struggle. they can resolve this >> thing york times has a photograph of the embassy in cairo which is where you are located. there are other demonstrations. what are you seeing in egypt? >> exactly. the embassy was a storm. it is not going to be on the streets here that you are going to see the fallout. now that the un is deadlocked, how are they going to push for this transition in syria, so you may see an increase in support

for the syrian opposition. basically, the gloves are off now, and the conflict is likely to heat up in syria. >> we are looking at some of the scenes. there are 15 members of the un security council. explain why china decided to join russia a curio -- join russia. >> i think china and russia share a version of seeing a community step in and push for regime change in general. i think there is also significant business between china and syria.

they have had close relations historical a. i think you are seeing them when behind their allied. >> hall with the world watching, and in an interview, he indicated no government would kill its own people >> those words do not have of all whole lot of credibility >> what is going to happen next? >> i think the conflict is going to continue to escalate to.

it had already been gaining steam. it will go increasingly do armed conflict. they are going to come down harder and harder, as we have seen with the shelling of opposition stronghold. i think we are going to see more bloodshed and an escalation of fighting. >> the headline is russia and china veto that resolution. in terms of the support of president assaad has been getting, russia is one of the allies. some are calling it a failure of diplomacy because it was a watered-down version, and even that failed with members of the

security council. good >> they attempt to find a common ground. but related paper over the security council, and that comes down to the fact that russia wants him to stay, and the other members want him gone. the fundamental split is not resolvable, and that came to ahead yesterday. >> finally, if you want to get into syria, and what is it like for you to get to the country, and what is it like logistically? >> the government is nogiving

limited visas to journalists. others have been going in-house illegally. the is obviously dangerous. it is limited as to some of the dangers. >> thanks very much for joining us and giving your perspective on what have month -- what happened. >> my pleasure. paul discusses the state of manufacturing, jobs, and what they consider unfair who manufacturing practices from china. they talk about the obama of administration's decision and requires church-affiliated employers to cover birth control and your good and the commission

on medicaid and the uninsured -- to cover birth control. and a discussion of medicaid for low income families. next, a house hearing on the 2012 the economy and spending which douglass element or -- elmendorf. later, q&a with navy secretary ray mabus. >> for more resources on the campaign, used embassies done website to watching videos, see what the candidates have said, and read the latest from social span.org.tes at c- >> douglas elmendorf testified

about when new outlook. government spending and entitlement programs was one topic. other topics included the bush era who payroll tax cuts. overall they predict the deficit will run of 1.2 trillion dollars and economic recovery will remain slow with unemployment near 8%. this is to in a half hours. -- this is to end a half hours -- 2 and a half hours.

>> the committee will come to order. there are difficult economic times ahead of us. i want to welcome the political director. good i want to thank your entire staff for their release. we have a compressed size line, given easter coming earlier, so we know that cdo is going to get pushed extra hard, and i know you are working around the clock, so i first want to start by saying thank you for all you have done.

furs are one to say the cbo projects economic growth remains refers to want to say the cbo projects economic growth remains sluggish. this confirms what too many americans are aware of. president obama's economic policies are not working. the president successfully enacted much of their agenda, but they failed to of deaths -- to advance solutions. they failed to pass a budget in over 1000 days. the problems have been growing for years, and there is no question who blame it is

bipartisan in nature. the new house majority has worked to chart a new course. we authored and advanced a brighter outlook. this strengthens programs, repairs our safety net, and makes sensible reforms. as for job creation and economic growth, while putting job creation on a more sustainable path. in response, the president and his party leaders have yet to put forward a credible plan to solve our country's problems. we have a big difference of opinion on the big questions, but i hope the alarming report encourages us to focus on real solutions instead of the same old false attacks with no

alternatives. let's build upon sensible spending cuts enacted last year. we have worked in a bipartisan manner to advest bipartisan reform and improving accountability -- to advance bipartisan reform and improve accountability. there is a critical need to save medicaid. i invite my friends across the aisle to join us. i look forward to your testimony, which i hope can inform us, and i will yield to the ranking member. >> thank you. i want to join the chairman in welcoming you and your daughters. it is great to have members of the family here. i want to reference to the reports from yesterday. while it shows the economy remains very fragile, it also

shows it is slowly recovering. it also demonstrates we still have much work to do to create jobs, tackle the deficit, and return the budget to of fiscally sustainable path. let's first return to the economic recovery and to remember where we were just three years ago. if you can put up the first slide. this slide right here. what this slide shows is that the day president bush left office, the day president obama was sworn in, the economy was collapsing at a faster rate than originally thought. gross domestic product was plummeting at a rate of 8.9% gdp. we are shedding more than 840,000 jobs a month.

from the moment the president was sworn in, we have lost 800,000 jobs. efforts helped end the free fall and begin to climb aboard to economic growth. we have heard the expression that we are entitled to our own opinions but not our own facts. the cbo said they help save or create of 2 3 million jobs in 2010, that it lowered the unemployment rate and lower unemployment by 1.4 percentage points in 2011, compared to what it would have done if congress had not taken action the private sector has added jobs every month since march, 2010, adding

3.2 million jobs in total. more jobs were created last year than in the year since 2005, and this chart shows we are on a huge downhill cascade and that after the president was sworn in, we began to reduce the downward momentum, and now turn the corner, and have been steadily heading up, reducing first the rate of job loss, which you have to do, and head into positive job territory, so the facts are clear that the job and recovery act did serve its purpose. it is kind of like when you are walking on an escalator going down, if you take no action you will go down fast. even if you take action it will appear you are running in place, and slowly you will move up.

