bombardment. my last question would be related to the battleships. i hated to see all the battleships stricken, and i was wondering why you don't see more ships get mothballed for host: thanks for the call. guest: in terms of weapons vessels on a cruiser that had six-inch guns and four-inch guns, i know what to guns are like. i am going to be specific weapons to real experts on this, but i would point out that our cruisers and destroyers today have just an incredible variety of weapons that they can choose from and that they can use, everything from cruise missiles, the types of missiles, the things we talked about earlier, beginning to see these laser weapons. and the problem with the issue keeping ships in mothballs is it

is not free, it is expensive, and it takes a long time to get them back on and it is probably better to build new ships that have the newest technology, the most capable, and can meet emerging threats. one of the things i wanted to talk about is we have 283 ships in the battle fleet today to on 9/11, we had 316 ships in the navy, and by 2008, that was down to 278. during one of the great military billets in american history, the u.s. navy got significantly smaller, and to have the defense strategy we have today, we need a larger fleet. i am happy to say that we have stabilized the fleet and we are growing the fleet. we are going to get to 300 ships before the end of this decade, so we can meet every mission that the country gives us.

in 2008, we put 30 ships under contract. that was not enough to keep the fleet from declining and was not enough to keep workers working in our shipyards. , we putast two years fortysomething ships under contract in the navy. host: we have a minute left. on september 11, the academy repairs for the challenges, both academic and also the military challenges. to beoes the navy need prepared for? what do the students need to be prepared for in the next 50 years? what they need to be prepared for is uncertainty. the good news is that people who joined the naval service have that sort of character and spirit.

they want to see what is beyond the horizon and what is going on in the world. they are willing to leave home and make those trips, make those voyages. that is the type of character that serves in our military. asked that question a ,ear before it all went down asking what we're going to face over the next 10 years, you would have gotten a very different answer. before 9/11, you would have gotten a very different answer than after 9/11. andlked to our commanders strike groups and readiness groups before we go out. i tell them that the only thing that is certain is uncertainty. they will probably face something that i have not out of.

but they have to be prepared for it. they have to be flexible and innovative. they need to meet whatever new , ient comes without saying did not train for this. i'm not prepared for this. it has never happened to us. it not happen in the future with them. ray mabus, thank you for coming by. [captions copyright national cable satellite corp. 2013] [captioning performed by national captioning institute] up next, senator rob portman of ohio. >> coming up on the next "washington journal" cumbersome and peter welch a vermont discusses the release of president obama's 2014 budget. and more on the president's budget and the gun bills being

debated in the senate and other issues with senator chuck grassley of ohiwa. -- of iowa. "washington journal" is live every morning at 7 a.m. eastern on c-span. wednesday, jeffrey zients will discuss the president's 2014 budget. he will be joined by alan krueger and gene sperling. that starts at 12:30 p.m. eastern on c-span 3. >> i like to think it is an important book. there are so few good books out there that explain what the process is and how they go about this and how they decide these cases.

what are they saying to one another? we see the cases of 5-4. do their personal feelings get into it? it is not just about capital punishment. it is about how it operates. >> in the library of congress, the memoranda, the notes back i'mforth between justices, not a lawyer. at theas fascinated human side of it. in many cases, justices have reservations about capital punishment. >> martin clancy and tim o'brien on the capital punishment cases that have defined the supreme court. book tv onunday on c-span 2. >> senator rob portman ohio

spoke about the upcoming release of president obama's 2014 budget and the possibility of the senate passing and immigration reform bill and his support of gay marriage. due to technical difficulties, this is a 30 minute portion of wednesday's program. >> when the president releases his budget tomorrow, is it important for him to say these entitlement cuts that are baked in there are there because they are the right thing to do. he's been saying so far, look at what i've done for republicans. does his party know this is the right thing to do? >> absolutely. he has the mega phone. individual members of congress have a role to play. i had a town hall meeting yesterday where i talked about this issue and talked about the realities of not dealing with it. >> so you're going to look for him to say what?

>> look to him to explain to the american people we have to address this problem to preserve these programs. second, he has to provide, only he can do it, the encouragement to the members of congress to take these steps. that has been the only way we can address these kinds of issues. back in 1983, that was the last time there was a significant entitlement reform. it was tip o'neill and ronald reagan and they worked together. the two of them coming together and being able to jump off the cliff together holding hands enables us to maybe do it again. ronald reagan was criticized by republicans taking on social security because they thought it this would be a tough political issue for republicans. it has been.

ronald reagan did what he felt was the right thing for the american people. then he ran for re-election and he won every state expect for minnesota. this is the right thing for the country and communicated it to the constituents. in the end, we were able to preserve an important program for our seniors. >> mitch mcconnell and republican leaders joining the threat of filibuster on guns -- some of these measures are being discussed as an 90% issue. are you worried about the optics of your party being visably on the wrong side of what is being described as at 90% issue. >> i have not talked to my colleagues yet because we are just back in session today. but the comment as it relates to a kind of gun control measure.

the reid approach -- we'll see what happens. >> how do you feel about a republican filibuster of the gun bill? >> there are two kinds one is on the motion to proceed, and the other is on the bill itself. we'll see. again, i think -- >> how do you feel on the filibuster on the motion to proceed? >> i want to see what the proposals are before i make that decision. i think that's probably the right approach. let's see what is being proposed. i'm a strong defender of the second amendment, i have an a rating from the n.r.a. and i'm proud of that. i think there are problems with the current system and there's a lot of states not providing the mental health information that

is needed to have a system that screens people that shouldn't be getting a gun. there are some ways that the current system can be improved and laws can be tightened that are in current use. i think people acknowledge on both sides. >> do you own a gun? >> only 14. >> only 14. >> i'm not going to tell you what they are. i have a gun safe. i have a long tradition of this. my great grandfather, who is an immigrant came to this country and loved hunting and fishing and did not have access to it in europe. he came from switzerland. he was a poor kid and hunted all his life. he died of a heart attack with a gun across his lap. they found him frozen at the end of the day with a smile on his

face. i have that gun. it was passed through my family, my kids have now used that gun. i shot a duck with it this past fall in ohio. i've grown up with guns and it is a part of our family tradition as it is with many families. i believe that gun safety is incredibly important. i instilled that in my kids. this is part of -- for many americans this is our heritage and our history. >> what do you conclude on where the republican party is on gay marriage? do you think they get it or is there a ways to go? >> it's understandable and i respect people have a different point of view on it. i had a different point of view until recently. it is a mixed reaction. i was talking about the economic impact, which frankly i had not considered it. i'm sure there are other political impacts of this. for me, this is not a political decision. >> how worried are you? >> i'm not worried about it.

i think for most americans, the top issue is what we're talking about here today, which is jobs, the economy, how to get the economy moving? secondary, the deficit that we're talking about provided to us. those are the top issues by far. so i think sometimes we forget that and we're talking about these other issues and they are all important. what drives the issues is that what people care about the most and that is jobs and deficit and other issues like that. >> one of the hats you wear is you're a vice chairman of the

republican senatorial committee, what are you hearing as you help with recruiting, help with finance? what are you hearing about the cycle? are people worried or encouraged? >> the republicans in the senate are encouraged. the numbers seem to favor republicans. we have 14 republicans up for re-election, 21 democratic seats are up. one of them is a good state who won last time and is running again. on the democrat side of the red states, barack obama got less than 42% of the vote. so it is an opportunity, obviously. it is a good opportunity for the opposition, so for us it should be a good year. what i'm hearing is what we talked about earlier people are concerned about the economy, they are concerned about the direction of the country.

they are looking for new leadership. so they think the senate by adding republican seats possibly getting a majority could provide a little more discipline on the fiscal side. ultimately, it will help to set up 2016. >> what are the chances that the republicans will get the majority in the senate? >> i think they are pretty good. again, i don't want to suggest things aren't going change a lot in the next 18 months, they always do. i think giving the numbers i just talked about, i think the chances are pretty good. no matter what, it is likely that republicans will add seats in the senate. in the house, i think we'll do well also. i know there's been speculation about how democrats are going to make it but i think it will tough. if you look historically at the

midterm after the re-elected person, it helps the opposition party. the average loss in the senate is 6.6 seats since 1906. in the house, typically, republicans again, this is convexalism that may not fly that may notalism fly anywhere but we tend to pick up seats. so it should be a good year in the house. >> last question. we were talking backstage i learned a new term what is a card ride. >> a credit card ride. so i ride bikes, mountain bikes. so the ultimate freedom is you take off and you ride with a credit card with you. >> that's it. >> that's it.

