opening statements are limited to the chairmen and ranking member. any who wish to have a opening statement so that one before the close of day. i also note that several members from the gulf coast that are not members of this committee have requested an opportunity to sit on this committee, and ask questions during that timeframe. we got request from mr. bonner of alabama, mr. sculley said louisiana, ms. jackson lee of texas. without members -- without objection, they will be able to sit and ask questions. how now recognize myself or my opening statement, and hopefully the ranking member will be here in a timely manner. i am sure that his staff is frantically e-mail in him right now on that regard. nearly a year and a half ago,

president obama called bp to the white house for a meeting that resulted in the president personally announcing an agreement to establish a $20 billion presidential-bp compensation fund. at the time the president assured those affected by the deepwater horizon disaster that legitimate disasters would be back -- would be paid "quickly, fairly, and transparently." when president obama announced the appointment of kenneth feinberg is administrator of the compensation fund, there was no doubt mr. feinberg at a difficult task ahead. the impact to the gulf's local economy, as well as the environment, was very real and they're certainly many moving pieces involved in evaluating real damages to victims filing claims. today, nearly 1 million claims have been filed by over 500,000 complaint -- claimants, and while roughly 95% of all clans

have been processed -- which means rejected, accepted, or turn back to the claimant for more information -- process that does not mean paid. of the over half a million claimants that have filed claims with a gold closed claims facility -- the gulf coast claims facility, just little over 200,000 have been paid. i have heard from many of my colleagues on both sides of the aisle that this number is simply unacceptable to the people whose livelihoods were disrupted by this disaster. we constantly heard from president obama that bp would be held fully responsible for the damages in the gulf. yet that is not appearing to be the case with the claims filed with the compensation fund. under the terms of the agreement agreed to and announced that the white house, bp about -- appears to have had no responsibility

for the then writing a check. when president obama announced creation of the compensation fund, he accepted the $20 billion, held a press conference, and exempted the company of responsibility to make certain called families and small businesses were made whole. in announcing this fund, he specifically heralded that it was to be an independent body accountable to no one, the sole responsibility of mr. feinberg. however that congress has an obligation to ensure that this fund is operating properly and fairly so that the people of the call for made whole for the harm caused it to them and that the economy of the gulf is getting back up and running again. i won it noted that it is not absolutely clear if the fund is actually under the jurisdiction of this or any other congressional committee, and i as chairman appreciate the willingness of mr. feinberg to come and sit before this committee today.

today there is a large hole and proper oversight and accountability to ensure legitimate claims are getting the attention they deserve. and that the process of administering payments is conducted in a timely manner. there is inappropriate effort in congress to direct and open and transparent audit of the fund and i certainly hope and expect that the fund will comply. it can be expected that the committee will continue to appropriately conduct oversight into the process, payments, and operations of the fund in order to ensure that there is a transparent and fair pay system. this opportunity to peer into that process that for the most part has flown under the radar a proper public oversight -- we are pleased to have mr. feinberg as our witness and i look for to hearing his comments and discovering if there is any thing congress can do to help make his job easier and get legitimate claimants their due compensation. with that, i yield to the

distinguished ranking member. hearingocus of today's is to examine the compensation fund set up for the residents of the gulf coast harmed by the bp spill. however, we address that question, it would be instructive to consider what does not work when it comes to compensating people affected by an oil spill. the 1989 exxon valdez ran aground in prince william sound of alaska. the ruptured single-hulled tanker built up to 57 million barrels of oil into the frigid water, harming the fishing industry. the citizens of alaska who lived near the spill, the event itself was just the first part of an ongoing nightmare. commercial fishing shuddered, recreation and tourism dollars were lost. exxon entered into in a position of aggressive

litigation, rather than financial mitigation for the people affected. they thought the initial judgment four years, -- they thought the initial judgment fought the initial judgment for years. there was an additional $500 million of interest on those damages. the litigation went on for so long that nearly 20% of the 32,000 victims seeking compensation had passed away before the final ruling against exxon. to top it all off, the first credit defaults whatever created came out of the exxon valdez spill. jpmorgan chase bankers created that mechanism to cover the company's potential payouts. subsequent credit defaults what

went on to play a critical role in igniting that canada crisis of 2008. let's take a look at the bp compensation fund. within two months of the start of this bill, president obama secured a commitment from bp to set aside $20 billion to begin immediately compensating the american people and businesses affected by this bill. ken feinberg, who manage the victim fund following the 9/11 attacks and the virginia tech shootings, was asked to take charge of the fund and he was given complete independence to run it. he and his team were expecting claims and soon pain lost wages and other economic impacts. there were compensated in time frames closer to days rather than decades. the exxon valdez led to the invention of the credit defaults what. the bp compensation fund -- the

only question is how quickly could mr. feinberg find a way to deal with these issues. unfortunately there were some who said that this fund accounted to a chicago-style shakedown politics. but at a pivotal time in the nation's history, when an oil rig sank to the bottom of the ocean and oil washed up on our shores, this fund kept families and businesses afloat. more than 200,000 residents and businesses had been paid over $5 billion so far this year. thousands of new claims are coming in every week as people see their neighbors being made whole. i've been quite critical of bp for many things associated with this bill, but here i believe the company did the right thing. and i would really like to thank the work done by ken feinberg. i think it is a model for how

tragedies bring up the best in people. mr. feinberg, you have demonstrated that as you did in creating a climate for the past in trying to resolve these issues as well. finally, i like to thank the chairman for scheduling an additional day of testimony that i and my fellow democratic members requested on the bp spill. we have requested that the company and by the ceo's of the company involved in the deepwater horizon disasters. it is imperative that we get testimony from the top executives from these companies as this company evaluates the findings in the government report. i think you for working with us. >> i thank the gentleman for is opening statement. we have only one witness today. we have mr. kenneth feinberg.

mr. feinberg, you are the administrator of the gulf coast claims facility, as both of us noted. you have the very difficult task and we look forward to your testimony. you have been here before and you know that your full statement will appear in the record. if you could hold your oral arguments to five minutes, i know you want to get out of here and we will probably have votes. but the green light means you are doing fine. the yellow light means that you have one minute, and the red light means that your time is up. >> mr. chairman, i think you and them ranking member. i appreciate the -- invitation. it took about two seconds to agree to appear. i this is about my sixth visit and i'm glad to be here to talk about my -- the fund. here are a few statistics that are very telling. in the 14 months that we have

administered this time, we have received just about 1 million claims from 50 states and 38 foreign countries. build it and they will come. there are some very creative claims. we have processed 95% -- you are correct, mr. chairman, not paid, but we are processing -- we have our current. it takes the initial contact of the claimant about 10 days to two weeks and almost all cases. we have distributed over $5.5 billion if you include outstanding offers that we are hearing, it is closer to $6 billion. this is in just over one year. we have paid over 200,000 people, and we have honored 380,000 claims from all over the gulf of mexico.

as evidence of the success of this program, we received it still every week over 2000 claims per week. still rolling in to the gulf coast claims facility. on average, this demonstrates that there is a lot of support in the call asked by residents who say that the program is working and are -- in the gulf by residents who see that the program is working and are filing claims. we a paid intern claims, no relief required, no waiver of any rights, a gift. we got -- they received compensation and in return could suit, could come back to the fund again and again, and this is in the first three months during the critical emergency

periods. since then be a paid another $3 billion. -- we have paid another $3 billion. we give the claimants a choice, 130,000 people have chosen a quick payment. 63,000 people a final payment. 30,000, an interim payment with no obligation. they can come back as long as they can document their damage. any praise about this program or any criticism really should be directed at me and me alone. the administration has largely taken a complete hands-off attitude, as the ranking member points out. bp has in no way interfered with my processing of these claims. i am out there on a limb, and if it works, thank you, and if it fails, they bear the brunt of that criticism.

the claims not only in terms of volume but in terms of complexity are apparent. anyone who examines the program. why don't we pay every claim? there is an absence of documentation with many claims. never mind the tax returns, know much of anything. we receive thousands of claims with no proof, it just a request to be paid. sometimes claims come in from massachusetts for minnesota or sweden where there is simply no eligibility. there is simply -- they are so too far removed from this bill that their claim is tangible. we cannot pay government claims. i have no jurisdiction over government claims. unfortunately i cannot pay moratorium claims. this is unfortunate. we have 1600 moratorium claims.

i have to send them to a special moratorium fund set up by be. i have nothing to do with that and it is unfortunate but i cannot pay those claims. in terms of transparency, 1500 people on happy with my decisions -- on happy with my decision had gone to the united states coast guard and past the coast guard to review might claim and make an independent determination. in every single case, everyone, the coast guard has agreed with my determination. so i think we are doing something right. in conclusion, the program is not perfect. congressman bonior is here, my most constructive, admired credit. he knows me better than most that the program is not perfect. my final point and i am done. i want to reiterate what congressman markey said.

there has never been a program like the gulf coast claims facility. i know in my experience of no example -- president bush did get the 9/11 victim compensation fund enacted to his credit, but that was public taxpayer money. this is the only program i know of in history where an administration succeed in in convicting a corporation to admit wrongdoing and putting up $20 billion. it is not perfect but i think overall we are doing our job, we are delivering on the president's promise, and i am proud to be here today. >> thank you for your testimony. i know we are under time but we will get to questions here. i have a couple of them and you alluded to the fact but that there has been over oversight from the white house at any time since the june 16, when the

fund was created and so forth, is that correct? >> that is largely correct if you say the white house. now the department of justice monitors what i am doing, just like bp monitors it. they occasionally have suggestions such talks -- such as a independent audit. but there is no oversight on how i decide individual claims that appear before me for processing. >> this is more speculation probably, but interesting to hear your response. hindsight is 20/20, and you say that this is a unique fund. have hope that we do not to go through this again with another disaster, but is that the proper model? >> if that is for policymakers to decide. at least with the gulf coast claims facility, the united states coast guard is there on the the federal pollution

control act to review any of my claims determinations. but i think it is a relative -- this congress can years ago enacted the 9/11 victims compensation fund. they reenacted it about six months ago during the lame month -- lame duck session, and expressly prohibited any oversight of that fund. so everything is relevant, but i must say it is problematic when one person is delegated this type of authority with limited oversight. so i share your concern, but i leave that to the policy makers. >> we always have a debate on what a dictator is. you mentioned the department of justice had some interaction. part of that has been an audit. when can we expect to have the results of that audit that you

have agreed to be made public? >> that independent audit timing should be directed to the department. the department, not the gulf coast claims facility, will determine the auditor and how quickly that process will begin. but i will say one thing. you cannot win on this independent audit. on the one hand, there is a request for members of congress and others to get that audit going. correct. i welcome the audit. we should do it as fast as possible. on the other hand, as many of you know, there are interest groups, elected officials and the gulf, lawyers, organizations -- all clamoring for some input into the nature of the audit, the scope of the audit, and much of that in the pit as justice or -- has just arrived at the department of justice just this month. on the one hand, speed, on the other, a demand of groups to

participate. i think the department is moving as fast as it can, not wanting to be accused of delay or high handedness. >> when exactly what is the audit request? july of this year or last year? >> this year. i think it was the first time around august. a few months ago. >> thank you very much. i recognize the ranking member. >> thank you very much. mr. feinberg, can you briefly laid out for us what the situation is with people who have decided that they would rather litigate then moved to the compensation process? >> everybody has a right to litigate. in fact, claimants come to the fund. if they do not like what they see in the way of my determination, the determination

of the gccf, they have a voluntary choice to opt out and head to court through the united states coast court, -- coast guard, after the coast guard reduce it. they have a right to go to court. the first is scheduled for february 2012. by that time, i will already -- the gccf would have distributed in the vicinity of slightly over $6 billion. i will say that a first trial in february of 2012 is miraculous. i think that what the judge has done in new orleans and what all lawyers have done in accelerating the trial schedule is a real tribute to them, frankly. just to pull it off. implicit in congress markey --

congressman markey's question, we will have distributed over $6 billion. >> so how long in contrast with going to court in the first case does not begin until february, how long does it take for claimant to work through the process with you? >> on average, a claimant gets an initial determination within two weeks. 10 days to 14 days. it was not like that in the beginning. ner one nosman bonio doubt reminding. but we have your file, it seems in order, we cut you a check, here are your options, we need more information, but we have greatly shortened the time for an initial contact with the claimant. >> if earlier this week, abc news return to the gulf of mexico to interview shippers --

shrimpers affected by the bp oil spill. when asked about the worst season in 40 years, one shrimpers said that the quality of the shrimp is not there, the abundance is not there, and when asked about what happened, another shrimper responded, there are going to be a lot of boats that do not sale. what do they have for compensation? >> assuming they shrimper or any other fishman can give as the minimal documentation that we need, they will be paid. they will have three options. one of those options is a hedge against future. we continue to take an interim payment and document the current quarterly damage, but we want to keep coming back, 30,000 people

have taken that option. if a shrimper or anyone else wants a final payment, for what they think will be future damage, as best they can surmise that at the gccf, that is an option also. it is strictly up to the shrimper. one other thing, we have to do better by the shrimpers. i was down in new orleans last week. we were reviewing ways to make the program be more generous for the shrimping industry in louisiana in particular. >> the indications are that this is a real, real catastrophe for the shrimpers down there. it seemed to be related to the spill. if this continues next year, the hereafter, what happens to the shrimpers? how many times can they come back to be compensated for what could be damage that goes on for

years? >> the gccf by agreement is not allowing for years and years and year period expires automatically in august 2013. if the shrimp company or individual shrimper can decide that it will not come back, as you put it, a shrimper can decide to file in from claims, take a check from the gccf, weighed no rights, keep coming back, until the shrimper either has the sense that it is ok now or we want the final payment, or the shrimper can take a final payment, or until the program expires, and in the shrimper can go to court. -- and then the shrimper can go to court. >> he does not shy away from a

fight, but he actually tries to find a peaceful resolution for every one of the issues that he has been confronted with, not just here, but in the 9/11 fund and all the other difficult situations that he has been tasked with trying to resolve of the course of his career. >> marciano was 49-0 so it sounds like he was not backing away from a fight either. we may go until 1013 for a vote. we recess and then come back immediately after the last series of votes. we could have votes as early as 10:15 a.m. >> thank you for the work that you're doing. i'm not from the gulf coast day and i know they have burning question. a procedural question. i understand that all claim

determinations are made without any interference from the administration or bp. i know that that department of justice has sent several letters of suggestions, but does this mean that the white house has not contacted you once about the fund since president obama announced its creation last june quarter margin that is correct. >> what you do with suggestions when people send them to you from the department of justice or whoever? >> we take very seriously any suggestions from the department of justice, from members of congress, from interested citizens. we have made changes. based on constructive criticism. it is always constructive, we welcome it and we'd do it best and are difficult assignment to move the process forward and improve its day to day to day. >> mr. chairman, i yield back. >> mr. holt is recognized for