the economy remains fragile, and we still face serious budget obstacles. while the economy continues to grow, at the current rates it will not take too long for unemployment to return to pre- crisis levels, which is why our first priority has to be making sure we do what we can to help small businesses put people back to work. we should take immediate action in this house on the plan the president submitted last september, including his significant infrastructure advancements to help who rebuild infrastructure around the country. we should finish the job with respect to extending the tax cut when making sure unemployment insurance is there for people who have lost work through no fault of their own. i am going to apologize, because

i am going to have to go to the conference committee on that issue, and i hope the conference committee will work quickly to get the job done. finally, the congressional budget office report underscores the need to balance -- to do the budget in a balanced way. the act passed last year saves about one trillion dollars from cuts in the discretionary budget over the last decade. it will also result in one trillion dollars. there are better ways to do that and worse ways to do that. i hope this congress does so in a way that makes sense. when we listen to the testimony, it will be clear that bipartisan commissions were right spirit of -- were right. you really need to tackle this

in a balanced way. what this chart shows is that under current law, the deficit would be reduced to the bottom line, so over 10 years the deficit which declined substantially. if we pack our bags and did not come back until next year, it would reduce the deficit significantly. that blew out the bottom is the revenue the is lost if we keep in place the current tax policies, so clearly that is a factor. i do not think anyone is suggesting we want to put in policies that would capture about revenue. this is an important chart to understand.

the next chart quantifies those numbers and makes it clear if you extend all of the 2001 to 2003 tax cuts come of that alliance -- tax cuts, that answer 4.5 trillion. if you continue the others, it adds 839 billion. if you add the debt, you get 6.3 trillion dollars in revenue, and if you look at the cbo baseline deficit is over 10 years, they are just over three trillion dollars, so the cost of continuing all those policies on the revenue side lead suit a doubling of the deficit over the next 10 years, so i want to make it clear, i am not

proposing that we change the current policy, but i think this gives us a clear indication of the order of magnitude. one trillion dollars is accounted for by tax cut side of the very top. if you return goes to where they were during the clinton administration, that would be one trillion dollars. i think we need to tackle those through tax reform, but i do think this underscores what the bipartisan groups have said, that you need to take a balanced approach. yes, we need to make some reform, but we also need to deal west the other side of the equation as well. i apologize for raveling. good >> -- for rambling.

>> thank you for your comments. i am privileged to lead a dedicated group of public servants, and we appreciate the support you have shown for our work when you're good we will continue to do our very best -- you have shown for our work. we will continue to do our very does. i will use this handout that makes it easier to follow. let me begin by saying our conditioned onn' current law. this provides a benchmark against which it can be measured. and what we are giving you is a benchmark, not a forecast. what is our assessment of the outlook?

the pace of recovery has been slow since two and a half years ago, and we project it will continue to be slow over the next two years, reflecting lingering effects of the crisis in the financial markets and the recession and the fiscal restraint that will arise under current law. current fiscal policy will reduce the output slightly in 2012 and significantly in 2013 through a combination of large tax increases and spending cuts. our taxes incorporates the expiration of the payroll tax cuts as well as other tax provisions, the constraints on spending who proposed by last year's budget control act. taken together, the policies will generate a sharp fiscal

contraction. in addition, the excess number of houses, run-up in debt, and economic downturn are continuing to weigh on spending. we projected real gdp will grow by only 2% this year and only 1% next year. we expect economic activity to quicken after 2013 but whose real activity to remain below the potential for 2017. according to projections, the economy is only halfway through the cumulative shortfall that will result from this aftermath. this picture is not the one i am referring to the moment. this fall disproportionately on people who lose their jobs or who are displaced from their homes or own businesses but

failed. the labor market has a great deal of slack as a consequence of weakness in demand for consumer service. the unemployment rate remains above 8%. as economic growth picks off when -- picks up, unemployment will decline, but it is projected above 7% before 2015 before dropping to 5 1/4% for the coming decade. inflation and interest rates will remain low. under current law we expect this year's deficit to be around 1.1 trillion dollars. that is nearly two percentage points less than last year but still larger than any deficit between 1947 and 2008.

the baseline narrowed sharply, totaling about three trillion dollars between 2013 and 220. dead drops a little as a share of gdp but remains quite high. under current law, revenue will rise your your revenues shoot up because of various tax provisions and other collections that go into effect. federal spending declined modestly while the economy expands and the statutory caps constrain appropriations. later, increasing expenses are

generated by the aging population and rising cost of health care and because of the accumulation of debt and rising interest rates will cause a surge in interest costs. these baseline projections are heavily influenced by the changes in tax and spending policies embodied by current law, changes the sometimes represent a significant departure from recent policies. to illustrate budgetary consequences of maintaining some tax and spending policies that have recently been in effect, cdo develops projections under an alternative fiscal scenario. it is not a recommendation about policy, simply meant to show to you the consequences of fiscal actions that are regularly discussed in congress. this scenario incorporates the following assumptions. first, in all tax provisions they are extended. second, the alternative minimum

taxes indexed for inflation after 2011. third, the medicare payment rate is held constant at the current level, rather than dropping a 27% in march and more after, and fourth, the automatic spending reductions required by the budget control act and absence of legislation do not take effect, although the original caps on appropriation would remain in place. under the alternative fiscal scenario, deficits over the 2013 period would be far above the baseline, totaling 11 trillion dollars rather them roughly three trillion dollars. that would climb on an unsustainable path, reaching 94% of gdp, the highest figure since just after world war ii.

