press, outside of chicago, folks were not all that stressed about the possibility of having protesters here because that is part of what america is about. rahm was stressed, but he performed wonderfully and a chicago police did a great job under some significant pressure and a lot of scrutiny. the thank you to everybody who endorsed the traffic situation. what can i tell you? that is the part of being a world city. this was a great showcase. despite being a 15 minutes away from my house, nobody would let me go home.

i was thinking i would be able to sleep in my own bed tonight. they said i would cause even worse traffic, so i ended up staying in a hotel. which contributes to the chicago a economy. [laughter] [applause] >> president obama is wrapping up four days of international summits, including the nato summit and the summit at camp david. we will have more from the present leader tonight as he delivers the commencement address to students at a high school in missouri. the president's comments start life at 9:15. -- live at 9:15 eastern. a look at the future of the u.s. jobs market and how it impacts trade issues and competition with asian countries. business owners across the

nation take part in the small business administration conference. it is focused on the importance of -- it starts at 7:00 eastern. >> consumers are very frustrated by not that they're mobile devices are working so slowly. >> the universal service fund, competition for wireless space, and two new commissioners. tonight at 8:00 eastern on c- span2. a discussion on whether the naval gets rid of one of its combat ships. it is called the lcs. we will hear more about that at this event hosted by the cato institute. this is an hour and 40 minutes.

i accept the promotion and i assume it comes with a raise. we are here today to talk about the navy and the surface fleet. we are what i call relative -- we want to have smaller u.s. military and fewer wars. were we do have course, we like for the force to come from the sea and not stick around that long. we like to give a bigger portion of the smaller defense budget to the navy. i will introduce the speakers in the order that they are speaking.

if you see our first speaker quoted in the newspaper, please assume that thanks to the strange likeness and expertise, i was planning to tell him there was not enough room for both of us in d.c., but i notice that he does good work as a national security investigator at the project on government oversight. he specializes in department of defense personnel issues, weapons procurement. focusing on the combat ship. he also looks at the impact of lobbying on u.s. policy. he has a book coming out on the subject sana. -- soon. we have eric labs. he has worked since 1995 at the

congressional budget office. he specializes in procurement and budgeting. he is used to the cameras from his vast experience in congressional testimony. his reports on naval shipbuilding and programs are required reading if you want to be up to date on the navy. he got his ph.d. at mit, where he was part of the world's finest security studies program. >> absolutely. >> and then we have roberts work, who has been the under secretary of the navy since the start of the obama administration. he handles the day-to-day management of the department. he served 27 years as an officer in the marines, working out is a military assistant during the clinton administration. after that, he worked at the

center for strategic and budgetary assessment. in these positions, he worked on defense strategy and programs, transformation, and maritime affairs, and produced a lot of writing. he has a master of science and systems management from usc, and masters of science from the naval postgraduate school, and a master's international public policy from the johns hopkins school of the advanced international studies. it gives him about one few were masters then we normally want for arcada speakers -- for our cato institute speakers. last, we have chris preble. he is the author of three bucks. -- books. he also has another book that he

co-edity enough to with me. he has his ph.d. in history. he was a commissioned officer in the u.s. navy and served on the uss ticonderoga from 1990-1993. i will turn the microphone over to ben friedman. >> i am looking forward to talking about the fleet. i am investigating -- it is going to represent a third of the combatant fleet. it is a very important issue to talk about, especially today.

we found some troubling issues with the navy's first combat ship, the uss freedom. working with whistle-blowers close to the program, i learned about the equipment failures, cracking, design issues. a certain door that is designed big enough to slide your hand through or the rampant corruption throughout the interior of this four-year-old shepherd the navy called these issues, but they never -- for your free did four-year-old share. members of the house armed service committee told us this issue building one . -- shipbuilding 101. we are confident that the senate will support this investigation. my hope is that it will further

clarified a number of questions i have been asking about the program. when i first began looking out the combat ship and working with the whistle-blowers, i learned about so many problems. do you think then maybe it should still use this ship? the answer was no. it was an emphatic note with an expletive in front of that. i was told it should be used as little more than a training vessel. the idea that it would deploy at singapore was laughable. even now, they're still not convinced it is a good idea. this should continues to have issues, continues to have cracking problems. equipment failures continued to plague the ship, we are told. including engine failures. the question i kept asking, we

know the other variant, the general dynamics, we know it has some problems, too. it has a lot of corrosion issues. which is worse? we have been asking this question since the navy and congress agreed. initially, the plan was to do -- have these two teams build two ships and have them compete. pick the best ship. we decided not to do that. based upon the information we have available, i think it is the weaker of the two variants. there is a lot of information we still do not know. we're not sure that dod knows. they have not received any testing or evaluation reports from the program testing office.

the navy says they're working on a report. maybe they cannot answer the which is better question. we do know that we're buying a lot of these ships without knowing what you're getting for our money. my fellow panelists said that we are not exactly sure how it will finally operate a fleet. why do we have 12 of these ships under contract if we do not know the testing results? another good question to ask, should be purchasing two very different variants? idea to your convincing arguments. it is better for lockheed and general dynamics, but for taxpayers, i am not convinced it is a good idea. if your concern to the military readiness, i am also not sure if

it is a good idea. for the first time, we're seeing these two ships side by side. it is pretty cool to see them out there. when you see them side by side, you really see how different these ships are. it is hard to imagine two ships that did the exact same mission looking more different. we have lcs1, and it looks like a traditional ship. and then we have lcs2. it's very intimidating looking at ship. the difference is -- they go far beyond the appearance. they will be very costly down . -- down the line. that is going to be costly.

it makes sense, your spare parts, the supply chain will be different. there may also be issues with compatibility of the mission. we do not know yet, but there could be. all of which drives up costs and compete -- if these ships can did the exact same thing, why should we pay more? another important question is whether or not it is a combat ship. it is a question we have been debating a lot lately. even though, that is literally its middle name, i am not convinced. at least not in the way that we traditionally think of a combat ship. it is going to be operating as part of eight network battle group and will only conduct independent operations in love right areas. if that is true, why do we needed at all? -- in low-risk areas. if that is true, why do we need it at all?

it is not going to be a low flat area and it may not have the carrier strike there. unfortunately. it is not currently prepared to fulfill its mission. development of the mission modules has been slow, at best. currently, we're looking at a 900 that cannot see or stop--- a mine hunter that cannot see or stop mines. i liken it to a swiss army knife. it can do a lot of things, it just cannot do a lot of things well. i will hand over the rest of my time to the rest of the panel. >> i want to thank ban for inviting me here today.

the views i expressed here today are my own and they're not the views of the u.s. congress. i would like to free my remarks with these three questions. can the navy afford a shipbuilding plan? is the navy buying the right ship? if there are negative or on certain answers to those questions, all other alternatives? the short answer to those questions are -- probably not. is the navy buying the right ships? i do not know. are there alternatives? yes, but most of them are not cheaper than the current programs. can the navy afford its shipbuilding plant? over the last 30 years, the navy has spent $16 billion a year. new construction, a refueling of submarines and aircraft carriers, all that sort of thing.

the navy's 2013 s shipbuilding plan proposes to spend $16.8 billion a year for new construction alone. when you are finished adding in all the other things, you are talking about $18.5 billion a year. of that money, a lot of this is going to be loaded for beyond. the average for the total amount of money being spent on the plan is $13.7 billion a year. that averages $18.5 billion for the years beyond, it is higher even still. we do not know yet how will hold sequestration scenario is going to play out. it seems clear to me that whether we get a change in the budget, that may have a further impact on the amount of funding available. asked -- is the navy buying the

right ships? the plan over the last few years has made a lot of changes to the forces. a truncated the program out three ships. it has restarted the 51 . it is proposing to modify the line that currently exists. it has maintained with a fair degree of consistency 55 lcs's in that program. a recent report has raised some questions about whether it is the right program for the future. it is a very long reports, a very detailed report. some of the bottom-line concerns are that it may cost more than the navy thinks it is going to cost and raises questions about whether it will have the appropriate margins of stability and growth and power and

cooling. that ship has been taking a lot of raft these days. -- wrath these days. i am not going to talk about the construction issues. not because they are not important, but i did not find them conclusive. i will let others talk about them in more detail. the concept is an innovative plan. it is a mother ship. we can have a long discussion on that subject alone, but that is probably the future of the navy. i would be hesitant to cancel a program that has pursued this path. the navy is going to have to prove this concept in an operational environment. i would like to make a few observations about the mission

and design. the navy justified the ship -- the navy did not do an analysis of alternatives ahead of the program. it performs what my counterpart has called an analytic version birth. for reasons that are not clear to me, it is not clear why it needed to be 40 or 50 knots in terms of the speed. because of the power and the speed, it has a very limited range at high speeds. it has an average range at slow speeds. it is justified as a critical wartime assets. over the past two years, the justification has evolved more to peace time emissions. maritime security, engagement with allies, a port visits, exercises, ascension enforcement.