five minutes. genette thank you, mr. chairman. and thank you, mr. feinberg. i appreciate mr. markey clarifying that you're from massachusetts. who would have guessed? [laughter] and i think you for doing work that i am sure many days seems thankless. we have heard from many that the sixth to drop -- the six months drilling moratorium's economic impact was worse than the impact of this bill itself. mr. chairman, i would like to introduce in the record a letter from the baton rouge foundation, from another organization. the oil rig workers assistance

fund was set up as your call to help individuals who worked on the deep water rigs. this might have been affected by the moratorium. it experienced financial lawsuits -- losses. to receive compensation, the workers had to submit simple documentation -- pay stubs, unemployment forms, and so forth. at the time of the moratorium, the fund expected that maybe 9000 workers would apply for financial assistance. in reality, it was 357. 357 applications were completed by the rig workers seeking financial assistance, for a total of $5.3 million in financial assistance. i am not saying that the oil rig financial losses are

unimportant, but it does not appear that they or anything like the losses that mr. markey and others were documenting in the fishing industry and the other associated industries. over $90 million from the fund was still available and the eligibility was expanded to individuals in directly affected by the moratorium. support vessels, to supply allies or what ever it is. during this round, an additional 428 applications for financial assistance were completed. so if we just look at the numbers, people who applied to mr. feinberg, people will apply to the area foundation, it is clear that the attacks of the oil spill on tourism, on fisheries, they are greater than

the effect on the oil industries. >> with the gentleman yield? >> and i'm -- in my characterizing it fairly? >> i think you're characterizing it fairly. i do not know how that foundation in louisiana is treating, not rig workers, but these other vendors. i have 1600 claims that i am sending to that foundation in new orleans. it is not clear to me that the foundation is honoring all of those moratorium claims. somebody should be honoring those claims. i hope you are right that the foundation is more receptive to claims that i am prohibited from paying. but i am not sure that that foundation is doing as well as it should in honoring all of those types of moratorium claims. i just do not know the answer.

>> will the gentleman yield? is there something that we should be doing to see you read that foundation -- i realize it is not a government foundation or institution -- is there something to do -- that we can do to see that they're giving sufficient attention to people that might be hurting? >> you might inquire as you are with us to find what the rules are, what the eligibility criteria are. i am hearing from moratorium businesses impacted by it -- >> would you care to join me in a letter asking for that affirmation? i do not think that we can demanded. >> we will have a lot of questions that come out of this hearing, i suspect. i'll say this right now -- we will continue to have oversight into this and if that falls into this category, i am more than happy to work with is the

gentleman. >> it sounds like the effect is been on these other industries. i am sorry, mr. landrieu. i see my time has expired. >> recognizing that gentleman from louisiana. >> thank you, mr. feinberg, and i appreciate your willingness to take the credit or discredit. that is a model for us here in washington. we accept the credit but not to discredit. thank you for being willing to take the heat on that. a couple of quick questions before i get into something deeper. do you have or will you had a metric for satisfaction? >> i have said from day one as with the 9/11 compensation fund, i would hope that at the end of this program at least 90% of all eligible individuals and businesses out into the program. i think that as an objective

measurement that have used in other contexts. >> when you have a questionnaire or survey? someone might agree to something but not be satisfied. you have any way of measuring that? >> maybe we should measure that at the end of the program. i am confident that the people that accept compensation are satisfied. >> i think that would be human nature. it sounds to me that there may be money left over at the end of the day. that might be reason to go back and reopen, just a little bit, some of these cases. you mentioned it fraud. to you plan to prosecute people who provide fraudulent claims? >> we have received out of 1 million claims about 10,000 claims that we think are fraudulent. after we do an internal investigation with our anti-

fraud team, if it still appears fraudulent, we send it to the department of justice, the criminal division, lanny breuer -- they have been fabulous working, indicting people, there have been convictions. i think fraud isn't ever-present concern. nothing will undercut the credibility of this program more than fraud. >> thank you, sir. what i want to turn to in my remaining time, you may that -- you may be aware that louisiana has been the biggest oyster production stayed in the union. 40% of the total yield comes from the state of louisiana. washington is now overtaking us because it appears it was not the spill itself, but that down streaming of fresh water that this change this alienation of the water in their beds, -- the

salination of the water in their beds. i understand there is a multi- year rebuilding of that. can you walk that and see where we are? i think there are special issues on compensation. they are clearly special issues. we treat oysters separately from any other industry. what we have decided is that and oyster claim, if someone wants in from damage and can show immediate damage, we will pay it. if someone wants a final payment, they say, all we are filing a claim and we will be gone. we give them four times their 2010 damage. and if a claimant is a -- lees oyster beds, that is not only harvesting but has a lease involving the beds themselves at the bottom of the gulf, there is

a special additional payment that we will make. we have tried with oysters to recognize the uniqueness that you reference in your question. >> and the four times is the reference to the four years, i assume, that it takes to build these beds back up and get them back. and this may be outside of your purview, but is there any evidence that the saline content of that area is beginning to return to normal? >> outside of my bailiwick. i think the independent evidence from what i am hearing in terms of the oysters been good to each and urging people to come back to the gulf and east coast oysters, i think the predictions are pretty positive, but i agree -- nobody knows for sure. it is uncertain biology. people who want to wait it out and see have every right to do

so. >> one final question. how many lawsuits are out there, or how many do you expect at the end of the day? >> i really do not know. i think as a lame and reading the newspaper, i think there are 130,000 lawsuits that have been filed. i have not checked to see how many that have been filed have already been paid by us in a release. i could get you that information but i do not have at my fingertips. >> i yield back. >> recognizing gentleman from south carolina. >> thank you, mr. chairman. mr. feinberg, thank you for answering these questions. interesting to hear that you cannot pay moratorium claims. i think that has been a significant impact on the gulf region, with the loss of businesses, the domino effect to

these oil servicing industries, welders, pipefitters, people hollers, food services, it goes on and on. from talking to ms. landry, it is close now and the remaining money, it went to another charitable organization. i do not have any specific questions so i will yield the balance of my time to mr. landrieu. >> i'm concerned about the moratorium fund because is it not correct that the fund that you administer, and you cannot pay out to companies who are affected by the moratorium, is that not correct? >> that is correct. it so they have to go to the $100 million fund. you have a $20 billion fund.

i think there's some disparity there. i had a guy -- the problem i'm having, dee dee -- dino how many claims were paid to shrimpers who are certified commercial fisherman? >> i can probably get you that number. >> once you open that fund, there was a blue light special, ok, down in louisiana. and that allowed people to claim that they were shrimpers that were not travers, are not traditional commercial shrimpers. of course, i have heard stories where there are shrimpers they got paid very little, and there are hobby sharpers, i guess you

call them, or tour of some shrimpers that got paid a lot. to me, it is very simple. we certify our commercial fishermen. but you are not using that in the matrix when you are paying out. and that concerns me. it seems as though when i go back on the ground, i continue to hear stories of people who really need this money, people who have been in the shrimping industry for generation after generation, they are not getting the help. but the fly by night are getting a check. maybe it is not as much as the actual traditional shrimper would be eligible for. but $15,000 check for a guy that puts a trawl on his boat -- that concerns me.

>> we had a paid commercial sharpers, large companies, individuals -- we do not discriminate. but i want to agree with you, congressman. i think that if there is one area where the gulf coast claims facility has to be more receptive than generous, it is with the commercial shrimping industry in louisiana. >> and you said that a second time and i appreciate that. the question is, what are you going to do about it chris margin within the next few weeks -- weeks -- we hope to announce rules, new rules, to deal particularly with louisiana shrimpers. i have been down to new orleans in the past few weeks to meet with a whole group for shrimpers. one is here today in the audience. i am listening exactly to the

points that you are making. i hear from them that they do not begrudge people being paid- rippers, but the historical -- been paid as shrimpers, but we do not think you're paying sufficient attention to our parochial concerns. >> let me make this suggestion. you aren't very bright man. you have a great reputation. it is simple -- you are a very bright man. go down to your clients. you do not need to visit with anyone else other than those that are louisiana certified commercial fishermen. how would appreciate if you did that. >> will do. >> i recognize the gentleman from arizona. >> thank you, mr. chairman. researchers discovered potentially dangerous

conditions after the spill an indicator of the health of the ecosystem, which may indicate all larger problem. in fact, research has concluded that there may be some of the same early warning signs that we saw in the years following the exxon valdez spill in alaska where fish suffered severe populations decline. if there is a ticking environmental time bomb in the gulf, leading to a long-term impacts on the fish, can the fishermen and trappers be compensated in the years to come if this ticking clock goes off? >> that is an excellent question. the cocoas clayton's facility is

around until august 23 -- the gulf coast claims facility is around until august 23. alleged damage between now and then caused by the oil of the horizon explosion, we will compensate. and we are daily and weekly monitoring what the experts tell us about the impact of the spill, as you point out. so when we make a final offer, and some 60,000 individuals and businesses accepted, we tried a factor in what the best experts tell us about the future. if someone does not agree, congressmen, with our estimation of long-term damage, but they do not need to accept a final payment. 30,000 people have accepted an interim payment for immediate damage. they want to wait and see what the future holds, as you point out, and then they will come back.

once august 23 expires, there is no gulf coast claims facility, they will have to go to bp. >> after 2013, if there is still impact being felt that has developed in the interim, the source of their making themselves hole in some way would be with the company. >> or courtroom, i guess. >> one other point if i may, sir. for those people harmed by this bill, it is it not true that the documentation requirements in place to receive compensation from the claims fund are much more inclusive than they would be in a courtroom? >> i think we're much more liberal and generous in recognizing a valid claim then would be the case in court. that can be argued. i'm confident that we are paying claims on our record much less

rigorous than would be required in the courtroom. >> i appreciate that. >> thank you, mr. chairman. how we deal the first four minutes to mr. -- i will yield the first quarter minutes to -- never mind, he is gone. i want to thank you for your candor and the buck stops here statements that you make. that is refreshing to see around washington, d.c. a couple of questions. going through the statistics, there were 17,000 claims of final settlement that were not accepted. what happens with those? does that mean that the offeree did not accept them? >> most of the 17,000 claims

not accepted have 90 days to make a decision. i will bet you the great bulk of the 17,000 claims are within that 90 days and they have not decided to except the final offer or not. they now want the final offer, they do not have to take it. they can take an interim payment for their immediate damage in come back every quarter and seek additional compensation. ultimately, congressman, if they just cannot get satisfaction, they ultimately always have the right eventually to get to court and file a lawsuit has it that gccf had never been established. >> how many have already gone to litigation? >> very few. i know that about 1500 individuals were dissatisfied with what we decided and went to the coast guard.

the coast guard independently reaffirmed what we had done. now how many of those people who did not get satisfaction from the coast guard then went on to file a lawsuit, i do not know the answer to that. >> it looks like the process is working. 1400 claims that people did not want and the coast guard upheld. >> i think it is important because this is come up twice. my question to you, if the claims process is dragged out, there is a prescriptive period by which those claimants would have to file a suit against bp, if that is correct? >> i think that many people have made that filing in court. >> are you saying that there are people who've made the application and still file? >> i think that there are many

people, maybe thousands, they have filed with the gccf and filed in court as well. >> when you think that that prescriptive period actually ends? >> if the statute of limitation, i do not know what the period is in louisiana. >> in your legal analysis, what that period have expired already? >> noaa, anyone who comes to the fund and presents their claim, -- no, anyone who comes to the fund and presents their climb, they preserve their right to file a claim in federal court. >> so the period when they come to you and the fund, if you're saying that the prescriptive period, the timing is suspended? >> extended or suspended so that they are not precluded from filing.

but i am not an expert in how you litigate that. >> mr. chairman, that is the biggest concern. you have people out there trying to navigate through a complex legal system and a complex application to the bp fund. time is moving against them. i would hate to see that at the end of the day, and i know mr. feinberg would not do this, setting up a system by which claimants were dragged on and on and on to the point where they lose their rights to court. but only because they have done what he and bp and a lot of them have asked to go through that process. that is a concern of mine. mr. chairman, i yield back. >> you have 22 seconds. >> i feel the balance of my time.

-- i yield the balance of my time. >> i recognize mr. bonner for five minutes. >> thank you for allowing me to be a member of the committee. i have always wanted to be. for the record, has already has been noted, i had an opportunity to have experience with mr. feinberg. while there have been in effusive praise at times, even sympathy for the tasks he has been as a sign, -- a sign, i would remind that he is being paid -- >> 1.250 million dollars. >> if is a generous amount of money to administer this. while it is a complicated process, mr. feinberg realizes that it is even more complicated than the 9/11 fund in many ways,

but it is not a perfect system. if anything, it is a very flawed system. so many promises have been made by mr. feinberg himself to people who live along the gulf coast, not just alabama, louisiana, and mississippi, and texas. so many broken promises, unfortunately. i am grateful for the opportunity but i have more questions than there will be time for. it mr. feinberg has no objection, like to invite the people who live along the gulf coast to take advantage of this time where we have five days to submit additional questions for the record that mr. feinberg would respond to, however like to give the people who live in alabama a chance who were promised certain things and did not get those promises fulfiled, would you have any objection to letting us get those questions submitted to you? >> i would welcome it.