you take off for a couple of days. it sounds weird but i'm planning one for this summer. i take off on the country roads of iowa and going with a few friends hoping that the credit card works at the hotel, otherwise it is uncomfortable then we make it home. >> appreciate it. thank you. [applause] >> sounds like things i did in ohio. >> last summer i did a 100-mile bike ride. i tell you that hill -- >> that is a tough one. i want folks to know you can ask us questions and we're going to take questions from the audience in just a minute. i want to ask one more before we do that. the next piece of the fiscal

fight, if we don't get a grand bargain sometimes in the spring, we'll hit the treasury borrowing again in may. they will have until july or august to continue to fund our borrowing before we run over the debt limit and possibly default. there is some growing concern on wall street we're going to have another summer where we have no agreement on how to raise the debt ceiling. the white house will demand new revenues in return for any spending cuts and we'll be right back to where we were in 2011, which is markets going haywire, losing steam on the economic recovery because we can't raise our borrowing limit. do you think we're going to have another debt ceiling fight, if not, how do we get around it? >> that's a great question. that should have been mentioned earlier because of the so-called grand bargain. let's call it agreement with the president and the republicans in congress. i think the timing is the end of july and i think it is crucial

that we get it done before then to make sure we don't get into another debt ceiling crisis because it could be detri menal -- detrimental to the economy. if you look at what the s&p 500 says about the debt limit they say let's resolve the problem. in other words there is let's avoid conflict at all costs. that does not resolve the issue, it can make it worse. sometimes there's a notion that if we just get over there everything will be ok. it's not going to be ok. the one downgrade we already had, we have to address this issue. by the way, if you look over the last three decades only the thing that worked to get the debt ceiling under control is a debt limit debate. that's how we got the proposal a sequester-type of proposal. it is how we got through the 1990's, including the budget agreement.

that is how we got the 1997 balanced budget agreement between newt gingrich and bill clinton. so the fact we can't use the debt limit to talk about this, is not true. most people don't think we should raise the debt limit. because we're talking about credit cards, when you reach your limit, what do you do? you don't just raise it. you're not able to do it you have to deal with the problem. i think this is a opportunity and i think the timing is actually pretty good. let's see what the president has in his budget. i hope it is a serious budget that deals with the spending side because if it doesn't it won't be taken seriously. his last three budgets got zero

if we miss this opportunity, it will reflect on the american people. .any are cynical that would be tragic. we cannot wait that long. that is about it. have another three years of this financial crisis hanging over our heads to have these investors unwilling to make an investment. that is the worst possibly result.

let's deal with it and use the debt limit as leverage. the leverage is that the american people think it is crazy for us to brother more outto borrow more with any end in sight. out debt will be $17 trillion that the point. we've never been here this before. we're headed towards greece unless we do something about it. i hope we use it as a leverage point to get something done. >> do you think there is a realistic prospect to get an original order. is there enough time? are we going to end up with a deal that avoids the bemmingtzilization process? >> that's a good -- reconciliation process? >> i was a member of the supercommittee, which ended up

being not so super. i kind of dread that again. i think we have to let the process work and see what.-- what happens. if we're not moving forward it may be necessary to take it out of that regular order. this is what the american people expect, they want transparency. this is being done out in the open. these chart should be out in the open for everyone to see and the alternative. if we fix this year, what will it look like over time? unless we're ready to make serious reductions in spending we're not going to change the trajectory municipal. if you look at what people are expecting for the president's budget it does not go far enough to deal with the problem. we can talk about that if you like. i think there are measures we ought to take where the g.d.p. should be at a certain level in tn years. >> what is your target for that? >> the minimum for the public

debt, you know, gross debt close to 90%, unfortunately, even under a scenario that we are doing everything we're talking about. public debt is 70% men mum. -- inminimum. what does that mean? it would require $1.8 trillion additional savings on top of sequester and the budget control act. from what i understand the administration is not talking about that, they are talking about a minimal amount of savings. they are assuming that the sequester did not happen, which is $1.2 trillion. then they are adding $6 trillion on top of that. that is not enough. let's talk about that. let's figure out what that is. that level is still historically way too high. it is higher than where simpson bowles wanted us to get. i'm hopeful we can look at the spending to g.d.p. that we looked at earlier.

that is how you have to look at the issue in terms of the objective now. where you want the economy to be? if you look at spending it is usually 20% of our economy, it is now 23%. it is indicated that spend willing continue to go up. in three decades it gets up to 29% -- 39%. no one has a proposal to raise taxes that high. it would result in us having income taxes, which would be a killer for economy and a new tax. so the democrats are saying let's do a balanced approach and split the difference. so instead of 39% and instead of 19%, 20%, which is the historic average. they want to split the difference. one dollar of taxes for one dollar of spending.

that ratio is between the two, that's about 29%. again, nobody has a proposal to raise taxes at that level and nobody should. so we need to get at the spending problem. that's the point. this is not a balanced approach a balanced approach means to start balancing the budget. that does not mean $1 for new taxes and $1 for spending. the problem is spending. that's going to be the issue that we address when we see the president's budget. >> let's bring the folks in. we have a question right here. >> uncertainty has been cited as a negative drag on job creation. you've been one of the awful onthoughtful voices improving the process. what would be your council to the incoming director of o.m.b. to improve the process going

forward? >> i talked to the incoming director if she is confirmed, i think she will be. influentialcould be in this regard. there's a group that looks at all regulations under o.m.b., made a simple point that there is a bipartisan view here to look at federal rule making from a transparent point of view but also to provide rigorous cost analysis and look at the least burdensome programs. i may have a little bias here but it seems to be that independent agencies are powerful and they are implementing agencies and those are not subject to even the simple cost benefit analysis. rules that have a huge impact on the economy.

the president has talked about this and he has indicated that half of it he can't do it because their are independent and therefore, by definition have to be required to do it by statute not by executive order. we've talked about the economy earlier and my view that tax reform is essential, another one is regulatory reform. there's a bipartisan reform way to do it. i've got two bills to do it. both are bipartisan. i have co sponsors on each one. we have not been able to get the majority threered bring the bills to the floor. -- majority leader to bring the bills to the floor. he talks about it all the time. i think we can get it through the committee and to the floor. those are specific examples but this is an area that we should make progress and it will help the economy.

>> we'll get to james in a second. on the confirmations front, i want to ask you about your fellow ohioan who has not managed to get a full vote. republicans, a lot of them, not including you have signed a letter that says you will not vote for anyone until there is certain structural reforms made. do you think he should be made as the director over cfbp and do you think there be a vote on him without the structural changes? >> it is a finance protection bureau and it is part of dodd- frank. a number of us have major concerns about how it was structured. every republican has concerns about it and it has a huge impact on our lives. it regulates all of our consumer financial transactions. so whether you're trying to

educate your kid and have a college loan or you're talking about buying a car or you're talking about some other consumer loan you might have, they have unbelievable power over consumers, yet, they have no accountability in terms of their budget. their budget does not come from congress like other agencies and departments do. that's how the founders set it up. we have the power of the purse congress. they get their money automatic from the fed. it is a percentage of the federal reserve's budget and it is an extremely high number. second they have no accountability in that the director is not removeable by the president and there is no board. there tends to be a board. think of the f.c.c. eastern commissions. because of the lack of accountability on the spending side and because of the lack of the accountability on the

leadership, i did sign a letter. it was signed by 44 of the 47 republicans of the time. now there is a new letter. i did not sign it for two reasons. one, i believe that we need to have a head of the protection agency who is confirmed. i do think we will not be able to repeal it. we need someone there that has ability to be confirmed and help make these regulations be more pro-consumer. i believe i can be a help to encourage some of these reforms that are needed by working directly with richard cordray and with the administration. i wrote a letter outlining a good compromise. i continue to work on the issue because i think there is a way

to get there. it will require some republicans who signed the letter this last time to change their view. but we are running short on time. james had a question. >> hi, james. >> hi there. since a lot of the big corporate tax breaks benefit manufacturers, is it possible to do tax reform without informing the industrial base in places like ohio? >> absolutely. one of the things they are concerned about the section 199. also concerned about depreciation. but these are issues that can and should be resolved. if you are a manufacturer in ohio, you want a competitive tax system. i visited a major ohio tax last week. they produce globally. their top issues are corporate

tax reform. it is disadvantaging them because other companies in different countries have a better tax system to be able to compete with them. the specific thing they raised with me which i'm hearing around the country is that when there is an opportunity for expansion, potential acquisition, if it is a german or chinese company, they have an advantage over the u.s. company. you are seeing relative to what should be happening is shrinking of u.s. companies ability to gain market share. it is happening right now. one of my examples i like to use is beer. i'm a beer drinker.