-- sanctions enforcement. recently, he would be hesitant to send the lcs into an anti- access environment during wartime. he would be much more inclined to keep it because it will prevent a war because it will be performing those engagement partnerships. are there alternatives? one alternative is that if you think we will be buying 24 l if it is going to be

using these ships, but you could up-arm a joint speed vessel. you could come up with a ship that would be suitable for the same sorts of missions that they state they will be doing for less money. that is one possibility. that is a cheaper option. another option would be looking at the coast guard's national security. u.s. navy turning a course for tomorrows lead, at the under secretary made the argument that he would bite nine maritime security for doing these types of -- by nine maritime security for doing these types of missions. he found that the -- it would be

a useful contributor to the fleet. however, this is not a cheaper option. the national security is the more expensive ship than the lcs, even before you make some changes. it might be a better fit because it has on the order of three times of range of insurance. in terms of the large surface combatants, if you did not find that it is a compelling story, there are not a lot of good alternatives. you could use -- it would have the growth margin, the power, all built into it already. however, it is going to be a more expensive ship. where does that leave us? there is the iron triangle of

navy ship building. if you find you do not have enough money to implement your program, you have three choices. you can spend more money, you can buy cheaper ships, or you can buy fewer ships. the spend more money option is not going to be viable. the navy has gone down the path over the last five years of looking to buy cheaper ships. the lcs itself was an expert -- an effort to buy an inexpensive can patent. even with $100 million model, $550 million ship. that is not a bad deal. you go back to the question of whether it is the best fit for the missions it will be doing. the result will be buying fewer ships. the question becomes, how small a fleet is too small?

whatever we discussed today, this should be the question that limbs in the background. -- looms in the background. thank you very much. >> good afternoon, everybody. pleasure to be here. before you can understand the lcs, you have to understand fleet designed. this is a radically different fleets design of any u.s. battle force that has been ever created. i want to take a couple of seconds to walk through the different generations before i talk about the lcs. there is a myth that today's fleet is nothing more than a smaller version of the cold war

fleet. nothing could be further down the truth. from 1945 on, the united states navy went all and end to the guided missions regime. most of the munitions being fired at sea would be guided weapons. one of the best tacticians the navy has ever produced said all this is about is about a new weapon, a long-range missile to take advantage of our communicating technologies. the first generation, each of these generations had a specific operational problem. everything is about to going after guarded weapons. each of the generations can now able differently. the first generation, we have 6500 chips -- ships, 1945.

a lot of those ships were decommissioned. all lot of them went into the reserve fleet. it was a blessing and a curse. there was a way congress was going to give you a lot of money. -- there was no way congress was going to give you a lot of money. in nuclear attack on the soviet union, what you needed was to keep the soviet bombers away from you needed a whole bunch of the radar because you're going to do them air to air. we feared the soviets got copies of the german 26 submarines and pretty much made obsolete all of our escort's during world war ii. the priority was to develop the guided weapons and go after a couple of things. we only built 40 new combatants.

that is it. they did not have any guarded weapons. most of them was a weapons alpha. we had 67 conversions of world war ii ships. the second generation, now we're faced with nuclear-powered submarines and anti-ship cruise missiles. the entire focus of the fleet was to get more anti-air war capability. the emphasis on battle force capable ships that would go with carriers and protection of shipping ships that would go with conflicts.

would they have gone under the high intensity combat? of course not. 16 conversions we take old cruisers and we put missiles on them. we have all sorts of different conversions and we took 1400 world war ii destroyers and we tried to make them capable. third-generation now, we are focused on the guided warfare weapons regime. high intensity warfare, there was going to be a collision of these battle networks. we built 106 third-generation ships. you never ever by every ship to

go into battle. you cannot afford it. it is not worth it. you do not need it. we did a couple second generation and ships. we return to make those ships a lot better. all the world war ii ships were gone. we're going to all digital combat systems. we introduced all sorts of new combat systems. this fleet is old and a guided weapons warfare mishima -- are urging. -- regime. after these three generations, the navy lost interest in small combatants. we build 774 torpedo boats. we had submarine chasers. we had all sorts of gunboats. we were a small combat and navy.

a very small percentage of 6700 ships. in the first combatant, the first generation, we found out that small ships cannot carry the guided weapons you need to fight the bad guy. there were failures. the only state in the fleet for about a 15-16 years. the second generation, we tried something with the gunboats. we build 17 of them. their average year of service was only eight years. there was no need for them. they were created because of the cuban missile crisis. in the third generation we build six hydrofoils, high-speed, low- drag ships. they had an average year of service of about 11.5 years. what i'm trying to tell you is we have come to the fourth generation at the end of the

cold war and the u.s. navy has decided the smallest combat should be 4,000 pounds. the fourth generation, the key operational problem is now planned attacks. it's about rapidly defeating an enemy invasion, so we need is a lot of capacity for a lot of guided missiles. you wanted to connect the joint battle network. you were doing everything independently at sea. we divested all combatants that did not have the system on it or the launch system. we standardized everything. it was enormously beneficial. the same propulsion train tour of the fleet, the same combat systems. we improved our bottle networking in gradually said weaver going to even go bigger and get rid of the 13 patrol

coastal ships and we were going to get rid of them. we built 13 because special operations said they needed them but it turned out to be too big. 14,000-ing to go to a ton destroyer so that the smallest fleet was going to 116 combatants and the smallest ship would have been about 9,000 tons. it would have been excellent at bombing an enemy or stopping an invasion, but as far as engagement with all the other world navies, it was really a one-note to the navy. here is where we are. the key operational problems are no lan-based anti-access the niall network's with naval components and you have to fight your way in to do we need to do. you also have to remain cost- forward problems going forward. how you solve that? multi-mission combatants,

cruisers and destroyers with the big vertical launch missile sites, a bigot, high-capacity, they're focused on the big fights. those are multi-mission ships and carry the capabilities with them. then you go after smaller multi- role ships, like a swiss army knife, but it does even better. everything goes ship in the fleet is self-deployed. -- every single ship is self- deployed. every single ship is now self- deployable. open-combat systems, change quickly, and a new emphasis on what i call the second stage systems, unmanned on board vehicles. underwater vehicles, but rigid inflatable boats.

the surface fleet supports the fleet designed, a total force battle network, which is a series of capability containers from small to extra-large. multi-role at the low end, multi mission at the high end, extremely versatile. you can put any capability you want in here. that is the fleet design. now, i say we have second stages systems. people look at the lcs and the people who do not like them are in three different groups. the first is people who just do not understand the fleet design. it is different than any navy that has ever lived or fought. totally different. they just do not get it. they do not except i just told you, ok? we can debate that, but we are confident we are on the right path. the second one of the focus --

are the ones that focused when we took over and they were a disaster. there were all sorts of problems how we we do stand designed it. we're well on the way of getting it on track. the third group of people who just do not like the ship itself, the design flaws in the ship. some people in the first group to do not get fleet design, they want to see a frigate. other people want to see gunboats. we must look at the contract for the first order that has four remote weapons systems on it. it 25, a 250. you can put anything on here you what. 40 knots, 80 feet. the second stage system. everything we are building is

either self-deployable or will take it with it. this is how we get the patrol boats to the flight. littoralk about the combat here. then we will have some questions. the liberal combat ship represents the turn of the small combatant fleet design. i have no doubt there are a lot of whistleblowers because they do not understand what this does to the navy. there are so many who believe if you are not in a frigate, cruiser, or destroyer that it is not a warship. they are dead wrong. they are dead wrong. it is about 3,000 tons. i believe clark was brilliant when he picked this size. if you look out these small combatants, they do not survive in this navy. it has to be big enough to be able to have the margin to do something with -- 3,000 ton, multi-role, emphasizing second

stage systems. it was so different that we build these two on r&d money. these are are in the platforms. -- these are our endy platforms. of course there are problems. we built them to identify the problems. we just had a very successful test on this module. it will do better right now and themcm's in the fleet. when we go to the spiral two band 3, it will just get better. the anti-surface module is designed to fight these small boats. those who think this is not a warship are nuts. on day one, this will be fighting against the threat. underneath the air-defense umbrella of the broader fleet, it will engage the services engagement zone out to the limits of its 57-meter tanner,

about five nautical miles. nothing is getting past it. we have a dual engagement zone where helicopters and missiles from the ship -- we lost the system that would have been great, but you do not have to redesign it, but we will just take another missile. that is causing a problem and i admit it. in the hours on, you're going to do air. this is designed to fight as a part of the fleet on day one in that environment. it is designed to sweep mines on day one in that environment. and has limited growth potential. you can make any type of module you want. is it survivable? it goes up against a frigate or another cruiser destroyer with a lot of weapons, it is not. he found himself in a destroyer

of against battleships. that's done a good situation to be in, but did he turn away because he looked at the manual? he turned into the fight. that is what commanders do also. cost? there's nothing out there that can match the cost of this ship -- and of story. i would be happy to listen to you tell me i'm wrong. if you cannot show me a ship that can do this for a smaller price, we will take it right now. why should we buy when we do not know what we are getting? oh, my goodness. we have built four claude jones and we have no idea if they would be able to do the job and we found out they did not and we stopped building them. we sent ships to sea with a system before it worked. we sent the 26 radar before it worked. you put these up in the hands of the fleet and they tell you how to fix it and then you do it. what do you what the ship to do?

you design it for a mission. can it do the mission on day one? not necessarily. every single ship we have ever built is made to a bold and this one is built to evolve. this will have about 27 of each type. look at the belt snap cruiser. it was the same boat but it was different. one was a double-endure, one was a single-vendor. -- double-ender, the other a single-ender. really built line of each. 26 ships in a class is more than you need to gain efficiency. we will go down to a single combat system so any vehicle can go to any other system on the other. we are sinking up with command control and communications and they will be able to go from one

end to the other. essentially, the mission guys can go on any ship and they do not care. the only people that will be different are machinery put an electrical. this will be an extremely effective platform for our fleet. do we know everything about the vessel? nope. are there going to be problems? yes. the problem that ben was talking about, that identified 62 things. we went into it and created a matrix. 25 of the 62 are flat wrong. they are incorrect. not one of the other issues that were highlighted by them or "aviation week," we are unaware of and did not have a plan of action. they mentioned a crack in the lcs. wheat notice that. it has already been fixed. this is a learning maybe.

this is a navy that is not afraid to say we have made a mistake. if we take this to see and we see what works and does not work, we will fix it. if we cannot fix it, we stop building them. from my perspective, the fleet designed is an awesomely cable design. lcs is the ship we need to fit this design. there are a lot of skeptics. this is first as a small combat so everyone in the navy will be skeptical. it has not proven itself. it has a new manning and maintenance scheme. we have to make sure it works the way we wanted. then we have to do the mission module. ladies and gentleman, i will tell you right now that this ship will sail in the fleet. it is a warship. it will be ready for war. the sailors to fight on this ship will be darned glad when the time comes.

i look forward to your questions. >> bank you. thanks for attending, those of you watching on line and on c- span. i want to thank our conference staff. charles will tell you i have been wanting to do an event or something, a paper or both, on the navy for a long time and i'm pleased on how well this came together. i cannot think of anybody more qualified than secretary work. that was an excellent presentation. i'm thankful to him and eric for being here. i see a number of familiar faces in the audience including a couple of my classmates from the george washington university nrotc. i am a navy partisan. i will admit it. i'm from maine.

this is the, of course with the naval shipyard. -- this is the home. by the way, the cards were stacked in a certain direction from the very beginning. i'm not going to pretend otherwise. i am a navy partisan. i think it is particularly important for those of us who care so deeply about the navy to have this kind of a discussion, okay? if we do not scrutinize every single one of these decisions, and i admit we are making his job harder. he is used to that. that is what he gets paid the big bucks for, right? we need to have this kind of discussion because we, as navy partisans, if we do not have this discussion, others will have that for us, including those who do not have the same kind of commitment to the service fleet that we do. but it's how i come to this issue.

