was. this was a man this was a man, incidentally -- he left law school after his first year. by the time to years later when we went back to school paul's mother was born. i start of law school when jane was 14 months and the dean of the law school, many of you know him. he was the dean and then a great solicitor general. he would explain that i had met marty in law school and marty

was ahead of me. and they said one day, dean griswald, it is embarrassing to me because jane was 4 years old when i graduated from law school. but the notion of harvard law school and motherhood, in my entering class there were nine women, over 500 men. a big jump from marty is class was five women and over 500 men. the notion that you could go through the rigorous training in law school and have an infant was just too mixed in the dean's mind. >> he once told me when i was interviewing you, you pointed to a picture of one of your law clerks holding one of his kids. you said, "that is my hope for

the future." i thought it was just a platitude. about what you were saying was that if men would assume it was on the ability for child- rearing, then women would be truly evil. [applause] >> the first toe for my -- for that is my grandson. he is lying on the bedside in a photograph. the love for that in is communicated so beautifully in that photograph, which is in a branc -- in a prime place in my chambers. the story of david is that he was going to law school at night and his wife had a good

job, i think cathy world bank, and so, he took -- i drink at the world bank, and so, he took responsibility for the two young children. he wrote the story of eight young -- of a contract as revealed in wagner's ring cycle. the combination of the two, his love of opera, and his being the primary caretaker of his two children -- and he was on top of that a wonderful law clerk. >> how optimistic are you about that vision of men and women sharing child rearing responsibilities? we had this wonderful article. it was the cover of "the atlantic" and is called, "the end of men." the author says the aptitudes

most valuable to become a social intelligence and other things are not primarily male. your the thurgood marshall of the women's movement. you managed to them to accept gender equality step-by-step. how optimistic are you that men will step up to the plate and take care of children -- take responsibility for children? >> i think that men and women, shoulder to shoulder, will work together to make this a better world. [applause] i do not think that men are the superior sex. neither do i think women are. i think is great that we are beginning to use the talent of

all of the people in all walks of life and that we no longer have the closed doors that we once had. >> and are you satisfied with women's achievements? there are conflicting statistics in this article. on the one hand, women are 60% of all college graduates, of all master's degrees, and then on the other hand, a small percentage of ceos. >> of course we have a ways to go. with progress, progress comes slowly and one must be patient. i remember the first time i heard about the swedish parental leave system. they had it long before we did. and someone was commenting on it and said that only 10% of the fathers take that leave. and i said, 10%, better than 2%.

it is more than i thought it would be in the beginning. and that is how come i think, is shaping up to date. men are sharing the burdens more and more of free of the next generation, but it takes time. the best way that i have found to reach men of a certain age in the days that i was a flaming feminist was to have them think about their daughters and what they would like the world to be liked for their daughters. and -- to be like for their daughters. >> and there are reports that the money track is giving way to a demand for flextime among both men and women who are graduating from college. that is a prized employment per, to have -- at a price employment perk, to have a flexible

schedule. -- that is a prized employment , to have a flexible schedule. >> and you would think that would be easier and easier today. >> justice o'connor was the first, then there were two, and then just one again, and then two, and now finally 3. should there be more? >> i am so glad that elena is joining us because i have said that i expect in my lifetime to see 3, 4, may be more women on the u.s. supreme court. we are a little bit behind canada. canada has nine justices. four of them are women, including their chief justice. but we will get there. [applause]

>> you have known elena kagan for a while, i think. how did you meet her? >> i met her when she was cooking for adminfa. and then i next got to know ileana and then she got to go in -- she got to know me when i was nominated by president clinton and joe biden was the chairman of the senate judiciary committee. he wanted to appear very well prepared for the hearing, so he borrowed elena, who was then working at the white house and he asked her to read every opinion i ever wrote, and every speech i ever gave so that she could inform him and suggest questions to ask me at the hearing. so, elena knew me quite well. when she became our solicitor

general, i lost my best law clerk because i had an arrangement with elena when she was the dean of the harvard school that she would pick one of my law clerks each term. if i had been exceedingly well served by the law clerks that she had chosen. >> some have criticized her for not having judicial experience. and it is a pretty tough crowd out there. will she be a good justice? >> her very first argument -- the very first corvette elena -- very first court that the lehnelena ever argued before was the supreme court and she was superb in every argument that she gave. she had a little bit of a problem because she had written about my nomination and steve

prior to oppose the nomination and said she wished we had been a little more yielding that we were. [laughter] -- than we were. [laughter] she is older and wiser. she steered the same course that we did. >> how did she do? did she steer it well? >> i said, it takes two qualities and that is all you need to know. one is patients and the other is a sense of humor. -- one this patience, and the other is a sense of humor. >> she showed that when she was asked where she was on christmas and she said, like most jews, i was at a chinese restaurant. [laughter] and now we have how many new

yorkers? >> we have everything but s.i.. sonja is from the bronx, from brooklyn, the net as from the queen's end elena born and bred in manhattan. >> people are curious, of course, about what the dynamics is on this remarkable body. from my perspective of a -- and anlace faculty meeting where you are locked in the same room with the same nine people for a long time, how you get along? you have a bipartisan frontier with justice scalia. you have spent years with him. you love opera. what are the ways that you have bonded most with justice scalia? >> i think sandra will back me up on this. of all the places i have worked, all of the law faculties i have been a member of, there is no workplace that i have found more

collegial than the u.s. supreme court. we are in a real sense a family, no matter how strongly we disagree on important questions, and we do, we genuinely respect, like and care about each other. summer -- some remember my first bout with cancer. i have colorectal cancer in 1999. shera's advice to me was -- gave me first advise when i had to have chemotherapy. she said, do it on friday and you get over it on the weekend and you will be able to come back to work on monday. [laughter] the other thing she told me, and

i was so glad to follow her advice. she said, you are going to get letters from all over the country, people wishing you well. do not even try to respond. in so many things, everyone of my colleagues -- my most recent bout was with pancreatic cancer a year and a half ago. i am just fine. [applause] my favorite story with my first answer was about my dear colleague, david souter. he said, along with my other colleagues, if there is anything in the world i can do to help me get through this time, just call on me.

one afternoon, one friday afternoon, i get a call ofsayin, when you get finished with the chemotherapy, please come to see me. i am in the cardiac wing of the washington hospital center. it was nothing life-threatening, but he had to be there overnight. and i had tickets to the washington national opera next evening. so, i called david souter and , david, you said anything, anything at all. i do not want to sit next to an empty seat tomorrow night. if will you join me? -- will you join me? this audience will not appreciate what a tremendous feat that was to get david to come to the kennedy center. he had invited dozens and dozens

of times. he enjoyed it enormously, but he never came back. [laughter] >> this idea of consensus is much discussed recently. chief justice roberts came to office saying that he wanted there to be more consensus, if you were 5-4 decisions. but he has had mixed -- few 5-4 decisions. but he had had -- he has had mixed not possess. -- he has had mixed success. willie achieve consensus and is that a good thing? >> etten not think he meant -- i do not think he meant that he or anyone of us would surrender a deeply held point of view. it is not like a legislator. we do not vote a particular way because we would like that outcome.

we have to account for everything we do by giving reasons for it. there is no cross trading at all on the court. what there can be as, instead of deciding the great big issue, we can agree on a lower ground, on a procedural issue, perhaps. when justice -- justice sandra day o'connor was a grand master at that. she could get us to come together on what we could agree and the for the bigger battle for another day. -- and d for the bigger battle for another day. >> -- and defer the bigger battle for another day. >> many of the recent decisions have not been narrowed. the citizens united the case could have been decided on narrow grounds, but instead, it was really quite broad. you think the chief justice is

committed to narrow decisions? >> i cannot answer that question. if they thought this was a very basic first amendment issue. and it needed to be decided sooner rather than later. you are quite right that it could have been decided on a lesser ground. we started out the term with that 5-4 decision. and i think that both sides, if you read our opinions, you will see our statements. >> there is a lot of hoping -- a lot of hope to appealing to a consensus and people of that elena kagan will be able to appeal to justice kennedy. can he be persuaded?

>> every once in awhile, and it is a rare while, -- i should explain. when the court is sitting, we will sit two weeks in a row. we will meet on a wednesday afternoon to talk about monday's cases and on friday afternoon to talk about tuesday and wednesday's cases. the chief will go down the list. he will start by summarizing the case and in expressing his tentative vote and then when all our say, thead are sayin chief justice will give people homework, that is, he will tell people to read the opinions -- write the opinions.

so, now, what? >> the question is, can you actually change justice kennedy's mind? >> that is not justice kennedy. maybe twice a term. the opinion will come out not as the conference voted initially, but on the other side. to give you an illustration of how it really ain't over until it's over, i remember a case where the conference vote was 7 to 2. i was one of the two and i was assigned to write the descent. -- the dissent.

in time it became 6-3, but my two became 6. we are constantly trying to persuade each other. we do it mainly through our ridings. and it will happen that -- our write-iing. and it will happen that a justice on the underside will say, i think he or she is right and i'm going to -- on the other side will say, i think he or she is right and i'm going to join the other side. >> sometimes the rhetoric can be very passionate. in the court case you objected to the gender stereotypes and the inherent idea that women had to be protected from their bad decisions. was it difficult to challenge a colleague directly? you seemed to really care about that case.