the economy would be noticeably stronger during the next few years and under current law but noticeably weaker later in the decade. the report presents estimates of those of fact, using ranges of numbers to reflect uncertainty. the midpoint of those ranges for the end of 2013 showed gnp that is 2% higher than would be the case. the midpoint for 2020 to shows gnp that it is almost 22% lower than current law. it bears emphasis to the projecting economic outcomes for any fiscal policy and budget outcomes is very difficult. many things could turn out to cause the economy or budget to be worse or better than we project. there is no plausible economic outcome under which the policies i have outlined would lead to a

sustainable outcome. the fundamental fiscal challenge during this decade and beyond remains the rising cost of health care. the number of people age 65 and over will increase by 1/3 in the coming decade, substantially raising the cost of social security, medicare, and medicaid. affordable care i've will increase the number of people receiving assistance through federal programs. the cost per parolee will continue to rise. the set of budget policies in effect in the past cannot be maintained in the future. here is one way to think about the problem using the alternative fiscal scenario, which represents a combination of many current policies. under the scenario, outlays for the programs would be much

higher than in the past. more than 5% higher than in that average. however, all federal programs are projected to be much lower than in the past, averaging a 11% of gdp in the past. in our projections they would be a% in 2022. now that would be lower than any year in the past 20 years. the rising costs for social security and health-care programs mean that the budget deficit is projected to be 6.1% of gdp. to keep debt from rising relative to gdp, the deficit would need to be about $900 billion smaller in 2020 to -- 2022. to put the federal government on a sustainable path, policy makers will need to allow federal revenues to increase to a much higher percentage of gdp

than we have seen in the last 40 years or make a very large changes to federal health care programs or pursue some combination of those approaches. let me close byron -- by stating some policies. if the current law is unchanged, the federal debt will increase because of a large increase in revenues and a sharp restraint in federal spending apart from the largest programs i have mentioned. both of those budgetary changes will have significant economic and social affects. the sharp fiscal restraint will slow recovery. on the other hand, changing current laws to allow policy to continue would boost the economy, allow people to pay less in taxes, and benefit more from government programs, but would put the nation on

unsustainable course. if policy makers wanted to achieve a short-term economic boost and medium-term to long- term fiscal stability, they would need to enact policies and that leaves a deficit significantly wider than in our current law baseline but significantly narrower than what would occur under the policies and we have described under the scenario. in conclusion, how much and how quickly the budget deficit declines will depend in part on how well the economy does. more critically will be the choices you make as you face substantial changes to tax and spending policies slated to take effect this year. thank you. i am happy to take your questions. >> it is pretty bleak. about medicare. we have to scenarios here

led to a service in showing where we are headed. in the alternative fiscal scenario, which is your attempt to get closer to reality, and from your june 2011 long-term outlook, you show medicaid rising to 14% white 2085. what we find is that medicare becomes unsustainable under the alternative fiscal scenario because it drives debts to untenable levels, so that is a future we know is not going to exist, because it cannot sustain itself.

you would agree. i agree that it cannot sustain in definitely. i think it is a combination of policies that cannot be sustained together. good one could sustain the medicare path while making other changes for the revenue path while making other changes, and the set of changes will depend on you and your colleagues. the combination of policies cannot be changed over the next quarter of a century. >> why we looked at the baseline, my experience from being on the oversight committee, whenever we seek to control costs by cutting rates to providers, what we learn is the cuts are not sustained, or they cause higher utilization rates have actually a road anticipated savings. the president's health care law

cut medicare payments to providers by $500 billion over 10 years to pay for the new entitlement. it also created ipad, and under this proposal, ipad would speed tasked with have region would be tasked with cutting reimbursements to providers. last year at you testified there was a gap in the tool kit when it comes to analyzing the behavior of ability to access to care. you still more or less have that data to try to analyze behavioral changes and access on the provider side? >> we have gaps we are trying to fill about trying to give the congress of better sense of how changes would affect access and

quality of care, but we are at the beginning of the road rather than the end. >> rick was here where he basically told us he estimates 40% of providers will become unprofitable by 2013 according to the cuts in the current health-care law, so they are able to make those kinds of projections. he also says in medicare pays 80 cents on the dollar but is on course to pay less than 30 cents on the dollar in decades ahead. he is basically telling us there are going to be massive problems. we are getting that kind of analysis. let me ask you another question about your tool kit.

now there have been many economists said have argued that choice is in competition and would an -- choice and competition would improve quality. a premium support model, and you have bipartisan efforts that have been made. the former cbo director, where recent work with senator widen which attempted to measure the growth of support payments. do you still have the modeling capabilities? we are working very hard to try to fill that gap as well. in the analysis we did last spring, and we were able to incorporate other factors and the cost of insurance through medicare today, but we did not have the tools to try to analyze how the flexibility to

providers and insurers would have on your proposal or how the price pressures that people would face would affect the dynamics spending, and that is what we are trying to do. we have been getting their insights as well as our own work, but we are part where as well. -- part way there as well. >> health care is a big driver of our debt in the future. these gaps in the tool kits need to be filled. i know you face serious challenges, but i want to get your response to some of the copy of i have so we can better understand how medicare works today.

when you compare the impact of medicare reforms relative to the alternatives fiscal scenario, we acknowledge that is unsustainable. it is really not fair or accurate because it is based on a system where the government is not able to fund beneficiaries. we do not want to compare ourselves to a future that is unsustainable and who will not exist. when you compare to the baseline, and we ignore that providers are not going to be continuing to provide benefits, so that is pretty implausible. and we are not capturing a dynamic and epiphenomenon -- en phenomenon that choices actually worked to tame inflation, so i think it is important to acknowledge we are not fully

capturing a proper analysis of what reforms actually achieved relative to these scenarios, or at least we cannot measure the affects of these scenarios. is that accurate? >> i have not provided all the information we would like to provide to help you and your colleagues understand the trade- offs we face. we have worked desperately hard for a succession of efforts pursued on the hill. most of them were involved with changes to health care programs, even though they were not voted on. i have seen people do an awful lot of work on a number of proposals. what affects we will find are unclear at this point. there was an exchange about

premiums support plants. when they wrote for and against. they are among the members we have consulted. i agree that we need to push hard to give you a fuller sense of the true choices you face. >> we understand there was a lot of interplay in congress on super committees and all of these efforts, and which tied up , but thedo that work problem is these programs, which are the latest drivers of our debt in the future, we are measuring in a reform effort against futures we know based on outside analysis are untenable. we know from other analysis but