the lcs problems, we know about this. look -- i know a thing or two about deploying on a first in class ship, okay? in march 1990, the boat had been in the water for nine years and we were still working through some of the problems associated with being the first ship in the class, okay? sanders did it can take time. -- i understand it can take time. they have responded to these issues. the have believed they address these issues and they have a plan for getting this on track. i just want to dwell for a moment and not on the specifics that was raised about lcs 1, but i want to look past it. there are alternatives and i do respectfully disagree with secretary work on that. we rode a papery few years ago making the case for a successor

to the british. we think there is an alternative -- a successor to the frigate. there has been a bit of a change in the last few months. i think we are in the minority. many people in the service community said there was a lot of skepticism all along because it was smaller and wanted a big ship with big guns. there has been a lot of skepticism about small ships for a long time, but people are coming around. commander salamander wrote last week that "the sad truth is we are well past killing this program, though we will bemoan the opportunity cost for a decade, this will make it to the fleet peak of the big questions are -- -- make it to the fleet." how will we manage to make it to give this the best optional platform and how we ensure we deploy this in a manner that does not necessarily curtailed

our sailors? lcs will, for many flapping from the cheap seats, be the gift that keeps on giving. i'm one of those flapping. are those that the deserve a second look? do we really need two different types? should we revisit the decision to go with two very different designs and not a down select? this was supposed to be a competition. at the 11th-hour, the navy decided not to have congress affirmed. again, i want to emphasize that i am not opposed to a duel by in principle. i served on a ship that was. when another class cruiser pulled up behind us, i did not know if it was one of those ships until i walked on the

deck. most people, including those service people, if they do not have whole numbers memorized, the same thing goes for these. if you have not memorize whole numbers, can you look at two class of destroyers side-by- side and say which is which? anyone at all who looks at lcs 1 and 2 side by side knows these are two different ships. what does that mean? i will tell a story here. when i pulled up, ready to go on deployment, i could walk down the pier in any class and did not matter, vertical launch or the original ship by was on, walk down the passageway, from the bulkhead, i could march down. i understand that there is a statute on limitations doing

this is expired. i was not supposed to do it, but i cannibalizes that new construction balls once, ok, in order to make sure it was ready to deploy. those kinds of advantages of a dual bye of the same ship. it there is the training pipeline. when we got ready to deploy, i had two second class petty officer is in my division, two of the finest enlisted men i had never dealt with. one of them made senior chief and another made chief. they had never deployed on my class before. the qualified in about a weekend they were engineering officer on watch by about midway through the first deployment.

the training pipeline below the waterline was identical. some of the other training for the other systems, the same guns on the destroyers, so i am worried about that. this is a problem you can solve with more money. there will be some training that is unique to the vessels, and i want to commend that i am sympathetic to the idea of having multiple kreuz assign to a single ship and you can have some movement. it makes sense, but how does the pipe line support that? can you truly deployed a guy who starts out on lcs 1 to 5 to 6? that is my question. other concerns -- manning. this has been raised. they are supposed to be minimal remand, ok? -- minimally manned with a core crew of 40.

that is undermanned and now the navy is considering increasing that. there is some speculation there looking at increasing the crew far more than that. when you do that, you trade away some of the core advantages like the alternatives. my bottom line is we are trading dozens of small warships -- and i am not opposed to the smaller warships, not at all, but we are treating them away, including the frigates, in lieu of a smaller number of the small warships. for a vessel with a single mission in mind, not a multi- mission, my dealer, yes, but that is where it ends. i think undersecretary work made

a compelling case and i'm not opposed to that principle. the subject of trade-offs, one vessel against the other, i have to say it. we have made the decision to build a very large aircraft carriers, 100 plus tons, at least $14 billion to build the next one and i'm shocked. that is 28 lcs's. is thart right? the opportunity costs are not in the service fleet. we have an opportunity cost versus the all-surface combatants planning to build 10 of the ohio class follow one and the target cost is $5.30 billion in this year's dollars. two months ago, the estimated the lead ship would cost $11.70

billion in the cbo estimated it would be $13.30 billion. i'm curious if you have revisited that yet because that number to me looks pretty daunting. this is a forum about the surface fleet, but these are opportunity costs if we decide to invest so much that we are giving up some in the shipbuilding budget unless you believe that the ship building budget is likely to increase by 50%. it's important to dwell on these numbers and prepare these two against each other. let me be clear. it i do not have something against submarines. i just do not think we need 10- 12 to have a credible deterrent. on trying to move from a nuclear triad to a nuclear dyad even if the submarine does survive and we turn out that we do not need all

three legs, but i do not think these need to be nearly as expensive as the current projections. but he closed with a somewhat bigger picture beyond what already has been said here. i want to see a few things about the navy service fleet matches -- mission. are we going to remain the world's fleet? is that the goal? the key proponent is reassurance, discouraging other countries from defending themselves in their interest. that is what that means. they are reassured, secure. here in washington, there is a notion that one country providing these services, because other countries would not do it as well, or they would just mess it up. it's just better for us to be doing those things. let's look at how these works. the recent case in the south china sea. the filipinos expect that we

will defend their territorial claim against competing claims by the chinese. the united states navy will also do this for taiwan, brunei and others. they are not worried because the u.s. navy has their backs. in the context of the surface fleet, and the lcs specifically, we are building a coastguard cutter. that is what this is. in other countries, they are choosing not to build anything at all. now, they have grown accustomed to this and have sheltered under our umbrella and the have become dependent on the u.s. navy and they are not worried. many people here in washington like it that way. they like being the world's please send a guarantor of public security or the global force for good, the latest recruiting slogan.

others are less inclined to protect themselves and their interests, and that's ok as many in this foreign establishment here see it. i see things differently. my colleagues here see things differently. we dispute the claim. it depends on a single superpower. at cato, we do not think it would be a bad thing to contribute more to global security but we doubt they will do so so long as the united states taxpayers are picking up the tab and the u.s. navy is on the front line of every potential dispute. we are lonely, but not alone. most americans desperately want us to shoulder the burden. 79% of americans feel we spend too much defending ourselves.

these think we spend too much defending others and 4% think we do not spend enough. then ncno mike mullen proposed a 1,000 ship navy, a system in which the usn would remain the power second to none and he envisioned other countries had te go and could contribu to global security. our plans seem to be heading in the opposite direction and i hope it is thought to late. thank you. >> before we get to questions,

you were very brief. do you want to say anything in response before we go to questions? it then i will. this one is for bob work. alternatives to lcs were mentioned. if the navy were forced by congress to not buy lcs, what would be the first choice as an alternative? >> if we were told to truncate, we would build the burk line until we could understand what we wanted to do. the national security cutter, i was writing that as "if you could afford it" as a presence

ship, or the national fleet station ship. the national security cutter cannot operat the mission modules of an l. -- of an lcs. it would only be good for sailing around. the do not believe it is a viable option. there is really not one on the market that we could build up. we have talked about this a lot. i would assume that you could build a good forget for $750 million. all the costs overseas to not put in your vastness that we do. -- put in the robustness. it would take several years to design, several years to build. if we were told to stop the

vessel right now, it would be disastrous for the u.s. navy. make no bones about it. the size of the fleet would shrink drastically. we do not really see anything available on the market that would be automatically better than what we are building now. >> second question for any who wants to answer before. to the audience, we were talking about the future of the surface. maybe there is a theory that the future of the surface is to become the below surface navy because of the nature of ballistic and cruise missiles with better technology means maybe metal objects on the surface of the sea will be drifting further shore until they might as well be under water. i am particularly interested in what the navy's view on that is, but anyone else who has views on that, too. >> looking at the 30-year ship

building plan, that jumped out to me. if you look at the plan, your submarine fleet is getting smaller. your surface fleet is increasing marginally, your service combatants. a lot of the issues you just said, we have the chinese, some of these positions that look at our big carriers as giant targets. if we are meaningfully talking about projecting a force and controlling these seas, you have to subjugate for taking other combatants. i would love to hear more from the navy about why there is a decision to go away from submarines in the 30-year plan. >> there are three or four different schools of thought. the threat to surface vessel, a

threat to any naval vessel, is unquestionably going up. supersonic cruise missiles proliferate so that threat is definitely going up. this is great if you only want a fleet for war fighting, but if you want to sailed the ocean and preserve peace, a submarine really is not the vessel to do that. a submarine is a warship. then there are the new-navy fighting machine that says you take your packet of 90 big destroyers and you atomizing them for 300 or 400 smaller ships and it makes the targeting problem very difficult. that is good in principle and if we're going to design a sheet from a clean design, maybe we would do that, but we're going that way in a different direction. we're going after unmanned systems.

then there are people who say we should just go completely unmanned come on see come under the sea, over the sea. the sea, under the sea, over the sea. . after networking and you try to make your network or powerful and allowing it to compete. . after directed energy weapons and electromagnetic weapons which allow you to fix the disparity in between the enemy magazine ashore and were relatively limited magazine at sea. we can preserve that until it is time to make a move, but we just do not think it is there yet. we have not gone away from submarines. 20'ss true that in the that is a result the bust of building a lot of submarines and we cannot build impossible to

replace the four or five that will retire each year. we are committed to 48 and we will get there. it is just that we will go through that trough. each of the fleet has a problem. the submarine has a problem in the early 30's. the surface fleet has a bottom in the 30's because we cannot buy enough in the 20's to build to offset the retirement. the amphibious ships are hurting right now. when you're trying to figure around how everything works together in a constrained budgets, you make trade-offs. we're very committed to submarines. we will go through a trough as we try to get out of it. >> ok. to audience questions. please wait for the microphone so that everyone here and watching on tv or on their computers can hear. announce your name and affiliation. try to end with a real question rather than giving a speech. first question.

