about their children. i have metany low-income families who cared desperately about their children's futures pit to say they are not good parents and that is the reason our inner-city schools are failing is a travesty. there are parents who, on the first day the programs open up, lid up around the block before dawn to get their children in. low-income parents cared deeply about their children. they want what is best for them. what is a cop out is to say that -- education is hard. of course. why would you get into the profession if it was not? it is e single-most important thing we have to do as a nation. we have to do better job. >> would now bring you live coverage of the u.s. house. the house is beginning with morning our speeches. there will be more work on

revisions of the patriot act. they love for one hour equally divided. the debate on after 5:00 p.m. e. now, live coverage of the u.s. house year on c-span.

the speaker pro tempore: the house will be in order. the chair lays before the house

the communication. the clerk: the speaker's rooms, washington, d.c. february 14, 2007. i hereby appoint the honorable rob bishop to act as speaker pro tempore on this day. signed, john a. boehner, speaker of the house of representatives. the speaker pro tempore: pursuant to the order of the house of january 5, 2011, the chair will now recognize members from lists submitted by the majority and minority leaders for morning hour debate. the chair will alternate recognition between the parties with each party limited to one hour and each member other than the majority and minority leaders and minority whip limited to five minutes each but no-no event shall debate continue beyond 11:50 a.m. the chair recognizes the gentleman from california, mr. campbell, for five minutes. mr. campbell: thank you, mr. speaker. the president today released his budget and it is a pretty ugly thing.

we reach another record deficit next year in his projection and we have deficits that go on as far as the eye can see. we are rapidly heading toward the time when our national debt will equal the economy 100% of g.d.p. the last time that occurred, 1944 and 1945 when we were fighting world war ii. there's a big difference between now and then. then we were fighting a war. at some point that war would end and the spending would drop. in fact, it did. and after 1945, we didn't reach that level of spending again for 30 years. however, this time the spending is projected to increase every year as far as the eye can see. then we finance this debt with americans through war bonds. americans financed their own debt. today 45% of our debt is held

by foreigners. we are giving them a power and control over us. almost more importantly back then we were fighting a world war to preserve freedom and our way of life. and that's what drove the deficit and the debt. today our deficit and our debt are driven largely as we create bureaucracies, free health care, and free retirement plans that the person receiving them doesn't have to pay for and no one in this generation is going to have to pay for. this debt is from the wrong place. it is for the wrong reasons. and it will be with us until as far as we can see. no, this debt is now the greatest threat to the prosperity, security, and hi gem any of the united states of america. our economy is like a patient,

a person. we have an infection. we have an infection of debt. if allowed to continue, that infection will kill the patient. in the last four years, democratic congress and this president in the last two years have made this infection much worse and it has grown and festered such that the condition of the patient is substantially worse than just four years ago. we have to kill this infection before it kills us. and we have three strong antibiotics we can give it. first, reduce spending. second, raise revenues by growing the economy. raising tax rates at this level will not raise revenue. and reform the entitlement which are the majority of our spending. this week we will start with the first of those antibiotics. we will begin for the first time in a long time to actually

reduce spending instead of just to talk about how much it's going to grow. now, there are those who are decrying on both sides of the aisle how much we are cutting or reducing. i submit to you, mr. speaker, that the bill that's coming before us tomorrow doesn't actually cut enough. you know, we have increased discretionary spending, that's the spending over which congress has annual control, by 38% in the last four years, since 2006. now, in that four years there hasn't been a lot of inflation, mr. speaker, and most americans seen their spending increase by 38%? most americans seen their income up by 38%? no. was the government so bad four years ago when we were spending 38% less that it couldn't function? were there great tragedies and trials on the streets that we don't have today because we

increased spending by 38%? no. we have to act and we have to reduce spending, and there is plenty of spending to reduce. mr. speaker, this debt is our greatest national security threat. this debt is the challenge of our generation. we must be up to that challenge. let us not fail. let us begin now. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. are there other members who wish to claim time? seeing none, pursuant to clause 12-a of rule 1, the chair dekwlares the house in recessin

minority member of the permanent select committee on intelligence; and, two, one motion to recommit. the speaker pro tempore: the gentleman from california is recognized for one hour. mr. dreier: thank you very much, mr. speaker. i'm happy to yield the customary 30 minutes to my good friend, the gentleman from boulder, and pending which i yield myself such time as i might consume. the speaker pro tempore: the gentleman is recognized. mr. dreier: i ask unanimous consent to revise and extend my remarks. the speaker pro tempore: without objection. mr. dreier: mr. speaker, 18 days from now three key provisions of the patriot act are set to expire, leaving a gap in our national security framework. today's underlying legislation would temporarily, and i underscore the word, mr. speaker, temporarily extend these provisions to allow for the development of a long-term solution with the many questions

that are out there. now, mr. speaker, with strong bipartisan support, the previous congress simply passed a blanket one-year extension without addressing any of the underlying challenges, questions and controversies. and, mr. speaker, i'm the first to admit that there are challenges, questions and controversies that relate to the patriot act. unfortunately, and again it was by a vote of 315-97, february 25 of last year, mr. speaker, and we went to that entire yew, -- through that entire year, but guess what? not a single hearing was conducted subsequent to the passage of that extension. not a single hearing over the past year has been held. now, i feel very confident that my colleagues who have joined me on the floor here from the judiciary committee, mr. lungren who is here right now, mr. sensenbrenner who chair the

subprime committee, mr. gohmert, i mean, these gentlemen and i have just had a conversation, mr. speaker, in which they have made an absolute commitment that this congress will not make the mistake that was made over the past year. following this short-term extension, we will have a thorough oversight process in which the committees of jurisdiction take a very close look at how we pursue the terrorists who threaten our homeland. now, everyone acknowledges that this is not only controversial, not only filled with questions and not only filled with challenges, but it is very, very complicated. the individuals and networks who seek to do harm to americans change and adapt every single day and mr. lungren and i were just vag conversation in which we were looking at the situation as it existed a decade agoing, right after september 11, and the threat is much different today than it was 10 years ago.

and that's why we need to recognize that they are constantly changing and adapting their tactics to try and undo the united states of america and the free world. staying one step ahead requires a tremendous amount of flexibility, ingenuity and coordination. and of course the right law enforcement tools. just today the secretary of homeland security, janet napolitano, said that the threat that exists today, and mr. gohmert just showed it to me on his ipad, it's on the front of one of the newspapers around here, the threat that exists today is as great as it's been since september 11, and then when i said it to mr. lungren, he reminded me that it's a different threat. a different threat today than the one we faced in the past. and that's why flexibility, ingenuity and coordination are absolutely essential if we are

going to proceed. ensuring that we are taking all necessary steps while fully protecting the rights of all americans, and i want to underscore, this is one of the reasons that going back 10 years, as we were legislating through the prison much of september 11, i was -- prison am of september 11, i was very -- prism of september 11, i was making sure we were not undermining the rights of the american people. we need to ensure that that is a priority as we proceed. this process is going to be a lengthy process over the next 10 months and it's not a process that can be resolved in the seven legislative days that exists between now and february 28 when this is scheduled to expire. in the immediate term, it is imperative that we temporarily extend the expiring provisions to ensure that we do not suddenly create glaring

loopholes in our national security. it is imperative that we commit to a comprehensive and, yes, transparent process, and i had a conversation with my california colleague, mr. rohrabacher, downstairs. we want to, all the way to when this measure comes to the floor, ensure that we have an open and transparent process when it comes to changes, modifications to the patriot act, and we want amendments to be considered, we want there to be a free-flowing debate as we proceed. now, mr. speaker, the last piece of legislation, the resolution that we were just discussing, has to do with job creation and economic growth because we want to unleash the potential of the american worker by treeing them from the onerous regulations that have been imposed on them. and some might say, is this in fact a jobs bill? when i think about what happened to our nation's economy following september 11 of 2001.

we all know the devastation that took place. the new york stock exchange had to close down for a week. we saw tremendous disruptions in our economy and the job force. this measure is designed to ensure our national security and without national security, we don't have the potential to save and create jobs in this country. so i see this measure as being critical to our quest for sustained, we're enjoying economic recovery today, for sustained job creation and economic growth and believe that they are so inex-trick pli tied that it is essential that we put this extension in place so over the next 10 months, nothing will be done to undermine the security and safety of our fellow americans. the five most important words in the middle of the pri amble of the constitution are -- of the preamble of the constitution are

"provide for the common defense." mr. lungren and i were talking about this yesterday morning at the republican conference, it is absolutely essential that we recognize that that is our number one priority. providing for the common defense ensures our economic security where the potential for job creation will be able to be sustained. i urge my colleagues in a bipartisan way, since we had a vote of 315-97 on february 25 of last year with, again, strong bipartisan support from many, many, many democrats who unfortunately chose to vote no when we had this under suspension of the rules, now we are considering it under a process. this is bipartisan, by the way. when a measure is not successful under suspension of the rules, democrats an republicans alike bring measures to the floor under this process that we're considering this measure today. so i urge my colleagues to support this so that we can proceed with the very important

work that mrs. sensenbrenner, lungren and others had been pursuing. i reserve the balance of my time. the speaker pro tempore: the gentleman reserves. the gentleman from colorado. mr. polis: the patriot act is a bill that's been plagued with abution since it first passed. today's rule is another example of short circuiting a system that our founding fathers set up. if there was ever the need for close supervision and congressional oversight of a law, it is a law that discusses how and under what conditions the government can spy on its own citizens. but yet after 10 years of public record, we all agree there are some clear sections of the law that can be improved. instead of debating these sections of the law to better find that balance between protecting what makes it special to be american and protecting our national security, instead, republican leadership has decided to ram through this bill with as little debate as possible. mr. speaker, we spent an hour

earlier discussing how we will spend 9 1/2 hours discussing the organizational aspects of the house committee structure and yet for something that cuts to our core identity as americans we only have an hour under the rule and an hour under the bill to discuss it in its entirety this bill would re-authorize three of the most troubling provisions in the patriot act. again, instead of debating the merits of the provisions and coming up with solutions that both sides can agree on to protect what it means to be an american, republican leadership has a tendency to force it through under a suspension and now they propose it under a closed rule. on such an important issue, one that affects our national security, our civil liberties of every american, that goes right to the heart of what it means to

be american and our identity in this great republic, the american -- the majority has reverted back. just yesterday, they held a vote open for more than half an hour pressuring members to switch votes. thankfully, the effort failed to switch the majority which is why we're here today with an additional hour to discuss the patriot act, weawowfully insufficient. ic member -- i think members can be grateful that we at least have this much. the majority says they haven't had time to look at this, but they've had hearings on other topics. apparently the topic of abortion was important enough to have a discussion of the judiciary

committee but the -- not the topic of the curt of the american people. why can't the judiciary committee find time to hold a hearing to discuss an issue this important that cuts to the very definition of what it means to be american. even if a little more time is needed, a month, two month, why sthrnt a 30-day extension or 60-day extension before us instead of a 10-month extension? it shouldn't be used as an excuse to prevent all proceedings from moving forward. mr. dreier: will you yield? mr. polis: i yield for a moment. mr. dreier: as i said work the controversies, the channel, and the absolute humongous task that is faced, we know the legislative process takes a while and to have that 10-month extension is essential for the work. mr. polis: i think there would be broader agreement if there was perhaps a 60-day extension

and maybe another 60-day extension but putting it off 10 months or a year can give an excuse not to bring to the forefront these rules that need to be dealt with. there's already been the single most significant bill was h.r. 2, the repeal of an entire body of health care law. sometime -- somehow there was the ability to bring that to the floor within days of the opening of a new congress. both parties want to ensure that the government has the tools we need to fight terrorism. we can all agree that the patriot act has issues that need to be recovered. -- resolved. if we can move this bill through the regular order, i'm confident that the judiciary committee can make improvements they've already discussed in prior sessions. last year, the judiciary committee reported out by voice vote measures that would imflive patriot act. it's clear there is bipartisan support to improve this bill. even as we speak, the senate is

debating three different versions of the re-authorization bill. yet here in the house, we have only this one, originally scheduled with hardly any debate, and now with a very closed structure and no ability for members of either party to offer amendments. apart from its procedural flaw the re-authorization fails to provide the administration the tools and support it truly needs. the administration, which does support re-authorizing the patriot act, has asked for a real re-authorization rather than a short-term extension that increases the uncertainty around left arm planning, intelligence and law enforcement as they carry out this mission. instead of a patch to get us through another few months at the expense of the civil liberties of the american people, we need the opportunity to work together to fix this bill. specifically this bill would re-authorize section 215, 206 and 6 001 of the reform and

intelligence act. one section allows them to capture any relevant thing that may be relevant to an investigation, your medical records, your diary, even what books you checked out of the library and what websites you visited. in the past, these were limited to narrow classes of business and records but the specific facts pertaining any any agent of a foreign power swept away the basic requirements. it was reported by a bookstore that everybody, the information regarding everybody who purchased biographical books about osama bin laden had been requested. the justification used for this provision is that the government needs to be the -- to have the ability to protect our national security yet this goes against the basic constitutional notions of search and seizure. we have a -- we should seriously consider making changes to this section instead of blindly

giving the government the ability to spy on its citizens. let me give a few examples. i think this will come as some surprise to many people of the transgregs that have occurred, the affronts to our civil liberties as americans that have occurred rn the patriot act. perhaps some of us have taken christmas vacations to las vegas. well, there's a list of 300,000 people that visited las vegas in christmas of 2003 that according to an article in "the las vegas review journal" said the ka see yow operators turned over names and other guest information on an estimated 270,000 visitors. i think a lot of people don't expect that to happen when they visit las vegas. there needs to be an oversight process in place to ensure that when extreme measures are necessary that interfere with our privacy it goes through the right chams. this particular incident, even the f.b.i. conceded that the

personal records had not borne out a particular threat. the patriot act has been used more than 150 times to secretly search individuals' homes and 90% of those cases, 90%, have had nothing to do with terrorism. the patriot act was used against brandon may feel, a muslim american innocent of any crime to tap his phone, seize his property, copy his computer, files, spy on his children, all without his knowledge, mr. speaker. it's been used to coerce an internet service provider to divulge information about web surfing and internet activity and gagged that provider preventing them from saying their information had been compromised. it's been used to charge, detain and prosecute a muslim student in idaho, providing website licks to materials that were fun objectionable by some even though those same links were available on a u.s. government website. mr. speaker, part of what makes

america special is the balance between our civil liberties and rights as americans and our national security. when so many members of congress, so many americans, on both sides of the aisle, of all ideologies, feel that we can do better, i think we owe it to the people of this country to do better and have a better process as a congress, to improve the patriot act to help protect our liberties and keep us safe over the long-term. i reserve the balance of my time. the speaker pro tempore: the gentleman from california. mr. dreier: i yield myself 30 seconds to say i agree with much of what my friend from bowler has said. i will say this, it was february 25 of last year that a one-year extension was provided and in the a single hearing held. it was very important that we deal with these questions my friend raised and we have them as well. they need to be addressed. the administration has come out in strong support of this administration. they'd like to have the extension, not a 30 or 60 days, they'd like it to go to december

of 203, if they had their way, that's what the statement of 1kwr5d mrgs policy says. mr. speaker, i believe that we are very much on the right track to ensure that we get those issues addressed. and now i'd like to yield four minutes to my friend from menomee falls, the chairman of the crime subcommittee, who will be explaining in great detail the challenges we face. the speaker pro tempore: the gentleman from wisconsin is recognized fur four -- for four minutes. >> the information provided by my colleague from colorado doesn't mesh with the facts. first of all, i was chame of the full judiciary committee on september 11. when the patriot act was introduced, we had two hearings and a full committee markup. mr. sensenbrenner: the senate didn't have that, even though it was controlled by the democrats and there were, you know, long

negotiations to come up with the original patriot act the president signed. at that time, i insisted that there be a sunset provision on all of the 16 additional provisions of the patriot act that expanded law enforcement powers and i gave the commitment that as chairman of the committee, i would hold hearings on each of these 16 provisions, subsequently increased to 17, before the sunset expired. and i did. and at that time, the testimony was very clear that there was no controversy over making permanent 14 of the 16 provisions. and the patriot act extension did that. the three provisions not made permanent were the ones that were in controversy. and most of the complaints advanced by my friend from colorado, mr. polis, were on the

14 provisions that there were no abuses that were brought out during the 2005 hearings. now let me talk about the three provisions that do expire, that are the subject of the underlying bill. first of all, section 206, the roving wiretap authority, law enforcement has had this authority on organized crime and drug pushing since 1986. the patriot act expanded it to include terrorism. there has been no constitutional challenge that has been filed against section 206. section 6001, the 17th provision and the lone wolf provision, says that someone who can be investigated urn the patriot act doesn't have to be a member of an identifyable group like al qaeda in order for the patriot act's provisions to come into

play. constitutionality of that is unchallenged. now section 215, which is the business records provision, there was a constitutional challenge and it was withdrawn. the challenge was in the case of muslim community associations -- association versus ashcroft filed in the eastern district of michigan. the plaintiff in the case alleged that section 215 violated the first, fourth and fifth amendments to the constitution. . the 2005 re-authorization of the patriot act amended section 215 and as a result of the amendment, the plaintiffs withdrew their complaint. we have solved those problems. so much of what we hear today are about issues that were made permanent because there really wasn't an issue or something that involves other type of law

enforcement activity other than the patriot act. this congress, i am the chairman of the subcommittee on crime, and we will have those hearings before this extension expires on december 8. and we will give everybody a chance to thoroughly air their complaints just like i promised and just like i delivered in 2005. and when the record is brought up to date, i hope that the members will confine their debate to what is actually in the expiring provisions of the patriot act rather than talking about a lot of other things, some of which don't even involve the patriot act whatsoever. i yield back the balance of my time. the speaker pro tempore: time has expired. the chair recognizes the gentleman from colorado. mr. polis: i yield three minutes to the gentleman from georgia, a member of the judiciary committee, mr. johnson. the speaker pro tempore: the gentleman is recognized for three minutes. mr. johnson: thank you, mr. speaker.

mr. speaker, i appreciate the historical account that was just delivered by my colleague on the judiciary committee, former chairman sensenbrenner, and i have abundant respect and admiration for him and his motives and his desire to protect the civil rights that we all hold dear. but i find it disturbing that today we are going to start out on a 9 1/2 hour debate on a meaningless, redundant measure that simply instructs congress and its committees to review regulations and we could be spending that time dealing with such a very important serious issue such as re-authorization of this so-called patriot act.

this bill is too serious, it's too important to be re-authorized without any hearings, no markups, who opportunity for amendments. i was glad to be one of the true patriots to vote against this measure when it was brought to the floor yesterday on a suspension of the rules. without due consideration by our judiciary committee. there's a bipartisan consensus that these provisions need some improvement. roving wiretaps, the lone wolf provisions, especially business records. while the threat of terrorism is real and law enforcement must have the right to protect

americans, any counterterrorism measure must have a solid constitutional fitting and respect for the privacy and the civil liberties of the american people. if congress re-authorizes these provisions with no changes, americans will remain subject to warrantless intrusions into their personal affairs and a gross overreach of federal investigative authority that could be and has been abused. it's just not how we do things in this country, ladies and gentlemen. rather than taking the time to craft reforms that will better protect private sit zens' communications and privacy from overbroad government surveillance, the republican party simply wants to ram this bill through without providing any opportunity for anybody to

offer amendments that would improve the bill. we all acknowledge that law enforcement needs new tools to keep up with 21st century threats. but surely it's our responsibility in congress -- the speaker pro tempore: the gentleman is recognized for an additional 30 seconds. mr. johnson: thank you. but surely it's our responsibility in congress to re-examine legislation that was hurried through congress in the wake of 9/11, to make sure it lives up to our national ideals because this bill, this bill fails to contain any checks and balances to protect law enforcement abuses and protect civil be liberties -- civil liberties. i oppose the rule and underlying bill. i yield back. the speaker pro tempore: the gentleman yields back. the chair recognizes the gentleman from california. mr. dreier: i yield myself 30 seconds to say to my good friend from georgia that no one is trying to ram anything through at this point. i would say to my friend that president obama strongly supports this extension, i would say to my friend. president obama strongly

supports this extension. he in fact wants it to go to december of 2013. we had a one-year extension put put in place by a vote of 319-27 on february 25 of 2010, there was a commitment then, certainly people inferred, we would have hearings. there was not a single hearing held during that entire period of time and we have made an absolute commitment, we just heard from mr. sensenbrenner, we are about to hear from mr. lungren the chairman of the cybersecurity subcommittee, that we are going to -- mr. johnson: would the gentleman yield? mr. dreier: i yield right now to the gentleman from gold river, five minutes. i would love to engage in a colloquy if mr. polis would yield time on this issue. five minutes to my friend from gold river, the chairman of the cybersecurity subcommittee. the speaker pro tempore: the gentleman from california is recognized for five minutes. mr. lungren: thank you very much , mr. speaker. i thank the gentleman, the

chairman of the rules committee, for granting me this time. the author of the sunset provision that requires us to these three portions of the patriot act. i offered that when we had the re-authorization of the overall bill because i thought these were three sections that were, at that time, controversial, and that we ought to be required to review it. so i did support the authorization for a year that we had last year, but i fully expected that the judiciary committee would hold hearings so that before this date we would have acted on any changes anyone deemed necessary. i would say i am not aware of any changes that are necessary, and i have followed this ever since they put the sunset provisions in.