>> thank you. a couple of questions -- bayh's president biden said that $20 billion is a floor, not a ceiling. let's rounded up, $6 billion, before august 2013, based on the trans you've seen thus far, how much you think you will exhaust? >> i would be reluctant, congressmen, to take an estimate of that. but i remind you as you know, that that $20 billion is used for purposes other than to go coast claims facility. local cleanup costs come out of the 20 billion, government claims paid in alabama come out of the $20 billion, so i cannot venture aghast to the total amount spent. i would guess that the $20 billion would be adequate to

compensate eligible claims, but bp has made it clear that if $20 billion is not enough, they will honor all additional financial obligations. >> you also indicated you are independent of bp. you said in july 2010, i work for the people of the gulf region. i am totally independent, although the federal judges no question that, and i want to maximize as much compensation as i can do fairly and consistently to the people i am trying to stir -- trying to serve down there. does bp not have the final say on the large claims? >> absolutely not. absolutely nine. what bp can do under the protocol, if it so desires, for claims that paid in an amount -- in excess of $500,000, they can

seek to appeal if they want to let three-judge panel set up not by me, but set up to review the claims. bp to my knowledge has exercised that right in one single case. >> that is inconsistent with the information we have received. we will take that up separately. you also indicated there is basically one% of claims that are fraudulent. >> we have received, i think i have at this, what we think are 14,000 fraudulent claims and we have sent 2800 to the department of justice. >> regardless, from your own web site, and accounted in my district has collected every day information showing that of the claims process, 35% of

claims have been reduced payment. according to your data, are you stating that 35% of those that had been refused payment are because of fraud chris marjah >> no, not all. if we have refused claims, it is for number reasons. no documentation, is insufficient document, ineligible. it might be a claim from idaho, i do not know. i'm just throwing this out. government claims are ineligible. moratorium clans, unfortunately, are ineligible. there are all sorts of reasons that we deny claims or dene claims to be insufficient. >> thank you, mr. chairman. >> the votes had just been called. we will try to get in some further questions. the gentleman from mr. penn project from pennsylvania is recognized. >> thank you, mr. feinberg.

you have mentioned that because there been approximately 1 million claims submitted, you said that there may be certain inconsistencies in similarly situated claimants. what have you been doing on improving that consistency? i recognize the sheer volume is a variable. >> you are correct. we received more claims in some weeks, then we received in the entire life of the 9/11 victim compensation fund. the sheer magnitude of the claims will result in some inconsistency. it is inevitable. will we do when we find inconsistency, either on our own or the claimant brings it to our attention for the accountants or lawyers, we will

look at it. if we made a mistake, we will throw it out and pay the difference. we are not looking to promote and consistency. it is a problem we do not want to have magnified. >> thank you. i yield the balance of my time to mr. bonner from alabama. >> according to data collected from your website every day and analyzed independently by an accountant, medical doctor, in a city official in gulf shores, alabama, 95% of the claims that have been processed and reviewed, 54% have been processed and issued for final payment, but 46% have not received final payment. 69% of the quick payment variety the required no additional documentation, 30% paid for the final payment. i throw those numbers out to

you, because basically, would ld us to believe that this has been a success because so many people continue to apply. you said to thousand people a week continue to apply, and yet, is it not true that the burden you have placed on many of these individuals and businesses for additional request for information, even when they have submitted their claims with a certified accountant who have shown the documentation, that there has been a great inconsistency in the payment process, and it fact, more people have not been paid and have been paid? >> i don't think there has been great inconsistency. that is one reason you are promoting, and rightfully so, the notion of the independent audit to get answers to questions. i've had people take a quick payment because they do not have it to show us or have already been paid by interim payment

during the emergency payment period. i point with pride, frankly, to the fact that overall it is almost $6 billion that has gone out in one year, congressman. i think we are doing something right. when you say people are applying, 2200 claims a week because they are being tracked or deceived, i don't think that is the case at all. eing tricked or deceive i don't think i think they see the next turn neighbor getting paid and i going to file a claim and they get -- make the same argument. >> in the spring of last year i think i ask you to initiate an audit on your own and i do not believe the gccf agreed to do that. mr. chairman, we actually have a provision added to the appropriation bill demanding an audit, requiring the justice department to do it, because the

assistant attorney general who came to our district, came to the gulf coast, realize that this was not adding up as it was intended to be. even the attorney general, when he was along the gulf coast earlier this year, then contacted mr. feinberg and said, and audit if necessary. the chairman asked where the odd it is. the truth is, it has not even begun yet. they have not even named the firms to do it. is that correct? >> that is correct. congressman, i just want to say i did not speak for the department of this. the department would choose the auditor. i only want to point out about the independent of it. it is my understanding -- and i mentioned this earlier. on the one hand, there is the demand the department's move forward with great speed to get this going. overdue, you should stop -- we should say. on the other hand, the department as i understand it from liddy -- letters,, is that

i get, there are various public interest groups, lawyers, elected officials of the gulf, who won input into that process and some of them had just been the last few weeks got to the apartment with their suggestions. i think the tension between speed and inclusiveness is partly the reason why there has been a delay, in your view. >> thank you. your view. thank we have less than 10 minutes to vote -- if you look at the people who have not voted, we have more time than that. we will go to mr. whitman. wait will then recess. the time getting back is approximately 11:30 a.m. at that time, we will only have a half-hour or so. for those of you who want to engage, get here after the last vote. mr. whittman, viewer recognized for five business -- five minutes. >> i want to follow up on dr. fleming's assertion about the

oyster industry. they distribute shells all around and they are interconnected. processors on one states rely on harvesters and dealers in other states to have their market needs met in those areas. obviously the middle atlantic as part of that. you heard the synopsis about the west coast also. in that vein, there are process is out there that have these relationships with gulf producers that have contracts that say, listen, i have to deliver a certain number of oysters. in this realm of you considering claims, is it reasonable to consider a claim from somebody that processes oysters and the state of virginia that relies on those oysters from the gulf as a legitimate came -- claim? >> absolutely. absolutely. if there is a direct link in your hypothetical between a va oyster processing company that it depends on its livelihood on

the gulf coast schramm, by all means -- and i can go back to see -- but i can and be sure we paid some of the claims. i know in maryland, we have paid -- i think there are a couple of oyster restaurants that we paid that were totally dependent on gulf shrimp for their livelihood. obviously the seafood industry is interconnected both with shrimp and oysters and in some instances, even fish. so, to be sure you are keeping mind of secondary impact on state and producers, i think it is absolutely critical. i would like to yield the balance of my time. >> thank you, congressman whittman, and thank you, chairman, for allowing me to sit here today. mr. feinberg, i have to share the same frustrations my other gulf states colleagues have expressed. from congressman bonner and congressman landrieu -- i cannot put this as eloquently as congressman landry. we are frustrated, tired, many

of us feel hopeless and the whole process but we also feel insulted. we have some very smart people, accountants and lawyers trying to help people all along the gulf coast to provide claims and support and documentation. as they do it, they feel they are given exactly what the claim center once and they are still rejected or there are delays in processing. the comments congressman landry said, is this a stonewalling, to drag it out to stop pay out the $20 billion which, again, was supposed to be the floor and not the ceiling on making those affected by the worst man-made disaster in our nation's history whole again? people don't feel like -- they see inconsistencies. a perfect example is omega protein, a large company that bought a $45 million payout in

their first year, and when you have shrimpers and charter vote captains and others who have made a living for generations of the gulf coast, they have yet to receive the first payment or the payments being offered are insult me -- consulting, embarrassing, and leaves them either with the option of take what they can, cut your losses, or go to litigation. quite obviously -- honesty, people in mississippi, litigation is quite honestly the last thing we like to go to. for some people, they will go to it. i guess the main thing is, i am expressing what south , what we arens seeing and feeling. going forward, look, you got $14 billion less. did these people -- i notice you send out a mass man allow, if you have been denied, and if you have the paperwork now, come in.

communicating. keep letting people know they can receive reimbursements or they have a right to come in and do a claim. also, listen to the people who have made a living out of the gulf, has made a living in the fifth, 6, 7 generation of people in south mississippi. if your methodology for reimbursement is not acceptable to them, tried to come in and find some common ground, find that place, because visa experts. i don't expect you to know how to reimburse for shrimp -- you probably have an idea. going to give municipalities -- i know it is not in your range but you have been in ground zero for a long time. the methodology is being offered to the cities and municipalities are insulting. the city of gulfport has been offered $79,000. maybe $79 million would be acceptable, at $1 per resident. again, i share the same concerns of my colleagues.

i appreciate the chairman for allowing me to come in. and, please, take it back home and make it right. >> i thank the gentleman. yes -- one quick question. i am sympathetic to mr. landra on the shrimping question, on the question of how we deal with these fishermen in. this is a huge, unprecedented science experiment that took place at bp's hands dumping all the chemicals in with the oil, and now we are seeing the worst shrimping year in 40 years. if it continues past 2013, my understanding in the law is after 2013 all of this money goes back to bp. do you have a recommendation to us in terms of how we should handle an issue like that, given the fact that the science might be pointing toward a much longer-term economic catastrophe for the shrimpers, and that the

funds in 2013 just dissolved. so, do you have any words of wisdom? >> i would say two things. one is, that is a subject. what happens after august of 2013, that is a subject congress should raise directly with bp and i expo -- suppose the administration, part of the escrow agreement. but as you pointed out, congressman, this is a rather unprecedented situation. bp, in putting up, as you pointed out, putting up the $20 billion, it is rather a unique contribution by a private corporation to try and create a system that is not required by existing law. i think bp deserve some credit. >> i am giving them credit. i did that in the opening statement. it is only what happens given the fact that there is a causal connection between what the bp did and what could continue to be happening in the gulf in

2013, 2014, 2015, in terms of ensuring there is some capacity to compensate people of the harm is still occurring in a significant way, especially for the fisherman. >> one option would be, if bp wants to extend the deadline of the program, whatever, passed august 2013, for some foreseeable future, but it is something congress might raise directly with bp. >> thank you, sir. >> we are going to break -- and i it would say simply this is unprecedented, it has been repeated several times. but the fact this initiative did come from this administration without any semblance of oversight is somewhat problematic, and this is maybe an experience of something in progress and we will have to see how what works. we are getting very close to votes, so, the committee will be in recess, and mr. feinberg, we anticipate the votes would be done approximately at 11:30 a.m.

and reconvene at that time. the committee stand at recess. [silence] [silence] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> use what we do is posted on

the website and invite comment and give people a chance to comment. -- usually what we do. >> you said you met? >> i have been down there and everywhere i turn down their the shrimpers, and the elected officials, concerned particularly about the future of white shrimp and the shrimp harvest in the louisiana area. that is really where we are hearing the most. and it is rather uniform, a unanimous. with all we said -- we said we would monitor the events in the gulf and reserved the right to modify our methodology as will learn more about what is going on. and this is an example where, as i said in the committee, there is something to be said here about the with something about the shrimp industry. >> have they not been fairly compensated along the way? >> i think they have been fairly compensated but the problem is we're hearing now in 2011 that

what is seen is more problematic than trade -- probably with some of us thought. >> in terms of independent audit, i know you express support in doing that. does congress have to approve that? and i am sorry if it is a question from someone who has not been following this very closely, but has it already been started -- >> i am waiting. >> any idea? >> i am waiting on the department of justice decision as to how they want to proceed. it is at the associate attorney general's office. >> are you expecting that -- >> really don't know. >> if you are a sham -- shrimper who accepted final payment, can you reapply? >> no, you release it. ou released one of the problems is i want to get more of the shrimpers into the system.

, this money left over to congress to deal with. >> leftover money in the congress is congress's. >> the administration and bp signed and escrow agreement. money that is not extended congress. >> i would have nothing to do with that. thank you. [iudible conversations]

>> the chairman n >> the chairman knows we have a quorum and we will resume. i thank you, mr. feinberg. we are back in session and i believe, mr. sutherland, you are up for five minutes. >> mr. feinberg, thank you for coming up. and i also want to thank you. i had some questions, and i called you several months ago and you were kind enough to express my concerns on the phone. really some follow-up on the dialogue that you and i -- can you hear me ok? ok. i want to ask as far as

determining, how do you determine loss based on the documentation that you require and should require in order to pay a fair claim to restore the damage that small businesses have incurred? restore the damage small-businesses have incurred. talk to talk to me about what your examiners look at -- how far did you go back? if someone asked you this question i apologize. addresses that for a moment for me. >> we will look, congressman, to income statement, wage statement free still. we will go back and look before the spill in 2009. will look at the beginning of 2010. inappropriate cases 2008. we will try to get a composite picture. what was this small business

doing before the spill. what did the trend look like. how were they doing? what does it look like toast still? sometimes a business will say be careful. that was during katrina and that is a bad example and we will take that into account. we try to come up with a fair picture pre-post. >> if i may address that little deeper. are live in panama city, florida. one of the larger coastal communities ong the gulf coast. we had a significant event that occurred in the history of not just our county but our region. we opened our brand new airport in bay county just a month or so prior to th oil spill. the reason i bring this up is

that was done in 2010. the ten years preceding that as you can imagine, incredible effort to get this project done. there has not been an airport built from scratch since denver. it was a prett big deal. we have bounced back and we have bounced back soundly. 2011, taxes were great, businesses were starting to recover and really had a wonderful year. i could make an argument that you have to factor in 2009 and 2011 if you are going to determine what 2010 would have been like with that significant event. what we have done in securing other airlines into that airport, delta and southwest, airlines we never enjoyed, i can make a pretty good argument that if you just look backwards and not forward then the small

businesses that will file those claims will not have the benefit of the doubt of recovering a fair and equitable amount of money. >> these small businesses out to have you representing them. we welcome tt type of dialogue to try and get before the gccf, to try and get a good, fair composite picture. let me just say it sounds to me that is probably if it is an airport damage claim it is probably a government claim. if the airport can show it lost revenue because of the spill because people didn't fly in because of fear the spill that sound like a government claim that i wouldn't handle. >> we have been meeting with bp representatives regarding government claims and that is another effort for the office. i want to say that our small businesses can have especially

around the geographical area of the airport, it's served multiple counties. i have walton -- i am pleased to hear you say that. >> if you want to convene that group or you want me to meet with a group that can explain the situation and make sure we do it the right way i will respond immediately to your suggestion. >> we will do our homework and try to gather those individuals that have that concern and reach out to your office. you will hear from me. i yield back. thank you. >> the gentleman yields back. you have one more question? >> mr. landry retains -- [inaudible] >> mr. landry, you are up for

five minutes. >> i want to go back and clarify a couple things. i noticed directly your responsibility but going to the moratorium, that fund is being closed off. is that correct? you have -- >> until i heard this morning the representation that was closed off i didn't know it was closed off. i doubt that it is closed off but i don't know. i have enough problems of my own with the gccf. >> the problem i am having is to me it concerns me because i believe the oil and gas companies and fishermen and everyone else, the moratorium was a direct impact from the spill. so there are a lot of businesses directly tied to the oil and gas industry or indirectly tied to the oil and gas industry have been impacted that were impacted

by the moratorium and i am concerned that they are not getting paid as well. i visited an oil and gas company, business is down 75% and yet when ty send their information over all of their accounting information, they were denied. that falls into or dovetails into another problem that mr. bonner alluded to. i am hearing across the gulf coast from people who applied to your fund that when they check in, when a claimant checks in and says where are we? we lost some paperwork. could you resubmit this? could you resend this to us? what i am telling you is is too coincidental that the person in louisiana is having the same

problem as the person in mobile or pensacola when it comes to the gccf losing their paperwork. it doesn't happen that coincidental. i know that you have set up in louisiana the long law firms that assist people in trying to put their paperwork together and that helps as well. but it just seems like the process is taking away, wade too long. >> three and his. one. there is no misunderstanding here. i share your concern over the moratorium claims. i wish i could pay those claims. i have no jurisdiction from day one. you are preaching to the choir. i think have 1600 claims that are would like to pay and i can't. >> do you move those to the

other fund? >> are move them to the other fund that as far as i can tell it has shown no inclination in paying these claims because -- has congressman holt pointed out an hour ago even if the memorial fund will pay some of those as he cited, they will not broaden it sufficiently so are amish sharing that view. second, we are not losing any paper. when we started congressman landry, when we spoke over for bp last summer into the early fall paying the emergency payments, transitioning from bp paid acclaims over to the gccf taking over, then we did but the idea that we processed 95% of the claims, the idea that we're losing paper. i don't buy that.

