not paying his federal income taxes. [laughter] >> that is very interesting, mr. coates, but i am talking about the conclusions of the inspector general. the conclusions that he had founded hiring decisions on ideological standards. is >> to that extent, he hired conservative people and liberal people. in terms of him taking into account ideology, in some cases, i think there is probably evidence of that investigation to support that. the idea that that was the first time that that had ever occurred in the civil rights division, is

maybe the more appropriate analogy and the pete rose willie nelson analogy would be for our younger folks -- to criticize them for hiring on the basis of ideology, it is like snookie on jersey shore" l in jers" criticizing lady gaga. [laughter] >> i am impressed by your knowledge of pop culture. sounds to me like you are defending this. are your friend? >> yes, i consider him a friend.

>> did you at one. apply for a position as an immigration judge? >> i did. >> did he write at recommendation for you? -- a recommendation for you? >> i do not think he wrote a recommendation. he sent an e-mail. >> so, you are the person referenced in the report in that he now, which says it do not be dissuaded by his work on voting matters. this is a very different man, particularly on immigration issues. he is a true member of the team. >> i think that is correct. one of the reasons i did not agree with that ig report was because of that entry. i was interviewed with regards to the report, and i do not remember them asking any questions about that. in fact, it is related to a.

in time where he did not know me -- to a time when he did not know me, and some of my conservative and liberal views were in evidence in the 1980's. the idea that i changed ideology completely upon coming to washington is not accurate. i think, as a friend, he was riding that e-mail to try to help me. but, the mouth is not factually correct. >> you were not a true member of the team? >> that i am more conservative now than i was 20 years ago. >> but the distinguished -- of the distinction that you are a member of the team that is correct? >> we have some battles about cases. in terms of the team, did we

always agree? now. if you are reading it to mean that i agreed with him in everything he did, and no. do i consider him to be a friend? yes. >> both of those people were your supervisors at the time. >> well, he was my supervisor when he was acting a -- aag. my other supervisor supervise the voting in his position of special counsel. most of the time i was so bored meant to them in -- on the division hierarchy. -- subordinate to them on the division hierarchy. >> when you talk about a meeting in september of 2009, when the

word traditional was used, what were the words she used to your recollection? >> the ones i have a mile written statement. >> would you refer to the words he said she specifically said? -- you said she specifically said? >> that is page 13. the bottom of page 13, the top of page 14. >> i have a larger print. >> mr. chairman, would you mind if the answer that question? thank you. >> ok. >> my recollection is that she used the term traditional types of section two cases, and the

terms of political equality for racial and language minority groups, and the term "that is what we are all about." >> ok. thank you. >> ok, if that is your answer. >> thank you. in the last round of questioning you answered yes to my question of did anyone at that meeting where you were participating by conference ez about theer ri race hostile opposition to the boating rights act. were you one of the people who told him? >> yes. i remember specifically say in it because i knew about his

testimony in front of congress, and i wanted mr. perez to know that i strongly felt that the reason the new plant -- black panther case was disposed of in the way it was was because of the hostility. >> that is important. i respect that you will follow the justice department's claim. you know that i think it has been properly invoked. i think that privilege is in violation of the united states against reynolds supreme court case, that is in violation of the departments on finding. i respect that if there is any argument, you have to follow the department's position on what i think is a privilege it frivolous privilege. you have not given us the details about the conversations

you had that lead you to the conclusion that they have hostility to race-neutral application of the voting rights law. if the privilege was waived, or if the courts determined it was not properly invoked by the president because it is part of executive privilege, or that it does not apply to cover up wrongdoing, as i think is the case here, would you be willing to give us the details behind your conclusion? >> if the department waives the privilege, or the court rules the privilege does not apply, if you subpoenaed me again, and asked you -- asked me the questions, i would give you the answers. >> thank you. i understand you will not tell us the content of any riding, but did you create any writing that document conversations or other evidence relating to

hostility toward race-neutral and enforcement of the civil- rights law? we are entitled to know if they exist, even if there is a privilege. >> specifically related to the black panther case? >> either black panther, or otherwise. >> i have created some documents that would address the subject of whether or not, i believe. >> was there one, in the spring, let's say april, or may, prior to the testimony, that was submitted to people about your pay grade? normally, in a privileged situation, we are entitled to know at least who it was sent to, what the date was. >> the document that i have in

mind right now would have been documents that i prepared with regards to other investigations. investigations by other entities. >> ok. and, i might ask the department whether we could get a proper index of those documents. also, you did not identify by name some of the employees that engaged in the harassment of others on your team or new black panther team. i understand why you did not identify the lower level of people. if you did not necessarily want to expose them. i'd do not think we need to know their names. it is on controverted testimony. that is supported by sworn

affidavits and articles, and other information. it all seems perfectly cooperated. if there is some dispute about all of these incidents of harassment, would you be willing to identify these individuals? >> if you have conflicting testimony, and want to call me back as a witness, i would certainly consider honoring your subpoena. >> as far as i'm concerned, we might not need to, because it is not controverted. at this time, i would like to enter into the record an article from the "weekly standard" that disputes the findings of the report, and also an article in "pajamas

media" debt casts further light that is both consistent with yours and mr. adams sworn testimony regarding various misconduct. mr. chairman, will these be received into the record? >> yes. >> thank you. >> can i say one further thing with regards to the examination? i was asked if i was a friend, and one of the reasons that i am a friend is that notwithstanding his conservative leanings, appointed me a former asou lawyer to a management position. he did not allow my past activities and might present activities of the time he appointed me to keep me from having an opportunity to be promoted. because of that, i respect his

judgment in that regard, and i will always be thankful that he judge may not on the basis of the fact that i worked with an organization he might be an ounce -- at odds with, but he is able to judge me on the work that i was doing in the voting section. >> thank you, mr. coates. you have provided some powerful testimony. i appreciate, and we all appreciate, the fed did you have to make a hard decision -- that you had to make a hard decision. it shows the character you have. we will not release the subpoena in the event we have additional need to question you. this concludes our hearing for today. we adjourn this meeting. i would like to hold the record open for additional evidence. individuals who wish to submit

items for consideration to be included in the record may send them to the general counsel of the commission, which is located on ninth street, nw, washington, d.c.. >> thank you. [captions copyright national cable satellite corp. 2010] [captioning performed by national captioning institute]

>> that as the commission taking a look at voter the the new black panther party. if you cannot get that discussion, and in our video library. this afternoon, remarks from federal reserve chairman ben

bernanke, talking about the 2008 financial crisis and the current u.s. economy. on tuesday, the federal reserve made no shift in my foreign- policy. mr. bernanke did, indicate that the fed stood ready to act. you can see the chairman's comments later today. we'll have them from princeton university at 4:30 p.m. eastern. tonight, the first general election debate between candidates running for wisconsin's governor. the democrat and republican face-off in an hour-long debate hosted by the wisconsin's broadcast association. you can watch the debate live tonight, 8:00 p.m. eastern on c- span. >> next, we bring you a discussion from this morning on the new financial regulation laws, simplify disclosure rules for mortgages. from this morning's "washington journal." final guest on this from a

morning. stephen kaplan is a lawyer -- steven kaplan is a lawyer, but he specializes in financial mortgage matters. welcome and thanks for being here. guest: thank you, susan. host: the description of one current mortgage disclosure is that they are a quagmire. would you agree? guest: i think that is probably an appropriate description. i think the different types of requirements and up being very confusing and cumbersome and a voluminous amount of paper. voluminous amount of paper. we have disclosures that allow people to shop for different products, so they can take the product that they got from lender "a" and compare it to render "b."

other disclosures are informational, like be careful, your house is on the line. it is very difficult for the consumer to understand. host: and the big headline from the "wall street journal" this morning, the "housing is staying stuck." guest: probably the largest issue right now from a housing sales perspective other than qualifying for mortgage loans are the underwriting guidelines that are being applied by lenders. they're very strict. a lot of people are applying for loans and because of the secondary markets -- people are not qualifying for the loans. the disclosures made it more difficult for people qualifying in the sense that they may not understand what they're doing.

but at the end of the day, it is not the disclosures. it is the criteria being applied. the verification of income requirements and housing requirements, those are the things making it difficult. host: when you're at the shopping stage when looking for a loan and at closing, the stacks of paper that you must assigsign in order to finish yor loan process, we're going to talk about what elizabeth warren hopes to do with a new agency that will simplify the process. we're looking basically for a broad idea. elizabeth warren was here speaking back in april. it is a very broad brush, but let's listen to her thoughts on mortgages. >> the consumer financial

protection agency. is an awful, but the bottom line is, on consumer products -- mortgages, check overdraft, these need to be readable and come parable from one to the next. two-page agreement, let's get a little market competition host: this week and others from the policy side of the business and getting to where she says we need to be. what did they learn from her? guest: i think they learned a few things. first, she means business and she intends to go forward with trying to simplify the mortgage disclosure process.

she wants to do it quickly. she started with, as i understand it, talking about disclosures, but also substantive limitations as well. the limitations related to the types of products offered, concentration of loan originators. at the end of the day, she wants to get things done and she wants to do it in advance of the deadline. you cannot see that often in washington. july, 2012 is when the disclosure released deadline is. host: host: there are a lot of sectors that have a piece of the pie in this. who will be the winners and who will be the losers as she moves toward greater competition and disclosure? guest: that is a good question because the number of players in this industry has shrunk over time. one reason we have not seen simplification of the disclosures is the exact reason that we have all of these

competing forces with these different opinions and different goals. at the end of the day, a large lenders have the most stay in the matter -- the most say in the matter. i think everyone agrees that some civil vacation should be done in the process. who will be the winner? i do not know -- some simplification should be done in the matter. who will be the winner? a i do not know. there are some laws that will be applied to credit generally, and those will include the fair credit reporting act, truth in lending act to name a few. those laws required disclosures or warnings. things like, we are using information or obtaining a credit report to make a decision on you. the cool of employment opportunity act -- the equal employment opportunity act, the law discriminates.

the truth in lending act allows people to shop. you always hear about a papr. that is not the interest rate. it is the interest rate on steroids, for lack of a better way to save. -- to say it. there is a procedure that has two purposes. one is to prevent kickback payments. and two, to provide disclosures or to consumers and allow them to understand the closing process. it is the last two laws that requires the legislation for the combination of disclosures. the truth in lending act has the disclosure.

it allows you to shop. and respa applies only to mortgage lending and it allows people to shop, but gives a lot more detail as well. you get this four-page document, that lessens the transaction. ironically, procedures were just modified in january of 2010. lenders spent thousands of hours dealing with that. host: let's get to phone calls from our audience about the mortgage process and disclosures and the government posing mandate to simplify and give you more information -- the government's mandate to testify and give you more information. this is fred on the republican

line in kentucky. caller: good morning. host: do you have a question for us? caller: yes, more of a little story. it is very timely to your topic. i apply for a home-equity line of credit and it was a lot of papers to be signed. i read it over, which i guess is unusual, and it was complicated. i asked the bank about some of the things. he could answer some of them, but he had to contact somebody else about the other ones. the next day i went back and they could answer some more, but they said, you better get a lawyer to answer all of them. and this was just a line of credit for home equity. some of the things were that the bank wanted me to sign off on

any future changes. and the other thing they had was that part of it was that i was signing off that i was giving them a quick claim to my property. of course, it is written in all of this legalese and britain so much in the banks' favor that it turned me off to the whole thing -- and it is written so much in the banks' favor that it turned me off to the whole thing. host: did you end up getting the loan? caller: i have to do all of the signing off now and i do not think i will be able to get a lawyer in time for that. host: how many people are in this situation? guest: unfortunately, there are many more stores where people feel confused or feel like they are treated unfairly. what would happen under the new

consumer financial protection act and the new directives is that the process would hopefully be simplified. frankly, the promise right now and the instrument that secures the loan, secured the property, that is not going to change. but what will change is the disclosures and how the information is presented. host: will there be a drive toward much more understandable english? guest: absolutely. and at the summit that occurred earlier this week, one of the things that elizabeth warren specifically says is that she wants to simplify the process and she wants to make sure that there are real -- there are true and accurate disclosures, instead of what they referred to as "incomprehensible paperwork. -- "incomprehensible paperwork." host: we are talking with steven kaplan about mortgage disclosure

rules. this is ginger, democrats line in california. caller: my husband and myself about a month ago were involved in a transaction that was in foreclosure. a realtor apparently stated that it was still on the market. we found out some months later that it had been a first fire. everyone knows that was involved, weak technically, were not. i walked in presuming it was a normal sale. and we put up our good faith money. our bank handled our transaction and at the end of the day, the person was -- it appeared to me that it was a fraudulent deal. we never had a chance. someone at the bank said it was like the wild west out there.

i felt naive. my husband and i found out it was not the 30-year conventional like it had been in the past. i have a friend who was willing to pay cash for a home and they refused him the loan. they suggested -- then he suggested taking a 30-year and they refused that. it is very difficult to figure out what is going on out there today. there is little that seems legitimate. could you answer my questions, sir? guest: unfortunately, in today's market when bad things happen and we have a mortgage meltdown, the legal reaction, or in some cases even the industry's reaction, is extreme. it is difficult to qualify for mortgages these days. and it is more difficult than it

has been in the past. part of the reason is because there were significant instances of fraudulent activity in the past. as a result, people are very conscientious. the statement that it is like the wild, wild west, i do not know if that is true today as much as yesterday, but sometimes unfortunately, the reaction is greater than what is required. host: i'm not sure if you can answer this, but a question by a viewer on twitter -- guest: i can give you steve kaplan's opinion on that. i cannot answer it in full. elizabeth warren is not actually the director of the new bureau of consumer and financial protection. she is, i believe, referred to as a special advisor. she has special powers to

achieve the goals contained in the dodd/frank act, but i think there will still be someone in charge appointed. host: tell us about your experience and what you would like to see out of a revised system. our phone lines are open. our next caller is from detroit. this is leon on the democrats line. good morning, you are on the air. caller: yes, thank you for c- span. i appreciate your insight. it is nice to call a place that does not have a lot of talking heads. the question i have is that we are going through a mortgage modification and it just seemed to go on and on and on. it almost seems like they want to delay and foreclose on the

home. from a i understand income on -- from my understanding, any money that the bank loses, isn't that guaranteed by the government? how does that exactly work? thank you very much and i will listen to your response. guest: that is a very good question. what happens with a foreclosure when the value of the home is less than what is owed? who picks up the shortfall? the answer is that it depends on what type of loan. if you have a loan that is insured by the federal government, then the federal government may pick up the shortfall it is guaranteed by the government. if you have a private mortgage loan, then nobody is picking up the cost. the losers in that scenario is the owner of the loan.

with respect to modification, although you did not ask a question, you are right that the modification process seems to go on and on. there are a few reasons for that. one of the services -- servicers of their modifying -- one of the servicers out there modifying the program is provided by freddie mac and fannie mae. the program has specific requirements the need to be complied with in order for servicers to be able to complete the modification into what is referred to as a permanent modification. host: still ahead, south carolina on the republican line, brian, good morning. caller: i'm calling as an investor and i'm thinking that

part of the problem, i believe, in this debacle had to do with certain things that banks were allowed to keep off the books so that investors did not know what they were buying. if the bears turned preferred a bond, they would not really know -- bear stearns preferred a bond, they would normally know that there were things off the books. do even the rating agencies in a wet the banks are investing their money in? guest: that is a great question and it is a great question for two reasons. one is that you're exactly right, the transparency provided to investors, it was not robust enough for people to understand the risks.

the other question get outside my area, so i cannot give you a full answer, but there is federal law. there are changes that require disclosure to the credit agencies and require certain levels of due diligence and disclosure. but it is outside of my area. host: back over to the disclosure forms, tiwa, as you put it, and respa, back in 1986, why did it take all of this time? guest: why does anything take a long time? in 1996 when they first began the process of attempting to combine these disclosures, they had a bunch of -- i think they call them town hall meetings around the country to give people a way to provide input.

at that time we had two different agencies working on it. one was respa and the other was the primary regulator for the truth in lending act. more recent lenders and builders were all fighting and everyone agreed that something needs to be done -- needed to be done, but no one could agree how to do it. host: next call, bill. caller: you have all of these divination seas and the next one, i guess, -- all of these different agencies, and the

next one, i guess, is going to be elizabeth warren. taxpayers are paying all of these people, as far as i'm concerned, to waste a bunch of time. and it gets back to basics. these different outfits like hud and freddie mac, are they constitutional? my investigation shows that none of them are. we are wasting a lot of taxpayer money and i wish you would run these bills through the new agency to see if they should exist at all. host: do you want to comment on that? guest: really no comment to be made. i think your body hopes that the government works with its existing checks and balances so

that the laws are enacted in norm -- are an active along with the constitution. part of the region -- part of the reason for the inertia is that candidates cannot seem to agree. but i completely agree that we need to make sure that the checks and balances apply and that these different agencies act and respond in accordance with wet the statutes are in the constitution. host: i go back to a -- an article that suggested that lenders complain that they are seeing significant resources each time a disclosure is change. who pays for that ultimately? guest: lender, ultimately. every time changes are made the

lender has to spend an enormous amount of money. first of all, these laws are anything but a model of clarity. and these changes that were made by respa and the settlement disclosure statement, and the good faith estimate that you were given was significant. once people figured out what they mean and how to -- at the end of the day, it is the lenders to pay. host: is that not passed on to the consumer in some fashion? guest: that is a good question. part of what people think is that the cost of that are imposed will indirectly be passed on to the consumer, but i do not know the answer to that. host: in california, clint on

the independent line. caller: thank you, c-span. it is what you just said. the truth in lending, even though it -- they do not know what it is they are asking for. i tried to refinance in 2006 and compared to what you have to offer as information, you know, job status, etc., all of those were not even needed and now you can are giving of information. -- you cannot give me enough information. it cuts through all lines of what it is we are talking of the art -- what it is we are talking about. i can understand from the underwriters and the lenders,

who have now been premature " in these past years, but i think it is based on knowing what something is valued for. the loan to value ratio then comes into appraisers and all of this stuff seems to amount to a very unclear situation. if you could respond to that, i would appreciate it. guest: absolutely, and an excellent point you are making. if you look at it, they use the word simplification. they used a bunch of the terms then you mentioned during your call. those are the things that they're looking at and that elizabeth warren and the bureau will hopefully address. but do not kid yourself, this is just one piece.

although they are probing not provided on the same transaction, -- they are probably not provided on the same transaction, they are just two of hundreds. lenders have to comply with a bunch of new disclosures under state law. it will not eliminate the complexity of the process of the transaction. your first comment goes to the ability to document the transaction of the loan. there are products will have limited documentation. many of those products have been eliminated. five years ago in 2006, i think, is when you said you last obtained a mortgage loan.

