciliation, i

remember the other side coming down with 2,700 pages and talking about what was in those pages. and also mentioning to us, madam speaker, that they had their staff reading through every single word. now i heard them say, congressman garamendi, that we're cramming the unknown through. this is highly, highly unreasonable and a misstatement. we intended and we set out to address the 38 uninsured. if you have insurance, and i want the public to hear this, the original intent was to cover the 38 million uninsured.

and by the way, congressman garamendi, eight million of that 38 million is in california, our state. and six million of those are children. would we not want to cover health care for our children? mr. garamendi: if i might for a moment, congresswoman watson, absolutely. it would seem to be the fundamental compassion of a human being to make sure that their children and the community's children, indeed our nation's children have health care. and we should extend that well beyond to all of us. it is not in our interest as human beings who presumably have compassion to leave people without health care. and we're not rushing to judgment here. we've been at this in america for more than a century and this house has been at it for a year, heavily debated.

i was just elected to congress back in november, came here three days later and voted on a bill that you and others had worked on for the previous 11 -- 10 months. so here we are with the house having passed its bill, the senate having passed a bill back on christmas eve, i think 72 days ago, that bill has been available, it's my understanding that next week we may have an opportunity to vote on the senate bhill and send that to the -- senate bill and send that to the president and then follow up with corrections to the senate bill that are desired by both houses, such things as eliminating that advantage that was given to nebraska and other corrections to the bill. so this is not something that's being rushed to judgment. in fact, it's been debated for a century. it's been debated in this house, back in the clinton period. . %%%. ms. watson: this is not mystery

content. what we are going to be considering are the issues that both sides can agree on. we should have health insurance that is affordable. health insurance that is accessible. you know, the great expanse of land in california, where you go to get your health care, needs to be acks isible to you and not in another town like it is in so many areas of our districts. mr. garamendi: one of the things that was in both the senate bill and house bill was an effort to expand access to care. specific -- not just with an insurance policy, but also with facilities. there are major improvements and significant sums of money available to expand community clinics. where most poor people, many young children, and people that are moving from one town to another are able to get their care. that is enormous expansion of

services. so what's wrong with providing a facility, community care, it happens to be good care, and it happens to be very well priced. ms. watson: i think of your district over an expansion -- expanse of land. i have gone to other districts in colorado with diana degette and we drove for miles all within her district, town to town. the community clinics will be accessible to people who live in remote areas. then we all agree that we wanted to cover pre-existing conditions. of mr. garamendi: i was the insurance commissioner in california, 19 the 1 to 1994, and then again in 2003 to 2008. that eight-year period i saw horrible things being done by the health insurance industry. in the way in which they discriminated, there is one lesson that i learned during that -- many, but one of the

principle ones for the private health insurance companies it's profit before people. do whatever you need to do to enhance your profits. you just mentioned one of the ways which is various mechanisms to discriminate. pre-existing conditions. give you an example. i know of a young woman that had been on her family's program, health insurance program for 23 years. she turned 23 and under the current law, 23-year-old can no longer be on their parents' care. under the proposal that -- under the bills that will be before us for final review, hopefully next week, is a proposal to extend that to 26 years. but for her that wasn't yet law so she went out searching for insurance. turns out she went back to the company that had insured her for 23 years. the company said, we can't insure you. she asked why? you have a pre-existing

condition. it turns out the condition was acne. the list of conditions that would exclude you from coverage called pre-existing conditions is about three pages long for most insurance companies. basically it says if you are a woman in childbearing age group, you are not going to get covered. why? because you might actually have a child. my goodness. we are not talking about family friendly policies here, are we? but that's reality. for this young woman she was excluded on the excuse of pre-existing condition. i happened to have been familiar with the woman. let me see. let me get on the computer and see what this is about. so i entered her name. came out, she was excluded. i went back and handed her a name and she got coverage. something seriously wrong. and the bills before us next week we eliminate that kind of

discrimination. pre-existing conditions as well as secretary of transportation because you happen to be a woman -- as well as discrimination because you happen to be a woman. ms. watson: i'm so appreciative of your knowledge and you live in an area that is a valley in sacramento, california. when i went up to sacramento and i spent 20 years there, and i inherited the health committee as you have already mentioned from you, i had it for 17 years, and i found out that i had allergies. and i spent years and years trying to find out why i had these allergies. and then i found that in this valley the allergens collect and i found out that i was allergic to grass, trees, bark, cat hair, the c.b.c.'s, that

material. mr. garamendi: you are uninsurable. can you not get a health care policy. ms. watson: exactly. mr. garamendi: unless you happen to live until you are 65. when you are 65 you will automatically be available for a single payer universal health care program called medicare. people want to live long enough to get into that system and at that white house meeting most of the gray beards there were 65 and they belonged to that system. ms. watson: i finally made 65 and went beyond. mr. garamendi: i don't believe it. ms. watson: i did. way beyond. the point i'm trying to make here is that americans deserve health care. if you have an insurance company that covers you and your family and you like it, you keep it. and i want to make this

perfectly clear to the public. that many meetings were held, many meetings were held here in congress. no bill gets out of committee that has not been voted on. and a majority vote will get the bill out of committee. we hold our meetings in front of the public. when a bill goes through a committee, it's held and spoken to, it's marked up in front of the public. so i want to make that perfectly clear to the viewing audience and the listening audience out there. we did nothing in a closed smokey room. we don't really smoke in all of our rooms. some people do. in california we have a policy that you cannot smoke in any enclosure or outside.

you can smoke in your own homes. so everything that was in the bill that we are going to consider has been discussed in the public. you were not here for all of those discussions, but you follow policymaking because you served with distinction in the california legislature. you served as a statewide officer. you know something about this. and thank you for tuning in to what we were doing here. but our premise was, we ought to have a single payer so that every american can feel that they are covered. if we want to keep costs down, we are going to keep people healthy and we even have a provision that allows medical students to be able to get grants and scholarships if they then commit to become a general

practitioner so that people can go, particularly to these clinics or to their hospitals, and all. their doctor's offices and stay healthy. that is what is going to save money. we are not doing this, mr. speaker, and congressman garamendi, to increase the deficit. it's just the opposite. we are doing it to save american money, because if you don't have good health care, and coverage, and you have a six child, and that child has a fever, what are you going to do? you are going to take that child in to where you see that flashing light. that neon light. that's emergency. that is a costly area in a hospital. and if that child is acutely ill, the next stop will be in the surgical suite and that's where the cost goes up. mr. garamendi: congresswoman

watson, you are very, very aware of all these having served those many years in the california legislature and also as an ambassador. you understand what apparently our colleagues on the other side tend to miss and that is the cost is in the system and because there are so many uninsured who do wind up in the emergency room, the cost actually goes up. for a variety of reasons i was at an emergency room in sacramento over the weekend, and it was plain to see that there were a variety of people there. most of them did not have a true emergency, auto accident. they were there with a cold, flu, and they were waiting. now, america has been waiting. and they are in a waiting room that is extraordinarily expensive. the bill, the senate bill as well as the house bill, addressed this in two ways. first of all they provide the health insurance so a person can go to the doctor before they become seriously ill and

go to the clinic, go to the doctor's office rather than to the expensive emergency room. that's one way they save money. the second way is there are a variety of elements in the senate bill as well as the house bill, specifically designed to reduce the cost in the system. you mentioned one. stay healthy. smoking, other health -- we know if we could keep people healthy we reduce the overall cost. there are provisions in the bill to advance wellness. great. there's also provisions in the bill to deal with the extraordinary administrative cost in the system. one of them, which i heard our colleagues on the other side of the aisle demean, is a national benefit package. a uniform benefit package across the nation. i know from my experience as insurance commissioner, doctors, insurance companies are faced with hundreds of different kinds of policies. different deductibles, different co-pays. the result of that is extraordinary administrative costs. one way of dealing with it is

have a national benefit available through what are called exchanges which are pools that people can -- which insurance companies can get involved in. creating a large ack two wearry -- actuary, and also allowing competition to exist. a third way, there will be competition. so you have a uniform benefit, you have competition, you have a national nonprofit company operating within those exchanges so that we provide additional competition. so you have competition keeping prices down and on this floor two weeks ago we passed a major change in the antitrust laws, applying the antitrust laws to the health insurance. so within this area of legislation that we voted on next week, are major efforts to reduce the cost. and i have gone through three what i think are a half dozen

different ways to reduce the cost in the system. so much so that the congressional budget office estimates that the reforms that will be before us will actually reduce the national deficit in the decade ahead and in the out years more than a trillion dollar he reduction in the national deficit as a result of these reforms. ms. watson: congressman, we have been waiting for the c.b.o. to then give us some idea of what these reforms will cost and how they will reduce the cost of health care here in america. we were hoping that we would have gotten that information today. we do have to give everyone 72 hours to look at the bill before we can bring did up -- bring it up. so we are waiting to get the cost estimate on this new proposal and we do expect it to come in lower than anticipated. thank you for giving that information. mr. garamendi: the figures i was giving were based on the

senate bill. the additional changes that are going to be made, corrections to the senate bill, will provide we are quite confident additional reductions in the cost of the total bill and reductions in the national deficit in the years ahead. the other thing that needs to be understood is that these cost reductions will be real and many will be available in the near term, others as we learn how to implement the medical technology so that we have records that are readily available. . so we will see reductions in cost as we've already discussed. one of the things that will be available as a result of this legislation is the availability of medical providers. you touched on this and you hit it hard. i know a lot of discussion is the bill has too many pages. well, many of those pages

specifically deal with making sure that the medical providers are there, extending the availability of loans and programs for primary care doctors for nurses, for nurse practitioners. and i recall years ago you carried the nurse practitioner -- ms. watson: i did. mr. garamendi: in california. ms. watson: you know, one of the misstatements i hear over and over again is that government, who doesn't do anything right, will be running this system. that is a misconcept, and i want everyone to hear me, because we do cover the conversation between the patient and the doctor to determine end of life care. it will be covered for the first time. they called it death panels. it's just the opposite. you know, you ought to have a right to discuss with your practitioners, with your doctor

how you want to -- what your quality of life should be. mr. garamendi: how to deal with -- what will inevitably the final days for all of us. ms. watson: yes. mr. garamendi: we would want that to be in the interest of the individual and the individual's family, but right now the doctors cannot do that. ms. watson: now, we allow you to tell your doctor and it will be covered who has a durable power of attorney, where your will is, do you want to be resuscitated, do you want to have these kinds of treatments or not, this is a discussion that will be covered. government does not have this discussion. the patient and the doctor will have that discussion. mr. garamendi: well, that's the way it should be, but often the way it is it's the insurance company that makes the decision. i cannot begin to count the number of times when i was

insurance commissioner that complaints would be brought to me that the insurance company decided that this young girl was going to die because she was not going to get treatment for her leukemia. this is not unusual. in california last year the statistics collected by the department of managed health care showed that the five largest -- five largest insurance companies that cover most everybody in california the denial of claims and the denial of services ranged from 25% to 40%. so it's the insurance company, not the doctor, not the patients that are making the decision, it's the insurance company. now, on the other side of it in medicare and medicaid, medical, you can't see those denials. you see denials for things that are inappropriate. so we know that in the reforms that are coming before us we opened the door for the patient and the medical practitioner, the doctor, the nurse to have

that relationship, to make the decision on what is the appropriate care. that is not the case today. it is the insurance company. all too often that's making the judgment upon whether a treatment will be available. ms. watson: congressman garamendi, you know this so well. a few weeks ago anthem blue cross, the california blue cross program announced to its consumers that they will have a 39%, almost a 40% raise in their fees. if we did nothing in the state of california it would cost a family $1,800 annually for coverage. now, we had a series of community -- mr. garamendi: $1,800 a month. ms. watson: it would raise their claims up to $1,800. mr. garamendi: additional

costs. ms. watson: ilnever forget this man -- i will never forget this man. he had a heavy accent but is an american citizen. he said, i have three jobs and he said, my 2-year-old became ill. even with my three jobs, i was not able to afford an -- for an insurance coverage and could not get coverage and she died. we should not have that in the united states of america. mr. garamendi: that is yet again an example of what is seen every day, in every community in this nation. there is a denial of coverage by the insurance companies and for those who have no insurance, they face a situation where death, bankruptcy and the loss of their jobs. it's not necessary. now, you mentioned -- we talked about the cost in the system. perhaps this is where we would

let this discussion end today. this nation is spending 17.5% of its total wealth on health care. our competitors around the world, not including china, which is completely different, but the other industrialized nations of the world, japan, korea, the european countries spend 10% or less of their wealth on health care. in all of those countries they have universally available health care, different kinds of systems, but it's universally available. we're spending 17.5%, they're spending 10%. you would think with that additional expenditure we would be healthier. unfortunately we're not. we don't live as long. our children die earlier. our women die in childbirth more often. our health care statistics rank us in the range of the nation of colombia. this is a tragedy for america, and it is a blot on our

reputation in america. the legislation before us would begin addressing that by providing better health care coverage, as we discussed with the clinics, access to health care because of the expansion of insurance to some 30 million americans that don't presently have it. control of the insurance companies. no more pre-existing conditions. no more game playing and discrimination and postevent underwriting which is you get sick and suddenly your insurance cancels. those things are gone. and also in this legislation controlling the cost of health care in america. so that our nation can once again revive its competitiveness so that we spend our money on education and manufacturing and the things that create a strong economy and a strong sew -- society with health care. that's our goal. and the great opportunity that you and i have and all 432, i guess we're down three members

right now, members of this house and 100 members of the senate and the president have is to finally close the gap, finally after a century of effort to provide a system that covers americans with the health insurance program that has the quality and the benefits that they need. and i know you've been there. you've been there since i first met you in 1976 in california and the years that you've spent here. so congresswoman watson, it's a great privilege to engage in this dialogue with you. ms. watson: i'd just like to conclude by saying this. i serve on the international relations committee. we travel the globe. i serve as an ambassador. i taught school in my 20's in the far east and over in europe. and so i've been around this world many, many times. our status has dropped among other nations. my intent is to continue to lift the status of the most

wonderful country in the world. and we're only as strong as our weakest link. and it amazes me to hear the criticism, to hear people rant over delivering health care rather than reason over delivering health care. when i know that they happily nodded their heads to spending $15 billion a month on a war that has not really benefited the united states much. and that was the war in iraq. and no one complained about adding to the deficit then. and now we come up with a health care reform that we want to strengthen america's children, america's adults, all americans. and to think that would be the

cost for these tie rates to hear is beyond reason. and so i really appreciate you enriching this house with your experience and your knowledge and, by the way, i'm a little prejudice because you're from california, but i think your background helped to give the understanding to that audience out there, americans, that we are doing this for the benefit of all americans. thank you. mr. garamendi: yield back. the speaker pro tempore: does the gentlelady yield back? ms. watson: mr. speaker, we yield back the remainder of our time. the speaker pro tempore: the chair recognizes the gentlewoman from california, -- -- the gentlewoman from california for a motion. ms. watson: mr. speaker, i make the motion to adjourn.

the speaker pro tempore: the question is on the motion to adjourn. those in favor say aye. those opposed, no. the ayes have it. the motion is agreed to. accordingly, the house stands adjourned until 12:30 p.m. on monday next for morning hour debate.

and last month marked one year since congress passed the economic stimulus money. of the money approved, three under $46 billion has been committed with a $194 billion paid out so far. -- $346 billion has been committed with $194 paid out so far. saturday on "america & the courts," chief justice roberts talks about whether the supreme court justices should attend the state of the union address. he spoke earlier this week and you can see that saturday at 7:00 p.m. eastern here on c- span. >> obama and his socialistic ideas -- the government running the companies in deciding salaries -- this is a life lesson in progress right now for conservatives. >> sunday, the founder and

president of the clare boothe luce policy institute, on her work to promote conservative women in leadership roles. that is sending it on c-span's "q&a." sunday, your chance to talk to karl rove live on "booktv." he will take your phone calls, e-mails, and tweets, discussing his new memoir. the former defense secretary and his wife will talk about race relations in america as they are interviewed by a congressman. we have live coverage of the tucson's festival of books. you can find the schedule at our web site -- website. >> house speaker nancy pelosi holds her weekly legislative briefing. topics include health care debate, student aid, and the 2011 budget. this is 20 minutes.