>> i don't believe people in the district are being disingenuous as well. of course i have seen a lot of times when we're being told in washington and with you being told in boston is different from exactly what goes on to the ground. i would just put in a request that we look for it in both -- with mr. holt and mr. marky and chairman hastings that we look somewhere in between. maybe we will split the difference between florida and louisiana. feinberg, if you would come with us and we could hear directly from before we put you up, we will give you the benefit of the doubt and put them up and listen to them and bring you on and somewhere in the middle we will find what the truth is. >> i have received since we took

over last august sixty million pieces of paper. it is conceivable. i would suggest if there are particular constituents who claim lost the arguments you get me their name and claim number i will personally get back to you with the status board of those claimants who claim losses documentation. the other thing i wanto mention before you depart, i checked during the break and i have an answer for you. if somebody files their claim with the gccf, they are protected by the federal statute of limitations. >> thank you so much. that is important. thank you so much. i yield back. >> the gentleman yields back. next is mr. holt for five minutes. >> thank you again for the work you are doing and no one here is surprise you are a good witness

and very forthcoming. we appreciate that. to some extent following what mr. landry was talking about, if there is money remaining in the fund that hasn't been extended by 2013, what happens to it? do you happen to know although it is not yr responsibility, what about the moratorium relief fund? this baton rouge foundation fund? what happens to that money? does it go back to bp? if so, what are the safeguards built into the system to prent what would you call it? an intentional tendency not to give it out? >> you ask the same tough questions you did when we were

doing the 11 fund and i thank you again for what you did ten years ago. ten years ago to get those new jersey constituents to understand how of the 9/11 fund worked. during the break i checked on this because i wanted to make sure am accurate. in august of 2013 when the gccf was ready tclose by agreement between the administration and bp there are three independent trustees in charge of the overall escrow, $20 billion. if those trustees conclude that there are more than $1 billion worth of claims that appear to be outstanding even though they are beyond 2013 they have the power to keep the fund open and every six months those trustees will review the state of the

claims. only if the total claims fall under $1 billion will that money then revert back to bp. so the independent trustees have some say. on the one hundred million dollar moratorium fund my understanding is that is forever gone from bp's dominion. they have no control over it. where the $100 million is used for $20 million is used, that money is going to be distributed by the trustees administering that fund. that money will not go back to bp has are understand it. finally if anybody in my day to day administration feels that i am not spending the money the way i should, that a claimants feel they are not being paid adequately they have the right

to check their claims to e united states coastguard and have the coastguard do an independent review of how our rules on their claim, 1500 people have done that and the coast guard has agreed with the gccf every single time so far. >> thank you. just to be clear, to whom the money would return if there was money left over, > absolutely correct. >> could be p, apart from the trustees ruling on whether there is outstanding billions of dollars could be pea voluntarily

keep alive your function? >> i think they cou. bp would thnically need the support of the united states government to do it but that is up to b p. i must say as congrsman markey whatever criticism one wants to level at bp i know of no case in history, i can't think of one where a company voluntarily put up $20 billion to resolve claims. i think the criticism ought to be tempered by the fact that this is a rather extraordinary -- i think the administration just as the bush administratn was able to promulgate this 9/11 victim compensation fund ten years ago i think the administration in getting bp to do this was a major positive step.

>> thank you. with the chair's indulgence for 15 seconds the reaso i am following this line of questions, the shrimping grounds, that looks as if there will be hard times for years to come. we want to make sure people aren't left out so to speak in the cold. a fairly warm climate but you get my point. the shrimping industry and perhaps others look like they will be rd hit for a long time. thank you. >> the gentleman yields back. the chair notes we're up against a hard time soon and it is going to work out perfectly because we only have one of your questionnaire. my colleague from louisiana has five minute and that should get us out right on time. >> thank you, mr. chairman. appreciate the courtesy of the committee to allow me to

participate and i think mr. feinberg for coming and have a few questions in five minutes. when we talk about the trustees, who appointed the two trustees? >> i have enough problems. i am not sure how those trustees were appointed pursuant to the escrow agreement. was between the administration and bp. >> we will try out specifically how that came about. when we talk about the agreement between the administration and bp an earlier question by mr. landry who ask about issues related to the moratorium. people who have not gone back to work because of the lack of timely issuance of permit and you said if you can'tay those is there something in the agreement between bp and the administration? >> when the gulf coast claims facility was established it was understood whether it is in writing or an agreement between

the administration and bp or bp unilaterally declared this before bringing me on board that the moratorium claims would not be part of my jurisdiction or with government claims be part of my jurisdiction. >> a few months ago i asked you for detailed information and broken down mrics on claims paid out and claims rejected. i was able to get some of the information on claims paid out of the right didn't get it broken-down by state and region and that was one of those things i requested. i would like to ask about that and we were not able to get information on claims that had been rejected. >> i have your staff take a look at attachment b on my testimony todayhich breaks out the overall statistics by state including the we see an and under louisiana how much has been paid out and how many denied and accepted and how much paid out. >> do we have that by industry

so we want to go into seafood processors? that isy next question. >> i can get you that. don't even send me a letter. have your staff e-mail me and i will get you that information. i do know that approximately as of the middle of this month $1 billion in the aggregate has been paid to the seafood industry but i can get you more information. >> i am sure the e-mail has gone out but the specific request we want to know within the seafood industry how is it broken down by region and if you give it at the state level but if possible even at the local level. >> i will try to get that to you. >> the complaints we are getting from some shrimpers that have processing facilities and some brought more people in advance of the macondo well explosion

and had severe layoffs, still dealing with severe problems from the industry not coming back. you met with a few individually and they have not been an answer. can you tell me what the holdup is with shrimp processors? may be just southeast louisiana. other colleagues might experience along the gulf coast too. >> we have processed and paid plenty. i can get you the numbers as you requested. from processors and harvesters and the shrimp industry but you are absolutely on to something here. earlier i mentioned thi up and down the gulf as you know to your district it is clear that the gccf has to be more responsiveo the shrimpers. there are a lot of shrimpers that haven't filed a claim yes with the gccf because they are watching and waiting to see how the gccf will treat the shrimp industry. you have been very constructive

and very vocal with me about the need to something about those shrimpers. we will in a matter of weeks take another look at how we deal wi the shrimpers but i assure you that your concern about the shrimpers is not going unnoticed. we are going to try to find a way to be more generous towards the shrimpers in louisiana. >> i will continue to work with you because there are a few specific shrimp processing processors who filed a formal paperwork th gccf and have not gotten an answer yet. i will push to make sure we get those results that may provoke others to get involved. only a couple seconds left so i will ge a plug for the restore act because this is a separate issue not in your shop but all five gulf coast state of come together in the house and filed legislation a few weeks ago that would dedicate 80% of the finds bp have in the water act to

allow us to restore environmental aneconomic damage not covered by your operation that we may have for years to come. >> if you can get me the name of those shrimper's i will look at those. no one is a more constructive critic than you. i hope to connue to work with you. your people have been very forthright and i appreciate your concern. >> that will be included in the e-mail. the other one went out but i appreciate your coming before our committee and appreciate the chairman and members for their discretion and allow me to ask questions. >> the gentleman yield back. mr. feinberg, we have one more member who has appeared in an effort to be as fair as possible to both sides if you indulge one more question her i would appreciate that. i now recognize miss lee from texas. >> i thank you for your kindness and i will be pointed.

i am an interested neighbor who has worked with your constituents because of my role in the homeland security committee and my familiarity with the or original work mr. feinberg was assigned to and i thank him for that. and however, express i am likewise a boy scout serving on the boy scout board having a husband boy scout and a son boy scout so i am an unhappy camper. i would like to ask how much of the money have you spent of the $20 billion? >> we have authorized about $6 billion. >> the life of this fund you have a period of time? >> august of 2013. >> i am disappointed that the

pace wn asking whether or not you heard the discussion of shrimp -- shrimpers and i did not know if i came in too late to listen about the oyster men. have you engaged with the oyster blue -- men? >> we created a methodology to take into account oyster men concerns. >> as you know i have attempted to meet with you. it has been frustrating and i would le to make a request to meet with u.s. and as possible in my office. who should we reach out to to get that done? >> i will get in touch withou in the next day or so to set a date. i wille in houston monday, tuesday and wednesday. one of those dates, november 28th through 30 i am working with congressman green of accused and to get community leaders together in houston and i will be glad to meet with you as well. >> if we can work on that i

would -- we are in different jurisdictions. there is a group led by dr. william s.. i would like to ensure you meet with her. i may ask her to come to houston for the meeting or how we can arrange that meeting and so we will work together on that. let me just proce with line of reasoning. one of the points as you well know that is may be played the shrimpers people will be oyster persons and others is the documentation questions and that is a challenging question about individuals working in a different kind of wo and not having the documentation. how are you respoing to that? they still exist? there's the issue of collateral damage. how are you dealing with that?

>> we work with these claimants to try to come up with proof, some proof that their claim is linked to the spill and they can show some damage. i don't need -- as you know from my 9/11 work -- i don't need a full panoply of tax returns and profit and loss statements that a minimal amount of documentation and we continue to work with claimants in trying to get the bare minimum that will allow us to pay damage. >> we will meet with some of those you may be able to give them courage or encouragent becausyou may say what they already have. the reason i know some communities, i see dick gregory -- have not reached out because they are intimidated by the process. you got $15 billion left.

we were talking about 2013. that is a long road for somebody to have their doors closed. the reason i came to this hearing is to indicate my region is impacted as well. i lived through not only the bp oil spill but hurricane katrina and rita. that is not your responsibility but there are those who can connect present status to this incident that occurred. we want to make sure these funds that rebuild communities, so as i close respecting the time you have to leave we need to reconstruct or have some of your staff work with these community organizations so they can present documentation to be compensated. >> i completely agree. >> i yie back. >> the gentlelady yields back. i thank the gentlelady and also thank you so much bleaker turtle mr. feinberg for appearing. thank you for holding over.

you are obviously a very sincere person, very candid and doing the best job possible and we appreciate that in louisiana, texas, mississippi, alabama, of the state that are affected. with that members of the committee may have additional questions for the record and i ask you respond to these in writing. if there is no further business without objection the committee stands adjourned.

[inaudible conversation] [inaudible conversations] [iudible conversations]

want every story to be 1800 words. >> last month, jill abramson became the first money to hold the post as executive editor of "the new york times." she believes her paper is more replaceable than ever but also sees a few changes. >> there is a certain last -- lack of discipline, sometimes a point is repeated too many times in a story or three quotes making the same point where one would do, and i would like to see a variety of story lengths. >> she will discuss her career, her new book, and a feature of "the times" sunday night on q&a. >> middle and high school students, time to get the

cameras rolling for this year's studentcam competition. make a five-eight minute video on the famed "the constitution and new" and get it to c-span by january 20 and you could win the grand prize for -- a $5,000. for details, go to studentcam.org. the marine corps commandant general james amos said wednesday that once marines out of afghanistan the goal is to shift priorities to marine expeditions in the pacific. he talked about the restructuring of the marine corps as well as its future role and priorities. this is just over an hour. >> good morning, everybody. welcome to today's session of the council on foreign relations, which i know will be

as dynamic and exciting and up to the council standards. it just a couple of housekeeping matters. first of all, for those of you with blackberrys, cell phones and pagers, turn them all the way off. not just to silence. the reason is because we have a wireless microphone and even on vibrate, you will interrupt. next, for all the journalists, this meeting is on the record so everything the commandant says can be discussed and spread far and wide. the third issue is, one of the reasons the council like me to come and preside is because i spent five years as a correspondent based in moscow and i run these sessions with a stalinist efficiency and we will be out here at 9:30 a.m. sharp because the commandant has an important meeting at the pentagon. the challenge for any preside their -- presideer with someone as distinguished and will know is what can you say about him

for some of you who are here so early. what i can say is over at the pentagon there are several chiefs and just want commandants, and he is with us today, general john amos. i would like to start really at the top strategic level. 10 years since the attacks of 9/11, it forced the american military to adapt and change it as much as the adversaries have and it really is what i would like to call a new darwinism -- adversaries learn a new trick and we have to adapt and back and forth. b-52's as a strategic asset flying close air support, who would have thought. the troops going out of their armored vehicles going out when infantry patrols. but want a dentation the corps has had to make is you have given up your historic expeditionary role, back-to-back deployments to afghanistan, operating out of fob's. in a post-iraq, post-afghanistan

world, how the did the marine corps going back to the historic mission and what other changes are you anticipating? >> first of all, we have been on the ground for 10 years now. and one of our more senior leaders used the term, we have become a second land army. that was coined from a marine, which i lived to rue the day the comments were made. >> wasn't there the other white meat? i never got that. >> but regardless, over the history of the marine corps, we have done it in france, and vietnam, we have done it over a period of time. but while we have been on the ground in afghanistan, we also have marine expeditionary unit out in the pacific and around the world doing other things. certainly -- we have kept our amphibious groups, but we have not been practicing it to a level that we need to get back to.