those products that are referred to as no income and no less of loans, those do not exist any longer. host: we are going next to old bridge, new jersey. janet on the republican line. caller: and calling in reference -- i'm calling in reference to billone i have for -- to a loan i had for a business. only when the business went under did we realize we had signed documents to delay the loan. we did not receive the commitment paper until we got to the closing table. we were handed the commitment paper first and then the closing documents. under those commitment papers we

signed a partial guarantee. consequently, we lost everything the bank took back my business. only one bidder, they claim, went to the auction, and he was a foreigner from a foreign country. he flew in to bid and the bank claimed that was the only bidder. it is awfully suspicious what these banks are doing. and receivership, the person that took over my property, the owner of the company worked for that specific bank. that specific bank gives him all the business when they foreclose on all of these commercial businesses. it is unfair what they are doing to people's lives. the commercial end of it should be investigated. guest: unfortunately, most of the laws we are talking of barricada and most of the

amendments and ends of occasions are related to the mortgage lending process. although there are certain laws the require disclosures, really, it is much more limited. the idea is that in a commercial transaction, the businesses or parties are more sophisticated and they do not need the connection that consumers need with residential loans. that being said, that could be why in new jersey -- if that is where you are located and the property is located -- but that could be why this is on those related loans. host: i do not know if you want to tackle this, but here is a tweet .

guest: i do not know the a guest: i do not think investors are on to the contrary. if you can qualify for a loan, i do not think that is frowned upon. one of the concerns might be the people were buying homes for speculative purposes and not to live in. that may have inflated the value of their property, but today, that is not a concern. host: people over the need to understand what they are signing. what would you suggest between now and when any changes are made if they are intending to close on a house about all of

those pieces that they get when closing? guest: one of the callers earlier on said that i received all of these disclosures and i only read one because it jumped out at me. the answer is, there's a lot of paper being provided to you. read them. the read them carefully. if you have questions, ask. if you have an attorney, it might be at the title company. ask the questions and ask them early so you have the information early and it allows you to make an informed decision. host: next up, san diego on the republican line. good morning, steve. caller: i am a forensic title researcher and i can say with fact that 70% of the sales on the courthouse steps are unlawful because they were facilitated over the last 10

years by mortgage electronic registration systems, which took responsibility for their record keeping, but has suddenly been in a position to hold their course before investors out of new york. when it comes to the sale, the identity of the investor is not known, but the investment trust is granted the property on behalf of the bond security. the question is so simple. because mers is such a thorn in the side of the foreclosure process, is anything being done to take it away? do you know anything about mers? guest: i do know a fair amount about mers. i do not know the specific question as to whether or not a thing is being done -- anything is being done.

you can i file mortgage loans without necessarily filing a statement with respect to the property each time. state laws have certain protections and requirements related to the names party that pursues the foreclosure. that is an issue that you're reading about in the newspaper more frequently today. it really is a creature of the state laws. i agree that people need to comply -- servicers need to comply with those laws. host: next up, diane on the independent line in georgia. caller: i was a loan officer

from 2000 to about 2005. i was an honest loan officer and it cost me a lot of loans anduse of the people widlied let people borrow. the main thing that cost me a lot of loans was when the borrower would try to get a loan and it would force them to use our lender. have they cracked down on that? they would threaten the buyer and make them pay the closing costs and things like that. has anyone looked into that and how much it has cost the borrowers by halving bumped up rates? -- by having the mdot rate? guest: -- by having the bombed

up rates? guest: it is a good question. the what are mentioned at the root beginning that had a provision which related -- related to kickbacks, a firm regulates that issue. the answer is that it is a practice that is regulated and the builders are reformed -- are permitted to refer folks to their affiliated lender as a long as they do not require the person to use the lender. and it defines require with sensitivity -- with specificity. there are certain requirements that expressly address that. there are disclosures that are required at the end of the day. if it increases the cost to the consumer, then it is not a good thing. if it allows the consumer to get a discount for using our affiliate, that is not something

that should be discouraged or considered illegal. host: our last call for you on the republican line. good morning, lane. caller: my daughter and her husband and their two little kids got caught in the countrywide mess. on a $500,000 home they put down $100,000. later they took out a second and put in a solar system and sunk a well. these kids were not going out and taking trips and buying new cars. he lost his john in january. he has been trying to carry this alone -- he lost his job in january. he has been trying to carry this loan all this time. they are trying to work with bank of america. this is the third time that they have applied to have the loan refinanced or taking care of

some how. they do not care how. they are just sinking, you know? and they both do not want to lose their home, but it is to a place now where they do not have a choice. it is coming up. and they are dealing with bank of america. i do not understand why it would take more than 90 days for bankamerica to either say yes or no. host: that is deep into the weeds on foreclosure issues. i'm not sure if you want to talk about. guest: unfortunately, that is not necessarily an uncommon story. i get the idea from the servicers that they are trying to do their best to get these people into loans or modifications that they cannot afford and allow them to stay in their home because at the end of the day, the servicers do not benefit from foreclosing on a property.

one way is to keep a viable alternative, to keep the consumer in the home. i hope it works of for them. host: let's wrap this all up. dodd/frank has mandated that mortgage disclosures become much more understandable and with more transparency. elizabeth warren is hoping to oversee the creation of the agency that would do that. what kind of timetable can we expect? guest: the timetable is aggressive. the deadline is july of 2012. there are also a bunch of other disclosures that people expect the new bureau, which has been created by the law, to address. when the bureau is in effect, it does not really a scimitars until july of this year -- it did not really assume its powers

until july of this year. -- it does not really assuming power until july of 2011. i think the fact that texas afternoon, we will take remarks from federal chairman -- federal reserve chairman ben bernanke. on tuesday, they made no changes. you can see the chairman's comments later today, from princeton university. that will be at 4:30 p.m. eastern. tonight, the first general election debate between

candidates running for wisconsin governor. republican scott walker faces off against the democrat in an hour-long debate. you can watch the debate live tonight at 8:00 p.m. eastern here, on c-span. >> i really underestimated how big the job was. i had been the republican minority whip. i jumped from minority whip to speaker overnight, and from a minority party that no one thought was going to be in carter, two leading a wave of 9 million additional votes in 1994. >> newt gingrich and his tenure as house speaker, the state of american politics today, and a possible 2012 potential bid. sunday, on c-span. >> next, and look at testimony from the veterans affairs secretary eric shinseki and his

decision to -- on his decision on agent orange, and the assumption of presumptive disability benefits. we'll hear from physicians who analyzed the research. this is two dollars and 50 minutes. -- 2 hours, and 50 minutes. >> this here in will come to order. welcome to today's hearing on the the a presumptive disability making process the disability decision making process.

most of our focus will be on the of them veterans and agent orange. this discussion also extends to presumptions on the first gulf war, and we're just beginning to hear about exposures to potential toxins connected to the wars in iraq and afghanistan. this committee is also addressing exposures at military installations. this is why it is so important that the way presumptions are created is appropriate and transparent for past and future wars. one issue we will look at this morning is the the a secretary's role in creating presumptions under the agent orange act. the secretary is called up to determine on the basis of sound medical and scientific evidence whether there is an association between exposure for all

herbicides and occurrence of disease. the law sets up a balance contest between exposure and disease. a possible association exists when the evidence for an association is equal to or greater than the evidence against an association. in making the determination the secretary is to take into account reports from sound and its medical information. as elected to recent agent orange information, -- as we look at the recent agent orange decision, we must understand how it was weighed and considered. for my part, i must be satisfied that the law enacted almost 20

years ago now, is still working today. while it is clear that there are real and substantial costs associated with this new presumptions, that is not the motivation for this hearing, or we made a promise to care for and compensate veterans for service connected injuries. i will never stop fighting for veterans, especially when the issue is directly related to the consequences for service. keeping our promise to veterans requires us to look closely at the current resumption process. we must be sure the process begins va appropriate authority to consider all relevant factors in order to determine whether service-connected

presumption is warranted. i hope that our witnesses will shed some light on these issues. the current secretary and a former secretary will be testifying about their experiences with presumptive decision making. experts from the scientific community will testify on dioxin and what science exists for determining and association between agent orange and heart disease and other diseases common to agent orange. i thank our witnesses for being here today to help us in this effort. i look forward to your testimony. at this time, i would like to call on our ranking member, senator isakson, for his opening statement. >> thank you very much, mr. chairman. i want to welcome all of our

panelists, including mr. secretary and former mr. secretary. i am in charge of the floor from 10:32 12:30 and will have to leave. senator johanns will then take my place as ranking member. unfortunately, many military personnel and their families have been put at risk by dangerous exposure where they're living, working, or serving our nation. last year, we had a hearing to discuss some of those exposures, including contaminated drink water -- from the water and smoke pits. we will hear about defoliants with toxic contaminants that were widely used in vietnam to clear jumbles. for all who been put risk by these and other exposures, but is extremely important in a process to identify their health may be affected and make sure they receive a fair, hassle- free, and timely benefits that they need and deserve.

as to discuss the presumptions -- as we discussed today, the pros and oceans can play a critical role in the process. -- the presumptions can play a critical role in the process. it can create a quicker, easier path the benefits and services. the current framework for creating presumptions may have flaws. institute of medicine recommended a whole new approach -- one that is more transparent, along stakeholders greater input, and proactively identify exposures and conditions that may warrant presumptions. given the profound impact they can have, i hope to have a productive session today about where improvements might be needed in the current process and how changes might impact our nation's veterans and their families. i am interested in learning the extent to which medical treatment is being extended for those 11 affected.

coronary heart disease is very common among -- for those who have been effected. coronary heart disease is very common among vietnam veterans. we want to help veterans to the greatest extent possible. we cannot achieve that if we focus only on disability and neglect treatment and prevention. i'm grateful for the opportunity to participate today. thank you for being here. >> thank you gary much, -- very much, senator isaacson. senator rockefeller. >> thank you, mr. chairman. i appreciate your commitment oversight. welcome our panelists. i apologize but i also have to leave because i have to chair a committee about making sure the full spectrum is available exclusively for our public defenders -- fire, police, the

ems, iemt. some wireless companies want to get it for their own. i say we have to get it to the first responders. i apologize. i am proud to be a co-sponsor of the 1991 agent orange law. that law directed the secretary of the department of veterans affairs to rely on the mud to -- the institute of medical studies and other science to determine presumptive coverage based on exposure to agent orange. the standard is a positive association. if the majority of the evidence is such an association, the secretary shall provide coverage. i have met extensively with the secretary, white greatly respect. i believe he followed the standard set by the law.

some suggest that there should be a new standard which is more appropriate. i do not happen to agree with that, partly because i come from a state where we have something called black long. -- black lung. i know for the ugly well that if you work underground fight -- i know perfectly well that if you work underground for 10 years, you have black lung. west virginia people who get the black long died horrible deaths -- lung die horrible deaths. i think this dinner is adequate. i'm concerned that -- i think the standard is adequate. i think the unspoken issue is cost. people are going to senay it

costs too much. we cannot afford to do that. it comes down to our spending priorities for our country. the vietnam war cost $740 billion. caring for the veterans drafted to fight that war is a fraction of the $740 billion. we did not question then and we do not question now. some will face enormous deficits -- some people say we deficits. enormous effort thi we also have to get the full picture. i was here when he proclaimed we had such a huge surplus that we had to cut taxes -- when some people proclaimed we had such a future + that we had to cut taxes. some people voted for that.

everybody said ok. tax cuts to expire at the end of this year. there is a moral choice facing the -- facing the veterans committee and the united states congress. there is debate about extending the tax cuts. if we do not extend the tax cuts to the wealthiest 2%, we will save $700 billion in revenue over the next 10 years. frankly, that is so much more than enough to take care of what it is the secretary is required by law to do and needs and wants to do. i have never believed tax cuts for the wealthiest among us is fiscally responsible. it does not stimulate the economy. i believe that is a proven fact. others disagree. given a choice between tax cuts for the rich and paying for care for our veterans, we on the veterans committee have a fairly clear choice about priorities. it will test to we are morally

-- test who we are morally. i think the choice is clear that we spend it on veterans. we must care for our veterans. we have to do that. we owe them that. thank you, mr. chairman. >> thank you, senator rockefeller. senator johanns? >> thank you. they intended be quite brief. i have a few thoughts i want to offer. i want to say thank you to the chairman. i appreciate him holding this hearing. i might add, mr. chairman, i have appreciated being on this committee. it is an honor to serve on the senate committee that focuses on the needs of the veterans. i just can tell you how much i have appreciated serving with the chairman and our ranking member, trying to figure really tough issues to try to help the families that are impacted here.

sometimes the impact is very direct. we can identify somebody who has been injured in the war -- maybe they have lost a limb or whatever. you can come to grips with what their disability is or try to help them with that. sometimes it is much more indirect than that. there are the unintended consequences. as a committee and as a congress, we have to deal with those. that is just the reality of the situation. i would classify agent orange in that category. millions and millions of gallons of agent orange were used to conduct a war. i suspect at the time those who made that decision thought they were making the right choice for a variety of reasons, but we have seen that the consequences of the use of that are just

horrendous. mr. secretary i have been somewhat in your position as a former cabinet member. i remember the hearings when i would get called for some discussion of some action i was taking. i thought i was discharging responsibility given to me by congress, only to be caught up in this debate. i would imagine today he might not have imagined you would get in a debate about the 2001 and 2003 tax cuts. the reality of that, though, i might add is that the largest revenue in our nation's history occurred in 2007, when they were fully in effect. you can grow the base. let me stop there. quite honestly, our want to focus on is what you have done. i think you have looked at this every way we have asked you to. i think you dug deep. you did the analysis that we expected.

as chairman rockefeller points out, once you get to that conclusion, your discretion in thes -- your discretion ends. it is not somewhere you can decide not to do that. we have to focus on that and the responsibility we gave you and your attempt to discharge that responsibility. i will offer one final thought. i come from a stake -- to the state of nebraska where, as governor for six years, i did not have the option of borrowing money. our state does not owe any money. our constitution prohibits borrowing. i could never balance the budget by borrowing money.

there were not many choices available to me. some might argue that is not a good way of doing things. i would argue that what it forced us to do was to make important decisions about priorities. i think that is what this hearing is about. for me, our veterans are a priority. we put them in harm's way. we ask them to risk their life and often times give their life. in the end, we have to protect them from the direct and unintended consequences of those decisions. i come here today with an attitude of wanting to dig deep and understand what you look like, what the justification that he felt -- that you felt. we will stand here with our veterans. secretary shinseki, thank you so

much for being here and for your work in this area. i know you are trying to get to a decent and honorable result for the veterans. thank you. >> senator johanns, thank you. >> thank you for holding this hearing. as everybody knows, the cost of war are never able to be predicted, and it is always higher than we imagined including lives lost, billions in funding to keep our troops if an investment made in farmlands. it -- in faraway lands. it always includes the many years of care that our veterans will need. it includes what is often expensive but absolutely sacred -- the promise that we made to large -- to our veterans that we would care for them when they return. the veterans who have these new presumptive the diseases are among those we made that promise

to. i remember that promise well. i interned at the v.a. medical center appeared we made this promise decades ago without a thought and budget deficits or agent orange exposure or politics. we made it because their sacrifice warranted it. for years now they have had to fight to see it fulfilled. they have had to fight the va, the doctors, and members of congress. it is not acceptable. i understand the need to tighten our fiscal belt, but we cannot do it at the expense of squeezing our veterans. mr. chairman, in the aftermath of widespread agent or do exposure -- agent orange expense, the department of defense did not offer early intervention, track the members who were exposed, or create a registry for affected veterans.

as veterans became sick, they had to fight to have their diseases recognized by the va. the unacceptable challenges faced by veterans exposed to agent orange lead congress to pass the agent orange act of 1991. that established a presumptive process to lower the burden of proof for veterans in determining whether a disability or illness is service-connected. make no mistake, i believe that veterans who sacrificed so much deserve the benefit of doubt. it appears to me that the secretary made the best decision possible, given the limitations on the findings and the limitations of his role under the law. given the lack of tracking data on who was exposed and to what extent i know we must provide for veterans, if an association can be made. with all that can -- with all that being said, the committee needs to know how the process

works and how to improve it. there's no question that we need to make a better effort to identify exposures that could lead to a onuses and disease. -- to illness and disease. we need to make sure we care for these individuals. d.o.d. must provide immediate treatment after exposure. i believe dod and the va should work to create a registry to track the service members and veterans and their levels of exposures. over time, we will have a better understanding of how these exposures impact veterans. mr. chairman, thank you for this hearing. i look forward to the testimony. >> thank you. senator brown of massachusetts? >> thank you. congratulations on that night's award he received the other night. it was well-deserved. thank you for your service to our nation's veterans. we spoke in my office about some of the issues we're discussing today. i will be bouncing back and

forth as well due to some other issues i'm marking on. i enjoyed that meeting very much. i appreciate you making the effort to reach out and talk to me. as you all know, we have a solemn duty and moral obligation to our veterans. i've been fortunate to serve almost 31 years and answers -- and still serving in the national guard. i've witnessed firsthand the sacrifices making good on our promise to repay those sacrifices will never change. they have a steep incline. i want to work with you every step of the way. the process of creating presumptive conditions for deserving veterans is one that should be examined closely with

all the facts. there are certain realities beyond the institute of medicine findings that are, in my view, a very critical component to deciding on presumptive treatment. the key stakeholders are highly qualified. i am interested in learning more about the process about determining what conditions are referred to the institute for study and how the va then reviews the report to make determinations. i would ask that this group of distinguished stakeholders continues to review current policies and processes for determining presumptive conditions and implementing efficiencies where possible. thank you for your work on this and other issues. while i have some concerns, and there is an opportunity to prove -- to improve the process. you take into consideration the financial obligations of these decisions.

as you and others should know, you are more than welcome to provide any and all information to bring me up to speed, being the newest person -- second- newest person here. give us the tools and resources we need to make better decisions. thank you, mr. chairman. >> thank you. senator sanders. >> thank you, mr. chairman. thank you, secretary shinseki, and the other witnesses, for showing up for today's very important hearing. i want to applaud secretary shinseki on a number of issues for stepping up to the plate and for his bold leadership in addressing some very long- standing problems facing the veterans community. i want to express my support for his decision based on existing law. that is the main point to be made today -- based on existing

law. there are three new presumptive medical conditions as service- connected for vietnam veterans. i want to say to my colleagues what they know. what we're talking about today is the ongoing cost of war. this is what war is about. and more the bullets, guns, and airplanes. it is about making sure that we take care of the last veteran who served. we do that person just this. if we do not want to do that, do not send them to war. if you make that decision and that is the moral responsibility we have. we have witness repeatedly wartime decisions that were tools of war, but had an adverse impact on the health of the very young men and women this nation has placed in harm's way. i think we're all familiar with that. we remember the rather shameful experience that a place during