>> could morning. -- a good morning. we are close to passing historic legislation to make health care more affordable and accessible to the american people and hold the companies accountable. each day we move closer, in terms of narrowing the decisions that need to be made. we are still waiting for the report of the cbo in print about the internet -- so that we can put it on the internet. they came out with the report yesterday on the senate bill. the senate bill passed on christmas eve. there was a cdo score going into the boat. this is as amended. -- there was a cbo score going into the vote.

that savings is what we hope to do with the reconciliation bill -- we want to sustain those numbers. the fact that we started in a good place is very positive. we are eagerly awaiting the final word. we will then be able to send the bill to the budget committee who will pass it out to the internet. we will discuss the specifics of the legislation with those members. we will take whatever time is required for us to pass the legislation. again, i feel very exhilarated by the caucus we have this morning, in terms of the questions that we had. we spent a good deal of time on the substance and on the process as well.

we stand ready to stay as long as it takes to pass the bill. i think members are eager to pass a bill. it will not be long before we will be making a real difference in the lives of the american people. in terms of the house -- the substance of what is in between the house and the senate -- they say they are prepared to act upon it. i am delighted that the president will be here for the passage of the bill. it will be historic. it would not be possible without his tremendous leadership. he has always guided by the statement that, "we will measure our success by the progress made by american working families."

any questions. >> are you saying by march 21, you will pass -- >> as i said, we will take the time we need to pass legislation. i hope it will be in that timeframe. our clocks cannot start digging until we get the cdo -- ticking until we get the cbo score. >> will it be easier to get votes with the student loan provision attached? >> thank you for that question. our budget instruction was about to bills that would be reconciled -- one was health care, one was education. if i may step back for a moment, this goes back to our budget bills that were passed in the house 100 days after the president's inauguration. that was in the spring of last year. in that bill, the president had a blueprint in the budget for lowering taxes, reducing

deficit, creating jobs, stabilizing our economy well into the future -- around three pillars which were investment in education, innovation, investment in energy and climate change, and investment in healthcare. we have passed all three of those. two of them -- the education bill and the health bill are going to be part of the reconciliation. the budget bill we passed in the spring -- the budget instruction we received in the fall was about -- was that reconciliation would deal with those. reconciliation of education would bring as more savings. it would cost the taxpayer less and the students less. that has always been part of the plan. there was some question as to whether this would prevail in the senate, until the senate

parliamentarians -- yesterday morning, i am losing track of time -- they said it must be part of the reconciliation. that is why it has emerged again as a subject of more public view. it is really important. i do not think it would make any difference in our house about passing the bill. it will make a difference in community colleges, pell grants, historic minority-serving institutions, k-12 school construction -- those are the kinds of things that will result in additional funding. >> if you include the public option in your version, more

than 40 senators -- is that something you're considering? >> let me say this -- i know i can say this with the assurance in this room. i have supported -- when i say support -- signs in the street, advocacy and legislation -- i have supported single-payer for longer than many of you have been alive. i have always thought that was the way to go. the public option -- it is with a little sadness that it is not in the bill. in fighting for the public option, a fight that was led in the house and was in our bill, we improved what will be in the final product. while they may not have a public option, we have the purpose of the public option served by the

exchanges and what they allow, by the rate reviews which we insisted upon, and by saying that insurance companies, should they be raising rates between now and the onset of the exchanges, may be prohibited from participating. i believe we have a very strong bill that will increase competition, lower costs to the american people, and accomplish some of the same goals. it does not produce the same savings. that is why we were fighting for it. the goal had to be served. we wanted more savings that the public option would provide, but it did not prevail. what we will have in reconciliation will be something that is agreed upon in the house and senate that we can pass and they can pass. i am not having the senate -- which did not have a public option in its bill -- put any of

that on our doorstep. we have it, wanted it, but they did not end it is not in the reconciliation. -- but they did not, and it is not in the reconciliation. we're talking about something that is not going to be part of the legislation. why do we not talk about what is going to happen? i am quite sad that the public option is not in there, but it is not because the senate is to bring it. it is not there because they do not have the votes to have it in there, or they would have had it there to begin with. yes, ma'am, you are next. >> how troubling is the ruling that the senate parliamentarians did yesterday on -- the president must sign the bill before they can do anything? >> it is not troubling.

it is more of a visibility issue. the fact is that once we pass the senate bill, it is enacted. maybe more on the subject -- i know you will stop me if that is the case. it is important to note that what we're doing is reconciliation -- dealing with a very few points, affordability for the middle class, equity for the states to collect -- correct the nebraska fix, closing the doughnut hole for seniors -- i am finding out that a lot of people do not know what that is -- making prescription drugs more affordable for seniors. expanding the accountability of insurance reform. in addition, on the pace side, changing the pay-for from the excise tax to another form.

that is largely what is in the bill. it must be central to the budget. there is nothing incidental or peripheral to the budget -- it is central to the budget, that is what it is. the bill that has passed in the house and senate, will be acting upon the senate bill with changes that were in the house bill reflected in it in reconciliation. in order to have the senate bill be the basis and build upon with the reconciliation, you have to pass the senate bill, or else you're talking about starting from scratch. we will -- once we pass it, the senate parliamentarians have said, in order for them to do

reconciliation based on the senate bill, it must be signed by the president. it is not going to make any difference, except maybe to move -- except maybe to the mood the people are in. once we pass it in the house, it will be the law of the land. among the rank-and-file do not trust the senate? -- >> the rank and file do not trust the senate? >> we are making insurance more affordable to the middle class, ending the prohibition on denying coverage to those with pre-existing conditions. we are committed to the goals of the legislation and they are strong enough to do with whether or not the bill is signed on monday or friday.

>> the cbo came out with their newest budget numbers that $9.70 trillion will be added in 10 years. do you intend to preside over a balanced budget? what time frame would that be? >> let us reflect on where that budget deficit came from. we have to wars that were done with supplemental, not pay for -- two wars that were done with supplementals, not pay-4. -- pay-for. it is our responsibility to reduce the deficit. for that reason, i am very pleased that the senate has agreed to have pay as you go. it became the rule of the house the day i became speaker and the

law of the land when the senate agreed that they would abide by pay as you go. excuse me, i am answering the gentleman's question. we have the commission that the president has, by executive porder, put forth. that has a short fuse. that will be a this-year phenomenon. the president has asked for a freeze in appropriations as we go forward. what i say to members when they have an idea or suggestion for legislation or an amendment to a bill is -- does it create jobs? does it reduce the deficit? that as the course we have to take. -- that is on the course we have to take.

under pay-as-you-go, the last four clinton budgets were either in-budget or surplus. after president bush lost reckless economic policy and tax cuts -- president bush's reckless economic policy and tax cuts to the wealthy, he added to the deficit. the trajectory change to about $6 trillion in deficit -- the swing of about $11 trillion, the biggest in history. we know how to turn that around. president clinton did it following the reagan-bush deficit. we have to turn it around now and that is our commitment to do so. yes, sir. >> i realize that leader reid cannot give you an ironclad assurances because of the rules of the senate.

what assurances do you have to ease your member's fears? >> we have sent a number of bills that have not been acted upon at. that is largely because the obstructionism of the republicans who are requiring 60 votes. senator reid has not had the time to address each of these issues. the concern that they had was about what has happened in the past, based on the 60-boat rule. under the simple majority and, still -- and constitutional majority rule, i think members are much more comfortable that the reconciliation will happen. nonetheless, there are certain assurances they want and we will get for them before i ask them to take the vote. we're in a very good place.

what we a been seeing from c b o is positive -- what we have been seeing from cbo is positive. any hesitation about mistrust of the senate is offset by the great vision we have for health care for all americans, and that we will be able to do it in a reasonable amount of time. it will take a little face. the mud you said yesterday that he would give your members a week -- >> you said yesterday that you would give your members a week -- >> i said they would have a week from yesterday to do the vote. i hope we have the scores as soon as possible so we can go to the budget at the beginning of the week and then go on the internet and take our boat. thank you. thank you. it is an independent agency.

i wanted it last friday, and i hope we have them today. thank you. thank you. >> speaker pelosi from earlier today saying that the meeting with health -- house democrats as letter exhilarate it at the process of passing health care -- prospect of passing health care legislation. she says she will keep the house in session as long as necessary to get health care done. speaking of the house, members, about 20 minutes ago, battled out for the week. they passed a bill relating to algae control and hypoxia research for a nationaoolal program. health care could return to the floor next week. democratic leaders have been working on a timeline to bring the legislation back for debate

and a final vote. follow that live on c-span. president obama -- this is -- he delayed his way to asia -- his trip to asia. final passage of the overhaul may be in days. she says it will be historic. they reached for final agreement on the measure. >> c-span, our public affairs content is available on television, radio, and online. you can connect with us on twitter, facebook, and youtube. sign up for our schedule alert e-mails @ c-span.org. >> a hearing on that path-35 joint fighter program -- f-35 joint fighter program. this is about two and a half hours.

>> we will play it by ear. \ >> the committee will come to order for our hearing. apparently, it is your desire to go through your entire opening statement. i want to clarify this -- how long is your opening statement? >> mr. chairman, i am at your disposal. if i did give the entire statement, it would take about 10 minutes. the only reason i mention that is because of the size of the program and the different pieces. i am at your disposal. >> if you could keep that down to 10 minutes, it would be welcome. we're going to shift to the

second hearing of the morning. we have a discussion on the f-35 joint strike fighter program. i want to they senator mccain for proposing we have this hearing. -- thank senator mccain for proposing we have this hearing. what actions is the department taking to ameliorate problems that were found in the program? what is the best judgment available as to how effective these actions will be in preventing problems with the program, including cost overruns and delays? we have with us today the undersecretary of acquisition technology in tsixand log -- technology and logistics, the director of operational test and evaluation, acting program

executive officer for the joint strike fighter program, and the director of acquisition sourcing management of the u.s. government accountability office. first, let me extend are welcome to our witnesses. we thank you each of you for coming before this committee today. we had a closed briefing before the committee of the joint strike fighter program in december, 2009, where secretary carter in director fox -- and director fox discussed the program, the scope of the problem andss, and while we woud have agreed to an open hearing, we decided to have up closed

hearing because of some of the contractor information we discussed. it is the largest acquisition program within the defense department portfolio, with an expected acquisition cost of nearly $300 billion. the cost schedule for performance of the program intends to buy more than 2400 aircraft for air force, navy, and marines, which will have significant implications for the rest of the department of defense acquisition programs and for the budget as a whole. i would also note that this committee's strong efforts on acquisition reform -- it became law on may 22 of last year, including changes to the acquisition procedures, requiring by implementation that they will not be just positively

unless we can demonstrate some success with the largest of the department of defense's acquisition programs. this is to say that the f-35 program started before the acquisition reform is not an example -- to say that the program started before the acquisition reform will not be acceptable. there is an estimated 13-month slip in the program for completing the test phase. we have heard estimates that the delay in initial operating capability could slip by as much as two good years. that delay has both cost implications for the program itself and for the services, as they tried to manage their current force structure of legacy aircraft. we know that the secretary announced that he is asking lockheed martin and the rest of the contractor teams to share in

paying for the cost built into the program. we want to hear more about this situation and whether this might be a way of ensuring that contractor teams will be more cautious before bidding low on future acquisition programs, with the hope that they will be more than -- they will be able to more than make it out of the government's expense later on down the road in that program. it is not enough merely to say that the program will live within its means by shifting production funding. delayed deliveries of aircraft, and/or buying fewer aircraft, will have a seriously-impact on unit procurement costs, as well as a civic it effect on our ability to support the currents -- as well as a significant effect on our ability to support the current force structure.

it totalled some 250 strike fighter aircraft, a short all that is large enough that if it were realized could cause us to -- a shortfall, that if it is large enough, it could cause us to tie up aircraft. the air force testified that they could be facing shortfalls even larger than the navy's, by 2024, with a fighter shortage of as many as 800 aircraft. secretary gates specifically mentioned that the quadrennial defense review was going to evaluate the requirements that could have caused those deficits to change. however, the qdr did not change the force structure requirements. even if the department were to decide that requirements should be changed, that is unlikely to erase those kinds of deficits. we need to understand what some

of the options are that the department may be evaluating to deal with those problems. another particularly troubling matter, revealed in some documentation of the various independent reviews of the program -- one observation from the independent manufacturing review team in their report about the program said the following, "affordability is no longer embraced as a corporate lawyer." -- core pillar." that certainly raises concerns. this committee has been a strong supporter of the program from the beginning. however, people should not conclude that we will be willing to continue that strong support without regard to increased costs coming from poor program management or a lack of focus on affordability. we cannot sacrifice other

important acquisitions in the department of defense investment portfolio to pay for this capability. those are a few issues that this committee will be hearing more about today. i called senator mccain. >> thank you, mr. chairman. i ask that my full statement be included in the record. i thank you witnesses here. i have been a strong supporter of the weapons system and aircraft, but i am deeply concerned about the cost overruns and the problems associated with the joint strike fighter. could i just remind you that last august, after meeting with the program's prime contractor in texas, secretary gates said that, "is impression is that most of the high risk elements associated with the jsf's development program are largely behind as." he went on to say, "there is a

good deal of confidence on the part of leadership here that the manufacturing process, supply chain, and issues associated with all of these have been addressed or are being addressed." that was not the impression we got in the closed meeting. it is not a hearing -- that which we had in december. reports are now saying that the program would need at least $15 billion more in funding through fiscal year 2015. there will be -- the jsf program would suffer a cost breach. the media reports have been very start, whereas this committee, although our staff is -- we have not been notified.

according to the statement on page five, a comprehensive statement, it should have been the opening paragraph, i would say, secretary carter -- this means that the average price of the jsf aircraft is -- the overall cost of the program, /number aircraft, would be more than 50% higher than it was projected to be back in 2001, when the program began. you go on to say that you expect air force secretary donnelly to formally notify congress of the non-mccurdy breach within days. i have to tell the witnesses that we have not been kept up to speed as much as we should have been. it has been very clear from the media reports that there are serious problems. the most important thing is that

so much of this was predicted. it is in keeping with the cost overruns we have had with every major weapons system in the last 10 years. cost overruns and behind schedule. the impact that has on the existing legacy aircraft, the ability to replace them -- all of those have been based on certain assumptions that are clearly not -- we're clearly not aware of. it is a bit frustrating. we hear the secretary of defense, as short a time ago as last august, tell us that everything is ok, when we have been reading in the media that they are not. i would respectfully ask, secretary, that you would begin your statement by saying how much over cost is this program going to be and what will be the delay. the american people want to know. the taxpayers are tired of this.

i cannot say i blame them. i thank you, mr. chairman, for holding this hearing, and i welcome the witnesses. >> thank you again for your focus on this. it reflects the concerns of every member and surely, most members of this committee. we have talked about these concerns and are opening comments and i hope they will be addressed in the early part of your statement, secretary, so we can just summarize it and then perhaps expand, if you would, as to how you are going to deal with these questions and how we get to where we are at. secretary carter? >> thank you, mr. chairman and senator mccain. i would give a very abbreviated version of the statement. at let me cut to the chase to follow up on what senator mccain said. when we met in december, i

described to you that there was -- before the leadership of the department -- the two estimates of for the program was going. one, provided by the program office and the contractor, and another provided independently. .

>> understood what is driving poor performance. we have found some steps, managerial steps that we can take. some of them have been described by secretary gates to do better. senator mccain mentioned one. steps taken to compress the development program that was stretching and costing us more money and taking more time than it ought to have. those investments, as i believe you, mr. chairman noted, are in investments that we do not

think the taxpayer should assume solely. we have asked contractors to share. by beginning a process of aggressive management of this program, we are trying to get to a point where the full consequences of the jet testament, which i repeat are very credible, that is a world where there is a realistic estimate of for this program is going. i would like to do better and challenge the contractors to do better. more jets -- faster, cheaper. in a statement, i will describe the managerial steps we are trying to take in the development phase, in ramping up to full production, in full production itself, and in sustainment, though which is many years in the future, it is worth planning for now.