so, as we come out of afghanistan -- secretary -- secretary gates last fall, he said build me a marine corps for a post as afghanistan environment. we have done that. we have about 10 months of analysis behind. within that, it incorporates the lessons we have learned for 10 years -- counter this rnc -- counter insurgency, build a marine corps that incorporates the lessons but also to allow it to be used anyway the marine corps is designed. the forward deployed expeditionary force, out and about doing the nation's bidding and representing the united states around the world. so, our role is to get back to that and i intend to do that when we come out of afghanistan. in fact, we are not waiting to come out. we are shaping the marine corps right now. >> of the do it exactly? what was through the orders you have given and the concepts? >> we have already looked at the

units that would reorient back to the pacific. quite honestly, it is an area the united states marine corps has been operating in for the last 60 or 70 years. we are familiar with it, it is and our nation's best interest to reorient back to the pacific. i have been looking at units -- ok, who would be the units that would be able to operate in the pacific? we have units in there right now. first of all, it is the identification of the europe -- units and changing the training regimen back here. i was at 29 palm sunday and monday and said what they had training, the premier training area, and i said, look, as we look,reorienting to the pacific, it will need different training. it will require more shipboard operations, more combined arms operations, and some of it is the bread and butter of the marine corps pre-9/11. we are reviewing the training

right now in anticipation of probably next year taking the first units and putting them into the training regimen and getting ready to go back to the pacific. >> that is interesting. all of this will be have to carry out at a time of less money for the pentagon. it seems the public has not been engaged in a dialogue as the pentagon has to cut at least -- it seems the american public might want to be engaged in a discussion of, if there is less money, the military can do everything it is doing today, what roles, missions, and capabilities do you not want your military to do for you? how does the dialogue in the budget affect your thinking? >> i think there is dialogue going on. i do not know if it is a public dialogue. >> i could change that. [laughter] >> it is probably going to the public after today.

but there is great effort underway right now in the department of defense to align itself with the administration's vision of a strategy of the united states of america. in the years to come, in this environment where we are fiscally constrain. that is going on right now. so, there is nothing happening within the department of defense where they are unilaterally going, we are going to do this, and in respect of of the budget. it is not happening. it is informed by the budget but really by the national strategy being worked right now. i am pretty comfortable we are heading in the right path. back to the issue about the implication -- implication about the pacific. you already bought the marines. if you already bought the ships. you already bought the airplanes, the sustainment and the supplies. in other words, the bill has already been paid for that. it is a function of what do you do with it. do you leave them back in the

continental united states or do you take the ships and marines in forward deployment and do the bidding of the nation. >> would that partly driven by available funds? i assume it is much more expensive to have them forward deployed an expeditionary mode? >> there are some ways to do this thing actually a little bit cheaper. i know the navy is looking at after the positioning some ships for deployed -- outside of the continental united states. they certainly have some now. they are looking at that. that is one way. then you do not have the transit time, which is fuel, time away from home. so, there are some things that you can do. the other thing you can do is you can look around the globe and say where are my greatest interest. in other words, where are the areas in the world that the united states needs to focus its efforts on? and i will tell you the pacific

is one of those areas. i think you begin to try to balance all of this you will look and say, ok, this is where we need to be. >> if we can talk about -- strength for a moment. i know the marine corps when through a process going from a glidepath from 200,000 down to 186,000 -- 186,800. >> we did not know what it was going to be. when secretary gates said design a marine corps post-afghanistan. wheat build that up from 173,000 on 9/11 -- sitting at about 176,000 in 2006, so we grew the court, not knowing how long it would last. when secretary gates said come out of afghanistan, or build a

core when you come out. you will not need to hundred and 2000. i completely agree. we sat the group down and i said take the lessons of 10 years of warfare. what are those things? we always had -- but it really showed its face -- what we call low density, high demand critical skills. we call them military operational specialties but it is critical skills. what would that be? counter intelligence, humor and -- human intelligence, signal intelligence -- you know, the guys who listen and to all of those things with radios and space and they are closely affiliated with the nsa. we needed those guys. we needed explosive ordnance. we only had about 200 to begin with. we are at around 875 today. military police, truck companies. and they're all these things. uav's. so we said, okay, let's take those lessons.

let's put them in. let us build in the mix, throw it in the bowl, and then let's determine the -- when we began in 9/11, our manning in our units was sitting right around 90%, 99%. so, equipment rate in this was probably less than that. but any day, in any unit, you probably have somewhere around 80% or 89% manning. when we went to war and we started putting these units in deployment we had to borrow manning from other people. taking units from people in your squadron -- squadron and putting it in mind. -- mine. we came to the inescapable conclusion that the manning levels were billed for a reason. let us increase the manning in the units to what it is supposed to be so i do not have to be borrowing. so, i am always ready.

we built units in this 186 that were ready. we took the mission of the marine corps, which is to be the crisis response force, to respond to today's crisis which today's force today. not next week or a month from now. then i will be able to train them -- no, the nation has a risk -- a marine corpswhat it de terrible earthquake with our friends in japan, we went over night. whether it be the libyan no-fly zone, we did that. i said, build the that and tell me what the number is. it came out to be 186,000. we've reduced the number of

squadrons and did a way with headquarters. we did this to be more deficient. when we went into the desert, we kept the number of reserves. we shook the reserve so that we could take these lessons learned and to cope with them. this gives you a heck of a force that is what our nation needs in the next few decades. i feel comfortable about the number. >> is that really be floor? personnel costs are such a huge part. if the government said you have to loosen the reins to make the budget work? >> you reality of where we are budget wise right now is -- i think everybody knows there is a $450 billion a bill that has

been levied on the pentagon. we have to pay it over the next 10 years. i can dial down manpower. i can dial down procurement, which is significant. we have been on the ground for 10 years. our stuff is in afghanistan. they have twice as much equipment in afghanistan. in afghanistan, an infantry unit has 200 pieces. the area is unforgiving on vehicles. i have to be said -- to reset all of that. as a kick a look at dialling down procurement or read -- as i take a look at diving down

procurement, i have to look at the 3 dials. one of the dials is manpower. it is and continues to decrease, i will reduce below 168. we have a system, a framework where we can judge the capacity that we would want to pull out of the marine corps to get down to a number so we can pay our bills. i am not sure 186 is the floor. it has more rigor and more analysis in its been any effort -- in it than any effort that has been done by anybody in the department of defense in the last five years. secretary gates approved it. that was before we got into the

fiscal crisis we are in. >> you did not talk about your new special operations deployment. what is the report card? >> i visit them all the time. i am a huge fan of them. there is a lesson learned over 10 years. we put 1000 more brains in special operations command. they are going to go to 3600. we are going to go -- we put 1000 more marines in special operations command. we are going to spend thanksgiving with them. the report card is strong. i am pleased with them. they are the ultimate economy of

force organization. instead of taking an infantry battalion and working them on the field somewhere, they are special operations marines. the seals the green berets. secretary clinton had an interesting essay on special

forces. do you think africa should be a renewed focus? >> africa and south america are two primary areas. we are reasonably inexpensive. we do train. we do that well. we have the rains in central africa training with african nations -- we have marines in central africa training with african nations. we do not need fancy hotels or air-conditioning. we are more than willing to live hard. you get a lot of bang for the buck with us. we have been training and working with columbia for the last 10 or 11 years.

look at what has happened in colombia. the country has turned around. we are working with peru right now. there are penny packets of small groups of marines doing what our nation would like them to do. it is clearly a nation that -- a mission that the marine corps would excel at. >> hundred 26 degrees in afghanistan in august. i was talking to a soldier -- 126 degrees in afghanistan in august. i was talking to a soldier who said, my grandfather fought in france in the world war ii. why don't we get to invade nice

places anymore? [applause] >> we get to train in the high desert. we are used to it. >> the procurement aspect. looking to your future needs. the list of weapons systems at 35b. talk to us about how we are trying to assess your needs. >> i will start big and so small. our nation needs a military that can do what our nation needed to do. then it needs a military that is not going to break the bank. for decades, the marine corps was known as the cheap force. they were known as the ruble -- the frugal forece.

we were known as the penny pinchers. we are going back to that. we have had 10 years in the culture of money. we have been tied up in afghanistan and iraq. that requires a lot of new stuff. money has not been a problem. we are going back to our culture of money. i will not ask for anything i do not need. excuse me, i would not ask for things that i want. i will only ask for things that i need. to your point, we have gone back. we have 40,000 vehicles. that is 7 ton trucks and humvees. the whole thing.

we do not meet 40,000 vehicles. -- not need 40,000 to be a close. we are not going to recapitalize. -- 40,000 vehicles. what is going to get us through the next 8-10 years? we will sell its. we cannot -- we will sell it. we will make a plan we can afford based on our budget. there are some vehicles that will have to be replaced. this pulls at the hearts of congress and mothers and thought this. -- and fathers. they have some vehicles that

have been uparmored. and we have saved some lives. we have been seeing these homemade explosives. they will take a humvee and destroy it. as we look to the future, we will need some vehicles that have heavier protection on it, but have higher mobility. that is when things like a joint tactical vehicle comes in. we have worked a deal with the army. we are going back to congress

and say, you have the two largest services that are in cahoots. we need to go back to congress and get their support. if congress allows us, we are going to buy a slice up those 23,000 humvees. the number is around 5000. that will suffice. we will take the rest of the 7 ton trucks and live with that. when we go somewhere where we need the extra protection, we will use the joint tactical vehicles. that is how we are living within our budget. 10 days ago, i was watching between strike fighters -- the

tin strike -- twin strike fighters. they are replacing a 44 year olds helicopter. they have got to be recapitalized. -- 44 year old the ago. -- 44 years ago. we are pretty good stewards of our equipment. we have equipment that has got to be recapitalized. we made the decision in the late 1990's that we would skip a generation of airplanes. we said we would keep our f-18s. we are going to keep those and then best -- invest and by the

f-35s. the f-18s began to run out of service life in the next 10 years. they are done. there's nothing left. we are living the electronic warfare prowlers along. how do we buy it? what is the affordable by a great -- buy rate. >> we both have the same hiker's compass on our watch. we do not like being lost. this is probably a question or

your sister service. as you talk about the rise of anti-access weaponry, that has to be a concern for you. the advantage of a potential adversary like china. what is the corp thinking about in the world of anti-access? >> you tend to think, i will pull up and something will come line up and think, is going to snip me. how do i make it targeting problem for the adversary? how do i make myself confuse the enemy? how do i dispersed by forces so that the enemy does not know where i am? how do i take away the end of the's capability to watch me away?

to watchs capability me away? the pacific is huge. 70% of the world is water. there are capabilities that we cannot talk about in here. that we have that can deny the enemy the ability to say, i will push you out there. you cannot come close to be. it is -- you cannot come close to me. there are ways you can decrease the degree of -- increase the degree of difficulty to find

you. weaponry, stealth, a variety of things we are doing. a bunch of kids is things we cannot talk about. it does not need it will be easy. it does not mean we will be investing in the capabilities. it is not going to be insurmountable. >> one last question before i invite the members and guests. >> that is pretty exciting. 1942-1949. president roosevelt signed a proclamation telling the department of defense it would

integrate the forces. in the marine corps, they went at it kicking and screaming. but we did. between 1942-1949, we recruited african americans to join the marine corps. we did not send them to our own boot camp. we sent them to a boot camp they built on a small part of land in north carolina. they had to build their own boot camp. we could structures over the top of them. their training was every bit as hard as what was going on in san diego. in many ways, harder. we kept them in segregated units and kept them in at the mission companies. in 1949, we closed it down.

20,000 marines had come through that point at that time. we have lost a lot of them by now. they are well into their 80's. they were true heroes. they were american patriots. i had them over at the barracks at the end of the summer. they said, we just wanted to join the best service. we wanted to join the marines. we read an advertisement in time magazine. >> it were on capitol hill last night. >> to give them the congressional medal. the house passed its 432 -- passed it 432 to nothing. just like the tuskegee airmen and the buffalo soldiers.

this is a big deal. it is long overdue. i am grateful to the house. >> i can invite the council members and guests to join our discussion. give us your name and your affiliation. keep your questions as concise as possible. the gentleman in the second row. >> fox news. i wanted to ask about reports that the marines are planning to close quantico. is this related to bradley manning? >> they are planning to close the what at quantico? >> the brig. >> it might be.

i do not know the answer to that question. >> i just retired from the senate armed services committee. a pleasure to be here. thank you for coming. joint strike fire. we have been hearing arguments. i would like to hear your opinion more about the utility to be marine corps. there is an argument out there now that it is unlikely that the marines will fight again without the navy. the marine birds and is expensive. it has cost overrun issues. i would like it to address this a little bit more if you do not mind. >> starting big and going down to the marine corps -- is what is best for the nation. i wear this uniform and i am

accounting of the marine corps. i want to talk about what is best for the united states. our nation has 22 capital ships. that does not mean the cruisers and destroyers. we are talking about nuclear power carriers. we have 11 of those and 11 large debt amphibious ships. they look like a -- deck and phidias ships. ships.ous our version of beinthe joint strike fighter was flying into libya. for our nation to have 22 carriers capital ships and to be

able to send them around the world to do what of our government decides it is important for the nation to do is a significant capability. we do not have the x35b version. our nation will be down to a 11 capital ships to do our nation's bidding. -- down to 11 capital ships to do our our nation's bidding. our nation will lose a great capability. we use the harrier for your support into afghanistan. we use them when we crossed the border. we flew off of the highways.

the joint strike fighter allows us to operate the way we did when we were in iraq and fly off runways and taxiways. we will miss an awful lot and hamstring our nation if we do not get those. it is doing well. i track them like a bird-dog. i have assumed ownership of that for the united states marine corps. it is fails, you can come to me.