nonetheless, i had thought that during the last year while my friends on the other side were in charge, as a matter of fact i believe our committee passed out a full re-authorization of the patriot act, that is the judiciary committee, under the leadership of chairman conyers, but it was never brought to the floor for us to consider. under any rule. open or closed. so what we are asking for in concert with the president of the united states is to extend it to the end of this year so that we can carry out the actually mandated obligation of oversight. chairman sensenbrenner, chairman of the crime subcommittee, has a track record. i believe it was 13 hearings that we held on these subjects. we went through chapter and verse, we had the f.b.i. before us, we had the attorney general before us, we had the criminal division before us. we had the aclu before us. we had classified briefings as

well as public hearings. we made some changes in 2005. pursuant to requests and information that was presented to us. now, i know some of our members said after they voted against this -- on this suspension calendar this bill has been in effect for 10 years, times have changed. yes, they have. and if we examine the changes we would see these three provisions are more necessary today than they were when first put into law. why? because as secretary napolitano, the secretary in the obama administration, stated just today we are on as high alert today as far as she's concerned in terms of the threat as we have been at any time since 9/11. and as the two co-chairs of the 9/11 commission said in testimony last year, which is basically repeated by secretary napolitano, and the head of the

nctc in testimony this week, we have a different threat today. we have the continuing threat of those of al qaeda on the international scene still attempting to probe and find where they might be able to provide a catastrophic event against the united states, but the new facts show that the greater threat to us today is as they have said, less consequential attacks from smaller groups, some not even officially allied with al qaeda, sometimes inspired by them, sometimes incited by them, and these three provisions go directly to the investigation that is are necessary for us to deter that. this is not the regular criminal justice system when you examine the evidence after the crime has been committed to try and convict the individual. this is in the essence of deterrence to make sure that we are not collecting body parts after the attack has occurred. and as a result, we have tried to make changes in the law that

will allow us to do what the 9/11 commission said we couldn't do beforehand. connect the dots. why do we have the lone wolf provision in here? because that is more and more the concern we have to have. now, this would not apply to major hassan because he is an american citizen. we are talking about lone wolf provisions for those who are not u.s. citizens. but he was a lone wolf if you want to understand what a lone wolf is. he wasn't officially connected with al qaeda or anybody else, but was in conversation, he was incited by our inspired by, and if anybody doesn't believe he committed a terrorist attack, they don't know what terrorism is. you talk about a lone wolf, about the guy who was on the airplane in christmas a little over a year ago. that would be a lone wolf. we might have been able to collect information on him had we had an opportunity to get some of this information. i would be happy to yield. mr. dreier: mr. speaker, we have the benefit of having my friend

from gold river, my friend from anom any -- anomy falls on the floor if they would underscore the commitment that was raised by the gentleman from georgia that we would be diligently -- mr. speaker, i yield myself an additional minute and a half. the speaker pro tempore: the gentleman from california is recognized for a minute and a half. mr. dreier: i would like to inquire of both my friends what kind of commitment they are prepared to make in dealing with this. we have gone for an entire year following the 315-97 vote passage of this measure without a single hearing being held. first i yield to my friend, the chairman of the crime subcommittee. mr. sensenbrenner: i thank my friend for yielding. i plan on doing with this re-authorization of the patriot act the same thing i did with the 2005 re-authorization of the patriot act. examine every one of the expiring provisions, let everybody speak their peace, and

then let the house of representatives work its will. there have been no civil liberties violations on these three expiring provisions. they have all been upheld as constitutional or not challenged. and we did have a problem with business records and we solved that in 2005. so all of the fears that the gentleman from colorado is making, i think are a red herring. we did it when we were in the majority in the judiciary committee and unfortunately when the other side was in the majority, they didn't do it. mr. dreier: reclaiming my time. i would say to my friend i think it's very important to note that as those hearings proceed, issues that relate to civil liberties will clearly be a part of the hearing process and debate, am i correct in concluding that? mr. sensenbrenner: you're right. i did it 5 1/2 years ago. i'll do it again. mr. dreier: i appreciate that.

how much time do i have remaining, mr. speaker? the speaker pro tempore: time has expired. mr. dreier: i yield 45 seconds. i'm happy to yield to my friend. mr. lungren: the reason i came to the house of representatives was in response to 9/11 to try and make sure we had the tools necessary to protect this country from these kinds of attacks and at the same time as someone who devoted his entire life to enforcing the law, but with the protection of civil liberties, to make sure that is done in this case as well. one last thing about the roving wiretap, it is not controversial. it's been used in domestic criminal cases since at least 1980. and all it does is respond to new technology. you have a wiretap that now grants authority, once proven, grants authority to follow the person with whatever device it uses because, guess what? most people are not confined to a single l.a.n. line today. that is all -- that's all this does. would you think we would have the same provisions we use against criminals we could use

those against those who would want to destroy americans in america. terrorists. mr. dreier: i yield myself an additional 30 seconds. in response to my friend on the roving wiretap issue, it's fast mate nating. as i began -- it's fascinating. as i began my remarks, mr. gohmert showed me the ipad which had the headline that the secretary of homeland security, janet napolitano, has indicate the threat that exists today is greater than it's been at any time since september 11 of 2001. that technology didn't exist back if 2001 or certainly back in 1980, the roving wiretap was designed to focus on the potential terrorist and not on some antiquated technology we have. and with that i reserve the balance of my time. . the speaker pro tempore: the chair recognizes the gentleman from colorado. mr. polis: the gentleman from wisconsin mentioned that he's

not aware of abuses under section 215. i would remind my colleagues that most of the uses are classified under 215 and there's not been a briefing for members of congress this congress to determine if there's been abuses. i have not had a briefing, nor has one been offered to the members of the 112th congress. i think before we make a decision about section 215, we need to know how it's been used. that's a simple request. with that, i yield three minutes to the gentleman from ohio, mr. kucinich. the speaker pro tempore: the gentleman is recognized for three minutes. mr. kucinich: i request unanimous consent to insert into the record -- the speaker pro tempore: without objection. mr. kucinich: two news articles, one from "the new york times," march 13, 2008, "f.b.i. made plan debt demands for phone records" and one from january

11, 2011, twitter signs -- shines a spotlight on f.b.i. credit subpoenas. the speaker pro tempore: without objection. mr. kucinich: i'd like to get back to first principles here. first amendment. congress shall make no law respecting the establish almost -- establishment of religion or prohibiting the free exercise thereof or abridging the freedom of speech or of the press or the right of people to peaceably to assemble and adress the government for redress of depree advances. this patriot act is a wholesale abandonment of the right to assemble peaceably. this patriot act is a square violation of the fourth amendment, the right of people to be secure in their persons, houses, papers and effects. against unreasonable searches and seizures.

now, i can trust my friends on the other side of the aisle, they're decent people. this isn't about democrat versus republican. it's not about a democratic president, not -- if there was a republican president or we'll have one in the future, it's about something actually much more important than all of us and than whoever might be an executive. it's about the constitution of the united states. congress made a mistake. when it passed the patriot act. mr. dreier: will the gentleman yield? mr. kucinich: i'm going to continue and then yield. congress made a mistake when it passed the patriot act. instead of sunsetting it and being done with it, we kept it going. this law today we seek to re-authorize certain sections of the patriot act. what i maintain is we have a

destructive undermining of constitutional principles. we can't say, let's trust our friends to do the right thing. it's beyond friendship, beyond party, beyond who's the president. i disagree with president obama on this. it's interesting, at this very moment that our president is on television celebrating the tremendous movement toward the free world of the people of egypt who have suffered real repression and suppression of their basic liberties, ewith can celebrate something happening -- we can celebrate something happening thousands of miles away. it would be much better for america if we celebrated our constitution. what we have done with the patriot act, we've given the government enormous powers. we've given the government to reach deeply into people's private lives, into their

business affairs, without a court order. we need to think about that. some people say they don't want government involved in certain things. government is involved in a way that is devastating when you come to the devastation of constitutional principles, you give the f.b.i. the ability to reach into people's private lives without a court order. i'm telling you, whether you're democrat or republican, this is a very dangerous thing we're doing here. stand up for the constitution. the speaker pro tempore: the gentleman's time has expired. mr. dreier: i yield my friend 30 seconds, the gentleman from wisconsin is recognized for 30 seconds. mr. sensenbrenner: the patriot act has been the law for over nine years. not one of those 17 sections have been declared unconstitutional by any court in the united states. the argument that has been advanced by the gentleman from ohio is just plain wrong. there has been plenty of

opportunity to sue and to get parts of the patriot act declared unconstitutional. most of these provisions haven't been challenged. so let's stick to the facts. rather than making up arguments that simply do not exist with the patriot act. the speaker pro tempore: the gentleman's time has expired. mr. dreier: may i inquire how much time is remaining on each side. the speaker pro tempore: the gentleman from california has nine and one quarter minutes and the gentleman from colorado has 13 and a half minutes remaining. mr. dreier: i'll reserve the balance of my time so my colleagues on the other side of the aisle can exhaust some of their time and then -- actually, i'm going to ask my friend how many speakers he has remaining? mr. polis: we have one more speaker remaining. two more speakers. mr. dreier: i reserve the balance of my time and let my friend proceed. the speaker pro tempore: the chair recognizes the gentleman from colorado. mr. polis: i yield three minutes to the gentlewoman from texas, a

member of the judiciary committee, ms. jackson lee. the speaker pro tempore: the gentlewoman is recognized for three minutes. ms. jackson lee: good to see you, mr. speaker. i thank the gentleman for managing and i thank the distinguished gentleman from colorado. mr. speaker, we are not the judiciary. we are the people's voice. we are the united states congress. the issue of whether a court has ruled any of this unconstitutional is the prerogative of that court. but we have the prerogative to address the issues dealing with the people's voice. so i am disturbed that this comes to the floor first as a suspension, which was defeated by the people's voice, and now through some unique trickery to come with a closed rule so the people ose voice is shut down. this constitution deserves more. the founding fathers were wise enough to establish three branches of government. this house is called the people's house.

and therefore we have the right to have a voice, that voice was already expressed by members on both sides of the aisle, republicans and democrats, who voted this down because of the lack of opportunity to engage on behalf of the people. what more needs to be said? now let me say this about the constitution and about this process. first of all, we have been in some very difficult times and we understand the crisis of terrorism and the aftermath of 9/11. but let us be reminded that in those early stages, when we developed this constitution, those men who were on this floor had to be concerned about the oppressiveness of the state that owned and dominated this country before it was. yet they did not yield to not putting in the constitution the fourth amendment which says that we should not be subjected to unreasonable search and seizure. i want to remind my friends that when the democrats attempted to have open hearings in 2005, the

republicans shut us down. they would not allow us to have people of a different perspective. they turned off the lights they sent out home, they wouldn't let the people be heard. is that what we're going to get now? so i raise the question about the roving wiretaps. my friend on the other side of the aisle is incorrect. this is more restrictive than general criminal law and all we ask is allow us to amend it so it conforms to general criminal law. that is the point. i offered an amendment with mr. conyers that talks about requiring a different standard other than the knowledge requirement when someone breaks into your house. when they come into your house and come into your office, we need to have a standard that is articulated so that innocent persons are protected. we realize that we live under a cover of terrorism. we are patriots as well. we join with the patriot act. and i must say to my good friend from wisconsin, the most shining moment of the judiciary committee was after 9/11 when we

constructed together, republicans and democrats, i believe, the best patriot act going forward. mr. dreier: will the gentlewoman yield ms. jackson lee: i will yield in a moment. his majority at the time took that bill we developed in the judiciary committee in a responsible, bipartisan manner with the ehotion and back drop of 9/11 behind us and skewed it in a way that frankly narrowed the rights of americans. it doesn't matter whether the cases have been selected. mr. dreier: will the gentleman yield. ms. jackson lee: the case -- it doesn't matter if the cases have been challenged by the court but whether the people of this place, the people's house, have a time to respond. i yield to the gentleman. mr. dreier: i thank my friend for yielding. i appreciate tremendous bipartisan support for the effort led by our friend from wisconsin which i think is terrific. the question is that -- that i would propound to my friend is if we look at the february 25 passage of this measure by a vote of 315-97 and the one year

period of time, i know the gentlewoman is a member of the judiciary committee and home left-hand security committee certainly would have wanted to have had hearings, why weren't there hearings held in that one-year period of time. the speaker pro tempore: the gentlewoman is recognized for one minute. ms. jackson lee: we know that february 25 is coming up. the fact that hearings had not been hold -- mr. dreier: last year, last year is when this was passed. ms. jackson lee: hearings had not been held as of december 2010, ehe knows if we were in charge we would have had the appropriate hearings. necessary to go forward before february 25. may i just have another 15 seconds. mr. dreier: i'll yield her further time. mr. polis: the house is not in order. the speaker pro tempore: the house is not in order. the gentlewoman from texas has

the time, the -- the time remaining is 30 seconds. ms. jackson lee feather sp --: if -- ms. jackson lee: if hearings were not held by february 21, 2010, the gentleman know he is cannot question whether we would have had the appropriate hearings before february 25 bauds we were not in charge. we ask to let the voice of the people speak. two days ago, the voice of this house spoke, republicans an democrats voted this down because they believe that the voice of the people should assure that the fourth amendment of unreasonable search and seizure has not been violated. mr. dreier: will the gentlewoman yields. the speaker pro tempore: the gentlewoman's time has expired. ms. jackson lee: we do have freedom. mr. dreier: would the gentlewoman yield. the speaker pro tempore: the gentlewoman's time has expired. the chair recognizes the gentleman from california. mr. dreier: i would be happy to engage in a colloquy. the point is, february 25 of

2010, there was an entire session of congress, it was when the democrats were in the majority, during that period of time through the entire one-year extension, there was not a single hearing held. i know that my friend, as a member of the homeland security committee and judiciary committee would have been a strong proponent of holding those hearings, that's why it surprises me that assuming she did insist on them that she was unsuccessful in the quest to get those hearings. i should add that the organization for the 112th congress is just under way today, in fact, due to the fact that the minority has refused to allow the organization to take place. so there's been a year period of time and i wish very much that there had in fact been hearing last year. with that, i yield three minutes to my very good friend from tyler, texas, the vice chairman of mr. sensenbrenner's crime subcommittee, mr. gohmert. the speaker pro tempore: the gentleman is recognize for three minutes. mr. gohmert: thank you, mr. speaker.

i thank my friend from california for yielding. there have been some great questions raised about these provisions in the patriot act. but it's hard to believe that for all of last year, when democrats had the majority in this body, that if those same arguments had been made to speaker pelosi and to chairman conyers that they would have just continued to deny for an entire year the chance to have a hearing on these things. either they were not canned for the hearings on those things when they had the majority and could have done it or they did ask but if they did ask, why would they elect the same speaker to be their leader going into this term if she was so entirely nonresponsive to their pleas like they made on the floor this year? going back to 2005, for that first extension. we had some very heated debates

as chairman sensenbrenner will remember in private over what we should do. and there were a couple of us that fought hard in private to have sunsets on those provisions and my friend, mr. lungren, happened to have the amendment there that would allow the sunsets on these and some of those concerns are the very concerned that have -- concerns that have been brought up by my democratic friends here. we want to make sure the abuses are not occurring, but so far we have not gotten the information from this administration to tell us what they have been doing. . one of the reaps we have sunsets is so we can force them to be accountable as they have not for the last two years. i want those hearings. you have been assured we will have those hearings that you couldn't get from your own party last year. we are going to have them. we are going to find out if there are any abuses and then we'll be able to know what should be done. but please know, this is -- this

does not allow under the fourth amendment a person has a reasonable expectation to privacy in their own house or place. that does not apply here. this is not to an expectation of privacy in somebody else's property. that's not what the fourth amendment addresses. but i want to find out how this has been used. please know that last year in the extension all the things that my friends across the aisle are screaming about, we didn't have a chance to amend, we didn't have a chance to recommit. you got that on this bill. and as far as the vote on monday, it was under suspension, had to be 2/3, i think it was stupid to bring it under suspension because if they brought it under a rule it would pass because the vote was 277-148. now they are doing what they should have done the other day. they are new at leadership. they are living and learning. hopefully they are not just

living. but we'll have the hearings. we'll address these matters, and we'll find out if it should be done for more than a year. but in the meantime we appreciate the concern and hope you'll express -- the speaker pro tempore: the gentleman's time has expired. the chair recognizes the gentleman from colorado. mr. polis: i yield myself a minute to respond. at this point in the 112th congress the judiciary committee has found time to hold several hearings. i have been informed they have held hearings on topics that are certainly important, immigration, health care, and malpractice. yet this topic that's being discussed today, something that's so fundamental to our identity as americans has not benefit interested a single hearing in the 112th congress. one cannot say it's because they haven't had hearings or they are just constituting themselves. i have been informed they had several hearings to date. they have been on other topics. apparently this topic isn't important enough to warrant a hearing in the early part of the 112th congress. one of the difficulties in

exercising oversight with regard to section 215 is that the orders are prohibited from being disclosed that they got in order to anyone but their alternatives. we have -- attorneys. we have very little ability to even find out whether section 215 has been abused or not. with that i would like to yield an additional minute to the gentleman from ohio, mr. kucinich. the speaker pro tempore: the gentleman is recognized for one minute. mr. kucinich: the gentleman makes a point. if you are under a gag order, how are we supposed to know if there's any abuses. hello? what mr. gohmert said a moment ago, i want to associate myself with much his remarks. and i have here for the record correspondentence i committeed on november 3, 2009, asking for -- correspondent, i submitted on november 3, 2009, asking for review of the patriot act. the speaker pro tempore: without objection. mr. kucinich: we create government to security our rights. not to give them away. the patriot act represents

giving away rights. not securing them. it's said while it hasn't been adjudicated. the laws that we make derive from our constitutional authority, and that's not just a matter of political will, but it's about moral reasoning. and when we look at section 215 which lets the government obtain orders from private records or items from people not connected to any investigation, when we look at section 206 which lets -- the speaker pro tempore: the gentleman's time has expired. mr. polis: additional 30 seconds. mr. kucinich: look at section 206 which allows the f.b.i. to obtain an order from fisa to wiretap without having to specify the target or device, when we look at section 6,001 which authorizes the government to conduct investigations of nonu.s. individuals not connected to a foreign power or terrorist group, effectively allows the government to circumvent standards that are

required to obtain electronic surveillance orders from courts . when we look at these things, these provisions are divorced from our constitutional experience. they are divorced from what we know are commonsense provisions of what our rights ought to be. that's why i'm opposed to the extension of the patriot act. and why if we had any sense we could repeal the whole thing. the speaker pro tempore: the gentleman's time has expired. the chair recognizes the gentleman from california. mr. dreier: i'm happy to yield 3 1/2 minutes to the distinguish chair of the intelligence committee, mr. rogers. the speaker pro tempore: the gentleman is recognized for 3 1/2 minutes. mr. rogers: thank you, mr. speaker. thank you, mr. chairman. i am excited that my colleagues renewed interest in the constitution. this is a good day for this house and this country. but i can't think of a bill and provision that is have been more misrepresented than what happens in this patriot act extension. a, i think they make all the arguments in the world why we don't make this permanent. let's give it an extension so you have time to talk about t but there is an inescapable fact at hand.