if we pay providers pennies on the dollar, they are not going to continue to provide, and what program if they cannot provide? we know if we stick to the status quo, our debt is so out of control but we go into a tailspin, so there has got to be another way, and we need to make sure we have a better tool checks -- tool kit. >> thank you for your testimony. i think all america would benefit if we were able to be like in the clinton years and begin to address these long-term

challenges of soaring health- care costs. i think we have to do it in a way that is different from what he recommends, because a voucher those costs onto elderly with disabilities and does not really resolve the problem. it just shifts the problem. looking at the issues of how we invents immediate economic growth, your office put out a study in november that looked at the impact of the economic recovery act, and while i believe you had a wide range, all about was positive, wasn't it? encouraging economic growth and job growth? >> it has been positive, and we

have a range affecting the uncertainty. >> and bad range suggested growth may have been advanced through the economic recovery act by over 4% in 2010 and over 2% in 2011 and that the economic recovery act may have been largely responsible for creating millions of jobs in this country. is that right? >> you have identified a high end correctly. >> looking at the effects and the composition and then trying to understand what that means for policy choices now, those choices that would place dollars into the pockets of the families adenine done the most right now, for example, -- the

families that need them the most right now, for example extending unemployment, that would encourage economic growth. >> that is correct. >> the same thing would be true of good infrastructure. those would be likely to encourage economic growth. >> yes, they would. >> on the other extreme, other than building things that taxpayers can see the advantage of encouraging economic growth, how does it compare to eliminating the estate tax in terms of encouraging economic growth? does that have much benefit in encouraging job growth? >> i do not think we have produced estimates directly here again we provided a large

testimony that looked at the effects of different sources of spending policies in boosting economic activity this year and next. the policies set seemed to have of higher bang for the dark -- for the above our payroll taxes. on the lower range are things like broad income taxes, but also infrastructure spending. that is not because it does not matter when it happens but because it tends to happen rather slowly because of the planning process. >> thank you >> specifically, since you mentioned the effect of changes in the tax rate, i

believe you did a study in 2010 concerning what the effect would be up extending over the next decade the bush tax cuts, and what did you find would be the effect on economic growth of extending the tax cuts? >> extending those tax cuts by a few years provides a boost to the economy for those few years, but by the end of the decade will be a drag on g.d.p. because the effects of accumulating debt crowding out investment outweighed the beneficial affects of lower tax rates, and that is what we showed consistent with the analysis we presented.

>> it sounds great in speeches, but the actual effects of extending the bush tax cuts is to reduce economic growth by between 1% and 2%. isn't that correct? >> there is a range of estimates depending on what one does. >> that does not include plus economic growth. all of that is negative. >> i think what you are referring to when we look at the fiscal scenario, the effect of that set of policies is to boost the economy, but by 2020 to to reduce gnp between 1% line and 3.7%. >> there were a number of things in the alternative baseline that you look at other than the negative affects of extending all these health cuts during the next decade.

during the short term, if we reduce the short-term deficit to quickly with sudden reductions in expenditures for vital public services, we will actually retard economic growth in the short term. >> about is right. reduction to quickly through tax increases or spending reductions would retard economic recovery, and that is consistent with the consensus of the experience we are seeing in europe where countries that are in worst budget shape than we are and are forced by the inability to borrow to make drastic changes in policy very quickly are suffering consequences of that. when we wrote a paper about our

risk and the united states, one risk was that budget situations tend to deteriorate when economies are already in trouble, and that makes it a particularly bad time. that emphasizes the importance of congress acting before we had a crisis of that sort, but given below level of our continued ability to borrow, i think experts believe that although the changes should not be implemented right away, i want to emphasize that is not an argument against congress deciding which decisions to make. the more warning businesses have about what policies will be undertaken, the better it will be, so there is a real cost to waiting to decide.

once one has decided, there is a trade-off. moving too quickly has the cost of slowing economic recovery. >> considering the economic program similar to that the conservative government in the united kingdom has pursued is likely to present some of the same economic problems for us but it is presenting to the europeans. >> i want to be careful not to second-guess the decisions they made when they had no choice because of inability to borrow money or fear that they would be able to borrow money, so i am not suggesting they did the wrong thing. i am just using that as an example of how about sharp fiscal contraction goes away on economic art 78 -- economic

activity and jobs. >> so it is not my preferred choice, and extending the payroll tax cut is one very positive way of encouraging economic growth? >> yes, we think so. >> thank you. mr. garrett's? >> one of your heroes. and [laughter] >> just following up on a couple of waves, with regard to do what was going on in europe, we can not second-guess them.

one question i have is your presumptions on interest rates. according to your baseline the american people will be paying 1.4 trillion dollars over the next four years, but obviously, if those interest rates are skewed, that number goes up significantly, right? >> yes, no doubt. >> right now we are at the benefit of the fact we are the reserve currency of the world, and that is able to keep it down, but we saw in the private sector how those prints to change basically overnight for these various companies and that initially had good rates. >> that is correct. >> did we see the same thing in europe, that their interest rates were somewhat favorable before, but basically it overnight, the spreads extended

beyond anyone's projections. is that a fair assessment? >> yes certainly in a way that interest rates will rise more rapidly than projected. slides andtion well above the rates of current market transactions. one can essentially back out of the yield curve over the second half of whom decade. >> they are certainly not above historic averages in the united states. one only has to go to the carter years, and that would put this at a multiple of 1.3 trillion dollars. >> yes. >> in our lifetime we have seen interest rates and above what

they are. which may give credence to the arguments that we are not overly aggressive but an aggressive spending might be the direction we should go in. >> we have said there was a trade-off. >> let me go back to something. earlier last month of the bill came out of the committee, the budget accountability and transparency act. back in june, the cbo testified, by including a premium, more comprehensive measure costs that recognize the financial risks the government assumes is more costly to taxpayers than estimates suggest. do you agree? >> yes, and we believe the fair