>> is also a retired general and a retired ambassador. also -- i am a retired general and a retired ambassador. there is a vocal minority doing a lot of damage with the department of defense and the congress. this is a group that is downgrading their compatriots say how much better they are. let me go back and tell you that in 1950, i was one of the planners in the inchon invasion. in order to make that invasion work, we needed an additional division. the chief of staff, was my boss. get is thelet's

vision. he said let me try a classmate of mine. he was head of the marine forces. he said, we have one regiment of more rain is in korea. if you get a us two-- one regiment of marines in korea. if you can get us two war regiments -- we made a decision with the help of the army. inchon was a brilliant success. instead of capitalizing on its success, a small, bo " minority -- a small, vocal minority said we did not need the army. we could have done it by ourselves.

the army was 80% in the marine corps was 20%. >> the question is about internecine rivalry among the services, right? could you post your thoughts as a question? >> is the marine corps aware that a vocal minority is bad mouthing the army and say how they are doing it all and do not need it. i think this is doing harm to the marine corps, which does not need any real boasting. >> general brown, first of all, i can tell you i do not know of that president barack obama --

vocal minority. there have always been competitive rivalries. the relationship right now has never been better than it is today. we have fought alongside one another. we have commanded army brigades. the relationship is better today than it has been in my 41 years of being a marine. if they are active duty -- if they are retired, i cannot reach in and touched them. if they are wearing this uniform, i can reach in and touched them. that is not the message. this is not a paid political announcement. today's environment requires all of us to work in a joint,

combined, interagency empire met. the world -- interagency environment. >> when there was plenty of money to go around for the past 10 years, it was easy for the joint forced to get along. the knives are out. second what the general is talking about. they are saying, we deserve our equity. >> one fourth of the service chiefs and one-fourth of the joint chiefs of staff -- i look around the table and we meet. i will be sitting there with my fellow -- when we go to the tank on friday

afternoons, there is none of that going on. i made a comment on npr last week saying that for budgets bring up the worst in the behavior of people. i have not seen it yet. we have a great chairman. if there is anybody who can say, we are going to do this together. , it is going to be him. >> yes? >> good morning and thank you. i am from japan broadcasting. you spoke at the brookings institute earlier this summer. he spoke about senator web's's

-. -- senator webb's proposal. >> can you come up here? >> early in the summer you spoke at the brookings institute and you said you were favorable to senator webb's plan. do you think this is still the best way to save money? >> secretary panetta is in japan. the reports that i have read say that it was an encouraging visit to japan.

there is strong encouragement from the central government to continue on the agreed to implementation plan, which is to build the runway and moving the marine corps stationed. i have tried to be a good partner and to delink some of these things and move summer rains -- some marines to guam. we want to give the land back that we have agreed to. all of that is done with honorable intentions. i am encouraged from what i have read from secretary panetta. i hope we can build a runway and continued the plan that was agreed to. >> yes. there is a woman here. >> the soil with the american

security project. i will -- i am with the american security project. the united states military has lost 105 helicopters. -- 405 helicopters. only one of those was a v-22. this same aircraft flies 1/3 less per mile than any other helicopter we have had. why does it take such a bad rap when it is probably one of the best helicopters you have ever purchased? >> i know him just like i know some of the other folks. i have not seen him in a couple of years. what he set about cost per passenger mile -- we get beat

up. people say aircraft are expensive. it will take them three times as far. it will take them twice as fast. it really well. -- really will. the rap goes back to the late 1990's and 2000's. we are well beyond that right now. when they pulled off the coast of libya and they had been no- fly zone, v-22's were on that aircraft carrier. they were awful because of libya. they launched. they picked the pilot up and they were back on deck in 90

minutes. you namey, why don't another helicopter and by the other helicopter? we would have been negotiating with gaddafi or the release of that pilot. those forces were on top of that pilot by the time we got there. had we not had the speed to launch and the ability to get there quickly and get him off of the ground in libya and get him back, we would have been negotiating until last friday trying to get his release. that is the significance, the speed and the list. >> people recall those dark days of 1999 and 2000 when the ospri seem to go down. is it fixed? >> the airplane was in

development. it suffered. this is a lesson learned for procurement today. that is why i watched the f-35b really closely. we as a nation and we as congress and the program managers of the v-22 program underfunded it. the program managers had to make a decision. i can only afford to do six of these things. we do the six most critical and the program continues to move along. we are making decisions on doing things. we end up with an airplane in the 2000, march of 2000. the airplane was flying fine.

we got an airplane in march of 2000. we lost an airplane in the december of 2000. that is when secretary cohen said, we are stopping. we are going to take a look of this -- at this airplane. one of them was, let's make this events driven. -- event driven. we are going to put the right management in the program. we are going to put in the right parts. everything is set up the way it should be to bring in a successful program. the program is not anemic. the program is funded well and has been cared for well by congress and everybody else. we have the fruits of that labor today. >> in the front row. >> general, it is great to get a

chance to see you. i want to ask about the human side of this. when the marines were going off to iraq, they were getting some cultural training. what are you doing about learning about the countries where you are likely to be delaware wen jiabao do you have language skill required -- a sort likely to be going? -- what are you doing about the countries where you are likely to be going? >> i doubled the number of regional area officers in the marine corps. they are getting promoted from major to the can it kernel. they did not used to be. -- they are getting promoted

from major to the tenets -- lieutenant colonel. we need more expertise in the regions around the world. when we are going to go somewhere, there is a requirement to understand the culture and the people, the human terrain of the country. if there is anything we learned after king years is backed -- it is that. -- if there is anything we have learned over the years, is it is that.

every lieutenant-colonel is assigned a region in the world. for his promotion, he has to pass a series of examinations in your region to become a first lieutenant or captain or major. it is an acknowledgement that that is one of the greatest lesson learned in the last 10 years. >> thank you for this compensation. i am from the u.s.-european command. i wonder whether you have concluded -- if you have some conclusions you have drawn about levels pertaining to libya. it may be too early. what conclusions have you drawn based on our experience in libya?

>> i am tried to think of who said this last week. we do not want to say, that is it and that is how we will do business as a nation. our government made the decisions it did on what we were going to do with libya. are we going to do a no-fly zone or put forces on the ground? nato was the lead. my sense is that the lessons, as i looked at it as a service chiefs -- i would ask over the next three years to give my best military advice. we do not always have to be in the league. we do not always have to jump in and be first. we have lots of strategic partners we can rely on.

this libya thing is a classic case of nato and our allies jumping in and we supported that. that is what i got out a bit at the strategic-international politics level-. - got out of it at -- got out of it at the strategic- international politics level >>. there was important -- >> there was important anti- aircraft activity. there is this requirement for the u.s. to have a lot of skin in the game even if it has to be a nato-led mission. >> i do not think there is any question that we did not provide enablers. some of them are more technical and have a higher level of capability than others.

i keep going back to this. when the aircraft carrier pulled up awful because, the europeans had not arrived yet. when you are going to do something like this, we expected to be cleaned and executed on a precision timeline. when you are dealing with nations, things do not happen that way in the real world. guess who controlled the airspace? it was the and hideous -- anphibious ship. the tankers that came down or not just u.s. tankers.

there were nato tankers that came down. they were working their way down. there were a lot of them. we are 18. we have the ability in some cases to provide -- we are a team. we had some abilities in some cases to provide something that they could not provide. i am not offended by that. that is the way we do team play in the future. this is a team sport. >> i am from aviation week. let's go back to some things we

were talking about regarding anti-access in the pacific. there are some programs that have been truncated. is that something you would welcome? how important are the ships brought to the u.s.? >> that is out of my lane. i cannot talk about that. i cannot give you anything that will be worthwhile. it had an enormous capability. from the marine corps perspective, we were looking at it to provide cable services. that is what the marines were looking at. it has been truncated. the ddg-51's are going to

provide the defense that our nation is looking to around the world. that is the extent of my knowledge. >> we have one more question. this meeting has been on the record. last question. >> i am retired air force. tying procurement and people together, i wonder if we could have your assessment of the overall volunteer force and what alternatives there might be. i am thinking about it because that seems to be one of the basis of the foundation up whatever strategy we develop. >> secretary panetta commented in japan yesterday and he made some comments about it. his goal is to protect all volunteer forces. if we start talking about the

budget and how we are going to do this and what the fiscal environment is going to impact the services -- secretary panetta has been clear. we have to protect the all volunteer force. you have to be right in the middle of it to really appreciate the quality of the men and women we have today. they are lined up. if you want to join the marines court today and if you want to be a marine today and you walk into a recruiting station in dallas or topeka, kansas, it will be 8 months before we can send you to boot camp. that is equality of men and women we have. how do you incentivize men and women to join and then to remain? in our service, i had to do some homework.

only 10% of the young men and women who joined the marine corps stay for 20 years and retire. some get out after four years and some get out a after 8 years. only 10% of them go all the way to retirement. we have to keep it in perspective. when we talk about paying benefits, we get to 100%. when you start talking retirement, you are only talking 10%. the other services are a little bit more than that. that is the focus for retirement. the benefits in between, the pay raises, the health care, the co- pays for pharmaceuticals, most

of that affects the retirees. the basic allowance for housing, current pay. i saw last night, that if you take the 70% and the average pay for a 24 year-old college graduate is x and you add that up, and he said what is being paid for a second lieutenant? you want to have that second lieutenant historically being paid whatever averages across the country. you watch him being paid 70% of what the market will bear. we are at 79% for officers. we are at 83% of what the market will bear for enlisted. we are paid pretty well. as we look at how we pay is $450

billion, is there room with just inside to bring that back down a little bit and make it a bit more of a level playing field. how much? i do not know. what is the bend in the knee? i do not know what that is. we have not put that kind of rhetoric to it. -- kind of rigor to it. we need to know what we do and what the effects are. >> thanks to the council on foreign relations for hosting us today. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> president obama continues to urge congress to pass his jobs proposal and talks about the actions he has taken this week to help the economy. and a different perspective from a freshman congressman and business owner. he talks about the party's jobs bill that have passed the house and remained stalled in the senate. >> this week, a new economic report confirms what most americans already believed to be true. over the past three decades, the middle-class has lost ground. the average income for the top 1% of americans has risen seven times faster than the income for the average middle-class family. this has happened during a time when because -- when the costs of everything from health care to college have skyrocketed.

we do not be grudge anyone making a living. america is better off when everyone has a chance to get ahead, not just those at the top of the income scale. the more americans who prosper, the more americans prosper. -- the more america prosperous. our economic problems for decades in the making. they will not be solved overnight. there are steps we can take to put people back to work and restore some of the security middle-class americans have lost of the last few decades. congress can pass a set of common sense jobs proposals that can boost the economy right away. proposals that will put more teachers, that trends, construction workers, and first responders that on the job. it will cut taxes for virtually every middle-class family in america. these are the same proposals democrats and republicans have supported in the past.

they should stop playing politics and act on them now. these proposals are paid for by asking those making more than $1 million a year to contribute more in taxes. i believe this is a contribution they are willing to make. one survey found that nearly 7- 10 millionaires were willing to step up and pay a little more to help the economy. unfortunately, the republicans in congress are not paying attention. they have not gotten the message. they have refused to debate the same kinds of jobs proposals the republicans have supported in the past, proposals that are supported by democrats and independents and republicans voters across america. it found time this week to debate things like whether or not we should mint coins to celebrate the baseball hall of fame. they are only scheduled to work three more weeks between now and the end of the year.

we cannot wait for congress to do its job. middle-class families are tired of waiting. they need help now. if congress will not act, i will. this week, we announced a new policy that will help families whose home values have fallen to refinance their mortgages. we are making it easier for better is to get jobs. we formed the student loan process so that more alone people -- more young people can get out of debt faster. these steps will make a difference. they will not take the place of the bold action we need from congress to get the economy moving again. i need not be to make your voice is heard. tell congress to stop playing politics and take action on jobs. we want to build an economy where every american has a chance to get ahead. we need at the american to get involved. that is how we'll change

happens. thanks. >> hello. i am a lifelong resident of illinois. nonpoint -- born and raided in rock island. we are the proud owners of a pizza parlor. my son said he is not used to see me dressed up after so many years of wearing flflour and pizza dough. a small, family run business. it taught me a lot of what i about how ourt economy works. there is no higher priority than jobs. when i look at things like the stimulus policies coming from the white house, i think it folks bear could use a few weeks up wearing flour and pizza

dough. when you are a small business owner, you are a troubleshooter. you identify problems and fix them so they do not come back. tipperary band-aids do not do the trick. i am proud -- temporary band- aids do not do the trick. our plan addresses excessive regulation, it is our tax code and close this loopholes and pays down our debt. the house passed another bill from the republican jobs plan. it stops an irs withholding plan that stops businesses from doing business with the government. this is a bipartisan plan. it was in our jobs plan and the president also jobs plan as well. johnson is not a democrat or a republican issue. it is a red, white, and blue

issue. we all it to the american people to find common ground. -- we owe it to the american people to find common ground. many of the jobs bills the house has passed are stuck in the democratic bin. these bills are common-sense bills that address excess of federal regulations that are hurting small business job creation. they were written after listening to farmers, manufacturers, and small business people from around the country. a number of them have bipartisan support. the senate will not give these bills a vote. the president has not called for action. politics and pessimism will not get america back on track. i was disappointed to give the president say that americans

have lost our ambition, our imagination. i respectfully disagree. the people of my district are working hard, making more sacrifices and doing whatever it takes. he is more than welcome to meet them. all we are asking is that we listen and get government out of the way so that our economy can go back to creating jobs. we are doing everything we can to make that happen. republicans have a jobs plan, one with bipartisan support. it is stuck in the senate. we are asking president obama to work with us and called on the senate to pass the or got in 15 to help the private sector create jobs. let's seize this opportunity. let's build on our common ground for jobs. you can learn more about the

republican jobs plan. thanks for taking time and have a great weekend. you for taking time and have a great weekend. >> the house arms services subcommittee on military personnel heard tuesday from the principal deputy defense undersecretary for personnel and readiness, and representatives from the military officers association from america and the fleet reserve association. this hearing is about an hour and 20 minutes.

>> good afternoon. ladies and gentlemen, welcome. today the military subcommittee will discuss the subject of military determined, an issue of immense importance to service members and in terms to combat readiness. it was essential that this subcommittee address this expeditiously. thank you for your insight and call to action. the defense business board, one element of the department of defense, was quick to present a major retirement reform proposal that set the tone of the retirement reform debate. the board's proposal would move the retirement system aggressively toward a private sector defined contribution system based on the personal investments of service members. the proposal received immediate criticism from service members and military associations. the proposal is certainly a radical solution that would result in a significant reduction of retired benefits for all service members. as could be anticipated, the

unveiling of the defense business board proposal injected considerable uncertainty into the force, to include troops fighting in the wars in iraq and afghanistan. the proposal created an immediate merrell firestorm as service members fear that senior members within the department of defense and the military departments were seriously considering its implementation. we invited the defense business board to testify today, to face the arguments of their critics and explain the merits of their proposal, but they declined the invitation. i am concerned that the defense business board knowingly elected to pursue a very controversial proposal with immediate negative consequences to morale and combat readiness, and yet they were unwilling to

come before this subcommittee and defend their actions. in my view, their failure to appear speaks volumes about their own lack of conviction that their proposal is deserving of serious consideration. secretary of defense leon panetta has been clear that retirement reform must be on the table for consideration as the department of defense contemplates the wide array of programs that will be considered for cuts to meet the budget reduction goals. i am pleased that the secretary understood the morale problem that has been created by the defense business board and announced his clear support for grandfather in the benefits to be provided to currently serving service members who have borne the burden of war over last 10 years. we simply cannot betray the trust of the service members who have performed with such courage and expertise in afghanistan and iraq. i was disappointed that secretary panetta did not disavow the defense business board proposal. that statement would have removed a major irritant to the

force. i was, however, very pleased at general dennis c.'s statement before the house armed services committee that recognized the unique requirements of military service and that strong asserted that the military requires the retirement system totally different from any civilian retirement program. today we hope to learn more about the current positions of the department of defense and military advocacy groups concerning the need to reform military retirements. i would like to welcome our witnesses, dr. joanne rooney, the principal deputy, undersecretary of defense for personnel and readiness. dr. rooney, this is your first opportunity to appear before the subcommittee. welcome. i am certain we will be seeing more of you in the future. next we have a two high respected professionals that

are longstanding friends of the subcommittee. miss virginia as penrod, the -- and the director of government relations of the military officers association of america. only, let me introduce mr. john davis. he is a marine, not a marine veteran or former marine, a marine. we appreciate so much you being here today. the director of legislative programs, mr. davis, this is also your first time as a witness before the subcommittee. welcome. council member david, you are recognized for your opening remarks. >> i note this is your first time testifying before the subcommittee, so we are glad to have you.