>> yes, but i did not say about the other side, this opinion is profoundly misguided, or this opinion is not to be taken seriously. >> those are justice scalia's words. [laughter] he said that about one of justice o'connor's decisions and she very calmly said, sticks and stones will break my bones. it was very effective. >> i never contradicted many sandra day o'connor opinion and i think those are as -- those are distracting asides, so i do .ot use them trad >> will roe vs. wade survive? >> rove versus wade was decided in -- rove vs. wade was decided in 1973. over a generation of young women have grown up understanding that

they can control their own productive -- reproductive capacity, and in fact, their lives destiny. destiny.life's and we will never go back to the way it once was. [applause] rove he weighed in its time was not all that controversial -- roe v. wade in its time was not all that controversial. it was 7-2, the two dissenters. there will not be a real change for anyone in this audience, or any daughters of anyone in this audience.

the only people who are truly affected are poor women because even at the time of roe vs. wade, there were four states where women wanted -- who wanted an abortion, at least in the first trimester, could have access to a safe, legal abortion. now it would be a lot more than four states. so, any woman who has the means to travel from one state to another -- you do not have to go to japan, or cuba -- will have access to a safe abortion. so, it is the poor people. whatever the state legislation may be. it is only the poor woman who will suffer. i think the people realized the

-- when people realize that, maybe they will have a different attitude. [applause] >> there are two things that are much in the political debate recently, and one is, this is a pro-business court, this is what the progressives are all saying and they cite that the chamber of commerce is one of 186 cases. you are one of the least pro- business justices, according to the survey. is this a fair charge? and is this a pro-business court? >> i thought you were going to ask me about how did i let jefferies killing off the hook in the enron case. -- jeffrey skilling off the hook in the enron case. all nine of us to the position that congress had written a statute -- took the position

that congress had written a statute that made it a crime to not deliver on the services. all nine of us agreed you could not make that an offense. i do not regard myself as pro- business or anti-business. i just call them as ithey come, as best i can. >> here is another statistic i am delighted to share with you. you are the most restrained justice, justice ginsburg, if restraint is the spine in the traditional way of -- is defined in the traditional way of just striking down laws. you are the least likely to strike down federal, state, or local laws. isn't it that the restraint has

been redefined and you are an activist if you do not strike down health care or campaign finance reform? >> you could see that some of the senators were begging for the court to relieve them of their own folly. [laughter] the label "activist," what does it mean? on that kind of score, who has voted to strike down more states to slash federal legislation? justice scalia is not high up -- more state/federal legislation? justice aliyahs not high up on that list. >> the same work that you are engaging in right now when the liberals were saying this was a pro-conservative court and you

have to strike down the new deal, might we see a resurrection of those new deal battles with the supreme court -- where the supreme court by divided vote is challenging the president on those issues about which you care? >> i think that era is long over. even my colleagues who might have some doubts if it were decades earlier are prepared to recognize the proper role of the legislature and social and economic legislation. -- i think ithinkin can say with some confidence and i think there will be another packing plant. because you know, franklin delano roosevelt was so frustrated that the court kept

striking down social and economic legislation that he decided to -- i mean, he could not fire the justices because we hold our offices during good behavior. that is what the constitution says. so, his proposal was for every justice that turns 70 and a half years old, a new justice could be appointed. that would have given him immediately six more spots and the court would have swelled from 9 to 15. i do not think we are in danger of that happening again. >> from the other side of the political spectrum, there are calls on the court to impose contested social reforms. i do not know if you know, ladies and gentlemen, but justice thurgood -- indeed justice thurgood marshall court, justice ginsburg chose to hand

pick her cases and slowly build a consensus for women's equality. do you take the stand that the board should not get too far ahead, but should gently nudge and follow rather than lead? >> i do not know an age in which the court has really led. if you think about crown versed -- brown vs. the board, that was the biggest decision of the 20th century, and rightly so. but if you look at the brief filed by the united states in brown v. board, it was urging the court to hold the separation of children in schools, to hold that unconstitutional. and the reason was the then soviet union, it was their best propaganda tools to talk about apartheid in america.

so, it was not just third marshall -- thurgood marshall's great advocacy and his careful .lan working uppe it was the aftermath of world war ii. we had just fought a war against freesias -- ot as racism -- against cody is racism. -- against odious racism. i was fortunate to be born in the right time and the right place. women in generations before said the same thing that my generation was saying, but they did it at a time when no one, or precious few, were prepared to listen. i like to tell the story about

the so-called liberal warren court and how it dealt with issues of gender differentials. the case was a woman in florida and she was what we would today call a battered woman. one day, she was beside herself with rage. her husband had just humiliated her to the breaking point and she was a little bit like billy bob when he strikes out because he is tongue tied. she took a baseball bat. she starred in the corner of the room and with all her might prodded down on her husband's

head -- brought it down on her husband's head, and in the altercation and starting a second degree murder prosecution. in her county in florida at the time, women were not serving on juries. they were not called to jury duty. and this woman, who is standing trial before an all male jury, she had the notion that women on the jury might understand her outrage, her state of mind and maybe not vote to acquit her, but maybe vote for the lesser degree of manslaughter rather than murder. she was convicted of murder by an all-male jury and the case went all the way to the supreme court. on the issue of whether she had been denied equal protection of

the laws and due process of law because she did not have the opportunity to have a single woman on her jury. the liberal warren court said, well, we do not really understand what she is complaining about. women have the best of all possible worlds. they are not called to jury duty, that is true, but if they go down to the clerk's office and volunteered to put their name on the world, it will be there. so, women have the best of all possible worlds. and that was that. that was only in 1961. changes came when chief justice berger was the chief justice of the united states and he was known to be a "conservative" justice. and you had in the decade of the of aalmost every challenge

sex-based beverage will succeed in the court, whether it was state -- the sex-based differential succeeded in the court, whether with state or federal. because whether it was when men come not a revival of the feminist movement, there were men and women working together for this change. -- whether it was within, a revival of the feminist movement, there were men and women working together for this change. i was there to help advance that course. and i did, i really did have as many women's cases as men's. but they were all making the same basic point, and i can illustrate its best, perhaps case.tephen reisenfeld's

\ this was a man whose wife was the dominant in the family. she was a math teacher in school. she was in the classroom into her ninth month. in fact, she went into the hospital from the school. and the doctor came out of the hospital and said, you have a healthy baby boy, by your wife child -- your wife died in child birth. she had an embolism. he was destroyed and he vowed that he would not work full time until his child was in school full time. and his case went to the supreme court. it resulted in a unanimous judgment for three different reasons. the one group thought that the law -- stephen applied for child care and social security benefits.

but he was turned down because they were labeled "mothers benefits," not "parents benefits." i got to the case because he wrote a letter to his local newspaper in edison, new jersey and it was, i've heard enough lib.t women's live let me tell you about what happened to me today. and he described going to the social security office and there being no benefits for the whittle -- for the woodwork. -- for the widower. the principal argument, this is discrimination against the woman as a wage earner. she pays the same social security tax as a man, but does not get for her family the same

protection. then it was discrimination against the male as parent because he does not get the opportunity to be the personal caretaker of his child. and one of my later colleagues, he was then justice rehnquist, thought it was totally arbitrary from the point of view of the baby. why should the baby have the opportunity for the care of the sole surviving parent only if the parent -- only if the parent of were mailed? -- only if the parent were male? so, arbitrary distinctions hurt everyone. they heard women. they heard men. and they hurt -- they hurt women. they hurt men. and they hurt children.

[applause] going to thank justice ginsburg by being candid. this is a time when many liberals, for whom you are a hero, are anxious about the future of the court. they look to you, who according to one study, has the most consistently liberal voting record, at the same time that you are most restrained. are you optimistic or pessimistic about the future of the court and few think it will break the hearts of progressives, or do you think it will continue to embody the principles that you care about? >> i revere the court. i think all of us do. more than anything else, we want to make sure that we leave it as healthy as we found it. i do not think there is any one of us that would do anything that would leave the cord to be

not only a model for our own country, but for the world in model of independence, of the judiciary, and of the obligation to reason why everything we do we must give reasons. maybe hope springs eternal. but i tried to be as persuasive as i can with my colleagues and sometimes i'm successful and sometimes i'm not. but i will continue to try. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> speaker pelosi is calling

members? tomorrow to vote on a jobs bill passed last week. the bill is designed to prevent teacher reductions and layoffs of state workers. live coverage tomorrow at 10:00 a.m. eastern on c-span. and "washington journal" is looking into energy issues. tomorrow, the electric car industry. this is on "washington journal" at 9:15 a.m. eastern. >> "book tv" has been looking at books coming out this fall. >> how did this pigtailed girl growing up in the '50s become the first black secretary of state? he is a health expert and also politically savvy. this is an account of what it was like to be on the road with her dad and from what we are hearing, is going to be hot, hot, hot.