yes, sir, in the back middle. there he is. >> this question is for undersecretary work and it's not about the lcs. you commented that we do not need forget's. there is some indicators that things could be changing in the next 5-10 years. i'm wondering if there is a decision with of the environmental change with t china that what would we do in that contingency? the pacific is a vast blue water that you need long and mullins -- long endurance ships. with the soviet model with a large continental power, we see

that model clearly with china. with the aspect of maritime commerce that could potentially work with their energy independence, we see another indicator that we may need to protect our own, is coming through the region. also, with the lessons of history, two world wars were pretty critical missions protecting ships and we had to develop ship class's pretty fast, some of those you had on your slides. air-sea battle was another. these are over a vast area to try to counter their capabilities and it seems that the indicators are leading to an era where we may need a forget. forget to that point, what will we do? >> again, this goes back to free design and forrigates. we are in the guided munitions

regime and you count the battle force missiles carried by a ship. cruisers, destroyers, it is very hard to delineate what it is. we have decided to build what i call large battle network combatants with 90-122 missile cells in them. not too many other navies do that. we have overcapitalized. a 600 ship navy, we were building to that. that was a signpost for the mid- 1990's. at the high point of that, we had 73 cruisers, guided missile cruisers, and destroyers. that was with a 600-ship navy. today we have 84. we have said we are going to have a big top end and that is where we put our money. if you're going to build a frigate, i would argue that if you drop down to 75 big boys, cruisers, a larger battle that were combatants and you want

frigates, you would not buy them out of the lcs but out of the big boy tonnage. then you say, for wartime, what do you get? about 48 missiles. we need is something to escort your combat logistics' aboard ships. lcs was designed for its anti- summary module as a barrier platform to drop sensors and sit there on the line and go after enemy submarines. we looked at the ships in the pacific and we said we needed to be able to escort combat logistics' and now it will have a variable that sonar with a torpedo alert system on it, with a helicopter. it will be every bit as good an asw as court as the big seven ever was. if we need to add anti-air

warfare capability, at 3,000 tons, it has margins to use at sea sparrow missiles. if we want escorts, we would build up from lcs. if we want frigates, build down from cruisers. you can mix and match. the real key is to have a lot of on ramps and off ramps. if we need to buy fewer carriers, we can go to large deck amphibious ships. we can do all sorts of things. it needs on ramps and off ramps, right now, we just do not need frigates. >> a question of range. 1 and 2, we were trying them

out, but can you speak to the range, the normal operational mode. how long can they operate independent? how are you addressing the early vulnerability? >> the high-speed of the ship, there is a healthy debate within the fleet on whether you needed a ship with that high-speed and small interceptor boats that you could shove out the back end. on the normal speed profile, it will be operating on diesel lesss than 15 knots. a fig7 has to light on a gas turbine. when you're operating with diesel come it is extremely operational. it is when you want to go 40 or

more than new bern fuel fast. it all depends on how you do this. the next thing is they want the ship to be able to close and the average speed of advance has to be about 16 knots. the follow on to lcs 1 can get at least 16 knots on d diesel which means it could keep up unless it needed to get summer in a hurry. in that case, it would just have to refuel a lot. this can get into very small ports all over the world. we could not base 4 frigates in

singapore. we can base 4 lcs's. they will be able to exert an enormous amount of influence. we will have 8in bahrain. on ramps, off ramps. it takes 4.56 ships to get one forward under a single crew system. 9 ships, cruisers and destroyers, to keep any 2 forward. the lcs design is one out of two. we have to prove it, but right now we think we can. chris' point on crew size is right. the document said it would be 185 sailors. took out to sea and we were off. it was 215.

we do not think it will be a 50% bump, but the core crew will be larger. we are thinking about increasing the bonsais. you can have 100 extra people then with no real problem. we are working it through. >> in the middle straight ahead. >> for years, this had reminded me at my early stages in the navy when the player was a magnet, someone to suck up the attention. the lcs has become a magnet.

if you took it off the title, two-thirds of us would not be here today. why is that? why are they having such a hard time getting people behind it? >> can i start? bob would rather respond. i think thet navy has a real messaging problem. he says it will be ready on day one. on the other hand, the cbo says it will not be sending in to a robust environment meaning it will take quite a few days before you can take down the anti-access network. in that case, the navy really has a messaging problem. lcs is built to level one and survivability. level one is in logistics' ship.

level two is amphibious and level 3 would be cruisers, destroyers, and aircraft carriers. level one means will be escorting ships that we would not normally send in a combat environment. i really would like to get bob's answer to this because i think there is a serious disconnect between different parts of the navy on how this ship is going to operate in a wartime environment. >> both comments are spot on. this ship is so different, more different than anything we have ever put to see which is why the skepticism is so pronounced. you have to prove it. on the waterfront, it is in a missouri shstate of mind. you have to show me. what do you think about the ship? we just sent two to lcs 1 and

sat down with the crew. we wanted them to tell us everything that was wrong. the first issue was criticized. they want a horizon-range weapon. got it. now we're looking for a replacement dr. we lost that missile. there is skepticism on the way we're going to man and maintain it. this is healthy skepticism. we have to be able to show the fleet. in the past, it has been the cno in the civilian leadership that has been trumpeting this. now people are starting to see it and you're seeing a change on the waterfront and they are saying, okay, if we do this to the ship, we can do that. this is what happens whenever we go in. we are not over the hump yet. we still have a messaging problem. what the cno was talking about with the anti-access area of the

niall system, he was asked a specific question about the western pacific. -- area of the niall system, you're not going to send this in the high end the battle network. it would be operating as a combat logistics' network. it would still be in combat, but not the high end system. we will have eight lcs's in the gulf. they are inside the environment of the war went down. they would go in and start seeking fast and short crafts. they will go out to try and sweet mines. it is a level 1 + survivability ship. it has more survivability features than a combat logistic ship and it is designed to operate under a bottle network. if it finds itself against an opponent that out guns it, produces the navy has been born,

it will have a problem. on the three missions and is currently designed for, fighting against fast attack craft, begins diesel submarines, and against mines, it will be more well-armed than any ships currently doing that mission now. you have to look at it in terms of fleet design and what this means to the fleet. >> ok, in the back middle. >> thanks. i'm from defense news. undersecretary, if i could ask you a follow-up on something that chris just said? originally, the navy likes as much commonality, but we moved away from that because we now allow the contractors to do more which is why the secretary complained about sun-sub-sub

classes in the strain. how are we not going to get in two distinct buses, two different sets of machinery? i know the combat system harmonization initiative is under way, but that is still a bit out. are we going to get into a position where you have freedom and independence class guys like which wereh the mcm's subordinate in this kind of looked similar? thanks. >> this is a learning navy. if you take a look at our history and you see some of the things we have bought and we have been more than willing to say we have made a mistake. one advantage of having two in production right now is if one of the two turned out to have more problems, we have been other options. -- we have another option treat let's assume it both will be able to perform missions and

perform them well. lcs 2 has enormous capability with aviation. lcs 1 is the swarm killer, much more maneuverable. you have all kinds of different options. we like having two options right now. if we build two 27-ship class's, that is more than enough to be able to sustain many of the ship class as we have had before, the charles addams, nine ladies. usually we do not have ship class is bigger than 27. what we will focus on our combat system, n commonality, weapons systems commonality and then you are really looking at the polls, machinery, electrical

differences. -- looking at the hulls, machinery. we may sync to one. >> in front, sir. >> formerl person and lockheed martin. >> i think it's safe to say there is the view that there really is not alternative to lcs. if that's the case, and i believe it is, going forward come what should the navy's priorities be to lcs? how do get beyond the criticisms given the fact this is the ship the navy will buy? what should the priorities going forward be with respect to lcs? >> i would agree we're going to have a minimum of 24.

come 2015 in anticipation for the budget that year, the navy will have a decision to continue and if they do, how? to the continue both types are just one? contrary to what people may not believe, the navy has gone through multiple swings in the program. it was initially going to be down select. they changed the acquisition strategy and then in december 2010, decided to change the strategy at the last minute. the navy has a wide set of options open to its starting in 2015. they will have 24 ships at that point and they can decide

whether they want to fill the fleet out after experimenting with it in the fleet, as bob has said, whether they need to do something else, modify the lcs frigate design? it will not be cheaper than that, but it will be cheaper. my answer would be, and i hope the navy's answer would be that they do not know , see what they can do and what they cannot and then have different off ramps for the future. >> i do not think it is true that i have resigned myself yet. i have not resigned myself yet

to the inevitability of this, especially the inevitability of 55, ok? i have been concerned about the dual buy strategy of two different ships. this is two different ship causes, not one. it is not unreasonable for those of us who are concerned about the cost to question why the down select was not executed the way it was supposed to be. we should revisit that. it is not their intention to single up, but we recognize that may be an option in the future. that would be my statement as well. it is a question of where and at what point do you choose to do so and what criteria do you use for assessing which of these two ships -- again, they have

different advantages. but if you did single up, which advantage would you privilege over the other? what would you build in lieu of the other vessel? let me be clear. when i talk about an alternative, eric and bob seem to agree that a frigate is cheaper. that may be true. i'm not willing to accept that, but maybe i'm talking about a corvette-sized ship. 1500-2,000 tons, that is still unpopular in the navy culturally. they have had difficulty dealing with a smaller warship that they just would not buy in. his argument is the reason they're fixed on 3,000 tons or more is that you could get a bye in by the fleet. with all due respect, the fleet is adaptable and they can be convinced of the merits of a smaller vessel if the alternate

is a less capable of the muscle that is twice as expensive than twice as large. -- less capable and twice as expensive. it is still worth asking the question, can we develop an alternative? in the meantime, could be experiment with keeping the remaining frigates in service slightly longer and spend a few million to keep them in service to buy us time to develop alternative? that is what we talked about in the proposal been and i put on the table. -- ben and i put on the table. >> in spite of criticism of the lcs, i am actually a fan of this mission, of going forward, of getting into the anti-access areas. you can temper my criticism with

that, too. i think i would agree with chris that the dual bye is still an issue. i'm not convinced we need two variants to do this mission. it is a very important mission. the inflection point we are talking about, with the issues in iran, the strait of hormuz, that is why i use the example that i did. they're very important and we need to make sure we have access to those areas. i am a fan of the mission, even if i am an ardent critic of the lcs 1 in general. >> think of the jsx. we convinced ourselves it was one single aircraft with three different missions. we got ourselves in trouble because of his three different aircraft. the f 35b is as different as lcs is from lcs 2.

they look the same, but it is an entirely different aircraft. yes, for the longest time, we decided maybe we should justice singleup, when the get the advantages of both vessels, you think may be over timethe lcs 2 becomes the pacific ship with long legs. it has the problem with endurance. huge aviation capacity. lcs 1, small, can get into any part you can think of in latin america or south america. barry maneuverable. if you want to up gun, you can. having these two different ships right now we believe is a tremendous advantage. i do say that 3,000 tons makes the ship more accessible to the fleet, but the reason why cno chose 3,000 is that it is the

one that could operate two of these helicopters. that was the limiting design. you need rigid inflatable boats, unmanned systems, and helicopters. that is what this brings to the fight. if you need to up gun, it could carry a twomh60's very easily. that was the lower end of the mission that we wanted, but it made it easier to sell. to robbie's questions, here are the six things we have to do. we have to address the issues that then -- ben brought up. there will be more issues that we find, but get hull 1 and 2 fixed and get them in production. second, get the corps crew size right. we know we are probably too low.