value method of accounting for transactions provides a more comprehensive measure of true cost. >> moving on to another measure, and that is the bailout. very quickly, is there is a possibility that the chance of the future net losses exceeding current resources close to 50%, which could necessitate a taxpayer bailout for them. currently the numbers show the leveraging ratio is around for at hundredo one, which makes everything -- 400 to one. what would the implications the to the debt limit, and can you

give a projection to the next step level increase? >> you are correct but the reserves are below the minimum, but there will be no bailout required in the congress does not need to take action to deal with these reserves. if more people default than they have reserves for, there will be a credit and the estimate, and it will be an assessment that will be recorded in the budget but will not require congress to take any explicit action. what it will mean is if the fha does not get money back that will affect future government borrowing. >> we may have to pony up another $50 billion to $100 billion, and they will not have

the money, then we would have to come up with the cash to pay that? >> what i am saying is automatically within the budget without congressional action, there will be no vote about whether to bail out. >> have you seen what the impact would be on the budget deficit? >> car baseline projection includes our estimate of what the cost would be going forward, and i think that is incorporated in what we have shown. >> we have a lot of numbers, so we should try to keep the time so everyone can get a chance. >> thank you for the good work the staff does and your patience with this committee as we ploughs some of the same ground, but i think who each of your visit provides greater clarity, and i am not as grumpy

chair. shar i think there is a pretty clear path going forward, which is implicit in your testimony, and i think most of the people can get their arms around it. goode said the share represents -- the chair references the problems we have had with medicare because we have a flawed payment system more than anything else, and as long as we are going to pay for volume, people will increase in volume, and congress will file down what is reported to be reforms, and it is of bipartisan failing. congress has more volume, less value. what we have in the affordable care act is an outline of things

that your studies show if allowed to work would have a substantial affect on the cost curves. i think we could have a robust conversation if we focused on the military. i think most of us do not think we need troops in western europe 65 years after in world war ii. we can dramatically scaled-down nuclear arsenals. do we need 12 aircraft carriers when nobody else has one that is comparable to what we have got, and you do not build those overnight. i go over agriculture, and i thought that was a bright spot in an otherwise mixed bag but was offered. there is a chance to come

together and save money. i love where you talk about various scenarios going forward, but you talked about the deficit scale being up in the short term, but with a balanced policies that deal with refinement and revenue, we can end up with lower deficits without economic disruption predicted with some of the other scenarios you are talking about.

we were able to pull together information from support organizations. there were shortcomings. to be able to identify, attack, and ensure the effective management, arlington leadership needs complete data on all contracts. with respect to support relationships, the army has taken steps to better align contracts support with the expertise of his partners. arlington has agreements with the army information technology agency and the army analytic group to help manage the infrastructure. while these agreements spell out the services that ita will provide, and these are positive

steps. they did not specifically address ita's roles and supports of the requirements. they told us they were aware of their roles and responsibilities. what happens when personnel changes tax this will be important to ensure that contracts of all types and risk levels are managed effectively. with respect to staffing arrangements, they have been identified for arlington but have not been filled. arlington is reading support from the contract in office in the form of 10 positions. officials have identified the need for a more senior

contracting specialist and are developing plans to fill this new position the success of the efforts to improve contacted and management at the cemetery will depend on management's sustained attention and efforts to institutionalize steps taken today. we made a number of recommendations and our december report to improve contract management and oversight and the three areas where we found shortcomings. dod agreed with our findings and that there is a need to do this. we will continue to monitor the of their progress. this concludes by statement. >> thank you.

>> thank you. thank you for the opportunity to buy here -- appear before you today to present our findings of arlington national cemetery. we issued a report on the oversight on december 15 of last year. but testimony is based on our reports. i will discuss the policies and procedures that the current leadership team has put into place to address these deficiencies that became apparent. i will identify some of our recommendations. i will discuss some factors that could potentially affect the feasibility and viability of transferring arlington from the army to department of veterans affairs.

the army has made progress in a range of areas including chain information insurance and improving procedures to address increase from the family and public. we believe some steps are needed to ensure these changes are institutionalized and will prove lasting long after the spotlight has faded. we have made recommendations in six areas. we believe they should complete the architecture to guide new investments. they ensure they are aligned with the operational requirements. an updated workforce plan to make sure they're properly sized and trained. an internal assessment program to gauge how the cemetery is doing.

improving coordination with the cemetery's operational partners, the military district of washington and joint base my air henderson halt to ensure a scheduling conflicts are avoided. a strategic plan our campaign plan with the expected outcomes and milestones. written policies explaining how to assist the families when it is warranted. this has generally concurred. if they have begun to implement them. we are encouraged. the feasibility and advisability from the army to the va is certainly feasible. congress transferred more than 80 national cemeteries managed by the army and the 1970's.

several factors could affect it. it can lead to certain transition challenges. it can affect the characteristics that make arlington unique. it may be premature to change jurisdiction right now. here are some of the specific challenges that could arise. identifying the goal of the transfer. the army and the be a have their own systems to determine eligibility -- va to have their own systems to determine eligibility. the appropriations structure is different than the va's. congress may wish to review that. arlington provide military abilities. arlington has special ceremonies

every year. arlington is one of the most visited destinations in washington. we think opportunities exist to collaborate more with a mutual benefit of both organizations. most ability for our veterans. the staff is dedicated to establishing eligibility for burial. va officials are examining whether the global positioning system technology should be used in their cemeteries. the army already does this. since no formal mechanism exists yet, we recommended that the two departments establish one. we believe the army has worked

through the crisis. it is a sustainable path to ensure operations. whenever have to come before you again. i would be happy to answer any questions you may have. >> both of you were very helpful. you are helping make that possible. thank you. >> thank you for the opportunity to appear before you today to discuss the progress you have made. as you know, there still is a