-- after world war ii when many of our soldiers were exposed to atomic radiation, yet we had the dod and other officials saying, what are you talking about? you're coming down with cancer. do not blame us. we had nothing to do with it. history has obviously proved that very wrong. we know the shameful history of agent orange. we know it was the service organizations who had to step up to the plate and sue their own government saying, our people are getting sick. no, no committed for, it is not us. we have made real progress. this and then we should never forget. men and women putting their lives on the line should not have to sue for the benefits they are entitled to. the agent orange act of 1991, the fundamental topic of this hearing, enabled the va to begin treating veteran exposure because of positive association.

it has been-parents -- it has been my experience that veterans want timely access to quality health care. when this nation needed these young men and women to go into harm's way, they went. when no same veterans came back knocking on the door -- when those same veterans came back talking on the door, they too often found themselves denied or turned away because of rules and regulations that would rather split hairs and provide health care. i was in the house on the government operations committee. i will never forget, as long as i live, the hearings that we held on go for a bonus. -- on gulf war illness. we had the va saying that they were not sick. it was a very distressing experience. perception descending -- decision making process rather than making the

health care needs of veterans. agent orange was a kick the can down the road issue that is so common inside the beltway that it does not make a bit of sense to the men and women who believe the va is their health care system. secretary shinseki, you have been placed in a difficult position. we owe you an apology. we give you the authority and responsibility to make this decision and then, perhaps, turn around and only question and second-guessed your decision making process. i am competent -- confident that he labored over this decision. the resumption process dates back long before agent orange and has repeatedly accomplished one objected that we can all agree on. it demonstrated the thanks of a grateful nation by addressing health care needs and providing benefits to veterans. my colleagues of the issue of

war, none of us are willing to put a price tag on good health. if cost is a concern, then cost should be discussed before sending servicemembers into our's way. clearly this is about the ongoing cost of war. the cost will be paid by not only this generation, the generations to come. i do not believe any better and should be denied timely access to the va health care system if they believe their condition was due to their service in the armed forces. how can we call these brave service members heroes in one breath and question their integrity and intentions when they come to the va. how many vietnam veterans do you think this nation failed due to an action between 1975 and 1991. i am afraid there are many thousands of them. mr. chairman, i want to congratulate you for your efforts.

i hope we can proceed in addressing this issue. >> thank you very much, senator saunders. senator brown of ohio? >> thank-you for your many years of service and for what you are doing now, mr. shinseki. it is been 40 years since the last use of agent orange. it has been a long, sad history for our service members who have suffered because of exposure to agent orange. veterans were also plagued by foot-dragging in congress, at the va, and that the department of defense. families encountered in difference that are a national disgrace. complicated science is involved in determining resumption of illness due to agent orange. exposure is changing

technological developments. waiting for a casual link after 40 years is another way of telling veterans note. complexity is not an excuse for years of inaction. it is not an excuse for veterans, their families -- like the widow from pike county who tried to get indemnity compensation. her husband who served in vietnam died five years ago from heart disease. her claim was originally denied. the appeal was held up. the regulations had not been approved. the widow wrote to me, "my husband did not hesitate to go to vietnam. i waited for a year per have to come home. when he came home he was never the same. his life was cut short by the after effects of agent aren't -- and it arch. -- agent orange." i am convinced he made the right

decision in adding these decisions -- diseases to the presumptive list. the cost of caring for the veteran is a non-negotiable cost of war as senator sanders said. it is a question of choosing between tax cuts for the wealthiest americans and spending money on our veterans, the clear, moral answer is that you take care of veterans first. it could take years of -- there are lives at stake, lives of men and women who served their country because we asked them to. the committee has been working on a host of exposure issues. we are trying to buy the right balance between evidence and level of exposure and causation. our troops, and i would add, many citizens of vietnam suffered and are suffering still from agent orange. this is about where do we draw the line.

how did the va, to this -- prompted the decision to add three more presumptions? it is not easy. there are legitimate questions about the process of determining the presumptions. i believe the secretary is correct. for more than 40 years of vietnam veterans have waited too long. we must work together to create -- to fix this injustice. >> thank you, senator brown. >> thank you, mr. chairman. welcome, assessed -- mr. shinseki.

given the questions that have come about as a result of the decision that has been made, we really need to have this hearing so people can understand the process that was put into place. i would like to, first of all, say that i have a pretty long experience with this issue, beginning as a marine rifle platoon and company commander and -- in one of the more war- torn areas of vietnam. the arizona valley, other areas, very ravaged places -- a very devastated villages and populations. i also have the privilege of serving as committee counsel on the house veterans' committee for four years from 1977 to 1981. on that committee, during that

time, we had a number of hearings about agent orange. i counseled several of them, i believe four, as we were attempting to come to grips with how to examine where origin -- where agent orange was used, who was actually exposed, and what conditions might have exposed -- resulted from this exposure, and what we should do as this to words of the people who served and of our country large -- as the stewards of the people who served and of our country writ large. -- hear is what we have to look at. we had a duty on this committee to examine these issues. first, the implementations of the law -- disregards the

secretary's decision. i have no question that the secretary's decision was within began bit of law, but we may want to ask ourselves if this is the right way for these decisions to be made in the future with issues of this magnitude. i want to say very clearly, this is not simply a cost issue. i have worked on veterans' issues my entire life. this is not a cost item at all. this is an issue about the credibility of our program. mr. shinseki pointed this out very eloquently. i do not want to get ahead of his testimony. it is also about the accuracy of the scientific process as it pertains to agent orange and service in vietnam. we have struggled with this for more than 30 years -- how we intersect scientific analysis with actual service inside

vietnam. it is also about the use of presumptions. the reason i put the chart up and the reason i ask for this chart to be shadowed to my fellow senators -- to be shown to my fellow senators, we need to know what was in the mind of the lawmakers when this law was originally passed. you look at the first three issues here. those were the three conditions that were written into the 1991 law. we asked the va to give us the number of people who were receiving disability benefits as a result to those conditions today. they come up to a total of a little more than 5000 people. the law banned began -- the law then began to be examined under a broader context -- the context of dual presumptions.

first that everyone was presumptively exposed to agent orange. secondly, we have said that in the vietnam veteran that ends up with the systemic disease based on this process that was written into law has, as a result, a service-connected condition with respect to agent orange. if you look at the last three of the items on this chart, d.c. what has happened. -- ec what has happened. we have -- you see what has happened. this hearing is vitally important for us to examine where we are now and where we

need to go in the future. mr. chairman, i thank you again for having the courage to hold the hearings. i appreciate secretary shinseki's appearance and the people we will see on the second panel. >> thank you very much, senator web. senator faster? >> i also want to thank you for holding this hearing. this is a topic that is not an easy one for anybody. i also want to commend senator webb for asking some very tough questions about agent orange exposure and about exposure issues generally. i also want to thank you, secretary shinseki, for coming here today and to talk about the steps the va has taken to do right by vietnam veterans and who are now suffering the consequences of agent orange. i do not anyone here thinks the

rules should be changed. they are in place. the funding is in place. we are not going backwards and i do not think we should. i have been to a few democratic policy committee meetings on things like burned pits in iraq. we have heard senator byrd's plea for camp lejeune veterans. we need to -- the bottom line is that there are going to be many more concerns raised about exposure to toxins and toxic substances in the years to come. in the case of granting presented eligibility, we need to be sure that exposure compensation is based on sound science and the right interpretation of the 1991 agent orange law. i am not a doctor. i am not a lawyer.

but i believe the basic responsibility of the government and this committee is to care for the veterans. that includes service members who were exposed to toxic substances and become ill as a result. at the same time, we also want to be sure that in this environment, we are careful steward to the taxpayer dollar. i look forward to hearing more about the decision making process in balancing the conclusions reached by the several different studies on agent orange exposure. it will not be easy. it is also why i am happy we are having this meeting. >> faq, mr. chairman. -- thank you, mr. chairman. i want to welcome secretary shinseki and other distinguished members of the panel. i also want to mention that i am

glad to see that there will be two witnesses from the university of illinois on the second panel. if i am not here, you'll understand your senator has recognized you. i am also pleased that all of you have come here to give the us your assessment of the possible future of presumptive disability decision making process. your experience and expertise should prove to be invaluable. i know i have witnessed several situations in regard to vietnam veterans. i remember being at the parade in chicago when they were finally welcomed home. that was a very, very heart- wrenching, moving situation to

see general westmoreland stand on the platform and watch those veterans come up and get their respect to the general. it was not a dry eye on the reviewing stand. now we know that some of those who came home with no type of parade, the type of motorcade, the type of flags flying, and they were not really given what they deserve. i am hope and pray that we do not do -- that if we do not do something, there will be continued misery for these men and women who gave up all and were fortunate enough to come back. if they are suffering from some disease as the secretary has determined under law, that there is presumptive support for them. we should find a way to make sure that those individuals are given the best care that we can possibly give them. they have suffered enough.

they do not need to be going to the rancor. i agree with senator sanders. he indicated the cost of war was costly. but there is more than guns, bullets, and tanks. it is the aftermath of those who donned the uniform and dear to go out and face bullets -- dared to go out and face bullets and the other large ships to serve this country. it is my belief that we must take care of the veterans. i am sorry that we had to get to this kind of a meeting, but that is our job. there is no price that we can put on what we can do if those veterans suffer from those chemicals that were sprayed due out that country.

we do not even know what the outcome is for those individuals who are in the war. we certainly cannot use finances and budget shortfalls and other excuses to not support our veterans. i am interested to hear the secretary's it testimony and the other witnesses. rest assured that we will be in the process of taking care of our veterans who have taken care of us. i have told everyone who has donned a service uniform that the only way america can be great and the land of the free, is because those individuals or all lead grave. there is no reason for us to give any more agony to those people who finally come to the va system. some of them stayed away.

they are finally coming back in because they are, now, in desperate need. the onus is upon them and they need our help. let's not abandon them. i look forward to your testimony. thank you, mr. chairman. >> thank you, senator burris. >> think you for holding this hearing. mr. shinseki, thank you for the meeting we held briefly. i have to go to a commerce meeting. i thought i had more time. i have to go where the chairman is. first i want to echo some of the comments. what the challenges we have when we engage in conflict be they small or large is that we failed collectively, democrats and republicans, we failed to outline what the total cost will be.

it is not just fighting the war, it is what happens afterward. what we have in front of us is one of those issues that was not calculated in from the monetary and. i want to say that i support what you have done. i have served in legislative bodies for 10 years when i was in anchorage. there are times when you have to make decisions based on a policy set by the legislative body, which this body did. you did the work and, actually, your predecessors did the work. here we are. you made a decision, which i can tell you in alaska i hear from many vietnam veterans about the issue of agent orange and the work and trouble and paperwork they have to go through just to prove what caused it. we can argue over certain

quantities of individuals who may or may not have, but the simple reason we call them up to serve our country in the war, we have an obligation to provide them with the benefits that they earned and they deserve. i am not a doctor. i am not here to tell you what the science is. that is what you do. that is why you are the secretary of the veterans affairs office. your ability to reach out of the last several months and -- several months to determine the right approach to deal with agent orange -- we have the gulf war to finish. then we have our iraq and afghanistan. we have other issues that we're not fully addressing that we will have to deal with. we have to recognize that we are going to have the bill do that is more significant than we can ever imagine of these conflicts we have been engaged in.

that is the cost of going to war. after our discussion and my review of the efforts you have done, i am not going to sit here and try to second-guess doctors, scientists, and others who have gone through this. you have an obligation to follow the law. you did. many vietnam veterans in my state are appreciative of the steps you have taken for the illnesses that they have as well as the disability component. i want to take you for the work you have done. we can argue. we will. oversight is good. that is part of the process of the committee. oversight leads us to understanding what the next issues are going to be. the next generation of veterans and the costs that are going to be associated will be staggering. this is an increasing cost in the sense of what it will be. all you have to do is look at the wars we are engaged in today. it is a staggering cost we

cannot measure today. i just want to reiterate from my perspective that i think the steps you have taken are positive steps for vietnam veterans. i think the process you went through, at least in my review, was tedious, in depth, and came to a resolution that we have heard for 70 years. i have only been here less than two. it took only a few months serving in this office -- people were very quick to talk about this issue aggressively. thank you for being here today. now you, get to say a few words. i will end it there. mr. chairman, thank you very much for the opportunity. >> thank you very much. i want to thank the members of this committee for their opening statements. i want to welcome our lead

witness, secretary eric k. shinseki. secretary shinseki is accompanied by dr. robert gentry to is the principal deputy under the secretary of health. the director of the radiation and the physical exposure service, the secretary is also accompanied by the associate deputy and undersecretary for policy and program management. jack thompson, the va deputy general counsel. secretary shinseki, i want to thank you for joining us today to get your perspective on the department's presumptive disability in decision making process. -- presumptive disability

decision making process. we look forward to understanding the process better after this hearing and deal with it legislatively to try to improve it for the future. i look forward to your testimony, mr. secretary. your statement will appear in the record of the committee. please proceed. >> chairman akaka, senator isakson, other distinguished members of the committee, thank you for the invitation to appear here today to discuss my decision to address a presumption for service connection of three new diseases in accordance of the agent orange 1991 law. some of it will be repetitive. mr. chairman, thank you for

including my written statement for the record. i appreciate the generosity by members of this committee prior to testimony. i want to acknowledge the representatives of our service organizations who are in attendance today. their insights are important and have been helpful to me. mr. chairman, you have already introduced the members of the panel. let me make sure that i have positioned to they are. on the far left is the assistant deputy -- the assistant deputy secretary for policy programs and veterans benefits administration. as you indicated, to my immediate left is our general counsel, jack thompson. to my immediate right is the deputy undersecretary for help in the veterans health administration. to the far right, someone from our department of public health and environmental hazards. congress established many

significant presumptions for service connection says creating them as part of the benefit system in 1921 following world war ii one. the department of veterans affairs have also used their statutory authority to establish that-based perception in service. congress passed the agent orange act of 1991, which prescribe a more focused and proactive policy for addressing veterans's concerns. the act was explicit both in the actions the secretary must consider and the standards the secretary must apply in these determinations. the act directs the va to establish a presumption for any disease or the evidence shows a "positive association" for the development of disease in humans. by law, a positive association

exist whenever the credible evidence is equal to or outweighs the credible evidence against an association. the act further specifies that in determining if a positive association exists, the va must consider a biannual report of the institute of medicine that evaluates the evidence regarding help the banks and exposure to herbicides and all other medical evidence available to the va. it was the report is released, the law allows the va only 60 days to determine whether it be -- whether new presumptions are warranted. the va will ensure that the determinations are made in a manner consistent with the standards. each report is reviewed by a working group of va employees with medical, legal, and appropriate expertise and by a

task force of senior va leaders. the secretary benefits from the advice and the analysis of these groups. the secretary is responsible for determining whether the evidence regarding any disease satisfies the statutory standard. in july 2009, the va receive the most recent iom report. the most significant changes from the 2006 report or the findings of sufficient evidence of a positive association between herbicide exposure and chronic leukemia and a limited suggested evidence of an association between herbicide exposure and parkinsons' disease and systemic or disease. after reviewing the analysis and scientific studies, and a consulting with medical and legal experts at the va, i determined that the evidence

that the positive association standard of the agent orange act. the be a proposed regulations to establish presumptions of service connection to this disease is. the evidence regarding hypertension was less compelling in my view and still did not meet -- did not establish a positive association. i believe that these decisions in all four cases are consistent with that the law. in conducting my review and making my decision, i was aware of the prevalence of systemic heart disease within the general population and the fact that it is associated with a number of factors other than herbicide exposure. i carefully considered whether these factors could be considered in applying the statutory standard. my determination that there is a positive association between our

side exposure estimate are disease was based solely on the evaluation of the scientific and medical evidence according to the statutory standards in the agent orange act. we identified nine studies that were rigorously conducted, some containing reliable measures of exposure that permitted evaluation of relationships that are particularly related to in determining if they situation exists. five of the studies detected a relationship. the studies with the best dose information showed increased risk of the highest categories of exposure. there is sound medical evidence of a biological mechanism of the disease causation. i took particular note that of

all nine studies, all nine studies had control for age. age is the primary determinant of systemic heart disease. it is the one determinate and one risk factor that cannot be moderated. some of the studies showed the association persisting after an adjustment from compounding factors. the iom study also noted that the studies did not adequately control for certain risk factors -- those risk factors were unlikely to explain the increased risk detected. the review brought to my attention at a recent study which was particularly helpful. it was useful because it analyzed numerous prior studies and concluded that those with the best data in comparison were consistent with finding a significant dose relationship between dioxin exposure and it

increased risk of systemic heart disease. in my judgment taking into account the findings, the strong evidence of this response relationship, and the extent to which these studies control for risk factors including age, the evidence for an association between herbicides closure encysted and heart disease more than satisfies the positive association standards of the agent orange act. the statute directed that i make a presumption of service standard without regard to cost or independent risk factors. my determination were not made lightly. no other course of action would

have met the intent of the law. veterans and their families have waited decades while science has incrementally revealed the impact of agent orange on vietnam veterans. not only did our actions follow the statues, but i believe our actions on agent orange will be viewed as an indicator of our seriousness of commitment in addressing veterans needs, not only for vietnam veterans, but our veterans of every generation. presumptions will continue to be an important part of the system for the foreseeable future. they are powerful tools for promoting efficiency, fairness, and justice. these presumptions are significant for the efforts of the va and congress to assure the fair adjudication of benefit claims at a time when claims are in -- when times -- when claims are increasing. the most important thing i have

learned from this process is the one that senator murray pointed out and that is we must try to be -- we must try to limit exposure earlier. such checking does not get easier or less complicated as time passes. early registration and surveillance of those exposed enables better treatment and rehabilitation and allows us to make protective decisions and mitigating -- in mitigating future exposures. early check-in, treatment, because better help for america's veterans. we must do better, and we will. thank you for this opportunity to appear before this committee and thank you for your continued, unwavering support of our veterans. i look forward to your questions. >> thank you very much, mr.

secretary. we appreciate understanding more about your decision. bodman will you please tell me about any concerns -- will you please tell me about any concerns within the va that were raised when you're deliberating on the issues and your decisions? >> by concerns you mean about the dialogue that went on inside our project? >> d v m eight. >> as indicated, we had several groups. there were other independent views i sought. i would say it was an open dialogue. people were encouraged to participate fully. in that kind of environment, you're going to have to give and

take on the discussions. i listened to all a bit. all of it was helpful. some of that was more focusing. i would say perhaps the most robust of the debate focused on systemic heart disease. i would say that the vast majority of the medical experts who engaged in that dialogue with me were solidly in support of the positive association. that is as much as i can describe for you about the internal process. i would offer that when i say it 60 days is what the law stipulates, i would say it was a time-constrained process. the dialogue was important and i

had to find a way to make sure that all of the views, including minority views, were shared. the time limits was a bit constraining. i have proposed -- one of my suggestions is that we look at a way to expand the window that the va has to do this. after all, the study is a two- year process of the iom. all of the studies of a book that, we received a report of about 650 pages. 60 days is a little challenging. >> thank you. according to responses to the hearing questions from a witness on the next panel, 8% to 90% of patients suffering from heart disease have factors such as

smoking, lack of exercise, and a diet high in cholesterol. how did this affect your decision? >> mr. chairman, i do not have any data that would refute that. i think it is fair that people my age in this country -- the 60-year group -- heart disease of some kind is a fact of life for all. 80% may be the right number. i would accept that. we are not talking about eight symptomatic heart disease. 8% of people who have this commission, whether it is having to control with bids through

medication or a buildup of plaque in blood vessels, that 80% is a symptomatic. what we are concerned about in systemic heart disease is the 17% who are estimated to have as symptomatic systemic heart disease. symptomatic in the sense that there is pain associated with it or in doing a routine activity like climbing a flight of stairs, they are exhausted and cannot do it. this is what we are talking about. it is this a lesser subset that we are focused on with the systemic presumption that we are dealing with. >> thank you. we will have five-minute rounds of questioning. let me call on senator joe hence.