by the end of this month, these provisions will expire. there are agents in law enforcement in our intelligence community who are preparing briefs to go to the court, the fisa court, to use these provisions. they will not be able to do it on march 1. why would we let that happen? let me give you a great compamplee. i used to be a f.b.i. agent i worked organized crime. we built a case, did a brief, took it to the judge and got a court order to do whatever. roving wiretaps. yes, before this bill, roving wiretaps. why? because they would use different phones to conceal the criminality of their efforts. guess what? we have that happening now with terrorists. they go and buy 1,000, 1,000 phones that you buy that are already preprogrammed. these use it for one call and throw it away. what you're saying is we don't care somehow it's ok for you to

go after a drug dealer, a mafia don who uses his brother-in-law's phone, but you don't want to use this provision to go after a terrorist who is trying to hide their identity and their conversations and their content to build a radiological bomb. it's lewd dangerous. -- ludicrous. why would we do that to ourselves? make no mistake, you are putting americans in danger when you let this expire. on the roving wiretap, the f.b.i. director today said in an opening hearing less than 500 times, it's even been used. it is hard to get a wiretap. but what you're saying is after march 1, we can continue to do it for a drug dealer, but you can't go to the fisa court and get a wiretap on a terrorist who is using these phones for god knows what. why would we do that to ourselves? why would we jeopardize american

safety when it comes to business record at the "new york times." before he wanted to do this evening, you could actually go to the hardware store and get those business records where he was buying materials to assemble a bomb under the fisa court, the patriot act. but what you're saying is we would rather wait until it explodes and kill thousands and thousands of people and the f.b.i. can go to the same hardware store and use a criminal subpoena to get the same records. it makes no sense whatsoever that we would let this bill expire at the end of the month and jeopardize the safety and security of the united states. when you look at the lone wolf provision, if you heard what the director of the nctc today and yesterday was talking about, the most dangerous threat that we have is somebody like alackey from yemen trying to radicalize an individual and get them to do something god awful like the new york -- times square bomber, christmas day bomberer, like the

hassan shooting at fort hood. that's their interest. you take away the lone wolf provision, and the government can't quite prove that they are a part of al qaeda, but we know they are doing something, you have handcuffed them to stop it before it happens. one of the reasons that we don't have an attack who are is because this act has been in place and they have used it judicial judiciously. the speaker pro tempore: the gentleman's time has expired. the chair would remind members to address their remarks to the chair. the gentleman from colorado has 6 1/2 minutes left. and the gentleman from california has 2 1/4 minutes. mr. polis: i would like to inquire if there are other speakers? mr. dreier: i have one speaker and i look forward to closing with a grant total of 15 seconds after we hear the eloquence of the gentleman from drexel hill, pennsylvania. mr. polis: i reserve the balance of my time. mr. dreier: when i get 15

seconds. mr. speaker, with that i yield two minutes to a hardworking new member of this body, my friend from drexel hill, pennsylvania, as i said, mr. meehan. the speaker pro tempore: the gentleman is recognized for two minutes. mr. meehan: thank you, mr. speaker. it's a great pleasure to be here as a congressman. before i came here i served as a prosecutor, both a federal prosecutor and state prosecutor. and i have actually been probably one of the few people who has actually been involved in the investigations who have used the patriot act. used the patriot act against the proclaimed imperial wizard of the kkk, plotting to take hand grenades to blow up an abortion clinic. it helped us to resolve the case. what's happening today by virtue of these provisions is not just use what's important in 2003 but to appreciate the changing nature of technology and the need for law enforcement to be able to keep in pace with that. this roving wiretap simply

allows law enforcement to be able to track the individual rather than the phone. and you have to appreciate that law enforcement is operating in real time. i have heard many references as well to the idea of the sort of lack of due process. and because we are dealing with the issue of a potential terrorist, we are looking at it differently from the context of the probable cause context, but we are going before the fisa court. mr. rogers explained specifically that the need to take these same information of probable cause before a court and even if that phone is changed after the fact, we have to report back to the judge. about what has been done with that phone. the protections have been built in with what congress did. i was in the justice department when we came before you and you fixed these provisions. significantly. and lastly, i now chair a subcommittee on homeland security dealing with the issue of terrorism and the lone wolf provision. it was janet napolitano who

talked about the changing nature of the threat and this being one of the most serious times since 9/11. mr. speaker, we must stand together and support those that are on the frontline with these commonsense changes that have already been put into the bill. we are not going over new territory here. what we are doing is allowing those on the frontline to use the tools before them to keep america safe. i urge support for this provision. thank you. the speaker pro tempore: the gentleman's time has expired. the chair recognizes the gentleman from colorado. mr. polis: thank you, mr. speaker. i want to again bring your attention, mr. speaker, to section 215, and the difficulty with which we in this body and the american people as a whole have with regard to exercising oversight over abuse of government authority. an example that i gave earlier, the american library association, confirmed that the federal government went into a library and asked for the list of everybody who checked out a book on osama bin laden.

recipients of 215 orders can't even disclose that they received such an order to anybody but their attorneys. so what ability do we have as the people's house to exercise oversight about whether there are abuses? it's been brought up by several people on the other side, my colleague from wisconsin, oh, there aren't abuses. if there is a secretive process that prevents us from knowing about abuse, how are we to know whether therer abuses? i also want to discuss section 206 that we are discussing today. the provision of the bill that allows the government to conduct the roving wiretaps. this ayou los -- allows the government to obtain warrants that don't even specify the person or object that's being tapped. it could involve tapping an entire neighborhood of telephones. the suspect might use, an unnamed suspect, might use or might not use. there's nothing even specifically prohibited from being an entire city of television -- telephone calls

being tapped. we don't know how it's been used. before the amendment clearly states the warrants need to specify the person and places to be seized and searched with particularity. mr. speaker, we began this session of congress by reading the united states constitution, including the fourth amendment, here on the house of representatives. we did that to help make sure the executive branch or the legislative branch don't have unfettered power to decide single-handedly who and how to search private citizens and seize their properties. the founding fathers were rightfully worried about the possibility of the central government issuing general war rants -- war rents that would give it far -- warents that would give it far-reaching power to interconvenient in the private lives. we should honor the founder father's -- founding father's requests. now, the justification used for this provision is that the government needs to have the ability to spy on a suspect as they move from phone to phone.

now, no one objects to that authority when the security of the american people are at stake, but that doesn't mean that the government shouldn't have to specify who they are going to spy on and under what conditions. in fact, under federal criminal law, the government's already required to state either the person or place that's subject to the wiretap. it's these sort sorts of commonsense provisions we can achieve bipartisan consensus on to provide a longer term stability with regard to the necessary provisions of the patriot act. . the final section that will be re-authorized in the bill, section 6001, teals with the quote-unquote lone wolf provisions which allow credit surveillance of nonsit zepps in the u.s. even if they're not connected to any terrorist group or foreign power. now, this authority is only granted in credit courts and again, threatens our understandings of the limits of our federal government's investigate -- investigatery

powers. it blurs the line between domestic national security and foreign intelligence. it's clear we allow a process to improve this. my friends on the other side of the aisle say they're worried about the growth of goth. yet despite the rhetoric of how the government is trying to take over your lives, this, their fifth bill under a rule actually gives the government the ability to spy on innocent americans. no wonder so many republicans join so many democrats in voting against this bill earlier this week. i urge all of my colleagues who are worried about the unchecked growth of the state, anyone who seriously believes in protecting the rights and liberties of americans or anyone who simply thinks we need to take some time to look at these issues dnd e-- and debate them to vote no on this bill an force a zugs of these issues rather than vague promises of future hearings or

future markups, let's accelerate that timeline, mr. speaker to ensure that the concerns of the american people to help protect what it means to be an american. what is so close to our identity as americans protecting our individual liberties as according to the founding fathers articulated in our constitution we can reconcile that with the need to protect the american people and let us begin that work and with that, i yield back the balance of my time. the speaker pro tempore: the gentleman from colorado yields back the balance of his time of the gentleman from california is recognized. mr. dreier: i yield back the -- yield myself the plans of my time. the only way for us to guarantee the rights of every american and ensure we will be going down the road to be a safe nation is to pass this extension so that these very able gentlemen can proceed with the kinds of hearings that are necessary to ep sure that all the rights wit

co what is your best hope and

biggest worry? guest: the biggest concern is the exceptions that fannie and freddie play to major replayed a major role in the downturn or mortgage finance fraud. which to be recognized is they entered the space of the

subprime much later than the private sector. it was investment banks, big banks who were creating pipelines of product that basically was low documentation or no documentation, adjustable rate mortgages, interest-only, all these hybrid products which drew a lot of people in with teaser rates into homes and mortgages that were not sustainable. the problem is that the new system, the new options from the president shift the primary responsibility for mortgage finance to the private sector. the ones to lead us and let fannie and freddie down the subprime of thabyss. what is important is that it protect consumers from the kind of abuse we have seen. the fact is the free market

brought us here. the proposal from the president is the free market will rescue us. hopefully that will be true. we need a regulatory oversight and transparency. host: our guest will be next -- will be with us for the next 35 or 40 minutes. our guest is the president and ceo of a national community reinvestment coalition. you have a special background on all of these -- guest: i was not a shareholder. i got to see how they operated. yes, i am personally and professionally committed to making sure the system of mortgage finance is democratic with a small d. homeownership is still the number one ticket into the middle class. the key is to make sure that people who become homeowners are ones who can sustain the

mortgage. that is what we need to clean up in our system of finance. the government has a role to play. the private sector is where the money is when the money comes back eventually. tt and mixture of healthy private sector working in concert to making sure loans that are sustainable or the borrowers can show they can pay back for safe and sound loans. host: the administration is putting forth its plan to look at various proposals -- what are the steps here? guest: the president has proposed three options. the first one is free market with the exception of keep fha. the second is free market but we step in in a big quake should there be a -- shared the private sector stop making money

available for mortgages and start lending. we step been. we create and bolster up the system of mortgage finance. the third option is a private- sector option. we require mortgage insurance companies to collect fees the buildup the fund to insulate against losses. the government is behind that. i suspect loans that are low or maybe they are plain vanilla, 30-year fixed. the government plays a secondary role. it is more of an ongoing role. host: fannie and freddie -- freddie mac was established in 1970.

how significant is that figur guest: we would not have an mortgage market right now free to not have them. because what has happened essentially is investors are skittish about coming back into the american economy and investing hundreds of millions of dollars in mortgage-backed securities. without those zero government- sponsored enterprises, we probably would not have a mortgage market at all. host: there is that figure on the screen. a number that is sure to get some phone calls. let's take that number and put it into perspective as far as how to move forward. guest: consider the number of nearly 14 trillion. that should not have happened. have the government been ahead,

the previous administrations have been ahead of this, come they would have limited the size of fannie and freddie in terms of how much market they could capture. the would have required adequate capitalization. there would have limited the kind of risks they would be taking. fannie and freddie stayed out of the subprime market through 2004. they got in with both feet. they were able to get in in a big way. it is a dead argument. the president and people in congress will abolish fannie and freddie and want them down. i suspect the hope is that the $150 billion would be less then fannie and freddie take little risk and take a segment of the market in terms of securitization which is highly

profitable. hopefully when they do wind down, that figure will be dramatically reduced. the system will be replaced by something that guarantees the continuing flow of mortgage finance in america. host: our first call, louisiana. caller: when i was young, i could not afford a house. i needed 10% or 20%. this was in the 1970's. i had to rent for years. i found it bought a home -- not a home that i wanted or desire, but a home that i could afford. chris dodd and barney frank caused this debacle. bush tried to fix this. the congress said no. i am sick and tired of bailing out all these people who made these bad decisions. i think they should go to prison for making these bad decisions.

they should be prosecuted. the shakira fannie mae and freddie mac. it has been a burden on the people and the public that are trying to do the right thing. host: we have heard that a lot. guest: the president agrees with you, that we should carry of fannie and freddie. the justice department is working to put people in jail who committed fraud and abuse. they are trying to clean up the system of how these things get securitized and how things get invented, particularly on wall street. that means create a council that is able to look at the rating agencies and creating more transparency. i don't think it is fair to blame barney frank or chris dodd because both of those

judgment proposed legislation several times and it passed in the house, to end the abuse of the kind of loans that were being made solely for the purpose of collecting the feet, knowing the borrowers would not be able to sustain these loans. that was defeated unfortunately. i have to say that the biggest culprit for me in all this is phil gramm who stood in the way of all efforts to try to end predatory lending. i think we would not be looking at 100th $50 billion in losses -- would not be looking happen $150 billion in losses. host: explain some rules and place in terms of fannie and freddie. they want to reduce conforming loan limits.

what is the amount they are looking at? guest: $729,000. those of the maximum mer mortgages that they can purchase. pushing back into the finance market. the suspicion is that it will reduce considerably the amount of market share of fannie and freddie and fha. host: first goal to make a 10% down payment. guest: it is and increase per if you were to get and fha loan, you can get a standard fha loan if you had 3%, so that would raise that figure presumably. i believe that skin in the game applies to everybody. you need a homeowner, a banker,

a wall street person per everybody has something to lose. when you have nothing to lose, you take whatever risk you want. whether 10% is the level, you can be assured that there will be people probably are creditworthy who paid their bills on time but if you're buying a house for 250 thousand dollar,000 not a lot of people e that much money, but they could be credit worthy. we do need some kind of a minimum down payment. host: shelley from west virginia. caller: does the gentleman belief regulation on the financial markets -- banks especially? guest: absolutely. dodd-frank went along way in

expanding that regulation. there is some 700 new regulations that apply to the industry. whether they are effective enough to make sure that we keep this industry out of the business of doing unsavory lending remains to be seen. i think the notion of someone owning a home should be something which -- it is the biggest investment for most people. we should not allow the private sector to be in a position where they are able to abuse produce things that are untoward. people like to talked and point to the risk that private enterprise created. anybody who is to deepen this issue knows the role of wall street and the securitized and the with the whole subprime

business was driven by profit and greed that took no concern for what happened to homeowners or what happened to the sustainability of the mortgage. that has to end. without inhibiting the ability for them to compete and operate in the free market. we need to make sure they don't get abusive. that is critical. caller: do you believe that the housing market would be in better shape if we would help the home buyers stay in their homes rather than throw them out on the st.? and this happened under bush. thank you. guest: let me say i agree wholeheartedly that our economy is better served by taking those

families who basically got into a situation where they had bad loans or maybe their income was reduced slightly, but they are having a difficult time even though they are still working. we're better off -- every house in that neighborhood is better off not having another for closure. if the person is the working, let's see whether we can refinance or modify those loans into a situation where that family can continue to be a responsible homeowner, but the mortgage matches their ability to pay, which is what should have happened in the first place. as far as president bush, i think there's a lot of folks to blame for this. we did not deal with this problem. we went through successive eras of deregulation. this blind faith that somehow

the corporate finance mortgage market is going to be more credible and less abusive and more professional than any government role. the result is what we got. any analysis of what happened has to point a finger at the incredible role that these on a regulated, non-transparent institutions and wall street played in making this problem happened. host: michigan. welcome to the show, dennis. caller: mr. taylor, i have a couple of points i would like to comment on. saw onlinew if you that there were a lot of areas within the united states that were previously untouched by the for closure problem that are now facing possible

possible for closures. do you see a bottom to this housing dilemma? on my second point, i had seen some more than initially fanny or freddie have a program that was like the program that was a leased to own to keep people in the for closure homes. that either failed or they did not succeed in going forward to implement that followed. i think that would have definitely been a way to go to keep the tax base intact. and also to stops the blade moving from the neighborhoods. host: this is the headline the caller was referring to in "the

new york times." guest: last year with a nationwide drop in housing values of 5.5%. some areas are getting better. but the country continues to seek devaluation of properties. we have another 11 million for closures waiting in the wings to go in one direction or the other, and this will not help the situation. as the paper said and the caller said, places like seattle, which are pretty much immune from the huge devaluation, seattle suffered a greater devaluation that las vegas did in 2010. there should be a note to people about whether we're out of this crisis. he asked if there is a bottom. the bottom is one we deal with these for closure prices.

helping as many people stay in their homes as possible who are still working and can be responsible homeowners is the way to go. the initiative of the program, they have been minimally and tactful -- mainly in pack full -- impactful. we have to find a way to take as many of these foreclosures for families who can be responsible homeowners off the table by getting them into sustainable mortgages if we're to see the bottom. host: georgia on the line, a republican. caller: mr. taylor, right now in detroit, they are using our tax money to buy -- spending one to $25,000 per home and --

spending $125,000 per home and selling a those homes for $1,000. you know that is going on, mr. taylor. my credit rating is 850. your credit rating is probably not 850, mr. taylor. if the people cannot put down 10% on a mortgage and i'm supposed to tell somebody -- sell some but more property and they cannot put down 10%, people like you guys want to comment and change the rules". you will pay so much unless you cannot pay and then you want to change the amount you pay. elipse change all the rules. three and three is nine. -- let's all change the rules.

you guys are destroying america with your crazy ideas. host: let's get a response. guest: we are on destroying america. the president agrees with you and the 10% down. all the president and the administration is trying to do and what we're trying to do is have a responsible system of mortgage finance, which insures that a hard-working blue-collar americans have access to home ownership as well. that has been a basic tenet of u.s. citizenship for as long as we can remember. that does not mean everybody is qualified to be a homeowner. if you are willing to work hard and you're a safe bar, you should be able to of access to the mortgage market -- if you're a sick borrower. before the 1948 in the early

1930's, if you wanted a mortgage from the private sector, that was the only mortgage you could get. there were five-year loans. there was another bubble every five years. you had 50% down. that is what we had went fannie and freddie were created. that is what they did until 2004. most people in america could point to home ownership has more to do with fannie and freddie and fha and that is all government -- they all performed pretty well for most of their history. it wasn't until we fall this free-market into the abyss that we got into the problems we got into. whoo the president has a commitment and members of both

parties in congress. to do it in a responsible way so we do not open up the avenue for more fraud and abuse. i have no idea. i think we are on the same page. maybe he is overlying an ideology that makes him see differently. host: we have about 20 minutes with our guests, john taylor, president and ceo of the national community reinvestment coalition. we will continue to take more of your calls. several possibilities put on the table at the white house. tim geithner started this late last week. this was at an event at the brookings institution about how government played too much of a role in the housing market. >> the u.s. government provided too much support for housing, too strong incentives for

investment housing. far.ok that too alongside a basic set of mistakes and the incentives we created, we allowed our financial system to take on too much leverage. we allowed a huge amount of basic mortgage business to shift where there's no regulation and oversight. we allowed the market to build up terrible incentives around underwriting securitization. those things -- they were avoidable mistakes. it is important to recognize that this was not just about what fannie and freddie ultimately did to bring the market downturn it was about a much more comprehensive side of failures and the basic oversights in the system. the government did too much.

it did quite poorly in what it did. host: avoidable mistakes, he said. guest: if we had limited -- if we were clear about what was permissible from an underwriting perspective, for the industry as a whole, that is not to establish what they should be doing but what they could not do if we outlawed predatory lending. we probably -- we must carefully would not be in a situation wherein care if we require adequate capitalization from fannie and freddie so that the increased risk for had -- and that we limited the market share and were clear about what the guarantees or, i think for a lot of things we could have done and should have done that did not occur. finger-pointing at this point,

leave it to the historians. what should we be doing to clean up our system of mortgage finance we continue to have the opportunity for home ownership going to people that are wealthy and those working their way up the economic ladder. we can do it. host: to the editorial page of ""the wall street journal."