there is no major u.s. beer maker anymore. the largest beer company in america is boston brewing company, sam adams. they have one percent market share. all the rest are foreign owned. if you look at it and talk to the executive vice president for finance as to why, they refer to taxes. so this is a real problem and it is happening right now. you talk to folks in st. louis at anheuser-busch. this is the real deal. there is a strong interest among manufacturers if they compete globally. if they do not, 35% is the statutory rate. it is still a high rate. even if at 28%, they are still higher than their competitors. canada just went from 16.5% to 15%.

that compares to our federal rate of 35%. it is a real issue for manufacturers. >> to change the subject to -- the odds of the reds winning the world series this year. f reds don't take it, do the nats? what is your view? >> i am sorry to tell the fans in the room here, the reds beat up on the nats. i am not saying i enjoyed it. >> you can be that -- you can admit that. >> the reds have an incredible line up this year. as good a team as i seen since the 1970's. our left fielder was the cleanup hitter.

he finished 30. he should not do that. got some great young players. a couple guys who were almost rookies of the year last year who are now coming into their own. chiu, a korean player who played for the indians, is now playing centerfield for the reds. he has had an awesome start. he is what we were missing last year. batting average was about .220 last year and we won our division. everybody is healthy except for ludwik. i like the chances. >> very good. bullish on the reds, not as bullish on the grand bargain. [laughter]

>> washington works in mysterious ways sometimes. it is usually not very pretty to watch the process but we are all here for a reason, to help make our country successful to get people the opportunities we have had in our lives to get the american economy strong. i worry that if we don't act, that is in danger. i see great opportunity here. this opportunity presents itself right now. between now and the end of july when the debt limit expires, we should put partisanship aside, focus on what is good for the country. if we do that and look at this objectively in terms of what has to be done, we will reform these important programs so they work in the future, we will put in place tax reform's naked the economy a chance to going -- to get going again. it will help ensure this century can be america's century. i love the comments from

foreigners who look at america and say it has a lot of problems but it is one budget agreement away from getting back on its feet. if we deal with this problem and get the economy moving, we can get back on our feet again and be that beacon of hope and opportunity for the rest of the world and provide the opportunities we want for our kids and grandkids. i am not a pessimist. i'm optimistic we can get it done but it will require leadership and the president will have to step forward and talk to the american people about these issues and honest ways, lay it out of work with democrats to give them the cover they will need to make tough decisions. >> thank you to all of you for coming and joining us on a great conversation. there'll be more politico to come. senator portman, thank you for joining us.

[applause] [captions copyright national cable satellite corp. 2013] [captioning performed by national captioning institute] >> later, the confirmation hearing for president obama's choice to be the white house budget director. president obama's nominee for white house budget director will be on capitol hill wednesday for a second day of confirmation hearings. will testifyl before the senate budget committee. you can watch it live starting at 10:30 a.m. eastern on wednesday on c-span 3. >> wednesday, and immigration rally. labors of congress and activists are expected to lead what they are calling a national rally for citizenship.

live coverage starts at 3 p.m. eastern on c-span 3. >> talk about some of the people of the movement. who were the people? king? malcolm x? stokely? carmichael? john lewis? >> all of the above. i explained to madents -- rosa part martin luther king possible. made martin luther king possible by refusing to give up her seat on that bus. martin luther king would have been an articulate, well- meaning, baptist minister. ares because of rosa parks

are talking about him today. she opened up the possibility for him to display those qualities that he had an to rise to the occasion. >> this weekend, stanford university professor joins organization of american historians meeting in san francisco. following the panel, he takes your questions live. it starts saturday at 9:30 a.m. eastern on c-span 3's "american history tv." wilentla tussia, jacob are therian bosem winners for the c-span's student cam contest. >> what exactly is the deficit? the deficit is in excess of liabilities over assets or expenditures over income. in simpler terms, the amount of

money the united states spends that he can't pay for. >> the four components that influence the deficit our budget, a plan for expenditures, savings, how much money our government keeps each year, leadership, the choices made to effect the deficit, and trade, how our country interacts internationally. >> the deficit has an enormous impact on our country and is the most important issue the president needs to address. >> the dangers of an increasing national deficit. the deficit has recently reached over $15 trillion. >> the debt has gone from $34,000 to almost $51,000 for each person. >> how much is $16 trillion?

>> that is hard to comprehend. you can build the great wall of china with 16 trillion bricks over 200 times. the numbers are yohard to compre hend. >> if you were given a dollar a day, it would take over 40 or billion years to pay off our debt. but what is causing our deficit to increase so rapidly? >> the dynamics are very simple. you have revenues coming in and expenditures going out. if they do not match, you have deficits. >> we are seeing an exploding situation with our deficit. that is the difference between the revenues we have coming into the federal government and the spending going out. we have been running deficits of 1.42 trillion and estimated $1.2

triliion for this fiscal year 2012. >> this is a problem for future generations. we cannot continue to spend more than we take in. >> where does the money that makes up the national deficit go? >> of all of the federal government national spending, 20% goes to the department of health and human services. 18% goes to the social security administration. 18% goes to the department of defense. another 18% goes to all other departments.

16% goes to department of the treasury and others. 10% goes to interest on public debt. >> what are the endangers of the increasing national deficit? >> the danger is financial ruin for our country. financial instability. runaway inflation. it would have the collapse of our economy. we are on the verge of going in a pathway that will be hard to recover from. >> this is huge. this is something that if we do not turn it around with the out- of-control spending here in washington, d.c., it will threaten your future. >> instead of spending time arguing over political views, political parties must work together to find a solution. >> sometimes i cannot tell you for the life when working with

because the focus on solving problems and seize an opportunity and not fighting all the time. >> i intend to work with both parties to do more. >> need to make tough decisions, live within our means and start growing the economy again. it was a combination of cuts, growing the economy, eliminating some loopholes out there that are inappropriately given to some business industries, you can balance the budget, live within your means and grow the economy and overtime get back to living within your means and eliminating the debt. >> we have to come up with the right tax policies to enable small businesses to grow. we have to stop printing money to buy ourselves out of this problem. in the federal government, there is no amount of money we can spend to rectify this situation. >> simpson-bowles commission worked hard and came up with proposals. we should take those proposals

and addressed them seriously. >> stop mortgaging our childrens and grandchildren's tutor in get -- future and get the spending under control. >> democrats, independents and a lot of republicans and independent economist and budget expert. that is had reduced the deficit. -- that is how you reduce the d eficit. with a balanced approach. >> together we are on a mission to move this nation forward. from doubt and downturn to promise and prosperity. >> both parties approach the issues before us from very different points of view. time is truly running out on our nation and the need for us to address the debt. >> how will the deficit affect the future? >> for the first time, the majority of americans now doubt

our children will have a better future. >> every generation of americans least their children better off. -- leaves their children better off. that is the american legacy. sadly, for the first time in our history, we are on a path that will undo that legacy. >> i'm concerned with the amount of debt we have accumulated that if we do not address this debt crisis right now, we are ensuring our children will have less opportunities then we have all had. >> that debt that we -- it will not fall on the generation today. my children and great grandchildren be shackled with that that would will inhibit their ability to have the quality of life we enjoy today. >> as it is set up now, i worry about my kids and my grandkids having to pay that we have incurred.