thank you all. i look forward to hearing your comments on potential reforms to the military retirement system. we all know the concerns about the current state of our nation's economy. the discussions on the condition and the future military retirement are once again being raised, no surprise. such discussions are not new. during previous economic downturns, focus has turned to the sustainability and affordability of our military retirement programs. for the most part, the current military retirement program was established over 60 years ago, so it is valid, no matter how difficult, difficult knowing the nature of the service and the sacrifice of the men and women who served, but still appropriate, i think, for us to

ask ourselves whether the current program still meets the requirements it was set up to cheat, which of course we know is the focus of today's hearings. only 17% of the force actually complete a full 20 years of service in order to qualify for a non disability retirement. many have expressed concerns that the current program does not recognize the sacrifices of those who served during tenures of conflict and may not stay the full 20 years to earn a return. is it fair that that person who may have been deployed once and stayed to return is eligible for a lifetime benefit, while an individual who may have multiple deployments in a combat theater does not stay 20 years, that person walks away with nothing more and the admiration of a grateful nation. when the 20-year retirement program was established, the

not -- a life expectancy in 1949 for a white male was 66.2 years. for black male, it was 58.9 years. compared to the latest data available, the life expectancy in 2009 for a white male is 76.2 years and for black male, 70.9 years. so there is no doubt that americans are living longer and fuller lives. which means an average individual who achieves military retirement for 20 years of service will receive return for nearly twice as long in his adult life. him or her adult life. in addition, many of those who retire at 20 years of service have gone on with an ability to seek another full career in a different field. changes to the personnel compensation program including the retirement system often strikes fear in the force. it is important that we do not

necessarily undermine the fate of those who are currently serving. but we do have a responsibility to ensure that the compensation package that is provided to service members are meeting the needs of our nation's national security, and that includes looking at the military retirement package. thank you, mr. chairman. this is an important hearing and i look forward to our witnesses testifying today. thank you. >> i ask unanimous consent that the defense business board report on their proposal to reform the military retirement and a statement from the reserve officers association be injured in to the hearing record. hearing no objection, so ordered. at this time will proceed in order with our witnesses, beginning with dr. rooney. >> the afternoon. chairman wilson, ranking member davis, and distinguished members of the subcommittee,

thank you for the opportunity to come before you on behalf of the women and men who so ably serve in our nation's armed forces. i am here today to speak to you about the military retirement system of our uniformed services. since the military transitioned to an all volunteer force, military compensation has been under continuous scrutiny. the primary goals of the military compensation system are to attract, retain, and eventually separate members so the united states forces can support the numerous missions both here and abroad and when called upon, succeed on the battlefield. even though some consider military benefits far reaching, we must remain cognizant that they support the brave men and women who volunteer to defend this great nation. over time, while the military retirement system has remained

relatively constant, pensions in the private sector have changed and more closely aligned to support the more mobile work force in that sector. unlike the private sector, the military services must grow most of their military work force internally. it generally takes 15-20 years to develop the next generation of infantry battalion commanders and a submarine captains. this need for greater longevity in continuity suggest there are valid reasons why mirroring a private sector compensation package may not necessarily be the proper approach for the military. however, the department does believe that reducing the retirement system is both a fair and reasonable in denver, and over the past year has begun reviewing such retirement in the context of a total

military compensation system. the officer of enlisting in civilian leadership of all services from the active-duty reserve and national car components as well as the u.s. coast guard are participating in this review. the review is designed to be delivered, careful, and pragmatic. the defense business for proposal is just one of several concepts that are being reviewed and modeled to determine the impact on recruitment and retention. the department is working to write the correct balance. this includes weighing the impact on the new system of recruiting and retention, considering the welfare of the individual service members and families, which includes grandfathering our existing force, who took their oaths under the current system, and acknowledging our responsibility to the american taxpayer. the department needs to ensure

any proposed changes do not break faith with the current members or negatively impact the current force. before proposing changes to the military retirement system or any part of the military pay and benefit structure, however, the department is committed to conducting significant evaluations and in-depth analysis of any proposal. the department must ensure its ability to continue recruiting and retaining the highest quality members and must understand to the fullest extent possible the impact of any changes on the future of the all volunteer force. finally, while the department acknowledges military retirement system appears expensive, it is nearly -- neither a unaffordable nor spiraling out of control, as some would contend. the department annually contributes in accordance with the carmen's set forth by the office of the actuary, but

contributions as a percentage of military basic pay our projected to remain relatively constant over time. at this time, the department does not have any specific proposals or recommendations ready to offer. within the last month, the president recommended forming a commission to review the military retirement system. if this commission is formed, the department expects to provide significant input to the commission. the department also expects that any proposals offered will be similarly presented to the congress and to this subcommittee for discussion and assessment. all i look forward to continuing to work with each of you, and thank you again for the opportunity to testify can for your continued support of our military members and their families. i look forward to your questions.

>> thank you for the opportunity to come before you and discuss the military retirement system for uniform services. dr. rennie towed to the department has begun a review of military retirement, and it is my office that has been tasked with this tremendously important undertaking. the purpose is to determine the impact and feasibility of restructuring. i would like to point out that the current system has supported the most successful all volunteer force in the world. question now is whether the current system is still relevant in today's environment. if not, should be modified to meet these requirements in a manner more in line with private sector? to ensure that we are doing -- that we are getting it right, along with associated personal the personnel, to have an impact on recruiting and retaining the all volunteer force. we are not looking at retirement in isolation. i work is not yet complete so i

am unable to report to you on the results of the review. i can assure you that sustaining the all volunteer force and the men and women that so ably serve our nation will be at the heart of whatever we do. i look forward to your questions. thank you. >> thank you for this opportunity to present our views on military retirement concerns. we are grateful to the committee for standing up as champions both now and in the past to ensure military retirement incentives remain commensurate with the extraordinary demands of career service. the primary purpose of military retirement package is to induce toys of all the people to serve multiple decades under conditions few americans are willing to endure for even one term. after a decade of war in which career service members deploy time after time after time, with ever-increasing of coming home a changed person, we find

it shocking insensitive that some now seek to curtail their retirement package to make it more like civilian workers. these are the primary incentives that have sustained the career force in peace and war. we are very concerned the recent proposals are aimed mainly at achieving budget savings, with scant regard for longer-term damage to retention and readiness. the fact is we already have a considerable history with military retirement cutbacks. enactment of the three-year average basic pay system in 1980 cut retired pay by about 8% with subsequent interest. through the 1980's and 1990's, military pay raises for capped below private sector pay growth in nearly every year, dramatically reducing lifetime

retired pay for all the thousands of people retired under those depressed pay cable. in 1986, congress passed the so- called reducts retirement system that cut lifetime return paid by more than 25% for a 20-year military retiree. at that time, secretary weinberger, secretary of defense at the time, warned congress that we ducks would undermine retention in readiness, which proved true a decade later, and congress repealed it in 1999. recent proposals by the defense business board and the 10th quadrennial review of military compensation envisioned for more dramatic cutbacks than reed texted, delaying most retirement compensation until age 57 or 60, even though the services don't want to keep most people anywhere near that long. it also proposed investing option for people who choose to leave early. we believe this is a formula for retention and readiness disaster that would have destroyed the career force had it been in effect of the past 10 years. some support vesting or principle of fairness with private sector workers, but it

is and odd concept of fairness that would dramatically cut compensation for those who service and sacrifice the longest to pay more for those who leave early. defense leaders have saw to quell concern in the deal by saying that plan to grandfather the current force, but their real ducks experience proves that grandfather in does not avoid -- the redux experience crude that grandfathering does not work. current defense leaders have repeatedly expressed support for significant retirement cutbacks for future entrance without a word about long-term retention risks. in our view, that is an abdication of their responsibility to protect future as well as current readiness. we are extremely grateful that this subcommittee and the full subcommittee have stood up to highlight those retention and readiness concerns to the super committee when few others seemed so inclined. that concludes my portion of the

coalition's statement. >> thank you very much, colonel, and now we proceed to lieutenant davis. >> thank you for the opportunity to testify on this important issue. the all volunteer force has successfully fought in a protracted war, due primarily to the dedication of our men and women in uniform. we should not underestimate the pay and benefits keeping the for sustained in this time of challenge. many raleigh believe that the uniform service should receive 50% of pay for 20 years of service, but that is not the reality. the retired pay is based solely on basic pay including housing and subsistence allowances. personnel with 20 years of service earn retired pay the replaces 25% of their growth -- gross pay and allowances. hundreds of thousands of retired

under depressed pay tables between the mid-1980s, and the mid 2000's. they already forfeited for the rest of their lives. regarding the change to cpi, some economists believe the consumer price index overstates inflation by failing to recognize consumers to change behavior when prices rise sharply. when that happens, they say, if people simply buy cheaper substitute prices. more complicated, is a compact car a substitute for a full-size car? over time, this leads to a major change in living patterns. a change in cpi would reduce lifetime paid by $100,000. cola cuts are opposed because that violates the very purpose -- to protect against erosion of

benefits by inflation. another proposal is to use the high-fives, and reduce the current high-3. we oppose this because it is another way to devalue military service. the 10th qrmc report suggested payments starting at age 57-60, which reduced retired pay from $24,000 a year, already a modest amount, to a ridiculous $3,600 a month. this will do great harm to retention and recruiting. a recent survey indicates that 90% of respondents believe if benefits were delayed until age 60, fewer would join and it would serve for a shorter time. the survey also indicates more than 80% would leave the military sooner if retirement

was switched to a 410 -- 41 k plan. -- 401ks plan. guidance is invaluable. civilian benefits likely to result in many of them leaving the military early, and these positions are very difficult to replace. the bottom line is the current retirement system has worked as intended -- sustaining a quality, career force through good and bad budget times, through war and peace. and only stopped working after congress cut it in 1986. and that is a lesson we should not have to relearn. thank you. >> thank you very much. we will proceed. a each member will have a five minute period of asking

questions. we will also have a timekeeper. you can almost look at his face and tell when the time is up. i would like to begin with dr. rooney and ms. penrod, it has been widely reported that with the proposal last summer, there was a great deal of distress among career service members. the reluctance to disavow the proposal has given rise to concern that there is strong support at dot for such reforms. with this report, does dod plan to support the proposal, and then it has already been reported that there are studies under way as to how this will effect retention. when should we expect a report

on the effect on retention? >> yes, sir. in regards to our posture on the defense business board, you indicated that early on we did not come out adamantly against it, but i believe recent statements by the secretary, the chairman, and even our opening statements clearly indicate we see the proposal as just one data point for consideration in review as we look at the overall compensation and retirement system. again, the key factor for us is that any change, or any system, frankly, must ensure that we are able to recruit and retain the all volunteer force, and not at all damage the current face the troops have in us. that report had some strong limitations. it is a data point, and we see it just as bad -- as a data point.

you also asked where we are as a proposal coming forward. we have a group currently looking at a number of alternatives and we are looking closely with the rant operation to help us what analysis with the idea that recruiting and retention our key factors to consider. we do not have a specific date, however with the president's proposed commission, if that would stand up in the springtime, should that go forward, we would be prepared to be very much informing the conversation with them. >> ms. penrod? >> yes, we are working to model any changes to the current program. we, preliminarily, have the final report and it does have a negative impact on retention.

that is what it is showing us at this time. we are not complete with that review, but again, as dr. rooney stated, it is a data point, and we will take that report, and it will inform as our review goes along. >> thank you. i was very impressed, colonel, and mr. davis -- the fax you pointed out, people should know how this defects individuals. with that in mind, what is your reaction that your average debt retirement reform is unavoidable because is fiscally unsustainable. what would be your response, each of you? >> the testimony we have heard here today from dod witnesses refuse that where they say it is nearly spiraling out of control, nor unsustainable. there projection is it will be about the same percentage of basic pay into the future.

i think the committee has statistics that have shown retirement costs as a percentage of the budget have been relatively stable over time. i read the first time i worked on military retirement was in -- the first time i work on military retirement was in 1977, and we showed projections but critics point out showed the system would go broke by the year 2000. we just fought a war since the year 2000, so i kind of poo- pooed those ideas. >> i would agree. the price of military benefits is really part of the price of fighting the war we are currently involved in, and the price of defending our nation should be put in that category as well. >> i want to thank you all as i conclude because i can see your appreciation of the career

officers. we can get new recruits, but the expertise must be maintained for the security of our country. i will proceed to cover some and davis. -- congresswoman davis. >> thank you, mr. chairman. thank you for being here. i was wondering if you could address the issue of fairness. as i mentioned in my opening statement, we have certainly hundreds of thousands of personnel that serve out the 20 years, though they may only deploy wants if at all, and opposed to those that deploy and many occasions, and in the last 10 years we know that is quite common, yet they do not serve the full 20 years. how should we go about looking ahead issue, and do you think it is one of fairness, or that it is just the way it is?