>> mr. secretary, let me go back a ways and lay some groundwork. back when agent orange was so routinely used, how much of it was ultimately used in vietnam? >> senator, this is a great question. i would say our best review of the records says that 19 million gallons of agent orange was disbursed over vietnam. i accept center webb's description. agent orange was disbursed over all four major regions. areas in the central highlands,

northwest of saigon, southeast of saigon -- it was disbursed to help the country. >> typically how would it be disbursed? >> aerosol biplanes. -- aerosol by planes. asking a veteran to prove that he was sprayed -- he may not know. it is distributed by aerosol and, unless you happen to be there, you probably did not know you were in the midst of it. it was due out the country. . .

i am not sure dumpsters could distinguish between 19 million gallons --if you thi0 gallon tank at exxon to download

underground as being a significant fuel supply, we are talking 19 million gallons. that is significant. >> moving ahead to this perception in how you will handle it, the last piece of your testimony in response to the question raises a question or two for me. do i understand you to be saying that if i walk in and i say, "i have elevated cholesterol" how are you going to handle that versus someone that says, "i have not been able to work for a number of years. i am short of breath. i have pain in my chest."

tell me this. how you manage this presumptions? >-- how will you manage this presumptions? >> we are talking about systematic symptomatic disease. we can begin the process of the health conditions of that over time if it does become of the symptomatic order, we can make decisions of what kind of disabilities are involved. if it is a cinematic, -- if it is asymptomatic, we are not into that discussion. let me turn the one party to see

if there is more that could be added. >> thank you. while 80% of people will have risk factors, roughly 1/3 will have hypertension. 50% will have cholesterol over 200. a third will have bad cholesterol beyond what is acceptable. the risk factors are important. they are not able to be parsed out. what is important, and it comes back to comments made by several senators, is treatment of the risk factors is important when it comes to quality care. if they were exposed to agent orange or it was recently, we

take the risk for disease very seriously. we have measures that are in place that are at par or better than any of our health-care systems in the country for the treatment of lipid and diabetes. we have a program that is focused at getting the veterans to increase their physical activities. all of these are taking very seriously. can we do better? yes. we are trying to do more. >> thank you. that is helpful. >> thank you very much. >> thank you very much. in his statement, he made some suggestions to improve the agent orange act of 1991 including new

studies in dioxin levels and blood testing to provide an estimate for latency periods for aided orange. -- agent orange. i want to ask you what your thoughts are on those recommendations. how do you think we ought to move forward from here? >>; dr let me call on dr. jesse. >> if we move to the issue of a tribute tributal risk, it becoms difficult.

they have been asked to answer that question. they have said, "we cannot do that." if we go back to causation, which inherently makes sense, it is the wisdom of congress in the 1991 act that moved beyond making that decision. in terms of trying to assign how many veterans might from m ninthight nor might not be affes difficult. we are back in the same position of defining the population. >> how do we move forward? >> the question on measuring levels unfortunately drop as time goes by.

you have some very good levels from 1980 and 1987. at this time, the residual from those exposures in vietnam are now approaching the level of the residual of exposure in the general population. this was seized in this country. the other important point is that we do not know when the damage to the cells actually occurred that develops into clinically significant disease. it could have happened in the 1970's or 1960's. the study shows that increased disease risks correlates with 1980 and 1987 levels. >> here is one issue you asked about, which was late in say.

-- latency. there has been some engagement of latency in the past b. i think it was 30 years. >> in the original perception, pulmonary cancers were given latency periods of 30 years. that was actually withdrawn by congress. if they said there is no sound basis for continuing that. some of the presumptions would be expected to be corrected at the time of high exposure. you cannot put a time frame on it. >> i just wanted to get that discussion out. i think this is a tough question. this is what we are wrestling with.

our best opportunity to set up an outcome different in the one we are dealing with today -- we ought to be looking. when an exposure occurs, we should be looking for it. it does mean the we have the knowledge that an exposure occurred. while we want to do -- what we want to do is figure out how to identify who was exposed coming get a registry of everyone who is in the unit, in find a way t and find a way to . you either believe in the

efficacy of medicine or you do not. if you diagnose and treat, you influence the outcome of those patients. that is what we are very much into, the prevention model. as these diseases reveal themselves, we treat them and then thebegin to modify the severity. i think that will address the other question about cost. >> that is sending you and i have talked about before, and denial of something at the time. we have a history of that when it comes to war in this country. i hope that is a lesson in alwel think about now. cracks may i follow up? -- >> man follow up?

this is the next comment. we have the opportunity to change the outcome and not have the agent orange example repeated. we did know about operation relief. we departed iraq. our opportunities to determine where and what was the exposure of which units -- we are losing the opportunity every day. this is the tough part of the business, i did find that exposure and being willing to do something -- identifying the exposure and being willing to do something about it. >> we have a severe problem in my state on the olympic peninsula with access to our veterans. many lives miles and miles away from care. there are very jammed

facilities. i want to talk to about dealing with some of those folks who are not getting the care that they need. i will contact you. >> i will be happy to have that discussion. >> thank you very much. >> thank you. this is a very difficult discussion, because we are asking the secretary to play god. i happen to think you are doing a great job, that you are not god. none of us are. in the old days before we knew what we knew today, everyone recognizes that if a soldier was wounded or lost a leg or arm, there is no debate. that was a cause of war. that soldier got all the care and benefits he or she needed. the difficulty is that the world has changed significantly as a result of chemical exposure. let us not forget that when

agent orange was first used, our friends said it was benign and it was not a problem. am i correct? >> to my recollection. >> i am sure the military would not have used this chemical if they had known. at the end of the gameday, a pon our own people. who is smart enough to know exactly the impact? because they were exposed to agent orange, if they combined it to a genetic predisposition. could it have led to another illness? of course it could have.

who is smart enough to make a correlation? i am not. i doubt you are. it is not saying the u.s. soldier put your life on the line. we will give you the benefit of the doubt. we are going to assume that if you come down with an illness that we can relate the exposure in this case to agent orange. we will make the presumption. i think that is the right presumption. in terms of agent orange, our history on the subject as the government had not been good protocagainst vietnam vets. one of the things i would like to ask, to the best of my knowledge -- i was in vietnam a few months ago.

it was a hot spot. to the best of my knowledge, i believe that we have really not in a thorough study of agent orange on the vietnamese people to learn from their exposure what it means to americans. i do not think that was an accident. i think in the years after the war, the attitude was the less we know the better we will be. the less we know that means and people come forward and say "i am sick" we can say "we do not know anything." doesn't it seem strange to the people who were most exposed

have not had a study? this somewhat to comment on that? >> i am not familiar with studies on the people of vietnam. there may have been said these. i am not personally aware of them. i will have a liggett that and provide you with an answer. -- i will have a book at that and provide you with an answer. -- look at that and provide you with an answer. a steady continued through the year 2000 -- a study continue through the year 2000. it lost priority. we have just restarted our efforts to begin the study again. it is looking at the long-term affects of agent orange on vietnam veterans. >> it some money on the panel could answer my question. -- if somebody on the panel

could answer my question. when we look at the impact of where agent orange was dropped on the vietnamese people to learn their suffering? am i missing something? wouldn't that be a scientific quest? >> the answer is yes. could it be done is another channel. we are not able to prices leprey identify the veterans that wherere exposed on the bubble on the same as the the average 1a level on the same -- that exposed on the same level as the vietnamese. >> all right. does anybody -- that was the point i wanted to make.

i think we have put the secretary in a difficult position. i think he has done a great thing. we ought to give him the benefit of the doubt. >> thank you very much. >> thank you. in an attempt to clarify the decision process and to clarify may be paying attention to this, one of the set of unknowns we have been working in to bring some validity to this process, i've looked at these studies that you mentioned in your testimony.

you are correct. all of them did and just for age. there is a great variance in the control factors -- and ju adjusr age. there is a great variance in the control factors. i am struck by the fact that i do not know of any extensive study that has looked at vietnam veterans as a whole. it was a study that was begun and interrupted in the year 2000. are you aware of any other studies that have examined vietnam veterans as a whole? >> this is a long-term study of vietnam veterans that i believe began sometime around 2000 or shortly thereafter.

they began to lose momentum. in an effort to answer some of the questions, we recently read initiated an effort to create that long-term -- we read- initiated an effort to recruit the long term -- we recently read initiat-initiated an efforo create that long-term outlook. >> we were trying to trace the dioxin chemicals. wouldn't there be a way to still examine tissue damage in the sorts of things -- and in these sorts of things we could determine among a control group? >> it is very attractive to look

at that type of delineation. it is not possible. there are many different numbers out there regarding what the half life of tcbd is. it is very variable from individual to individual. when you look fat tissue damage, if there is no way to say that this damage -- when you look at tissue damage, there is no way to say that this damage was caused from smoking or what. once it is damage, it is damaged. >> let me suggest something else. as we were discussing in the office, when we were first looking at this issue in 1978,

one of the discussions that we read having on the staff -- we were having on the staff was to take veterans from specific unit that we would know had been in the areas where dioxin had been sprayed and into a comparable study with them as opposed to other -- and do a comparable study with them as opposed to other vietnam veterans. is that something you are considering doing? >> i'll get more into this and provide you an answer of exactly what transpired in the previous study. i think you and i are in agreement. we need an effort to curry create better data. it is not preconditions. we have veterans after suffering

from these -- this does not change the conditions. we have veterans after suffering from these diseases. >> when your of looking at disability compensation on this issue, has there been any discussion about these other risk factors as a component of evaluating one's disability? do you measure the overall disability of the individual despite smoking and all the other conditions such were mentioned? >> at this time, i think the inside are helpful. i think it is difficult to figure the contribution of these various confounding factors. all we know is that tcdd attacks

the vast litter -- vascular turture of animals. we know there is a contribution. we do not know to what degree it is more significant than others. >> you are basically taking the medical condition and assigning it. >> and assigning it to the conditions overall. >> rather than breaking out one component of it. >> that is correct. >> i see. of like to understand your motivations -- i would like to understand your motivations in regards to the 28th report in the association between

herbicides and heart disease. was this -- where their new studies that came into effect? -- where their new studies that came into effect? ere there new studies that came into effect? >> there were two new studies that drove that preponderant of associatioce association to a sr degree. there was no information. >> was a new research or evaluations? -- was their new research or valuations? >> there were new studies.

>> there were two additional studies. they were published after 2006. most of the animal studies and the data that was available was published after most of thafter6 committee have their elections. you have these consistent studies. you have animal experimentation. you have a known biological mechanism. you have a dependent response. >> you are saying there was actually new research that had been conducted. >> yes. >> the clock is beating me here.

one final question. do you believe this authority should remain with the secretary of veteraveterans affairs? do you think it should be given to congress in the future? >> whether it should be left to congress? >> the decision will authority as it now exists in the stat sheet -- the decision and authority as it now exists to the state. >> i never presumed to express to congress how to do their work. congress had an intent.

we can see what transpired. there were no presumptions to treat vietnam veterans until 1991. in 1991, a 12th of presumptions -- there were 12 presumptions. if the intent of congress was to move from where we were and causation was not working and we needed another mechanism, i think the will of congress was met. congress and achieved what it wanted. we can discuss how the modified that progress. -- how to modify that process. it will require the kind of work that i have been through for

nearly a year now th. besides being descriptive of what congress discuss them to do, any reference to cost is discussed. that was not oversight. that was clearly the intent of congress. it is the secretary's decision. congress reserved to itself the decisional authority of where and how to pay for that decision. i think there is significant involvement on the part of congress and oversight. it that needs to be adjusted, i

am more than happy to have that discussion. congress has decided to fund these three determinations. i think congress had an opportunity to review my decision and decide to do its part. >> with respect to funding, if a disability is service connected, it will be funded. that is the united states of america. >> thank you. >> thank you. i think he had been contingent

of some tough decisions. -- you have been conscientious of some tough decisions. patterns need the benefits they earned and deserve -- veterans need the benefits they earned and deserve. in the meeting that we had on tuesday, you mentioned that claims for heart disease are rebuttable in certain cases. i want you to walk through the attitude you envision they have in determining the heart disease. who is responsible for what? you have someone who smokes a couple a pack of cigarettes a day and drink alcohol. they come to you with a problem.

is that rebuttable? is it a situation where they are in? >> let me just ask you to talk about how we distinguished this hard disease from other -- this heart disease from others? >> thank you. scheming card diseasit is the de hardest not get enough oxygen to meet its needs. generally, that is symptomatic. that would constitute a of a disability. as clinicians, we confirm that shortness of breath is due to epistemic heart disease.

a lot of things can cause chest pain if they have a normal stress level. >> can over use of tobacco and alcohol create a system occurred disease -- create epistemic heart disease? if they served in vietnam and they gotta regardless of their lifestyle, it is our problem? >> yes. we cannot parse that out.

>> with respect to the rebuttal a presumption, they claim examiners in the regional officers are not making a medical opinion like that. if there is clear evidence of risk factors or heart disease, when they request the examination, it is appropriate for them to ask the clinician in light of this risk factor. is it as likely as not that the current disability is due to herbicide exposure? we will then award benefits based on what the commission says para. >> it to be very difficult -- it would be very difficult for a

doctor to say it was herbicide exposure. >> i do not believe so. >> it is difficult to parse out. we do know from the studies that the iom is rigorous enough for us to give weight to them. six of the studies were strong and specifically as a dividend in making the tie between herbicide exposure and epistemic heart disease.

we have to make this connection. >> i understand. i understand this is very difficult. i understand there is a number of veterans out there that tried to get through the door and cannot. i know you have worked on it. i think that is the whole point. i think everyone who earned the benefit should get it asap. as we try to limit potential fraud, is there a rebuttal process if someone comes in that served in vietnam and maybe everyone was exposed to agent orange -- it appears they come

in with estimate -- epistemic hard disease in a surge in vietnam they will get it. is that correct? >> that is correct. there is one individual that recently made a comment that he is receiving agent orange benefits. he paused in the airport in saigon for eight hours. i do not know if this is true. that is the report. if someone sulfide and isulphids like this, we will take a look. >> -- self identifies like this, we will take a look. >> thank you. are there any further questions?

>> i have one. it deals with the administrative costs. one estimate say it to cost about $1.6 billion over the next decade. do you agree with that estimate? >> i think you are referring to a 10-year cost estimate that has been provided. i am just reading the notes. the note that applies for epistemic heart disease of $1.6 billion read that multiplied the total administration costs of 1,880,005 unde $74 by 8%.

i think we have a calculation error. i do not know how that becomes $1.6 billion. >> if these figures are correct, i would expect to try to reduce the administrative overhead. >> thank you. >> i really appreciate your being here today and with this panel. i believe there is much of value added of through transparent in discourse. -- value added through transparent discourse. i want to thank this panel very

much fo c-span3 c-span[captioning perfoy national captioning institute] [captions copyright national cable satellite corp. 2010] to establish a presumption for type 2 diabetes. he is also a former staff

director of this committee. i understand that you will need to leave soon for a flight. there may be questions that are sent to you for the record. >> thank you, mr. chairman. i am pleased to testify on an issue of great importance. we know that neither individual

veterans can show that an illness it is or is not a result from a harmful substance. that is why congress established a process for presumptive service connection, and that is why i endorse the concept of presumptive service connection. the secretary of veterans affairs must decide based on in perfect knowledge whether or not to presumptively served a connective disease and to do so within 60 days after receiving the report. decisions must debate -- must be made despite the ambiguity and uncertainty. this illustrates the point.

while the report pointed out significant uncertainties and possible confounding factors, other risk factors with type 2 diabetes, the findings on the relationship of herbicide exposure. these included the air force udy and studies of male and female veterans from australia. only the survey from austria did not show a positive association. the study of vietnam veterans found more than 3000 cases reported, when only 1700 were expected. only one small datasets kept -- instead give a suggested one

between type 2 diabetes and exposure to agent orange. i also consider the recommendation who staff thoroughly reviewed the report and recommended the presumptions. finally, my belief that america's veterans let me to decide for the connection between type 2 diabetes. i was very aware that the american people were watching my decision very closely. this was a very, very difficult decision, one that i labored over and even at one point called in a representative to see if i could make a better decision. i believe the american people lose faith in the integrity of the veterans affairs compensation system, and that is not just about cost. veterans and their families will

most certainly suffer. the surest way for that to happen is for the american people to believe that veterans are being compensated for illnesses that might not be a result of their military service. i think that is the crux of the issue that we are all grappling with. the presumption for a vietnam veteran rests on three degrees of possibility. first, that they were exposed to dangerous herbicides. such exposure leads to at least some cases of illness. third, the possibility that the individuals veterans onus was caused by that exposure. presumptions are premised on the transformation of those three possibilities into uncertainties. that transformation has significant consequences for veterans and for the american people. it is a very difficult question. i have a few suggestions i believe will reduce

uncertainties surrounding these decisions and improve the process. the first about new studies, medicine and medical research has made tremendous strides since the agent orange act was enacted. we were dealing with rare diseases. today, we are dealing with diseases of ordinary life. if new studies could be commission that might improve our ability to base future presumptive service decisions on stronger scientific evidence. perhaps we could replicate the study of the 1990's. second, i would suggest that congress and the secretary of veterans affairs the wreck them for a latency period of the

illness. this has been done twice in the past, to my knowledge. certainly, a connection for peripheral -- the name of the disease has to be manifested within one year of exposure to herbicides. in 1904, the institute of medicine indicated that respiratory cancer -- in 1994, the institute of medicine indicated that respiratory cancer could last many years after exposure. third, i believe iom should estimate the number of vietnam veterans that might be affected

by an illness as a result of herbicide exposure 100,000 veterans could be expected in the normal cost of life to develop a disease, approximately how many veterans would contract the disease as a result of exposure to herbicides? perhaps other steps could be taken to ensure that they receive proper medical care, for whatever that number might be, and hold off on disability compensation until there is further evidence to put it into the positive association category. mr. chairman, i am proud of the role that i played in the service to veterans and i make no apology for ensuring that veterans receive the benefits that they have earned. they have earned those benefits in the heat of battle during a very long and difficult and unpopular war. i am worried that the american

people are the source of those benefits. all american people need to know that the veterans affairs benefit system it needs to be beyond reproach. i hope you and the veterans affairs will consider my suggestions to help us make better informed decisions. thank you for the opportunity to testify. >> thank you very much and thank you for your suggestions. one question before you leave, and then i will continue with the rest of the panel. you have suggested that the language of the agent orange act did not fully anticipate the challenge of determining presumptions based on limited or suggested evidence with respect to diabetes.