but we should be providing to the next generations and generations that follow is not a debt but a surplus. >> so let's get to work. >> dear mr. president, let's get to work. >> congratulations to all the winners in this year's studentcam competition. to see more videos, go to studentcam.org. >> former british prime minister, margaret thatcher, died after suffering from a stroke. towill see the the tribute her live on wednesday at 9:30 a.m. on c-span 3. u.s. pacific command

operations discussed what would happen if north korea fired a missile strike. this is two and half hours. >> good morning, everyone. work.e our speakers the microphone. we will start with open mic. ok. have got to get closer. we are receiving testimony today on the u.s. forces in the asia-pacific region. , thelcome the admiral commander of the u.s. pacific command. yourommittee appreciate

long years of faithful service and the many sacrifices you and your family have made for our nation. we also greatly appreciate it if you would pass along to the men and women with whom you work our admiration for their services as well. particularly busy time for you, admiral, and your staff. we appreciate you joining us today. the commander of the u.s. forces of curry at was testify,y scheduled to but the decision was made to keep it on the korean peninsula at this time. we appreciate the reason for that decision. and histhem well ongoing activities. today's hearing is a timely one because of the events on the korean peninsula. it has intensified as the north korean regime, which is a long- standing international pariah,

has elevated its reckless rhetoric in this provocative behavior. any optimism about north korea that might have accompanied the december 2011 death of the longtime dictator has faded as the new regime has adopted many of the same destructive policies as its predecessors, stubbornly pursuing the subprograms -- missile programs with co. the north korean regime earlier this month announced its intention to restart plutonium production. in february it tested a nuclear device. last year, the regime put a satellite in orbit, using technologies associated with a long-range ballistic

missiles. last april, it displayed a rogue missile launcher which may or may not be operational. the north korean regimes rhetorical threats appear to exceed its capabilities. capabilities it has against the united states or our allies seems highly unlikely. it would be completely contrary to the goal of survival. nonetheless, its words and actions are not without consequences. even china, to spite its long- standing relationship with north korea, has joined the united of northombinations korea's dangerous behavior. it has supported new sanctions and bans on luxury goods. ago, secretary hagel announced a plan to enhance our ground-based interceptor capability in alaska. last week, the department announced the deployment of a

listed missile defense system to guam. further precautionary measure. the administration has responded to the north korean bluster. not with rhetoric of our own, but firm and confident resolve with our partners that want stability and calm. of auzzled by the delay long scheduled operational test following the north korean rhetorical threats. why was this delayed? why was the testament? i would appreciate knowing -- why was the test delayed? i would apeciate knowing if he agreed with the test. we are working in" a nation to address the north korean challenge -- we are working in close coordination to address

the north korean challenge. additional steps can be taken. the face many other challenges and opportunities in the asia- pacific region. china has continued to rise in global influence. coupled with its military modernization and growth has grown justifiable attention. china's pursuit and capabilities that extend the reach of its military raises concerns about chinese in theon, particularly increasing willingness to assert its controversial claims of sovereignty in areas such as the china sea and east china sea. the locker regard for the intellectual property rights of the u.s. and other nations remains -- the lack of regard for the intellectual property rights of the u.s. and other nations remains.

in addition, china appears to have engaged in a massive campaign to steal technology and other vital business information from american industry and ever government. china's apparent willingness to exploit cyberspace to conduct corporate espionage and to steal trade and proprietary information from u.s. companies should drive our government and our businesses to come together to advance our own cybersecurity. there are a number of other nations that are grabbing our attention as well, such as ensuring freedom of navigation and protecting the free flow of commerce through critical sea lanes can indication and string thinning allowances and building on -- and strengthening allowances. -- alliances.

and assistingor the humanitarian disaster efforts. the administration continues to rebalance toward the asia- pacific. the defense department has been working through substantial realignments. south korea and japan are also engaged in initiatives to position forces further to the south in countries such as australia, singapore, and possibly the philippines. as we rebalance our presence in the asia-pacific area, it is important we get it right in terms of strategy and also in terms of resources and sustainability. tos committee will continue exercise its oversight responsibilities to ensure that our presence in the asia-pacific and elsewhere in the world is affordable, sustainable, and supportable.

in this regard, the committee has reasonably approved the report of the inquiry into u.s. contributionsed associated with u.s. military presence overseas. we anticipate releasing the support -- report in the next few days. there is respect -- with respect to that realignments, senator advocated changes to the realignment roadmap plan to better support u.s. to teach it -- strategic goals in the region. joint u.s.-japan announcement of changes to the 2006 plan reflected an appreciation by both governments that we need to make adjustments in order to support the goal of achieving a more viable and sustainable u.s.

marine presence in japan and in guam and elsewhere in the region. the department of defense is currently working to develop the details of this new plan and the final construction schedule and total costs are not yet known. after we received that plan, we will be in a position tjudge it. until then, the committee has deferred action on associated requirements and the previously adopted conditions are met. i support the concept of re- stationed marines to go on, but it must be done in a sound manner. -- i support the concept of re- stationing marines to guam, but it must be done in a sound mattenner. we would be interested in your assessment for the effects of sequestration on your ability to your arearements in

of responsibility. again, we very much appreciate all the work that you do for this nation. we reshoot you joining us this morning. we look forward to your testimony. -- we appreciate admiral locklear, i think general thurman made the right decision staying where he is. north korea's recent actions start -- highlight the [indiscernible] with the declaration that the war is receding and the reality. threats are being replaced by new, more dangerous ones. north korea's new leader represses its people and is engaged in provocative statements and military exercises in the near test that have pushed the region onto the brink of of conflict.

nuclear tests that have pushed the region to the brink of conflict. i just got back from there. i got the clear impression he was doing that intentionally to intimidate and provoke people. both general thurman and admiral locklear are implementing steps to continue to train our south korean partners in exercises and practicing strike missions. and installing the fad readability in one. are increased military competitions should deter and they stand ready to punish aggression and protect vital united states interests. i'm encouraged by the president's's reversal of his previous decision by acquiring the 14th -- 14 additional ground-based interceptors, the decision to reverse the first decision was the right one.

that does not address the problem though that we would have which is not the leader not really in s oyour area. the regretful thing we did getting rid of the ground-based interceptor capability in: four in poland four years ago. we understand our capability in taiwan. i took all the stuff i had on china out of my opening statement because i agree with the statement of chairman made. i think you covered it very well. we have to have a clear long- term strategy to our force posture, including a plan for marine presence in okinawa, guam, hawaii and australia. it is been over a year since the administration announced the rebalance asia.

i look to admiral locklear as the commander on the ground to provide the committee with detailed descriptions of what the rebalance means in military terms. i also look forward to his frank assessment and how the ongoing budget crisis will impact his plans and operations in the pacific. i have some questions about that and i am sure you will give us very straightforward answers. i'm concerned about the growing divide between what we expect our military to accomplish the resources we are providing. i often said that you do a great job at hand you are being dealt. we need to deal you a better hand. i cannot recall a time in my life in the world has been more dangerous. while the president might use these the tide of royer -- tide of war receding, i see the need for a strong and able force that remains engaged in the asia pacific and beyond. the decision by the president to slash the defense budget puts the future of such a force at risk.

shortsighted cuts to defense capabilities will result in weakened he was military and will embolden adversaries. the reckless course of action by the regime underscores the importance of our foreign military posture. our presence helps to shape the events in the under pin debility. in this case to determine. should deterrence fail, our military forces standby ready to defend the nation. thank you very much, admiral. i look over to your testimony. >> thank you very much, senator.

>> good morning senator and established members of the committee. taking for the opportunity to testify today. and provide you with my perspectives on the posture of the u.s. pacific command. i request my written testimony be included in the record. for the past 13 months, i've had the great honor to lead service members and civilian employees and their families. our area of responsibility is diverse and complex. it encompasses 52% of the world surface. and over half the world population. it is cold fully, socially, economically, and geopolitically diverse. the framework includes five of our nation's seven treaty allies. three of the largest in seven of the 10 smallest economies, the most populated nations in the world, including the largest democracy in the world and the gross -- of course the world's

smallest republic. there are $8 trillion in bilateral trade with one third of the world's bulk cargo. by any meaningful measure, the indo asia pacific is the world's most militarized region. seven of the 10 largest standing militaries. the world's largest and most sophisticated navies. five of the world?s declared nuclear armed nations. when taken together, these aspects is that a region with the unique strategic complexity and a wide, diverse group of challenges that can significantly stress security environment.

affectively engaging in the area requires a committed and sustained effort. u.s. paycom as a military component is clearly focused to assure our allies and partners and prevent conflict should our national interest be threatened. the indo asia pacific is relatively peaceful over time but i'm concerned by a number of security challenges similar to those you have outlined. i am sure we will talk later about the korean peninsula but it appears it will persist and an impetuous young leader continues to focus on provocation rather than on his own people. the rise of china and india as global economic powers in their emergence as regional military powers will continue.