lot of work left that we have to do. the army and the cemetery are prepared to address the challenges that remain. cigna began progress has been made. -- significant progress has been made. it emphasizes safety, proficiency, professionalism, and accountability. the implementation of technology now makes the grounds of arlington one of the most technologtechnologically advanc. it used to be a paper based operation using a typewriter and only one fax machine. calls were not answered. the work force was not properly manned or quit. the stewardship and displaying

this is paramount in our effort to restore the trust and honor our veterans and their families deserve. a former chain of custody process has been implemented to maintain verifiable control of remains throughout the process.nt and in are mean we have recovered funds. they were fully used to fund the construction of this and to make the necessary improvements to years of backlogs. you have my commitment that we will continue to examine the funding wreckers to see if there are more dollars that can be recovered to cut back. in the accountability report,

we have examined and photographed 259,000 markers and ditches. we couple them with the existing records. we have consolidated 147 years of this. these are paper based records that we used to have that and no longer there. it these are the automated records we still have. we have them in an accountable data base. the total validated one is 212,674. we are working to continue to close the remaining 18% of the cases to bring our efforts to closure.

the creation of the data base will soon allow family is and other stakeholders with internet access to search and produce a picture of each and every marker in the cemetery and to review that with a publicly available information. they can do this on our state of the art website and applications we will be launching. we have made progress in transforming the activities to position the program for long- term sustainment. they have added skill acquisition for personnel. in order to orchestrate the many activities necessary to run the arlington, we have developed the campaign plan which codifies

the long-term vision for the operation of the cemetery. it is the vehicle that the superintendent and i will use to ensure that we do achieve our future vision. it incorporates support and recommendations we have received. coupled with the campaign planning, we are developing our technology acquisition road map which will serve as our blueprints and insure our investments are meeting the needs of the organization well into the future. i wish to thank both committees for your leadership a monthly guidance as we restore honor and

dignity to arlington national cemetery. i look forward to your questions. >> thank you. we will proceed to questions. we will be on a straight 5 minute rule. he is a professional staff member of the armed services committee. is very good about keeping the five minute roll. -- rule. it is exciting that you can access records now by the internet. as a person that has a direct family member there, it means a lot to me as a citizen of our country and as a member of congress. you have identified more than 57,000 grave discrepancy still have to be resolved. i would like you to focus on what the most serious are.

what is the corrective timeline required to address the critical deficiencies? >> what we have done is we started business rules to match the photo that the old guard everyother each and gravesite. we had to match that with to records. most discrepancies means that we did not have to records. we only had one. we're finding from the civil war we only had one document. what our task force did, we now have 45 analysts. most are temporary employees who

have dedicated themselves to looking at the social security index, essences that, military records to make sure that we could find another record so that we could validate the information that we have. that incorporates most of what that is. >> i am delighted to hear that. it said $12 million was previously appropriated. you have indicated that you have recovered $26.8 million. could you tell us how the recovery was done, whether there are any on obligated funds to be found, and how it can be prevented in the feature? >> i will for start by having to all million dollars came about. theyage 15 of contract anding,

cited an audit that said 50 million was recovered. the report and the army audit report or all snap shot in time. we're in team to recover the funds. it requires us to look at each and every contract to make sure we close out the contracts and recover funds. this is how we're able to recoup the 20's is mainly saw.

>> i cannot imagine recovering that much money. i am pleased. should the department of veterans affairs assume responsibility for the cemetery at the soldiers home here in the district of columbia? >> i think we need to take a good look at this. we need to take a more detailed look. the army should keep it. the bottom line is collaboration. we will take another look. >> as you noted, given the progress the army has made, the costs it seemed to us that in my

been more prudent to give the army a chance to see if they complete their progress. it seems to us that it might be a little premature. >> i'm not going to answer this. my job was to fix this. the decision on where arlington is place, if it is transferred, do have a much improved arlington. cried thank you. -- >> thank you. >> thank you. if you were to get arlington a great right now, what would it

be? correct i would go down and talk to some people. i've not had the of the urgency to look at it in depth like i'm going to do this summer. what i can say is that being deployed for the past two years, our have to give them a zero with what i heard. i have to be honest. it is not something -- it was inconceivable that it was happening. what i saw is that everything seemed to be going well. i will say that looking at the progress that has been made, i go back and look at the reports that the department of the army has done. there has been significant progress.

onyou're asking me to put it a number scale, that would be difficult. i do not usually give that. they're probably a round, they are better than 5. >> certainly from the testimony, when the things i kept hearing was about staffing issues and making sure the issues around that are really sustained so that no matter who was there, the issues are addressed. is that one that will improve it? is there anyone that really stands out to you? >> in 2010, we identified the fact that the staff was not robust enough to be able to do the jobs there were being asked to do, particular the from an oversight function. the agency recommended that they

come down. they did. the authorized an increase of about 63 personnel. they have been hiring folks. and nothing she has them all yet. -- i do not think she has them all yet. if i had to say what really influences the score, the service to the families is remarkable. they're doing a good job but that. ceremonies have already been done well. the fact that they were done well cause a lack of oversight and some other areas. there was an assumption that everything was ok. at the end of the day, it is about establishing the process. it is all about making sure that the s o p mashes execution.