did you believe it was clear under the law how you were to weigh evidence that was suggested in that association but with their work on controlled risk factors? >> mr. chairman, clearly, that was the most difficult part of the decision that i had to made, whether the evidence was clear. based upon the fact that three of the four studies showed a positive association. my undersecretaries recommendation, and then, of course, balancing the evidence for and against, the fact that it was relatively close, i erred on the side to give the benefit of doubt to the veteran. we need to make any changes that are appropriate.

it is too short a period of time. it does indeed create certain difficulties for us. >> fine, let me ask other senators specific questions. >> i will ask one i hope will be a brief question. i think you answered this in part. looking back at those days when you were going to that decision making process, if you could identify one, two, three things that you wish you had at your disposal -- i can see even today, you agonized over this and i understand why. it is a tough call. what would those one, two, three things be? >> certainly a more definitive

recommendation from iom. i thought i was getting conflicting data on the one hand, honestly telling me about all of the confounding factors about diet, lifestyle, and hereditary. on the other hand, pointing out that i had three study showing a positive association. in made it very difficult for a secretary to take all of that information and come up with a decision i think better information is needed, a more definitive recommendation from the scientists. this would help the secretary make the right decision. especially as it relates to common diseases. it is a greater challenge for secretaries when you are dealing with diabetes or prostate cancer. it we know if we live long enough, we are going to die from prostate cancer or

diabetes. >> under the law that you had to work with, there is this 60-day limit. do you have the option as the secretary to say that the information is so conflicting, i want to hold this open for a year or six months. the you have to give it a yes or no at the end? >> a good question, senator. you try to adhere to the law. if you delay the decision, there is no penalty, so to speak, but you always try to be responsive to congress. perhaps no time limit. it should be up to the secretary. he or she may have to go back to get further information. i think it should be more open ended. >> that is helpful. thank you.

>> thank you, mr. chairman. i want to thank the secretary for coming to this hearing and for the perspectives that he brings to this issue. tony, you started as a staff person, struggling to come up with answers well before you became a member of the executive branch. you and i both >> uni both struggled with the inattentiveness after vietnam. there are two portions of your testimony that i hope people will pay attention to,

particularly those who work in the area of a veteran ala. you said that -- of a veteran law. you said the we must maintain the integrity of our compensation system. you have given it three constructive, forward-looking recommendations. i am going to see if we can come up with a better way to deal with this issue. the recommendations that you have, given your experiences here and also over into the va, i think are really going to help us do that. i appreciate you coming today. >> thank you. i apologize again for an early departure. i certainly apologize to my

fellow panel members. i look forward to hearing in their testimony and to finding a solution that protect our veterans and preserves the integrity of the system. thank you very much. >> thank you very much for your presence, your responses. without question, this is going to be helpful to us as we try to improve this legislation. >> thank you. >> our next witness is the chair of the committee on evaluation of the presumptive disability it decision making process for herb veterans. he is here today to share in sight -- presumptive disability decision making process for our veterans. he is here today to share

insight about cancer and type ii diabetes. please proceed with your statement. >> i am from the medical school at the university of southern california. i was in the u.s. army from 1971-1973 working as an anesthesiologist in panama. i am here working -- representing the committee that i chaired. i note that with me is one of our distinguished committee members, formerly counsel to this committee. our committee had two brought

assignments. one was to describe and evaluate -- brought assignments assignments. one was to describe and evaluate the presumption of disability benefits. the second was to propose a scientific framework that would justify recognizing or not recognizing conditions as presumptive. we produced a report that covered much of the theoretical and practical ground work that would be needed to put a system into place and address some of the methodological components you have heard about today. in our case studies that we carried out, part of the groundwork for our report, we

noted some of the problems that have already been discussed. the lack of evidence on exposures, the difficulty on retroactively identifying effects of service versus those that might be sustained from lifestyle or other factors. we in fact, in our report, proposed that there should be a more robust, evidence-based future process for our veterans. we collaborated studies and found gaps in assessing exposures and in tracking health, particularly after our veterans leave service. nonetheless, we thought these gaps might be addressed by infusing our fundamental

research trolls -- fundamental research tools. we had a decision making process that would be transparent and evidence-based. we recommend that the va established an advisory committee that would provide guidance on disability matters, including on presumptive disability. this advisory committee was proposed as a clearing house for new possible presumptions that might be recommended by veterans, researchers, the government, at dod, and others. as part of this process, we recommended that an independent side of the organization be identified to perform the functions of a science review board, just as iom does now. this group would consider the

relevance and analyze presumptive conditions given to it by the va. we recommended a two step process, the first that would involve reviewing determination of the strength of evidence to determine whether a health outcome could be caused as a standard by a particular exposure. we recommended the strength of evidence be graded, and if there was a tie to causation or stronger evidence, that the consideration would be given to a presumption. in the second step, we recommended that the science review board would calculate the service attributable factions if the data were available. that is the assessment of how much could be attributed to the exposure. we felt this information would be important for decision making and, giving our

understanding of the scope of the population, would be covered by presumptions. we felt the evidence accumulated that would be incomplete, action would need to be taken. we recommended the need to determine military exposure from other factors and the need for good data. bottom line, our example shows why new approach would be of benefit to veterans. we found limitations in the current process. one, the focus of association and not causation. in looking at the viet process, our committee at least did not understand -- looking at the dmv a process -- at the va process,

our committee at least not understand what the process was. our new approach includes two committees and a process that we view as evidence-based and transparent. we recommended that the evidence be looked at for its support of causation and the calculation of the service attributable to provide a better indication of the magnitude of the support that would be given to the veteran. again, the details are provided year in our report, which was published three years ago. thank you for the opportunity to address the committee. >> thank you very much.

next we have two witnesses from nih. both have been asked to provide insight on i hd and its major risk factors, and to address what role science is currently capable of with respect to determining an association between exposure and ihd and other diseases, and to aging. will you please begin? >> mr. chairman, members of the committee, thank you for the opportunity to appear before you on behalf of the national heart and lung institute, part of the national institutes of health. i was asked to address current

understanding of ihd, including noted risk factors and the extent of those risks for developing the disease, qualifications for treatment, its prevalence among men over age 60, and the relationship between dioxin exposure and ihd. ihd -- plaque begins to form in humans in the first two decades of life in the form of a fatty streaks along the artery walls. i brought a diagram that shows the artery at different stages throughout life. those that the streets are shown here. this is the where the blood flows. a good example of the evidence that this disease starts early was the landmark study published

in 1953 that found visible evidence of coronary plaque in 77% of u.s. casualties in korea. the average age of these soldiers was 22. this study opened our eyes to the fact that this disease starts early and generally progresses throughout life. for most people, the black causes no symptoms. for some people -- the plaque causes no symptoms. for others, it may lead to chest pain or heart attack. by the eighth decade of life, almost all americans have some plaque in their arteries. the major causes of ihd are smoking, and bad cholesterol, high blood pressure and diabetes. sedentary lifestyle, poor diet,

obesity and stress and depression also are believed to contribute. these factors account for 80%- 90% ihd in the statistics that were referred to earlier. i mentioned several forms. i will briefly touch on how they're diagnosed. chest pains or it shortness of breath upon exertion. it testing is needed to confirm the diagnosis. exercise testing with an electrocardiogram or nuclear imaging, or a demonstration of the actual narrowing in the artery. diagnosis of heart attack is made on the basis of similar symptoms, but they are usually more proper prolonged -- more

prolonged or severe. internal medicine, family practice and general practice physicians in the u.s. are all trained to recognize the typical symptoms, and understand the need for prompt treatment. treatment guidelines from respected organizations are readily available and widely promulgated, and most physicians to do not feel comfortable treating ihd will generally refer patients to a specialist or a cardiologists. in the u.s., 70% of men ages 60- 69, and 26% of men ages 70-79, report having ihd. in addition, many have plaque of which their underwear.

that brings the total to 80%. -- many have plaque of which they are unaware. that brings the total to 80%. this can be treated with lifestyle changes, daily aspirin, or more specific treatment of the arteries. the doctor is going to address the relationship between dioxin and ihd in more detail. although we have concluded that dioxin exposure does appear to be associated with ihd mortality, the association is modest, and most studies cannot account for other factors such as smoking. it is also impossible to determine in a given individual

if dioxin was responsible for their ihd. thank you again for this opportunity to provide information on the topic. i would be pleased to answer any questions that you have. >> thank you. now we will hear from a doctor. please proceed. >> i am pleased to appear before you today to give testimony and the relationship between dioxin exposure and the risk of heart disease. i am the director of the national institute of environmental health sciences at the national institute of health, an agency of the department of health and human services, and i am also the director of the national toxicology program, an inter- agency program whose mission is to evaluate agents of public health concern by developing and applying tools of modern

toxicology and molecular biology. understanding the role that environmental and occupational exposures play in the development of chronic diseases can be challenging, particularly for diseases that have significant risk factors in addition to chemical exposures. the quantitative role of agent orange and dioxin exposure in vietnam veterans is clouded by the contribution of other risk factors such as age, smoking, family history, body mass index and other factors. in 2008, my colleagues and i published a systematic review that evaluated the evidence of an association between dioxin exposure and cardiovascular disease in humans. we found that the highest quality study reported consistent and significant dose related increases in heart disease mortality and concluded

that there is an association between dioxin exposure and mortality from heart disease and cardiovascular disease. similarly, the institute of medicine concluded and 20 away that there is -- in 2008 that there is a limited association between agent orange and ihd. this used all the available data from epidemiological, toxicological and other studies. there are several challenges and other limitations of toxicological and epidemiologists call -- epidemiological studies. in humans, dioxin is not causing a unique cardiovascular disease,

but is increasing the risk of developing heart disease that has a significant background. thus, there are another -- there are a number of other risk factors that could also influence this disease. we have considered in our recommendations, in our attempts to adjusting control for all major risk factors, such as aging, diet, blood pressure and obesity. few of the studies have attempted to control all of the risk factors. studies have not attempted to compare the risks of developing heart disease from does not send -- from dioxin to these other risk factors, and have not reported the data in a way that would allow comparison. it may be possible to obtain this data and re-allies in

ordered to answer questions, however, at present this analysis is not available. the timing of exposure is another question that arises in evaluating risk. this data level of uncertainty to the actual exposure estimates based on blood level measured much later on. it is unclear to us how much risk remains many years after exposure. research in italy showed an increase in incidence of cardiovascular disease among people living in the most highly exposed areas after the 1976 accident that resulted in widespread dioxin exposure. but over time this affect dissipated. in contrast, a recent study from the australian department of veterans affairs of their vietnam war veterans showed a pattern of increased risk with

time. a number of review activities in this area by different agencies of the u.s. government, as well as the national academy of sciences has generated comprehensive reviews of the risks of dioxin exposure. in 2008, epa released a literature search entitled, " preliminary literature search results and requests for additional studies" as part of an ongoing updated their dioxin assessment. this was reviewed by a panel of outside experts to ensure that all appropriate studies were identified with special emphasis on the latest literature. the summary from this workshop, which was held in february, in ohio, was released in june, 2009. in addition, the report entitled, "veterans end agent orange," also provides a

comprehensive and reliable source and the health risks of dioxin exposure. thank you for the opportunity to testify on this important and difficult issue. i would be happy to answer any questions. >> thank you very much. doctor, in response to a pre- hearing question, you noted that the lack of exposure data for vietnam veterans precludes a determination of any increased risk of disease that might be caused by a specific exposure. the question is, was an alternative approach comparing disease prevalent among vietnam veterans and the general population more accurately identify diseases that are likely to be associated with the

vietnam service? >> without going into all of the complexity of epidemiological research, the comparison one would like to make its that the risk of heart diseases and other diseases of those in vietnam exposed to agent orange compared to a group of similar military personnel in vietnam and not exposed. after that, you look for alternatives that may be suitable to various degrees depending on how similar or alike vietnam veterans are, let's say to the general population nor any other group. if we try to make that comparison, let's say for heart disease, where we know there are many lifestyle factors, the validity really hinges on how well we can measure all of those relevant factors in vietnam veterans and an equally make and compare to the general

population. in essence, comparing like to like, expect -- except for the vietnam experience. to have the tools to do that would require a large effort and measurement of many factors. in the end, we would be left with an imperfect and uncertain answer. the difficulty of retrospective reconstruction speaks to the need to really be proactive with those troops your now being exposed -- who are now being exposed. >> thank you. doctor, your response to a pre- hearing question suggests that the dioxin reassessment is the most reliable source on the

health risks related to dioxin. what is epa's most recent analysis on the association between dioxin and i hd? >> the epa document is still undergoing final radio for the final meeting -- final review for the final meeting that will be next month. it is available on-line for public comment. there is an analysis of many different health impacts and the repeal of the literature. it is clear from many animal studies, from data from mechanistic studies both in animals and in cells and culture, including human cells, that dioxin can cause heart disease as a consequence.

they have not directly quantitated the association between dioxin and heart disease in people. there does appear to be an association with cardiovascular disease, more broadly defined in studies. there was a long-term study conducted by the air force which, unfortunately, ended in 2006. in that study, one of the last reports from that that has been published since then, there was a two-related increase in the rant -- a dose-related increase in the ranch hands compared to veterans who had served during the time window. that is one of many studies that

makes it difficult to compare, because not all of them look for the same measures on the cardiovascular system. >> dr., in your response to a pre-hearing questioned, and you stated that approximately 80%- 90% of ihd is explained by life style factors. you have explained the major factors that cause the disease. what can you share about what role, if any, scientists believe dioxin exposure plays in connection with lifestyle factors? >> are you asking what role lifestyle -- what role dioxin plays in connection with lifestyle factors to produce ih

d? >> yes. >> there are decades of evidence epoch associate the lifestyle factors -- of evidence that associate the lifestyle factors i described earlier with heart disease. in general, the 80%-90% figure that i quoted was looking at all ihd and, from models, estimating the that is attributable to the lifestyle factors in the population. theoretically, if one were able to eliminate or modify all of those factors, you would eliminate that amount of disease in the population. in order to understand how dioxin might contribute to that you have to know the strength of its association. we know some of that from some

of the studies that the doctor has quoted. we also know that the -- we also do not know the extent of exposure in the population at risk. if the proportion exposed was low, the attributable risk is low. it is not really a question that i can answer. >> thank you. senator webb, your questions. >> is there a follow-up? you had your hand up. >> there may be a misimpression that if life style factors cause 80%-90% of heart disease, there is only 10%-20% leftover to be caused by dioxin. that is not really the fact.

it is important to know, understand and address with research. these risk factors are common, and then we have on top of that the question of how additional exposures might amplify the background. >> i would like to also add to that. there is lots of evidence that indicates, certainly from all of the mechanistic studies, animal studies and epidemiological studies, that dioxin can contribute to all of these common risk factors that we talked about. for example, it alters the triglyceride content. it is associated or can be associated with type 2 diabetes. it can be associated with elevated blood pressure both in animals and humans. we know that dioxin can alter the vascular chair as well -- the vascular system as well.

>> i would like to ask a couple of questions. first, a doctor, -- first of all, thank you all of you for the details you provided in your reach instead -- in your written statement. doctor, in europe july 15th response -- in your july 15th response, the second page, you referred to a study -- >> we will be leaving this hearing to go live to federal share -- federal chairman ben bernanke. he will discuss the impact of the economic crisis. you're watching live coverage here on c-span.