>> could i ask you to provide us with the amount of cost overrun and the months of delay you estimate now? >> absolutely. the measure of delay that i focused on because it is a good measure of the technical performance of the program is the slip in the time to completion of developmental testing. that is the number that i am sure you have heard. we work originally projected a 30-month slip. now, as a result of these remedial steps that the secretary directed, a 13-month slip. as far as costs, i will ask miss fox, and she does those estimates, and i am assuming you

are asking about the unit cost -- the total cost of the total program as we now projected going forward/the number of the total airplanes, and then secondarily, in every year of the ramp up, and that is as we negotiate as we are now the initial production contract. there will be a certain number of aircraft and a price with the fiscal year and 11 funding. -- with the fiscal year 2011 funding. order numbers are smaller. the line is in mature. the unit costs there are different and obviously higher earlier in the program. we have both the cost in the

early ramp years and integrated in the entire program. since she is the keeper of those estimates, let me ask miss foxx to address that if i may. >> could i just ask what the original estimate of the cost of the program and the estimate now? could we start with the at -- start with that? >> it was 50 million in 02 baseline and dollars. the current program estimate will be somewhere between 80 and $95 million in constant year 02 baseline dollars. >> this will be the overall -- the air force was asking for one aircraft in the supplemental

budget request? >> i think i may be able to explain that. >> that is the unit cost. >> that his unit cost, but at the early ramp. >> is that the unit cost of a particular ram, or the overall cost? >> i think the number that senator mccain was pointing to was the unit cost in that particular lot. >> is that the same number of planes? >> no, it is 32. >> has that changed from the 2002 estimate? is it 30 and 30 now or has it changed? >> absently, the ramp moved. >> -- absolutely, the ramp moved.

>> i am not talking about the ramp. you were divided by the same number of planes. >> for the average unit cost, it has been that since 2002. the numbers have changed, and i am sorry, i did not have those. >> i think maybe this could be helpful. i take it that the reason why one aircraft is not to 1 $5 million in the supplemental request is because you're looking at the overall cost, which means the costs will decrease in later years as the ramp up production. the early cost in the first couple of blocks is much, much higher. is that correct? >> absolutely correct. >> thank you. >> to have a number to compare to the 2 05 million? >> it not off of the top of my head. i could get you a number.

>> ok. >> i will call back to -- i will go back to the beginning and agree with what was said. >> i am sorry if i'm not you off stride. >> -- i am sorry if i'm not you offs stride. >> i just want to agree this is the largest acquisition program. it is immensely important. it will be the backbone of our air combat superiority for a long time, and at the same time, however, this committee and secretary gates have emphasized performance in our programs, not just the necessary -- not just the necessity to have them, and as i will describe, the program is falling short on performance over the last several years.

this is unacceptable. it is unacceptable to the taxpayer, a the navy, the marines, and all the international partners there depending on this aircraft we describe the situation in december. as a part of the fiscal year 2011 budget, secretary gates describes some of the steps he is taken to restructure the program and to put it on a more realistic schedule and budget. these are important steps. i would give you more detail today, but i would also like to emphasize that it has taken a couple of years for the program to fall behind and the department is going to need to aggressively manage this program years into the future as it transitions from development into production. we're going to be looking for a program, as i know this committee will, to show progress

-- to show progress against a reasonable set of objectives. i will describe the elements. the elements must be on restoring a key aspect of this airplane. you have spoken this work already. affordability. you know that we have conducted several reviews. your staff has those reviews. i will not repeat what they indicated at this time. just to rewind the clock, i will remind you that the very first jet testament was done in october of 2008. at that time, it projected essentially the same thing that this one is projecting, namely the phase of the program is taking longer and costing more than it was projected. in response to that estimate,

secretary of defense gates added 406 million in fiscal year 2010 in order to hopefully begin the process of catching up. what we got in october of 2009 was jet two, the second jet analysis. it was established -- it was substantially similar to the one the year before. namely, it said the program continues for a second straight year. continues to take longer than we thought and cost more than we thought. it was on the basis of this two years of this news in a row, that is what we determined that we should have a department- wide, at in depth review of the program to get to the bottom of what was going on and why there was this? the difference between the jet

two estimate and what we're hearing from the program office and the contractor at that time. it is also abundantly clear that if the estimate was true, that the program would be in critical breach. that review started in november. i had the opportunity to meet with you and give you some of the results in december. the secretary of defense give you some of his decisions based on that review. i would like to briefly recap them in three phases, first the jsf development phrase, then the transition to the full the element -- to the full right production phase and then fled production itself. the jet two forecasted a longer, but 30 months and more expensive, by $3 billion

development phase than the joint program office was forecasting last summer. as i indicated, secretary gates is determined that that jet two estimate was credible. he developed several steps to try to partially restore the schedule to what it was supposed to be. he did not get all the way there. first, he directed the procurement of additional aircraft to be used for flight testing. yes, more aircraft for flight testing. you can get through the tests faster. that is a matter of adding resources to the test program. secondly, he directed that we take three early production jets that were planned for operational tests and loan them

to developmental tests, again with the objective of hastening the development of tests. third, he directed that we establish another software integration line to the program. this was to prevent a situation in which we compressed the flight test program, but then found that the long hole was the delivery of administration software. we wanted to proactively add to the software integration capability of the contractor, said that would not become a limiting factor in the future. the secretary of defense did that. on that basis, the jet team said let's look at that program as restructured by secretary gates, go through the mass

again, and when they did that same methodology, they found that the slick was 13 months, rather than 30 months. 813 month slip is better than a 30-month slip, but it is not better than no slept. -- no slep. it did not seem reasonable that the taxpayers should bear the entire cost of the failure of the program to meet expectations. the additional cost, it seemed, that cost should be shared between us and the contractor. that is the reason why the secretary decided to withhold money for the lockheed martin contract. the second thing i will say before getting to the early

production is that while is a constructive result of this jet process that we got 30 months down to 13 months, i just want to emphasize that these are still a estimates and reality gets a vote here. however good we are, and they are very good at estimating, reality gets a vote. the next two years will be critical. there will be a lot of activity. we have delivery of test at -- test aircrafts. completion an analysis of hundreds of test flights just this year. if we go on to 2011, that is when we will go on to have the first stovall training and sea trials aboard an actual ship. also, the completion of land base catapults.

catapult and arrested landing testing. release of the block two software, which is a critical, software-related milestone. both 2010 and 2011 are event filled years. reality gets a vote. the current program plan, the current plan estimate as result -- as revised stands up and delivers production in 2012, 2013, and 2014. that is delivery of aircraft. that is not i o c. i would like to address that. there has been so much confusion about what determines that. they are determined by the

services based on both the program and how each of the services defined ioc. each service has a somewhat different definition depending on what capabilities they intend to have, for operational tests and training requirements, and the number of aircraft they require. since the restructuring, the services have specified these distinctions. at this time, based on these definitions, the services are estimating ioc's of 2012 for the marine corps. let me now speak to the initial production process. my report, which my office commission already, that report examine this critical transition from development to full-rate production as one goes up the

ramp. just to remind you, there is an unprecedented amount of currency in the program, that is a time frame which development activities are still continuing and testing even as production begins. what they said when they reported back was that there were a large number of conditions that would have to be met for this program to achieve the ramp that was than planned they recommended eight somewhat flatter and smoother ramp. that -- that, together with a slip means that we are now in essence with a. objection -- with a projection for a later and somewhat lower production ramp. secretary gates, accordingly,

decided to budget to this revised jet two production ramp, and that is why the fiscal year 2011 budget forecasts a later, slower grant. we are, therefore budget in to an independent cost estimate, constant with your legislation reform act, and in doing so has three important consequences. first, it reduces risk because it reduces concurrency. second, the earlier aircraft will be more expensive, since they are produced in smaller, and you will lots. third, this is, just to say it again, an estimate, obviously we would like the program to perform better. that is why we are protecting the option to produce 48 aircraft and not 43 in 2011.

this'll be determined in negotiations with the contractor which are ongoing. these negotiations include the transition of contracts to a fixed price at an earlier date. this is something that this committee emphasized. obviously, we think the taxpayer would want to get more and cheaper aircraft in those years than the jet two estimates. we will try to do better in our negotiations with the contractor. last, and finally, the more up we go, after several years, the program will enter full-rate production which was noted as jets for both us and our international programs. we have been approaching the

current threshold for several years. as i mentioned earlier, it was obvious back in november that if the jet two estimate was accepted, then, it would indeed, breach the threshold. since we do except the jet two estimate as credible, the secretary of the air force will inform congress within days of a breach and we will then begin the process of considering the certification of the joint strike fighter program. the only good thing i can say about it at this juncture is that what the thorough process called for is the very process

that we began in november. we have been acting as we were under a breached since we realized back in november that that is where we would end up. some of that work is represented in what i am able to tell you today. miss foxx can describe all the factors that go in. that includes the engines and materials. many factors go into that cost. let me conclude. i want to look ahead, now. several management measures will be critical over the next few years and secretary gates elevated the position of the executive officer to three-star rank to reflect this need for experienced than vigorous management.

the office, with oversight from the secretary of defense will need to take a number of critical steps. i divide them into development, wrapped up, and addressing a breach. with regard to the development program, it is important to provide the new tests and software capabilities so that there will not be any further delays. secondly, the contractor must be held to account to meet a defined set of milestones all of those dividends -- milestones. all of those events in 2010 and 11 are now on a schedule. the remaining c will be tied to the achievement of all of those miles of -- the remaining three will be tied to the achievement of all of those milestones. finally, the program will need to deal with issues that arise to in-flight testing. experience shows that issues

will surface. with respect to the wrapup to fulbright production, the contract should -- with respect to their ramp up to full-rate production, the contract should exceed or meet the need for aircraft. these negotiations are underway. the contracts should transition to a fixed-price structure, reflecting a need for the contractor to control costs and not simply pass them on to the government. the director for policy will be conducting a should-cost analysis so that we, too, will have a to you on what the aircraft should cost. in regard to addressing the affordability, it must be aggressively and relentlessly

pursued by all three contractors, northrop grumman, a lockheed martin, and bp. we'll be looking at all of the aspects. cash flows, contracts such -- construct -- contract structures, and life cycle costs. more fundamentally, the managers need to surface candidly and openly issues as they arise, so that we can deal with the manager really, so that congress is aware of them and they could be addressed. i pledge to keep this committee fully and promptly informed of the progress. we will keep our international partners fully and promptly informed. as i said, the program benefits in the fresh eyes and managerial and of a three-star

program executive officer. the military capability will ensure that this aircraft will be the backbone of u.s. air combat superiority for the next generation. the technological capabilities are sound, but it has affordability to be restored. thank you. >> thank you, secretary carter. are there any more opening statements from any the other panelists? miss foxx. >> thank you, mr. chairman. thank you for the opportunity to appear before you to discuss the analytic basis for the restructuring of the program that dr. carter has just described. the announcement has been led by the department and this study lead is here with me. >> let me interrupt. give us an idea of how long your opening statement will be.

>> less than five minutes. >> are there any other opening statements? >> i can do that in one minute if that is what would like. >> that would be fine. if you could boil them down, and i mentioned before, we will call on centers in the same order they arrived for the first hearing so that hopefully no one is confused by the order of recognition. miss foxx. let me try to shorten my statement. we built on the methodology is that we have used for many years i think it is important for you to know that the but one step further and built a team of exports -- of experts. this review is not done alone. we involve multi government experts and the members of that

team provided expertise across the areas of the air vehicle and systems testing. this was quite an expert team. dr. carter has gone through the history. i will not do that again. i would like to talk about what the estimate actually means. it is difficult to mathematically calculated the precise confidence levels associated with independent cost estimates -- as a shade with the programs. based on the rigor of the methods used in building the estimates, the strong get parents to the use of historical information and the review of assumption, we project it is equally likely that the jet two estimate will prove too low or too high for execution of the programs as described. i would also like to comment on the documentation. normally, we would document the results of an independent cost

estimate in a written report. in the case of jet two, we pulled the results into a summary-level briefing as quickly as possible. this briefing, the same region that has been provided to you, immediately provided -- prompted dr. carter to create a task force. from that point forward, the same analysts were deeply engaged in guiding the restructuring and have not been given the opportunity to write a report. we believe this combination of cost estimation is an independent activity and using it to drive the restructuring. we prefer to document our worked in written reports and we hope to return to that practice in the future as we add staff and time permitting. i was going to briefly summarize the restructuring the dr. potter has gone through. in the interest of time, let me

focus again on the cost just to make sure that my answer earlier was clear. the program's restructuring, based on the jet two cost estimate will result in a critical breach of greater than 50% when measured from the original acquisition program baseline established a program in 2001. we have been preparing for this breach ever since the jet two results became available in october of 2009, even though the formal declaration has not been made to you, we anticipate it to be made to you within days and the department plans to complete three certification review of the restructuring program by june, 2010. to go over some of these numbers again, in 2001, at the time of the milestone approval, cost was projected to be $50.2 million in constant a seers.

this figure was based on a u.s. procurement of the 2000 aid under 52 aircraft, including all three variants. the number to be procured was revised in august, 2002, to 2002 under 43 -- 2443. if that holds to this day. -- that holds to this day. the latest estimate, projected an average cost of $69.2 million in baseline $2,002. we currently anticipate that the cost will fall in the range of 80 two $95 million.

we are in the process of determining that number. i will close by focusing on the perceptions of the program that results from the restructuring. it makes clear to you the projected delay in completion of the program should not be interpreted as a signal the program has an surmountable technical problems. the result of our reviews, instead reflect the program's complexity, and the risks develop -- the risks remaining. i know this is not the goal, however development delays have been experienced by other aircraft programs and these programs ultimately produced programs that are valuable to the defense department. for example, 217 experienced problems that raise questions about cost effectiveness.

in response, the program was restructured until the problems were resolved and were resolved in the mid-1990's. similarly, another program repeatedly failed to meet cost goals. in response, it was restructured. ultimately, the contractor was able to overcome these challenges and produce a capable aircraft. we are restructuring the program at an early stage and we think that is consistent with the goals. independent cost estimates were taken very seriously. the or acted upon by secretary gates. the department now has a realistic fiscal path and plan for this important program. thank you again for the opportunity. >> and dr. gilmore, he wanted to go next? >> thank you. my primary concern has been

that we are sure we can begin testing on the paris schedule was contemplated, colonel dell be ready around january -- our primary concern has been that we can begin testing and that testing can be significantly robust to demonstrate that the air force, navy and marine corps are getting aircraft to provide them with the capability they need. to do that, we need to make sure we have a robust development of test program. if we do not have that developmental test program, the problems that should have been discussed it -- discovered yen discovered -- discovered in developmental testing, will become more expensive to fix. in that regard, the direction that secretary carter has given to provide additional flight of aircraft, additional resources and time, and to account

realistically in a restructuring program for the inevitable discovery of problems, is to provide the additional engineering is absolutely key. the 13-month extension is absolutely key to heaven that robust program that will enable us to not discover a lot of problems in the operational system. >> thank you. mr. sullivan? >> i will be very brief. we have looked at the restructuring efforts and we think they do go a long way to getting at what the problems are. however, we still believe there is substantial overlap across development test and production activities and there is a significant risk on the program, slowed by light aircraft delivery, technical problems and low activity. the flight test program, for

example, only completed 10% of the tests they had planned for 2009. the problem that we had seen is not necessarily technological in nature, and it is not necessarily on known on nones. it is about manufacturing the aircraft. the estimates they had to the time and manpower it would take to manufacture in the aircraft were very optimistic. i think the object analysis is finally getting the actuals. their family a appearing more real. i think it is a lot more reasonable. i would throw one metric out. back when they started emd in 2001, i think they were estimated somewhere around 1

million hours of labor to complete the program. it is well over two million today. that is one example of what happened. the flight test program is still nascent. once it begins, there will be more design changes and probably more delays as a result. just to summarize, i think that the jet team got as realistic as they can get at this time, however there are still a lot risks in the manufacturing of development aircraft. one other thing that i think is important is that the department did take more aircraft out of the near-term years, which we think is a way to mitigate risk, however they choose will still be purchasing about 300 procurement aircraft before they are done but devilment tests.