>> thank you. >> you mentioned the need for contacting specialists in senior staffers as well. what do you think is a reasonable timeframe? if we look forward six months from now, should those issues be addressed? what is reasonable to assume? >> i would have to defer to the leadership at arlington. she has identified a need for a more senior specialist. she has taken some steps to get that in 2013. there is a process to do that.

the fact that she is getting the support she needs, it is positive. our point would be that at some point if there is another urgent need, the support may not be there for arlington. it is important to put the policy procedures and have the right people in place to sustain. sustainment is the key. that certainly taken the steps to identify what she means and bring this people on board. >> what do you think is a reasonable time frame to move back? six months? three months? >> we are in the process of hiring the senior contacting professional to be on my staff. the reason why i am comfortable with the agreement we have is

because that means that we have trained acquisition professionals who are in the acquisition chain. i make sure they have the right training and levels of certification and warrants. arlington is not that large of an organization to have a contacting structure. if i had the one sr. professional staff and then reach back to the command for support, i think that will satisfy the oversight requirements. ? >> thank you. i want to begin with you. i find it interesting that you speak about contract management and efficiency of their --

efficiencies there. i keep contracts that. to be wasteful. he said the management system is not guided by a modernization blueprint and that it is duplicative and costly to maintain. what did your review in terms of why you believe that was occurring as the current deficiencies, where are they to make sure there is not a duplication? >> thank you. it spans both of the reports. the external reviews found that the 5 million that had been

spent to try to modernize the system. it did not get us very much. there are a number of reasons. they did not have the right experience. they referred to the importance of doing that planning. a couple of the systems did not give up much in terms of trying to modernize. we were required to look at 5 particular systems that were called out. we found that to the systems are active. we were able to use gps to do the mapping, etc.. one system is the va system, not an arlington contract.

there is no payment under that contract. the system and the total cemetery management system are the ones that we basically got nothing for in terms of the monies that were spent. there a number of reasons in terms of the contracts not having the specific oversights. it spans the gamut in terms of things you did not want to do for contracts. we made some specific recommendations in terms of having an architecture. >> the point that she is making is that we had made the point that the cemetery staff to deal

with immediate deficiencies. there are very reasonable steps. as they transition to a long- term path, having a good plan that ties the future and firemen back to the investments will be needed. it to be an important step to make sure that the cemetery is on a sustainable path. they can expect to complete later this year. >> also point out that there is the lack of a plan. it says to me that they cannot get there without a clear vision. can you tell me where you believe the deficiencies lie in far as not having the plan?

>> there is not a plan at that time. it turns out that the cemetery was working on one. we saw for the first time the army's campaign plan. that is their jargon. among the kinds of things they look for, there are goals and objectives. performance metrics a you have some record of knowing how you got there are not. there is a process to go back and look at yourself and as did i get where i need to go? we saw the plan for the first time a couple of weeks ago. we have not had the time to fully review it. it does seem to have the basic fundamentals that we would look for. >> very good.

>> we now go to jim cooper of tennessee. >> the title of this hearing is an update of accountability. i am worried we're hearing a bunch more about accounting. they think accountability mean some was in charge and they had to account for what they did and did not do what they were in charge. we're not hearing much about that. they discovered irregularities. it was jean 2010 the secretary of the army responded. we have a hearing now code 2011. now it is 12. we are years into this.

not one person military or civilian has been punished in any way for one of the worst scandals. over 200 airmen and women. to my knowledge, there's been no accountability either. what is going on? i love your new systems. i love software. we must remember this is a core function of the u.s. military. there's no more premiere of location and arlington.

we have not even identify it the folks to be held accountable. i think great progress has been made. how do i the folks in the eye and says there has been accountability? any talk about what it should be, who in the army was in charge? this is way beyond this. i appreciate the limits on your supervision. this is about accountability. the best i can tell is there is done in terms of holding. what are we going to do about this ta?

members of congress presumably this should be handled. i want to be fair to all involved. years have passed. what is going on here? i hope that these committees will not be part of any sweeping under the rug and whitewash. shouldn't there be accountability? thank you. i did not take an opening statement. i did not want to stress the committee. we have more work to do. >> thank you for your increase. they certainly need to be addressed.

>> thank you. that is a hard act to follow. >> i am a cpa. i am trying to figure out the record keeping progress. the report went through a model where in 1999 there was a system that i guess was a va cemetery system. did you have anybody but at the state of the arts -- their people that control cemeteries all over the united states. there is a full industry of that. there's nothing unique about handling remains to the military.

>> these are the veteran of their system. -- these are the veterans affairs system. scheduling is the system that be great stones, markers are ordered from. that is how arlington uses the system. thats a scheduling system va uses. did the interment system was 01 at arlington. i inherited it on june 10. -- that was used at arlington. i inherited it on june 10. the difference is the variables for a burial at arlington a

somewhat differently. it is a system that we do not need to. services are being held at arlington today. they're looking with the records look like. is it all automated? >> the members of the committee had actually seen the paper records and the machine. they do not have one paper

records. >> you keep track of who is buried where. >> yes, sir. >> the research is being held. what does it look like? >> it follows the exact data we reported in december 22 progress. this is how we are counting for each and every burial. when they had sun is said, take the photo of its peers -- when

that is set, take a photo of it. this is a little crude, maintaining the inventory of the folks who are buried where, that this electronic now for all new interments. >> yes, it is. >> thank you very much. >> thank you. i am trying to get my arms around this. you said that in the '70s at some point the jurisdictional responsibility for the cemetery was transferred to the va. >> they manage 82 national cemeteries. under the act comedy transferred to the department of

veterans affairs. arlington did that transfer the soldiers here. >> is there any trouble like we are experiencing at arlington at any other cemetery? >> we have not audited anymore be on the activities at arlington. i cannot say. we are focused on arlington. >> prior to what was reported, have there ever been an audit of the record keeping primary? >> i am not aware of one by gao. we have not to my knowledge. >> was arlington's management required to report at the end of fiscal years or at any point

back to the army budgetary processes anything that happened during the year? >> as you do your resources, the hatch report to the department of the army. >> we had this many ceremonies, not specifics. >> it would be the resources required. >> going to the grave site accountability, this is a complex issue. there are some sections within. they're not clearly marked. there will be issues. do you have any recollection of anywhere before to thousand eight -- before 2008. we are finding sections that do

not have people and then? is there anything prior to this disaster? how long have you been involved in this since we started? >> my first day was on june 10, 2010 when the secretary created the executive director position. it was to be accountable for the management of arlington. >> everyone is pretty much sense -- since ightince 2008 new. nothing was reported? >> nothing that had to do with