>> learn about these and other books coming out in her 2010 book preview this weekend. for the latest in nonfiction authors and books, watch "book tv" every weekend. but the whole schedule at booktv.org. >> i will tell you based on hundreds of tapes, hundreds of hours, that they are not conspiratorial. they are not sitting there saying, what do you think about this? do you think that is going to play? they really do not know what is going on. >> this week marks the anniversary of the 1974 resignation of president richard nixon and almost 40 years later, watergate still resonates in american memory. look back at the people, players and events that made history. online on the -- at the c-span video library, it is history, all free. >> now look at the future of

fiscal security. the national academy of social insurance hosts this event. it is about an hour and 15 minutes. >> welcome to the national academy of social insurance is. if you intended to be in another brief and, you are in a social security briefing this morning. good morning. my name is lisa mensa, the chair of the board of the national academy of social insurance. i spend most of my time the about private savings and financial security. part of my message is that the true security of the households really rests on the insurance foundation of our social insurance system, in particular

our retirement system on our social security. i think there is no other path to social security in our vast and critical system. you are in for a treat. this is by far the best briefing on the facts of what is happening with our social security system. there has been a lot of fear. we will banish words like "bankrupt" and get into the real details. this is a rich set of data and you will hear it from the experts. you will also get a good explanation of what is really happening with this system, with our trust funds, and i'm hoping that we will promise you a robust conversation. we are deliberately limiting their remarks that we will make so that there will be time for give-and-take. i want to start by introducing

our panel. to my far right is virginia reno, the vice president for income security at the national academy for social concerns -- insurance. and any massey directs the program on a worker's compensation and related programs. she is famous because of her relationship on several panels, especially the un charter of waters panel, which is about paying individual -- un charter waters panel, which is about paying individual accounts. she is also one of the authors of what is in your packet, the nassey briefing on social security finances and it is the shut -- the short cut of the 2010 report. it is a great report, but if you want the eight-page summary, she has done a great job, as usual.

i also want to introduce steven ross, the actuary of the social security administration. you have his bio in your packet. stephen joined the office of the actuary in 1973 after graduating from the university of virginia with a master's degree in mathematics. he has written articles on many topics and made many presentations, participated in discussions. he is a member of the society actuaries and the academy of social insurance. but truly, he is one of our most trusted voices on the social security system. ironically, he does not have a voice today. he is suffering from bad laryngitis, so we have with us today -- we are very lucky to have his deputy. that is alice wade. she is the deputy chief actuary for long-range estimates in the

social security administration. miss wade has been there since 1983, i believe. she is the author of many studies on the vote -- on the social security system. before coming to the social security administration she worked admitting your as a pension consultant. mettinger as a pension consultant. alice, we want to say a special thank you for your jumping in. this is the 70th briefing. that means it was 1940 when we were starting. it would be very rare then to have three women standing giving you your briefing on social security. it has come a long way. i am pleased to have a great participation of the social security administration. we will start with dallas and then move to virginia. -- start with alice and then move to virginia.

come on up. >> ok, let's start again. good morning. it is a pleasure to be here. thank you. it is a pleasure to be here. i have some good news and i have some bad news. let's start with the bad news. in the 2010 trustees' report has left their chief actuary speechless. [laughter] not really, it was not the fault of the report. i promise you that. no, the bad news is that he cannot speak, he cannot deliver the presentation that he was

prepared to deliver. and you have got me. you are stuck with me. the good news is that he is here and he is not contagious. [laughter] with that said come on what i'm going to do today is the sort of present you with some of the results of the 2010 trustee's report. what i'm talking about is the oes the guy -- oesdi trustees' report. that stands for the old age disability insurance program. the trustees' report was just signed on thursday the last week. that was a huge delay in the norman -- normal timing of the reports. and i will tell you exactly why. the reason for that delay was

not to keep the public uninformed. the reason for the delay was the medicare actuary's needed the time to incorporate the health care legislation that was passed at the end of march. they needed to incorporate that legislation in their estimates and that was a huge piece of legislation and it impacted their estimates of lot. they needed that extra time. also today, what i'm going to present are the results under our intermediate assumptions. these are our "best guess" assumptions. i want to make one point before i go on, when you make off estimates, there is a lot of uncertainty. there is a lot of variability, as we all know, in just presenting one set of estimates.

if our trustees report tries to address the uncertainty -- our trustees report tries to address the uncertainty of variability. it has a low cost and a high- cost scenario. those two scenarios are probably very unlikely, but they give legislators a range of possible uncertainty. also, the low-cost has all the key assumptions on a very optimistic viewpoint, and the high cost are selected. so, they are very pessimistic to the cost of the program. the second thing that is in the trustees' report to try to communicate some of the variability is the sensitivity. what we do is we take all alternative two assumptions, our best guess assumptions, and we change one of the key assumptions at a time.

for example, we will use all alternative two assumptions, or intermediate assumptions, but instead of using the 2.0 fertility rate, that is, the intermediate assumptions, we will use the 2.3, which is the optimistic set of assumptions and then we will run it and get a set of results. it will also use the 1.7 total fertility rate from the pessimistic set of assumptions. all of those are in the trustees' report. the third way that we communicate uncertainty is through a cast it modeling. here we run 5000 simulations and the assumptions are generated by a combination of two things. looking at a combination and then having some random variation. we do 5000 of those runs and

then present results. what are some of the news from the 2010 oasdi report? first, we will break into long- term and near-term report. the long term -- we actually have some good news. the actual deficit was reduced from 2.0% of taxable payroll to 0.192% of taxable payroll. you might say, what does the social security -- what does health care legislation how to do with social security? i will get to that in a minute. but in the absence of actual

legislation, the actual deficit would have risen to 2.06% of taxable payroll. how about the year of exhaustion? that is very important to the program. i will show you that side in just a moment, but it did not change. it remains 27, same as last year. the annual balance after 2016 was improved. on average, that annual balance improved after 2016 by 0.25% of taxable payroll. ok, near term. the near-term outlook is not as good as it was last year. we have more disabled workers that have come on the role in the last year and are projected

in the next few years to do so. we have also had a slower economic recovery. this all leads to the di trust fund exhausting two years earlier than was projected last year. we have the di trust fund exhausting in 2018, and that is within the next 10 years. we also have lower annual balances through 2016. ok, this next graph speaks to the solvency of the oasdi trust fund and the di trust fund, too. anyway, the oasdi trust fund

combined we said was 2037. is the same. before i want to talk about what the trust fund ratio really is for those of you who might not be familiar, the trust fund ratio is just a ratio in the numerator in the assets at the beginning of the year. and the denominator is the annual cost, or all of the money that is supposed to be going out to pay scheduled benefits. if your trust fund ratio is 100%, what that means is that as of the beginning of the year, you have enough on hand today all scheduled benefits kamal kadmon costs, -- off all scheduled benefits, all administrative costs during the year.

the solid lines on this graph represent the 2010 numbers. the dotted lines represent the 20-2009 trustees numbers. as you can see, the black, which is the oasdi, exhausts of just a few months later, but in the same year. the oasi

we can still paid 78% of the scheduled benefits. at the end of 2084, this goes down. at that point, you can pay 75%

of scheduled benefits would just the tax and, coming into the program. the dotted line, the dotted line, is the scheduled benefits that are not fully payable. the solid line is what is payable. we call that payable benefits. this is the real reason for needing reform to the system because you do not want to get 22037 and then you do not have enough money coming in to pay full benefits, so the reform issues try to avoid the. this is almost like an automatic trigger in our system. it equalizes the benefits and the income.

these are the annual balances. that is the tax in, -- and come. you can see last year and this year, the blue line is the sheer -- is this year. you can see what i said before. 2016 -- the annual balance is worse after 2016. after 2016, the annual balance is higher. the next slide is sustainability. expresses the cost of the percentage of gdp. this is what we as a society are willing to pay as social

security. it arises from 4.8% of gdp in 2009 to a peak of 6.1% in 2035. it stabilizes between 5.9% and 6% of gdp. if you focus on alternative to the grass there, and it looks very familiar with the cost and the prior grafts. it almost follows it. this -- the middle line is our intermediate consumption. -- consumption. we are going from a level of 30 under the intermediate, we hit

about 50 beneficiaries by the end of the 75-year period. three is the pessimistic set of assumptions. the pessimistic, you can see, we are ending up at 70 beneficiaries per 100 workers. the optimistic comments you have a little shy of 40 beneficiaries. this next slide, i am going to try to cover this quicker than i was anticipating. the summarized values on the long range. , at the actual deficit to is an important calculation. it is 1.9% of payroll now.

it is 0.08 smaller than it was in last year's report. the unfunded obligations is also smaller. it was 0.7% of gdp last year. now it is 0.6% of gdp. the rest of this slide sort of goes through their reasons for the change. the first reason is evaluation period. every year, we add a new year to our 75-year evaluation. . this year, we added 2084. it is way out there. it is adding a-year. it increases the actual deficit. it makes things look worse by. 06% of taxable payroll. the next bullet is the

legislative, the health care reform. we will refer to it as aca. i told you that i will explain how this has to do with social security. first of all, it changes the ratio of covered wages to employ you can. how does it do that? compensation by employers, they pay out wages directly to people and some of that wage is taxed by social security. other pieces of employee compensation that are paid on behalf of an individual worker are not taxed by social security. one of those is what the employer and employee pay for

health care premiums. ok. what this legislation did is slow the rate of growth and employer sponsored -- it did not change the law that said you did not -- there are still deductibles. you do not have to pay fica taxes. it slowed the rate of growth in employer health care. more wages now can be paid directly to individuals and therefore are subject to the fica tax. incorporating this into our estimates, we actually were able to increase our real earnings growth from 1.1% to 1.2% and

reduce the actual deficit by 0.14% of taxable payroll. that is a major. going on, the 2006 -- especially at the older ages, it is good news that people were living longer. that negatively impacts the social security trust fund, but we can handle that-, right? anyway, it increased the actual deficit by 8.05% of taxable payroll. disability, like i said, we had more disabled, on the role, especially in the near term, and that was enough to once again increase the actual deficit by about. 02% of taxable payroll.

we had some benefits and data updates -- methods and data updates and they sort of work together to help reduce or decrease the actual deficit by about. 07% of taxable payroll. -- .07% of taxable payroll. i will not go into the details due to the time constraints. our chief actuary would like to speak a little bit, as much as he can, on this next slide. >> i am not totally speechless, just pretty much. let me interject on slide nine.