the china specifically, we are focusing efforts on building relationships with them and doing all we can to assist them as they emerge into the security environment as productive contributors to the global peace and prosperity. we expect the growing populations of the world will continue to be challenged by a earthquakes and tsunamis and flooding as well as continued transnational threats like pirates, terrorists, criminal organizations, human trafficking and proliferations of mass destruction. we will also see a historic border and territorial disputes continue as the need for water, food, and energy grow. there is no single organization mechanism in the indo asia the civic to manage relationships when needed or provide a framework for conflict resolution. so we have to rely on our allies and growing partner

relationships, including those where growing with multi-lateral organizations to ensure we can maintain the peace. the u.s. joint forces been heavily tasked and other aor's over the past decade. we have been resourced challenge. our rebalance the pacific strategy has given us a new opportunity to solve these challenges and to reemphasize to our allies and partners that we are committed to the pacific, we are committed. it also reflects the recognition that the future prosperity will be defined largely by events and developments in the indo asia pacific.

the rebalance account focus our planning and decisions as we were closer with allies and partners to ensure security environment favorable to u.s. interests. however, the impact of sequestration have created budget uncertainties and limited flexibility to manage risk and have the potential to undermine our long-term to teach it rebalance momentum. our homeland defense and crisis responsibilities resident in our deployed forces. the pacific ocean does not separate he was from asia. -- the u.s. from asia. it connects us. we are making good progress. let me sure to you that paycom continue to demonstrate the u.s.'s resolve and commitment to peace and security in the important part of the world. half of our military sacrifice every day to make sure our country is well defended. i would like to thank each member of this committee for your support.

i look forward to your questions. >> thank you very much. we are going to try to use the technology be have been provided with your today.-- with here today. i was asked why we don't use timers. i do not have the biggest idea. -- the vaguest idea. we will find out whether they actually have an impact on us as that of the card being handed in front of us. now you have to keep your eyes on the timer. we will start with eight minutes. quantum leap, right. small step for committee, major step for mankind.

admiral, let me start. over the weekend, the department announced they were delaying a routine reliability test of 3 icbm to an impact site in the marshall islands 4300 miles away. the test was delayed so it would not be misconstrued by north korea. i know you are not in the chain of command here but do you agree with that decision? do you know what the basis for it was? >> i do agree with the decision. i assume the bases with a look at the tgg mitigations that all events surrounding this particular continuous time with north korea and impact of the totality of those. through this -- these last few weeks, we have demonstrated to

the people of the region and hopefully the leadership of north korea and their own population back here our ability and willingness to defend our nation, to defend our people, our allies and our deployed forces. >> what are some of the things we have done them with bonds to the bellicose rhetoric of north korea. -- we have and exercise. have an exercise. ear witha series each yaer wit our allies. in particular with north korea about this time of year it each year, we do an called key results.

>> with south korea? >> with south korea. those exercises are to build our alliance capabilities together. our defensive capabilities. many are a result of exercises we do annually anyway. normally at this time of year, you will see a north korea they will go into the winter training cycle and conclude that winter training cycle about the time that [indiscernible] finishes. when you lay on top of that the bellicose rhetoric that has come out of north korea and now the poor decisions it appears they are invoking, each of these events will doubt take on a more significant contact -- each of these events that are rolled out take on a more significant context.

it demonstrates the defensive capabilities and the deterrence capabilities of the forces we bring together. we pursued a long-range b2 demonstration. it was a good opportunity for my forces to coordinate effort to demonstrate that capability. it was demonstrated at the right time to indicate the capabilities the united states has to ensure the defense of our allies and homeland. >> we removed a missile defense system. is that correct? >> we did. i asked the joint force to produce for the defense of guam the fad asset.

>> i understand president obama talked to the chinese president regarding the actions we have taken following this north korean rhetoric. have you had any conversations with your military counterparts in china in the last couple weeks? >> i have not. >> there is a widespread attack by north korea. there is a prospect based on history for a limited military action of some type of north korea.

if there were such an event, that would draw a military response i presume from south korea. the united states and south korea have reportedly finalized a combined counter provocation plan in an effort to get in place the terms and type of any such response to a limited military action from north korea. can you describe for us in general terms what the parts of the agreement are? are you satisfied that the plan we have entered into with south korea strike the right balance between enabling south korea to respond and defend itself and at the same time ensuring the united states is involved in any decisions that my white in a military action -- that might

widen a military action? >> we have been planning with our ally for many years. we have plans that we work together and continue to revise them. this particular land that has been talked about is basically a branch from our normal day to day planning we have there to take a look at how things have changed. our recognition of a better understanding of the cycle of provocation we see from not only this leader but his father as well and how best to deal with it. i will not go into the details of the plan here. i do not think that is appropriate. it has provided us the opportunity ensure the right command and control in the right coordination is in place to ensure that as we were to approach future provocations that we do sell in a predictable way that allows us to manage his provocations without unnecessary

escalation that none of us want. i am supportive of the plan. i think it is a good one. >> are you satisfied that we would be ready? >> i am satisfied that we are ready today. >> can you give us the impact of sequestration on the pacific command? >> there is no doubt that sequestration is having an impact on operational readiness. by the nature that it is put in the budget, particularly this year, there are only so many places where we can pay that size of a bill.

most of those are an operational accounts. i would say that for us to be able to deal with that is prioritized our assets globally. today i think we have managed that. that is just for today. what happens in the near in midterm. you are saying things like we are cancelling large scale b2 s that we have done to ensure the future readiness of our force. we're having to prioritize these things. today that most pressing situation is what is happening on the peninsula in north kora.

-- north korea. >> thank you. i would like t o get clarification on one statement that i think was misrepresented. it indicated that the biggest long-term security threats in the pacific region is climate change. i would like to have you clarify what you meant by that. i like to follow up with a couple of things.

>> i am happy to have the opportunity to clarify. >> the people trying to use your statements are the very people who think we're spending too much money on defense and that the money should be spent in other areas. >> as you might expect, i give 100 percent interviews over the last year. during those interviews i can assure the committee that i start by taking the most military threats we have, all the things that he laid out in his opening remarks quite well.

and this particular case i do the same. we started to talk about the long term and what are the implications of it. i would clarify my perspective this way. we're going to go from bought 7 billion people in the world to about nine or 10 by this century. about 80% live off the coast. that is increasing as people moved toward the economic centers. we are seeing people moving into those areas. if you go and as the numbers of how many people died due to natural disasters was about 280,000 people. from 2008-2012.

they were not all weather- related but a lot of them were. there was about $500 billion of lost productivity. when i think about our planning and what i have to do with allies and partners and i look long term, it is important that the countries in this region build capabilities into their infrastructure to be able to deal with these types of things. >> you have used up half my time. we did not get around to it. is it safe to say that in the event that this climate was changing, the boston globe made that statement. it is one of the top scientists in the country. he said it was laughable. crs told us we can be totally independent in terms of providing our own energy if we develop our own resources.

i believe that to be true. wouldn't it be a more secure world if we were totally independent and able to supply our allies in your jurisdiction with energy so they do not have to depend on other sources? >> absolutely. >> let me say something about china. they are talking at increasing their defense budget by 10.7% in 2013. i remember in the 1990's when they increase their defense spending by 300% at the same time we reduced hours by about 30%. this is after the cold war. 11 people thought we could afford to reduce its. we did. we went down 30%. now we are facing the same thing.

could it be that we will cease to become the partner of choice to our allies of this trend continues? does this concern you with the amount of increase that china is making? we have seen this in africa. every time we have any type, it moves in. they seem to have the resources to do something. >> it is concerning. amid the aspects is to ensure we have the right mixture for the asia-pacific so we can reassure our allies and our partners and the american people that our interests are protected over there. i think we do have to watch very carefully how the chinese

military rises, what they do with the military and how the military is integrated into the environment. >> we were looking at the controversial hanger and beef that he made a statement that maybe should be hardened.-- and the fact that you made a statement that maybe that should be hardened. i would agree with your statement. with the resources that we have, i would think that others would say these need to be hardened also. would you address that issue in terms of the scarce resources and the advantages of pardoning those facilities? >> we are aware of the suit against of the resources.

it boils down to resiliency. it is a significant strategic hub for us and any scenario that i would see in the asia-pacific for the next number of decades. when you look at resiliency, there are a number of components. there is offensive and methods to protect it. then there are things he might do to harden. then there is command and control. we are looking across all of those. it lets you as quickly as possible recovered guam if it were ever to be attacked by

someone. >> give us some ideas on priorities. i know it is not of a lot of interest. it was during our trip over there. it might also be true on this. taking the 9000 marines, going to guam and some to australia. there is an issue there in terms of the real-estate that would free up for the japanese. is there a brief comment you can make about that move in terms of where the remaining marines would be and how that affects the value of the real-estate there?

but let me deal with resiliency in guam. generally when you look at fuel supplies and how you could regenerate those and whether the fuel heads when need to be hardened or not is when we look at whether you have the right runway by someone who decided to attack guam. we're also looking at dispersal of assets so the assets might go to different places and times of crisis. we're looking at a broad spectrum. these are things that fit together. >> thank you so much.