>> thank you. i yield to senator mccain. >> i appreciate it. very briefly. miss foxx, you give examples of success the c-17 and the f-22. both of them had significant cost overruns, but you also mentioned that they resulted in decreased production numbers. do you anticipate the same thing to happen with the joint strike fighter? >> i am not try to suggest that we will decrease production. >> he suggested -- i am not want to suggest. >> you suggested they were successful programs. >> the only comparison was that they were not on a technical problem. those program looked troubled

and develop capable aircraft. >> developed capable aircraft, but at far higher across -- costs. i am astonished that you would use that as a success story because they overcame technical problems, but the unit costs almost doubled or more. is that right, mr. sylvan backs the delays were enormous -- mr. sullivan? the delays were enormous. >> i was not try to suggest. the cost is clearly a tremendous problem. i believe the costs we estimate our as realistic as we could be. it is merely that the program is producing technically-capable programs. >> if you follow the example of the past-22 and a c-17, the numbers produced codon and unit

costs is way up. mr. sullivan, you indicated in your remarks that basically this reduction began official timeline to 17 months vs. the 30-month delay, savings is fraught with risk. is that correct? >> what we have looked at is that there is still incredible risk in just manufacturing the aircraft and having a test program that has not started yet. >> basically, what we are doing here to reduce this delay is putting aircraft out into operational mode without having completed the originally-planned testing and evaluations. >> i think the ramp up, as they ramp up, they will have procured about 300 aircraft, even given

the restructuring. to us, that is still significant risk. this mitigated risk because they added test assets. they will be able to burn down the test points. it is still very risky. >> could i go again to the cost thing. they're asking 205 million dollars in the initial request, but we are alleging that the costs will be $80 or $90 million. is it a bit lucid to say that one clearly in the first couple of blocks the cost will be very high and the examples that miss foxx just stated, easily these

costs could not be at $85 or $90 million, they could be dramatically higher. >> i would argue that they didn't know yet. one good indicator is that there are still operating under contracts to procure this aircraft. that means at the contractor is not willing to commit to a unit price at this time. >> i wonder when the contract is willing to submit a unit cost. >> it is a good caulk -- it is a good question and a good indicator of how the contractors' own estimator -- as the nation. i will not require a fixed price. >> how long will that be? >> that will be next year. up until now, they have been

clocked -- cost plus. i think a good discipline suggest -- suggest that we transition. that puts a burden on the manufacturing to control costs and to be able to know what these unit costs are. if they overrun, it is on their budget, not on our budget. that is the whole point of a fixed-price contracting at this stage. it is the healthy thing to do. >> general, you're confident that the plan has been described to this committee, the amount you buy and the unit cost will not increase further and you will have the operational test and evaluation successfully completed while the aircraft is an operational mode without

having to go back and retrofit rather significantly and expensively? >> if i can take on those questions. as far as cost, i am confident that we will be able to do better based on the cost estimates. i've been challenged by the department. >> you are confident we will by this number of aircraft? >> i am confident we will continue to reduce the costs as we projected as the continue to negotiate the future contracts as we're doing right now. >> your conference will be no further delays? >> i am confident that we now have a reasonable margin to deliver the full capability of the aircraft within the schedule and the budget that has been allocated. >> i think the witnesses and thank you mr. chairman for holding these hearings. we have a lot of monetary --

monitoring to do. i would like to submit follow-up questions. >> thank you, we will keep the record open for your questions and questions of other centers. let me begin my question. looking backward in time, what cost these huge errors in these estimates? these are 60% to 90% increases. they are somewhere between 60% and 90%. how do we deter this? who is accountable? whose mistake? who is paying a price? >> if i may do some of the diagnosis first, then the treatment, in the development phase, it has basically been

going on for the past couple of years. when it comes time to put the pieces together down in fort worth, on occasion, they do not quite fit together. that is because of when they were designed, the matchup was not done just right. all of this is perfectly normal. that leads to what i referred to as class two change traffic, meaning that the design of the piece has to be changed. you're not changing the capability of the aircraft, you're just trying to make it fit together. there has been a lot of change traffic. >> i do not know what that means. changing the design, the requirements? >> changing the design of the pieces so that they fit together. it takes engineers and time to do those changes. everyone else waits around. it introduces inefficiency on

the line. it may seem mundane, but this the kind of thing that has driven the slow delivery of aircraft to test. >> i am not talking about slow delivery. i'm talking about huge cost overruns. >> i was going to get to the second part. >> since march 2007, it has gone up from 15% 35%. it has gone up from $10 to $25 million. that is in the last three years. are you satisfied with that? >> i am not satisfied with it. i am sorry, you are asking the contributory causes to the unit cost growth in the aircraft and there are several of those.

first, and very significantly was the larger-than-planned development cost for the stovall version. that is the of vertical landing of version. if that was because of the weak growth in that there and that occurred several years ago. bell longer than forecasted elements schedule -- the longer than forecasted development schedule, the degradation, the increase in labor -- >> were the foreseeable? is this a historical by in here? someone bids low and we pay the price down the line? is that what is going on? >> that has certainly been something that occurred in the past. it is a pattern that would match that, but i cannot speak to that

intent. >> who will determine whether that is true and what action will be take? for the -- >> for this program, we will aggressively management -- we will aggressively management -- we will aggressively managed from this point if you -- further so that there is not an opportunity for buyouts. we are where we are in the strike fighter program and from where we are now, we need to wrestle these costs down. >> there was great concern currency that you made reference to in this program -- concurrence see that you made reference to in this program. that means there is great risk. that has been somewhat reduced

by the sloping. i believe the other way was that we are going to have more planes that are going to be tested. in any of that, -- in any event, dr. gilmore, is the level of concurrence in now have acceptable risk? >> i think it is still an unprecedented. but we will have bought more aircraft here that we did for example, in the f-16 program. i would defer on judging. >> who is quick to give us a judgment if not -- who is going to give us a judgment if not you? >> i know i am passing the buck, other a -- but i think have to otherwise i will not be reviewed as object appeared >> is a level of currency acceptable and why?

>> the level of the currency is unprecedented and it is reduced as a result of these actions. we are judging that the schedule that we are giving you is realistic. it is not optimistic. i think as miss foxx has summarized, this is not the worst-case estimate. i did not want to leave anyone with the wrong impression. the currency that remains in the program, though less, is worrisome. it has to be managed. the theory and it was reasonable, is that we have gotten to the point in modeling and simulation that we should be able to confidently enter production before we have completed testing fully. that is the theory of the case that has been with the joint

striker program since the very beginning. unprecedented. we have found that in some respects, that aspiration, so far in the program, has not always been achieved. that is why we are trying to take some of the aggressiveness out of the program at this point. it is still aggressive. reality will have a vote here. >> you shorten the development. if anything, it seems to me that increases the concurrency. in new modeling and simulation would be going on since the beginning. why has the shortened in -- short and in not been increased in the current currency level? >> the reduction from 30 two 13

months means doing the exact same testing required to do in 30 months in 13 months. that is good. it is the same but it progresses more rapidly because you have more testing resources. >> ok. >> thank you, mr. chairman. secretary carter, i support the program and i believe it is extremely important and we need to do everything we can to mitigate this gap. i am very concerned about these development delays and potential reduction to the number of aircraft that are planned for the program. i am consistently told by my south dakota and national guard constituents that there f- fifteens on not one to last forever.

i want to do everything i can do have this program reached co- production as soon as is reasonably possible. when you see actually having full-strength squadrons of training jets and when you realistically see this program reaching full-rate production? >> let's see. i do not want to speak for the services who will determine where, how when and where they feel the bear aircraft. -- their aircraft. we will begin delivering aircraft for the air force in 2013. the air force's current intention, based upon the revised schedule is to go to ioc

in 2016 and that is with the full capability that they always intended, which is now the emissions system capability embodied in the box 3 software. that capability after completion of operational test and evaluation, that is how they are defining ioc in the air force. >> there has been a lot said and there will be a lot said about the affect. sometimes it is easy to forget the importance and what it means to the eight -- to the army and marine corps. the joint strike fighter represents the future. we know what a significant delays and cost overruns. there are recent news reports also indicating an increase in aircraft operating costs. there was a recent article in "defense news" that each flight

will cost around $31,000. in 2029, compared with these estimates, at a recent symposium it was quoted as saying we must ensure that we cannot deliver an unaffordable fleet to the next generation of leaders, stubbornness in effigy at this there 20 years from now. at the same time, lockheed martin is claiming that production costs will be significantly lower. can you set the record straight about what you really expect the operating cost to be compared to current fighters and will the department be able to afford those costs in the future? >> i cannot as i sit here right now, because you are pointing to the system costs. that is the same kind of discrepancy that i was talking

about earlier for the costs. another has been a testament of the total ownership cost of the f-35. there is the contract office estimates. these are for the out years. it seems in the distant future, but what we do now will determine how much we pay then, and we owe it to the taxpayer than to control those costs. we are having the same independent cost estimation done now of the sustainment phase as we have done and are doing it for the production phase to wrap up the production and development phase. i cannot give you an answer now. i hope to give you a credible answer in the future. that is a lot of money out there to maintain a fleet, even if it costs a lot of money to make the fleet in the first place we owe

it to you. >> >> foxx, would like to add to that? >> i would like to and we will have as good an estimate as possible as soon as >> these increasing costs are determined along with an increased timeline in obtaining a lot of these systems. this is not a unique phenomenon to the joint strike fighter. it inevitably causes an increase in costs and reduces the number of items that we can buy. this year, like any other, we have substantial procurement initiatives. my question is, this is the bigger picture and pertains to jsf, what steps is the department of defense taking in order to control costs and increased numbers of units

versus increasing costs and decreasing numbers of weapons systems? >> good question. two answers. you are rightly speaking about what we're doing and acquisitions at the back end of the program. we have a lot of good practice and that was the principal of the act to help the start products so we did not did trouble. we have what we have now, what are we doing so that they deliver? we are past the beginning point right now in many ways many of jsf. we are looking very carefully and very aggressively at the cost structure of our program and the contract structure between cost ;lus and fixed

price. our overhead and indirects, if we can squeeze 2% here and 4% there, you are talking about a serious amount of money. the management security is very important. there is a form of acquisition reform that secretary gates has emphasized which is the discipline to stop doing things that we have enough of or that are not working or that are single purpose capabilities. as you know, but this year we will be proposing some programs to end. that is always a difficult thing to do. every time we can stop buying something we did not need, it frees up money for exactly what you say, more money for the

things that we do need. more units of a program that is performing well that we can buy more of. acquisition reform has to go across the entire spectrum right through into having discipline to stop doing something when it is time to stop. >> it just seems like this has become a recurring theme and a recurring story. it is unfortunate, if you have projects over budget, and that you do not need, we should not be funding them. at the same time, i would hate to not fund programs because of the programs are so far over budget and these increasing costs and overruns and the latest, it seems like our acquisition process is in desperate need of a new model. i wanted to make that observation for the record and raised that question with you. thank you.

>> senator lieberman. >> thank you. i think i got the drift of the testimony. i want to ask you a question that is probably a simple but a central. what will the $2.80 billion increase in the jsf program's budget bring total costs to? what degree of confidence to you have in that estimate for total costs by the april 26 -- by the april, 2016 completion date? >> i will ask the general. >> the total cost will be $50 billion for the total std cost.

>> that is by the april, a 2016 date? >> yes. >> thank you. >> just to be clear, that is the total cost from the beginning of the program all the way to the end. the 2.8 is in addition to the program relative to what was projected. >> thank you for that clarification. secondly, as you know well, the consensus of support there has been for the joint strike fighter in congress, there is a sub part that is much in conflict and that is the question of whether there is an alternative engine built. it looks like we are going to have that again. i want to make a general

statement and ask questions. this conflict and the idea of building an alternate engine and the cost associated with it seems to be more exacerbated with the argument against it gets stronger because of the cost increases in the overall program. i will quote from the information memorandum that you did on this issue while ago. the department has not funded or altered an engine for the program since 2007 because a second engine is unnecessary and too costly. but this position was most recently reflected in the fiscal year 2000 budget which does not include funding for the jsf engine. this is based in part on updated analyses which continue to show the business case for a jsf alternate engine is not

compelling of the alternate engine program would require a significant dod investment of additional resources. later on, you say analysis shows it would require a dod investment of $2.90 billion over the next six years to get the alternate engine into position for competition. that is alongside the estimate of the predecessor in 2007 who said that the alternate engine would require another $1.20 billion at that point in development of funding before it was ready to compete. in the three years since then, we have spent $1.30 billion on the alternative engine and you're estimating and additional $2.90 billion in the upcoming budget.

is that correct? >> yes, sir. there are a few changes. and apples to apples, assuming competition in 2014, when you account for the additional funds congress has given, we estimate it is at a break-even point for costs and terms of the long-term procurement of this second engine. the initial investment that would be required and we predict the restricted program would reach 17. i am sorry for the difference in dates. to account for that, that additional investment to complete the development costs and also to fund the component improvement program we would need to maintain the engine. you would need to revise the engines, primary and secondary, to prepare for competition and you would have to put support equipment in there. >> that is all in the $2.90

billion. there were real space concerns. what would be necessary to employ the backup for the alternate engine for the navy and marine corps? >> i will end with a broader question. you served in the defense department before you were back into this position. we have continued to be hounded by the fact that the systems that we need so much are costing so much more than we expect an estimated. forgive this question. to the best of your ability, what the heck is going on? is this happening because we

should be moving along the spectrum toward fixed-price contracts from cost plus? is it happening because we are accepting initial estimates of the cost of programs that are simply not realistic? at this point in the round of your service, what is your explanation for what is happening? you want very much to stop from happening. >> it is pervasive. secretary gates says there is no silver bullets but i wish there were. it is pervasive. i do believe that we have always had problems with the acquisition reform system as long as i have been associated with it. there are two things that are critically important to attend

to. it seems to me that the last decade of double-digit year on year growth in the defense budget, which has been terrific in several ways for the department in terms of being able to buy more capabilities and enhance our capabilities, has also engendered, and this is human nature, an erosion of discipline. it has been easy to solve problems with money. you see that in programs. a technological problem, throw more money at it. we need to be much more vigilant about using money to solve our problems. einstein said his work was knighted & perspiration and 1% inspiration. -- einstein said his work was

99% perspiration and 1% inspiration. you have to be willing to say, wait a minute. this does not look right. the other thing is people. not to sound abstract about it but we have to have good people. in the last 10 or 12 years, this has been widely reported, the acquisition cadre in the acquisition side in uniform side has been allowed to dwindle away and our work force is older than it should be. nothing wrong with that, they are experienced. i am trying to pay a lot of attention to drawing into service the people that we need and the program managers and cost estimators and systems engineers and so forth that will make the system better. there are all the changes to the

system itself, including those that were included in the legislation. what i was going to say is you could have the best system in the world and if it is not populated by the right people, and you do not have the discipline to recognize surface problems when they arise and try to address them, you can have milestones, landmarks, this sort of independent assessment and not get anywhere. we are trying to do the blocking and tackling that delivers value to the taxpayer. >> i appreciate that answer. and i think it is important. it was candid and the obvious reality is the problem of more money is with the enormous deficit and long-term debt the country is running, we are just getting to the point where the broad bipartisan consent and support of defense spending is

going to begin to break or at least be under real pressure that is going to deny the kind of funding that has been available. i am fearful, up until now, so the work until now is really critical. every dollar you save is a dollar that might be spent on additional personnel which i think we still need. >> thank you. since we cling edison is a son of michigan, the perspiration inspiration, we claim. >> i am sorry. i am sure you are right. >> as i hear you talk about the average age of the workforce in the acquisition department, i think about the average age of the u.s. senate, we are both headed in that direction.