the principal change that we had that was not due to the evaluation. the sheer was because of the health care legislation. as alice mentioned, the principal factor that affects the social security program from the health care legislation is what is referred to as the excise tax. that would be applied starting 20182 employer-sponsored insurance. employer-sponsored insurance premiums are not included in our payroll for payroll tax purposes or for medicare part a. the excise tax will be a 40% tax on employer sponsored group health insurance cost that will

be built into the premium by the insurance companies that provide this coverage. but the 40% tax will applied above a specified threshold. this is why this is referred to as a high-cost health insurance excise tax. overlong -- over a long period of time, this changes. that threshold is indexed by all item c.p.i., which we all know will probably grow more slowly than per-capita health costs. so gradually over time, this threshold goes down, down, down and 40% excise tax applies to more and more. as a result, it is anticipated overtime that employers and employees will shift by

providing as much group health insurance. in the future, however, this tax advantage will be gradually eroded and it will be a combination of less rich plans offered by employers and people will move out of this insurance. leaving employees to get individual insurance with additional wages they receive. the individual exchange coverages that will be available should help facilitate that. that is why when you look at this graph, you see the bottom line in blue. it is what we used to project our proportion of total employee compensation that would be paid in oasdi wages.

as a result of this legislation, we are assuming that more and more of that slippage will not occur because people will not be increasing the amount of employees -- employer sponsored insurance as much as we used to believe. it will go at about half the rate. we used to have a 0.2% of 1 percent decline in this ratio initially. and this report, we have a one- tenth of 1% decline. that extra one-tenth percent increase in wages actually flows through that into our wage growth assumption, the wages to which the tax applies. it is as though wages are growing by one-tenth of 1% faster because they actually are.

we're just not having as rapid a shaft -- shifted out of wages and into french benefits. -- french benefits. -- fringe benefits. >> we wanted that it would be data rich. >> near-term factors, we had a deeper recession it was a long- term recovery than was projected in last year. this led to reduced employment and more disability beneficiaries and so those results in lower annual balance in the near-term and sooner trust fund exhaustion. i want you to take note of the last bullet.

it is projected right now that there will be no -- this is not absolute. that is the projection at this point. it looks pretty likely. here is a slightly slower recovery in gdp -- i will just flashed these up. the blue line is 2009. the new is in rent and it is a little bit below. especially in the near term. the next slide shows the recovery in employment is less rapid. once again, the red line is the 2010 trustee's report. you can see that projection of civilian clear brook -- labor force is a little lower.

>> if i may just add, you will see that the drop-off in the recovery in employment is greater for this year's trusty report that it was for gdp, indicating that this is soon to be a new job less recovery. >> we will do questions right after this. some clarifying questions. go ahead. >> that is civilian labor force. the next slide -- the next slide shows the projected civilians unemployment rate. as you can see, the 2010 number is significantly higher through 2017 or 2016. >> this just speaks to the slower recovery.

>> ok. once again, all this makes sense. we have fewer workers contributing and this is the next slide -- this is 180 million on the scale. it is a scale of thousands. ok. here is a graph that shows that we have more disabled workers and beneficiaries starting out in 2008, just shy of 7.5 million. the projections, as you see, throughout the first 10 years, this sort of match last year's report at the end at about 9.5 million.

this slide is your projected and also cashcome income. social security, we count the interest on the trust fund and that gives you the annual balance that is higher. the purple or blue. it looks blew up there. -- it looks blue up there. as you can see, the reds is above zero in 2012, 2013, 2014. then it becomes permanently 2015 and beyond. in terms of the total income,

it exceeds total cost until 2025. compared to last year's report, the annual balance is lower for 2009-2016, we have said that before, and hire thereafter. this is the unified budget perspective because this does not include the interest. in in the income. here is the last line -- it shows why we are estimating -- which is the third quarter calculations of the c.p.i. w. that is what this is based off of.

you can see the 2010 calculation, it is still below that 2008 third quarter calculation. i am sorry. yes, there you are. you will see the 2008 is still higher than the third quarter 2010 calculation. this is all determined by a formula, see you are just working through the formula. this brings us to the end of this portion. steve, did you have anything to add on this? .> may be just a quick point there we go. on the bar chart, alice alluded an important distinction here. the bluelines on here really do speak to the point of view of

the trust fund accounting and is social security solvent. the trust fund assets that are held by a social security interest that accrues on those assets to build up in the trust fund and to provide the ability to pay that. the red line really speaks to a completely different perspective. the blue line also speaks to if we were to look from a budget point of view at the on budget versus off budget separately. that is the appropriate way to look at things, some would argue. there are many views. for the off budget, the blue bar chart is the appropriate thing to look at only if you combine all operations of the government together. the trust funds arsine into the entire budget.

it is an expenditure of treasury, so it just washes out. that is slated to be read bar chart. there are two different perspectives. when you are speaking about social security's solvency, the blue lines are important. at the very end on the cost-of- living adjustment, those who were paying attention last year recalled that when we had no cola, we had no increase their taxable maximum. expecting a performance on both of those issues this year. >> thank you. [applause] i want to bring virginia ought to continue this discussion. -- up to continue this discussion.

>> thank you very much. thank you, alice and steep, for being here to eliminate on this newton doesn't 10 trustee's report. -- on this new and 2010 the trustees report. we have done research with them. we asked some policy perspective on the new news in the trustee'' report. i will talk briefly about four questions. first, can we afford social security? is it sustainable? second, should we be concerned about benefit adequacy and if so, what might we do about that? finally, what our policy makers

choices for paying for what we want from the social security system? can we afford it? i think most experts agree that the best way to look at affordability is to look at the cost of the system in relation to the entire economy as far as gdp. by this measure, and i am repeating what alice presented earlier, a social security is almost a flat line in contrast with health care spending. it is about 4.8% of gdp. it goes up over 6% when all baby boomers are well over 65. it stays around 6% for the next 75 years. that is a very small increase over a very long time. we have sustained increases in many programs much bigger than that.

second, more of us will be getting benefits in the future. the population over 65 grows from about 13% today to about 20% when all boomers are well over 65. a gradually creeps up to about 22%. somewhat more of us will be beneficiaries. overall, beneficiaries are projected to rise in the new trustees report, about one in four americans today -- from about one in six americans today to about one in four at the end of the next 75 years. the difference between this charge and the one that came before us is somewhat puzzling.

a couple of -- one that that occurs to me when i look added is that what -- when i looked at it is that we should not let projections of an aging population lead us to conclude inexorably that social security costs are soaring have control. they are not. the population is growing quite a bit, the size of social security in relation to the whole economic pie is not going much at all. that leads me to a second question. should we be worried about the adequacy of those benefits for the people in the future? actually, as we look around us today, we do not have to look far into the future to be concerned about the adequacy of benefits. it is important to focus on are benefits because they are so critically important to the people receive them. for people under 65 today, of

those receiving benefits, the benefits are more than half their total income for a bout to that of three. for about one set out of three, benefits are almost all of their income. equally important is that we have faced growing risk in terms of everything else that people might rely on in old age. we have seen losses in jobs. that affects retirement jobs as well as jobs for the broad workforce. we have seen losses in housing value, which is typically the largest part of an older person's nest egg. we have seen pensions dwindle in terms of coverage. we have seen sharp drops in terms of retirement savings accounts. during those recent experiences, only social security has held its value. yet, benefits are modest and they are probably inadequate for

some. the average benefit is about $14,000 per year. to meet basic frugal necessary expenditures is about $20,000 a year. benefits are critically important great many people get much less than the average. a full-time worker at the minimum wage at that level all his our life would conduct with a benefits below the poverty threshold if you're she retired at 62. -- if he or she retired at 62. another reason for concern is that future monthly benefits for retirees will be somewhat lower than they have than in the past. this is because of raising the

age for eligibility for full retirement benefits from what they used to beat 65, it is now 66, and is scheduled to be 67 and is equivalent to an across- the-board benefit cuts. medicare premiums, when they rise again, they are rising, they are expected to take a bigger bite out of future benefits. the premiums will increase faster than a social security benefits. been our recent reports -- our recent report, which is in your folders, list a variety of ways in which we could improve the adequacies of benefits in targeted relatively low-cost ways to address some problems of

adequacy. it also lists about 30 ways of improving the financing of social security over the long term in terms of scaling back benefits or raising the revenue that is needed. i will just briefly mention the kinds of increases that are talked about in terms of targeted improvements for vulnerable groups. they include the oldest old, and people over age 85, which are at the greatest risk of having depleted on all their resources. their options for would add spouses of low-income couples to improve the adequacy of benefits when both the husband and wife have been low earners and 1 alabama list the other. there are improvements in a so- called special minimum benefit for long service low-paid workers to improve the adequacy of benefits for people who are at risk for getting benefits

below the poverty threshold. finally, there is an option that affects young people. that is a proposal for children of disabled or deceased workers who want to go to college, the benefits would extend to those children until age 22 instead of cutting them off at 18 as we do today. if they are enrolled in college or vocational school. we had a briefing your packets called a new deal for young adults that discusses that option. it has some momentum from groups that represent young people today. how could we pay for what we want from social security? i will draw on just three generic ideas that are in this report. there are many different ways they could figure out how to balance long-term finances. much of the discussion of fixing

social security finances over the last decade has focused on benefit cuts. to be a little radical, i am focusing on revenue raisers -- grazers on this case -- revenue raisers on this case. gradually raise the cap on taxable earnings that is now $106,000 to cover 90% of all age -- all wages. to treat salary reduction plant like 401k -- plans like 401k. come up with a 75-year financing plan that matches the revenue needs of the system. in terms of raising the cap, in 1977, which was the last time congress addressed this issue, they made ad hoc adjustments to get a cap to cover 90% of

aggregate wages. then they provided that it should be indexed to keep up with average wages there after. they thought that would keep the debt 90%. what has happened is that people making more -- above the cap have had larger wage increases than the rest of us. the cap has gradually fallen. it now covers 83% of wages. it is also a important to know that people earning more than the cap are 6% of the workforce. a 94% of the work force earn less. to raise the cap to cover 90% of wages, it would reduce the shortfall over the long term by about 39%. in your hand out, it says something less than 39%. this is an update. the second proposal to treat all

salary reduction plans like 401k -- this sounds complicated, but it reflects the action of congress when the last thought about this issue. that was in 1983 when we did major social security financing reforms. at that time, 401k plans were very new at the time. at the time, congress decided that worker contributions to 401k plans should be included in the fica tax base. they should be taxable for social security and medicare even though they should be made exempt from personal income taxes. their rationale for doing dass what -- for doing that is that you do not want to erode the sat rejoice -- social security tax breaks.