>> thank you for your service. you described a growing number of nations adopting the submarine enhance weapons system. the russians attacked with ballistic missiles. india is drawing submarine force. the chinese seem to be the ones who are expanding the most. this seems to be the class of weapons systems that are actively trying to compete with. is that a fair judgment? >> i do not say they are actively competing with the united states. globally, you have well over 300 submarines. that number is growing.

people recognize they have a significant anti-access accessibility and that technology is allowing very quiet submarines to be built. i do not know that they're competing with the united states. they are reemerging into the security environment in a way we should be very thoughtful about. >> in terms of our fleet, no longer do we have an open field. we are now beginning to note an increase in submarines deployed by asian powers.

>> we have the very best submarines in the world. i am not concerned about the capabilities of our submarines or the crews that operate them. i am concerned that numbers matter. where you have them matter. there are places in the world where an asymmetric advantage from undersea warfare is important. >> it seems to be important now based on your comments, is this doctorine what you're proceeding to be the major emphasis, particularly the major powers like china wanting to be able to deny access to our fleet? >> it is a general trend around

the globe that people want to be able to control what happens in their economic zones. then there are powers to like to project power beyond those areas. submarines provide them viable alternative is for doing that in a way that is sometimes asymmetric. >> shifting gears slightly, the ship freedom has been deployed to singapore. we are going to have issues with respect to budgets and the capability of different ships. do you intend to monitor the operation of the freedom? how will you deploy it? >> the freedom is the first class of combat ship. it is a concept ship.

we started to build it and then rolled the research and development into it. they have wisely decided to push it to protest a deploy it out of to apore.-- to paycome and deploy it out of singapore. it is a ship designed for operations. it has the ability to be reconfigured as mission module packages. what it does for me, it provides a visible presence of u.s. it allows us to cooperate and participate with a key strategic partner out there. it provides my pacific commander another tool in the tool kit to be able to deal with peace time events as well as those of

crisis. i am anxious to get out and see what it can actually do. >> do you have our conscious plan to evaluate the capabilities to make recommendations with respect to the design and function? >> we do. freedom will be there for about 10 months. during that time my understanding is that we will concentrate on how we move the mission module packages around. how do we integrate them into the operational fleet? it is a good thing. a gets it into the real world.

he gets you seeing how they can best perform and best be used. >> when you are doing or planning for a range of operations from non-combatant evacuation of the way up to a main fight or a forced landing, will you think in terms of where the combat ship it in those missions and what missions it may or may not be adequate? >> my other components are looking very carefully at what they can use because of its reconfigurable abilities. we'll also be looking at an integral part of the navy strategy for the next generation countermeasures. we will ensure that those technologies are looked at as carefully as we can. >> can you comment about the amphibious capabilities you have in the pacific now? the frequency of amphibious operations from ship to shore

have been curtailed at the time. what are the problems do you see? >> one of the initial impacts was to see the marine forces that many of them had been deployed into afghanistan or the middle east over the last decade and return to the pacific. we have had extensive conversations about how we reintegrate them back into the amphibious ships we have there. one of the missions we need to pursue. we have a good plan. this has been positively received.

>> thank you. >> @ thank you for being here. the mentioned the effects on sequestration that you're making certain adjustments. are you going to be able to adjust adequately and carry out your assigned missions in the medium and long term is sequestration continues on the path it is on? >> i would say we will have to closely assess globally the types of things that our military is being asked to do.

>> where is the most pacific command? >> it depends on how the resources were prioritized and balance. at the end of sequestration we will still have the most powerful military in the world. it depends on how we're going to be prioritized with it. it will be a challenge. >> my question is not whether we will have the most powerful military. will you be able to carry out the assigned missions that the pacific command has now in a sufficient manner to ensure our national security of sequestration continues the path it is on? >> i hate to give you this. >> you know what the numbers are. you know those numbers in some way of going to have to be put into effect.

my question is will you be able to ensure the american people you will carry out your assigned security requirement to defend this nation and sequestration continues on the path it is on? >> it depends on how the resources are prioritized. >> sequestration is ok as long as they prioritize in the proper fashion. is that the answer? >> i have been consistent in saying sequestration would have a catastrophic effect. sequestration is something i would be supportive of in general. it seems to be heading in that direction.

they are looking at what the strategic choices are that have to be made. the choice is that we are not going to be able to provide the force levels we have today. the answer is i cannot do it. they will re-prioritize it. >> thank you. i do not know of a time of greater attention since the end of the korean war that exists today between north korea, south korea, and us. would you agree? >> i would agree that in my recollection i do not know a greater time. >> do you believe we have the ability to intercept a missile and if the north koreans launched a missile as is widely

reported they would do in coming days? >> we have the ability to defend the homeland, hawaii, guam, our forces and allies. >> do we have the capability to intercept a missile if the north koreans launched within the next several days? >> we do. >> would you recommend such actions? >> if the missile was in defense of the homeland i would certainly recommend that action. if it was in defense of our allies i would recommend. >> would you recommend that we intercept a missile if it is launched by north korea no matter where the intended target is? >> i would not recommend that.

>> until you're sure what the target is. >> we will be able to understand pretty quickly where any launch from anywhere in the world, where it would be going and what we need to do about it. i am confident that we'll be able to make that decision for defense of our allies and our homeland. >> in the event of a missile launch you'd wait until you could determine where the missile was aimed. >> if we have any predetermined, we should have a sense of where it will be aimed. if we do not, it will not take long to figure out where it is going. >> we have seen china make some cautionary remarks about north

korea. we now identify a building in rising from which cyber attacks and minutes.-- imminate. we see continued confrontational behavior on the part of china as part of its assertion of sovereignty over the south china sea. would you agree with me that the only restraining force at this time is the chinese? >> i would say they will play a key part in any restraint. i do not know if they are the only one. >> do you think they have played a sufficient role of restraint of north korea? >> i think they could do more.

>> are you concerned about this combination of factors about chinese behavior, that they are not behaving as a world power should be in light of the military buildup? >> i do have some concerns. >> how serious are those concerns? >> as the chinese military, and i think it will evolve, the question is about transparency and what they are going to do to the military and how they integrate the military to the rest of the security environment. it does concern me. they know my concerns. i have a voice to them. we continue to have dialogue.

>> do you have adequate defense missile resources to defend the homeland? >> the secretary of defense has announced some additional missiles. we have a capacity and a limited capacity to defend against the type of storage we're seeing from north korea. -- against the type of threat we are seeing from north korea. >> is it true this concern about north korea is exacerbated by the fact that artillery could strike seoul and caused horrendous casualties? >> it is very much exacerbated by that. that amount of artillery would put seoul at risk.

it is a primary concern of u.s. forces, korea, and mine. >> the governor of japan announced for movements that is our even mentions. we are awaiting a master plan for the movement and the cost required including environmental impact assessments. when do you think they would receive the master plan? >> i do not have a date for when they would present that to you. i have been provided information to them as required. i responded to the committee on a number of issues you have

asked me about including the lift requirements. >> thank you. >> senator blumenthal. >> thank you for being here and for your excellent testimony. i am concerned as much about the threat that north korea poses in terms of nuclear proliferation over the long term as the immediate attention and potential threats in the short term. you have briefly discussed it in your testimony and we have barely discussed at all here today. i wonder if you could elaborate on your testimony to describe what you see as the extent of

the ongoing aid that north korea is providing to other nuclear- arming countries such as iran. what can we do to bolster? >> north korea's proliferation of weapons systems very much concerns me. we know that over the time that north korea it goes through cycles a provocation one of the things they rely on to fund their ability to do what they do is through proliferation and moment of arm sales around the world. i do not have any direct knowledge that there has been a

collision between iran and north korea but it does not mean has not happened. >> does it mean iran would be greatly disadvantaged of north korea were not helping them? >> iran would be greatly advantaged if north korea helps them. >> is that help on going? >> i cannot give it to you in that form. >> perhaps in another. what can we do to stop the proliferation? >> the international community is going to bring continued pressure. we have to tighten our ability to see what is being proliferated and where it is going.