3, single up the combat systems. if we do that now, we become interoperable within the fleet and solve problems. four, make sure the mission modules work. the beauty of this ship as you can make the changes relatively quickly. you have to prove to the guys on the waterfront that the maintenance and manning scheme will work. we will not be able to do that until we get more than three. talk forlet's not just think about these remission modules the ship house now. let's think about all the other mission modules that it may be able to carry on board. if we get those things right, then the navy will be all in. if we get none of them right, we are not going to build a ship. we are confident we can solve all these things, but we have to prove its. >> i think the key to oversight

issue for congress is the mission modules. in my mind, the number one question, which needs to be addressed. when are they going to be delivered, how much will they cost, what is the capability, are they truly interoperable? can you take it from one and put it on the other and vice versa? those are the key questions. we talk about the baseline cost of the structure, but you got to factor in the mission modules. that is -- that is the critical one. questionsrab three and hopefully they will be quick. we will go over there, the gentleman in the middle in the blue.

>> we had talked about the navy using nfc's. it cost $750 million. this is an institution looking at your chip of u.s. taxpayer dollars. why doesn't the navy buy in to the training system? >> down here. >> you were talking about off ramps. if resources are the the main factor here, you saw all the problems, but resources start to stair step down. do you have the analysis and

place to support the off ramp that the others are bringing up? >> finally, right here. >> on that issue, eric labs said it does not have the money. the question is, what do you really need to buy, and what will you buy if it comes out to be your several billion dollars short of what you need on an annual basis? >> i will take a shot. i wrote a report that looked at that question. at that time, circumstances would suggest the coast guard would not be interested in the lcs because it would be too expensive and not have the range. the evolution in the program,

assuming we get the fixes right, the problems that ban has pointed out, might be worth a look again from the coast guard's. of view. if you get a nautical range of -- maybe a $450 million platform, it would be worthwhile to investigate this question and answer whether it can meet their requirements or not. >> i defer that one. the coast guard is struggling to get there seventh and eighth national security cutter into their budget. they have a more difficult time than we do. they have what is called the offshore patrol cutter. i do not know what is called

now. they have that decision facing them, and it may turn out the lcs is an option, but i cannot speak for the coast guard. they have a tight budget and once we get this vessel into cereal production, the 10th ship coming off of the line is going to be an extremely cost- effective ship. if you derated the ship, if you only had to go 27 knots, the lcs would not get a lot of range. we just went to the biggest strategic changes in my view. some people look in the 1990's. i think there is nothing like this since 1954 when eisenhower came in. he was faced with a war in korea. he needed to get out to balance the budget, and he made some

major changes. if you look at what we just did, the prioritization implicit -- if you read the strategy, this is the most maritime friendly greenbank national security strategy document since the 1890's. that is my view. if you read this priority, you can not execute the strategy without a strong navy-marine corps team. if the resources are cut dramatically from where we are, we would have to look at the assumptions we made. we will get to 90 cruisers. we have 62 right now. we will be able to build the other 10 between now and 2016. we will finish up the three. we have 90 of these big boys. is in serial

production. we will get to three and the chips by two dozen 19. there questions are, what happens over the long run? people say -- i cannot look out and say what is going to happen. what i can say is we are prioritizing now. we are breaking away from the 1/3, 1/3, 1/3 split. if we take more cuts, i would expect more prioritization to occur and the navy to be able to build its 300-ship navy. i could be totally dreaming. what would we buy? we are buying the right stuff.

we have the best cruiser and destroyer in the world. the lcs is unlike anything out there, and i'm convinced it will be something. virginia is the best ssn in the world, and down. there's nothing like the wasp class. you take a look at that ships we're building, every single one of them all the best in the world. what would i buy? i would continue to buy what we are doing. i would come back to you and say we have to have a different plan. the surface navy as a very bright future. there is a lot of people that would like more chips, but the plan we are on now we think we can afford and we think it is what the nation needs. >> thank you for coming. thank you for charting --

technique you for helping me think our speakers. lunch is upstairs, one for up the spiral staircase. [captions copyright national cable satellite corp. 2012] [captioning performed by national captioning institute] >> consumers are frustrated that their mobile devices worked so slowly. >> night at 8:00 eastern on c- span2. tonight live for marks from president obama as he delivers the commencement address to the students of joplin high school in missouri. it has been one year since a tornado destroyed six schools.

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j. edgar hoover. some people think i should make a statement about freedom of the press. [unintelligible] i think i should stay out. what is your judgment on it? >> you should remain absolutely solid about it. >> listen at 90.1 fm. c-re streaming act spanradio.org. >> this is one of the markets where people vote for -- do not vote for the party. this is the city that votes for the candidate. even though this heavily republican, midwest, you are seeing more of that in recent

years here in the midwest. they are voting more for what the person stands for. >> export that heritage and literary culture of wichita, kansas. >> this house is the only remaining structure from the 1865 to 1878 time, and it was an important building in our history in that it is a residence, but also the headquarters of the wichita town and land company that came down here to create the city of wichita. >> on june 2 and 3, on c-span2 and c-span3. >> a discussion on the national flood insurance program, which allows insurers purchased policies through select companies. this is about 40 minutes.

host: on monday, we have our your money segment looking at how $5 are spent, what the program is about, who participates. this morning, talking about the national flood insurance program. our guest is carolyn kousky, a fellow at resources for the future. talk to us about why there is a federal program. when we think of insurance, we think a private insurance, for things like fire or theft. how is flooding different? guest: the idea date back to the 1950's. it was created in 1968 in response to a widespread belief that private flood insurance was not readily available for american homeowners. if it was, it was extremely expensive. congress created the national flood insurance program and decided for it to be a partnership.

communities design the program. when they do, they have to pass minimal flood plain regulations and the government that makes insurance available for the residents of that community. currently, homeowners can ensure the structure for up to $250,000. they can ensure the contents for up to $100,000. insurance is also available for businesses which can ensure each of those up to $500,000. there are 22,000 communities participating nationwide that covers much of the area of the country that is subject to flooding. there are 5.5 nil it -- million policies and represent $1.20 trillion in coverage. host: who has these policies? has yet worked? there are over 5.5 million active policies. the average claim of a payment

is $15,000. that does not sound like an enormous amount. how far does this go in helping those who have suffered from a flood? guest: the average claim is not that high. claims a lot of small flooding, but it does not destroy the whole structure. if you look at the average claim payment after 2005, the average claim that year was $95,000. we do get these severe events that can cause more severe damage. we then saw an increase in the claims. host: congress is working on the national flood insurance program, but unless the senate also does the same, the program actually runs out of money on may 31st. guest: it has been operating under a series of short-term extensions since 2008.

several times, it has completely lapsed. what is going on right now is that there is an effort to try and have some comprehensive reform of the station for the nfip to extend it for five years. the legislation has already passed the house with overwhelming bipartisan support, i should say. the senate has passed a bill out of committee but has not yet acted. the house passed a short-term extension to the senate time to act. but people are looking to see this week is if the senate will pass a short-term extension or whether they will take up the more comprehensive reform. host: what happens to people if they have a flood in the fall in the window when the programs expired? guest: noted policies can be written which can be an issue when people are trying to buy or sell properties in the flood

plains. for property was already in force and expires and a flood happens, you can still submit a claim payment, as long as there are bonds available to claim. people who already have a policy will not be in too much jeopardy. they just stall waiting on writing new policies. host: carolyn kousky is a fellow for resources for the future. let's go to the phones. first caller, kenny, huntington, new york good morning. are you with us? caller: yes. well, i live in an area slightly off of huntington bay. every time it rains, the

streets get flooded. it was only during irene that i finally had to put everything up in my apartment and leave because the area flooded badly and it ended up in my apartment. i would like to know, seeing as i did not have any home owner's or renters insurance at the time, even if i put in a policy, how long would it be that i could still make a claim for any damages that may have been there? host: after the fact, is there anything you can do?

guest: after the fact is too late. you need to be holding insurance at the time that the flood occurs. there is also a 30-day waiting period for when you can sign up and when it takes effect. in response to the caller's question, for most homeowners insurance, flood insurance is not included. but is also an important thing to keep in mind. if they want flood coverage, they need to purchase it through the nfip. an important aspect of the program is that, for homeowners located in 100-year flood plains, on the nfip map for designated areas, flood insurance purhcases are mandatory. there is a sub-class required to

purchase. host: here is a map of teh 100- year flood zones and where fema considers areas that could potentially flood. florida, good morning. caller: how are you? i appreciate you taking my call. i live in a flood plain in florida. i have to buy flood insurance because i have a mortgage. i know there are certain people in this same allotment that are exempt from having flood insurance even though they still have a mortgage. certainused as to why people it is mandatory for them and others it is not. maybe you can help me out on that. guest: flood insurance purchase is mandatory if you are in the

100-year flood plain and you have a federally-backed loan. there are some lenders were this would not apply, certainly you do not have a mortgage or alone, then you are not required to purchase flood insurance. there has been ongoing debate about how well they have been forced this precedence. we do not have good data for those with qualifying mortgages. it is hard to say the extent of compliance with the mandatory purchase requirement. after a few years, lots of people let their policy lapse and it is unclear whether lenders are around to make sure they hold onto that for the life of the loan. host: our guest is a managing scholar at the wharton school at the university of

pennsylvania in philadelphia. our guest, carolyn kousky, mentioned what is going on in congress and the flood insurance program. you can see here in this story from nola.com, some debate over how the flood program should go forward. tell us about the reforms that republicans in the house want to make to the program before allowing it to get reauthorize. guest: the first thing is to talk about how prices are set. right now, prices in the nfip, there are two differences in rates. one is a determinant on the fema map. you have higher rates of your in the 100-year flood plain. there's also a zone for areas subject to wave action that have a different rate structure.