today these accounts have -- are more common for more purposes, flexible spending accounts, dependent care allowances, and commuting to work cost. this proposal would have them outside the income tax base, but have would have been part of the basic support social security and medicare. this plan by itself would reduce the long-term short fall by about 13%. these two things together would shrink the long-term data set by about half. -- deficit by about half. the final idea -- i would point out that over its long-term future, or long-term past, 75

years, social security has usually had to fight the rate increases -- fight the rate increase is scheduled summer out in the future. that ended in 1990. the policy-makers to de ownby could put together a package -- policy makers today could put together a package that allows for scheduled rate increases out in the future when they are needed. if we had a 75-year time horizon for looking at solvency, we can think about scheduling of revenues out in the future that match the needs of the system. as has been done in the past, congress has used the earned income tax credit to offset the burden of social security taxes from low-wage workers. that kind of provision also accompanies such a plan.

if policy makers today scheduled a future rate increases, it would put the system in balance, but if it turned out that the money is not needed, future policy makers could address that a new and changed the tax rate increase. i turn to another report that is also in your folder, a public opinion poll. that poll found that people do not mind paying for social security. they would rather see revenue taxes increases and benefits cuts. but we ask them why they do not mind paying for it, their answers -- because they value it for themselves and they expect to get it.

72% agreed. did they supported for the support they give to their aging relatives? about 75% agree with that. do they support it for the stability and security it provides to millions of other people they may not even know? 87% americans say they do not mind paying for social security. that was also true across party affiliations. this is not a partisan program. 87% of americans said they value the system. that was true of 81% of republicans, at 85% of independents, as 93% of democrats. it is really striking support across the political spectrum. to conclude, targeted at a seat

reforms and a 75-year financing plan could balance social security for 75 years and beyond. if congress did this, next year when we hear from the trustees, they would say, the actuarial deficit is zero. it is a surplus over the long term. this was also ensure american workers that the benefits would be there. the scary talk of bankruptcy and insolvency does not need to be. finally, it would show people that washington is listening to what people seem to be sang about their own preferences. thank you. [applause] >> we are going to switch to the question and answer portion. what i love about a new. -- briefing is that it provides

the true details on solvency. they have -- you have heard them in their blue and pink lines. but it's lost in this discussion -- what gets lost in this discussion is the question of overall adequacy. that is a very clear question to look at. what are our options? you have for presentations on all of that. we welcome questions on any of that. you are our first question. just introduce yourself. >> i have a couple of questions. why is the deficit so high after the baby boomers are gone? can you speak about that demographically? secondly, have the trustee is

addressed what immigration reform, what effect immigration reform would have on the long- range solvency? >> i am assuming you are directing that to alice. >> those are too great questions. -- two great questions. can you hear me? your first question was about the deficit to -- about the data set after the baby boomers. -- the deficit after the baby boomers. during -- when the baby boomers were born, the total fertility rate at up above 3.5, 3.6. i think we even reached 3.71 year. what this did was when social

security started, we had lots of workers. we had to sort of maintaining that number of workers and beneficiaries at that point time. the baby boomers did nine not have the children they needed to have to maintain that. none of the other generations balling them had enough -- following them had been left children. >> effective -- the effect of immigration? >> we have not officially scored any immigration reform packages recently. if you are talking about what is being talked about now, i am not sure we have a firm formulation of any particular plan. we have, in the past, scored some reform options.

that, of course, bringing in more immigrants and recognizing their legal status could probably help social security. >> i want to add on to the first part of the question. that is so critical. the big flap that we have when you look at the graph that is up there, we have a level shift in the cost of social security between 2008 and 200035. as he pointed out, it goes up and it stays there. it is not because we have a baby boom of fault that will go up. the baby boom is the last of the generations that were born of birthrates representing about

three children per family. historically, if you look at children born and surviving to about 5-10 years old, for decades, centuries, it has been about three children. in the mid-1970s, something you happened and we drop down to about two children. we have stayed there and we are expecting to continue to have two children. think about the number of people who are old and a number of people who are younger. if people are having fewer children, the ratio of workers to beneficiaries will be lower. you see this explicitly since 1975. we are now on the track for that

ratio to drop down to about two workers per beneficiary. the birth rate is lower. we are not advocating that we should have a lot more kids. this is just to recognize the reason for the cost shift overtime per it is because of lower birth rates. it is really not because we are living twice as long. >> the integration of a sort of takes up some of the slack, especially if the immigrants come in at young ages. it picks up the slack of the missing births. >> other questions? >> [inaudible] my question is about the projections of the effect of the

health care reform. how did these projections compare with other projections? how does that affect the ability to raise payroll taxes in the future because wages will rise? >> this is interesting because the affordable care act had many, many provisions. the one provision that really has impacted -- impact on the social security program is all in dispute. i am 99.9% at shore -- sure that the long-term projections that came out from the cbo recently are as one with where

the trustees are. we think that the excise tax will be viable and it will cause the gradual change from less employer sponsored group health insurance coverage and more wage is that we would be taxing. there are other aspects that are more under significant discussion. there is the multi factor productivity adjustment on expenditures for medicare other than physician and drug. the good news is that is not something that directly impact upon the financing of social security. >> the medicare estimates of the employer sponsored health insurance, the trustees are very consistent with those for social security and medicare. >> yes? >> i am joe anderson.

[inaudible] this tax on premium health insurance plans create a change in the rate of growth that seems to be consistent rather than a level shift that would be phased in over 10 years? white does that not increase the rate of growth for a period of time? -- why does that not increase the rate of growth for a period of time? >> there is a threshold above which the 40% excise tax -- i do not recall the exact number, but it is a pretty high threshold. most group sponsored health insurance is below that threshold. because the threshold is only indexed by c.p.i., we estimate

our compatriots over as medicare estimate that that threshold will slip down relative to health care cost over time and will have a greater share of employer sponsored group insurance subject to the end -- excise tax. this happens over a 30, 40, 58- year basis. -- 50-year basis. >> [inaudible] >> current law says that threshold will be indexed and it will be indexed by all items. if that is changed, our estimates would change. >> i would like to refer back to

the chart that shows blue bars and the red bars. [inaudible] the red guards are without interest. i have a question -- the red bars are without interest. i have a question about mechanism. what happens when the blue bars go below zero? how does that work? >> it is my favorite slide. when you read bar falls below zero, nothing. basically. however, it the blue bar falls below zero, nothing happens there either. what happens is only when the trust fund is exhausted.

it means that you cannot go in and get money from the trust fund to pay for the scheduled payments. that is the critical point. that is what everybody wants to avoid. to only be able to cover 70% of scheduled benefits. >> this really depends wholly on your perspective. the perspective from a trust fund insolvency, but we start to kick in less taxes than what we are paying out emily starts to take and less taxes plus interest, we simply start dipping into the trust fund reserves to augment our taxes and interest income to pay the

benefits fully. from a budget perspective, it is a little bit different. in the period in which we have social security tax surplus declining, the amount by which social security is positively helping the unified budget. the critical point historic week for social security has been with trust funds exhaust. that is when the congress must act. >> i am going to ask virginia to join in on this question i think the academy is often in the position of explaining trust fund accounting. this is not easy. can you help us a little more on this question of the 78% of

benefits being paid? what does 0 me? -- what does 0 mean it? trust fund exhaustion sounds terrifying. >> i would agree with everything that alice said. there is no reason why we cannot in act some sort of the revenue plan that enables us to continue to pay benefits or some type of scaling back of benefits if that is what the consensus brings us to. but this fact that benefits cannot be paid in full under the law when the trust fund is exhausted it means that social security cannot run a deficit. it is extremely fiscally responsible, extraordinarily so. policymakers need to figure out

what they are going to do before 2057 to ensure that the money is there to pay the benefits without a sharp disruption. >> can we give any more history on trust funds? >> the system has always had a trust fund. presidents roosevelt wanted to ensure that the benefits would be viewed as an earned right. workers and employers pay for them any money is set aside in a separate trust fund. we have had -- this is the 70th trustee's report. this is part of the history of the program. it is viewed as a pension system with responsible long- term forecasting of the obligations of the system. it is a guideline for policymakers to figure out when

they need to take some action. >> the briefing, it you referenced a $77 billion surplus in trust fund on the front page of fewer -- where is that in your report? the $77 billion current surplus. >> back to the blue bars. for 2010, the blue bars. >> that is our favorite. >> let me just add to virginias comment about the scariness of trust funds.