>> i would be happy to take a shot at this. >> that is fine. >> for all of you. >> for me, the key purpose on the retirement system is sustaining the career force. national defense comes first. i am all in favor of fairness. i built my career on arguing issues of fairness, but you have to sustain the system through peace and war, through good budget times, through bad budget times, and we of all seeing times in the past week pulled out all the stops to retain people. where we a bad service conditions so terrible, or an economy that was so strong, the we have to raise pension bonuses or pay extra things. those will happen in the future as well. when we acknowledge that the military service conditions are

unique and vastly different from civilian conditions -- a factor which can only get 17% of unlisted people to stay for the current system for me, and speaks to itself about the few people willing to indoor that for a long time. to then turn around and say but we need to pay more to people who leave, to me, anytime you have a dusting system, by definition it detracts from a tear -- career at incentive, and in bad budget times it leaves the government bidding against themselves for their services, which only drives up costs. if you want to talk fairness, we have to first be fair to the people who suffer and sacrifice the longest, and that is the career person, and the last thing we should be doing is cutting their package to fund a better package for people who

lead. >> dr. ready? -- dr. rooney? >> certainly. when we look at fairness, and you brought up this point, and in my opening statement, when we look at compensation as a total package of which retirement is only one segment, whether it is basic pay, or hazardous duty pay, or imminent danger pay -- all the different assets and go into compensation, that is how we get the balance of fairness. the other thing in terms of the overall system for fairness is that when people come into the military, they understand the system. they come in knowing what the various pieces are, and as a result, they feel that because we view it from not only does it take, but all the tenants of compensation up to retirement, we do get a balance of fairness in terms of should we be adding a component to retirement to compensate for people less than

20 years, that is one of the reasons why we say it is very prudent to look at military retirement as part of the overall compensation to determine if there is something in that aspect we need to look at more closely. >> thank you. in a little time left, mr. davis, did you want to comment? >> we did a survey, and there was one of the question we ask of 350 active-duty personnel -- do you think it is fair that you have to surge 20 years to get a pension, and 81% thought it was fair. in the ranks of the military, apparently, there is no feeling that "i served 10 years and got out. it is not fair i did nothing." i would also like to point out that if someone surge 10 or 12 years, they are then under the jurisdiction of the veterans committee, and they do have benefits, of course, such as

the g.i. bill and a letter to the things they can use to basically get benefits from their service. >> right. thank you. did you want to comment? >> i think i agree with you, congresswoman davis, that the 20 year retirement has sustained an all volunteer force, but i believe we should look at it. we have a different court coming in every year. how do we know what the future will look like? it might make the military more enticing to come in if an individual thinks they may have something they could take with them. also, even though you have a gi bill, and i think that is an outstanding benefit, you still have individuals that will be separated during drawdowns with 12 years of service. so, i think we need to look at that. >> thank you. thank you. we proceed to mr. kaufman of

colorado. >> thank you, chairman. i think some of the testimony today had referenced that it is a relatively low percentage of payroll that supports the retirement system, but nobody has said what that is. i'm wondering if someone can give me a percentage number. >> at this point, we have some of the numbers. i would like to take that for the record, sir. >> very well. i agree with the secretary of defense when he recently said that whatever reforms we do should not effect those that are currently on active duty, and went in with the understanding that this is what the system is when they in fact in listed or

were commissioned in the armed forces of the united states. however, with that said, and myself being a retiree from an active duty and reserve combination, that i remember, as i was approaching the 20th year marked -- when you are a reservist, and you are injured not when you are on active duty, it is not considered line of duty. not misconduct would be the category paid you did not fall into that, -- category. you do not fall into that, and if you determine you cannot do what possessed of you because you engaged a security -- and injury, you are automatically out, and there is nothing there for your. i gave up skiing in colorado just to make sure nothing happened. i just think we need to take a look get not so much the are

reservists, but the active duty component. i disagree with the notion that we ought to go in the notion of all the fine contributions. i think we are asking our service members to give a lot, and i think there needs to be a component of certainty in that. so, perhaps a more bifurcated approach that would be defining benefit with an element of defining contribution for those who would enter the armed forces after the effective date of the new system when it was put in place. so, i just think that the the system needs to be reforms, revised. it is something my father -- who was under the system in world i thinkand korea -- that as congresswoman davis said, things have certainly changed since then in terms of

life expectancies and a number of other issues. so, i just think that everything we ought to look at. if the defense advisory board only looked at one issue, only came up with one suggestion, and it was completely defined contribution. is that my understanding? >> yes, that is the only proposal we have seen, one that is a defining contribution. >> i am surprised by that, and disappointed. i think if you look at the system for federal civil servants, or four members of congress. four members of congress and their staff, i think it is 1.7% a year for the first 20 years, 1% thereafter for the next 10 years, and there is a thrift savings plan which is the defined contribution part, which is there for all federal employees, and it is a lower, overall, i think, sector. the difference between federal

employees and the military, or members of congress, as you well, -- as you will, is they do not have, and we do not want them to have the career protections that federal civil servants have. so, when you compare the two retirement systems, you need to recognize that in the military system, and it has to come and the fact that they are all that will employees when making determinations about retirement -- all at wheel in place when making determinations about retirement. i look forward to coming up with a new system. i'm not quite to save the old system ought to be wrecked philip -- replicated. i think we need to look at those folks that serve less than 20 years. i think they ought to approve something for that.

in the new system, again for those that are not members of the armed forces yet, i think we ought to look at the notion that should you begin drawing the defined benefit portion of your retirement right at the end of the 20-year marks, or whatever the market is. i think there are a number of issues that should be on the table. with that, mr. chairman, i yield back. >> thank you. we now proceed to congressman dr. joe heck. >> thank you, mr. chairman. i want to thank all the panelists. where i disagree is when the defense business board proposal is released publicly, without much information given to our men and women currently serving in harm's way, and then i received this e-mail and phone

calls from folks wondering what is going on with their potential retirement, and hearing first impact what the impact was on morale. it is not that they are already worried and off, -- worried enough about getting their next paycheck so there wife can make the mortgage, but now they are worried about their potential retirement. the question of is the current benefits package or retirement relevant, i think, opposes a concern in how you define relevance. i hope that is not a euphemism for the cost associated with the retirement program, especially when only 17% of the folks that spent their lifetime in the service windup qualifying for full retirement. i noticed hard enough in this fiscal times when figuring out how the department of defense will meet the reductions this administration has called for,

but is this review of benefits and pay taking place in a vacuum, or being looked at in conjunction with the amount we spend on facilities, hardware's, and weapons, or is each one of duty in a silo? my concern is we could have the best piece of equipment, but if we do not have the person to gain the site vision or pull the trigger like the great pilots i have many in dhaka -- man , is being done across the board? >> no, it is not been done in a vacuum. where are the cannot the challenges we have for budget cuts, and not just as across-

the-board cuts, but very strategically looking to what our future force needs to look like, and how, then, once we determine that future force how do we attract and retain the best people using compensation as the tool to support that all, volunteer force, keep our current troops, and also going forward and trying to retain. his part of an overall strategic look at how we will face the budget challenges and our challenges as the department of defense going forward. >> fire trichet with the colonel stated having lives -- i appreciate what the colonel stated. we are now getting to the point where we are cutting active-duty force in both the army and the marine corps. how does that play into these decisions? we are already trying to downsize the force on purpose, and now we are talking about changing the retirement program, which might cause an additional

accidents. >> 19 -- exodus. >> when i was indicating strategic, we are considering the force drawdown, and also acknowledging that in addition to keeping pace with our current forces we will be recruiting new force is going forward. you mentioned specific capabilities. that is part of the area where we know our forces will rely on new technologies and we may have new requirements for recruiting those folks. so, as we are looking at what this course looks like, what are the attributes, which just want to make sure that our overall compensation package, of which retirement is one, is the right combination. that is why we say there is no decision. as the secretary has said several times, we must put everything on the table because that is the prudent way to approach this challenge. >> a quick final question -- has there been set a dollar figure that is supposed to be attained

in try to help balance the ddod budget? >> not a specific one. >> thank you. >> we proceed to congressman alan west of florida. >> thank you, mr. chairman. thank you to the panel. i am one of those guys the ranking member talked about the did do a career in the military and was young enough to have a second career, which is kind of a laughable hypocrisy in that 22 years of active duty i got a 55% retirement, and in five years on this side, i can get busted into a greater retirement. we can talk about that later. as i sit here today, i am concerned, and it takes me back to the " by -- quote by george washington. i recall my father, a world war

two veteran, talking to me about how great it would be to serve a career in the military. when i look at a career in the military, the people serving in the military, that is a defined contribution, and on the backside i think we should be giving them a defined benefit for that contribution because of what they do. my first question is do we still have the thrift savings program for the men and women out there who may just serve five years, and while they're in a combat theater they're allowed to go into the savings plan so they can start putting away some money? >> yes, congressman west. we continue the thrift savings plan appeared >> ok. now, when we talk about comparing military service to the civilian sector, does the private sector, civilian sector, have something secret to the uniform code of military justice? >> no, sir, they do not. >> in the private sector, other

than being a professional athlete, is your position and your ability to progress through the ranks depend on your physical abilities and we meant it that people have to get the 6:00 a.m. in the morning regardless of the conditions to participate in physical training and activity? >> well, congressman, i cannot comment on private-sector employment, however i can say that the sacrifices are not the same for our military personnel as they are for private sector civilians. >> that is my biggest concern. when we asked the men and women to do ever since they asked -- answered the call of arms at lexington and concord is different from somebody going to a bank, or coming here to work on capitol hill. it is a very dangerous road when we start to go down the comparative analysis of the private sector, the business sector, to the united states military. i asked that we be very careful

about that because i think we are already starting to make some decisions there of. how many people in the panel, do you remember what happened after desert shield, desert storm, when we offer people money to add to the united states military? i do. have you done any research as far as the degradation of leadership, which is something general martin dempsey talked about when he came and talked before us a couple of weeks ago? have looked at that, and what could happen as far as a progression of leadership? >> yes. i believe general dempsey used the term "hauling of the forced their called the secretary has also talked about that. -- force." the secretary has also talked about that. we have learned lessons so we do not end up with that hollowed force. >> any comments? >> i would just like to say, i know you are saying about that, and from the in listed side, you

have senior enlisted people, sergeant, major -- >> you need first sergeants, majors. >> if nothing else, those people combined with the junior officers, r-charging junior officers, you also have the senior enlisted person who can have a wealth which wealth of experience with the military, 20, 30 years, and they can explain things. a junior officer can call on them for their experience that that makes a powerful combination. >> i will testify to that as a young, stupid, second lieutenant when i first came in. >> i think so many of these things and these analyses treat people within the context of "human resources" as if they were which it's in a box, instead of thinking, planning, human beings. when we model -- i have been

doing a lot of studies, spent a lot of time working, the problem with all of these is the models do not improve things you can not -- include things that you can not quantify, such as sacrifice, time away from home. they include all the money people spend, you know? they can measure behavior, but they do not talk about -- there is nothing in the model that accommodates the chance that we might go to war tomorrow, and you might be going to iraq every other year for the next 10 years. there is nothing in there that accommodates for the fact that we might do the opposite. we might stop a war. we might have a budget-driven drawdown, and you have built your plans on staying for a career, and all of the sudden we are going to force you out. those are the kinds of things

that service leaders are always seeking additional flexibility to be able to micromanage the force. the only thing we know about those kinds of plans is what every plan for five or 10 years is going to be wrong because the world is going to change your plan for you. to us, that is one thing when you have a powerful career incentives but the 20-year retirement plan -- incentive like that 20-year retirement plan, if it is very resistant to day-to-day manipulation, and that is a good thing. >> thank you. i hope that our fiscal irresponsibility on the side is not borne on the backs of the military men and women and their families. >> thank you. congressman scott of george appeared >> thank you, mr. chairman. -- of georgia. >> thank you, mr. chairman.

i will focus more on the gentleman with my questions, ladies, if i may, and i would like to focus on the 83% did get nothing. carl, you were just talking about the -- kernel, you're just talking about the potential for someone to go overseas every other year, and then you have a drawdown or a force reduction, and the bottom line is that person will not qualify even though they may have wanted to stay for 20 years. they will get nothing, is that correct? >> i do not think that is correct. when we have these kinds of drawdowns, for example, congressman west was talking about what happened in the 1990's. we had very special programs to provide additional incentives to try to entice people to try to separate voluntarily for people with 15-to-19 years, congress

authorized an early retirement program. as difficult as those things are, that was probably the best example of the kind of thing that can be done. now, the challenges, the drawdown that is coming out, in this fiscal environment, i think it will be a lot tougher for congress to authorize those kinds of programs. so, we are going to be seen less incentives. there will be some incentives, but probably less. >> of the 17% that receive the benefits for the 20 years, what percentage of them are in listed? >> 17% of the men and women who qualify. >> the people that stay for a career? >> right to >> probably abou -- right. >> probably about 70%. >> ok.

you object to having any other plan, is that correct? >> no, i do not object to having any other plan, but i object on the face of it to saying that because civilians do these things that the military should, too. the military is a very different system. it is built to serve a very different purpose. so, to me, it has to start with that uniqueness, and not assume that what happens in the private sector in any peace is a good thing. needs to be evaluated on its own merits. >> i certainly agree with you that they are different, but i do think it is necessary for this committee and for us as a congress to do something that helps that 83% who do not qualify under the 20 years, and there are many of them that have surge many tours overseas, and i

understand that we have to have our experience and our officers and maintain those things. i will also tell you that i do think we need to remember the 83% of the people who and spent their time -- who have spent their time, and their families time, and contributed a great deal to the freedoms we enjoy in this country. i see nothing wrong with them being free to choose a different retirement plan on their own will. so, we will work on that as time goes on. i would ask, mr. davis, would you give me the math again that you used where you said 3000 was the last number, and 24,000 was the first in your presentation? >> that was the 24,60420 years

-- 44,600 -- 24,600 for 20 years, as opposed to the 401k benefits of $3,600. >> could you share that math with the committee? >> if i could clarify, he is referring to a chart that we made. the $3,600 would be the initial value of the defined benefit retirement pay. in other words, the $24,000 would be reduced by 5% for each year the person left before age 57. assuming an enlisted person leaves at age 40, that means it would be reduced 85%, so the

defined benefit portion would be $3,600 a year. there would be some additional amount that person would receive from their thrift savings plan that would be in the range of $10,000 to $13,000, that they could start drawing at age 60. >> that would be contingent on how much money they put into the savings plan? >> correct part >> if i could just see the math on that. >> yes, sir. we have a chart on that in our formal statement. i could get that to you. >> thank you. >> will now proceed to congressman from missouri. >> -- congresswoman from missouri. >> i wonder if i could start with you, colonel, expanding on your comment that if you do not think if there was a new plan

that you do not support grandfathering in current members of the military. could you expand on your concerns? >> sure. i think my point that people look it grandfathering as a panacea that everything will be ok as long as we grandfather the current force. if the letter that i refer to that caspar weinberger wrote in 1985 that went to tip o'neill, expressing concern about the redox plan congress was about to enact. that letter spoke very eloquently on grandfather in. if you do not mind, i would like to read it. the changes that we have been likely to said that technically effect on the future entrance, we expect an immediate effect on the morale of the current force. the matter how the reduction is package, it communicates the same message, that is the

perception that there is an erosion of support from the american people for the servicemen and women who we call upon to ensure our safety." kits as an absolute terms that the unique and dangerous and sacrifices they make are not worth the tax dollars they receive, which is not overly generous. now, there was a line in there were he said, basically, you have two categories of people surge in side-by-side, who each know they have different benefits, and that was a very accurate predictor of what happened in the 1990's, where you have the people trying to reenlist people say they either missed leave them, or tell them the benefit they have, and when the people find out that is not true, they get particularly upset, or you have the people saying i am sorry, but the benefits you have is not what your predecessors have. there is no way as those people there is no way as those people