on top of those difference in rates ,fema has two classism policies, those that refer to actuarial where the premium is said on the modeling of expected it damages and historical damages in the area. there is a small group of policies, about 20%-25%, that receive discounted premiums or are referred to as subsidized policies. they only pay about 40%-45% of the full premium. to have been concerns over the nature of these discounts. they were initially have been put in by congress to encourage communities to participate and encouraged homeowners to purchase insurance. it was thought it was not fair that people who may have located in the 100-year flood plain before they knew of the

rest should be penalized. it was thought that the discounts would phase out relatively quickly over time because, as structures were modified, the idea is that the discount would phase out but it has been persistent. those paying discounted rates are also some of the most risky properties and they see the highest claims and highest damages and they are not paying enough to cover it. that has been part of the problem. what happened in the early 1980's is that fema decided the combined revenue should be enough to cover the average historical losses which in accord required increasing the rates. fema was taking in enough for the losses. in 2005, on the amount of

claims they paid out was more than the sum of all of the claims they had paid out through the entire life of the program which plunged the program deeply into debt. the nfip was designed as ole years there were excessive payments that it could borrow from the federal treasury and repaid with interest, which works find that there is a few losses, but in 2005 and had to borrow billions of dollars. it peaked in 2008 after hurricane ike it is currently at $17 billion and it has been a focus of the reform efforts with the current premium structure that they will be unable to repay this debt, essentially. one of the key things in the house and senate bill is phasing out those discounts on that sub-class of owners for business owners, second homes, vacation homes, the riskiest

properties. they differ slightly. every time the property turns over or if the policy lapses, they phase out the discount. host: there is been some push back on the program generally overall. let's listen to this republican from michigan. this is debate from last week on the national flood insurance program. [video clip] >> this charges some of the highest risk areas a subsidized rates and charges some other areas astronomical rates. you can use my home state of michigan as a great example where our residents have been forced in, charged thousands of dollars, even though there is little to no risk of flooding.

we look down at the water, not up added. we pay multiple times more in premiums than have ever receive in benefits. mr. speaker, the people in the great state of michigan are getting fleeced by this program. host: is it really based on geography? guest: it is widely understood that the program is not priced or designed to suffered catastrophes like in 2005 and put us in the terrible position now. the question is what to do? there is broad, bipartisan support for handling the discounts.

they want to bring rates closer to what would be risk-based rates. that is something in the reform bill that would move forward. more radical reforms, there is less consensus. she is one of the individuals that believes we should simply abolish the nfip and privatize it. that is getting attention from other stakeholders and it was one of the potential reform options considered by fema to improve the nfip. there is a little bit less consensus on that. my personal view is, while i understand people questioning why the government is involved in a program that under-prices of risk, there's a lot we still need to investigate and understand before we launch a complete privatization and eliminate the program. this gets to one of the concerns about flooding in particular. it is a catastrophic risk. there are years where there are very few, but then again have a

very severe loss year, like 2005. that is very different than other lines of insurance, like automobiles, where the claims your to your are more or less stable and it is easier to match premiums and pay for them. to ensure a catastrophic risk, like flooding, you need access to a large amount of capital, like an event like 2005 occurs, it does not bankrupt them. you can build up reserves of bonds. you can also provide private reinsurance, more broadly diversified more global companies that can help primary insurance companies manage their risks. both of those strategies are expensive. the costs are passed on to homeowners. private insurance for these disasters can often be

expensive. one concern is if the nfip were to privatize that homeowners might see huge increases in the premiums that they face. that may not entirely be the case, but the question is then what happens to homeowners who cannot afford it? do they simply drop coverage? we need to see what the implications of that are. host: democratic line from california, good morning. go ahead. you're on with carolyn kousky. caller: i question is why? i am in the central valley of california and we are mandated to pay for flood insurance because they say we are in a 100-year flood zone. we are paying the very same rate they are paying in new orleans, the high risk flood zone.

they are using 1986-1987 maps. people like my neighbor, for instance, who was on social security is in the flood zone and is mandated by bank of america to pay. they take her social security checks and leave her no money to live on. this is ridiculous. we even have a dam raised 23 feet to not be in the 100-year flood zone. they are still going by the 1986-1987 maps. guest: you raised an important issue as we think about improving the program. the first, the outdated map. it has been a problem. fema was criticized for years because a lot of the maps had

not been updated in years or decades and this was based on outdated data and methods. in response, they have launched some programs to update the maps, digitize them, bring in better data, more and affirmation. the have been rolling out of the country. not everywhere has received them yet. hopefully when those come it will more accurately reflect risk and incorporate new flood control structures, such as the dam you mentioned. the second thing you mentioned is more difficult, that these rates are based on these very broad class's. you are mapped in a 100-year flood plain and you pay the same rate. if you take that home and put it in new orleans and you pay the same rate. there are lots of people who

say that will create issues. host: can you challenge this by going to an assessor? her neighbor is only partially in the zone or in the area. guest: you can challenge the designation in their work is a way for communities to do that, especially when these new maps come out. there is a way for individual property owners to do that. if you think the map does not reflect local conditions, maybe you are up on a hill, you can appeal that to fema and get marked out of the 100-year plan and get deducted from the requirements. you cannot change the rate if you are mapped in though. host: off of twitter. talking about the national flood insurance program. our guest, carolyn kousky, a

fellow at resources for the future. next caller, republican line. caller: my next question, my parents had a flood. it basically in covered half of the 2x4's, half the dropped ceiling, etc. insurance is insurance. my brother is a lawyer and he could only get half of what was lost or damaged because of the flood. could you speak to that? guest: two things to mention. there are some things that are covered and some that are not covered within the national flood insurance program. i do not know the details with structural damage, but this has also been in an issue with basement damage.

in some cases there are excluded, so it's important to know that. you choose the coverage. this is not the question raised, but you choose your own coverage level whether it is $10,000 or $100,000. you will also have to pay the deductible on the policy, which is standard at 100 -- at $1,000. host: "how and where do i buy flood insurance?" guest: they are purchased through "write your own" policies through fema and it is all underwritten by the nfip. host: democrat in portland. welcome.

caller: you kind of just answered my question. first, i wanted to point out that my lender requires me to carry flood insurance because i do not own my house. some people do and some people do not, well the probably own more of their house. my question to you is fema considers me in the 100-year flood zone but portland, ore., does not. my street is on the sand bag route. house specifically do i asked fema to reconsider this issue? on their plan, my house is included, but on the city's my house is not. what can i do? thank you. guest: there are many ways of

designating the 100-year flood plain depending on the data that you use. there is difference in the way that the army corps of engineers and fema does this. i cannot specifically speak to what the city of portland is doing. for the regulatory requirements of the program, it is the fema map that matters. if you think there is an error, there is a process of submitting a letter of appeal. you can google the website and enter that in. host: when was the last time new york city flooded mentioning the image that we showed on the screen. guest: what exactly is a 100- year flood? and actually means there is a one in 100 or a 1% chance of

that magnitude flood occurring in any given year. if you have two in a row, statistically you could go more than 100 years. there is a 1% chance every year and that is difficult for people to wrap their heads around. they say that translates into a 26% chance that your property would be flooded over a 30-year mortgage. the requirements of the national flood insurance program, in or out, the changes your re in the mandatory purchase requirement, but the risk varies continuously through the 100-year flood plain and beyond it. there are places beyond doubt will be flooding and have higher damages. and then there will be others that will see less frequent flooding. host: bedford, pa., independent scholar. good morning. are you with us? let's move on to sand point,

idaho. hello, james. caller: i would like to explain the problem we have. fema is taking control of our property. in 2008, we purchased a property for nearly $900,000. we did not choose the flood insurance. in december of that year, now we have gone from a 100-year flood plain to a floodway, so fema has mandated that the county should remove us, throw us in jail, fine us on a daily basis. we seem to have no option but to move off our property. the house has been there for 20 years, they went back 20 years

and said that the house was improperly permitted. we are in the process of losing our property, going to jail, or getting fined in this power grab by fema. i would like to hear your comments. guest: that's very troubling. guidelines within a flood way are much more restrictive. if you have been mapped in that zone, there is much tougher requirements. what is a bigger concern is that when these new maps come out, homes will be mapped from outside of the 100-year flood plain it to within it. fema had policies to help homeowners with that adjustment. if you have a policy at the time that the 100-year flood

plain is expanded, as long as you maintain your policy, you can keep your less-expensive rates. there is actually a group those policies for homeowners outside of the 100-year flood plain with low loss histories and those are called preferred risk policy. you get a much lower rate. if you have one of them and get a map in a bun hundred-year flood plain in a new map, you can keep that for two years and moved into the grandfathered category of paying their rate as if he were outside of the 100-year flood plain. both of the legislation is include that for many years so that there is not such a shock to homeowners going from paying low rates to much higher rates. host: off of twitter. is this true? guest: that will vary by lender. they think there is significant

risk, they could mandate it as a condition of the loan. that is outside of the national flood insurance program. it is similarly how their require homeowners insurance. host: new jersey, independent caller. welcome. caller: my sister lives in fort lauderdale, fla., 5 miles in from the beach. the flood maps work redrawn and she now pays $6,000 a year in flood insurance. she is 67 years old, working as a nurse, and would like to retire. one reason why she cannot is that your early flood insurance bill. i live 10 miles in from atlantic city and i'm not affected by any flood plain or danger maps yet, but there have been numerous articles that in new jersey the keep adjusting the flood area inland. when it comes down to, really -- i'm an independent.

i think both the tea party movement in the occupied movement is that this is a case of the wealthy transferring their expenses on to the backs of average people. i give you an example of a community just south of atlantic city. you cannot buy the smallest cottage there for under $1 million. most of them are multimillion- dollar houses. they are subsidizing their flood insurance. when the beach needs replenishing, the state and federal government has to replenish them, but if you want to go on their beaches you have to get a tag and they do not provide facilities. you cannot find a place to park, and a public restrooms. this is just another case of why i am so frustrated. but this has become a ripped-off nation. of the things transferred to the middle-class. the wealthy get subsidized.

the poor get some supplies. people like my sister, a nurse, and i'm a retired police officer, we pay the bills. thanks. guest: the caller raises two important points. as we have talked about already, the types of rates can vary substantially. properties at risk from storm surges and hurricane-related flooding, if they are in that special class of policy, they have a much higher rate. i believe the caller is sister is in one of those zones and she could easily be paying the rates. that is a lot of money to pay especially when that is only flood insurance and they often need homeowner's insurance policy to cover wind damage. because this only covers the flooding, knocked the wind.