they are really unusual to the central budget. each of them are trust fund driven programs. they cannot borrow like the rest of government. if at any point, any of those programs had insufficient taxes, they cannot. people really pay attention to that scariness. as a result, in 1983, when the trust funds reached the point -- a full benefits would not have been payable, congress acted, social security cannot build up

so when we reached the point of running out of trust funds, congress has always acted. >> with regard to disability, we it knowledge that disability is much shakier in terms of financing. there is some urgency with the protection of exhaustion by 2018. talk about the possibilities resolving that in terms of benefits or revenues. >> back in 1994, we approached a similar point where the disability insurance program

alone was looking like it was approaching running out of money in the trust fund. the congress very simply, very easily just enacted a tax rate reallocation to put more of the total payroll tax rate of 6.2%. this is a little bit more from the program to equalize the two programs. right now, are projected exhaustion date or 2018, but 2040 for oasdi. if they acted right away, -- we are scheduled to have 1.8% of the 12.4. starting next year, if congress were to reallocate to make a 2.1%, that would be enough to

put a program not in a position of being exhausted in 2018. it would become solvent throughout. if we wait until 2018, it would take a larger reallocation. if we look at the pattern of 1994, it is reasonable to expect that a tax reallocation would be used to we equalize the programs financing. >> last question. >> i have a question for alice. to what extent are the actuary's independent of the current trustees in making their projections? >> that is a good question. the atrocities -- are chief actuary gets to assign the back

of the trustees' report that says that those assumptions that the trustees have decided upon are reasonable. he has a powerful role of approving that assumptions chosen by the trustees. >> the chief actuary has to provide a statment -- statement as to whether or not the methods are deemed to be reasonable. this year's report, it says reasonable. >> on that note, i think it is my job to thank the deputy chief actuary and the speechless chief actuary as well as our vice- president of the national academy of social insurance for a tremendous informative briefing. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> what to watch for an emerging tech trends. industry insiders on cyber security, whether sensibility for the disabled, and how young people use the web. the house returning for a session. no legislative vote -- business will be discussed today. we expect the house and in just

a moment. the members are cutting their summer recess short. nancy pelosi is calling members back into session tomorrow. we will have coverage beginning at 9:00. . .

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the speaker pro tempore: pursuant to section 2 of house concurrent resolution 308, 111th congress, the house will be in order. the chair lays before the house a communication from the speaker. the clerk: speaker's room, washington, d.c., august 9, 2010, i here by appoint representative pingree as speaker pro tempore on this day, signed nancy pelosi, speaker of the house of representatives. the speaker pro tempore: the chair lays before the house that on wednesday august 4, 2010 of the reassembly of the house. the clerk: office of the speaker, washington, d.c., august 4, 2010, dear colleague, pursuant to section 2-a of house concurrent resolution 308 and after consultation with minority leader of the house, i have

determined that the public interest requires that the house assemble on august 9, 2010, the expectation is that monday will be a pro forma session and votes will occur on tuesday. further announcements will be. thank you for your attention to this urgent matter, signed nancy pelosi, speaker of the house of representatives. the speaker pro tempore: the prayer will be offered by the guest chaplain. >> a world that is restless and filled with many threats, an economy whose stubborn challenges continue, a great nation not quite at peace with it self, this role of the beacon of the people of the world. an electorate troubled and anxious and even angry, these are the pressing concerns, o god, that bring this congress back into session. we turn to you now to seek your guidance and ask you to give us the guidance to see the right road ahead. we ask you at this moment for the courage to search heart and conscience so that our actions will promote the national interests, will reassure our

people and will lead to lasting solution for the many challenges we face this day. in our turning for this moment to you, may you turn to us and hear this prayer. may you bless our efforts here and may you continue to bless america, amen. the speaker pro tempore: the chair has examined the journal of the last day's proceedings and announces to the house her approval thereof. pursuant to clause 1, rule 1, the journal stands approved. the pledge of appear legionance will be led by the gentleman from california, mr. dreier. mr. dreier: i ask our colleagues and staff and guests in the gallery as we reaffirm our commitment to the greatest nation ever known. i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation under god, indivisible with liberty and justice for all..

the speaker pro tempore: the chair lays before the house a communication. the clerk: the honorable, the speaker, house of representatives, madam, pursuant to the permission granted in clause 2-h of rule 2 of the u.s. house of representatives, the clerk received the following message from the secretary of the senate on august 3, 2010, at 9:23 a.m., that the senate passed without amendment, h.r. 2097, that the senate passed senate 1055, senate 3689. with best wishes i am robert f. reed, deputy clerk for lorraine c. miller. the speaker pro tempore: the house lays before the house a communication. the clerk: the honorable, the speaker, house of representatives, madam, pursuant to the permission granted in

clause 2-h of rule 2 of the rules of the u.s. house of representatives, the clerk received the following message from the secretary of the senate on august 4, 2010 at 1054 a.m., that the senate passed senate 3397. with best wishes i am signed sincerely robert f. reed, deputy clerk for lorraine c. miller. . the speaker pro tempore: the chair lays before the house a communication. the clerk: the honorable, the speaker, house of representatives, madam, pursuant to the permission granted in clause 2-h of rule 2 of the rules of the u.s. house of representatives, the clerk received the following message from the secretary of the senate on august , 2010 at 10:58 a.m., that the senate passed without amendment h.r. 5981, h.r. 5872, that the senate passed with an amendment, h.r. 5283. appointments, board of trustees

of the john center for public service training and development. with best wishes i am signed sincerely, robert f. reed, deputy clerk for lorraine c. miller. the speaker pro tempore: the chair lays before the house a communication. the clerk: the honorable, the speaker, house of representatives, madam, pursuant to the permission granted in clause 2-h of rule 2 of the rules of the u.s. house of representatives, the clerk received the following message from the secretary of the senate on august 6, 2010 at 9:15 a.m., that the senate concurs in the house amendment to the senate amendment with an amendment, h.r. 1586, that the senate passed senate 3611, senate 3307, that the senate passed with an amendment, h.r. 5875. with best wishes i am signed sincerely, deputy clerk for lorraine c. miller, clerk for the house. the speaker pro tempore: the chair lays before the house a

communication. the clerk: the honorable, the speaker, house of representatives, madam, pursuant to the permission granted in 2-h of rule 2 u.s. house of representatives, the clerk received the following message from the secretary of the senate on august 6, 2010, at 10:36 a.m. that the senate passed without amendment, h.r. 511, h.r. 4275, h.r. 5552, that the senate passed with amendments, h.r. 3562, h.r. 3978, that the senate passed senate 2781, senate 3656, that the senate passed with an amendment, h.r. 1517, that the senate passed senate 3354, that the senate passed without amendments h.r. 3509. that the 123459 passed 1674, that the senate goode to without

amendments, house concurrent resolution 226, house concurrent resolution 307, appointments, senate national security working group, signed sincerely, departmenty clerk for lorraine c. miller, clerk for the house. the speaker pro tempore: the chair lays before the house a communication. the clerk: the honorable, the speaker, house of representatives, madam, pursuant to the permission grant nd clause 2-h of rule 2 of the u.s. house of representatives, the clerk received the following message from the secretary of the senate on august 6, 2010 at 2:45 p.m., that the senate passed senate 3729, senate 3304. with best wishes, i am signed robert f. reed deputy clerk for lorraine c. miller. the speaker pro tempore: pursuant to clause 4, rule 1, the following enrolled bills were signed by the speaker on

july 30, 2010. the clerk: h.r. 5278, h.r. 5395. the speaker pro tempore: the chair lays before the house a communication. the clerk: the honorable, speaker, house of representatives, madam, this is to notify you formally pursuant to rule 8 of the rules of the house of representatives that i have been served with a subpoena for testimony issued by the superior court for the district of columbia in connection with a criminal case now pending before that court. after consultation with the office of the general counsel, i have determined that compliance with the subpoena is consistent with the precedents and privileges of the house. signed sincerely, chamber support staff. the speaker pro tempore: for what purpose does the gentleman from massachusetts rise? mr. mcgovern: i send to the desk a privileged report from the committee on rules for filing under the rule. the speaker pro tempore: the clerk will report the title. the clerk: report to accompany

house resolution 1606, resolution providing for consideration of the senate amendment to the house amendment to the senate amendment to the bill h.r. 1586 to modernize the air traffic control system, improve the safety, reliability and availability of transportation by air in the united states, provide for modernization of the air traffic control system, reauthorize the federal aviation administration and for other purposes. the speaker pro tempore: referred to the house calendar and ordered printed. for what purpose does the gentleman from massachusetts rise? mr. mcgovern: i ask unanimous consent that the gentleman from georgia, mr. price, may be recognized on a legislative day of tuesday, august 10, 2010, to offer the resolution that he noticed on thursday, july 29, 2010, without further notice under clause 2-a-1 of rule 9. the speaker pro tempore: without objection, so ordered. for what

purpose does the gentleman from massachusetts rise. mr. mcgovern: i move that the house do now 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 9:00 a.m. >> house members are interrupting their summer resource an issue heard speaker poelosi. the house returns on monday and will begin work on local school boards with budget problems. there are also expected to take up a bill to provide $600 million for voter security. live coverage of the u.s. house when members return right here on c-span. >> tonight, what to watch for in emerging tech trans. insiders on cyber security,

where it accessible to for the disabled and how young people use the web on c-span2. >> book tv has been finding out about the new books coming out this fall. >> it is a really interesting more. how did this pigtailed young girl, growing up in the 50's, become the first black secretary of state? he is a health-care expert and he is very political savvy. this is an account of what it was like to be with her dad. >> learn more about these in our 2010 full book review this weekend. for the latest on nonfiction authors and books, watch the tv every weekend. but the whole schedule booktv.org. >> defense secretary robert

gates laid out plans to cut private contractors and to eliminate agencies. secretary gates said the changes are necessary in order to ensure the pentagon budget in the future. this is about 50 minutes. >> our country is fighting two worse. did leaves tuesday reductions in defense the planned defense budgets project modest growth and represent the minimal level of spending and to protect our interest and capabilities in a dangerous and unstable world. having said that, we must be

mindful of the fiscal situation facing our nation. on a matter of fiscal and political rally, the cannot expect america of representatives to approve this each year unless you're doing a good job. as a for step, which began performing military acquisition. programs that have cost more than $200 billion. additional program savings have been recommended on the budget was submitted this year, however, it is clear to me that additional changes are needed. i believe that sustaining modernization will consist of 2% or 3%.