guest: they were bringing their normal fare self. there is grains of accuracy in that period -- the normair normr self. there is no question that the president has proposed what i believe to be a bipartisan perspective of people on the left and right who have been suggested what he needs to do. as far as planting on it -- as he has offerednting, different suggestions. "here are the options we're

considering. input."people said. inpu's if they ended friday and fannie tomorrow, it would be a disaster. they are the name of the game. if the war ended tomorrow, it would collapse of the system of mortgage finance in this country. we would be pushed into a recession. the president is saying we will face them out over a point of five to seven years. i think what they are doing is they are taking a sensible approach to, let's work on this together. we are in this together. we do not want to do is narrow the window of opportunity for home ownership to such a degree that we're keeping up qualified people because home ownership is an important aspect of entrance into the middle class,

of building equity, of sending your child to college. we do not want the next generation of home buyers and families to have to squeeze through this tiny sieve in order to get through the reality of home ownership. we can do that by offering a safe product and making sure there is safety and soundness and transparency and they are being put into place. host: warrenton, oregon. caller: i was wondering if the repealed glass-steagall by phil gramm, was that the trigger for all of this when commercial banks and investment banks, the line was erased and basically it was to the rodeo. guest: yeah. i do think that played a

significant role. the push to deregulate banks and oversight the financial-services sector coupled with efforts to not allow their to be laws that prohibited high risk and unsavory lending practices, i think they all contributed to having an industry that and least to do what they wanted. you rent small mortgage companies grow into giants like americaquest and countrywide that grew through their participation in subprime lending and tried to sell that with any terms and conditions to wall street investment firms that were flush with money and looking for a home to invest in. investment banks cut their fees. brokers and their lendings --

brokers and lenders got their fees. this was a ponzi scheme. people were not getting sustainable loans. people might have known better than to take out these loans. what is ironic is we had more financial literacy programs than ever before during this period of the worst lending in our history. that cannot prohibit -- people did not believe that a letter or broker would make them a loan that they did not think it was sustainable. what a personal loan me money if i could not pay it back? that was a fundamental belief that most people walk into a bank or loan office always held. little did they know that no longer were these banks holding these loans in portfolios.

they were selling them to wall street and all they cared about was the fee. if you talked a person into getting a higher mortgage with an adjustable rate for non-prime rate, even if they qualify, you got a higher fee as a broker or lender. the system was corrupt. all those things did contribute to this. host: raymond, from california, and independent. caller: i have been falling this for a good many years. my first house, i bought when i got out of the service. guest: digit day -- did you get a gi bill? 4% interest, right? caller: yeah.

i retired from the department of defense. we were involved in all kinds of things from contract management and all this. i want to tell you something i experienced the fights. i approve this and many military contractors and their accounting system even though the government has all kinds of accounting people looking at your books. nobody understands the bottom line in the government because there is no bottom line. here is the whole thing. i look at this thing. correct me where i am wrong. i think i have it. what they are going to do today will be devastating. you are not going to find a lot of people who are going to be able to come down with this 10% and 20%. you'll eliminate a lot of young people of ever getting a house.

the cost of living is going up. you're going to stop the housing construction, which the majority of our people in this country, blue-collar workers. guest: i don't disagree. i think he makes some good points. thank you for server and thank you for reminding some money americans who take for granted their own interests are made apparent entrance into the realm of home ownership, it giually was to ththrough the bill. 4.5% interest. i do think you are accurate that as we begin to require a downpayments, as the down payment figure continues to escalate, you'll say new families entering home ownership, families of color,

people who don't have the savings because they live from paycheck to paycheck. they may be worthy borrowers. they may pay off their bills. they may be saving for a home. an earlier caller talked about ing a house. pbuy today, you have to, but $30,000, $40,000 per if it is 20% down, hire been 50,000. not a lot of working-class families have that capacity to enter that. this will cut out what i think are important households that would contribute to our national economy by being homeowners and

would be responsible and who would pay their mortgages on time. some down payment is necessary. whether it has to be 10% remains open to question. i don't see a huge difference between 5% and 10% versus 10% or 50% when it comes to putting down that kind of money. host: this is from "the chicago sun-times > ." there are some figures here. they have a small chart. mortgage amounts loaned to whites -- they published million but i

think they mean billion. guest: the private sector is pretty much abandoned people of color when it comes to mortgage finance. right now 80% of all african- americans have to do go tofha for their -- have to go to fha for their mortgages. that figure in closer to 65 ce% for latinos. we do not want more government involvement behind finance. we do not want to leave behind people of color and low and moderate-income people. all of them could be contributing to our economy.

homebuilding could be devastated if we don't have enough buyers and if we continue to add to the vacancy rates of housing. who will build housing if never its are filled with abandoned houses? we want to support a sustainable, healthy, mortgage system of financing, which includes the broadest base of people possible. with all the safeguards and soundest to make sure they are responsible borrowers. host: south carolina, rudy. caller: i took out a loan seven years ago. my wife and i -- my wife was working. i am on a fixed income. three years ago, she lost her job. i have never missed a payment. i have never been late on a

payment. when i go to the bank to try to restructure and everything, they tell me i am approved, but paperwork comes back and says i don't make enough money. if i have missed a payment or have been laid on payment since my wife lost her job, i cannot understand it. what can i get a 4.5% loan? where should i go? guest: he should go to the hud website in his area. if that is too difficult, call ncrc where i work. ask for a council and they will amount. he is trying to -- there is a program to try to help responsible borrowers get to

stay in their homes and to have those loans modified. there are lenders who would like to try to help him in the process. host: michigan, david, a democrat. caller: -- tell us -- glass- steagall was enacted after the great depression and it worked well for 50, 60 years. phil gramm pushed real hard for its removal. they were able to do what they did, they were not able to do what they did because of glass- steagall. we got stuck with the cost of their bad investments, something the would not have happened if glass-steagall had stayed in effect is that not true? do you think reinstatement of glass-steagall would help pull

the please answer these questions. go in more depth. how glass-steagall separated the commercial phase from the public. guest: you're right. i did not want to dwell on that. i can give you a litany of what i think were bad moves and that steps. the time on this program is so valuable to me to be able to talk about whether what is the best thing going for. i do think is separation of commercial and non-banking interests served this country well. you've made those points. i do not know what it serves now to go back and say, this is a who caused the problem. this is who is to blame, one party versus the other. i could do that. i'm more concerned that we in up with a system of financing going forward that creates the

greatest window of opportunity for families to become homeowne >> will now go to the u.s. house live. general debate coming up at 5:00 p.m. eastern. chaplain coughlin: lord god in history and ever present to our needs, this weekend the commemoration of president abraham lincoln's birth brought to mind stirring words, he wrote in 1863, we have been the recipients of the choicest piece of hench. we have been preserved these many years in peace and prosperity. we have grown in numbers, wealth, and power as no other nation has ever grown. but we have forgotten god. we have forgotten his gracious hand which preserved us in peace and multiplied and

enriched and strengthened us. we have daily imagined in the deceitfulness of our hearts that all these blessings were produced by some superior wisdom and virtue of our own. intoxicated with unbroken success we have become too self-sufficient, too proud to pray to the gods that made us. so it's fitting and proper that god should today be solemnly, and gratefully acknowledged with one heart and one voice by the whole american people. therefore in that same spirit and with the words of president lincoln himself, i invite you, my fellow citizens, to thank and praise our gracious father who dwells in the heavens and beg for god's continued hand of blessing upon our nation.

amen. the speaker: the chair has examined the journal of the last day's proceedings and announces to the house his approval thereof. pursuant to clause 1 of rule 1, the journal stands approved. for what purpose does the gentleman from illinois rise? >> mr. speaker, pursuant to clause 1 of rule 1, i demand -- smoke the question is on agreeing to the speaker's approval the journal. so many as are in favor say aye. those opposed, no. in the opinion of the chair, the aye vs. it. the ayes have it. the gentleman from illinois. >> i request the yeas and nays. the speaker pro tempore: the yeas and nays are requested. those favoring a vote by the yeas and nays will please rise. a sufficient number having arisen, the yeas and nays are ordered. pursuant to clause 8 of rule 20 , further proceedings on this question are postponed. the pledge will be led today by the gentleman from illinois,

mr. schock. mr. schock: those in the gallery please rise and join with us. i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. the speaker pro tempore: the chair will entertain -- the speaker: the chair will entertain requests for one-minute speeches. for what purpose does the gentleman from texas rise? mr. burgess: i ask unanimous consent to address the house for one minute. revise and extend my remarks. the speaker: without objection. mr. burgess: mr. speaker, today i sent a letter to kathleen see we'llous -- sebelius, secretary of health and human services asking in light of judge vincent's ruling in florida two weeks ago today where a declare torrey judgment was issued that the patient protection affordable care act is inconstitutional that further implementation of this act not

go forward. in fact, judge vincent stated that officials of the executive branch willing adhere to the law as declared by the court. as a result the declaratory judgment is the functional equivalent of an injunction. there is no reason to conclude this presumption should not apply here. end quote. i believe the judge is correct. that the administration should not proceed with implementation and i have asked the secretary for clarification that is indeed her position and will be her position going forward. now, of course, we do have debate and vote on the continuing resolution to fund the united states government for the next seven months. it is my expectation that funding for provisions of enacting the patient protection affordable care act will not be funded in the continuing resolution. the american people have made it very clear and even recently the florida ruling confirmed the health care law is unconstitutional and congress must do its job to make sure funding for this legislation is denied. i yield back.

the speaker pro tempore: the gentleman yields back the balance of his time. for what purpose does the gentleman from ohio rise? mr. kucinich: request permission to address the house for one minute. the speaker pro tempore: without objection. mr. kucinich: thank you. on this day when around the world we celebrate the transformative power of love, it's also appropriate for us to think about a world as one. that the world in fact is interdependent, interconnected, and if we can't have this realization of the power of love, then we can also have a realization of the power of peace. peace is not simply the absence of war. it is an active presence of an understanding of the capacity that we have to relate to each other in a way which is not only nonhaven't but which is loving. so on this day when we think about love, let us also think about peace, let us think about peaceful relations at home and peaceful relations with people around the world. i yield back.

the speaker pro tempore: the gentleman yields back. pursuant could clause 12-a of coming up, we plan to bring in

the house budget committee chair, paul ryan, with the response to the president's budget. we can have that live for you. in the meantime, president obama talking about the proposal this morning. he traveled to parkville middle school outside baltimore, md., to talk about priorities for education. he joined by the education secretary arne duncan. >> good morning, everybody. i am here at parkville middle school outside of baltimore with arne duncan. i came on a day when we are unveiling our budget and i am here for a reason. i just want to think principal parker who has shown us around

as well as the eighth grade science teacher who we just visited with in her classroom. over the last few weeks, i have travelled the country the jobs and industries of our time will take root in the

united states where people will prosper and our country will succeed. i am also convinced that the on the way we can make these investments in our future is that if we start living within our means. we start to take responsibility for our deficit. that is why when i was sworn in as president i swear to cut the deficit in half by the end of my first term. the budget i am proposing today means that pledge and puts us on a path to pay for what we spend by the middle of the decade. we do this in part by eliminating waste and cutting whenever spending we can do without. as a start, i have called for a freeze on annual domestic spending of the next five years. this would cut the deficit by more than $400 billion over the next decade bringing this kind of spending, domestic discretionary spending, to its lowest share of our economy

since dwight eisenhower was president. let me repeat that. because of our budget, the share of spending will be at its lowest level since dwight eisenhower was president. that level of spending is lower than it was under the last three administrations and a lower than it was a than under ronald reagan. some of the savings will come from last waste and more efficiency. getting rid of 14,000 office buildings, lots, and government owned properties no longer need we can save taxpayers billions of dollars. when it comes to programs that we do need, we're making them work better by demanding accountability. instead of spending first and asking questions later, we will rework people inside and outside of government who deliver results to make sure that special interests are not large. up -- are not larding up any

bill, i vow to veto earmarked bills. this will mean like cutting things that i care deeply about. for example, community action programs in low-income neighborhoods and towns and community development block grants that so many depend on. if we are going to walk the walk and it comes to fiscal discipline, these are going to be necessary. i am looking forward to working with members of both parties to take steps beyond this budget freeze. cutting annual domestic spending will not be enough to meet our long-term fiscal challenges. the only way to truly tackle our deficit is to cut excessive spending wherever we find it --

domestic, defense, health care, and through tax breaks and loopholes. we have done here is making a down payment. there will be more work that needs to be done and it will require democrats and republicans coming together to make it happen. we have begun to do some of this with a $78 billion in cuts in the defense department budget plan, ending tax breaks to oil and gas companies, billions of dollars in wasteful health spending. these will make sure that doctors do not see their reimbursements slashed and they stay in the system. here is the thing. what it is absolutely essential to live within our means, while we are absolutely committed to working with democrats and republicans to find further savings and to let the whole range of budget issues, we

cannot sacrifice our future in the process. even as the cut out things that we can afford to do without, we have a responsibility to invest in those areas that will have the biggest impact in our future. that is especially true when it comes to education. right now, this school, parkville, is preparing our kids for the jobs and careers of the 21st century. it is preparing them for success. students in the magnet program here start out by taking courses in each of four subjects from applied engineering, environmental science and gradually focus on one subject of the next couple of years. i am told the most popular subject at the school is engineering. that is important because today the most common educational background for the top business leaders is not economics for

finance or business. is engineering. engineering and math, critical thinking, problem-solving. these and the kinds of subjects and skills that our kids need to achieve success in. it is why we are spearheading a drive to prepare more than 10,000 new math and science teachers of the next five years and train at 100,000 more current teachers in those fields. we are pushing forward in the race to the topic in our schools that has led over 40 states to raise standards for teaching and learning for less than 1% of what we spend on education each year. it is why we're protecting the more than $800 increase that we added to the most widely used federal scholarships in the making the tough choices to put them on a firm footing for years to come. that is why we are on track to meet the goal i set when i took office. by 2020, america will have the highest proportion of college graduates in the world.

i know the american people understand why this is so important. those of us who work in washington need to understand why these investments in the future are so important as well. i mentioned in my weekly radio address a letter i got from a woman named brenden who is a special ed teacher in missouri. her husband lost his job when the local chrysler plant shut down. they have had to sacrifice the little things that they can do without. one thing that brenda knows she cannot sacrifice is her daughter's education. she is looking for a second job to help put her to college and is it sure that the money is there to help rachel with their future. future true for brenda's

is true. education is an investment that we need to win in the future. is like innovation. infrastructure is an investment we need to win the future. to make sure we can afford these investments, we are going to have to get serious on cutting back on this things that would be nice to have a we can do without. that is what families across the country do every day. they live within their means and they invest in their family stagers. it is time a dissenting as a country. it is how we will get our fiscal house in order, attract new jobs to our shores, and it is how we will win the future in the 21st century. thank you very much. >> the president's education secretary arne duncan and the director of the omb.

also, earlier today he said that the budget does the job and cut the deficit in half by the end of the president's first term. we expect to hear from him when he speaks which is coming up in just a moment. live pictures from capitol hill where we expect remarks from paul ryan and jeff sessions responding to the president's budget proposal. they will answer reporters' questions and we will have that live set for 2:30 p.m. eastern here on c-span. now for the remarks from the omb director on the budget. we will show you as much as we can until the republicans respond to start shortly. >> thank you for coming.

we of the chairman of the council of economic advisers who will go over the economic assumptions and take questions. then jack will do the q&a. austan? >> as appealing to the budget, we thought we would just get the assumptions out of the way. i will make four short points. the forecast that we used has to be locked in for planning purposes as of mid-november last year. this predates the tax deal. as you know, many of the private forecasters up to their forecast based on what was in the tax deal and most of that is not in the forecast. number two, real gdp growth on a year-over-year basis the administration is forecasting 2.7% in 2011, 3.6% in 2012, 4.4% in 2013. the growth rate in 2011 is a

fair bit lower than the consensus of private forecasters surveyed by the blue chip or the survey of professional forecasters. over the long run, we anticipate catching back up the potential gdp which has not been severely damaged by this recession. the medium term forecast is a bit faster. it is within the central tendency that comes out of the fed fomc forecasts from last november which is the reasonable range in which they drop off the highest and lowest. it is rather in the center of the central tendency. over a five-year period, the typical recession since world war i has been solved by a growth rate of a little less than 4.2% over five years. our forecast is about 3.8%.

it is slower than the typical recovery and we assume that because it is harder to get had a financial recession. the third point i raise is that the unemployment rate in our projection is that at the end of 2011 and will be 9.1%. by the fourth quarter of to dawson 12, 8.2%. this was made in mid of member -- by the fourth quarter of 2012, a printer%. we are currently at 9.8% but any revisions will come out at the midsession review. finally, inflation we're projecting in 2011 it will be 1.3% so an actual decline from where it is now. it is very much in line with other professional forecasters. 2012 and beyond we will go back to something like the fed and others predict the 2% inflation

level. that is the overview of the assumptions. if anyone has questions, i will answer otherwise we will switch to jack. chuck? [inaudible] >> as you know, running the budget machinery is extremely onerous. you can only have one forecast. we made the forecast as of mid- november. we have included the middle- income part of the tax cuts getting extended for one year. as you also know, we did not anticipate that the tax deal -- and in november, we did not anticipate the deal would be as significant as it turned have to be just as most of the private forecasters did not. crux of the $1.60 trillion? >> we have not gone in to figure

that exacting now. in the analytical perspectives volume, there is an analysis if the g.d.p. growth rate is better or worse by 1% with the impact on the deficit would be. it is a little less than $100 billion. rather than speculate about changing with the forecast should be, we updated at the midsession review so we will see what happens over the next six months. >> what about the projections made about this year? >> into the deficit forecast goes many things -- g.d.p., unemployment rate, and a number of others. in the short run forecast, it is shared to say that our forecast predates the fall budget deal and the tax field. the blue-chip and others have

revised that since they have come out. ok, with no further questions i will now turn it over to the main event. >> thank you, austan. the budget we sent to congress today is irresponsible plan that shows that we can live within our means and we can also invest in the future. and it cuts spending and the deficit. we have more than $1 trillion in the deficit reduction, to third from spending cuts. this puts us on tasks so that we will reach sustainable deficit by the middle of the decade in the government will no longer be adding to the debt.

as a share of the economy, we will stabilize the deficit. we will become in short, be paying for what we spend every year. to put the goal simply, we went to be in a 3% of our economy by the middle of the decade. it is important to reducing the deficit is a crucial step for us to take, but at the same time we need to invest in the areas where if we cannot investor will undermine the ability to stimulate economic growth in the future. we need to out educate come out build, and out innovates of the economy will create jobs in the future. the ministers of the details of how our budget does this. in the discretionary side, we have a five-year freeze which will save $400 billion over 10 years. that will bring spending on this part of the budget down to a level that we saw when president eisenhower was in office. part of the cuts are in the

updated programs and things that are duplicative. these are things we would choose to cut just because it is the right thing to do. part of the cots are not going to be in that area. they are things we would not do but for the fiscal challenges that we face. we have enumerated many of them. the reductions in community development grants, cutting the community development block grants, cutting the low income energy assistance program, cutting the great lakes restoration initiative. these are all things that in a different environment we would not be looking at making this kind of reductions. we take $1 billion out of grants to large airports. $1 billion from state revolving funds for water treatment plants. in total, we have more than 200 terminations and reductions. we have a book which i am sure many of you will get a copy of

that lists how we get $33 billion in savings just in this year alone. we learn -- we are not freezing the national security budget, but we are making serious cuts in defense, which has been growing faster than inflation for more than one decade, and we can no longer afford to stay on that path. this brings spending on defense down to a low real growth level. $70 billion in savings of the next five years. that means we will have to reduce certain weapons systems that we cannot afford and that the military does not believe we need for our national security. things like the c-17 and the marine expeditionary vehicle. if you look at the spending for iraq and afghanistan, there are not in the base budget but in the overseas contingency

operational budget. these come down considerably in 2012. because of the withdrawal from iraq and the look of the savings in that area, overall spending in defense goes down more than 5%. now, we are not going to be able to get back to the kind of sustainable situation that we need to just by cutting discretionary spending. the budget looks at other areas as well. a look at mandatory spending and revenue. i would like to just highlighted a couple of areas where we have savings in those parts of the budget. every year for the past many years, action has been taken in two areas. one is the alternative minimum tax where there is a bipartisan consensus that middle-class taxpayers should not fall under the alternative minimum tax. the others in the medicare. there is bipartisan consensus that we should not cut what we pay doctors in the medicare

program because if we did they may start trick -- stop treating medicare patients. the way we dealt with this for most of the last decade is to simply put that expense on our national credit card and kick the can down the road. this budget says we cannot do that anymore. in case of the alternative minimum tax, we have a specific offset that pays for an extension of the provision that would prevent it from hitting middle-class families for three years. it would reduce the value of itemized deductions in the top income bracket, a captain at 20%, and take the value of itemized deductions back for the were in the reagan administration. we think that is a responsible thing to do. it is the first step toward dealing with cutting back on the spending that goes on in the the tax code. we put this elite in order to pay for the minimum alternative tax. we have $62 billion of specific

savings in dozens of different parts of the health care budget which would pay for a two-year extension of the six. in the december, last year congress worked on a bipartisan basis and we worked with congress to pass a one-year extension. that was the first time it was paid for. and did not have to be paid for, but it was the right thing to do. we have said here of the offsets to pay for it for the next two years and now we need to work together so that we can deal with this on a longer-term basis so it does not become just another year to year charge. i would like to talk with a couple of the aspects of the budget that i called the storage areas. -- stewardship area. one is the risks to federal government and risk to taxpayers of having to bail out entities is something that we really want to avoid in the future. in our budget, we have a

proposal to give the pension guaranty corp. to set premiums in the way that matches the default risk. this would give them the ability and would shift the burden of the risk from the taxpayers' back to the companies to get the benefit. it would very much reduced the risk that there be a need for a taxpayer bailout in the future. in the unemployment insurance, this has been a very tough time for the unemployment insurance trust fund. each state has a fund and have been heavily, heavily burdened. we have a proposal that might have a two-year moratorium on federal increases on an employment -- the unemployment trust funds. because they have are from the federal government, those automatically would go into effect without the moratorium. give the states two years to get their funds back in solid shape. that means the next time that

they need to draw down because unemployment is an issue -- >> to get to the rest of this briefing on our website, c- span.org. we go live now to the republican response is to the fiscal year 2012 budget. paul wright and jeff sessions are answering questions. this is just getting under way. >> we know we need to do something about it. whether you are right or left, the sooner you tackle these problems in america, the better off everyone will be. our problem is that we are running out of road to keep kicking the can down. what did we just get today? we got a punt. he punted on the deficit and the dead. that is an abdication of leadership. america expects their presidents to lead. they expect the president to take on the country's biggest challenges.