>> we are very grateful for this. 10 years ago, the center for finance was dedicated on the princeton campus here on prospect avenue. we have the objective to develop new courses that will afford exciting learning opportunities to our students, establish a leading center for research in the issues that matter, and to serve as a major venue where the world's leading experts from academia, the government, the private sector can meet regularly to exchange ideas. the conference met earlier today as well as this lecture by the founder of our program, my former colleague, the federal reserve chairman ben bernanke,

our great examples of this mission. over the past decade, almost 1200 princeton undergraduates have earned their undergraduate certificate and finance. the first 10 years of existence of the finance center have been really exciting but also a challenging time to teach and do research in the area of quantitative finance. it is a. that was marked by the financial markets -- it was a time that was marked by the financial markets meltdown, an accounting scandal, the mortgage mess, at the ensuing worldwide recession, all of which has raised numerous questions about the ways markets, financial firms and governments interact. for us, the relevance of our models and research.

the first 10 years have also ben an exciting time for princeton. our president is a molecular biologist who was an architect of the human genome project. she has overseen, as many of you know, a very significant expansion of princeton, the creation of the neuroscience institute, and the center for creative and performing arts among other initiatives. she is provided national leadership on issues the relate to higher education, federal science policy and women in science. we welcome her year. [applause] here. welcome her to hea [applause]

>> get afternoon. i am delighted to join you in marking this 10th anniversary. each center has become a crucible for research into questions that affect assault, particularly in this time of economic uncertainty. each of ford's strong ties strongs -- each of ford' ties between our university and public affiliated programs. we help students understand the complex interaction between the instruments and forces that define today's financial marketplace. to all the played a role in the creation and growth of these centers, especially family and

friends, i would like to extend my warmest thanks. i am also grateful to a man who was present at the creation. let me be clear that i am not referring to the former ceo of goldman sachs, but the chair of princeton's department of economics from 1996-2002. during that time, he played a central role in building our current economic -- academics strength in finance while furnishing our reputation as a leader in the field. he made major policy decisions such as whether to serve bagels or doughnuts at the department's coffee hour. were it not for him, the center might well have languished in the realm of good ideas, rather

than becoming what my predecessor called, "of vibrant, intellectual environment the promotes exciting, innovative and multi- disciplinary teaching and research." i am, of course, referring to our speaker today, ben bernanke. he served on our property from 1985-2002, when he took what we thought would be a short leave of absence [laughter] to join the board of governors of the federal reserve. i wish i could say that this brilliant monetary economist who attended harvard and mit returned to princeton. but in the best conditions of our university, he heeded the call of public service and stayed in washington, where he assumed the chair of president bush's council of economic advisor is in 2005.

less than one year later, he returned to the fed, this time as its 14th chair, much to the delight of his princeton colleagues, such as the founding director of the center for economic policy study, himself a former vice-chair of the fed. as allen put it at the time, by virtue of his incredible knowledge of monetary theory and history, his honesty and integrity, his cool temperament, his attention to detail and his previous experience at the fed, ben bernanke has all of the ingredients to be a great fed chairman. and so he has proved to be. if our speaker was the right man for the job, he was also the right man for the time, which soon went from good to bad, and then to potentially disastrous. an authority on the great

depression, then had the unenviable task of responding to the worst financial crisis since the 1930's and a recession continues to adversely affect the lives of millions of americans. to him and his colleagues came the challenge not only of a sailing inflation and deflation -- assailing inflation and deflation, but to keeping our economy alive. as a vice chair of the fed observed, no central bank innovated more dramatically than the federal reserve. be it through the creation of emergency liquidity facilities or the reduction of the federal funds rate to an unprecedented target of 0.25%, or the large sale of securities to lower

long-term interest rates, at the full impact of these initiatives will not be known for some time. it is not too early to say that were not for the actions taken by the fed and its chairman, the crisis in confidence would have been far worse and the larger economic fallout infinitely more destructive. in the words of president obama, who nominated been to a second four year term as fed chairman just over a year ago, we were on the verge of collapse and he navigated as through with, and wisdom -- with calm and wisdom. thank you,ben, for all you have done to strengthen standards domestically and internationally, and for

nurturing the recovering that is so important to our nation's well-being. it is a pleasure to have you on our campus once again. i would ask all present to join me in extending the warmest of wellcome's to one of princeton's alan, ben bernanke -- princeton's own ben bernanke in. [applause] >> thank you for giving me this opportunity to come back to princeton. by todd economy when no one at 8:00 a.m., and in -- i taught economy 101 at 8:00 a.m., and i

never had this kind of attendance. [laughter] when my colleagues and i founded the center of a decade ago, we intended it to be a place not only to learn the technicalities of theory, but also about the broader context of financial activities. recent events have made clear that understanding the role of markets and institutions in the economy and the effect of economic development on finance are more important than ever. the financial crisis has proved to be one of the most difficult challenges for economic policymakers since the great depression. policy response to this challenge has included important successes, most notably, the concerted international effort to stabilize the system. for its part, at the fed worked

closely with other policy makers domestically and internationally. we provided a backstop to a range of financial institutions as needed. the fed also developed special lending facilities that help restore normal functioning to critical financial markets, including the commercial paper market and the market for asset- backed securities. we created the bank stress test that significantly improved confidence in the u.s. banking system. in monetary policy, the fed's aggressive actions to help stabilize the economy and laid the groundwork for recovery. the crisis as a whole has not been kind to the reputation of

the economists, and understandably so. those few issued early warnings generally identified only isolated weaknesses in the the system, not anything approaching the full set of complex linkages and mechanisms that amplified the initial shock and ultimately resulted in a devastating global crisis and recession. moreover, although financial markets are a functioning normally now, a conservative -- a concerted policy effort has so far not reduce the high level of unemployment. as a result of these developments, some observers have suggested the need for overhaul of the economic system, arguing that much of the research in macroeconomics and finance in recent decades has been of little value or even counterproductive. those economists have much to learn from the crisis, as i am

going to discuss today. calls for a radical reworking of the field go too far. in particular, the current critiques of economics sometimes conflate three overlapping yet separate enterprises, which for the purposes of my remarks today i will call economic science, economic engineering and economic management. economic science concerned itself primarily with theoretical and empirical generalizations about the behavior of individuals, institutions, markets and national economies. most academic research falls into this category. economic engineering is about the design and analysis of frameworks for achieving specific economic objectives. examples of such remarks are the risk-management systems of financial institutions and the financial regulatory system of the united states and other countries. economic management involves the operation of the economic

framework some real time. for example, in the private sector, the management of complex financial institutions, or in the public sector, the day-to-day supervision of those institutions. as you may have already guessed, my terminology is intended to evoke an analogy with science and engineering. like the heart transplant for the construction of a skyscraper, our first fundamental scientific knowledge, a second principles of design and engineering, third, the management of the particular endeavor, often including the coordination of many people in a complex enterprise will dealing with myriad uncertainties. success in any practical undertaking requires all three components. for example, the fight to control aids requires scientific knowledge about the causes and

mechanism of the disease -- the scientific component, the development of medical technologies and public health strategies -- the public engineering application, and the implementation of those strategies in specific communities and individual patients -- the management part. 20 years ago eighth mortality rates surpassed scientific -- aids mortality rate surpassed scientific understanding. today, there is a lack of personnel to carry out programs or apply treatments. with that hand, i would argue that the recent economic crisis was more a failure of economic engineering and economic management than economic science. the engineering problems were reflected in a number of structural weaknesses in our financial system. in the private sector, these witnesses included in adequate risk-management and risk

measurement systems at many financial firms, as well as shortcomings in business models, such as excessive leverage. in the public sector, caps and blind spots in financial regulatory structures in the united states and other countries proved particularly damaging. these regulatory structures were designed for earlier eras, and did not adequately adapt to the changes in the financial structure, such as the increasing transactions taking place outside repository institutions in what is called the shadow banking system. in the world of economic management, the leaders of financial firms, market participants, and government policymakers either did not recognize important structural problems or emerging risks, or when they identified them, they did not respond quickly enough or forcefully enough to address them.

shortcomings of economic science for come up for the most part, a less central to the crisis. -- were, up for the most part, less central to the crisis. economic analysis has proven and will continue to prove critical in understanding the crisis and developing the policies to contain and in designing a longer-term solution to prevent a recurrence. i do not want to push this analogy too far. economics is a discipline that differs in important ways from science and engineering. the latter deals with inanimate objects rather than human beings. it can often be far more precise in its predictions. the distinction between science and engineering can be less sharp than the analogy suggests, as much research has direct policy implications. while i do not think the crisis requires us to rethink the economics from the ground up, it

did reveal the shortcomings of our understanding of certain aspects in the inaction of markets and the economy as a whole. the crisis should be and indeed is already leading to a greater focus of research related to financial instability and on implications to the broader economy. in the remainder of my remarks, i will focus on the implications of the crisis on what i have been calling economic science, basic economic research and analysis. i will first provide examples of how economic principles and research, rather than having misled us, have significantly enhance our understanding of the crisis and our informing our regulatory response -- and are in forming our regulatory response. i will discuss gaps and suggest possible corrections that could help us achieve greater

financial and macroeconomic stability. the financial crisis represented an enormously complex set of interactions, indeed, a discussion of the triggers that touched off the crisis and the vulnerabilities of the financial system and financial regulations allow the crisis does such devastating effects could more than fill my time is the afternoon. -- allowed the crisis to have such devastating effects could more than fill my time this afternoon. at least in retrospect, economic principles and research were quite useful for understanding key aspects of the crisis and designing appropriate policy responses. for example, the dependence on unstable short-term funding led to runs on key institutions. the fact that dependence on short-term funding could lead

to run it is hardly news to economists. it has been a central issue in economics since the 19th century. indeed, the recent crisis or a striking resemblance to the bank runs of that era. in this case, the run occurred in the shadow banking system which consists of financial institutions other than regulated depository institutions, such as securitization vehicles, money- market funds and investment banks. prior to the crisis, these institutions had become increasingly dependent on various forms of short-term funding, and us -- has had some commercial banks. this includes paper, purchase and other typess

of lending. repo liabilities of u.s. broker- dealers increased by eight 2.5% in the years before the crisis. -- increased by 2.5% in the years before the crisis. during the era before deposit insurance, retail depositors who heard rumors about the health of their bank whether true or untrue would line up to withdraw their funds. if the run continued, absent intervention by the central bank or another provider of liquidity, the bank would run out of the cash necessary to pay depositors and would fail as a result. often the panic would spread and those with the relationship to the troubled bank would come under suspicion. in the recent crisis, providers of short-term funding or the

economic equivalent of depositors. shadow banks relied on these providers to fund longer-term credit instruments, including securities backed by subprime mortgages. after house prices began to decline, concerns began to build about the quality of subprime mortgage loans, and consequently, about the quality of securities in which these and other forms of credit had been packaged. although many shallow banks had limited exposure to subprime loans and other short-term credits, the opaque as of many of the financial arrangements made it difficult for investors to distinguish relative respite -- relative risk. in an environment of heightened uncertainty, many investors concluded that simply withdrawing their funds was the best alternative. the financial institutions, knowing the risk posed by a run, began to hoard cash and limited

their willingness to extend new credit. because the runs on the shadow banking system occurred in an historic lee unfamiliar context outside the banking system, anticipation of the risks such runs might incur was insufficient. however, two decades of evidence were available to inform the response. central banks around the world followed the dictums set forth in 1873 to avert or contain panic. they lent freely to solid institutions with good collateral. the federal reserve eased lending terms to the discount window and established a regular auctions in which banks could bid in return for credit. invoking emergency powers not

used since the 1930's, the federal reserve also found ways to provide liquidity to critical parts of the shadow banking system including money-market mutual funds and asset backed securities markets. purposey's purposes, my is not to review history, but to point out that in its policy response, the fed was relying on well developed ideas with historic roots. this was not a lack of professional understanding about how runs come about or about how to respond to them, but rather the failure of both private and public sector actors to recognize the potential for runs in an institutional context quite different from the circumstances that had given rise to such actions in the past. this was partly the result of a regulatory structure that had not reacted adequately to the rise of shadow banking and had

placed insufficient emphasis on systemic risk. economic research and analysis have proved useful in understanding other aspects of the crisis as well. for example, one of the most important development in economics over recent decades has been deflowering of information economics, which studies how differences in economic information among different agencies affects market outcome. an important branch of information economics called principal agent theory considers the differences in information between the principals, say the shareholders of a firm, and the agents who work for the principles, the firm's managers. because the agent typically has more information thanet the principal, and because the financial interests of the principal and the aged are not

perfectly aligned, much depends on the contract, whether implicit or explicitness between the agent and a particular incentives the contract provides. poorly structured incentives were pervasive during the crisis. for example, compensation and financial institutions made insufficient adjustments for risks and contributed to an environment in which top managers and low-level employees took excessive breast -- excessive brearisks. to satisfy the strong demand for securitized products, both mortgage lenders and those who packaged the loans for sale to investors were compensated primarily on the quantity of product they moved through the system, not the quality. as a result, they paid less

attention to credit quality and many loans were made without sufficient documentation for underwriting. conflicts of interest that credit rating agencies, which were supposed to serve investors but had incentives to issue of ratings, were another example of bad incentives. research and informations economics -- the public policy response has focused on the changing compensation incentives. they're now subjected to supervisory review. supervisory guidance and support compensation packages that induce the employees to take a longer-term perspective, such as paying part of the compensation in

recent legislation requires regulatory agencies, including the federal reserve, to develop new standards after the rules to securitization activities that better align incentives market for dissidents in the various stages of the process. the sec as been charged with developing new rules to reduce conflicts of interest that credit rating -- credit rating agencies. information economics are also essential to understand the problems caused by so-called too big to fail financial institutions. prior to the crisis, market it is and believe that large, complex, and interconnected financial firms would not be allowed to fail during the financial crisis. as you know, authorities both in the u.s. and abroad did in fact intervene on a number of occasions to prevent the failure of such firms. not out of any special

consideration for the owners, managers, or creditors of those firms, but because of legitimate concerns about potential damage to the financial system and the broader economy. however, although the instability caused by the failure or near failure of some large firms did prove to be very costly, in some sense, the real damage was done before the crisis. if predators in good times believe that certain firms would not be allowed to fail, they would demand relatively little compensation for risk. thus, weakening market discipline. as a result, as predicted by intermission economics, firms thought to be too big to fail tended to take on more risk and face little pressure from investors as they expected to receive assistance if there vets went bad. this problem is an example of what economists refer to as moral hazard. the resulting bill of of risk in

too big to fail firms increase the likelihood that a financial crisis would occur and worse and that the crisis when it did occur. one response to excessive risk taking a stronger oversight by regulators. the recent legislation and rules being developed will subject systemically critical firms to tougher regulatory requirements and stricter supervision. the federal reserve has also been involved in international negotiations to raise the capital and liquidity that banks are required to hold. however, the problem of too big to fail can only be eliminated when market participants believe the statements of authorities that they will not intervene to prevent failures. if creditors believe that the government will not rescue firms when their bets go bad, the creditors will have more appropriate incentives to price a martyr, and limit the risk taking of those firms to which they lent -- to price and limit

the risk taking of those firms. if the owners can take place more safely, the authorities will no longer have an incentive to try to avoid them. the financial reform legislation passed during the summer took the important step in this direction of creating or resolution regime in which large, complex plan to firms can be placed into receivership, but also gives the government the flexibility to take actions needed to safeguard the stability of the financial system. this new regime should help restore market discipline by putting a greater burden on creditors and counterparties to monitor the risk of large financial firms. the insides of economists prove valuable in many contexts, in the setting of capital standards, in the decision to provide the market with extensive information, leading

with the bank's best -- stress test, in the design of liquidity facilities, in the analysis of the collapse of the securitization market, and in the measures taken to protect consumers from deceptive and inappropriate landing, just to name a few areas. many of the key ideas are quite old, but some reflected relatively recent research. for example, recent work on monetary policy helped the federal reserve provide further policy accommodation, despite the constraints imposed by the zero lower ground on interest rates. economic principles and research have been essential to understanding and reacting to the crisis. that said, the crisis and its lead up also challenge some important economic principles and research agendas. let me briefly indicate some areas i believe would benefit from more attention from the economics profession.

most fundamentally, and perhaps most challenging for researchers, the crisis should motivate economist to think further about how the model human behavior. most economic researchers continue to work within the classical paradigm that assumes rational, self-interest and behavior and the maximization of expected utility, a friend are based on a formal descriptions in risky situations -- framework that has been very useful in many contexts. an import and assumption of this basic framework is that in making decisions under uncertainty, the economic agents can assign meaningful probabilities to alternative outcome. however, during the worst fate -- phase of the financial crisis, many economic actors including investors, employers, and consumers, metaphorically threw up their hands and admitted that given the extreme and and prison and a trip the crisis, but did not know what

they did not know. as donald rumsfeld might have put it, there were too many unknown unknowns. the profound uncertainty during the crisis resulted in a panic selling by investors, sharp cuts in payrolls, and significant increases in household and precautionary saving. the idea that at certain times, decision makers cannot assign many probabilities to alternative outcomes, and they cannot even think of all the possible alternative outcomes, is known as knightian uncertainty. much of this work is relatively abstract and relatively little progress has been made and describing and predicting behavior of human beings under circumstances in which their knowledge and experience

provides little useful information. research in this area could aid our understanding of crises and other extreme situations. i suspect that progress will require careful empirical research with attention to psychological as well as economic factors. another issue that needs more attention from economist is the formation and propagation of asset price bubbles. scholars did a great deal of work on bubbles up after the collapse of the dot-com mobile. much of the literature at this point address is hubble's persist and expand in circumstances where we generally think they should not, such as when all ages know of the existence of a bubble. as it was put up former colleague, a scholar who has done important research on bubbles, we just don't have many

convincing models to explain when and why they start. we also don't know much about when they stopped, either. better understanding this process and its implications would be helpful in the design of monetary and regulatory policies. the third issue brought to the fore by the crisis is the need for better understanding of the determinants of liquidity and financial markets. the notion that financial assets can always be sold at prices close to their fundamental values is built into most economic analysis. before the crisis, the liquidity of major markets was often taken for granted by participants and regulators alike. the crisis showed that risk aversion imperfect information and market dynamics cannot scare away buyers and impair price discovery. market illiquidity also interested in the financial panic in their -- in dangerous

ways. a vicious circle developed and which investor concerns about the solvency of firms led to runs. firms were forced to sell assets quickly, and these fire sales drove down asset prices and reinforced investor concerns, and the circle continue. this dynamic contributed to the profound blurring of the distinction between illiquidity and insolvency during the crisis. studying illiquidity and liquidity is difficult because it requires going beyond standard models to examine the motivations and interactions of buyers and sellers over time. with regulators prepared to impose new liquidity requirements on financial institutions, and to require changes in the operations of key markets to ensure normal functioning during times of stress, a new policy relevant research in this area would be most welcome. i have been discussing the

research and microeconomics but have not touched on macroeconomics. standard mack truck and -- macro economic models did not predict the crisis, nor did they incorporate easily the effects of financial instability. do these failures of standard models mean they are irrelevant or at least significantly flawed? i think the answer is a qualified no. economic models are useful only in the context for which they are designed. most of the time, including during recessions, serious financial instability is not an issue. the standard models were designed for these non crisis periods, and they have produced -- provided quite useful in that context. that were part of the framework that delivered low inflation and macroeconomic stability in most industrial countries during the two decades that began in the mid-1980s. that said, understanding the

relationship between the financial and economic stability in a macro economic context is a critical, unfinished task for researchers. earlier work that attempted to incorporate credit and financial intermediation into the study of financial fluctuations and transmission of monetary policy represents one possible starting point. to give an example that i know well, much of my own research as an academic focus on the role of financial factors in amplifying business cycles. others have developed the basic framework to look at the effects of financial crisis. i am encouraged to see the large number of recent studies that have incorporated banking and credit creation in standard macroeconomic models. most of this work is still some distance from capturing the complex interactions of risk taking, liquidity, and capital in our financial system and the implications of these factors

for financial stability and economic growth. it would be fruitful if post macroeconomics economists would look more at the work of international economists. drawing on substantial experience in emerging market economies, they have examine the origins of banking and currency crises in some detail. they have devoted considerable research to the international contagion of financial crises, a related topic that is of relevance to our recent experience. macroeconomic modeling -- earlier work on this topic relied on the example of japan, and now we have more data points. for example, the experience of the u.s. and the united kingdom with large sell asset purchases could be explored to improve our understanding of the effect of

such transactions on long-term deals and how such effects could be incorporated into modern models. i began my remarks by drawing a distinction between the scientific, engineering, and management aspects of economics. the financial crisis reflected problems in what are referred to as economic engineering and economic management. private-sector arrangements and the financial regulatory framework were flawed in design and execution. these weaknesses for the primary reasons that the financial crisis and its economic effects were so severe. disasters required urgent action to prevent repetition. engineers seek to enhance the reliability of a complex machine to improve -- for improvements in basic design. and through increases in the resilience of the machine

through such means a stronger materials and better backup systems. economic policymakers efforts to avoid or mitigate future for initial crises must proceed along analogous lines. first, the reason reform legislation has improved the design of the regulatory framework, closing important gaps such as the lack of oversight over the shuttle banking system. in the private sector, firms have taken significant steps to improve their systems for managing risk and liquidity. to reduce the probability and severity of future crises, policymakers will monitor the system more intensely. the recent legislation creates a financial stability oversight council, made up of the heads of the financial regulatory agencies, which will assess potential risk to the financial system, identify regulatory gaps, and coordinate the efforts of the various agencies. enhanced market discipline, the result of the new regime, and a

number of measures to increase transparency will complement regulatory oversight. finally, numerous steps, both prescribed in the legislation and taken independently by regulators, will work to make our financial system more resilience to shocks. examples include rules to strengthen key financial utilities, toughen bank capital and liquidity standards, and require that more derivative instruments be standardized and traded on exchanges rather than over the counter. economic engineering is effective only in combination with good economic management. for its part, the federal reserve has revamped its supervisory operations to provide more effective and more comprehensive oversight of financial firms. we are taking an approach that is both normal to disciplinary, making greater use of the federal reserve's wide expertise in macroeconomics, finance, and other fields, to complement the work of bank supervisors.