therefore, in order to use the capabilities, our spending difference will need to be made up elsewhere in the department. as a result, called on the pentagon to how the department is regulated. i concluded that the headquarters have swelled to cumbersome and talk of the proportions. we of relied on contractors and grown accustomed to operating with little consideration. this manifest itself in vast increases in spending and staff. by nearly 1000 employees. in the proliferation of new organizations and senior executives to leave them. this expansion and its associated habits and attitudes

were embedded by a near doubling of the budget since 2001 and further enabled by war for provisions. those factors will soon end. let me be clear. this is not to reduce the top line budget, but to reduce costs and apply savings to the structure and modernizations. starting in june, we embark on a four track approach to move america toward more efficient and can't -- cost-conscious way. earlier this year, there was $100 billion over the next five years did the services will be able to keep the savings the generate.

this exercise is well under way as these services are evaluating programs and activities. they are all planning to eliminate headquarters that are no longer needed and reduce the size of the staff. i have authorized each of the military departments to consider consolidation or closure were for it. this is obviously a politically fraught topic. congress has placed restraints on the dod's ability. hart is not impossible and i hope that congress will work with us to reduce unnecessary costs. we are seeking ideas and proposals from outside normal official channels and this includes soliciting input from think tanks and external boards.

within the department, what we are soliciting creative ideas to save money and use resources more effectively. i would encourage all dot employees to. visit togov learn more. i directed a series of assessments on how this department is operated to perform the budget request. as part of that process, we have launched an initiative to improve efficiency and reduced costs. the goal will be to get better buying power for the taxpayer. we plan on providing more details of this effort in early september and our intent is for this initiative to begin ongoing programs immediately. even with these underweight, i have concluded that there were a number of areas that we can take actions, starting now, and not wait for the normal budget and

program process street today, i am announcing decisions designed to improve over head. these initiatives vary in size and levels of achievement. it ranges from personnel and their work to organization of structures and business practices. it represents an initial step of efficiency and savings that will be incorporated more fully into the budget request. i will summarize them briefly and then take some of your questions. copies of this statement will be available at the end of the session and we will brief in more detail and answer questions. to the initiatives.

first, over the last decade this department has seen a decrease in contractors 26% of the work force cost in 2000 to 39% a year ago. in some cases, contractors may be performing functions that should be done by full-time government employees. last year, the department announced a plan to reduce the number of service support contractors. over -- were necessary, we have filled them with full-time government employees. based on the data, i am not satisfied with the progress. accordingly, to accelerate this process, i have directed that we reduce funding by 10% a year for

each of the next three years. furthermore, as i will explain in a moment, we will no longer automatically replace full-time personnel. second, is the expense of the office of the secretary of defense, the defense agency's and command staffs. much of this growth has emerged since the tender love it. and there was no decrease in activities and that have become less relevant. there was not much incentive to do so. as i have said, the department much set priorities and make will trade-offs and separate appetites. this is one way to force this painful but necessary process. therefore, i am directing a freeze on the number of os the

positions no organizations will be created after this fiscal year to replace contractors. some exceptions can be made in critical areas. this is the first that of command staffing and organizations. we will conduct a review to determine what our people should be doing and what level of rank in keeping with the most critical priorities. i expect the results of this effort by november 15 of this year. third, the proliferation of new staff and more layers of bureaucracy is a natural consequence of the substantial increase in the most senior leadership. general and black officers, a

career senior executives and appointees require confirmation. over the past decade, the department has added what is a high and historical baseline for senior personnel. for example, since september 2001, the number of general and black officers have grown by more than 100, including now 44 short positions. -- 40 four-star positions. apart for meeting these genuine war related needs, we have seen an acceleration of what john blin called brass creek. a situation where personnel of higher and higher rank are assigned to the things that can be handled by lower ranks. in some cases, this is fueled by a desire to increase your product -- bureaucratic reason

rather than reflecting the scope of the job itself. in a post 9/11 era, more and more responsibility, including strategic consequence decisions is performed by junior officers. for example, unlike most other commands, four star components remain in europe long after the end of the cold war and long after the vast majority of deported. we need to create a system of fewer and more agile responsive structures were reductions in rank at the top cascade downward and outward. in addition to the number of senior positions, there is a question of their allocation and whether or distribution of rank by geography or function reflects the mission and reality

that our military faces today. i am directing a freeze of number of civilian senior executives, general and black officers and other positions. furthermore, we will assess the number of senior positions, the date old or new, as well as the overhead and accouterments that go with them. i expect this by november 1. at a minimum, i expect this effort to recommend cutting it least 50 positions and 150 senior civilian executive positions over the next two years. this will represent the to% of the positions -- two%. that is unknown. there are great benefits to be gained in costs and efficiency by taking a advantage of this.

the problem is, to many parts of claim artment's separate infrastructure and process. all of our bases have their own infrastructure and application. this decentralization approach will have a patchwork of capabilities that create formally started therefore, i am directing an effort to consolidate these assets to take to damage of the economies of scale, but creating savings and acquisitions. this action will allow the increase by the department of common functions and improved our ability to defend networks against growing cyber threats. this department is awash in studies.

in 1970, the pentagon produced a total of 37 reports. a number that top of that more than 700 reports and the last year's cycle. in 2009, the department had nearly 1000 contractors working in some capacity to produce reports for the congress, of which more than 200 were working for time. -- full time. a good number of these reports were internally generated, including my own office. at this time, nobody knows what the cost and there is little basis to determine whether the value gained is worth a considerable time and resources expended. i have directed that we will freeze the overall number of dot require oversight reports and will immediately cut the dollars out of the the advisory studies by 25%. we will publish the actual cost of the proportion of the report

and study prepared by the dot on the front of each document. by october 1, we will conduct a comprehensive review of all reports and use the results to reduce the volume generated internally. in addition, we will engage the congress to meet their needs while working together to reduce the number of reports. the department will set up outside boards and commissions, 65 in the case of os be alone to oversee our activities and provide independent advice. some of these entities will provide more or less. these bodies still require substantial support, $75 million for os the alone including staff and indirect costs treated i am ordering -- indirect costs. i will cut the overall funding

available for study is. -- for studies don't know it is no great secret that the u.s. government has seen a proliferation of new intelligence organizations and operations since 9/11. this is partly due to the intelligence. even so, in the defense arena, the large staff structure exists in the services, the defense agencies, the combat commands and in the world theaters. to some extent, we are still struggling to find the right balance to find a value between intelligence functions and embedding them closer to the front. nonetheless, we should not flinch when eliminating unnecessary redundancy and directing more resources to places where they're needed such as certain specialties in short supply in the theater. i am directing an immediate 10% reduction in funding for intelligence contracts and

freezing the number of senior executive positions. we must also take further steps to end it needless duplication within the department. accordingly, i have directed a zero base repute of intelligence missions, relations and contracts to be completed by november 1. these steps will only apply to the department of defense intelligence organizations, and it has been indicated that there is an interest for a coordinated effort for the national intelligence organizations. the last decade has seen a significant growth of new offices and organizations, including two in new agencies. the flattening in trimming structures will eliminate organizations that perform duplicative functions or

outlived their purpose. the office of the secretary of defense was set up in 2003 when the policy oversight and advocacy functions for command control and communications was little from intelligence. the resulting arrangement that includes a similar function of the joint stuff, has since become redundant, costly and cumbersome. therefore, i have directed the elimination of nii and j6 operations. this will be assigned to other organizations and will transfer. we will stand up and refashion the chief information officer and the responsibility of the early operations will be assigned to the defense agency for it -- defense agency.

since its creation,, bta has shifted more of its focus to day-to-day oversight of individual acquisition program started this has largely been legislatively assigned to other elements of the department. therefore, i have eliminated the agency and shifted his responsibility to the deputy chief management office. finally, the joint forces command was originally established and compelled to everything the it military does. it was understood at the time that it created an extra layer in the management process. the benefits of improving this

out with the resulting bureaucracy. since then, compelled by decades of operational experience, the u.s. military has embraced it as a matter of culture and practice, although we must also remain vigilant. training joined forces, creating joint forces and experiment with that doctrine, they do not necessarily require a separate four-star combat command, which entails a about 28,000 military positions. i am recommending the closure of this department. the remaining responsibilities will be evaluated and those determined to be essential and still necessary to protect will

be reassigned to other agencies. all told, as a result of closing or consolidating these three organizations over the next six months to a year, a substantial number of full-time employees will have to find other positions or no longer work for this department. like millions of americans affected by this tough economic climate, i know these changes will likely mean real hardship for displaced employees and their families. accordingly, i have asked the undersecretary of defense for personnel and readiness to work with the leaders of the affected organizations to assist employees in what may be a difficult transition. i do so with great appreciation and admiration for the service these employees have rendered and i hope that we can find new ways for them to offer their expertise and experience in service to our nation. the ultimate success of these initiatives, as well as the other reform will depend on a

change of culture and attitude across our defense institutions. the culture of endless money that has taken hold must be replaced by a culture of savings and restraint. towards this end, i am directing that any new proposal or initiative, large or small, be a policy, programs or whatever, come with a cost estimate. the price tag will help us determine if what we are getting is really worth the cost in dollar terms or in the diversion of limited manpower. as i have said a number of times, the way to make sure something gets done in this building is to set short deadlines and provide oversight from the top. to see these initiatives through over the next 90 to one under 20 days, i have appointed a task force chaired by my chief of staff. this task force will develop action plans and transition to

department leadership. these initiatives represent an aggressive effort, not only to reduce costs, but to a reform of the department. this effort will not in this issue. in style and habits of restraint, of subtracting as well as adding, of elevating affordability is a project that is years in the making. i hope and expectation is that the efforts will lead to the kind of cultural changes that, over time, become part of the department's dna an institution. in closing, i want to reemphasize that this agenda is not about cutting the department's budget. it is about reforming and

reshaping to insure that we can focus defense resources to america's fighting forces and most important, for men and women in uniform. let me just add, before turning to your questions, to see these initiatives in context, i think you need to step back and see them as the next move in a process that has been going on for two years. it began at the university in my speech in 2008. the decisions on the alternate engine for see seven teams earlier this year and the eisenhower library speech. i am determined to change the way this department has done business for a long time. earlier decisions i have

identified are part of a broad campaign that will be on going. today's announcement represents a down payment to demonstrate that i intend to continue to move aggressively to achieve the broad goals of making this department more efficient, but also ensuring that we put our resources where they're needed. >> you mentioned some of the high-profile cost-saving efforts. given that several of those, including the engine one, the have so far failed to convince congress that this is a way to save money. what confidence to you have that the virginia delegation that stands to lose multiple thousands of jobs is going to go along with this? >> first of all, in april of