arguably, the biggest domestic challenge perhaps in the history of this country is this crushing burden of debt that is coming our way. many people thought, ourselves included, that the president would moderate after this last election. this is not a moderate budget. this is not a triangulation. this is a budget that went to the left. it would be better to do nothing and if we would actually pass this budget for the sake of our economy, our future, and jobs. we all have to remember that today's big deficit means tomorrows big tax increases and interest-rate increases. this will cost us jobs. this hurts the economy. this tells small businessmen and women, all businesses and entrepreneurs that the more we borrow and spend today, the higher their taxes will be tomorrow. the higher interest rates will be to borrow and expand businesses. this will hurt us and our ability to the debt of this

recession and create the kind of jobs we need to create in the kind of economic growth we need to create two not on the help of our fiscal situation that our economy and to help people get back to work. i would just quickly go through what this is. we have a tidal wave of debt. budget, as you can see, doubles the dead within five years and triples it by the end of his budget in 10 years. this budget has a $1.60 got -- $1.60 trillion increase. he got a $700 billion increase but he is looking for more tax increases on the american people, on the economy, on small businesses, families, and entrepreneurs.

people like to talk about spending and we are hearing the word "freeze" being drawn around. $8.70 trillion in new spending. $13 trillion in new borrowing over this budget. smoking mirrors have been down republicans and democrats in the past so we have seen budget gimmicks from both political parties in the past. this year contains a good doozie. it assumes that we will be out of afghan and iraq. we will have a 10-year surge. everyone knows that is not true. the president has announced his withdrawal dates from these excursions and he is basically saying that if we're not there for 10 years that we will ramp down spending and withdrawals which will save as $1.10 trillion. when you look at all the smoke

and mirrors, it looks to me like this thing has about $8 in tax increases for $1 of spending cuts. not to dollars in spending cuts for $1 tax increases. we have looked at these numbers and they are very clear. you really cannot borrow, spend, and tax your way to prosperity, but this is what this budget does. let me close by saying this. i served on the fiscal commission that he created. it was a pleasure to do so. while have problems with some of the fiscal commission reports and funding, i along with others put out a number of plans. the president suggested and get people like me the idea that we would move the ball in the right direction. that was a constructive step in the right direction. this is a pawn in does that even include significant recommendations from the fiscal commission. discretionary spending is $350

billion above what was suggested. the fiscal commission give us hope that we were going to have an adult conversation in washington about how we pre- empted the debt and deficit crisis. unfortunately, this budget does not of it. this ignores the problems. this budget has more spending, more taxing, more borrowing, and at the end of the day, that will cost us jobs. it will cost us prosperity. it will cost our country its credibility. now i will turn it over to senator sessions. >> thank you, chairman. what a fine statement of the situation we find ourselves in. our country should be pleased to have been in the key position that you now hold. the question to me with the budget always has been, will that change the trajectory that we are on? every witness we have ever had says we are on an unsustainable path. it runs the risk of a

cataclysmic event. that can happen very quickly just like it did in 2007, just like it did in greece, and these are matters that are in the responsibility of the elected leadership of this country. when you see a danger, it is the duty and responsibility of leaders of the country to do the things that can avoid that danger. we definitely are facing the danger. this is not being made of. this is not exaggerated. everyone believes that we are facing a danger. is it to match? one could something happen? we never now those say that when you reach 90% of gdp that you lose 1% growth and documents over 200 years, country after

country who have done that and have had cataclysmic events in their currency. the name of the book is, "this time it is different." than half thought it was different and that this would not happen to them. and the president changer directory? i do not think so. he assumes that the war savings are $1 trillion in savings. he shows that he has accomplished another $1 trillion in savings. first, i discount the war scenario just like hurricane katrina. we hope it does not come back and you have another same type of emergency expenditure. that is not a legitimate savings. you have $1 trillion in savings.

we have identified $700 billion in gimmicks that would reduce that $1 trillion an actual reduction of our deficit to only $300 billion over 10 years. this is negligible. i thought the article in "the washington post," was so dramatic quoted erskine bowles was so dramatic. he was chief of staff for president clinton. he had to know that his words would have significant meeting today. the co-chairman of the debt commission says, "it goes nowhere near where they will have to do to resolve our fiscal nightmare. >> that is a major condemnation of what has happened here.

there is no reform on the entitlements which consumes more than half of the problems in debts that we have. our chairman, chairman ryan, has proposed a solution. what does he get? he gets a tax. i do not appreciate that. i really do not. the one man who has the gumption to stand up and propose things that could actually work gets criticized by the democratic colleagues. you can count me as your defender because we need to talk about this. we can do this. let me just say that. i have been working on the numbers. we have been working on them to see how we get there. we can get this deficit under control. it is not impossible. if we do so, we will put the country on a better path, a path to prosperity. admiral mollen said the greatest

threat to our security at this point in the history is our debt. digger of german parliamentarians and that is what one of them raised with me. our security is jeopardize back our debt and i certainly agree. we will try to answer your questions. i will try to do my best. i know our chairman is able to handle anything that you could possibly ask. we would be glad to try to respond. >> when is your budget coming? it will have taxes and entitlements reforms and military cutbacks >> if you want to take a look at what is to come, many budget reporters know that we will send the president's budget to the congressional budget office and they will score it using their numbers. after they do that, about three

weeks, sometime in march we will get their baseline and then we will begin writing your budget and ours will come out later in the spring. it is difficult for me to tell you what it will look like given that we have not written and are have not gotten a baseline with which to write it. we are not interested in punting. we want to lead. we want to show the country we're charting a different course to get this situation for control. i now demonstrated this in the past, but is not too late for america to fix this. is not too late to get our economy growing and get this going in the right direction to get america's problem solved. if we keep postponing this and we keep hunting like this does, there will, a moment where it is too late. that quite frankly is why i am so disappointed today. i really thought given that the president credit a fiscal commission that we would see an

advancement, a step in the right direction and fiscal control. instead we saw a step further to the left and if we did nothing at all which is so disappointing about today's budget. i cannot tell you what our budget will be. you will find out when i write it. we will share your budget and that will be in the spring. >> you know the process. the president makes his budget, the cbo scores of, we get the base line, then we write hours. that is how the 1974 budget that the dictates of this. i cannot touch with the budget will be because we have not written it yet. >> there have been some democrats in the house and the senate including steady hoyer -- steny hoyer and others who talk onout a deficit reductin package

did these provide the opportunity for bipartisanship? >> erskine bowles and sandridge hoyer are two examples. this budget does not address the drivers of our debt and instead makes it worse by doing nothing. it calls for more spending which they call "investing. $1.60 in new taxes? $13 trillion added to the debt? this is not an austere budget. this is not getting the debt under control and getting taxes lower and topping the economy. there are democrats who want to tackle this problem. their voices were obviously not heard in this budget. >> i would just say that i had made remarks at one of our budget hearings not long after the state of the union and i

criticized the remarks. chairman konrad has been through this many years. he said, "maybe we have to lead ." there is some hope that we could come forward with some ideas and agreements that could make a positive difference. of course with the senate being what it is it will take a number of votes from the other side to pass something with any teeth. >> you were asking after day [inaudible] >> i would call this "debt on arrival." he raises spending everywhere. he raises taxes everywhere. he increases taxes. the jury room this budget is in

the wrong direction. it would be better if we did nothing than to actually pass this budget. >> i like to think that there are some democrats in this town that want to get serious on spending. this is caused by spending, not taxes. let's go where the problem is and that is pending. i would just like to think that there are some democrats out there, and i know that there are, to get working on this. this requires bipartisanship at the end of the day and we are hoping to advance that kind of dialogue and we got everything but that. >> you say this is punting. just a follow-up on that. why can republicans not talk about entitlements. >> we would get the cbo and see. this is discretionary spending. the reason we do this this week is this the first time since the 1974 budget act that there's a

lot of unfinished business from last year because the democrats did not even pass a budget. we are halfway through the fiscal year and we're talking but discretionary spending, not mandatory spending. these are not entitlements. the on the purview is discretionary spending, not entitlement spending. what we're doing here is having a great debate in congress about how much spending we should cut. how cool is that? one year ago, we were debating about how much congress wanted to increase spending and now we're in the middle of a debate about how much more to cut. just in a few short months, we have done a great job of changing the culture of spending to reduction. that particular issue is discretionary spending. the fiscal year 2000, budget is when we can deal with the other issues such as entitlement that you describe that is when we will put our budget out. >> any areas you would like to target?

>> discretionary spending. i can talk about what areas we talk about and we will do that when our budget is out. we have not written a budget yet so it is premature given that it has not been written yet. >> manages a one thing that i think is important? -- may i just say one thing? chairman rand has proposed a complex, far-reaching plan to deal with entitlements and bring to this country on the road to a sound economy. we are here today talking about the president's budget. i know the president asks if you're happy if you ask what our plan is. the law requires the president to submit a budget. he is one week late. this is the difficulty we are now facing. we are taking on something that is complex as entitlements, deeply emotional, and the

president of the united states is that even in the game? he does than even suggest it has to be done? my wife said to me that when i complained, do not complain me. you asked for the job. he asked for the job. i am sure he did not want to have a debt crisis as big as he is not binding, but leaders have to deal with the problems they have. >> german rhine, and looking ahead to when you do read the budget -- chairman ryan, look ahead to win you write your budget. as the chairman of the committee, would you recommend to your colleagues at the go ahead and -- >> no. but i have been proposing these entitlement reforms for quite awhile. we will have a conversation to get consensus. i only have the consensus of one person right now, myself.

writing a budget, you need a consensus of 280 people. once again a base line, and the march, we'll move forward to get a consensus to write a budget. given we have not done that yet, it is impossible to tell you what it is. we did not ask people in wisconsin or round the u.s. to send this to congress to not solve problems. that may put it this way. i was involved in the tarp negotiations in october 2008. so was senator sessions. that was an ugly situation. we did not see it coming. let me ask you this. if you knew your president for congressman knew it was coming, saw the scope, timing, and the nature and know it was necessary to prevent it from happening which wiped of the savings of millions of seniors and put our economy into a great recession and they knew it was coming and what to do to prevent the but

they chose not to do so because it was not good politics, what would you think of that person? what we think of your leaders? this debt crisis is coming and we know what it is. we know when its timing, nature, scope. we know exactly what it will do to our economy. the cbo is telling us without a shred of doubt that we are giving the next generation a lower standard of living. we are giving our children and grandchildren a diminished country. if we cannot put a plan in place to fix this soon according to ben bernanke and other economists we will compromise jobs and the economy today. by tackling this fiscal challenge, we can grow the economy today, create jobs, and give our kids a better country. that is what we're supposed to be doing here after all. when you see our leader, the president of the united states, seeing this, knowing it, acknowledging it, and ducking? that is why we are so disappointed today. steve?

>> can you talk about what your goal is as you look forward? there are a lot of republicans that same -- that say your turn to have a balanced year when you add the 10 years or are you going to go beyond fiscal commission? >> i know everyone wants to get into what our budget there -- will do. we do not have a base line to ride it. we're talking about the president's budget. we just thought that today. we are just going for all this and looking at the numbers. the omb base line has $1.70 trillion in higher revenues because of economic growth just than the january base line. when cbo looks at this again, i have no doubt in my mind that the deficit, debt, and interest will be much higher than even with the omb or the president is

claiming. we have to see what it looks like before we even begin to write our budget. >> he says he wants to see congress cut the $3 billion for the joint strike fighter. is that something you think? >> we have a difference of opinion in our conference. >> you think it should go? >> yes. i have always had that position. >> do you support this particular on entitlement reform plan? >> i think his plan could work and would work. and as far better than where we are today. i believe we can achieve greater discretionary spending reductions day than even his plan calls for. i've been to give personal attention -- i plan to give

personal attention to how this plan works to put our great medicare and social security programs on a sound footing. many to be done carefully. we need the input of the president. they cannot just be from carefully -- from the floor. we need to work together to achieve that and i am prepared to do it. >> can you comment on how coherent the republican fiscal position actually is? >> cut spending. grow the economy. next question. >> your thoughts about this not having anything with the fiscal deficit commission. what is missing that you think should be on the table? >> there were three of your $53 billion above discretionary spending -- they were $353 above

discretionary spending. none of the entitlement reforms that were proposed, none of the tax reforms, none of the discretionary caps are cuts proposed are in this. in the metrics that the president gave to the sysco commission are not even been accomplished with this budget. -- to the fiscal commission are not being accomplished. we do not need a second engine. >> back on entitlements, are you committing to entitlement reform, in whatever shape it is, will be in your budget? >> i am not committing what will be in our budget because we have not written it yet. obviously, entitlement reform is the biggest slice of the pie. we clearly need to go there, but i'm not get into what it will do, the specifics, because we have not written it yet. everyone knows we have to cut entitlements.

jonathan? >> i have a two-partner. the profile being so high on non-security spending, is there a danger that by the time you worked that out that there will not be any appetite to deal with the defense? secondly, your raeproposed the line item veto. >> i'd like to get something done around here. i want something bipartisan. we have tried to come to an agreement on how to do that. the president supported a version of this in the past and i would like to see some changes to that version. it is a tool that would be a step in the right direction on defense spending.

the number we brought to the floor is $16 billion below the obama request. the conservative republican house is bringing discretionary spending for the fiscal year $16 billion below with the president has requested that it goes. this budget has $70 billion in savings over the next five years. we want to take that seriously and what we will be taking a look at it. you cannot expect waste to occur. people would live to see a budget for a peace dividend. the problem is we cannot have peace right now. it is a dangerous world that has got more dangerous. there is clearly world for savings in this section of our government. craig? i also -- i always want to give the milwaukee diatribe. -- guy a try. >> could you tell us about high

speed rail? >> we are not a fan. we are responding the stimulus in the current c.r. we disagree. i can tell you about the wisconsin plan and calling it a boondoggle would be generous. we are rescinding the funding for this year and we do not think it is a good investment. >> i believe it was $120 billion over time. he proposed of the state of union to have it within walking distance for a% of americans. it is ambitious at a time when we have no money -- within walking distance for 80% of americans. amtrak goes through 3 days a week at 1:00 a.m. going east and

not a lot of people use it. there are areas of the country that could use better rail. no doubt about it. this plan is way too ambitious. >> in ohio, they have opposed the program and the bill we are bringing tomorrow to the floor rescinds the money for ohio and wisconsin. that is the kind of thing we ought to be doing in the future. thank you, everyone. i appreciated. -- appreciate it. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> they say president obama is proposed budget will make the debt crisis worse, not better. gop lawmakers say the proposed

budget cuts are too timid. some democrats are criticizing the budget saying it needs a more vigorous attack on future deficits. you can see this briefing and a number of the federal agency briefings and the president's remarks from this morning from a middle school near baltimore all available on our website, c- span.org. a start time ago -- a short time ago the state department held a briefing. that would cut foreign assistance and military financing to several countries and proposing cuts of 10% to 40%. >> let me get situated here. good afternoon. let me tell you, there's probably no better way to build an organization than six weeks into a new job, i get to stand

up and explain the budget. i hope you'll understand that. thank you very much, i appreciate that. i am pleased to present the 2012 budget for the department of state and usaid. we are here to discuss with just 1% of the federal budget how state and usaid presents -- prevent conflicts abroad and delivers results for the american people. most importantly, how the state department and usaid advance our national security. we often talk about return on investment. serving alongside our troops, trading the police force, what we do is sit back -- critical to our national security. with an investment of just 1 percent of the federal budget, the men and women of the state

delivernt and the u.ssaid remarkable returns. we recognize this request comes in a difficult budgetary environment. it is a lean budget for lean times. we have made painful but responsible choices. we have scrap the entire budget for savings. we have eliminated foreign assistance programs in several countries. we have reduced development assistance by over half in 2011. we have cut funding in europe and eurasia by 15%. we have managed to identify over $100 million in administrative savings for more efficient travel and procurement. in the wake of the first quadrennial development and diplomacy review, we have aggressively sought to find efficiencies and to change the way we do business. qdr recommends that we move

forward and have an integrated national security budget. this budget represents our assessment of the funding we need to use civilian power to advance american security and accomplish our mission, no more and no less. this year, for the first time, our request is divided into two parts. the first part is very familiar to all of you. it is our core budget, our foreign assistance and operations budget. this represents our ongoing investment to advance american security and economic interest. it supports our presence and about every nation in the world. our core budget request for 2012 is $47 billion. the second part is are extraordinary temporary cost in our racked -- in iraq, afghanistan, and pakistan.

as our civilian employees take on more responsibilities, for the first time, omb is present in our more funding as they do with the department of defense in a separate account, the overseas contingency operations. this will allow for a full transparency and unified approach for the cost we believe are not part of our corps budget. the state and usaid local request for 2012 is $8.70 million. i will come back to it in greater detail and a moment. finally, i am sure some of you will be confused with the comparison to last year's budget. i assure you, you are not alone. here is why. congress has finalize funding for 2011. we are operating under continued resolution, an extension of our