>> that is off the record, by the way. >> we are all dealing with experience, mr. chairman. >> that is on the record. >> mr. sullivan, your statement relative to the cost of this airplane being unknown is not new. you testified to that over and over, particularly last year as you -- as we were going to the defense authorization process and with the ongoing debate over the f-22. you noted in your written statement dod does not have a estimate for the program. you validated that statement again today. in april of last year, you made a statement on npr that when all is said and done, the price of the nearly 2500 f-35's could

approach $35 million for each plane. do you stand by that statement? >> i frankly do not having -- have remembered sitting -- saying that. at any rate, that is not some great -- that does not sound right. >> would you concur with the estimate miss fox alluded to relative to the $2,001, -- 2002 dollars would be in the range of $80 million? >> i have numbers that are apples to oranges. the average procurement unit cost recalculated is about $112 million. >> you have answered my question because that was my point.

when we talk about today's dollars, we are looking at somewhere around $100 million. that is an average cost. that is assuming that the perfect storm occurs and every time line is met in the test phase is conducted within the time. let me ask you about this timeline of reducing 30 months of testing down to 13 months. this is a very sophisticated air plan. we know that. you have that experience with other weapons systems at the department of defense. do you know of any other weapons system that has been able to produce its testing time from 30 months down to 13 months? >> just to qualify that, it is

an increase to an existing plan. the way they came about, the pullback was by adding new assets. it is actually an increase. it seems relatively optimistic to make. i think it will be a challenge for them, especially given this aircraft which is laden with software. that will be one of the long poles in the tent. >> can i just observed that the total testing program is not going to expand. the question was whether we would expand -- extend from 53 months which was planned to 80 some months to over 60 months. 60 months is in line with past experience and these kinds of complex programs. i hope that clarifies the testing program.

>> i understand that. in your written statement, you state the current f-35 is 2012, the air force is 2016. that is a two-year delay for the navy and a three year delay for the air force over what was advertised only one month ago. is that correct? >> if you are referring to testimony given, i am not sure what the baseline is. it is an increase over what you have heard in the past. because the services have taken the breed that -- the revised jet to estimates and are realistic for when we can deliver them jets. then they have done their separate things with respect to

ioc so they have adjusted their ioc dates in accordance with the changes in the program. >> why did it take csd over one year to validate the report of 2008? >> there were actually two separate reports, both of them valid. >> there were basically the same conclusion. >> exactly. what made the second one, what made the content more serious was that it was the year later. the problems noted in the fall of 2008 had continued into the fall of 2009. it was reporting essentially the same dynamic going on on the assembly line but since it came one year later, it said this has

been going on not just for one year which the department knew but for two years. two years is much more serious than one year. same content but one year later, the same news. you need to be more worried than you were earlier. >> when did you become aware of the 2008 report? >> shortly after i got into office which was a few months -- which was about the same time when the secretary of defense ordered up a new jet estimate recognizing the 2008 estimates was serious. the deputy secretary of defense said we better do it again. it was done again in october october and showed what it wa showed. it is october of 2009 and still

true. >> was that 2008 report widely known throughout the department of defense? >> i certainly knew about it. i understand it was also briefed to the congress last year, as well. i think it was pretty widely circulated. >> my concern is during the debate over the f-22 last year , two issues were front and center. one was the cost had gotten out of line. the last contract was $140 million per copy. that is $28 million difference and what was estimated in today's dollars. it is not materially different when you consider the f-22 has significant more capability.

i am curious as to why that was not talked about during the debate on the f-22. >> i do know from the records what transpired after the first jet estimate which was that secretary gates recognized there had been this poor performance in the program and added $476 million to the fiscal year 2010 and said we better adjust our budget for fiscal year 2010 to take account of the estimate. he did not adjust the entire out your budget as we are doing this year because he only had the first jet estimate which showed there was trouble going on for

one year. this year, knowing the trouble has gone on for two years, he directed that we address the budget to reflect the cape estimate not only this year but throughout the out years. it is a more serious action taken response to the more serious news which is the second just as some predict a second jet estimate sang the same thing as the previous year. he took actions both years proportional to the information he had at the time. >> i have some additional questions i want to submit for the record. i think it is pretty obvious to the panel members how serious this issue is. if we are committed to this program, it is a great airplane. we do not want to go down the trail that we talked about, reducing the buy. we cannot afford to reduce it. we just had testimony that there

is a reduction in tactical aircraft for north and command having to call on the canadiens. if we do not get these costs under control, who knows where we are going to go? these planes are so superior to any other, and the russians coming out with an airplane that they say is comparable to the f-22. they assume it is superior to the f-35. it is imperative we considered -- continue down the track to keep these costs under control. i appreciate all of you working as hard as you have and being as frank is you have with respect to this program. thank you. >> thank you. senator mccaskill.

>> i know there has been talk about unit costs and i was here for the previous testimony. i have not heard an estimate for the entire program. can somebody give me that number? >> i am sorry. we did not have it but i can get back to you. i do not believe we have that number with us. >> i think we need to know that number. i am a little worried you would come to this hearing without a. knowing this was going to be all about costs and the problems associated with the program, everybody having a handle on the overall costs compared to what they were predicted to be. we are stuck. i am sure this is going to be a great jet but we want to learn from this. we did not want to do this again. we have the potential, if we do not have competition, we have

the tanker coming up. for accountability purposes, whenever this group of people assembles, you should have a number for the overall program. let me talk about two things. first is the shortfall. as you might imagine, the home of the f-team is intent was. i know what that kraft means to our services now. as you talk about more and cheaper, there is a shortfall. it has been difficult to get a handle on the shortfall but learning today it will not be operational until 2018, it is hard for me to believe that you are maintaining that there is

only 100 shortfall. do you have a number that you are comfortable with the shortfall? >> let me ask ms. fox specifically to address the shortfall issue. she has done a lot of analysis on that point of that need back up to the point you made. you are exactly right. we have to take into account and manage the fielding and the other associated ownership costs of the joint strike fighter, not just the costs to build it. we have been addressing the cost to build it mostly in this hearing and to be quite honest, your question reveals this internally. we are going to turn to the total ownership costs. we have a couple estimates that

differ among themselves and we need to reconcile them not just so that they have -- that we have a number but a plan for reducing that number. somebody is going to end up owning these things and they should have a reasonable cost of ownership. with respect to the f-18 and joined a strike fighter issue, we have done a lot of analysis on that question. >> you know i am headed toward the ultimate question. multi-year, we will save money. we have a big enough shortfall. you have asked for an extension. you know you are going to buy that many jets. this thing got moved. by and just hopeful, it would be great i could go to lunch with you saying multi-year is the best way to go. >> why don't you speak and i can speak to the multi-year issue.

>> we are concerned about the shortfall for all the services as a result of the restructuring and are in the process of doing an analysis. the number you quoted as an old number. we are looking at that right now. i apologize i did not have a final analysis for you. we will have an assessment of ons costs with this program in the certification. i just wanted to alert you that these are challenging things to estimate this early in the program. we owe everybody estimates for shirt and we know -- and we owe everybody working on the services numbers on their inventory. >> since we did not know, we know it is not 100. it is not a number we have. >> multi-year procurement prices

and new and appropriately because we have made the decisions to procure more f- 18's in order to recapitalize the expeditionary electronic attack fleet. since we are buying more, we have asked the question of the manufacturer to give us a price. we indicated the threshold of interest is 10%. that is the threshold of interest. we would look for saving in the teens in order for that to be an interesting proposition to the department and the taxpayer given that it is a multi-year

commitment. if there has to be savings of their and the department of the navy is in discussions with boeing over that very point of the course i am glad you are in discussions. i note 10% is the threshold. i hate to say i told you so. i kind of new debt 100 was not real. if you just look and look with common-sense, it was not going to be on time. it was going to keep getting pushed back. we got those 11 carriers. if we save money, we should save the money if we are going to buy the jets. this notion that we get into the teens of savings for multi- year, i did not know what we accomplished if we buy them anyway. if that is going to save money and we know we are going to buy them, by all means, let's do it. my final question, i need

somebody to do when estimate on the problems associated with this program. we are going to have a breach. i need to know whose fault it is. this is too big to fail. this program. we are going to push money across the table. i need to figure out, we all do, whose fault is it? is it the contractor? how much at fault is the military? were there things changing during the process that the military is responsible for? is anybody in charge of figuring out whose fault this was? secondarily, if it is the contractor, we withheld payment once, are there other penalties you are envisioning that the contractor pays for these mistakes? this is not no harm, no foul.

somebody needs to be held accountable. what worries me is we all sit around and drug -- and shrugged about it but nobody is ever held accountable. i want to know who is going to be held accountable. >> i will address that. who is accountable for it, i actually think there is responsibility on both the government side and the contractor side. it is our job to get the best business deal. it is our job to surface problems and to tell the truth and not an optimistic story. that has not always been done in this program and it is the contractor's job to perform. failures on both sides. i will say that as soon as i got

the jet two estimate, i went to the contractor and the leadership of the contractor recognized immediately, as i did, that this was serious. he rolled up his sleeves and the same spirit i was. i have to commend him for that. it would have been better if we did not have to find this out in october of 2009 but there was immediate but the mission of the importance of the problem and a willingness to acknowledge it and get on with solving. i wanted to say that because i am grateful that that was the response. >> if you could indulge one more question. is it unreasonable for us to ask somebody to give us names? is somebody being demoted?

has somebody lost their job? is there something happening on the contractors' side in terms of accountability? these are multimillion dollar mistakes. we need every penny of that money right now in terms of economic strength of this nation. our economic strength is sapped. it is not just the military. i am for a proud of the military and the work you do. can we get some names on whose fault it is? cards on the government side, secretary gates has taken some steps to strengthen the program management and specifically upgrade the program manager on the joint strike fighter to a three-star position. we will be continuing to try to strengthen that. >> i do not want to know about who is getting promoted.

i want to know who is going to be demoted. has anybody been held accountable? if you could get back to me with that, i would appreciate it. >> as the program manager, the senator was removed. >> if i could just take 10 seconds further on this. i was pressing them for the same question before and i interrupted the secretary when he gave me the first two reasons for this huge cost overruns. he listed two and i would ask you for the record to give us all of the causes that you began to identify. engineering changes, labor costs that went up, give us all of the reasons for the record as to this 60% to 90% increase in the

unit cost. >> thank you. i want to commend senator mccaskill on her vigilance on these issues but we need more of that in this chamber. i am new to the u.s. senate so you will forgive me for being not expert on these topics. my understanding of this project, perhaps you can help me make sure my numbers are strict about this project started in 1995. we are 30% over budget. $18 billion. >> we are more than that on the std program if that is what you are talking about. >> do you know what it is quick to marquis i will ask miss fox -- do you know what it is? >> i will ask miss fox. the program is at $50 million at

the estimate. we added $2.80 billion for this review. i believed it had gon boree up so iou have to t you a total. >> if you could submit that for the record. we are very excited about this joint strike fighter. we are very proud of our military bases in florida. i think the american people, if they knew about this, would be shocked about how long it has taken to do this and get it in the air. we did not yet have one ready. >> there are test aircraft flying. >> we hope to have them to the marines by 2012. that is still a target date? >> yes, sir. for the marines. " we started this program in 1995 and we get a plane delivered in 2012. we went to the move faster and then developing this plan.

to be this far over budget, more than 30%, i appreciate the comments of my colleagues about accountability. i think, mr. chairman, it bespeaks a larger problem with procurement. i appreciate your comments about business models but this would not happen in the business world. if it did, a company would fail. i would commend the chairman to have a hearing on procurement. bring in large companies that buy billions of dollars of business services and bring our friends from the defense department to have them hear what is done in the private sector. my private sector experience, i had the opportunity and the honor to run a large law firm, nothing comparable to these

numbers, but when you do procurement, there are carrots and there are sticks. in these processes, the vendor should be held accountable. i understand there are problems that cause overruns. the fighting a goal and setting the specifications that stays static, that the vendor comes in over, they bear the responsibility and less it is ours. we would have to work on that side, too. this is a needed plane. we need them as quickly as we can get them. i am supportive of the plane but these numbers in this environment, when this country is going broke, we are called $0.40 trillion in debt, we're going to add another 10 brought -- another 10 trillion dollars, this is not sustainable. i know you are -- i know you have a difficult job. it seems like we have to do

better. we have to. i am sorry that is not a question. i am becoming increasingly concerned about this as i watch. give me some hope about where we are with this program and where we will be with procurement going forward. >> i can give you realism. at think that is what we are trying to do with the professed estimate is be realistic -- with the revised estimate is to be realistic. we can project the progress of this program. i have the aspiration to do better than the projection if we possibly can. that will be a matter of discipline and negotiation and performance. i agree with you.

the picture that we painted at the beginning of the testimony today is unacceptable. we are paying more than we said we would have to. that is unacceptable. we need to wrestle this back into some sort of realistic box. i think the best i can offer you is realism, not optimism. >> going forward, learning the lessons of this plant as well as they f-22, are we going to change the way we do procurement? >> i think we have to. we are making a number of changes that were written into law, the acquisition reform act last year. it prescribed in number of changes to improve the acquisition system. all of those are in process.

some of them are in my office. some of them are in miss fox's office. what you see today is a reflection of what was written in the legislation that came out of this committee last year, namely that we should start doing independent cost estimates and take them seriously. that is what we are trying to do. perhaps belatedly, but that is what we are trying to do. >> is there something that you have not yet implemented that you need to implement what we get to the next procurement? i know you do not ever want to be here in the future with another program that is over budget and not on time. did you have all the tools you need or mechanisms in place? have we learned enough to know that is not going to happen again? with -- >> the bureaucratic

structure is there to do better. all of the structure and boxes did not matter and less you have to other things -- the discipline to surface problems and solve them in a candid manner, surface them and solve them. the other thing as i mentioned earlier is good people. that is something we are still working on that will take years to rebuild the acquisition cadre in the department so they have the engineering skills and contacting officers and pricers and everything it would take to replicate what you rightly suggest in the private sector would be a matter of course. >> do we need to pay these people more?

would it be more efficient to put a squad of the best and brightest in the world working for us? it could cost us millions of dollars and we save billions, it is good for the taxpayer. when you say rebuild, do we not have the talent we need? >> we do not. either on the civilian side with the uniform side. i think it is widely recognized. on the civilian side, we reduced the numbers about 10 years ago without adequate care to preserving key skills and quality. we are trying to rebuild. something similar happened in the armed services a major or colonel who has acquisition expertise vacancy cone that they

can go up in the acquisition field. we are having a lot of experience seen what the market is like -- seeing with the market is like because we have initiatives that came out of this committee. we are hiring 20,000 people into the acquisition workforce. we cannot pay them what they can get outside. we take too long to hire them. it is a cumbersome system to join the government. what we have going for us is the mission. they come in and say i am doing something that matters. that is our hope. we cannot pay them a locked. it is frustrating to work in the government and all the rest of it. the mission, that is our hope. >> thank you. >> thank you. as a committee, as the secretary

said, we lead the way to get major acquisition reform into law last year and it is hopefully about fully implemented now. miss fox is here because of her office which was technically created for exactly this reason, to do the same kind of work as other offices do four tests and evaluations. these are major changes that took place. you are absolutely right. we were not doing business the way a business would do it. through that lock and through full implementation of that, we want to change not just the words on the page but the culture. that 20,000 figure comes as a

startling figure. when we talk about adding 20,000 government employees, that has a negative affect on the minds of some people. we know how badly this acquisition corps was damaged and reduced. we are going to reverse that. the president is determined to reverse it. we put some provisions into that law that will strongly promote the rebuilding of that acquisition capability. one of the things that is critically important in terms of keeping costs down as competition. -- is competition. the entire argument on the second engine for the joint strike fighter, will there be competition or not? competition is critically important. those that favor a second engine did not do it because of a back home interest, it is because we believe without competition, we

are going to see that same kind of upward curve on that engine as we have seen with jsf. we are at the mercy of a contractor. we all want the plane. we want that plane. the number has not changed in the past two years. once you tell a contractor we are buying 2000 plains, okay. now what? where is the leverage? i did not know what the leverage is. i do not see the leverage. one other thing about competition, we wrote that into the lot that we passed last year. the secretary of defense will assured the strategy for each acquisition program includes measures to ensure competition.

both at the prime level and the subcontract level of such program throughout the life cycle of such program. another question is to what extent we are going to do that at the subcontract level. we have done that with shipbuilding with the secretary has decided he is going to source ships. the problem with that is where is the competition going to be with those ships? you are at their mercy. it says they will ask lockheed to share some of the cost increases. we will ask them. where is the leverage?