we have to ensure that we have the ability to interdict it before it is proliferated. >> i know you're focused on this problem. some of the most chilling testimony this year before our committee came from the admiral who told us, remember the truly dark edge of the spectrum is weapons of mass destruction and the proliferation of these weapons. he said the ability to move 10 tons of cocaine in the mini-sub, begin also made a nuclear device.

this is already the means of proliferating nuclear arms that do beyond what we have seen so far. >> my area of responsibility are the highways for a lot of activities. some unrealized the size of the pacific ocean. >> you say the sheer physical extent of your challenge. i didn't mean to cut you off. i hope we can be re-briefed on the threat of proliferation, particularly as it concerns iran going forward. let me shift a subjects. there are 300 submarines out there now.

they cannot compare to the united states in terms of their technological capability or the ability of the personnel who sent them. don't we need to keep pace with what is happening in the rest of the world? >> that has been my recommendation. >> nothing has happened to change that recommendation. >> nothing has happened to change that recommendation. >> arguably, the urgency of the recommendation is all the more present now with the increasing submarines by countries around the world. >> it is not only about the submarines. our submarine force as a lot of

other things from intelligence and reconnaissance to special operations support. it is a wide array of things that need to be addressed that can be addressed very well by a competent submarine force that has the capability and capacity to be able to address the challenges we see. >> you mention very briefly the challenges posed by human trafficking. i wonder if you can elaborate on that. >> i have a slide that someone gave me the other day. it said that the slave trade in the world today is about $30 billion a year. in my particular aor, my guess is that there is a fair amount

of that trafficking coming from that part of the world. we do look at this. we try to work with our partners and allies to look at where the sources might come from. what are the security mechanisms they may have in place? it is a problem. it is a much larger problem than we want to think about. >> isn't the republic of north korea a primary control research to this problem? >> i do not have knowledge of that. >> my knowledge is that they are to human trafficking but within that country in the united states. are you aware of information that would corroborate that? >> i am not aware of it but i will look into your numbers.

i would not be surprised. >> i do not have numbers. if you have them out is certainly welcome them. my time has expired. i want to thank you for your very helpful testimony today. >> thank you for your leadership and for all the serve underneath you. what is the relationship between china and north korea? it depends upon china? >> they're on their border. they share a common border. it supports the north korea through food and fuel and water there are diplomatic ties between north korea that are much more robust than what we may have ever experienced.

i think their influence can be significant. >> as i understand it, china is north korea's biggest trading partner, their main source of food and fuel. it seems to me that north korea would have a difficult time continuing economically even at their lower economic development pace as they are now giving the start in that many of the north koreans experience if they did not have china support. would you agree with me? >> i would have to agree with that. the north korean economy is about 2% of the south korean economy. >> if you look at what is happened in the last couple of

weeks with the new leader of north korea with his actions that seem to go beyond their cycle a provocation that we have seen in the past with his father. couldn?t china play a key role in getting north korea to stop their actions? >> i would think that china could play a key role in influencing the rhetoric and restoring some more sense of calm to the peninsula. i believe sometimes the chinese are more nuanced than we are. i believe there has been some reporting an indication that the leadership in china has made some statements about the issue.

i cannot tell you what is going on behind the scenes. >> one thing that troubled me is that when you were asked about your conversations with your chinese counterpart, you said in these past few weeks that you have not had contacts with your military counterparts.

her wisdom in both the public and private sectors will be put to use in addressing fiscal challenges much more severe than the challenges she addressed in the 1990's. for some perspective on the serious nature of our nation's debt and deficit crisis, i just note that in fiscal year 1993 the deficit was $255 billion. congressional budget office now projects the deficit for this country to be $845 billion. that will be the first time in five years that the deficit actually dipped below $1 trillion. in 1993 debt as a percentage of gross domestic product was 49%. today it's approaching 76%. the grand budget compromise that i believe we need to address this fiscal crisis must have, i think, three essential elements.

it must address both spending and revenues in a balanced approach. must rein in the cost of our entitlement programs in a way that do not disadvantage our sabotage the poor or elderly. it must demand that better management of our government programs, something that senator coburn has already referred to. we ought to deliver better services to the american people at a lower cost in almost everything that we do. this committee is important partner with the office of management and budget in all of these areas, but especially in ensuring that our government achieves better result for less taxpayer money. both congress anti-executive branch bear equal responsibility in rooting out waste and fraud and abuse in government programs and just playing he inefishency. both bear responsibilities, both, the legislative and executive branch, bear responsibility in ensuring we measure the performance of programs and alter or end those programs that do not work or outlived their usefulness. both of us bear responsibility for providing transparency to

the public, transparency on how our tax dollars, their tax dollars are spent. dr. coburn and i have worked closely together over the years to identify sensible, achievable savings that can be accomplished simply through better management. i'll mention a couple. we know that we can save billions of dollars by shedding some of the thousands of pieces of federal property that we no longer use. we know we can save billions of dollars every year by further redution the amount of improper payments our government makes, still over $100 billion per year. we know that we can save billions in federal contracting every year through the efforts such as so-called strategic source initiatives which involves buying more in bulk. we can save billions of dollars through better management of our government information technology infrastructure, including, for example, by continuing the efforts to consolidate federal data septemberers. and we can bring in billions of dollars in revenue by doing a better job of collecting taxes

owed but not paid. here i'm not just talking about new taxes. i'm talking about doing a better job of collecting the taxes that are already owed. some of which have been outlined and point --ed out our by subcommittee on investigation. i know from my conversations with mrs. burwell she's fully committed to all of these efforts and more. she's also committed to helping improve ways to 34esh sure the performance of government programs and to ensure that we have sound financial management practices across the government, including at the department of defense, which in its whole history has never been able to conduct a full audit of its finances much less obtain a clean audit. as you sit here 20 years after you first came to washington, i do think it's instructive to look back and reflect on the budget debate of those days when like now we face deficits, long- term debt problem, and many days seem insurmountable. just over 20 years ago, january

of 1993, president clinton's nominee to be the director of the office of management and budget, then congressman, my colleague at the time, leon panetta, appeared before this committee and he talked about how the american people didn't trust the government any more. he spoke of the importance of making the budget process work so that our government could start to restore that credibility. this is what he told this committee. 20 years ago, he says, we need to make government more efficient. more creative, make it an instrument of long-term economic growth, not an impediment. and make it a source of investment in our future not a robber of our children's birthright. all of those words ring, i think even more true today. the american people will not and should not tolerate congress and the white house kicking the can down the road any longer on making tough decisions. nor will they tolerate our failure to make significant progress in addressing some of the tough management challenges

faced by agencies across government. so my strong recommendation to my colleagues today is that we confirm this nomination of mrs. burwell, properly, so she can bring her considerable kills and intellect to bear on the work that the american people sent her here to do. if you'll bear with me another 30 seconds. when the president submitted the name of sylvia burwell to be the o.m.b. director, i know they worked together in the clinton administration, i said erskine tell me what you know about her? he took me back in time to the late 1990's, you at the time were maybe chief of staff to bob ruben as i recall. he said that he was in a meeting in the oval office with bob ruben, the president, leon, erskine, and you four of you. and i think the president was grilling bob on a particular issue. and he was maybe struggling to respond.

you handed a note to bob ruben. he read it. gave the president a brilliant answer. as the president was aing and awing over the brilliance of the answer erskine interrupted and said mr. president, i think i have broken the code here. ruben isn't that smart. it's sylvia. that addresses the issue you raised. that is high praise for a guy i respect enormously. we are grateful you are here. our best to the folks who raised you for doing a terrific job with you. one sister? one sister? you turned out well. i know hinton, west virginia, they are proud of you. so am i. with that having been said, we turn next -- i want to say -- senator johnson, ok. >> thank you, mr. chairman. i apologize i have to go to another hearing. i just wanted to say this is an incredibly well qualified nominee who is well-known to

many of us in her previous incarnations. there must be some character flaw that she wants the job, but other than that i think that she is very well qualified. you can -- the witness can see how controversial her nomination is by this packed committee, but this is an excellent choice and i wish her well. maybe before she leaves she could get us some discounts at wal-mart before then. congratulate her on her nomination. i thank you, mr. chairman, for allowing me to say a few words. >> thanks so much for being here and for your comments. i'm going to go through some -- a brief interducks, very brief, and ask a couple of questions. then we'll turn it over to you and then my colleagues. sylvia burwell has filed responses to a biographical and financial questionnaires.