2010 operating levels. to complicate things even further, in 2010, there were a number of supplemental spending bills and adjustments. anchor our conversation today, we have created a chart that lays out comparisons between 2010, 2011, and 2012. i work for 2012 request of $47 billion -- our core request supports development in 190 countries. it represents a 1% increase over are comparable 2010 levels, less than the rate of inflation. make no mistake, the corps budget as part of the u.s. government's national security budget. it stabilizes conflict zones, reduces the threat of nuclear

weapons, restores old alliances, supports democratic transitions, counters extremism, open global markets, and protect citizens abroad. it accomplishes this by investing in four principal areas. first, we devote 23% or $11 billion of work $47 billion core budget to prevent conflicts, foster economic security, and support fragile states. as we all know, this is a complex and interconnected and fast changing world. we have the capacity to prevent conflicts and stabilize fragile states. for example, this money funds development, humanitarian and military efforts in yemen and somalia. we are working to prevent these countries from becoming safe haven for terrorists. it supports intensive american

diplomacy in sudan, where the government peacefully accepted -- it sustains peacekeeping missions all over the world. it funds non more related economic assistance to the front-line states of iraq, afghanistan, and pakistan. second, we spend 16% are approximately $7.40 million of the $47 billion of our corps budget to keep the support key allies and partners. this includes over $3 billion for israel and strong support for west bank and jordan. it fun support for nations recovering from conflicts like liberia and emerging partners like indonesia. it funds military partnerships in over 70 countries, and in egypt, it gives us the funds to

respond as situations evolved. third, we have 31% or approximately $14.60 billion of the $47 billion of our corps budget to advance human security. we have targeted disease, hunger, and climate change. these challenges not only threaten the security of individuals across the world, the plant seeds for future conflicts. we invest $8.7 billion in the global health programs, including money to fund treatment and prevention of hiv aids through the continued support of the bush administration's program. it funds the fight against malaria and tuberculosis. we or dancing over $1 billion in food security, another cornerstone of global security

and to respond to climate change. these are to government efforts against serious and growing threats. this budget also reflects $4 billion in humanitarian assistance for victims of four, refugees, and survivors of national disasters. fourth and finally, we spent 30% or approximately $14 billion of our corps budget to strengthen and sustain our diplomatic and development presence. we fly the flag at embassies and consulates in 190 countries, and each of these countries where serving americans to a advance our security and promote our economic interest. our political officers work with foreign governors and monitor elections to promote democracy and human rights. our economic officers open

markets, promote u.s. exports and championed american companies. our development offices are improving lives and driving growth. since taking this job i have learned how much our cultural offices do to help the american people. last year they issued 40 million passports and assisted 11,000 into country adoptions. i was amazed to learn that they worked on over 1100 new child abduction cases which help return four hundred 85 children to their parents. however, we remain severely understaffed. we are asking for just a 1% increase in the state department's foreign service offices. some of the hires we hope to make will just have to wait. unfortunately, too many of our embassies are falling apart. too many are liable to

terrorists and other threats. together, these four areas make up our core budget. i said earlier the cost to iraq, afghanistan, and pakistan ungirt insurance in those countries. some are extraordinary and temporary war costs, so this year we are taking a more unified and transparent approach. the president's budget includes the state department war costs, along with the department of defense and the oco budget request. the request represents a small fraction of the total u.s. government's war cost of over $126 billion. if you ask our commanders on the ground, they will tell you help

vital are civilian missions are. as the military transitions to the state department and usaid, the total cost to the american taxpayers will drop dramatically. the overall savings is $45 billion this year from 2010 levels, while our or related expenses are rising by less than four billion dollars. as secretary clinton says, every business owner she knows would gladly invest four dollars to save $41. the rack portion of the 2012 -- the rack portion is $5.2 billion. -- the iraq portion is $5.2 billion. i have seen the remarkable sacrifices are soldiers and civilians are making.

we have to use this moment to help iraq emerged as a stable, strategic partner. these funds let us worked out the country, especially in key strategic areas, to defuse crises and find long-term solutions. the department of state is ready to take the lead from the military. we are ready to take on new responsibilities, but we need the support and resources to do the job. our budget includes programs to train police and assist iraqi .ecurity forces pete the afghanistan and pakistan portion of the request is $3.5 billion. these funds support civilians who work vital to our strategy. we are research civilians in

afghanistan. now our challenge is to sustain our presence and build on our military gains and show results. we are working to give general petraeus and ambassador eikenberry the support they need to execute our strategy. this budget request funding for 1500 civilian staffers. two years ago, we had 320. taken together, our core budget and the extraordinary temporary war cost of our oco budget represent an attempt to support our leadership in the world. we recognize the are exceptionally tight times. the resources outlined in this budget, the state department and usaid can continue to protect

our rights, promote growth, and above all, serve our national security. with that, i will take a couple of your questions. >> neither of the figures you get exactly the functional budget, is it? state only focus on the u. and usaid budget. >> in terms of the actual money the state department and usaid are going to spend -- this is not the entire international operations budget. >> this is not the full 150. >> i guess we can wait --

>> they will be all the information you need, absolutely. >> can you talk about aid for egypt and the 2012 budget? has it been altered any way to reflect the developments going on in egypt now? >> budget request for 2012 is $1.5 billion for the full allocation. the military portion of that is $1.3 billion and $250 million is economic assistance, which is the same as last year. obviously we are willing and ready to help the egyptian people. we will have funds available until we hear exactly what the egyptian people will need. we will then communicate that to the congress for authorization. >> with that come out of 2011 money? >> that will come out of 2011 monday.

the $1.5 billion in 2012 budget numbers. >> in the summary documents released by the white house this morning, it said that year 2012 request will cut foreign military financing, eliminate it completely for five countries, and other funding for nine countries. can you talk about the thinking behind the eliminating of those 14 accounts? >> these guys will what do the actual individual countries. gentlemen, we had to make trade- offs. one reason we are basically flat in 2012 from 2010, we had to cut some things to grow other things. we made some very serious and concrete decisions about how we prioritize, and you will be able to get exactly which countries we did and which countries we did not. >> do you plan to cut or increase support for democracy in russia? >> i don't have the russian

numbers exactly. they will be able to give those to you in a minute. [unintelligible] >> i understand that people will get into more details, but a broader question on that last chart. since you don't know what the 2011 numbers are going to be, that is probably a true statement. begich to goo from from the 2011 request, this is actually a decrease in funding, correct? >> let's be clear. if in fact the numbers we are talking about on the hill today of the numbers that potentially could be cut -- >> no, i am just talking about what the request was. >> the department has just reece -- just released a letter that the secretary sent talking about 16%. they go to that 16%, this

becomes a rather significant increase over the 2011 budget. >> as my mother used to say, i hope we'll have that problem. the reality is, right now, if the 2011 numbers, if curley what we requested 27 gets cut below the fiscal year 2010 numbers, we would have almost 20% reduction in the budget in the state department and usaid. i don't think anyone believes that is what we should be doing. we will be very much focused on what is going to happen on capitol hill, but the purpose of this discussion is to talk about the 2012 budget. there is no question we are very concerned about what could happen in 2011. >> given all the uncertainty, isn't it pointless to talk about percentage increases and decreases, since you have no

idea what the baseline is going to be? if you go back to years ago, the situation is totally different. for the purpose of argument here in this briefing, if you want to look at it from that 2010 enacted -- >> i think your point is well taken. if you look at what our numbers are compared to 2010, we were basically flat in 2010. if you look at what was requested in 2011, we are down. anyway, the budget reflects a very tight budgeting and what we believe or repurchase asians for the berman of state. -- what we believe our re prioritization for the department of state. >> [unintelligible]

is some of it because there are anti 8-u.s. sentiments in some of the states? the adr been given to pakistan is not going to the people. >> the amount of money we are giving reflects what we believe are the priorities of this department, what we need to do to keep ourselves safe here at home. this is a national security budget. we are making the decision to give these funds both on military aid and economics, for one reason only, which is our national security. thank you. >> will take a moment and break down the cameras. >> the house is in session today. right now they are in recess, subject to call of the chair. on the agenda is more work on the respire -- expiring provisions of the patriot act.

it failed to get the two-thirds majority that it needed to pass. it was reintroduced last week, needing just a simple majority for approval. we expect general debate when they return at about 5:00, and votes on that bill after 6:30 with possible special speech is to follow. you can see the house live here on c-span. tomorrow they continue work on the resolution. live coverage of that debate on the c-span networks. the commission on wartime contrasting continued its luck on how u.s. tax dollars are spent on construction in afghanistan and extend that contractors are supervised. security and afghan illiteracy were cited as the two top challenges facing contractors. the final report is expected to be issued in july.

>> the co-chair and commissioners could not be here with us today. the other commissioners will be here shortly. today's hearing is a continuation of our january 24 session of recurring problems in afghanistan began afghan construction. we were looking into the planning, management, execution, accountability, and sustainability of contract construction projects in afghanistan. there are literally thousands of these projects ranging from

schools and clinics and afghan villages to power plants and training centers in afghan cities, to barracks and dining facilities for u.s. and nato troops. they are all important and they all involve billions of taxpayers' dollars, mostly funnelled contractors through the departments of defense and state or through the u.s. agency for international development. at our january 24 session, we heard from government balks, the special -- government folks, a id, and witnesses from the army corps of engineers and the air force center for engineering and the environment. we are also supposed to hear from witnesses who are back today, but we got so involved in the first to panel said there was not enough time left in our room reservation to just for our guests. we apologize for the attendance

of our third panel, which is here today. we thank you gentlemen for agreeing to talk with us and take our questions. we thank you for not complaining about having to come back. our witness panel, rises construction contractors to have carried out some major construction in afghanistan. charles -- sinar, executive vice president environmental inc, ane mckaren, regional sughs for project services. that is u.s. aid piece partner for the school project. i will note the united nations mr. mr. karen available today

without the status, privileges, and immunities enjoyed by the u.n.. he is a u.n. official. again, gentlemen, thank you for your cooperation with the commission. another witness scheduled to speak on the 24th had prior commitments and couldn't join us today. his larry dewalker. we are making arrangement for him to appear in a future hearing. we have brief oral hearings of their testimony. a written testimony was entered into the record last month. we will also accept any updated versions they may provide. we ask that the witnesses submit within 15 business days responses to any questions for the record and any additional information they may offer. now, if the witnesses would rise, i'll swear you in.

raise your right hand. do you solemnly swear and affirm that the testimony you're about to give before this commission is the truth, the whole truth, and nothing but the truth? for the record our witnesses responded in the affirmative. mr. karen, please join us, and i thank you, and let the record show that as i've said they responded in the affirmative. i think we'll start with you mr. colby and your testimony. let me say you have 5 minutes given that you were having to come back. if you run two more minutes, we'll allow it to happen, and i will definitely stop you after 7, and we'll finish by 11:30 because i know you have commitments, and that you can count on. >> thank you. chairman shays, distinguished members of the commission, i'm michael president of overseeing

the division that executes our government contracts, and our work in iraq in afghanistan. on behalf of the 23,000 men and women, i'm pleased to participate in the discussion of wartime construction in iraq and afghanistan. i'll keep remarks short and ask my written statement be submitted for the record. it was my pleasure to meet both cochairs of the commission along with the commission staff in our corporate office in denver last june and participated in the commission hearing last july. ch2m hill has a long service to the united states government and works on behalf of the army, navy, air force, epa, fema. we are in support of the federal government. since 2004, ch2m hill provided support to the u.s. military first in iraq and then afghanistan. this support embodies our corporate commitment to follow the dod clients in both peace

and war. while we served numerous clients and provided the full range of construction services in iraq and afghanistan, the majority of our work results from three large contracts. first, an army corp. transatlantic contract from january 2004 until january 2009. second, from april 2006 until the present, ch2m hill also held an heavy engineering construction contract, and lastly since july 2009, we're a subcontractor under log cap 4. i understand that many from the commission visited afghanistan last august as reference in the previous panel discussions and many were briefed on a project in kabul. on december 7, my government facilities and infrastructure group president met with general ted johnson, the kabul based

cluster commander who is anxious to receive the last barracks being built for the client. they are scheduled for completion within the next two weeks. ch2m hill appreciates the work that this commission has done to ensure troops in iraq and afghanistan receive the support they need and that taxpayer dollars are spent wisely. we are committed to serving the facility, infrastructure, andly gist ticks needs to the wartime environment. we are dedicated to protecting the men and women who fight for our interests. with that, i'll answer any questions the commission may have and share lessons learned from our work in afghanistan. thank you. >> thank you. >> chairman shays and distinguished members of the commission, thank you for our

experience to share our reconstruction projects in afghanistan. my name is charles mouzannar and i work in environmental inc. amec is a focused supplier of energying and product management services for the world's natural resources, clean energy, environmental sectors. they maintain assets for its customers worldwide with sales of approximately $4 billion. they are operations in the americas and united kiang dome and work for customers from the arctic to os trail australia. they employee 23,000 and more than 4,000 employees in the united states. the sales to the u.s. government

for work performed in afghanistan were approximately $58 million. the commission has invited us to appear at this hearing to provide our perspective on recurring challenges relating to u.s. funded construction projects in afghanistan. some of the key challenges that we have encountered along with our recommendations for improvements are provided in our written statements. i want to briefly outline a few points we have presented. a clear and comprehensive scope of work, site surveys, and geotechnical reports are a prerequisite for preparing reliable proposals for a firm fixed price on construction contracts. faced with aggressive deadlines, it appears the government is using firm fixed price on contracts, competed and awarded on the basis of lowest price possible when access is

limited. the firm's method is effective when site conditions are known, conditions a stable, the supply chain is available, and the scope of work is reasonably defined. many of the projects currently needed across afghanistan do not conform to the above criteria, an we believe they could easily result in significant cost overruns, delays in contract performance, and the government's inability to achieve its mission on schedule and at the desired cost. we recommend that acquisition officials reconsider the use of cost contracts by best value selection criteria for projects when site conditions are unknown, security conditions are unstable, the supply chain is unavailable, or the scope of work is not well defined. amec follows a local approach to delivering projects.

we focus on planning through commissioning and has developed various designs that maximize the stainability of facilities and minimize operations and maintenance efforts required during the useful life of the facility. for project delivery, amec maximizes the use of afghan workers and engineers in the afghan foreign policy. since 2006, amec delivered prongs consistenting of a minimum of 25% of afghan workers supervised by amec staff. we are proud to surpassed 5 million man hours on the afghan national defense university project without a recordable heflt and casted incident while also building a local and sustainable work force. we have positive results by training afghan workers and engineers, yet are challenged with balancing these goals

against achieving contract schedule and cost requirements. we believe the government can achieve desired stainability goals for the afghan work force by setting aside projects that allow contractors time and funding to train and develop afghan workers and engineers. last, but not least, amec sees training as an integral part of training in afghanistan. they give training to maximize the effectiveness of the management team, build manageable relationships with the stake holders and supply chain, and avoid incidents. we believe this approach is critical for government and contract and staff alike to successfully deliver projects in afghanistan. in closing, amec is proud and thankful for the opportunity to contribute to the reconstruction of the country of afghanistan. our ability to deliver projects in afghanistan during the current challenging circumstances reflects the

contributions of all stake holders including the afghan end users, u.s. government, and the amec team supported by our afghan engineers and workers. thank you for the opportunity to brief the commission on amec's perspective on successfully delivering reconstruction projects in afghanistan and i'll be happy to answer any questions you may have. >> thank you. mr. van dyke. >> good morning -- >> is your mic on, sir? it's the mistake we all make. >> that's better. i'm bill van dyke, a wholly owned subsidiary of black and veatch. i thank the mission for this opportunity to discuss my company's efforts in support of u.s.' mission in afghanistan. our corporation is a global

provider of power, water, communications, and other infrastructure. as part of the worldwide reach, the company proudly supported u.s. government projects for more than 90 years. since august 2006 as a partner in the group black and veatch venture, we assisted the client in develops essential energy infrastructure in order to improve the economy and quality of life for the people of afghanistan. from 2006 until today, total megawatts of power generation available for afghanistan have more than doubled, and us aid projects contributed to 90% of that increase. in december 2010, us-aid awarded them a separate contract for the helmond project for distribution in the south for the support of

u.s. government policy. working in support of the mission to increase energy delivery to afghan's people and with afghan government organizations, black and veatch's dedicated professionals has successes. we provided advice to the government in negotiating power agreements with other countries. we developed a successful plan in just 35 days that enabled afghanistan utility to transmit 70 megawatts of imported power to the northeast to a complex network of never before used existing facilities. we constructed the 105 megawatt power plant at a greenfield site northeast of kabul that provides the power for kabul and ultimately provides 100 jobs. we trained kandahar workers to

overhaul their generating engines rather than shipping them out of the country. this enhanced the power program. projects currently underway enhances their ability to better manage loads from domestic hydropower, fossil fuel, and generation forces. in achieving successes, we've had challenges. in april 2010, our joint ventures living quarters in kandahar was destroyed by an improvised explosion device. we had to evacwase our forces, afghan staff trained by black and veatch personnel continued to operate without interruption for weeks, a proven success in training for sustainable operations. in building the power plant, we had issues with the power gerkses we were unable to resolve.

we addressed this issue in two ways. first of all, we figured out how to transmit power from pakistan to kabul to deliver power in january 2009, and that was far earlier than originally thought possible. second, black and veatch immediately stepped in to performing the remaining work on the plant delivering a full power for the winter 2009 to 2010 ahead of the scheduled at the time of the subcontract termination. u.s.-aid turned over ownership of the plant in june 2010. the plant met all asks since it was -- requests since it was commissioned and we work 2.7 million person hours in building the facility without a serious safety incident. the cost of taking the project from an empty green field site to operation was by the u.s. army corp. engineers.

it was discussed before the commission in january. the costs in 2008 after all major subcontract work was awarded was $260 million as noted in the report. the cost is precisely within the range of we have ongoing efforts underway with afghan government agencies and our contractors to determine how we will ensure the security

of work that isn't necessary to complete important projects as a move forward to provide power in southern afghanistan. we are proud to support efforts that have improve the availability of electrical power to hundreds of thousands of afghans and will benefit their lives for many years to come. we never forget that are professionals on the ground, working in a hazardous environment, and those supporting them, are the ones who deliver these results. thank you for the opportunity to appear before you today. i will be pleased to answer any of your questions on these or any other issues. dyke. >> chairman shays and members the commission. i'm regional director of project services and formally from 2008 until december 2010, director of the operation cementer in afghanistan, and i'm honored to brief the commission on unops

work in afghanistan. we were established by the u.n. national assembly with a mission to implement peace building, humanitarian operations. we deliver approximately $1 billion through project implementation annually and spends $60 million administering it. it's a fee basis and has no core funding from the united nations. during periods of conflict or crisis, unops has a physical presence on the ground and engages governments and local communities. the services made the highest international standards. turning to afghanistan, unops had a delivery of infrastructure and other projects to the afghan people. it's funded by the afghan government and international community. one is the gazi boy school project.

presently under construction, the project is funded by the u.s. government, u.s.-aid, and represents the best standards of construction in afghanistan. designed to meet the california building codes as well as the demand of a several thousand students, this is the best in the portfolio. after the problems in contracting, despite the real security related limitations, it's hard to implement projects in afghanistan. this is not meant to down play the security risk on the delivery of capital infrastructure programs. side preparation is key within any construction project, but in afghanistan, there's the additional complexity of land ownership, ideal sites, and the remanents of explosives from war. there's a range from very poor to very good. the situation makes construction management more essential if the

investment made by the international community is to be effective. security in afghanistan is a major consideration for unops. they have been impacted by threats and intimidation from the various antigovernment and criminal elements operating across the country. unops found through long and sometimes bitter experience that infrastructure is not effectively delivered in afghanistan without the serious social inclusion effort working in parallel as well as the provision of security forces. unops does not at present use international security providers in afghanistan. we found that when allocate the appropriate resources, the national security forces and the minister of interior can be effective. they recently visited the project in kabul. that site is protected by interior on special assignment to unops. they have a close relationship

with the u.n. government team and the ministries of finance, public works, rural rehabilitation and development and agriculture livestock. at present, over 80% of the project work is on agreements with the afghan government while the remainder is by lateral with australia, italy, sweden, and the usa. the close relationships between the unops and the afghan governments mean they are thoroughly involved in capacity building. we invested in the necessary training and systems to ensure the best practice is observed in infrastructure, project management. in wartime contracting, operational imperatives arrive that load to cutting corners. we have ensured we have the procedures in place to respond to project demands in an accountable manner.

unpos observed for some years the investment in afghanistan has not included the concept of maintainability. unops design teams composed of local engineers ensures this is appropriate. recent experience emphasizes the need for safe buildings. the ghazi boy school that the commission soon visited is an example of safe high-quality maintainable and appropriate construction. this was not the case at the start of the project. we had to remove the initial contractor, not an ideal situation, but it led to a new contractedder to meet the deadlines on time. i hope my written statement has shown wartime construction in afghanistan has contract management to locations of specific challenges like security threats.

the international's ongoing investment in the area indicatings the important contribution to peace building, humanitarian, and development objectives provided by infrastructure development. if also demonstrates that results can be achieved even in the most challenging environments. thank you again for the opportunity to brief the commission on this important subject, and i stand ready to answer any questions. >> thank you. let me tell you the order we'll proceed. we'll start with commissioner ervin, and then commission ehank -- henke and then myself. >> thank you, mr. chairman. i want to echo the chairman's comments at the beginning by thanking all four of you for being at the first hearing and returning for this one. we know how busy everyone is and thank you for accommodating our schedule.

as you know. mr. van dyke, i want to spend the bulk of my time talking with you on the issue. just to get the facts on the record for those not present at the last hearing, there was a $266 million sole source contract awarded to black and veatch to provide power to kandahar, the real heart of the insurgency, and this was done in december of 2010 against a backdrop of having complained a number of times about your performance under the 2006 contract to provide power to kabul that the contract originally was projected to cost $100 million that ballooned to $300 million, and there were overruns in terms of time. the project was a year behind schedule. now, it is not fair, it seems to me, to blip black and veatch to issue the sole source contract.

i think it is fair, though, whether you have any better justification for it than we were provided last time. we spent time talking about this november 29, 2010 justification that aid prepared for that kandahar contract, and there's two terms used in it to justify it. first, they say that you were uniquely qualified to perform this work, and then the term uniquely positioned is used. if you really read this document as i'm sure you have, it seems to me, really the ultimate reason why black and veatch was chosessen is because you were uniquely positioned meaning you were the only contractor on site. it also says that to get other contractors in would have taken a tremendous amount of time even though, again, you were sited just months earlier for being a year behind schedule with regard to kabul. >> commissioner ervin, there was

a lot in that preamble. just one correction, the award was to black and veatch and not the joint venture, and it was to us directly. i think that -- i haven't seen the justification that our client wrote, but i believe we were both qualified and positioned. one thing that is not clear to the commission is that we had done an expensive study of power needs including projects necessary in the south for five provinces that included capped hair and helmand. we had a good understanding of the work up front, and that's important to know. the other thing that's important is you talked about past issues by u.s.-aid. you heard what we did sin that time, and i remember i was asked at the last hearing whether people were using evaluations of their contractors, and our latest evaluation is very, very

positive, and i'd like to read just one comment from it. the execution of the power plant resulted in a high quality state of the art pour plant capable of meeting all requirements and providing reliable power for 6,000 afghan citizens for years to come. this was given to us -- the date that we received it was 2010 in may. >> what's the date of it? you received it in may of 2010, but what's the date of the document? >> it reports on 2008 to 2009. >> we'd like a copy of that. >> i'll get you a copy of that. >> thank you. now, you say you did a number of things between march 20, 2009, the last document that we have from aid complaining about your performance in kabul. between then in december 2010 when the kandahar plant contract was awarded to you, can you describe in document what improvements and performance

you're referring to? >> some are in my original statement, so i'll go back to them. if you recall in the report, one the short term reasons for building the plant was fear that you couldn't get power through the neap -- nep power system, we were asked by the afghan government through u.s.-aid how can we get power? the creative engineers figured out how to do it in 35 days. ..