>> we do not have to ask about that. that was a specific reference to an award feet. that was a polite way of saying a fee was being withheld. in general, it is in the interest of the performers to have a successful program. otherwise, the international customers and u.s. services are going to buy fewer jets. the danger of poor performance is that you sell less. it is obviously in the interest of the performers of the program to sell more jets sooner and therefore to move that ramp over and get up that ramp as soon as possible.

that is the principal reason the performance we seek is also and the interest of the performers, as well. >> that has not historically stopped by ends in the past and i am afraid it continues that way. i worry greatly about where we are going with this program. i am appreciative of the effort you are making to be realistic on these numbers. we might as well know the facts of this program. you have given them to was as best you can put the facts are painful. you have a 90% increase in the projected cost of each plane. that is a painful bit of news.

the taxpayers are not going to be particularly happy to hear that. it is better that we do not sugarcoat it. it is better that we left the country no and that is what this hearing is all about. exactly what kind of problems we foresee in an honest way and we think you have done that. as i understand your earlier answer, you were attempting to basically tell us, when you made reference to the earlier planse, you were not holding that up as a role model. you were saying we have produced planes that costs us more than planned, took longer, but were able to carry out their mission in any effective way. my question is in relation to that. there are $200 million -- this

$200 million figure for this experimental plane, if you estimate in constant dollars, a plant will cost 85 billion to $95 million, and the first one is costing two to three times that much, is that about normal for these kinds of programs? for the first ones generally that much more then when you get to full rate production? can you measure that? >> we do have a way of measuring that. i do not have them with me. the short answer is yes, we have reduced that the very sharply and what we have done with the restructuring. the initial by as much smaller. one of the leverage points we have on the contractor is that ramp.

they want to push that ramp up. we are holding them back based on the analysis we have done and the review of the imrt and the desire to keep pressure on this unprecedented issue. if i could add one of the most important things about the legislation is the independent cost estimate is the beginning of the program that i think will prove very critical for us all to look at. based on historical performance, the jsf program is not inconsistent with what has been achieved in the past but the independent cost estimate is the very beginning -- at the very beginning would have allowed us to figure out what we were going for. >> i made reference to the

independent manufacturing group that late last summer said that affordability is no longer embraced as a core pillar. that is a totally unacceptable premise for us to proceed on. the secretary said you were going to be relentlessly pursuing affordability which means that you have rejected that " from that independent manufacturing review team's presentation. is that correct? >> absolutely. that review was started by my office and what they were reported was the program had a loss site of affordability as a key ingredient and i could not agree with it more. that statement in the report was

important input to us as we restructure the program. >> the identified a series of milestones. i will not try to pronounce that acronym. that plan was intended to get the program back on a reasonable schedule. among the action items were completing a risk management plan, completing business systems, modernization, a milestone action plan and a risk management plan. those were scheduled to be completed by the end of last month. where are those? >> there are 20 action items associated with that. some are process-related and some are department-related.

some occurred on schedule. we are tracking those. >> those plans were filed? yes, sir. we understand all the rest. we are tracking goes to closure. >> more specifically, or those plans completed on schedule? >> yes, sir. >> i appreciate the law that this past and thank you for providing that information to me. i just want to make a couple quick points. when i talk to people on the vendor side and they talk to me off the record, the view that they have is the defense department gets gamed on these

bids put a bit low knowing there is mission creep. this is not unfamiliar to other parts of the world. they know there is going to be changed orders but that is where they can make up the difference. when i was speaking with you earlier about controlling costs, making sure that the mission does not creep certainly seems to be a big part of this. and when something goes on for 15 or 17 years, you are going to have changed because technology is changing, the demands of the time changes. the longer the project goes, the more it is going to be costly. i want you to address that in a moment about how you keep these projects static if you can and without sacrificing safety. make sure that we try to end these projects in the future quickly. . .

you know, are there people working for you who have that experience? who are, you know, going to the vendor over time and pressuring the heck out of the vendor to make things cheaper? do you have the flexibility in

your contract to make them do things cheaper? do your contracts give you all the tools you need to put two more in a setting as if he were a large company -- put you more in a setting as if he were a large company? so we can have the most cost- effective pricing as possible? >> senator, you put your finger on just about every major issue in acquisition policy and practice. i will try to -- i will try to address the three major ones he pointed to. the first was the practice, which does occur, of bidding low. then you have yourself a program, and the country depends on the program, and the cost goes up, but we still have the program. that dynamic is one the weapon

system acquisition reform act was intended to interdict by having us require us to do a realistic cost estimate up front so we would not just be buying indeed so to speak cost estimate of the vendor. we now have a mechanism for doing that. without changing requirements, that is something that has to be dealt with, so you do not come in and decide, whoops, that was not what you wanted. and it will cost you more. that is related to your point about the pressure on the vendor, in one point at least. if you -- and that is the dynamic between the government and the contractor in a cost plus contract, compared to a

fixed price contract. both are inappropriate in different circumstances. if you know pretty much on the government side can know what you want in your not going to change that, and it is a fairly well-defined article, then it is reasonable to give a fixed price and the burden is on them to control costs. >> which is great. >> and we want to do more and more of that. that is unreasonable when we do not know what we want. sometimes we do not know what we want for a good reason because you're doing an exploratory development of a new capability. that is fine. elsewhere, we're trying to do more of our transactions in a fixed price away for just the reason you say, because that requires everybody to get real. we have to get real about what we want and not change it. the contractor needs to get real about what it costs to deliver

it. >> can i interrupt you? >> absolutely. >> on the we do not know what we want, but we are in the developmental stage -- are we making the vendor bear some of that cost? if i know i have the opportunity to get the m-35 for 20 or 30 years, and this becomes their signature program, just like any company doing research and development, they have to bear that expense. that should give them incentive to bear the costs on their rahm. >> the traditional practice for a development that really requires some attention, and therefore the future is legitimately uncertain, is to audit and reimbursed the contractor costs and add to that a fee.

as a said, that is appropriate in any circumstance where it is not reasonable to expect the vendor to give your price because you do not know exactly what you want or when you can get it. but if you come to where we're coming in the joint strike fighter program, to ramp up to production, it is not reasonable to say to the contractor, "give me a price for the next lot of jets. you figure it out and we will hold you to that price." it is now mature enough that the contractor should price the performance. >> against the concern -- two points. one is, and i will conclude, mr. chairman, and that is the traditional practice of paying for their development of a product they will sell to us this not seem to make a lot of sense to me, looking at it from

a private-sector perspective. i understand that sometimes -- i do not know why we are buzzing here. i understand that sometimes that might have to be the way it is because it is too big and expense to bear, but -- is too big and expense for them to bear, but i would encourage you in the future to extract concessions on the front side, too, to see if they will finance research and development. then on the -- the question of making sure we do not have scope creep, do we have a disadvantage that the vendor stays constant, but folks like you and others progress. there will be a new secretary, a new general so and so, and we cannot have the constant see on

our side? to me to think creatively to -- to we need to think creatively to make sure there's something on our side to give us that as well? >> excellent point. people do change jobs. more rapidly in government than in industry. programs tagalong time. -- take a long time. problems need to be solved. it is important people come into these jobs and respect the commitments made by predecessors and in the interest of stability in a program, unless there is something wrong. unless circumstances have changed. this gets back to another point you have made up. hell long at these programs take. -- how long these programs take. i think time is the variable we

do not manage well enough in general in our programs. the dynamic is that if you have a program that runs into trouble, the first thing to do is come and get more money for it. there is only so much money each year, and your next step is to flip the program to the right. so these things stretch out to be bright. and 11-year program is 10% more expensive than a 10-year. that is concerning to me. by the time you get the thing, it might not be what you want or we have forgotten why we bought it in the first place, but it is more expensive than it should be. managing the variable of time is an important idea. i appreciate you raising it. >> i thank you all and i think you for your service.

thank you, mr. chairman. >> thank you, senator. there is that one important point raised about the creep of requirements. what we did in this bill was we created a configurations board to make sure our that if there are proposed changes in a mission or a requirement, that it goes to a board for approval, so it does not creep. we understand it is pretty slow getting those boards going. i want to remind you, my staff has looked into this and it is not moving as quickly as we would like. if you want to comment, we can. >> my only comment is is an incredibly important idea, and i will look into it and get back

to you. >> thank you. >> also, ms. fox, he said in your business case, you will achieve a break even point. which is important news. but it is also important in of the assumption made relative to the savings and competition. what percentage savings did you assume? >> sir, man asked my colleague if we have that number? -- may i ask my colleague if we have that number? perhaps i can invite my colleague to answer that question. >> can you tell this to you are? >> yes. i it led the jets team. i work for ms. fox. the 2000 -- the study, we would need 20% to break-even. for the updated study, we did not determine what savings would

be needed. we've not determine that. >> have not? >> no. >> in the past, we assumed 21%. >> from what? >> savings from competition. for a competition that would start in 2014. >> over the life of the contract? >> that is right. >> are you all set, george? >> ok. it has been a long hearing. i want to particularly thank our reporter. we do not often do that, but it took longer than planned. once in awhile we remember to say thanks to the folks who keep us going here. we appreciate you coming to be with us today. we stand adjourned. [captioning performed by national captioning institute]

[captions copyright national cable satellite corp. 2010] >> and earlier today, we heard more about the development of the f-35 joint strike fighter, been promoted as the next generation of aircraft for the u.s. and its allies. this is about 40 minutes. >> [unintelligible] >> these and gentlemen, thank you for joining us. it is my pleasure to introduce the undersecretary of defense for acquisition of technology and logistics, dr. carter, he will spend some time talking about the f-35 joint strike fighter program. >> very good. thank you. i apologize for the delay. something came up when this was

scheduled. i know some of you were pulled back and forth and i do apologize. the purpose of this is to revisit some of the points i made yesterday before the senate armed services committee regarding the restructuring of the joint strike fighter program. that is on the basis of various estimates. estimates and analyses done in the fall. and the department-wide review, which i lead over the last few months, and which led to the decisions he made and he announced and in connection with the fy 2011 budget. in that sense, there is nothing new relative to that. but that was our first the opportunity to appear before congress.

so, let me revisit the main points of the restructuring and i will take questions. and i will do that as i did yesterday, in addressing the three phases of the program -- the development phase, at the ramp up from development to production, and then full production and the actions taken in each of those three phases. for the development phase, the secretary directed three actions to review the overall direction of the program. federation had beene --gt that n lengthening overtime for reasons

i will go into in a moment. to reduce the span of time, he suggested three actions. first, the procurement of another aircraft to add to the test program. that is another resource to get through the various test point that constitute the flight test program. it is not hard to understand that if you have more aircraft, you'll get through them faster. that is an investment worth making because you bring back the program to schedule and the people of people doing flight testing for a shorter period time. secondly, he directed the loan of three aircraft in the operational test program for the same reason -- to hasten

development of tests. and finally, he directed the creation of another software integration capability, which was intended to forestall the possibility that if you, as we intended to do with the first two actions, compressed the developmental flight test program, then you have to say, by the time you are done, you have finished up your testing. is the software going to be done? we had to make sure the answer was yes. those are the three actions that secretary gates directed to correct the schedule of the development program. that is not to say we were able to restore its to what it was projected to pay by the program

office -- projected to be by the program office of the contractor. but we got some of the way back. that is where the famous 30 months and 13 months, and. the secretary believed, and this is the principle that is important, that the investments needed to get back the development schedule ought to be made solely by the taxpayer, that the responsibility for that should be shared, and it is being shared with the contractor. that is for the $614 million fee with held comes in. so with those actions, we have restored some of the schedule erosion that was occurring in

the development program and reduced the risk of the development program, and we saved the taxpayer money they should not have to spend. if we can get to the next phase, that is the transition to production, which is also difficult. it is historical a difficult -- historically difficult for aircraft programs. here we have another independent review done, the so-called independent manufacturing review team report. the report was commissioned by my office. they just looked at the workings of the assembly line in short order. and they'd identified a number of steps that would be needed in order to guarantee that that assembly line could ramp up production in a way that was originally planned. so we identified the steps that

need to be taken so we could ramp up production as quickly as possible. the secretary judge the independenct plan rate was realistic, therefore we should plan later because the development plan was a little bit later, and a flatter -- that is less risky. that means fewer jets produced in the early years in the interests of a more predictable and stable achievement of full rate reduction. so there will be fewer aircraft produced over the second phase, but the objective is to accelerate production in a predictable and stable way.

additionally, the secretary asked that we transition from a cost plus a structure to a fixed rate structure. he directed that, also, in order to ensure discipline in the transition from development to production. and get out to full rate production itself, we're going to buy large aircraft for the r3 services, and we have international partners counting on this important aircraft, and for the production phase, we are -- the secretary viewed the

independent cost estimate as realistic, and that estimate projects a breach of the threshold for the entire joint strike fighter aircraft. as i said yesterday, that is disappointing, but it is a fact that' is a fact of life at this point. he recognized that and put in place a number of measures to cap that cost, including the fixed-price contracting i described, a should cost effort, which is an independent analysis by a us of what the joint fighter should cost, so we have that and not just the contractor's estimate of that.

and the implementation of the steps we are taking, which are also identified through the joint assessment team, to deal with the cost of the engine, which was increasing the cost of the aircraft. so, just to take it from the top -- and no some of it is technical and it is friday afternoon. this is the stuff of aircraft programs. and the development phase, we ramp up the production, awful of production, we have an assessment of where the program stood. we wanted to be realistic and candid, but also smart about how we address each of the three phases. the secretary took actions in each of those phases, and on the basis of what we judge not to be realistic -- not optimistic, not

pessimistic -- program plan in schedule, to plan on that basis and put them into mechanisms he had defined to ensure that going forward the program performs better than it has been performing of the last couple of years. so that, in a nutshell, is what secretary gates directs as part of the budget process. yesterday was our first chance to get in front of a committee and explain that. it was not new news to us. it was not good news to explain. it was not new news to us. it was news we first began to confront back in november and we began to do -- to act as though we were in breach, which we were not, but the to identify and take the managerial steps you would need to take.

that in a nutshell is what i said yesterday -- what i said yesterday, and i am ready for questions. >> to apply this to this average taxpayer, you a program that was estimated the $50 million per jet in 2001. now it is $113 million per jet. that is an astronomical increase. how does that happen? how you keep it from happening again? >> first of all, just to get the numbers straight -- you to need to take account of inflation there. so what christine fox said yesterday was it was a $50 million aircraft in 2002. it had grown to $82 million

aircraft in those year dollars. we just need to correct that. how do justify that -- how do you justify that? no one wants to pay what they should not have to pay. that is performance. secretary gates made it clear how he feels about poor performance in acquisition systems. that is why he took the steps he did that i am describing to you. they do not make that any better. they tried to get it under control and get back to affordable aircraft and to a story can tell that will not be different five years from now, 10 years from now. we're trying to be realistic now. obviously, a realistic story has not been in people's minds for the last couple of years because this was the picture

became to see in november -- we came to see in november. we had occasion last year, but that persisted for another year. we said, wait a minute. this is another issue here. that is an explanation -- i am sorry. >> is it wishful thinking? is a blatant lying? was it contractors? >> i think it is the fact of life in terms of things being more complicated than people imagine there were going to beat and an unwillingness to -- there are going to be and an unwillingness to recognize they're going to be more expensive. you cannot control costs or schedules if you are being unrealistic about them. now we're trying to be realistic about cost and schedule. that puts us in a better situation, positioned to manage.