insurance in hurricane areas can be steep because in assuring that can be expensive. the war broad point is the question of who should really be paying for the damages? it is something that we need more conversation about as a country. the people who choose to locate in hazardous areas, should they pay most of the costs? there is only a disaster when people are there in structures to be damaged. in 2005, should it be born generally by all the taxpayers as a whole and it is our duty as a citizen to help others? we have not come to a good agreement yet on how those costs should be apportioned across society. it is my personal opinion with regard to the national flood insurance program that the rediscount are structured is in need of serious reform. the reason for having those discounts is people who did not know about the risk are no longer valid.

these maps up and around for a long time. we should replace those with discounts based on the need for income so that these premiums where it is a burden can get a discount for those reasons and those that can readily afford to pay them. host: carolyn kousky with resources for the future, recently with the wharton school in pennsylvania and a study in risk-management. she has a ph.d. from harvard and did undergraduate at stanford. alberto weakens, the first of the season. it hovered off teh coast producing showers and serving as a reminder that the 2012 atlantic hurricane season is just around the corner. it starts june 1st. guest: that is why it's imperative that congress figures out what they're going to do and not let this lapse as hurricane season is beginning.

it brings up a point worth mentioning. the national flood insurance program has over 40% of policies in florida. host: republican in beaverton, mich. caller: when the comments or guest made about how we can "share the burden," i guess, of disaster relief. i live on a small lake in michigan. fema did a flight photograph and the bottom of my hope is -- home is 12 feet off the river. two dams create a lake. two feet means it would go over

the spillway, so we would have to have a catastrophic flood before my home would be touched by high water. but i will be forced into buying flood insurance. york, with the previous caller about sharing this, i am paying flood insurance, which i will never use, for people that are not really smart and have built structures below sea level. every couple of years, we have to go back down and rebuild the dykes and it's ridiculous. if i built my home below the flood level, shame on me for being that stupid. guest: the costs right now are not based on the risks that people face. there are homeowners with lower rates paying much more than those with higher risks.

they should take it up with fema. the rate varies in relation to where the water comes. if you are up out of it, you should have lower rates to compensate you for reducing your risk. to date, there has been an unpleasant assumption that doing these broad categories of risk would not produce enough benefits for fema, but i think it is not in need of much more research. host: independent caller from texas. caller: i am an insurance agent, but the banks are selling all of this for home buying, auto insurance, they are throwing all the agents out.

you now have a rep. i don't know what that is. in oklahoma city, i lived there and we got hit twice by tornadoes. fema had good sandwiches, but as far as insurance, you do not get any help. they gave you a $2,000 shelter, so now everyone has a shelter. anyway, we are being driven out of the insurance business thanks to our governor, governor perry. thanks. guest: a couple of responses. fema does not offer coverage for tornadoes. you'd have to talk to your primary insurer for homeowners.

disaster aid and relief efforts are often managed by fema. there are some instinct interactions between the two. but they are separate programs. it is governed by the stafford act. you must request the presidential disaster declaration. fema advises the president on that and perhaps through other agencies. those are separate programs. host: why not get the government involved?

guest: there is some state involvement in other lines of insurance. california offers earthquake policies. lots of gulf coast states have state-run insurance for people who cannot find a policy in the private market. host: carolyn kousky, part of our your money segment this week looking at the national flood insurance program. thank you for coming on to speak with us. thank you for joining us here on "washington journal."

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> tomorrow we will talk about the 2012 campaign. the republican senator don johnny isakson of georgia and joins us to look at the government's role in the housing market. we will discuss middle east diplomacy with the ambassador to morocco from the 1990's. "washington journal" is live every day at 7:00 a.m. eastern. >> consumers are very frustrated. the smartphones are working so slowly. >> robert mcdowell on the universal service fund, competition for wireless space, and more, tonight at 8:00 a.m. eastern -- it cut p.m. eastern on cspan 2.

tonight, live remarks from president obama. it has been 1 years since a tornado killed 161 people. see the president as a speech at 9:15 p.m. eastern. earlier today, president obama held a news conference at the end of a two-day nato summit. he discussed several topics including the u.s. economy and the future of military operations in afghanistan. this is 35 minutes. >> thank you to my great friend, rahm emanuel, the mayor of the city of chicago. you are my neighbors and friends, the people of chicago, for their extraordinary hospitality. and for everything they have done to make this summit a

success. i could not be prouder to welcome people from around the world to my hometown. this was a big undertaking. 60 world leaders, not to mention folks who were exercising their freedom of speech and assembly, the very freedoms that our alliance are dedicated to defending. this is a city of big shoulders, rahm emanuel and his team proved that this world class city knows how to put on a world-class event. partly, this was a perfect city for the summit because reflected the bonds between so many of their countries. for generations, chicago has welcomed immigrants from around the world, including a lot of our nato allies. i have lost track of the number of world leaders that came up to me and remarked on what an

extraordinarily beautiful city chicago is. i could not agree more. i am especially pleased that i had the chance to show them soldier field. i regret i was not able to take and one of the classics. i will note that my teams did ok. [laughter] now, as i said yesterday, nato has been the bedrock of freedom and prosperity for nearly 65 years. it has not just in doors, it has thrived. our nations are strong for when we stand together. we saw that most recently in libya. as president, one of might top foreign-policy priorities has been to strengthen our

alliances, including nato. that is exactly what we have done. in lisbon, we took action in several areas there are critical to the future of our alliance. we pledged in chicago we would do more. over the last two days, we have delivered. we've reached agreement on a series of steps to strengthen the alliance's defense capabilities over the next decade. in order to fulfil our article 5 commitment to our collective security. we agreed to acquire a fleet of remotely powered aircraft to strengthen intelligence and reconnaissance. we agreed to continue air patrols over our baltic allies. we agreed on a mix of conventional nuclear missile and missile defense forces that we need, and we agreed on how to pay for them.

that includes pooling resources. we're moving forward with missile defense and agreed nato is declaring an interim capability for the system. america's contribution will be an approach we are pursuing on european missile defense, and i want to commend our allies who are stepping up and playing a leadership role. spain, germany, and poland have agreed to host. we look for contributions from other allies. i continue to believe that missile defense can be an area of cooperation with russia. second, we are now unified behind a plan to wind down the war in afghanistan, a plan that

trains security forces, transitions, and builds a partnership that can endure after our mission ends. since last year we have transitioned parts of afghanistan to the afghan national security forces, and that enabled our troops to start coming home. we are in the process of drawing down 33,000 troops by the end of this summer. we reached agreement on the next milestone in that transition. we agreed afghan forces will take the lead for combat operations next year, in mid 2013. at that time, isaf forces will have shifted to a support role in all parts of the country. this will mark a step toward the goal we agreed to in lisbon. afghans will take responsibility for their own

country and so our troops can come home. this will not mark the end of afghanistan challenges or our partnership with that country. we are making progress against our core objective of defeating al qaeda and denying a safe haven. we leave chicago with a clear road map. we're committed to this plan to bring the war in afghanistan to a responsible end. we agreed on what nato's relationship with afghanistan will look like after. nato will continue to train and support afghan forces as they grow stronger. while this summit has not been a pledging conference, it is encouraging to see countries making significant commitments to sustain afghanistan's progress in the years ahead. today the community also expressed its strong support for efforts to bring peace and

stability to south asia, including afghanistan's neighbors. finally, nato agreed to deepen its cooperation with partners that have been critical to operations, and today's meeting was unprecedented -- our allies, joined with 13 nations from around the world, europe, middle east, africa, and asia. each country has contributed the operations in different ways. each wants to see us do more together. to see the breadth of those countries represented in that room is to see how nato has become truly a hallmark of global security. i want to thank all my fellow leaders. the bottom line is that we are leaving chicago with a nato alliance that is stronger, more

capable, and more ready for the future. each of our nations, the united states included, is more secure and we are in a stronger position to defend the freedom we have around the world. i will take a couple questions. i will start with julie. >> you said the u.s. cannot deal with afghanistan without talking about pakistan, and there has been little discussion about pakistan's role in ending the war. in your talks with zardari, did you make any progress with opening the sidelines? >> keep in mind my discussion with the president was very brief, as we were walking into the sunlight. -- the summit. i emphasized to him what we

have emphasized publicly as well as privately. we think pakistan has to be part of the solution in afghanistan. it is in our national interest to see a pakistan that is democratic, prosperous, and stable. we share a common enemy in the extremists that are found not only in afghanistan, but within pakistan, and we need to work through the tensions have arisen after 10 years of our military presence in that region. president zardari said these issues can be worked through. we did not anticipate the supply line issue would be solved. we're making diligent progress on it. everybody in the alliance, all my staff and most importantly

the people of afghanistan and pakistan, understand neither country is going to have the kind of security and prosperity it needs unless they can resolve some of these outstanding issues and join in a common purpose with the international community to make sure these regions are not harboring extremists. i did not want to paper over challenges. there's no doubt there have been tensions between isaf and pakistan, united states and pakistan, over the last several months. they are being worked through, both military and diplomatic channels. ultimately, it is in our interest to see a successful, stable pakistan, and it is in pakistan's interest to work with us and the world community to ensure they themselves are not consumed by extremism that is in their midst.

we will keep on going with this, and every nato member is committed to that. hans? >> thank you, mr. president. yesterday democrats and your friend alleged the romney campaign was responsible for job losses at a kansas city steel mill. is that your view, that romney is personally responsible for those jobs losses? can you give us your sense -- three parts, mr. president -- of what private equity's role is in stemming job losses as they seek a return for their investors? >> cory booker is an outstanding mayor, and it is

important to recognize this issue is not a distraction. this is part of the debate we will be adding in this campaign about how do we create an economy where everybody from top to bottom, folks on wall street and main street, have a shot at success. if they are working hard and acting responsibly now, my view of private equity is that it is set up to maximize profits. that is a healthy part of the free market. that is part of the will of a lot of business people. that is not unique to private

equity. my representatives have said and i will say today i think there are folks who do good work in that area and there are times when they identify capacity for the economy to create new jobs or new industries. understand that their priority is to maximize profits. that is not always going to be good for communities or businesses or workers. the reason this is relevant to the campaign is because my opponent, governor romney, his main calling card for why he thinks he should be president is his business experience. he is not touting his experience in massachusetts. he is saying he is a business guy, and this is his business. when you are president as opposed to the head of a

private equity firm, you job is not simply to maximize profits. your job is to figure out how everybody in the country as a fair shot. your job is to take about those workers who get laid off and how are we paying for their retraining. your job is to think about how those communities can start creating new clusters. your job is to think about how we set up an equitable tax system so everybody is paying their fair share that allows us to invest in science and technology and infrastructure, all of which are going to help us grow. and so, if your main argument for how to grow in the economy is i knew how to make a lot of money for investors, then you are missing what this job is

about. that does not mean you are not good at private equity. that is not what my job is as president. my job is to take into account everybody, not just some. my job is to make sure that the country is growing, not just now, but 10 and 20 years from now. and so to repeat, this is not a distraction. this is what this campaign is going to be about. this is a strategy for us to move this country forward in a way where everybody can succeed. that means i have to think about those workers in that video just as much as i am thinking about folks who have been much more successful. [unintelligible]

what i would say is that mr. romney is responsible for the proposals he is putting forward for how he says he is going to fix the economy, and if the main basis for that and suggesting he can do a better job is his track record as the head of a private equity firm, then both the upside and downside are worth examining. hold on a second. alistair? >> thank you, mr. president. i would like to take you back to the summit you hosted at camp david. what do you feel you can ensure investors that there are contingency plans in place to cope if greece leaves to euro?