>> my time is limited. let me stop you there. you have any reason as to why the work could not have been broken up into discrete parts? why was it necessary? >> the fact is that's exactly what usaid has asked us to do. we are a power generating company and that's what we do for living, and we're going to break up the work into parts. we're going to competitively did it and award did some competition. >> isn't that a function of the government ought to perform rather than the contractor bidding out the work? >> i think the major question is does the government have the

ability to do the technical detail of dividing up technical work scope like a whole energy distribution transmission, generation system for the south. that's what we were asked to do. >> let me ask you about security. you talk in your statement about having the single biggest challenge that you have to get the work done with regard to kandahar. we understand that your security firm is blue heckel, is that right? >> that's the security firm we have at the tarakhil power plant right and which is the only job would have. tarakhil not mentioned anywhere here, we are providing training for operations and maintenance today, and so the only direct contractor we have is blue hackle. we have no contractors speedy's i understand that. spent we have no contractors. >> let's talk about the blue hackle contractor that you had at the kabul plant. we understand that the afghan government has called the contractor the major offender. is that right?

can you give us any details as to what's behind the afghan government judgment? >> we're aware that there have been discussions with blue hackle and we've seen the press releases that relate to those things. blue hackle is to license to do work and provide license -- provide services at this point. so we are using them. we understand usaid is -- >> yes. my time is limited. if any and the afghan government determines that blue hackle can no longer perform this function, what are your plans to provide additional -- >> we are working with usaid, the ministry with interior in afghanistan, with our own working contractors, people doing the work to forget what are path forward is on security across the board. we do not have firm answers yet because i think this commission needs to understand is the security issues in afghanistan are evolving daily. i think dr. shah has been there this week.

i know mr. thier is on his way back today. and we will talk with him about what they have learned, but there are not yet solution spent final question, the fact you don't have the contractor right now with regard to the kandahar plant, that surely poses some threat to the ability to perform with eye contact? >> we have some time because we are getting the equipment and subcontractors in place. we have some time but there's a window within which things need to be worked through. >> and what is the window? >> i would say the next six to eight weeks. >> thank you very much. >> thank you. dr. zakheim. >> thanks very much, mr. chairman. and thank you all for being here. i've got a few questions as well, a few from where my colleague left off. the first, mr. mccarron, did i hear you correctly that didn't think security was enough of a bar to your succeeding at what you've been asked to do?

[inaudible] >> h.r. mic on? >> it is now. i was trying to indicate the security -- we can still chase right things in afghanistan as long as they are the proper risk analysis and make the proper measures to address the security? >> you believe you have, i take it? >> it's very difficult to say. at the moment we seem to have a very good record in the last two and a half years while i was director of the operations center. we just a few incidents, and i'm very thankful for that. but anytime things can go wrong. i think even today it was a big ied explosion. so you never know when something is going to go wrong. >> i take it all of you gentlemen support the idea of going to -- can you hear me now?

just hold on one second. thank you for letting us know that. could we have staff sit in the back of the room, and if you can't hear, please let us know so the general audience can. i'll try again. is that better? >> can you hear the witnesses or the issue not -- >> canyon in the back now? still not. >> go for a. >> i take it you all support the idea of moving to cost-plus contract because of the security situation, is that correct? it is not. does anybody disagree with that? are you comfortable with the term fixed price? >> we actually did out subcontractors worked on a price basis. we do a lot of -- mr. mouzannar mentioned which is we try to

specify the work scope that is biddable with no conditions so that it can be bid. in terms of subcontracting we do go from first -- fixed contracting. >> but for your own contracts you prefer what? >> cost-plus is appropriate. >> let me ask you this. given that the security situation has pretty much been the same since about 2005, and you've had overruns, but the security situation is no better. why do you continue to bid on fixed-price contracts? why did you bid on the 2010 contract? you're not going to lose money. unite in the business to lose money. supposed the government complied with all its requirements, given the secret he situation it would be your neck, wouldn't? so why do you being? >> the contract we have is a cost-plus contract.

and i guess -- >> you wouldn't did if it was fixed-price? >> not on this particular work, no. >> okay. let me ask you this. the report of the sigar folks point out a number of things that were not a ids responsibility of, but yours are taken with subcontractors. you have ever had trouble doing things in time. do you have the same situation today? are all your subs lined up ?-que?-quex hasn't been any delays at all since you signed on nearly a year now and? >> actually, the contract was signed on december 4 of 2010. so we have a couple of months, we have projects out for bid. we are getting back speculative anybody lined up and? >> yet, we have one contract ready to order.

>> mr. mccarron, do you see yourself as a contractor century century have to raise your own money? >> interesting question. people have pondered over that for some time. no, we don't. unops, it has an implementation mandate from the u.n., and it doesn't have a political policy mandate. >> neither does any contractor i've ever heard. >> and we do approach things in a business like manner. we have to be efficient. we have to be very tight on our margins, and we have to perform. >> every contractor does that as well, right? >> but we don't have -- spent apart from that. >> apart from that we are a not-for-profit organization. >> but not for profits also have contracts, correct and they are contractors, greg? >> that's correct.

we are supervised -- >> who checks your books? >> the executive board of unops, as well as the united nations board. speaks of the audit all your books? >> they do. >> and your accountable to the? >> yes, for the last two years. >> i've got a couple of minutes left. let me ask mr. mouzannar, when you hire a sub to provide security, how do you go about that? >> ensure. what we do, typically we have our internal security department here they might be a global contractor. we are practically -- we have a regimented internal, how do we vet and audit internally the procurement process. so in essence first we go

through the typical financial business requirements but we physically go and visit with the locations and make sure that the contract has the appropriate systems and procedures that meet our requirements. >> that's a.i.d. ever come out and see your people in the feel? >> we don't work for a.i.d. >> black impeach, sorry. today, and see your people in the feel? >> yes. >> how often spirit it depends on the project. they been up to visit the projects where we're doing the iraqi power competition project so they come as necessary. >> what you define as necessary? >> at the tarakhil plant they were out their weekly as we're finishing to plant. i think they been up to the reactive our company probably three or four times in the last six months. i would have to check.

>> sigar says they provide quality control. >> i think if you carefully read cigars report, he talked about quality assurance, but the main issue was on an indication. been no allegation that tarakhil power plant had any quality issues but it is a high quality plant. >> i guess i'm puzzled with these folks coming out every week, how come there's no indication? >> i think the communication improved a lot after january 2009. spirit that maybe but i still don't understand how there can be no indication prior to that. can you explain it to me. >> i don't think there was no indication. i think we improved communication. by the time we told the client that we would completed in 2009, in fact we -- >> you mean a year late? >> after we had the issue with the client. we did complete it late, but we did get our from the northern

countries, uzbekistan, much earlier than anybody predicted and that was equivalent to the amount of power that would've been from the tarakhil power plant. >> thank you. my time is up. >> professor tiefer. >> thank you, mr. chairman. although chairman thibault could not be here today, i just want to acknowledge that like our previous panel on construction, i draw on his valuable leadership. he went out there. he saw these projects for himself. he was even correcting witnesses who may not even have seen those projects as much as he had seen them. so i can believe and follow his leadership. i want to build on commissioner ervin's recap, which was at the last hearing, as he said. we question aig about its sole-sourcing of the kandahar

power initiative to black & veatch. this past december. at the last hearing sigar said it had an investigation of the kabul power plant coming, and what i understand to be a preliminary inquiry of the kandahar power award. and that i have questions about prior projects because if that project had been completed, black & veatch might have problems in the competition due to a history of unsatisfactory past performance here so, let me start with one of the energy projects that interests me. which was, mr. van, about your unsatisfactory past performance on aids project to assess a natural gas deal. for those trying to follow this,

a.i.d. formally rated you after a year of the project over all as unsatisfactory, which is the rate on a scale from zero to five, and they rated it zero. i come in particular, they said my understanding is the position was that over all the contractor has to date that an unsatisfactory job in getting the project started. delays were due to unsatisfactory planning, about various things, and that the contractor missed every milestone date in its revised workplan. lack of coordination between offices also added to delays. my question is, do you at least acknowledge that you did get that overall unsatisfactory rating that would count against you in competition for new

projects and kandahar? >> we did get a rating partly to the project. the client later terminate the contract for its own convenience and we are in the process of settling that oath with usaid and subcontractor. i think the view of the project is a little different today than it was and the time to read that. if you look at the sigar report in january 2010. >> okay. now let's go on -- thank you and i appreciate the brief answer. let's take the kabul power plant where you were given in the course of its construction, and you discuss back and forth an argument you have about why your performance wasn't why aids appear but a.i.d. rated you formally poor and unsatisfacto unsatisfactory. it had four ratings and as i understand, you got one unsatisfactory, to force, and

one fair. i have to say i teach at the university of baltimore moscow and i have a diverse class there. but even the worst student in my class, when you rate on a scale from zero to five that's better than getting zero, two ones, and one-2. the key here was scheduled that they thought that the delays in the schedule of the plan could be attributed to the following performance deficiencies of the prime contractor, including again that the contractor has missed several scheduled milestones. did they give you ratings like that, and was a critical in that way of your missing milestones? >> they gave us those ratings partway through the project. i read to you and i were read against their latest one which is the execution of the powerpoint have resulted in a high quality state-of-the-art

power plant capable of meeting all technical requirements and able to provide reliable power for up to 600,000 afghan citizens for many years to come. i think the other thing you need to realize is, as i said in my statement, when we had issues with a subcontractor we stepped up and solve the problem and we did it two ways. one was to get power from uzbekistan much earlier than anybody got to kabul. >> i understand. spent and the second issue was that we did step in and finish the plant faster speed and i understand after that rating, yes. let me ask because commissioner ervin focus well on the fact that the jna for sole-sourcing is said that you were -- sole-sourcing the kandahar power initiative that you are uniquely positioned. i want to start -- this had two parts, and i discussed at the last panel with mr. thier, the a.i.d. chief, and he agreed, you

knows it was possible to separate into two halves, 1100 miles away, diesel plant in kandahar. what i want to ask about first is the damn part. although there have been previous work -- the dam part. in 2009, louis berger completed rehabilitation of the second of two working turbines at the power plant. the work was not done primarily by you at the power plant, but louis berger. isn't that right, in fact, you have said you don't want to take responsibility for the problems of your partner at that plant. haven't you said that you deny you ate any responsibility for the problems with the kajaki dam

because you certainly berger handled that part of a joint contract? >> it's a long question, mr. tiefer. let me clarify one thing. 6% of the total cost of the kandahar project is the kajaki dam. 6% of the major part of the work that has to be done in kandahar -- excuse me, kajaki dam, nobody else has done that were. i told you at the beginning, we've done an extensive study of the power demands, to aid the projects necessary in the south. there are 11 separate projects in the recently awarded contract. we did not do the work on the dam that was done prior, but we do to hydropower work. we are a power company. >> i think you did not do the work that was done prior? >> that's correct. >> you are not uniquely positioned to follow up that were. my time is almost expired. >> mr. van dyke, he referred to a later review.

what is the date of that? >> it's the one we received -- i told you we received it in me. it's 2008-nine. >> can you make that available to our staff? was there anything in that review that was not couple of entry? >> they acknowledge that early on in the project we had difficulties but we have stepped up and solve for them. so yes, they did talk about them spend back if you would allow one of our staff to take that, would like to -- >> i can e-mail it to you. >> no know. we want to make a reference to it. if one of the staff would get that document, please. >> i would just like to see it now if possible. >> can i just interrupt? >> as long as i have a copy back you can ask me any question. >> one seconds. we're going to make a copy for the commission members right now if we would. and they will get it right back to you. will not ask any question about and to get a copy back. >> mr. chairman, you are referring to the evaluation,

cracked? >> no. that was 2008-9. >> that was the species referring to an earlier one. >> this is the one -- >> yes. >> thank you. you will get a copy back. >> okay. >> mr. hanky, please. >> i would like to ask each of you some questions about security. mr. mckelvy, in your statement you say security risk is our first concern and along with safety and remains our primary concern throughout projects life. mr. mouzannar, you talk about access and you can't get to do site surveys and tell they are secure. and unexploded ordnance in getting a progress. mr. van dyke, you clearly state that your largest single challenge is the security environment in afghanistan.

and mr. mccarron you say in your statement that your staff have been directly impacted by abductions, ieds, threats and intimidation from various anti-government and criminal elements in the country. so i would like to ask each of you just were simple yes or no answer to the question of come is security your number one, your foremost challenge and operating in afghanistan? >> yes. >> yes. >> yes. >> yes. >> with that as background, how would you assess, how do you assess as a company trying to execute contracts, how do you assess the extent of your reliance on your security provision, your security contractors or in your case, mr. mccarron, afghan forces that torture projects? if you had to assess your extent of reliance on a scale from one to five, one being not reliant

if there was no security tomorrow, my projects would continue unimpeded, 25, heavily dependent, extremely reliant on that security. without that security it would come to a stop. just give me a numerical assessment of your extent of reliance and discuss for a few seconds the impact of that on your company. transport? >> i would say it is probably a format. for ch2m hill he'll reconsider the security of our people. there's many opportunities that we will not pursue if we deem them to dangers. so we really look to come in this case, the professional security companies to provide security for us. and should they become not available then we would reassess our interest and working in afghanistan. >> does that mean one of the options would be leaving? >> that's correct. >> mr. mouzannar?

>> i would echo the same comment made by mr. mckelvy, except that -- >> numerically? >> i would say more of a fight for us except projects out there, one which you would refer to as within the wire and others outside the why. obviously, within the wire such as at bagram, it would be a less of an issue, especially with fixed wing flights going in and out of these bases. so for the outside of the wire, a definite five. about a three for others. >> okay. think. you are drawing a distinction between whether you're behind a fence with u.s. forces or whether you're outside the wire, is that your distinction? >> none of our work is inside the wire. so i would say we're in a fortified range. security is very important to us. the situation is changing so weird we are working on solving the problems but our first requirement is keeping our

people safe. >> thank you. mr. mccarron? >> similarly with unops, how i figure as well, for the five. and, of course, priority is the case to keep people safe. we operate umbrella under the united nation secured also. so it's not just unops decided on its contractors. it's the whole of the united nations that we have to listen to in terms of safety and security and where we can put our people. that does complicate where we can send our staff are. >> with the understanding that security is your number one challenge, but you are all extremely reliant on security, how do you as a company, the three of you are contracting subcontracting for that security, how do you as a company ensure the quality of your private security? what vetting process if you go through, to what standards do you look? to your contractors have, your

security contractors, do they have certain professional standards that you hold into? how do you ensure the quality, transport? >> thank you. similar to what we said before we have an internal group that does an assessment of the companies that we had to choose from. in the case of afghanistan, we have three different companies that we use across the country based on what our investigation has found, their strengths are regionally. >> what are the company's? >> we use all of, blue hackle and cohort. what we found when we first went into the country is we use companies that were already in use in the area and that we got a good feedback from others as well as the u.s. government who uses the same countries to a certain extent from time to time. so they were prequalified in that respect, and they continue to serve us well over the last three years. >> to your companies subscribe to what people refer to as the swish initiatives for private

security? >> i'm not familiar with the swish and it is but i'm sure our security folks are. >> as i indicated earlier we have a very regimented security process that goes through prequalification, and that is only receiving documents but also on the spot looking at facilities. we ought all the way to the mechanic that is changing the tire, making sure they have processes and systems and very regimented reporting that we would get. we have an internal security, corporate security group that does all of that, and keeps close tabs on that. the other piece of the puzzle is when we go to different regions, we look at establishing companies that are there from our prequalified a list of companies because of the knowledge on the ground in being able to get. >> thank you. mr. van dyke. >> we have a corporate security operation that helps us figure out what we need to do. we have individuals in afghanistan who have security

background to help us also if i were contractors. >> black & veatch employee's? >> yes. we routinely keep in touch with the region secure the officer with what's going on in the area. and we evaluate contractors based on past expense and past practice. >> and with unops we have an in house security team of some internationals but mostly afghans who know the security environment. we have close liaison with the minister of interior. ..