it is focused on risk to the system as a whole as well as risk to individual institutions. together, better designed of private and public sector frameworks for managing risk, better to err -- better mantra and supervision, thus not guarantee that financial crises would not occur, but it would mitigate the effects of any that do happen. the potential crisis did not discredit the usefulness of economic research and analysis by any means. both older and more recent ideas drawn from economics have proved invaluable to policymakers attempting to diagnose and respond to the financial crisis. however, the crisis has raised important questions that are already occupying researchers and should continue to do so. work is needed on the behavior of economic agents in times of profound uncertainty, on asset

price bubbles and determines of market liquidity, and on the implications of financial factors for macroeconomics and monetary policy. much of that work is already under way. thank you very much. [applause] >> thank you very much. this was as good a capstone to the conference that took place today, and the beginning of the conference that is starting right now. it will continue tomorrow, as can be imagined. the students in the audience can extrapolate from this that this

was a very good teacher of economics. it is an interesting job that you have right now. the only thing i want to take issue with is, i can assure you, especially students, that economics 101 has never been offered at 8:00 a.m. that was an exaggeration. the students are still groggy at 10:00 a.m. [laughter] he has a lot more back up. [laughter] the floor is now open for questions. [inaudible]

[inaudible] >> could the question be heard? >> no. >> the question was broadly about the fed balance sheet and the interest-rate on long-term securities, and what was the exit strategy.

i am not sure i can fully answer that question. the world is uncertain, and we are trying to approach conditions as they arise. i would begin by saying that the fed now has about $2.40 trillion balance sheets, and with the exception of a small portion of that, it is not toxic assets that we hold. we hold government guaranteed securities. we own mostly treasury securities or fannie and freddie mortgage-backed securities that have a government guarantee and are traded in liquid markets with the strong presumption of safety. the fed balance sheet is actually quite secure from credit perspective. the reason we purchased the additional securities, and as you point out, we purchased on the order of $1.50 trillion net,

had to do with a fact that our conventional monetary policy methods ran out of room. we had reduced the overnight interest rate, which is the typical school of monetary policy, to its lowest level ever almost two years ago. as a result, the standard conventional tool of monetary policy is no longer available. there was a view some years ago that once the short-term interest rate was close to zero, the central bank was out of ammunition. i argued for a long time that that was not the case. we demonstrated there are other things the fed can do, in particular, by buying mortgage- backed securities and treasurys. we did additionally stimulate

the economy, and research supports that. we did that in a couple of ways. first, the purchases reduced interest rates directly by raising the prices of the assets that we purchased, and secondly, the role of the supply from the market pushed investors into related securities. as we pulled mortgage-backed securities out of the market, investors who normally would like to hold safe, liquid, longer-term fixed-income instruments moved into high- quality corporate bonds, for example, thereby lowering yields over there. we have been able through this process to ease financial conditions broadly, above and beyond the usual policy of reducing short-term interest rates. the reason we have supported such monetary policy is because

the economy continues to need support. as you know, the recession was officially declared over as of last year, but all that means is that the economy is still over contracting. has been growing, but not very quickly, and the unemployment rate is still very high. we are using these tools to support economic growth and to maintain price stability. we have spent a lot of time, and i think it is constructive, because lower interest rates in the corporate bond world make it easier for firms to finance investment and to improve their balance sheets, which is positive for growth. the day will come, as indicated, when we have to exit from this situation. it is not a permanent state of affairs, certainly. we spent quite a bit of effort developing -- we have been quite

creative in seeking out a wide range of tools we can use to exit from this situation, over and above selling assets. we felt a lot of other ways to tighten monetary policy and raise interest rates at the appropriate time -- we found a lot of other ways. it was never the point of saying we were about to exit. it was important for us to say how we could exit, so that we would have the confidence of investors and the public that we had control of the situation and would be able to exit at the appropriate time. at some point, the time will come. the fed will normalize monetary policy, and that point we have a list of tools that will allow us to drain reserves from the system and normalize interest rates and bring us back to a more normal monetary policy.

>> there is a mike right behind you. >> thanks for your remarks. in regards to the shadow banking system, what have we learned and what do we have to learn about how the shadow banking system intersects with the traditional understanding of the transmission of monetary policy? how is it somehow fell under the radar with regard to credit being supplied to the economy. >> the main problem was that we

had a financial regulatory system which was designed fundamentally for the 1930's, which was a time when our financial system was essentially bank centric. there were some innovations and changing some of financial regulation that tried to adapt and modernize the financial regulatory system, but unfortunately, the innovation in the system which created the use of off-balance sheet funding, which was a typical issue, and the use of the originate to distribute model, which vacuumed up subprime mortgages and brought them into securitization vehicles that were then sold to investors under the guise of aaa ratings. all of these things that developed were innovations that for one reason or another either were not covered appropriately

by the financial regulatory system, or were not addressed adequately by regulators or the private sector either. one reason for that, besides the fact that there were gaps in the structure that did not keep up with innovation, is that our system was designed to be -- to use a jargon term, micropru dential. a bank regulator might say everything is fine because the subprime rid of some proble mortgages. no one was looking at the whole system and trying to figure out how to change the regulatory response as these innovations occurred. the shadow banking system added potential problems both with

credit quality and with funding at the heart of the crisis. in indirect ways, regulators could look at parts of the system. bank regulators in principle could look at some of the awesome -- off-balance sheet vehicles and so on. the system simply did not catch those problems, and the shocks that hit the system were therefore allowed to become so severe. what is new and different about our regulatory approach now going forward, both as captured in the new financial reform legislation and the federal reserve's practices, is that from now on, we are going to be more attentive to the system as a whole. we will be asking not only what

is the risk to an individual institution, but what are the risk that could bring down the overall financial system? within the federal reserve, we are restructuring our supervision so that we have explicit attention to the whole system, with financial stability as the primary goal. nothing is ever guaranteed, and the financial system is so complex that things can happen, but this will give us a fighting chance to identify the problems that arise as the financial system evolves and innovates. >> i think the next biggest financial crisis will have to do with the social security trust fund. it is my understanding that it

has actually been added to the $1.30 trillion deficit. i am wondering if there is any plan to rescind the upper income limit for social security. i think it is very important that we pay attention to this now. about 14% of americans 65 and over depend upon 100% from social security. about another 50% depend on social security for another 50%. i am is wondering if that is something that might be addressed. >> there is a more general problem of which shall security is a part, and that is the long- term fiscal stability of the u.s. government. every analysis done by every responsible party of any stripe, including that congressional budget office and the federal

reserve and everyone else, shows that on current policies, the u.s. federal deficit -- debt will become unsustainable within a few decades. that is a very serious concern, and one that needs to be addressed. as i once put it, the only law i want to stand up for is the law of arithmetic, which says that the deficit equals the difference between spending and taxes. if you want to reduce the deficit, you have to figure out some combination of spending and taxes that adds up. the question then is, what do you do to try to address these long-term deficits? that ultimately is a decision for the american people and for the congress. the federal reserve does not make fiscal policy and we don't advise on specific aspects of

fiscal policy. the big issue is the issue of entitlements. we have an aging population. we have a situation where medical costs are rising more quickly than in comes. on current trajectories, social security, although entitlement programs together, in a few years will be the entire federal budget or more than the entire federal budget. most people believe that in order to solve long-term fiscal issues, we will have to do something about entitlements, one way or another. social security is a more manageable problem than medicare and medicaid, because it does not have an ongoing cost increase. there have been a lot of suggestions on how to address that problem. the president appointed a commission that is supposed to report later this year, and they

may be looking at tools for stabilizing the long-term finances of social security. there are lots of ways to do that. one thing i would say is that i trust that what they will do, if they do make changes, is not to make changes that affect people who are already retired or close to retirement. obviously, those folks or dependent or have not had time to plan, etc. it is unlikely that those changes would have significant impacts on the debt in the next few years, but we will see what what they come up with. the budget has lots of other components as well. >> one last question, right over there.

>> you mentioned that that though the recession is officially over, the economy is growing rather slowly. there is uncertainty over what is happening in the economy. an interesting manifestation is the fact that there seems to be a wider variety of opinions about where the economy is going. thinking about the distinction between economic science and management, is it that the market's -- some of your colleagues have a different view of hell the world works -- a different view of how the world works. some have a more optimistic opinion of where the economy is going. is it a question of a difference of models and how they will work, or are they seeing

different information? what is the fed seeing is that is not being seen in the markets to explain why the fed is seen to be more economic -- more optimistic going forward? >> i would dispute your premise a little bit. you can try to infer what markets think by looking at things like real interest rates and volatility measures and things of that sort. but those are very incorrect inferences, and they reflect a whole range of views that are being abrogated in the market process. if you look at private sector forecasters, there typically -- they are typically a similar to the projections that the federal reserve reserve open

market committee believes on a quarterly basis. i don't think is really true that the fed is more optimistic, generally speaking, than private sector forecasters. i think it's pretty comparable for the most part. in particular, we have followed the view that most private sector forecasters have that since the spring, there has been something of a slowing in the economy, which we have all taken careful note of. the question about why is it slow is a very good question. we have a lot of evidence that recoveries that follow a financial crisis tend to be slower than other recoveries, but unfortunately, this is just an observation that comes from looking at a lot of different experiences. it does not necessarily tell you why.

it could be that financial crises lead to slow recoveries because of the head winds created by deleveraging, by bad assets, or problems in the banking system and the like. we try to incorporate that in our forecasting. it may also be that governments and policy makers were not aggressive enough in fixing their financial systems and using monetary and fiscal policy appropriately and so on. certainly the federal reserve has been quite aggressive. we have tried to be proactive both in addressing financial issues and the macro economies. certainly it is the case that, given the tremendous blow that our financial system took, i think it could of been much worse, and we avoided what could

have been a global meltdown. even so, we got a taste of how powerful a financial crisis is on real activity. that blow, which not the world into a deep recession in 2008 and 2009, we are only recovering from that at a pace slower than we would like. we will continue to monitor this and to do our best to understand the determinants, but i think it is an issue that all forecasters, including those that are making investments are faced with, there are many aspects of this episode that are not the same as previous episodes. we have to draw inferences based on what we see, and using the economic science, as i discussed in my remarks.

>> please join me in thanking ben bernanke for sharing this conference. [applause] >> federal reserve chairman ben bernanke addressing a crowd at princeton university in new jersey. you can check out the entire segment and his remarks on our website, c-span.org. for tonight, the first general election debate between candidates running for wisconsin governor is coming up. democrat tom barrett and republican scott walker will face off in an hour-long debate hosted by the wisconsin

broadcasters association in milwaukee. you can watch the debate live tonight at 8 eastern here on c- span. >> for all the people in the book, there are many mistakes that might have made in their lives, but moving from the self is not one of them. >> nearly 6 million african- americans migrated from the cell. -- from the south. that is it 8:00 on c-span's "q&a". >> i really underestimated how big a job was. i had not even been the minority leader. i jumped from minority whip to speaker overnight, and from a minority party that no one thought was going to be in power, two leading a wave of 9 million additional votes in 1994. >> newt gingrich, on his tenure as house speaker, the state of american politics today, and a

possible 2012 presidential bid. that is sunday on c-span. >> we go now to a house hearing on immigrant farmworkers from earlier today. comedian stephen colbert brought attention to the hearing as one of the witnesses. he had spent a day working at a vegetable farm in new york in august as part of a united farm workers campaign. the campaign called unemployed americans to take jobs in agriculture sector. this is just over two hours. >> we will ask that the press pulled back from the table so that we can observe all four of our witnesses.

if the press cannot do so, that will be asked to leave the room. i would like to welcome our witnesses, members of the immigration subcommittee, and others who joined us today. the subcommittee's hearing on protecting america's hardest. the american agricultural sector has long suffered from a lack of available u.s. workers to grow and pick america's fruits and vegetables. even in today's tough economic climate, whether we like or not, insufficient and continually do -- decreasing number of u.s. workers willing to fill manual agriculture jobs. america's farmers are dependent on a reliable work force to produce our domestic food supply, and today's forms are struggling to stay in business as a result of current labor challenges. today's hearing will explore the labor needs of our nation's agricultural sector, its attempts to recruit u.s. workers

for agricultural labor, the problems with our current visa program for agricultural workers, and potential solutions. one explanation for why american workers may now be unwilling to engage in manual formwork when they were willing to do so decades ago may live in our improving educational system. havee 1940's and 1950's, the native-born work force did not have a high school diploma. last number in -- last year that number was 5.7%. the difficulty has been highlighted by the united farmworkers take our jobs, please, campaign. the campaign in by its unemployed americans to use the u.s. government's assistance to obtain employment as farmworkers. according to the u.s. -- usw, even in a time of high unemployment, only seven u.s. workers have agreed to actually

work in the field as of today. i have been a longtime advocate for farmworkers and growers. when i was on the santa clara county board of supervisors in the 1980's, and works closely with the united farm workers and the farm bureau. i spent time on many farms. recently at the invitation of the usw, i spent the day picking strawberries at a farm near my district. they also invited me to pick a day picking expended day picking vegetables on a farm in new york with stephen colbert. i want to thank the usw president for bringing us together on this important issue. i would like to admonish the audience before i continue my statement that we need to maintain order and decorum throughout these proceedings, and to that end, i would like to remind all of the visitors in the audience that they should refrain from any manifestation of approval or disapproval of these proceedings or any other

disruptive actions. if necessary, the capitol police are here to remove anyone who disrupts the hearing, but we certainly hope that will be necessary. part of what i learned over the years is that without a sufficient u.s. labor force, u.s. farmers have increasingly relied on undocumented workers. according to the department of labor, over 50% of all seasonal agricultural workers are undocumented. experts believe that due to underreporting, that number may actually be closer to 75%. critics argue that the shortage of u.s. agricultural workers could be solved by simply increasing wages and working conditions. as a longtime an ardent supporter of farmworkers, i would like nothing better, but we must also face the reality that the nation's grocers compete with farmers from around the world in this increasingly globalized world. increasing wages and benefits in an amount necessary to track millions of educated workers to

the fields would mean increased production costs that could render u.s. food products and competitive with imported products. american firms would then close, in turn resulting in the offshore in of tens of millions of agriculture and related jobs. this is already happening. when farms close, our country suffers. we lose the millions of so- called upstream and downstream jobs connected to those jobs, whether processing, packaging, transportation, feed production, manufacturing, accounting, advertising. these jobs are overwhelmingly feel by u.s. workers, get these jobs disappear when forms are closed. economists believe that for every form job loss, the u.s.

loses another 3.1 complementary jobs. aside from a loss of millions of jobs, the closure of american forms endangers the nation's economy and national security. our national security depends on our ability to produce a stable domestic crude supply. like oil, the more we rely on other countries for our food supply, the more recall victim to an increase trade debt, scarcity in times of drought, fluctuating eckstrom market prices, and political pressure. we would also increase the possibility of foodborne illness is and terrorist attack your nation's food supply. the security is national security. america cannot afford to stop producing its own food supply, and we need the labor force to do so. today we will hear from our panel of witnesses to better understand this complex and very important issue for americans, american jobs, our economy, and our national security. people in the media spotlight

have a special ability to focus public opinion on an issue, whether bono talking about third world party or angelina jolie advocating for protecting children against human trafficking, the power of media figures to use their celebrity to focus attention on the essential public issues is well known and well regarded. i am happy that stephen colbert has joined that region of celebrities who will use their media position to benefit others. as you can see from mr. colbert's written testimony, he has taken the time to walk in issues of migrant farmworkers, and he urges reforms of our immigration laws. i am happy that the united farmworkers introduce me to mr. colbert, who i had not met before, so we could spend a day on a farm together. his actions are a good example of how using both levity and fame, a media figure can bring attention to a critically important issue for the good of the nation.