2009, most people were deeply skeptical. we were successful. the position that i have made clear, to which the president has spoken on the alternate engine on c-17's is also clear. that bill, i am confident will be vetoed. any bill that takes the alternate engine and more c-17's to the president will be vetoed. i think that you have to have some perspective, here. just to take the example of the virginia delegation. it is as a result of these efforts -- if, as a result of

these efforts, va. may come out with a lot more jobs than it loses. this is why the point needs to be emphasized again and again, this is not about cutting the defense budget. this is about a -- a reallocation. the issues are not as -- this is actually very good. for one thing, there are two things that make this different. this is not a budget cutting exercise.

the services get to keep the savings the identify and invest them. in the past, they have been called off. the have lost programs. they can add to that. the congress and this bill in, under the current economic circumstances and budgetary pressures will see this as an opportunity to protect our force modernization. that i havet say talked to the leadership of both the operations and appropriations committees.

i expressed this in broad terms and i talked about the eliminations and so on and the people that i have talked to were supported. >> to make comments earlier that you were against unwise cuts in the budget. is that a fear that you have right now? do you feel that if the steps are not taken that there will be pressure to take more drastic action? >> i think that if we are to make a compelling argument for sustaining the top line, we have to demonstrate a compelling argument that we have tackled the things that worry them. pour acquisition practices, poor business practices, excessive reliance on contractors, waste,

abuse, we need to be able to show that we are doing something about these programs in a systematic way that affects every part of the department. i think that under those circumstances, we have a pretty good opportunity to make our case. my greatest fear is that in economic times, and that people will see the defense budget as the place to solve the nation's deficit problems and to find money for other parts of the government. my responsibility to the president into the congress is to present them with a program that i believe is necessary to defend this nation. as i look around the world and see a more unstable world, more failed states, countries investing heavily in their

military is, as i look at places like iran and north korea, as i look at the new kinds of threats emerging, my greatest worry is that we will do to the defense budget will be have done four times before. that is to slash it in an effort to find some kind of dividend to put the money someplace else i think that would be disastrous. in the world environment that we see today, and what we are likely to see in the years to come, if he were to grant the defense budget going back the last 40 or 50 years, it would look like the cagey of a defect related heart. -- of a defibrillated part. if we are able to make sensible

decisions and not have these giant increases and giant decreases that make efficiency and doing acquisition impossible. it my hope is that through all of these efforts, we will make a persuasive case to the congress and to the american people that we are spending tax dollars wisely in the department of defense and in areas where they would like to see it spent and that is in capabilities and in our structure and any investment for the future. >> you said that you're not happy with the results that you got in the direction that she gave last year. what makes you think you will be any more successful in driving through some of the changes that you want to make between now and november 1? >> part of the problem is that

as we were reducing contractors, we will not see in the savings that we had hoped. the way to get a contractor -- the problem with contractors and what we have learned over the past year is that you really do not get contractors by cutting people. you give a contractor a certain amount of money and they hire however many people they think that they need to perform the contract. the only way that we have decided that you get at the contractor base is to cut the dollars. if you add it up, we are looking at cutting a third of the budget over the course of the next three years. that, we are convinced, is a way to get a handle on this problem. >> if you go to a place of -- like afghanistan, there were thousands and thousands of contractors.

there were 2000 contractors training afghanistan forces as opposed to 900 from nato. talk about that as being a problem with the allies not pulling their weight and then contractors doing the jobs that used to be done by a soldier. >> first of all, i think that is mixing things. nato -- our partners have done a lot. if you had asked the a year ago if we would have nearly 50,000 partner troops in afghanistan by this summer, i would have thought that a very tall order. i think that they have come through. there are still shortfalls and the primary shortfall is about 750 trained individuals. we're continuing to work on that. there are a lot of things that contractors to that soldiers used to do. peel potatoes, do the dishes.

i think that contractors should do that stuff. if i have a highly trained combat infantryman, i do not want him doing that stuff. that can and should be done by contractors. i think it is sensible and is cheaper in some respects. i think that the other aspect of it is that it is a transitory issue. the number of contractors in iraq has already come down. at some point, we will see that happen in afghanistan. this is a phenomenon that started a long time ago and has excel rating significantly. -- and has accelerated significantly.

>> what are the key things to put the money into? >> i think that the services get to keep the savings that they fund. my intention is to take the savings that we find from other parts of the department and provide those to the services. the defense agencies, the savings that we find there, they do not get to keep. our intent is to provide that to the services. i think that everybody realizes that we probably need more money. that would be an area that i would look to when it comes to the navy in terms of not only

letting them keep the money that they identify for the purpose, but if i could provide some additional resources in that area, each of the services has that in that respect. we have had this conversation before. of the overall procurement budget, and i get a little impatient that everything is about providing for today's wars, but out of the overall procurement budget, about half coast towards modernization programs. the joint strike fighter, the new missile program, new ships, the tanker. the next generation long-range strike. the new ground combat vehicle for the army that they will be starting on to it all of these services have these organization programs. half of the procurement budget

goes torso's modernization programs. about 40% of it goes towards things like c-17s. only about 10% goal for the war so year end. the cost of the wars that we are in is paid by the overseas contingency operating funds and by supplementals. this is not about finding money for the wars that we're in today, we have got that money. it is about protecting the money for the future. >> when you talk about reducing intelligence contracts, other concerns of the redundancy on the intelligence side as well as civilian side? >> luscious say that i am -- let's just say that i am -- it is hard to believe that in all of these different elements, the services, the defense agencies, the combatant commands, that

there are not redundancies for duplications. it has grown by leaps and bounds over the past decade. i read about that in "the washington post" series. i think that the thing that people haven't focused on is that that was not just about terrorism. a lot of that was the intelligence for foreman to fight these wars that we are in. i think that nobody has stepped back and looked at all of this. i do not remember this ever being done. if it is done on the national side and we do it side by side, i think that we will certainly have savings to be found. we do not need to fire people, but rather the reverse. to take people who may be doing

redundant jobs here in the u.s., and if we are short that kind of a specialist in intelligence in afghanistan, to provide -- to cover the shortfalls of staffing in afghanistan with some of the savings that we find in people who are not in theater. leaving aside the money in the people, it is hard for me to imagine that there's a lot of duplication. >> what is going to happen to the general? >> i have talked to the general about this and he it supports the decision to eliminate the organization. as i indicated in my remarks, i suspect it will take about a year to carry out this change

and i have told him that his assignment is the same as his assignment in iraq and that is to work himself out of a job and then i will find a new and better one for him. >> there is one expense that you did not mention, and that is health care. how much longer can you see the growing costs before you really have to pass on those expenses in terms of premiums for reduced coverage? >> health care reform is on my agenda. some of these efforts are part of the third track that we were talking about. we have studies that will help. they involve logistics.

they involve health-care and personnel policies. i think it is safe to say that there are no sacred cows. i believe there is a growing understanding about this. it costs us $19 billion in 2000 and 2001. it will cost us over $50 billion in fiscal year 2011. when the topline -- is unsustainable. therefore, it has to be a part of our effort. >> you are not exactly working yourself out of a job with all

of these initiatives. heavy may a decision as to how long you will stay? >> first of all, i think it is important to stress that i believe that this is not just about me. i believe that the service secretaries, the chiefs, ash carter, the comptroller, i believe the senior leadership of this department in this administration is committed to all of these activities. and normal and, general car run, they are very supportive and they're doing some things and are more for reaching them some of the things that i have talked about. i think that there is broad support in the leadership -- and of course the deputy who, on a

day-to-day basis will end up managing this. all of the senior leadership of the apartment from the deputy and the chairman on down is supportive of this. i have every reason to believe that whenever i leave, that these efforts will continue. the president is committed to it. the congress is committed to it. i think that a lot of this will continue. , all ias i'm concerned will say is that i will be here longer either i or others thought. >> mr. secretary, these are major changes that you're discussing. is this the tip of the iceberg? the see the need for a further tightening between os thd?

>> i think that this is a dynamic process. i expected to continue. is not the work of one year or one budget cycle. i would not describe it as the tip of the iceberg, but if 90% of an iceberg is under water, this is a pretty good percentage of it. we have a four tracks under way. i would tell you that the services are thinking about some pretty dramatic things. they are not ready to fill out -- to talk about it and they have not made any decisions yet, but the options they are looking at are impressive. i think that this will be an ongoing process and i think we will learn as we go along