>> there was some bipartisan anchor -- anger -- if congress comes back and says it does not want to find the 2100 planes and cuts back to a smaller number, that could increase the cost per plane, could it not? is it possible, even with cutbacks, to truly reduce the amount of the program? >> there are more aircraft, by the way, then 2100. just to get you the specific numbers. the number is 2443 for the united states. that is over the entire lifetime of the buy. i think most customers will recognize a slower ramp up to a

full production does not mean the aircraft will not be there when they need them. i think most of the customers are going to stay with the joint strike fighter program because of its capabilities, and i do not think our services are clear about what their requirements are. when we have the program and a realistic plan that everybody can see going forward, then congress, as well less the military departments here and in the international partners, will stay with their plan, which is to equip these aircraft. >> you said that you think that most are going to stay with the joint strike fighter program because of its capabilities. you do understand that some are reviewing and reconsidering their plans to purchase? >> our international partners

have been reconsidering plans for the joint strike fighter ride along. all of them have a dynamic situation. budgetary, strategically, and so forth, and so they have all been reassessing their needs a ride along. but, as i said, i think the capability of the aircraft is there, and it will be the best fifth generation aircraft. we will emphasize its affordability, which was a critical feature for all those partners when they first decided to by the joint strike fighter. we will try to deliver it to them as they wanted. >> was this as quickly as the united states expected -- >> of course, it was not as

quickly as united states expected. that is their decision making. . .

it's all laid out there. >> there are and the numbers -- there are an enormous number of fighters that are phasing out. >> it is just a little bit slower in getting up to that, just to be careful. we hope to get to the original ramp rate. we are trying to be very realistic and are projecting, if you like, the mid range of the estimates. this is an estimate about the future, and we would like to do better than that. we may be able to climb up that ramp faster. he might be able to do it faster

than we can, but that may depend on the assembly line and that is something we are working on, making happen as fast as possible. [unintelligible] it is not that long in the future. if you wrap up -- that plateau has not changed at all, it is just the rate at which we get there. >> it is then a real push of yours. what leads you to believe that lockheed's operation will be stable enough, and what will protect the government from a change that would come from the the government that would treatment -- that would renegotiate the entire contract? >> the fixed prices are a challenge for the contractor so

they can price its performance, recognizing if the price it too low they will pay the extra, and the government to know what it once. we know that. we are in a position to be specific about the configurations of the aircraft that we want. we're prepared on our side to be specific. we're not going to change that. i explained yesterday, we have not changed the combat capabilities of this airplane. there were no technological issues that caused us to believe that we could not have all the military to abilities, to the configuration has not changed, and we can specify exactly what we want. we are now at 5 and we are up to our industrial partner, who is always in a fixed-price environment. it is a good discipline to have

to specify a price. >> up to now, like for example, the 50% over rich in labor rates, the issue that you discussed, were those the kinds of things that would be on the contractor to pay for? >> yes. >> the government would not? >> no, but that was done in the early stage of the program in the cost that the project -- type of contract, and which all the adjustments that cost money fell to the government. that part of it which is now -- >> fixed price, when you and secretary -- and the secretary talked about the tanker, there's a discussion about the price and what would happen if there's only one contractor, which now seems to be more of a

hypothetical. there were some options that you alluded to, but he did not want to discuss it. >> i do not have any more to add on that today. >> you talked a lot about basic problems with parts, quality- control. are you concerned that has happened that lockheed may not have a good grasp on its suppliers, good enough to ensure that for disability? >> -- for producability. >> that has not been a problem

recently, and it was a problem early on in the air freight. there is more than one year frame -- airframe contractor. it is a team. early on, there were parts issues, which is not uncommon, but not something you want to have a lot of. that particular problem has been dealt with very aggressively by the contractor team down in fort worth and is in a much better place than it was a couple of years ago. in the as-135 engine, -- f-135 engine, the supply chain has been an issue as well. the other thing to work on --

>> your contract -- confident that the contractor has -- >> the problem has been worked on aggressively and is in a much better place than it was a couple of years ago. >> the $614 million, you keep saying that this is sharing the risk, accountability, how is sharing the risk if they are having the opportunity to win at all back emmeline -- down the line? >> that is an incentive on them to beat all the targets, said that is a perfectly -- so that is a perfectly appropriate -- it is reasonable enough for us to withhold that part of the fee which would be used for the remedial measures that i described, the new aircraft, and the software integration . but be on that, they will have

an opportunity to win back parts of that fee and only as a very specific set of milestones are hit on schedule. that is the way fees are supposed to be awarded. they're not supposed to be awarded willy-nilly. they're supposed to be awarded for turn for specific performance. that is not just in this program, but in other programs, that ihas been the case. >> how much of that 614 -- in- line >> i cannot tell you that. >> going back to the way we were in 2001 tahlequah when was -- in 2001, when was that supposed and provto end? >> they can lay all of that for

you, what was said and thought at every moment going back to the birth of the program, which goes back to 1995. what actually happened, and then we are projecting now, which we believe to be realistic -- again, we hope to do better than that plan, but that is a realistic plan. they can take it all through that. i do not think there is any problem. they are the keepers of all that the debt. it is perfectly realistic. >> the cost czar hasn't as $284 million? >> they have all these numbers. i do not want to mislead you. they are the keepers of those numbers.

it is complicated and depends on what year dollars you are using. >> they were asked that question yesterday about the overall cost of the program and did not have the figures. why is it hard to come up with? >> the number that was asked about was not the production of the aircraft. it was something called total ownership costs, the life cycle cost, and decades in the future, to own the aircraft, ok? that assessment is being done. it is perfectly reasonable that it is not done yet. this is a number that does not become operational until the aircraft becomes operational. that is, the cost estimators had been focusing on the demint program, the ramp to production, and full- reproduction. it is hardly surprising that that analysis has not been completed yet.

it is not germane to decisions, managerial decisions, we are thinking now. this is something in the future. the analysis is being done and that will be part of the overall process. we try to do total ownership costs for all programs. there is a certain amount is an art of estimation because you're looking at the distant future. those numbers will be provided. >> we are talking about the joint strike fighter, but i wanted ask about the tanker program to see what your plans are for possibly accelerating it? >> i cannot have anything you did tell you on that. we will tell you as we proceed with the tanker solicitation, but that -- i do not have anything for you today. >> this is a fifth-generation

fighter, a lot of capabilities. it is not just airframes. how much of the problem so far is strictly the aircraft and the development so far? what about the sensors and systems? is that part of the delay, or has that not about to get? >> some of everything. most of the drivers of the schedule issues that we have been discussing, and they are so central, the std issues, are associated with the airframe assembly. but in the overall cost, for example, as i mentioned earlier, the engine has been an issue. >> yesterday, christine fox told the committee that the latest

analysis showed that the second engine -- there was a business case that would show it would break even for taxpayers. german 11 said he was more convinced than ever -- sherc hairman levin said he was more convinced than ever. >> we will get you -- i am sure there are versions that contain the proprietary information, but i believe the business case, the central case, which has been made available to congress, can be made available to you as well. i will tell you what the essence of it is. i do not do these estimates to. -- these estimates. i am a consumer of them, as is

the secretary. the comparison you need to make in your mind is of a -- the program, the f-135 program to a hypothetical program in which you paid the up-front cost to develop an additional engine, to create the manufacturing capability for a second engine, to create the sustainment base for a second engine, to nurse that second engine along so that it catches up with the first engine and competes, and then you have from that point on a pocket -- a hypothesized situation between the two

engines. which competition will pay back all the money of buying two of everything that is the analysis that ms. fox referred to, and what she was saying if you do that analysis, you can hypothesize a competition out in the future in which some of the savings, even all of those expenditures, are we could in the future. but we judge that that analysis , the competitive analysis, is based on optimistic assumptions. we do not think these are reasonable to accept. for example, the assumption, to take one very important one, that the buyers of the engines

would accept in any given lot whenever engine. you have two engines, and you are competing against each other. the economic theory is whichever engine wins in a given year is doing better, is being or economically produced, that is the one you will buy. but the navy, to take one example of a customer, does not want to buy one engine this year, one engine the other yet picket certain international partners would probably have an engine that they wanted. that is not a free and open competition. that is a series of directed buys, and that is not what economic theory is about, so you look at the economic theory that is reflected in that hypothesized competition, and

the facts will not feeit the theory. none of the numbers have been changed. i encourage you to get the business cases. $2.5 billion, and the reason people have problem with the numbers is they are doing apples and oranges. the number -- one of the numbers that you will find in that analysis is the $2.9 billion over the -- and somebody will say, i remember some other member from some other time. they were probably thinking of another kind of number, which is the number for just the development of the engine. people have been confused by that. the development of the engine is not the only expense of having a second engine, as i explained. there were four elements to it. this is not something to guess

about, and you had to do and apples to apples comparison. the business case does an apples to apples comparison, and is not a good apple to only look at the development program when you are accessing the cost. >> the bottom line here is the question whether the department will continue to recommend a presidential veto of any defense spending bill, that includes funding. >> that is what the secretary of defense has said. >> the latest analysis suggests that it is not as open and shut a case as has been suggested. >> the latest analysis is what i described, which is that the hypothesized competition, the case for a second engine, hypothesizes or makes such

optimistic assumptions about a theoretical -- theoretical competition, that we give reasons that we do not think that what happened. that is not our experience in these situations. it is not our historical experience, so you would be paying a great deal of real money that you can really see up front for hypothesized savings in the past. we owe it to the taxpayer to take a hard look at how hypothetical those hypothesized savings we had and we judge that they are hypothetical. therefore, we owe it to the taxpayer not to fall into the trap of spending real money up front for hypothesized savings in the past. it is an analytical judgment. to have a point of view on that you have to have done the analysis. and we head, and that is available for people to look at

and assess. >> when can we get that? >> a immediately after this meeting, and again, i repeat it has been provided to the congress in some detail, and it is what it is. he is an analytical case. that is all there is to it. that is the best way to spend the taxpayers' money. he had to do the work to do the opinion. >> the topic of lowball or buying it came up yesterday during that period -- during the hearing. he said something if lockheed had bought in something to the fact that this would be a pattern that would match that, which is an indication that -- >> i do not have an indication. the point is that there is a right history. one of the things we know -- we need to guard against in defense

programs -- and it is not contractors, it is everybody -- is kidding ourselves about what something is going to cost, because it is easier to believe that it will be cheap. for all of us, not just for contractors, but for the government side as well. we have to have the discipline not to fall into that trap. that is what independent cost estimation is about. that is why the process that led the secretary to the restructuring he directed it was important, an independent set of eyes, and a tenet of those involved in the program, saying, what is this really going to cost? let's look at how it has been going the last two years, not how we said it was going to go. things change. you have to be honest and realistic as eagle long, and it is a very healthy process -- as you go along, and it is very

painful, but it is a healthy process and it is the one that led him to take a managerial succeeded, which will do the program could in the end. >> the withhold was a punishment to lockheed, but the weak performance is tracked is for future work. has it been deemed appropriately? >> it is not punishment. it is sharing the consequences of a failure to perform. >> moving forward, how is their performance rating going to be affected by this situation that we're in today, potentially to affect in the future work, that sort of thing? >> the actions that we take with respect to the feed on this particular contract cannot contractually spill over on any

other contracts. i will say that we also look in general at overhead rates and that sort of thing, but it does not spill over from one contract to another. bmi use the word "realistic" several times in the spring. can you say that this has stopped roaring inflation? >> that is what realism is supposed to be. it is not a guarantee that the estimate is correct. the estimate is a projection. that is what we believe we can tell you is our most realistic estimate we have. we would like to do better than the estimate. we would like to do better than the estimate. realism means i will try to tell you as best i can what i think will happen. would i like to do better than the estimate?

of course, i would. will we be managing to do better? yes, i do not do a realistic projection and say i will live that no matter what. i would like to lift a better future. that is what management is about. we hope to do better than the estimate. >> you talk about ioc slipping yesterday. the marine corps has not changed. get the end of the initial test and a valuation has slipped by four years. that is the test phase that says -- . >> you are at a distance -- different variants of the aircraft. you have to dig into each one. the marine corps variant is different from the other dish. what they are looking for in the capabilities of the aircraft -- this is not new. this has been true right along. each service has its own

definition ioc. >> you do not think that the marine corps ioc should change? >> the marine corps assessed on the basis of the restructured program their ioc, and they're in a different circumstance from the other services. there is no disconnect there. he had their definition of ioc, and they are all based on upon the restructuring program. the ferry and the marine corps is starting with is less capable. it has always been. that is what they want. >> compelling thing that is out there -- >> as the marine corps changed its definition of ioc? >> no.

they clarify things from time to time. they have been steady in the kind of aircraft they want. we can provide you with at intermission about how the various services define it. there's no mystery there. they are all different. >> are they different now before the restructure? >> some have clarified. they're not related to the restriction. as it comes more to the date at which you're going to the point, he think about how you want to stand it up. they have clarified, and they will probably continue to do so as they get closer to ioc. they are the user. they get to decide how that want to field their plan. we will deliver them airplanes when we can, and they will decide on the basis of that how they want to operate the

airplanes. there are two parts to this ioc equation. >> a lot of anger coming from europe from leaders having portrayed a contest that was skewed from the start against the northrop bare hands. -- variant. >> i want to reiterate what he said, which he said we value the contribution of the european industry to the choices we can make as a department. we welcome that. there is no protection isn't going on and so forth. it is important to us. it is the widener technology base that is good for the

department's of defense. >> are you considering a possible extension of the bidding deadline to allow eads to put together a new team if it wanted to, now let north curb has pulled out? >> -- now that northrop has pulled out? >> we do not have any additional bidders for the tanker. we welcome competition in the tanker solicitation, and the deputy made it clear the other day that no one should interpret this as a statement about how welcome european industry is in our competition. >> thank you.

>> you're watching c-span. next, the white house briefing. followed by a state department briefing on the situation in somalia. later, the growth of islamic radicalism in the united states. [captions copyright national cable satellite corp. 2010] . .

the >> premier robert gibbs said president obama is postponing a trip to indonesia. this briefing is about 50 minutes. >> nice to see you. let me get a few pictures over here. what was that groan for? come on. >> show us again, come one.

>> you can't go yet, i'm not ready. >> don't worry, we'll do a couple of non-serious announcements in my -- >> what position did gibbs play, anyway? >> this is -- i am, first of all, as you can tell, not in my normal attire -- though it does signify friday here at the white house, casual friday as we newly instituted. [laughter] i am making good on my aspect of my wager with dimitri, my canadian counterpart, who is somewhere several hundred miles north laughing. >> are you itching yet? >> i am not. no, i'm a little warm. the number 39 is for ryan miller, who of course was the united states goalie and the tournament mvp. i have one official government announcement. we have the embassy, our embassy and our ambassador to make arrangements to deliver one case of molson canadian and one case of yuengling lager from pottsville, pennsylvania, america's oldest brewery, to the prime minister's office today. i'm sure dimitri will take most

of that home and consume it. let me do the week ahead and then we'll get back into more semi-serious attire for the rest of your hockey questions. >> no! >> fifteen minutes! >> fifteen minutes -- i thought we were doing this on the metric scale. [laughter] >> that's 30 minutes. >> fifteen canadian. >> exactly, right. what's the exchange rate? the president has no scheduled public events this weekend. on monday, as you know, the president will travel to strongsville, ohio, where he will deliver remarks on health insurance reform. on tuesday the president will attend meetings here at the white house. on wednesday the president will meet with the taoiseach of ireland, brian cowen, at the white house. in the evening the president and first lady will host the taoiseach and mrs. cowen at the annual st.patrick's day reception held in the east room, and the event will be pooled press.

on thursday and friday the president will be here in washington, d.c. and we'll have a chance to talk, i'm sure, about the trip here in a few moments. let me get a little bit semi- organized. i will say -- no offense to my canadian friends here -- but we couldn't have done this fully with alex -- [applause] let me put my specs back on -- of course this just has 10 for 2010 on it. nick and u.s.a. hockey -- the happy providers of this jersey -- it's a little smaller in size, which i think nick did on purpose so that at the conclusion of this i would give the jersey to him. >> what else are you taking off? >> no, that's rahm, ma'am. that's the chief of staff. >> it's lucky you didn't make a bet about wrestling. >> one more fashion spin, please. >> you like the usa, 2010 usa.