>> we had an extensive discussion of the situation, and everybody is interested in getting that issue resolved. i will not speculate on what happens if the greeks were to leave, because they have an election at this is going to be an important debate inside of greece. everybody involved in the g-8 summit indicated their desire to see greece stay in the euro zone in a way consistent with commitments that have already been made, and it is important for greece, a democracy, to work through what their options are at a time of great difficulty. we all understand what is at stake. what happens increases an impact here in united states. businesses are more hesitant to invest if they see a lot of

uncertainty blooming across the atlantic, because they are not sure whether that is going to mean a further global slowdown, and we are already seeing very slow growth rates and contraction in countries in europe. we had a discussion about how do we strengthen the european project generally in a way that does not harm world economic growth, but moves it forward. i have been clear and not just this week, but over the last two years about what i think needs to be done. we have to put in place firewalls that insure countries outside of greece that are doing the right thing are not harmed because markets are skittish and nervous. we have to make sure that banks are recapitalized in europe said that investors have confidence, and we have to make sure there is a growth strategy

to go alongside the need for a fiscal discipline as well as a monetary policy that is promoting the capacity of countries like spain or italy that have put in place some very tough targets and some very tough policies to also offer their constituents a prospect for the economy improving, job growth increasing, incomes expanding, even if it may take a little bit of time. the good news was you saw a consensus across the board, from newly elected president hollande to chancellor merkel, to other members of the european community, that balanced approach which is needed right now. they are going to be meeting this week to try to advance those discussions further.

we have offered to be there for consultation to provide any technical assistance and work through some of these ideas in terms of how we can stabilize the markets there. ultimately, what i think is most important is that europe recognizes this project involves more than just a currency. it means there has got to be more effective coordination on the fiscal and monetary side and on the growth agenda. i think there was strong intent there to move in that direction. they have 17 countries that have to agree to every step they take. i think about my one congress, and then i start thinking about 17 congresses, and i start getting a little bit of a headache. it will be challenging for them. the last point i make, i do

sense greater urgency now than perhaps existed two years ago or 2 1/2 years ago. keep in mind, here in the states, when we look backwards at our response in 2008, 2009, there was criticism because we had to make a bunch of tough political decisions. there is still criticism about the decisions we made. one of the things we did was act forcefully to solve a lot of these problems early, which is why credit markets started loosening up. that is why businesses started investing again. that is why we have seen job growth of over 4 million jobs over the last two years. that is why corporations are making money, and that is what

we have seen strong economic growth for a long time. acting forcefully rather than in small bite-sized pieces and increments i think ends up being a better approach even though we are still going through challenges ourselves. some of these issues are ones that had been built up over decades. all right? steven? >> as you try to prevent afghanistan from reverting to its former role as a terrorist state, terrorists in yemen today massacred soldiers. are you concerned yemen seems to be slipping further into anarchy, and what is the united states going to do to slow that process? >> we are concerned about al qaeda activities and extremist activity in yemen.

a positive development has been a relatively peaceful political transition in yemen, and we participated diplomatically along with yemen's neighbors in helping to lead to a political transition. the work is not yet done. we have established a strong counter-terrorism partnership with the yemeni government, but there is no doubt in a country that is still poor, that is still unstable, it is attracting a lot of folks that previously might have been in fatah before we put pressure on them there. we will continue to work with the yemeni government to identify aqap leadership and operations and try to thwart them.

that is important for u.s. safety and for the stability of yemen and region. one of the things we have learned from the afghanistan experience is for us to stay focused on the counter- terrorism issue, to work with the government, to not overextend ourselves, the cooperate smartly in dealing with these issues, which are not unique to yemen. we have similar problems in somalia, mali, and the sahel, and so this is part of the reason why not only is it important but these partnerships we're establishing is important because there will be times when these partners have more effective intelligence operations, more diplomatic contact, etc., in some of these parts of the world where the state is a little

wobbly and you may see terrorists attempting to infiltrate or set up bases. i will call on jake tappan. jay, you have been talking about troops in afghanistan, and since so much of the summit has been on afghanistan, none of this would be working were it not for the sacrifices they are making. >> thank you. i put out an invitation for troops and their families and i will give you some of them. mr. president, if this withdrawal proved premature, what plans are and place for an afghanistan that is falling apart or under taliban rule? i will do one more. do you feel that the reporting you received from the pentagon

could represents what the on- ground commanders assessed? is there any disconnect between what leaders feel and what the president wants to hear, versus the truth? >> let me take the second question first. one of the things that i emphasize when i talk to john allen, the joint chiefs, or with the officers in afghanistan, is i cannot afford a whitewash. i cannot afford not getting the very best information in order to make good decisions. i should add by the way that the danger is not that anybody is purposely trying to downplay challenges in afghanistan.

a lot of the time the military culture says we can get it done. wey're thinking is, how are going to solve this problem? not, why is this such a disaster? that is why we admire the military so much and love our troops, because they have that candid spirit. we have set up a structure that tries to guard against that, because in my white house, i have four officers who had been in afghanistan who i will send out there as part of the national security team at the white house, not simply the pentagon, to interact and to listen, and to go in and talk to the captains and majors and corporals and the privates. this is to try to get a sense of what is going on. the reports we get are relatively accurate and the sense that there is real improvement in those areas where we have had a significant

presence. you can see the taliban not having a foothold, that there is genuine improvement in the performance of afghan national security forces, but the taliban is still a robust enemy. and the gains are still fragile. this leads me to the second point, in terms of premature withdrawal. i do not think there will ever be an optimal point where we say this is all done, this is perfect, this is just the way we wanted it, and now we can wrap up our equipment and go home. there is a process, and sometimes a messy process, just like it was in iraq.

we had been there now 10 years. we're not committing to a transition process that takes place next year, but the full transition to an afghan responsibility is almost two years away. the afghan security forces themselves will not ever be prepared if they do not start taking that responsibility. frankly, a large footprint we have in afghanistan over time can be counterproductive. we have been there 10 years, and i think no matter how much good we are doing and how outstanding our troops and civilians and diplomats are doing on the ground, 10 years in a country that is very different -- that is a strain, not only on our folks, but also on that country, which at a point is got

to be very sensitive about its own sovereignty. i think the timetable we have established is a sound one. it is a responsible one. are there risks involved in it? absolutely. can i anticipate over the next two years there are going to be some bad moments along with some good ones? absolutely. but i think it is the appropriate strategy whereby we can achieve a stable afghanistan that will not be perfect. we can hold back our troops in a responsible way. and we can start rebuilding america and making some of the massive investments we have made in afghanistan here back home, putting people back to work, retraining workers, rebuilding our schools, investing in science and technology, developing our business climate. so there are going to be

challenges. the one thing i am never doubtful about is the amazing capacity of our troops and their morale. when i was at bagram air force base a couple weeks ago, the fact you still have so much determination and stick-to-it- ive-ness and professionalism, not just from our troops, but from all the coalition allies, isaf, is a testament to them, and we're very proud of them. since i am in chicago, even my press secretary told me not to do this, i'm going to call on a chicagoan. >> good to see you, mr. president. chicago looks at you. there is an undeniable sense of pride. in your view, how did reality

match up to a fantasy in welcoming world leaders to undermine your efforts to project the image of chicago you would have liked to have seen? >> i have to tell you, i think chicago performed magnificently. those of us who were in the summit had a great experience. if you talk to leaders from around the world, they love the city. michelle took this group down to the south side where wonderful stuff is being done with early education. they saw the art institute. i was talking to david cameron. he is sticking around, doing sightseeing. i encouraged everybody to shop. we want to boost the home-town economy. we gave each leader a bean, a

small model, to remember, as well as a football from soldier field. many of them did not know what to do with it. [laughter] people had a wonderful time, and i think the chicagoans could not have been more hospitable. i could not have been prouder. this is part of what nato defends -- free speech and freedom of assembly. frankly, to my chicago press, outside of chicago, folks were not all that stressed about the possibility of having protesters here because that is part of what america is about. rahm was stressed, but he performed wonderfully and the chicago police did a great job

under some significant pressure and a lot of scrutiny. the only thing i will say is the same to everybody who endured the traffic situation. thank you to everybody who endorsed the traffic situation. what can i tell you? that is the part of being a world city. this was a great showcase. despite being a 15 minutes away from my house, nobody would let me go home. i was thinking i would be able to sleep in my own bed tonight. they said i would cause even worse traffic, so i ended up staying in a hotel. which contributes to the chicago a economy. [laughter] [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

>> consumers are very frustrated right now. the smartphones are working so slowly. >> robert mcdowell on competition for wireless space and two new commissioners, tonight at 8:00 p.m. eastern on c-span 2. >> i think this is a market that people vote for -- they do not vote for the party. they vote for the candidates. u.s. seen a lot more of that. it is heavily republican, midwest. you are seeing more of that in the recent years. they are voting for what a person stands for parry >> bookt. >> we explore