i appreciate all of our witnesses' efforts to be with us today and their leadership in this area, and i hope that together we can find solutions to these pressing problems. i would now recognize our distinguished ranking member, stephen king, for his opening statements. >> i appreciate being recognized, and i am wondering how the eskimos got along for all those centuries without fresh fruit and vegetables if it is a national security issue. i would like to focus my remarks on protecting american workers. illegal immigration, the lack of enforcement of our immigration laws, and today's jobs depression have formed a perfect score for hurting americans. the most important duty of the subcommittee is that we ensure our nation's immigration policy lives of americans, not hold them down. i find it hard to understand why some people carelessly claim that americans won't be hard work. i find this claim insulting, as

i am sure most are working americans do. it is most insulting to those brave american soldiers to voluntarily risk their lives to defend our freedom and way of life every day. the men and women that have gone terrorist in iraq and afghanistan, travel miles across the desert with hundreds of pounds of gear for about $8 an hour. that includes the marines. maybe we should be spending less time watching comedy central and more time considering all the real jobs that are out there, ones that require real hard labor and don't involve sitting behind a desk. every day, american workers perform the dirtiest, most difficult, most dangerous jobs that can be thrown at them. from crab fisherman that venture into the rough is dangerous in the world, to that joe the plumber's of the world, who in many days would prefer the aroma of fresh dirt to that of sewerage from american in elitist who disparage them even as they flush. these are real americans doing

real jobs, a task that simply must get done. when american workers are treated with respect and paid for the labor, they will do any job and outwork anyone on earth. on to agriculture. i represent rural district made up mostly of farmers and farm communities, and people buy when know what it takes to manage and effectively run a farm. one issue with attracting more workers to seasonal agricultural labor is that most my bra workers are consigned to perpetual poverty. -- most migrant workers are consigned to perpetual poverty. it is argued by the secretariat agriculture that food prices would be up to five times more if it were not for illegal immigrant workers. this is blatantly false and cannot be supported by any data. he does not bother to defend

himself. data from the department of agriculture and the bureau of labor statistics show that labor costs only represents 6% of the price consumers pay for fresh fruits and vegetables. you could double the pay of workers and see only a 6% increase in the price to consumers. if there was a 40% increase in farm wages, the average household would spend only $8 more a year on fruits and vegetables, less than the price of a movie ticket. i am sure most americans would pay $8 more a year to ensure a legal work force. the reality is, employers hire desperate aliens who will work for much less than americans, driving wages down and making it impossible for american workers to compete. as ranking member smith has pointed out, there are 8 million illegal immigrants in the work force competing against the 15.4

million americans who are officially counted as unemployed, which includes the 80 million who are simply not in the work force because they have dropped out and are no longer looking for jobs. americans have given up looking for those jobs because wages have been depressed and job opportunities eliminated by a very -- very mobile immigration. a professor will testify about the toll mass emigration is taking on minority communities. all of this started happening well before the recession. a professor at harvard university did groundbreaking research on the impact of immigration in the 1980's and 1990's on low-skilled american workers. other researchers at the center for labor market studies at northeastern university found in 2005 that given large job losses

among the nation's teenagers, a 20-24-year-old without a degree, black males and poorly educated native born men, it is clear that native-born workers have been displaced in recent years because of immigration. it is amazing to me that and as the advocate simply ignore that 80 million labor pool. we can either feed, clothe, and house them, or put them to work to feed and clothe the world. the current economic crisis magnifies the impact on american workers and families. unless emigration policies are changed, they will continue to be undermined even after the economy turns the corner. the heritage foundation found that the average household headed by an arrogant without a high-school degree -- by an immigrant, receives over $19,000 in benefits more than they pay in taxes. cheap labor. i think about the day that i had to swim out into a sewer lagoon

and dive into 9 feet of wood to retrieve a pot. -- 9 feet of water to retrieve a pump. it is an insult to me to hear that americans won't do this work. i cannot think of a job i have not been willing to do, and i cannot think of an employee i have had in 28 years of construction that refuse to do the work. americans will do the work, but they want to be paid respectable ways to do it. >> with the agreement of the minority, we are recognizing the author theag jobs bill, mr. berman, for his statement. >> thank you very much, madame chair, and thank you very much

for holding a hearing which perhaps like few others will highlight the conditions of migrant farm workers in this country and turn attention to this critical issue. i thank the chair and the ranking member of the committee. this is an issue i have been focused on for 40 years. in the last 10 years, with each session introduced bipartisan legislation to try and deal with this issue. unfortunately, because i chair another committee, i have a hearing at 10:00 so i appreciate the courtesy extended to let me jump in line here. i am going to forgo my opening statement, but i simply must respond to the comments of the

ranking member on this particular issue. there is nothing that the chair said, nothing implicit in the take our jobs campaign, explicit or implicit, that said americans are not doing hard work. if the gentleman from iowa were deeply concerned about the conditions on the farms and the wages, i would have noticed more activity to ensure that a number of laws that apply to all other workers in america apply with equal force to the people who pick or fruits and vegetables in this country. i would see an effort to push greater appropriations and greater funding for people to monitor the working conditions on our farms. i would see an effort to try and get the rights that all other workers have to collective

bargaining extended to form workers who are excluded from our national collective bargaining legislation. the fact is that while americans over and over again have produced -- have shown both their courage and willingness to undertake terribly difficult jobs, jobs that i would dare to say the people on this podium, including myself, would be very reluctant to take, study after study, including studies at the time of welfare reform, where huge numbers of people were going to be forced off the welfare rolls, in counties where unemployment was two or three times the average of the country generally, people would rather have no income and no welfare and take the backbreaking jobs -- then take the backbreaking

jobs that the migrant farm worker has to do every single day. there is a problem here. you can try and cheap seat it want, but were it not for immigrant farm workers in this country, there would be no seasonal fresh fruit and vegetable industry. i join the gentleman wanting better wages and better working conditions, and we should do everything we can to try and improve those conditions. the facts are the facts. study after study has demonstrated that these jobs are not taken by u.s. workers, even when they have no other means of support. i commend the gentle lady for holding this hearing. i want to pay special recognition to my friend, the

president of the united farmworkers, and the other witnesses as well. i hope to come back when my hearing is over, but i apologize for not being able to be here for the entire hearing. >> mr. smith. >> thank you. american workers faced tough economic times. jobs have become scarce and millions of families are hurting. there are more than 7 million illegal workers in the united states. a clinton administration i nsa official and now deputy commissioner for refugees --

admit how many illegal workers there are. this has had consequences that are devastating. american workers are unemployed, forced to work part-time, or too discouraged to look for work. for native born african americans without a high-school degree, the rate is 43%. we could make millions of jobs available to american citizens and legal immigrants if the federal government simply enforced our immigration laws. about half of migration workers are illegal immigrants. that means a substantial number of illegal workers labor in the field, perhaps as many as half. and certainly more would take jobs if the wages and working

conditions were better. the most effective means we have to save jobs for americans are u.s. immigration and customs enforcement work site actions. each time they detained and deported an illegal worker, they created opportunities for an american worker. each time they sanction an employer, it sends a clear message that illegal workers will not be tolerated. unfortunately, this administration is turning its back on american workers. administrative arrests have fallen 79% since 2008. criminal arrests up fallen 62%. it is hard to conceive of a worse time to cut worksite enforcement efforts by more than half, and yet that is what the obama administration has done. the department of homeland security will tell you that they have increased the number of works by audits of employers. employers consider the small

fines or the cost of doing business. what happens to the illegal workers? they walk down the street and take another job that could have gone to an american worker. citizens and legal immigrants should not be forced to compete for scarce and jobs with illegal immigrants. the imam administration should put the interests of american workers -- the obama administration should but the interests of american workers first. steven cole there has shed light on the issue but -- stephen colbert has shed light on the the issue of immigrant workers. he asked, do not want cheap labor -- do we not want cheap labor doing the jobs americans do not want to do it? he added, yes, unless you are an

american landscaper or construction worker. fortunately, in a tv host, so my job is safe. it is no laughing matter to pretend that americans do not want jobs. do not insult american workers by telling them the government cares more about illegal workers than u.s. citizens. thank you. i will yield back. >> mr. conyers will be recognized for any opening statement he may wish to give at this time. >> i would like to propose to mr. king that we formed this committee so that we could have everybody worked very quickly. between you and i, we could probably recruit hundreds of thousands of people and solve

this problem, even though the farm workers could not do it, senator feinstein was not successful. you say it is pretty easy, so i would like to work with you on this. what do you say? >> i appreciate you yielding to me. i have a actually recruited farmworkers and hired them and paid them. i had to raise the wages and benefits in order to attract people. i know that migrants go to california for jobs. if you raise the wages, the workers will show up, the legal workers will show up. >> so, the answer is yes? >> i would be happy to do that. hopefully we can consider the labor is a commodity like corn or beans and that supply and demand will establish its value in the marketplace. >> you would not have any objection to them being

organized members of the union? >> i think if you want to market your skills as a worker in america, you do it the way you best can. >> thank you. see you after the hearing. we will get started. and now to stephen colbert, whom i enjoy and have for many years. you have helped us build a room. i have not seen this and carries a sense, when -- this many cameras sense, a plan? >> maybe it was impeachment. >> on haunting remembrance. here is what i will suggest so that we can get to the bottom of this.

mr. colbert has presented us with a fine statement. it will be entered into the wreckage -- into the record. he has a huge march coming up in washington which many people are going to be at, i know. i have a very good feeling about that. i will be busy working in michigan, trying to turn out the vote. we have been having very low voter turnout. that is the only reason i will not be with you in the march. but i would like to recommend now that we have all this attention, that you excuse yourself and let us get on with the three witnesses and all of the other members there.

we are sure it will be shown on the show tonight, and maybe monday. you run your e show. we run the committee. what do you say to that? >> i do not understand the question. >> i am not asking you not to talk. i am asking you to leave the committee room completely and submit your statement instead. >> mr. chairman, i am wondering microphonecolbert's is not on. he cannot be heard.

i think he can ponder what you said. i think many are eager to hear his comments. >> that is fair enough. >> i am here at the invitation of the chairwoman. if she would like me to remove myself from the hearing room, i am happy to do so. i am only here at her invitation. >> that is good enough. >> the gentleman's time is expired. >> we will now hear from mr. lundgren who will make an opening statement. in the interest of proceeding to our witnesses, we will invite other members to submit their statements for the record. >> thank you. i have been working on this issue for some 30 years. i confess that i was the republican floor manager for the

simpson-mazzoli bill. i thought that time that we had presented a reasonable solution to the problem of immigration. unfortunately, what was supposed to be co one time program -- supposed to be a one time program, had a total failure in respnforcement. the seasonal agricultural worker and rick punishment agricultural worker programs -- and replenishment agricultural worker programs were repeated with fraud, which some people suggest it would happen when we proposed that section of the bill. since that time because of a lack of enforcement by the federal government, we have seen the continuation of the flow of illegal immigration into this country to a larger dimension data was in the 1980's.

at the same time, we have the highest rate of unemployment i have seen in my lifetime. california has a higher unemployment rate in all 50 states. it is a severe problem. i have agriculture in my district and i have urban areas in my district. it seems to me that we ought to be -- we ought to put all the facts on the table and understand that there are different segments of our economy, most of which, in my opinion, can successfully attract american workers. i see no reason right now for the presumed or assumed lack of opportunities for african- american young males in the construction trade. i see no evidence whatsoever in

the area of construction or landscaping that there is a need for foreign workers. i think the intelligent thing for us to do is establish a law that would allow us to look, economic sector by economic sector, and make a determination through our government as to whether or not there is a need for farmworkers. i have never worked in the fields. i worked on ranches. i worked in construction. working in shipyards. it is all tough work. i doubt it is as tough as the work have seen individuals in the farm fields do. it is really tough work. being from california, i happen to believe there is evidence that we cannot attract sufficient americans for agricultural purposes. i have always protest that we have to establish a program that

works, and that the american people determine through their elected officials the condor's of, and that on an annual basis we'd make a determination as to how many people are needed in this country. one of the problems with the proposed bill is separate -- is that it provides a path to citizenship as a major tenant of this program. i do not think that is necessary. the reason i say that is this. there is an essential notion in our society, a belief from the time in schoolyards and beyond that that cutting in line is unfair. i have to ask the people from countries who followed a lot -- the law, what does it say to

them if they get put behind those who were not following the law? i think we can reach a satisfactory conclusion to this if we recognized that enforcement in the past was not there and therefore encouraged continuing illegal immigration. a failure to have a workable temporary worker program has caused some of the problem that we have, and i think thirdly, that you do not have to have an amnesty component in the program. there are other ways we can treat people humanely and deal with this problem. i fear, madam chair, that if we have this as a component of any legislation that we have, the american people will not support it and we will fail to deal with a real challenge. among all of the issues that we have, we always see that we also

have the backdrop of the threat of terrorism. i am not and never have suggested that the people here illegally are terrorists, but the longer you have a porous border, the greater you have a chance that terrorists will take advantage of that. that is not something we had to deal with the 1984-1986 the way we have to deal with today. madam chair, thank you. i also thank mr. colbert for bringing attention to the question of workers in the field. we're not sure what will happen in return and what will appear on television -- and i know he would never take anything out of context. [laughter] i might as well quit while i am ahead. >> thank you, and your time is expired.

i would like to introduce the panel of witnesses before us, and i will start by introducing dr. carol swain, a professor of science and political law at vanderbilt university, and a member of the james madison society at princeton university. she received her bachelor's from roanoke college and her master's from virginia polytechnic institute. she holds a ph.d. from the university of north carolina, chapel hill. in 2000, she was awarded an m.l.s. from yale law school. she specializes in that race relations and is the author of several books, including her most recent, "debating immigration." next, i would like to introduce phil glaze, a third-generation

fruit grower and former chairman of the apples association. he serves the interests of the entire american apple industry. he is an active member of the coalition for immigration reform. his family business grows, packs and ships apples, and has been producing apples since the 1920's. it is my pleasure to introduce our third witness, arturo rodri giez. since 1993, he has served as the president of the united farm workers, note first founded by cesar chavez. he holds a master's degree in

social work from the university of michigan and has worked for the usw since 1973. he has oliver -- he has over 35 years of experience organizing former erskine negotiating contracts, and working for -- organizing farm workers, negotiating contracts, and working for fair wages and working conditions. finally, stephen colbert is a peabody award winning host of the comedy central television show, "the colbert report." he and his team have a one two emmys for outstanding -- have earned two emmys were outstanding writing. he recently teook a trip to a

working farm to understand the circumstances of the american farm worker. each of you has prepared a written statement. those will be made part of our official record. at this point, we would like to summarize your statement and about five minutes. -- we would like you to summarize your statement in about five minutes. there is a machine on your table that will give you a green light when you have time and a red light when you should summarize and finish. we will go first to dr. swain. >> good morning. thank you for allowing me to testify on this important issue. i speak today on behalf of

millions of americans who would like to see immigration laws vigorously enforced. i contend that america does not have a shortage of agricultural workers. instead, we have a manufactured crisis by some the web like to ensure a steady supply of cheap labor -- by some who would like to ensure a steady supply of cheap labor and bypass existing programs. a labor economist who has conducted extensive studies of farm labor has found a rise in production and a stagnant wawages for workers.

if there were labor shortages for agricultural workers, one would expect to find rising wages and more attractive working conditions. one would not expect to find an unemployment rate of 10.8% in may and 7.9% in august. these figures indicate that there are native workers actively seeking employment in agriculture, forestry, fishing and hunting. the majority of these workers have less than a high-school education. they work under the most strenuous conditions. there is a high turnover rate among these workers. agricultural workers often leave the farms or other low-wage, low skill occupations. there they compete directly with low skill americans for a dwindling supply of low-wage jobs. the "take our jobs" initiative entirely misses the point.

america cannot continue to bring in low-skilled guest workers to compete with the most disadvantaged americans, the poor whites, blacks, legal hispanics, and others whom are here legally. nor can it continue to turn a blind eye to illegal immigration. often migration into the field migrates into other industries. without illegal labor, employers would be forced to pay higher wages and improve substandard working conditions. instead of paying $8 or $9 per hour, employers might be forced to pay $12 or $13. an increase in the wages of farm workers would not substantially increase the average family's food bill. the average family's food bill would rise by about $8 per year. the take our jobs initiative

mrs. the fact that in some parts of the country, native workers have successfully worked alongside immigrants. yesterday, i had a conversation with a businessman from nashville who ran a one-year experiment in arkansas involving sweet potato planting and harvesting. he invested over a quarter of a million dollars of his own money to help unemployed americans get jobs in the field in an area of the country where unemployment is around 40% for african americans. his experiment involved the agricultural workers who are and a native-bornisas blacks. they were picked up, transported to the site, provided with facilities and at decent wage. he noted no difference in the quality of work provided by the

native-born black workers, and concluded that americans would do farm work if they had transportation and decent working conditions. even though he had a program that was providing jobs for unemployed americans, he could not get state or federal agencies to make an investment in this program. he would like to see an independent farm services company created to stand between the workers and the growers. they would hire the workers, provide air-conditioned transportation, buses, a bathroom facilities, and served as a middleman between the bathroom workers and the growers. the "take our jobs" initiative has not made an effort to recruit american workers. this is a publicity stunt. we need to reform immigration. there is an oversupply of labor from foreign countries that works against the interests of native workers. it depresses our wages, reduces

the opportunities, and deters employers from investing in native human capital. compounding these problems, native-born blacks and hispanics suffer more than any other groups. just look at the unemployment rate. it is in my testimony. it is off the charts. this is a disgrace. congress needs to do something about reforming immigration and they need to protect the most disadvantaged americans. >> thank you very much. we turn now to mr. glaze for your testimony. >> i am honored to testify today on behalf of the u.s. apple association and the

agricultural coalition for immigration reform. i am a third-generation fruit farmer with operations in virginia. we employ from 30 to 155 workers, depending on the time of year. the fact that i appear before you today as a farmer with the president of u f w should send a very powerful message. we have a common problem. despite continued attempts at automation, apple's still need to be manually pruned and hand- picked. the work as physically demanding and a certain amount of skill is necessary. apple's bruce greatly -- apples bruise easily, and improper picking will greatly reduce the value of our crop. today, farmers rely on legal and illegal workers.

without a solution, farms will fail. we will export jobs and lose our food. government statistics tell us that 80% of farm workers are foreign-born, and half of those are unauthorized. only 2%, are coming in through the existing program. many believe that native-born workers will harvest american specialty crops, however, the take our jobs campaign is just the latest in a series of unsuccessful efforts in good and bad times, in michigan, washington, california and elsewhere to recruit americans into farm jobs. those of us struggling to harvest our crops are not surprised that take our jobs is only producing a handful of workers. it is not about hourly wages.

farm workers can earn more picking apples and flipping burgers or stocking shelves in a big box store. the average worker on my farm earns $93 for a nine hour day. like so many agricultural jobs, and picking apples is highly seasonal. it is out in the the weather and demanding. i have a kicking bucket of apples here. i invite every member to come down and put it on, then understand what it is like to put that on 150 times per day going up and down a ladder. most people in this room understand that our immigration system is broken. some are trying to use the guest worker program but face huge obstacles and uncertainty. just last month, apple growers in the northeast had a huge disaster when the state department and immigration services put applications of hundreds of jamaican workers in

jeopardy just days before the grower needed them to start harvest. members of congress intervened and the workers arrived at the last moment. a few more days of an action could have meant losses of $90 million for the growers. the program is a mess. the choice between using the dysfunctional program or hiring workers whose documents look good but may not be is untenable. in the u.s., we have a short window of a couple of months to get about two hundred million bushels of apples off the trees. as the apples ripen, there is about a five day window to pick them that the proper maturity. different varieties and strains allow us to manage the harvest over the course of 8-10 weeks. the arrival of workers has 8 -- the delay of the arrival of workers have a domino effect. what is most worrisome to me as a grower is the reality that we could lose a large por o