miss march graves or accountability. >> has there been any documentation of the issues of ?s. mark graves since 1999 ta we have some issues prior due to paper records. anything 699 when we when digital? -- since 1999 when we went digital? >> the graveside accountability task force was in the process of reviewing all 350,000 records. they were in the process of reviewing every record. it did not seem fruitful for us

to do that since we already had an organization doing that. the report was issued late december. >> i am new to the committee. i am listening to mr. cooper. we are talking about accountability. these issues should have come up long before. i am sure someone knew this. this is not just pop up in 2008. it is interesting that we have no players that have been identified. >> thank you for your testimony. my consent as a veteran is specific to the remains of those who have been lost in

afghanistan or iraq or anyone lost in combat. i can remember being that there was no extraordinary care. there is the fact that you have a civilian personnel whether by the army are by the air force that respect me our main not be there. it is not necessarily share it. -- that respect may or may not be there. it is not necessarily there. when there is a violation of a regulation, it is a lawful order.

uniformed military personnel can be prosecuted under the military justice. civilian personnel are not there. the violation of the same regulation. i think if anything comes out of these hearings that the chain of custody for those who have fallen in battle, that chain of custody for the remains of those who have fallen must be by uniformed military personnel only. that is what is most upsetting about this. we are in this discussion saying things are getting better and changing. if this all were handled, and understand support services.

i am nearly -- narrowly defining things that need to be changed. i do not believe we would be in this situation right now having had a career between the army and the marine corps. the kind of discussions that we have about the kind of dereliction of duty that has befallen arlington and dover. i know dover is not a part of this discussion today. i simply do not believe we would be here today if we were doing that. i understand there is a broader question. we're talking a retired personnel and dependents and other thing. they must come out of these hearings. it is that only a u.s. military

personnel handled the remains of those that have fallen in battle. i will open it up if anybody would like to comment on that. >> i yield back. >> thank you very much. you raised a good points. we proceed to mr. runyon of new jersey. >> thank you. i somewhat agree with what my colleague has said. i think we all agree that we have our arms around this. we have to put teeth into it. we talk about accountability. i have the opportunity to chair the va subcommittee. i have dueled jurisdiction here.

we are beginning with the sam houston cemetery experiencing some of these pitfalls that we have here in arlington. again, the word "accountability" comes up time and time again. if there are no teeth into what we are doing, actions have consequences. no one has the fear of a consequence coming down whether it is through contracting or your predecessor. how do we do this tax do we do it through the contract to? and dick how do we do this? do we do it -- how do we do this? do we do this through the contract? we have to address that issue. there are multiple factors that have to be in there. we have to pull people

accountable. at the root of it, most of these problems go away. withey're moving forward our plan, and i know you are still building the road map of taking this mean you'll and handing it to your predecessor, i know we are building that. to have your teeth and those procedures also and throughout the process of gaining the information and the pitfalls you are finding to make sure all of the information is in there. it is truly a disgrace what we have done to the cemetery and to what i am finding in the va. i know being briefed by the va people that you are working closely together because you have similar problems. we camera together.

it is our soldiers at the end of the day. there are people that need to be held accountable. we have to find a way to do that as a committee. i applaud you all for your efforts here. there are a lot of things. it hurts people every day when these loved ones call up and say i do not know if my loved one is a buried were they say they are buried. there are some cannot even prove. it is heartbreaking. i know we have our arms around it. we need to sink our teeth into it and make sure this never happens again.

>> unless there is any further question, we should think the witnesses for being here. thank you for making a difference. arlington is the shrine of our country. the respect we have for service members, this is so important. >> i think there are a couple of things here that all of us would like to know. we feel like the submission of a lot of time has passed for the investigation should have reached a conclusion. there should be fine tunes and action.

it may not be under your direct jurisdiction, i regret there are internal investigations. i think both of our committees look like a definitive answer as to where that goes on. the same questions were asked about when we could find its actions. it has been a long time. it is very reasonable that a conclusion should have been reached by this particular point in time. i hope that comes back to both of our committee so we understand where things are. that is an extraordinarily important question. we talked about some of the nuts and bolts. it leaves us all in a very

uncomfortable position. i think mr. cooper for bringing it up. it is a very important issue. we look forward to hearing something definitive back from the army as to where that is. >> i believe the general wanted to comment on that. >> as we went through the investigation for what we had with the outstanding issues, the earning graveside reservations in particular, we look at violations. if it is criminal, we handed over to the criminal division. we will do the best we can to do the best we can. >> it'll be great if you will

let us know when cid passed it over so they can communicate. >> i look forward to working with the chairmen and their ranking members, too. they can come and let us know what the status is. this would be beyond your purview. there should be accountability. we cannot proceed without it. >> another thing to take that i asked you to consider, i think the suggestion that the leadership change includes -- chain includes someone in uniform is something that is a very significant suggestion, one that as strategic planning is looked at, it is something that

garners your serious consideration. >> we shall be adjourned. thank you everyone for being here today. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] " with ray mabus. richard fisher of the federal reserve bank of dallas talks about the economic challenges

facing the u.s. and the limits of monetary policy and global competition. that is like today at 12:30 p.m. eastern on c-span3. >> this past week, lawmakers continue negotiations to extend the payroll tax cut for workers. they will continue the work on tuesday with a public meeting. >> i do not hear a fundamental disagreement in the philosophy that if people get a ged that enhances their lives in the ability to get a job down the road. i do not hear a disagreement with that. i hear an excuse as to why not do it but the fundamental philosophy of trying to rearm people with an education so that when they go into the workforce they have an additional tool. >> to link a social insurance program designed and

functioning to provide financial support when you lose your job to a requirement that you have to be in restraining, i think would not work for the practical considerations. it contradicts the notion that you are speaking. >> it is online at the c-span video library. >> fix week on "q & a", ray mabus discusses the 75th navy secretary. --