[applause] so i don't think i should take any questions wearing this, but -- you know what, we'll take a couple. go ahead, sir. >> okay. now that the trip has been delayed, how is the president going to use those extra two days? >> phil, the president has met with and talked with, as you know, many members of congress over the past several days. i anticipate that he will talk with the leaders and members of congress in -- talking to them about the benefits of passing health care reform. so i anticipate that that kind of -- that kind of thing will happen. this came about as a result of a conversation that the president had with speaker pelosi, majority leader reid, who --all three agreed that it would be helpful to have a few extra days here, talking to members. but they also agreed that this

was an extremely important trip for the united states of america for the president to go to indonesia and to australia. >> but congress is going to be around for a week after the president leaves. so is the 20th now the new 18th? [laughter] i mean -- >> i don't -- >> in terms of deadlines. is now the 20th now the -- >> look, i'm simply going to say the president, as we announced today, will leave for the trip at 10:00 a.m. on the 21st.>> so the president is okay with congress continuing discussions of health care, even while he's traveling, or does he want this all wrapped up with a bow by the 20th? >> i think -- we've been talking about this for more than a year. i think the president wants, members of congress want a vote as soon as possible that will lead to improved health care for millions of americans. >> but does the president expect to leave having the house pass -- >> look, i will leave deadlines up to the speaker. yes, sir. >> if the president fails -- if

congress fails to get this across the finish line or very close to it before next sunday's scheduled -- rescheduled departure date for asia, is there a chance that this trip could be delayed again or even canceled altogether? >> in speaking with speaker pelosi and majority leader reid, all three agreed this was an important trip for the president to make. the asia-pacific region of the world is tremendously important to the united states for a number of reasons. we will -- we're going to visit, obviously, indonesia, the world's largest muslim population, an emerging democracy. the president will follow up on his speech from cairo in a speech in indonesia -- a key partner, obviously in our counterterrorism efforts -- before traveling to australia, obviously a very important trading partner and an important ally in our efforts in afghanistan.

i will say that if you -- as the president said in tokyo, that for years the united states has been absent from the asia- pacific region. we are -- we can't lead in this region of the world without strong bilateral relationships with indonesia and australia. they're key in our ability to keep our country safe. they're key in our ability to grow our economy through increased exports. and they're key to tackling big challenges. indonesia is the fourth-largest greenhouse gas emitter in the world. obviously they'll be incredibly important to international agreements on climate change. so the president believed it was important to give the issue of health care and the effort to

get votes on health care a few more days, but also believes, as do those leaders in congress, that it's important to keep this trip on our schedule with two important partners. >> one other issue. the president looks to be homing in on his fed nominees. can you confirm that janet yellen is the leading candidate for nominee as vice chairman, and that sarah raskin and peter diamond are under consideration for other vacancies? can you give us any kind of sense of the timing, whether he's going to make an announcement before the trip, after the trip? >> look, we -- she is obviously somebody who -- a former chair of the council of economic advisers, somebody with great expertise in macroeconomic issues, the current president of the fed in san francisco. and she is a leading contender for the vice chair nomination. as you know, we are hoping to fill the vacancy of the vice chair in time for the end of

the current term, which is june. and i would say sarah raskin and peter diamond are also under strong consideration for additional vacancies. i don't have a timing announcement, though, on any of those. >> are we speaking a matter of weeks? >> well, again, i don't want to speculate on when the timing would be, except obviously for janet yellen, who's under strong consideration, i would say anybody that is appointed to the vice chair would need to be done -- our hope obviously, as i said, is to get it done before the current term expires. >> and she is the leading candidate? >> i would say she is a leading contender, yes. >> a leading contender? >> has it been 15 minutes yet? do you want to put your jacket on? >> do you feel uncomfortable, jake? >> i feel like if i show this to the viewers of abc news, world news -- >> then we have to explain the whole thing. [laughter] >> -- they're going to be a little confused why on a story about health care you're wearing a hockey jersey. i'm saying --

>> it can't be any stranger than some of the other stuff i see on the news, so i don't i am not entirely sure what -- somebody give jake the canadian one and we'll just do a quick two-shot and we'll -- >> faceoff. [laughter] >> yes. would you feel more comfortable if i switched? >> i'm just glad it was a hockey, not a wrestling, bet. [laughter] >> or sumo wrestling. [laughter] >> i was going to say something, but i -- >> say happy birthday. >> true. >> other than talking to members of congress, what is so important that the president needs to be here for those extra two days? i understand that the members of congress were asking president obama to do this, that you're not imposing his presence, but what can he -- what difference will it make? >> well, look, jake, i think the president will use the time, as i said earlier, to speak either individually with or in small groups with members that may be at this point undecided

on how they'll vote. the president i think will take the opportunity to once again reiterate his case for why this reform is so important, why it's important to do this now, why it's important not to stop or to start over, why we're dealing with dramatic spikes in health insurance right now, and why we have to deal with this problem. >> why do you think so many members -- i mean, 216 members of the house who voted for it in november, voted for the house bill, are still there -- and that's a majority. why do you think so many of them are having second thoughts? >> well, jake, i think some of them are likely waiting for finished cbo scoring. i think that's a natural thing to wait for and i think they'll

have time to evaluate that scoring and to evaluate the legislation in full. but, again, i think the president believes that he can make a very strong case for why this is important to do right now. >> and, lastly, as you know, a lot of house democrats are distrustful of the senate -- of senate democrats, and they're worried that with the way the parliamentarian has ruled they're going to be tricked somehow into passing the senate bill and then the fixes to the senate bill, and the senate won't pass the fixes and they will have been tricked into passing the senate bill that a lot of them don't like without those fixes. is president obama reassuring them, telling these house democrats that if the reconciliation, if the fix doesn't pass the senate bill in itself, he won't sign that bill? or -- >> well, look, again -- and i mentioned some of this yesterday -- i think some of this -- i

don't want to wade into the parliamentary politics on capitol hill, except to say this, the president is talking with -- not just with members of the house on the vote that they're going to have to make, but also with members of the senate to ensure that the corrections that the president sees as so important -- not just the house, but the president sees as so important -- are also acted on. and so i don't -- this is -- it's a dual track. it works together, but the president is working on both of those issues. >> you think -- will -- is it possible, in any way you look at it, that one would happen -- that the senate bill would pass but the fixes would not, and the senate bill would become law? because that's what house members are worried about. >> they're concerned. i think that's why the president is spending time also dealing with senators to ensure that

they are supportive of those legislative fixes on their side of it, too. >> thanks, robert. representative dreier, in referring to the president's delay, said today, "we know that they are doing everything within their power to try and twist arms and encourage people to vote for something that is extraordinarily unpopular and i believe would be devastating for our nation's economy." what do you say to americans who are still having a difficult time buying the president's plan? >> like mr. dreier? [laughter] >> well, dreier and others. he's not the only one. >> yes, i would probably tell mr. dreier the same thing mr. dreier from california. people in his state are getting the letters that we've talked about here for the past several weeks, the letters that say, "i know you've paid your premiums, i know you haven't gotten sick, but you're in the individual health insurance market, and your health insurance rates are going up 39 percent next year." that's what we're dealing with. that's what we have to take on.

we have to provide the ability for a small business in the state of california and throughout this country, or in mr. dreier's district, or a family that's struggling with the high cost of health care, to get them some help. the president is doing this because he believes that this is the right thing to do for our country -- to have a health care and health insurance network that works not just for health insurance companies but works for average, everyday working americans. that's why he continues to pursue this, and that's why he'll see it to passage soon. >> does it frustrate the president at all that he's been making this big push, pointing

out what the insurance industry has been doing with the premium hikes -- does it frustrate him that the message still isn't getting through to some? >> i don't think the message -- i think the president is -- i think the president feels some momentum on this issue. i think the president believes that while many thought this issue was going to go away or was dead a few weeks ago has gotten new life, i think largely because we've seen insurers send out the letters that i'm talking about. >> on the afpak meeting, can you tell us more about that? >> let me give you a quick readout, and then we can go through a couple of questions. the president met with his national security team as part of the regular updates that he receives on afghanistan and pakistan. this was part of the monthly video teleconferencing. the next one i believe is scheduled for april 16th. the meeting began with a briefing from general mcchrystal, who noted a continued progress in the marja offensive and the strengthening partnership with afghan national security forces.

the president and his team discussed a range of issues related to security and governance. the president also received a briefing from ambassador patterson, our ambassador in islamabad, on our security cooperation with pakistan and support for the pakistani people. of note that general mcchrystal told the group, including obviously the president, that we were on schedule on our force flow in getting additional forces approved by the president into afghanistan by the end of the summer. they discussed in surrounding marja that we were largely through the clearing phase and more rapidly moving to a phase of hold, which puts a premium obviously on good governance. and we spent quite a bit of time discussing the afghan national security forces, the army and the police forces, the

training and some adjustments that the president and the team have been working on around recruitment and retention of police and army forces dating back to the president's original meetings in the situation room prior to his decision in december. >> and one quick thing. is the administration pleased with the pakistani government in the effort fighting terrorism, or does pakistan need to do more? >> well, look, we have had -- we've enjoyed i think a almost unprecedented level of cooperation with them, dating back probably almost a year now, to extremist movements that threatened the pakistanis and i think in many ways alerted them to many of the concerns that we

had long had. we feel like we're making progress each and every day, and i think in the update that he got from ambassador patterson that was conveyed. yes, ma'am. >> i'm sure the president is aware that it's against international law to annex occupied land. why do we keep giving, as vice president biden did, iron-clad commitments to israel when it violates international law? and the president says that our relationship is unshakeable. how can that be? >> well, we enjoy a strong and important relationship with the country and the people of israel. and we are -- >> even when it violates the law? i mean, you go into this whole thing -- why should they be -- get this reprieve? >> well, again, we enjoy a strong relationship with the country and the people.

we are committed to their security in a very important and dangerous -- >> how about the palestinian security? >> well, let me finish my answer, helen -- in a very important region of the world. i think the vice president, though, could not have been clearer on, as i said and as the vice president said, on both the timing and the substance of the announcement that was made during his trip, that we have asked each side to refrain from the type of announcements that would shake the trust needed to sit down together and make some decisions on moving forward on a peace process. so i think the vice president was extremely clear on his trip there. i know the president looks forward to speaking with the vice president. he's -- he'll get back very,

very early tomorrow morning, and i anticipate that they'll either -- they'll likely talk either later in the weekend or first thing on monday about what the vice president saw, not just in israel but in the region, as we try to move things forward. >> we've already seen the violation on the part of one party. what is the u.s. going to do about it? >> well, again, i think that the vice president was extremely strong in condemning what the israeli government announced during his trip. chip. >> you said that the president is feeling some momentum on health care. congressman weiner, who has long been urging the president to be more involved, said that as a result of the president's recent increased involvement, there is now a tidal change in the last 72 hours up there. do you agree that the change has been that great in degree? and if so, was it because of the president's uptick in involvement? and if so, why didn't he do it

sooner? >> again, i don't -- i probably said this a thousand times, but i'll add another one to it. i doubt the president -- i doubt we'd be where we are on health care, after this long, if the president wasn't personally invested in, from the very beginning, on getting this done. i think, chip, as the president said at the state of the union, it's pretty clear, by some of the polling numbers, we're not doing this out of -- for sheer political benefit. i think there are -- you don't have to -- you can swing a cat in this town and hit somebody that believes that the president should just give this up for political considerations. the president, i think, has been pretty clear about why he's made decisions during his time as president -- not because they're easy, not because they're in the next day's political interests, but because they're

the right thing for the country. so i think what has provided health care with the most momentum, quite honestly, in the past several weeks, are the insurance company rate increases. i think they have crystallized for many across the country what happens. we've seen report after report from wall street about what happens if reform fails. they all agree that insurance companies, like the ones that raise rates, are likely to be the big winners out of this. >> and in delaying the trip, to what degree was that because of pressure from democrats in congress? and did he -- did nancy pelosi specifically ask him to do this? >> no, the president talked to the speaker and the majority leader. they discussed what would be most beneficial for this process, and agreed together to move the trip back a few days. but the president and, as i said earlier, the majority leader and the speaker believe it's important that the president go

on this trip. again, this is a very important region of the world. if we don't help lead in this region of the world, other people will. it is in our national interest to have strong bilateral relationships with emerging democracies like indonesia and important partners like australia. i've seen some people say, you know, well, why does the president have to do this, because there's not some big multilateral conference that he's attending, or this -- as i said, we're at -- we have long -- long ago have been -- for quite some time we've been absent from, again, this important region of the world. we have important partnerships that lead to increasing our security, increasing our economic growth, and increasing the likelihood that we deal with important problems in having strong bilateral relationships with places like indonesia and australia. >> and the central reason that the three of them decided that delaying the trip was the thing to do? >> to give a little bit more time to get health care done. >> one other question.

you had said earlier in the week that the president was not calling individual members yet but -- >> he had not at that point. >> okay, he has now. >> he has -- i mean, obviously he's talked to -- he's had meetings with. there have been other events that individuals have been here for. i know obviously on monday he had talked to members who had visited for, like, a paygo reception or things like that. he has made individual calls now and i anticipate he'll continue to do that. >> is he spending most of his day or a good portion of his day doing that? >> he's spending part of his day. i mean, again, he spent -- the afghanistan meeting, afghanistan/pakistan update was scheduled for 60 minutes and the meeting went 90 today. >> any chance we could get a call list of who he's called? >> not likely. [laughter] >> you said the president is leaving at 10:00 a.m. sunday -- >> i think it's 10:00 a.m., yes. >> -- the 21st, regardless of whether the house has voted or

not? >> the president is going on a trip on the 21st.>> regardless of whether the house has voted or not? >> the president is going on the 21st.>> you announced on twitter this morning that -- this development and that the first family would not be joining him. >> yes. >> can you shed any light on why that particular decision was made? >> scheduling-wise, the way now the trip sits in the week is not as good for two young girls who have to go back to school at the conclusion of that trip. i will say this. this was and i should have said this yesterday, chip, to your question -- even under the old itinerary, the president was not scheduled to stop at the house that he spent time in when he lived in indonesia, nor was he scheduled to go to the school that he attended. so i should have said that yesterday in answer to your question. but the way now the trip sits in the week, it's not as conducive for them to go. and i will say when you get your renewed itinerary, you'll see it's a brisk trip. >> members of the house who

met with the president last week said that he told them that success on other high-priority pieces of legislation is predicated on success on health care -- energy, immigration. does the president believe that he will have a diminished chance of passing other items this year if health care is not passed in congress? >> well, i've not spoken directly with the president about what you've heard members say. i think the president -- leaving aside what it does for any other issue, as i said earlier i think the president believes strongly in the desire to see progress on an issue that we've talked about for decades, to do something positive on behalf of those that are struggling with high costs, and dealing with insurance companies on preexisting conditions, and it's important to get something done.

>> finally, the immigration groups, the leaders that were out in the driveway yesterday, said that they pressed the president for a bill in the senate by the end of april. does the president want a bill in the senate by the end of april? does he buy into that deadline? >> well, look, i will say that in addition to meeting with activists, in addition to meeting with the congressional hispanic caucus, as you know, the president met yesterday with senators schumer and graham, pleased to get an update on their progress in forging a proposal to fix our immigration system. the president -- they asked the president and he agreed to review their framework, and we're in the process of doing that now. >> can i follow on mike? >> sure. >> isn't it more important for the girls to go to this trip and miss a few days of school, despite how brisk the trip is? >> well, it's a decision i would leave to the parents, and i think it's -- having a six-year- old, i think it's important that they also spend some time -- lord knows we've had enough snow days -- they spend some time in school.