>> they were cited as a major offender. they employed 1, 358 guards more than they're allowed, they used embassy vehicles for off-base, nondiplomatic purposes. how dud your system -- did your system of quality assurance not catch that? or did it catch that? >> in essence, it did. we immediately contacted senior management -- >> well, you came across the slip, the press report? >> obviously, in terms of -- >> yeah. >> they have two different -- >> you came across what information? >> >> well, we had, obviously, seen -- >> okay. so you saw it in the press and then responded? >> correct. >> okay. so your quality assurance system found none of it before, right? >> well, again -- >> is that right? >> correct. >> so you saw it in be the press, and then what'd you co? >> as you know, in the press,

you can get all kinds of free reports that come out. >> right. >> so there were a lot of discussions in terms of the information. >> uh-huh. >> and at that point we had the change in security subcontractor from the one site that they're operating at with a different company. although my understanding now -- >> you said you fired -- >> no, we did -- it was almost a request from their part because they were still trying to resoft the issues with -- resolve of the issues with the presidential decree that was -- >> okay. >> so, in essence, it was a request that they came back, you know, to try to -- >> okay. but you told me your system checks down to the guy who changes the tires. >> sure. >> but you found none of these -- your system of checking your subcontractor found none of these discrepancies before the press picked it up? >> my understanding is different groups that operate in afghanistan in support of the

u.s. government -- >> who operates for you? >> >> we have a whole group within g force that we interact with -- >> i'm over my time but one brief last question, just yes or no. do your private security providers, are they on fixed price, lowest-price acceptable contractsome? >> yes. best value selection. >> best value, not lp today? >> no. >> sir? >> doesn't apply. >> okay. so yours are fixed price? >> they are. we provide the scope of work. we actually develop the scope of work and provide pricing for providing the resources. >> thank you. my time is expired. >> gentlemen, again, thank you for being here. i -- we're going to be issuing our second interim report next

week, and it's focused on legislative changes, some regulatory changes, maybe an executive order or two. um, we, we're wrestling with a lot of issues that i'm sure you wrestle with as contractors. first off, the combination of participants or, basically, the military, our government civil servants, contractors. then you have, obviously, contractors who are domestic to the united states and overseas. we wrestle with the fact that we'd like to know what that balance is and nearly half as many military, we have an equal number of contractors. we started out thinking that we just needed to oversee contractors better and manage them better, and that was a management issue. then we began to realize that if we couldn't properly manage them, maybe we shouldn't do it. and it gets into this whole

issue of waste, fraud and abuse. you have waste in projects badly done, but you have waste in projects that are not sustainable, not culturally appropriate and so on. we've seen a significant number of projects we believe are not sustainable, and you wonder culturally absurd. why would we build an atrium in a school building? the heating costs? you've got to, basically, bring in the diesel fuel and so on. when you see something that appears to be so stupid, why would we do it, and what is the obligation for contractor when you're asked by a gooft to do it? >> mr. chairman, the atrium that

you refer to is actually not an atrium. i provided a supplementary -- >> let me back up. forget the atrium. >> okay. [laughter] u.s. standards. why? >> there were two major earthquakes, one in china, one in pakistan. we don't see buildings we build kill children. and so usaid decided to impose the seismic design conditions to the california building code on the structure. that, then, determined -- because the site limitations, we were going to a three-story building. that then determined -- >> why would you build a three-story building? why not one story? why three stories? why would we do that? do you have to use steel to build a three-story building? >> yes, we do. it's a reinforced concrete structure.

and we're servicing over 5,000 students and on a limited site. the ghazi school is hoe candidated within -- located within a short distance of the parliament, the old part of the city. so the available land was -- >> why a school for 5,000 students? >> that's the number of children that are being serviced at the moment. >> why not two schools, why not three? i'm just trying to understand why we would build buildings like this that then have huge energy costs, etc. so, i mean, isn't there a part of you that says maybe that wasn't the way to go? you're going to build what you're paid to build, but what we're trying to do is wrestle with, what is the role of a contractor when we are doing things that, you know, are so different than what's there? what is the role of the contractor? mr. mckelvey, what is the role of the contractor? >> i think we have the responsibility to point out issues that are not culturally

appropriate through the process of construction. when you look back on our experience in afghanistan, certainly several years ago there was quite a bit of united states standard being put into projects that, perhaps, was not applicable, i think was mentioned on the last panel. >> let me go through this a little more quickly. what is the rolesome. >> well, our role is to bring in design the engineering to try to min nice poise the instances where you need the very extensive operation and maintenance. it's keeping it basic, keeping it simple. that's our rule. >> keeping it basic, keeping it similar l. mr. van ciek? -- van dyke? >> i would add that it's also our job to operate with the training. >> mr. mckelvey, is there an instance when you had a conflict with what you were being asked to do because you thought it was

culturally insensitive, not sustainable? any examples you can share with us? >> there's been examples where we installed on an international building code and we've been asked to change to the other codes. >> so you did it? >> that's correct. >> so there's nothing, you're not given a document that allows you to put a protest in or at least be on record as saying this does not make sense? >> no, there's dialogue with the client, dialogue with the team that we feel -- >> how do you document it? if i were a contractor and i was being asked to do something i thought didn't make sense, i would at least want some documentation. >> there's documentation in correspondence. >> would you give us any documentation where you've actually said this doesn't make sense? >> we'll provide that for you. >> thank you very much. i'll ask you the same question. >> same situation. i think the work that we're

doing in afghanistan predominantly is with afcee. there's a lot of that communication. and beyond the client/contractor communication, we periodically get together as contractors and share lessons learned. actually there's some good case studies that we'd be happy to share how the contracting community worked with afcee, come back with some standard designs. >> i'd like an example where maybe you have objected to something being done. you know, whether you did it or not, once you've gone on record, you're going to do it. but i'd like an example of it. >> i meant more of an example of a positive situation where all together came in. i would have to research to see if there were instances where we came back and said, no, it doesn't make sense. >> mr. van dyke? >> i can think of two recommendations for change. one was the one i mentioned in my statement where engines in kandahar were being shipped out for overhaul and we trained them

to overhaul them themselves. the second is the issue with the kabul plant where we recommended if you're going to have the capability, wait for a while to use it until you get people trained on operating a diesel plant. and i could go into why as you want the details. >> thank you. >> i'd like to, perhaps, propose the kabul women's university -- sorry, kabul university women's dormitory as an example of where appropriate policy has been put in place and that the building was not only refurbished, but the infrastructure was established, the training, the personnel to insure that the facility was looked after and maintained, that students were enrolled and seen through to their graduation. so it was fully working before it was handed over, so the ministry of higher education had the capacity to keep it going. too often we build nice, shiny buildings and hand them over -- >> the sustainability is

appreciated, but i just wanted to ask do you have any example of where you were asked to do something that you thought was wasteful or inappropriate and, therefore, went on record as saying we shouldn't do this? >> not so far. >> okay. well, what's a little unsettling about your answers is that we know there are a number, and the fact that somehow you're not encouraged to do that and wouldn't, you know, want to be on record documented we didn't want to do this, this and this, i would have found a all littlee encouraging. going to -- >> thank you, mr. chairman. mr. van dyke, thank you for making this document available to us. it is an evaluation that -- i can't find a date here, but it appears it had to have been done sometime after 8/31/2009 because that's the final completion date of the kabul project. and as you say, it does give an

overall rating of good to black & veatch and commends you for the work you did. i would just note for the record, though, that it's not a bouquet. the two issues that were highlighted earlier, cost overruns and time delays are noted here. the rating was given a two, a fair. and it's interesting what it says here -- >> can i interrupt a second? we're all going to be taking on eight-minute questions, so you may start over again. >> thank you. since your cost records and documentation was very good and complete in line with requirements and good cost control practices, so you were given kudos for keeping record properly. it goes on to say, however, the project budget escalated substantially from original estimates, that's the 100 million to 300 million or whether or notes. >> to the initial estimates were in the 40-240-290 range.

>> [inaudible] >> 2-300. it's actually a little under that, but that's what the cost estimate was. so it did go up, and that was a result of the subcontract issue i talked about. that is the subject of a dispute resolution, and we've been asked not to talk about it further until the dispute is resolved. >> even asked by a.i.d.? >> no, no. i sent a note to you, maybe you haven't seen it. we have a dispute that is being resolved before the international chamber of commerce arbitration panel, they've asked both parties motto talk publicly about the issue before it's resolved. >> i look forward to following up on that. >> with by the way, nobody would be happier than i to talk more about that, but i do need to respect what the arbitration tribunal found. >> i appreciate that. we'll talk to the panel about

that. it also notes, of course, the timeliness issue. >> yes. >> you've been very transparent and forthcoming, and i appreciate that. in that spirit, are there other -- presumably there are -- are this other documents; letters, memos, etc., from a.i.d. to black & veatch between the last communication that we had, march 2009, and december 2010 when the kandahar plant was -- other than -- >> this is the only evaluation we received since the one that you had. >> do you have any other communications other than evaluations -- letters, memos, e-mails, anything? >> i'm sure we have thousands of letters and e-mails. we provide them with daily and weekly reports. >> would you be willing to make a representative sample of those documents available? >> i guess i could talk to your staff about what would be representative. >> do you have any internal audits? are you done any -- have you

done any internal audits of the kabul plant? >> not specifically the kabul plant. >> do any of those audits cover the kabul plant? >> no, they did not. >> so you haven't done any internal assessments of the kabul plant? i find that hard to believe. >> no. >> okay. finally, i was interested in your agreement that the preference for black & veatch would be cost-plus contracts, but you say that you use firm-fixed contracts for your subcontracting. why the difference there? >> well, i think the difference is in the work scope. you're asked -- we are asked to go figure out how to get distribution, transmission and dollar generation -- >> all right, let me stop you there. >> yeah. >> is the government -- [inaudible] would you prefer to have firm-fixed contracts? >> if many musen art laid out some requirements, you can get adequately known conditions.

that would be something we would consider. >> but not pledge to? >> something we'd consider. i've told you all very honestly that the biggest problem we face is security in afghanistan, and that's an issue that has to be addressed. >> both of you in your testimony, in your written testimony, your oral testimony, you've laid out to me some really common sense call things that would make life for contractors easier. thing like making sure the ordnance is removed beforehand, giving you access to topographic reports, taking cultural practices into consideration, etc. presumably, you two, your staffs, have raised these issues with the appropriate people in the united states government, right? and if so, what's the answer to that? why do we continue to do this? following the line of the chairman's questions. >> i think there has been improvement over time. when you draw the distinct between when we with all, together with afcee, for example, started doing work in afghanistan, there's been a

great improvement since then. there's still room for improvement with respect to consistency of standards that we're asked to build to and design to across the life cycle of the project, but there has been measurable improvement. >> i agree with that. one thing i'd like to add is, also, i think these types of common sense measures happen more and more on idiqs or framework contracts where an agency would work and interact with contractors. i think some of the issues, is where there are one-off contracts that are procured outside these idiys. -- idiqs. especially there are some projects that come up as urgent or mission critical where there is no time to conduct any of these types of analyses. and i think the temptation would be to just get them out. and i think this is something that, hopefully, the commission and others would look into, is what are these instances where

projects were just let out on a lump sum without that, you know, all of the common sense issue. and then, also, the linkage between these actions, the way it afejts -- effects the supply chain and subcontractors if these things happen and the contractors fail, what is the effect on the community. >> thank you. and finally let me ask you a couple questions about security. we understand security for you is provided by a company called g4? >> that's one of the units. olive group is the current company that is helping us out. >> with so you no longer use g4? >> they elected that they were going to retract because of the presidential decree that was going on, so they were practically pulling out at the time. so we went in with a different company. >> so you're not -- just to be clear, you're not using g4. >> i'll have to double check. my understanding is, no, but i

will confirm that and let the staff know. >> thank you. >> mr. mccarron, you mentioned earthquakes in china and pakistan. where in pakistan? >> there were, it was major earthquake in pakistan in the mid 2000s. >> but where? that's a pretty big country. >> exactly. but i can't tell you -- it was very well broadcast. >> was it close to the afghan border? >> i'm sorry, i can't say exactly where. >> what about china? was that close to the afghan border? >> no. but the seismic conditions in afghanistan are such that the risk of earthquake is similar or higher. >> when was the last earthquake in be kabul? i'm just curious. >> the last earthquake in kabul that i felt personally was just last year. but not, of course, wasn't substantial. but there's regular tremors in afghanistan -- >> that's finement but when you go to california standards, it's

much more than tremors, right? >> yes, of course. but afghanistan is a severe seismic area. >> kabul? >> and kabul included. kabul has had a devastating earthquake in its history. >> when was that? >> it was in the last century where it destroyed the famous walls of kabul. >> that's a while ago. okay. question for several of you gentlemen. you all said that security was the biggest concern you have. mr. mckelvey, do you have any firm-fixed price contracts right now? >> yes, we do. >> why'd you bid on them? >> we've gotten better at doing work in afghanistan, and we will bid on a contract when we determine that the schedule is achievable and it's within the fence, so to speak, it's within the purview of the military. >> outside the fence -- >> outside the fence we would not. >> okay. >> we have one firm-fixed price

project that is within the fence, inside the fence, and the reason because -- >> right. it's in the fence. but you have nothing else? >> not in afghanistan. >> and you as well? >> correct. >> and you, mr. mccarron? all right. question on -- >> mr. mccarron, we couldn't hear your answer. >> he said no. >> thank you. >> the electrical equipment that you actually install, was that t to the u.s. or to the british standard, mr. van dyke? >> it depends on the circumstances, primarily u.s. standard. >> can you explain to me why since the afghans use british standard? when we leaf -- >> well, i think we have made sure the interfaces work. >> the interfaces worksome. >> right. >> but if afghans -- but that makes it more costly. obviously, anyone who's ever used a shaver in london knows an interface -- why are we doing that? is a.i.d. telling you to do

that? >> no, they're not, and be i actually have to retract what i said because i i know, for example, on the piping for the kabul power plant, we used dim piping. so i need to probably check the specifics, but i don't think we're doing u.s. standards overall. >> uh-huh. primarily british standards? >> i think primarily, yes. >> okay. mr. mccarron? >> i think the criteria is international standards and that it'll take the most appropriate or the best for the country. generally, the international community and the afghan government require international standards. they don't want us to put in any old thing. >> those tend to be not one concern. [inaudible] >> definitely not. >> the american. how about you, mr. mckelveysome. >> the work that we do is initially done to the international building code and certain times we might be asked to do it to the nec code in the united states. >> i how often is certain

timesesome. >> well, the preponderance of the work we've done is to the international building code. on some of our work recently at camp phoenix we were asked to recertify the wiring to nec twows -- 2000 standards. >> not to my knowledge. >> we also in the same way we are required to follow the international building code. so it's practically the same, the same answer. and, yes, we are checking against, say, the u.s. standards on all of our facilities. >> okay. mr. mckelvey, i'm going to pick up on something that my colleague, commissioner henke, stated with respect to a different company. did i hear you correctly, you've got blue hackles as a subsome. subsome -- sub? >> that's correct. >> well, they, apparently, have

employed 385 unregistered weapons, et, etc., and they're at camp eggers which is pretty easy to figure out having been there what they're up to. how come they're still your subs? >> this has come to our knowledge just recently -- >> you mean because of the article in "the washington post"? >> that's correct. >> with you mean to say you didn't notice a thing until you picked up "the washington post"? >> well, what i can say is the blue hackle has done a good job for us, and we use them specifically in kabul. and these allegations that you're referring to are something that our security brief is investigating right now. >> so you had absolutely no ink inkling this was going on even though kabul was as safe as anywhere in the country and camp camp -- how often do you guys run a check on these folks? >> we have security people that are in the theater with corporate security who are currently, you know, and continually involved with those

contractors. so i'd have to get you more information in regard to if they found out before i heard about it personally. but chances are they've been on top of it way ahead of the press release. >> be okay. if they were on top of it, i'd certainly be interested and i'm sure my fellow commissioners would be in seeing whatever report was sent back giving you a heads up. because if this was going on, i'm kind of puzzled -- and maybe it's just me -- but i'm puzzled why you continue to retain them. >> well, we'll certainly evaluate that. >> okay. last question. for each of you. in the past there have, clearly, been issues regarding house statements of -- how statements of work are defined by a.i.d. or your other clients. when you get an s.o.w. that's not clear, have you gone back to the u.s. government agency and said, look, this is not clear? be can you give me an instance

of when you do that? i want to go through the line. mr. mckelvey, can you give me an instance after when you said this is just unworkable, and it's going to take longer, etc., etc. >> i'm certain that happens on a frequent basis because of the contingent environment. many of our projects are scoped before the full details are known, sometimes even a year to a year and a half before troops arrive at the location, for example. so we've come back, and we've, we can probably provide you many examples where we've asked clarifying questions on scopes of work as how many people, when will those people be there, etc. and so forth, and in many causes the client -- cases the client cannot tell us that due to wartime strategies. >> and those circumstances you still sign on to the contract? >> we proceed, those are cost-plus contracts, and we proceed on -- >> then it's no-lose for you. the government, of course, has to explain why they're doing that, but that's not your problem. >> that's right. >> from our standpoint when we

cannot get answers, we don't bid. we have never bid a project where the scope of work was not up to our, you know, level of -- >> in the last three years, how many projects did you walk away from? >> about a billion and a half maybe. >> oh. if you could give us any examples of that, that'd be helpful. >> sure. >> mr. van dyke? >> we typically, under our joint venture contract, have gotten requests for proposals, and we go pack and forth on declining what the projects are before we finally arrive at something. one other comment i'd like to make, there is an issue for contractors on cost-plus. what you do is you agree to a given cost, and if you go over that cost, you don't get any more product. >> unless the government gives you new instruction. >> unless the government changes the work scope. >> which it always does? >> well, not always. >> how often does the government not change the work scope. what percent of the time, 10, 20, 30? >> sir, i don't have that off the top of my head. >> oh, give me a rough --

>> i have no idea. >> but it's frequent? infrequent? >> i can tell you that on the work scopes that we've had even when there have been time frame delays in getting the work done, we've held the cost. that's the best i can tell you. >> mr. mccarron, how about you? s.o.w.s, what do you do? >> well -- [inaudible] on all of our relationships with usaid, one example would be the ghazi school -- >> yeah. >> where initially usaid had a design competition for that school and then awarded the winner. and then come to unops and during that initial phase we went pack to usaid and talked about solar efficiency and we changed the design in consultation with them. they came back to us and told us that we had to have disabled access, for instance, to american standards.

and so that was incorporated. so it was to and fro in relation to developing the final design for the ghazi school. >> you said to american standards, how sensible are all these american standards in the afghan context? >> well, in the case of the one i'm referring to, the americans with disabilities act standard for the access ramp which resulted in the linkway between the buildings, the main school buildings. >> are there many americans in those schools? >> no. but there's kids in wheelchairs that need to be able -- >> americans with disabilities act, last time i checked, that was an american law. thank you. >> [inaudible] >> thank, mr. chairman. mr. van dyke, let's focus for a second with respect to the kandahar power initiative on the

kandahar diesel plant that you're to build. your opening statement alluded indirectly to the fact that iap, another big construction firm, was awarded a $51 million contract, fixed-firm price, for the other power plant in the kandahar industrial park. and be you made, and it's entirely appropriate for you to make comparisons to show you are competitive in terms of what you charge. but what i want to ask is were you so uniquely positioned to use the words, the justification for sole sourcing, so uniquely positioned that there couldn't have been competition by iap, the builder in the same industrial park of a power plant, and if there had been such competition, wouldn't your

unsatisfactory past performance ratings have been evaluated? >> i think that all of our performance, past performance evaluations would have been rated, and there are a large number of them, many of them in the excellent and outstanding category. so i would hope they would look at all of them, number one. number two, it's for usaid to say if they could get another qualified client, or competitor, but i will tell you what i said before, we had done an extensive study of all the requirements defining -- >> thank you. thank you. i know, mr. van dyke. i was -- we'll take it that you're not -- we'll take it as what was just asked and answered. ..

>> one to four, the first four, and five and six these separate. and then i said again, couldn't they potentially be separated? mr. thier, yes dear i said they could be separable. keep disagreed as to whether they should have been separated

and so forth but we reached that point. what i want to ask, you must know, or i hope you know, the major breakdowns cost twice of that project. wouldn't be substation and the dam been at least out of the 255 million, 80 million, at least 89 in terms of cost breakdowns? >> i don't care the numbers in my head but my recollection is it was not that high. >> okay. among other questions for the record can ask for the cost breakdowns? >> i think usaid needs to provide those, but let me talk to usaid about that. >> okay. now, i want to go to the issue of delay in your prior projects. not only because this has to do with how it would have been if kandahar power initiative had been competed, but even more

fundamentally the kandahar project is urgent timewise, not like other projects, because general petraeus himself we were told by a.i.d. in the most direct way, general petraeus himself said he needs it as soon as possible, he's got a counterinsurgency to fight in kandahar province. that's the reason that we got from a.i.d. as to why they sole source it at why. the extreme urgency as part of a counterinsurgency strategy and they allude to that end the jna. looking at a kabul power plant seems to me that we have comments by a.i.d. i.t. and sigar. i'm reading from sigar, not years ago but in january of 2010. they said usaid afghanistan contended it was unable to assist the contractor in the the the forward because the

contractor did not convey critical information to the mission promptly enough to be useful. they say the nation any a.i.d., and ted had it known all the problems contract was experiencing, it could have intervened sooner to help solve the problems? >> so we have sigar on this. we had a.i.d. ig on this come and we're finally a.i.d. itself when it the view i rating as i previously said on business relations from a kabul power plant. the contractor failed to maintain proper business relations with usaid, for instance, the contractor has not notified usaid of construction delays and other critical issues in a timely manner so that corrective action could be taken to expedite performance. do you acknowledge that this same critique of you has been put forth that delay critique

because you didn't want to be the bearer of bad news for