answering prehearing questions submitted by the committee. we had her financial statements reviewed, without objection, this will be made part of the hearing record with the exception of financial data which are on file and available for public inspection in the committee offices. our committee rules require that all witnesses at nomination hearings giving their testimony under oath and i'm going to ask if you would just to stand and raise your right hand and respond to these questions. do you swear the testimony you are about to give to the committee will be the truth, the whole truth, and nothing but the truth, so help you god. >> i do. >> please be seated. why don't you go ahead at this time and make your statement. i'll come back and ask you questions. >> thank you. thank you, chairman carper,

thank you, ranking member coburn, for and that entire committee welcoming me today. it's a privilege to be considered by this committee as the president's nominee for the office of management and budget. i want to begin by thanking senator rockefeller for that kind introduction and i will just say i don't know he actually remembers it. he for me embodies the values of my small town in west virginia. it was many, many years ago that the senator visited hinton and at that time he gave his first interview to a group of young reporters. we were actually in the sixth grade and started our own newspaper. and it was just a reflection of his caring and commitment to the youth of our state. and his willingness to engage with the young people of the state of west virginia is just a reflective of what an incredible role model he's been in terms of public service for me and for so many others. i thank him for that and the tireless work that he's done in the state of west virginia and for the nation. i'm pleased that my husband and my brother-in-law and friend

could join me. our 5-year-old and our 3-year- old chose a park over hearing their mommy answer questions. so they are not with us today. i understand the sacrifices entailed by public service and i recognize that one of the biggest burdens often falls on one's family. so i deeply appreciate the support that my family is giving me as i take on this new challenge. i'm also grateful to president obama for nominating me to serve as the next director of the office of management and budget. it's an honor to be considered for this position at this important time. and finally, i want to thank the members of the committee and their staffs for the meetings that have occurred over the past weeks as i have come to prepare for this hearing. i appreciate everyone's time. those i haven't had the opportunity to meet with i look

forward to doing that. what i hope is that those meetings are the beginning of a conversation. that if confirmed we can continue. i believe in the greatness of our nation. as the second generation greek american, my family and i been fitted greatly by the opportunities this country has offered. and our nation has made important progress over the last four years. we pulled out of a deep economic downturn. oufer financial markets have stabilized. businesses are hiring again. and we begin the long journey to put our fiscal house in order. the president and the congress together have made progress on the deficit, but there is much more to do, and we need to focus on making the economy work, for middle class families and american business in both the short and long-term. harkening back to. so phrases and words of leon panetta. if i'm confirmed, my primary focus will be to contribute to achieving balanced deficit reduction, increased enishency efficiency and effectiveness in how our government works, and

targeted investments that help this economy grow and create jobs. the president is actively engaged with members congress on the subject and if i'm confirmed, i will do everything in my power to keep this dialogue going and to continue to build on the relationships between the administration and members on both sides of the aisle. from my experience in the clinton administration at o.m.b., the white house, and the treasury department i learned the importance of working together in a bipartisan fashion to get things done. i saw firsthand how we had to come together to get deficit reduction agreements in the late 1990's. i know that we all come to the table with firm convictions and the belief that we know the right answer. but i also know that we all come with the same conviction to serve the american people, which i hope is what will drive us to find common ground to move the

country forward. there is no question that the road ahead will be difficult. the challenge we face -- challenges we face are sobering. i'm confident we can come together on a comprehensive plan. i'm pleased with the prospect of returning to o.m.b. i have tremendous respect for the interconstitution and the incredibly talented men and women who work there. i'm hopeful that film' confirmed i can contribute to ensuring o.m.b. is a place where talented people want to go and that the institution is strong for other administrations. although o.m.b. is most well-known for the work on the federal budget, the management side of o.m.b. is critical it is even more important than ever that we are operating the government in the most efficient and effective way possible. i want to credit this committee in asking the directors for their strong leadership in these areas. and if i'm confirmed, i want to build on these efforts and continue to increase the firbletsy and effectiveness of taxpayer dollars. by governing smartly and by

going good stewards, we can increase the value of what is delivered. as someone who has been out of government for now 12 years, i'm hopeful that i can bring a fresh perspective to the fiscal debates under way. from my positions at the wal- mart and bill and linda gates foundation, i have the seen the important role the sectors play in the lives of american people. if i'm confirmed it would be an honor to dedicate myself to using the tools of o.m.b. to ensuring that our government delivers for the american people. again, i want to thank the president for giving me this opportunity and the committee for considering my nomination. i look forward to answering the questions that you may have. thank you, mr. chairman. >> thank you so much for that statement today. and to our guests for joining us as well. i'm going to ask four questions. i'm going to yield then to senator johnson for a couple of questions that he might like to ask. i think you may have heard these questions before. but i'll just start off by

saying. number one is, is there anything you're aware of in your background that might present a conflict of interest with the duties of the office to which you have been nominated? >> no, i'm not. >> ok. do you know of anything personal or otherwise that would in any way prevent from you fully or honorably discharging the responsibility of the office to which you have been nominated? >> i do not. >> and do you agree without reservation to respond to any reasonable summons to appear and testify before any duly constituted committee of congress if you are confirmed? >> yes, sir, i do. >> all right. so far so good. senator johnson, please. >> thank you, mr. chairman. welcome. welcome to your family and friends. i also enjoyed our meeting earlier. and appreciate your willingness to step forward and serve. it is a sacrifice, particularly with a young family. you though what you're getting into. thank you for your willingness to do that. i also have an opportunity to

question you during the budget committee confirmation hearing as well. let me concentrate on the management side. from my standpoint, the regulatory side. i was in wisconsin the last two weeks and visited one company which i don't want to name, but they were talking about the new boiler mack rule. that they've had an engineering study conducted on it. it will cost them about $5 million to hopefully be able to comply. that was the cost. the benefit, and this is an independent engineering study, you -- they would be able to reduce the nontoxic particulate matter coming out of their operation by two dump truck loads full per year. that's it. to me that certainly qualifies unthe law of diminishing returns, that's something we really need to take a look at. and so in your position as o.m.b., what would be your response to that? how can we do a far more

effective job at evaluating those types of regulations that have such a high cost and such a minimum benefit? >> senator, not familiar with that specific example. but in terms of overall velocity and how we can work to make our regulatory system work in a more effective way, i think it's starting with what the principles of what we're trying to do with the regulation and thinking through the issues of we do the regulations in order to promote health, safety and the environment. at the same time consider how those regulations impact the economy, economic growth, innovation and jobs. and putting those things together through a process of which i -- of which it is an important part. an important part of making sure that things are appropriately considered, looking at the cost- benefit analysis which agencies do. thinking through, have the appropriate parties had an opportunity to comment and been a part of the discussion and whether that's inside the government or outside the government. and so if i am confirmed, i look forward to helping that in terms

of implementing that oversight role in regulation. >> ok. you raised an important issue in terms of having people affected by regulations having input into the process. between 1998 and 2010, the opportunities for public comment has really declined. in other words, the times regulations have been issued without opportunity for public comment has basically doubled from 18% of the time to 35% of the time. is that something that troubles you? is that something you'd direct your attention toward solving? >> i think there are two elements to that question. the public comment. one, i think you're referring to interim rules. the issuance of interim resumes and the use of those as a tools. if i am confirmed i want to make sure that any use of interim rules is appropriate. in the broader category of regulation, one of the things that i think has changed since the time i was previously at the

management -- office of management and budget is people can comment using technology that so that expands the ability for people to discuss and comment in the rule making proelse is. i think as we think about public comment and transparency, we want to think about it over the entirety, but with regard to the specific issue, interim rules, that's something that i want to understand how and why those rules, when they are interim, what are the decisions and how they're made. >> ok. one of the macropieces of information that's pretty eye- popping to me when i came here was a study commission by the small business administration or this administration that tried to put a figure on how much a cost complied with federal regulations and their result was $1.75 trillion per year. put that into perspective, that's a number that's larger

than all but eight economies in the world. i know some people dispute that figure. i have no idea how particularly accurate it is other than we know the regulatory burden is huge. is that something you acknowledge? do you dispute the figure or -- again, do you just acknowledge the harm that the regulatory burden is causing to economic growth and job creation? >> senator, with regard to the issue of small business, one that my father was a small businessman, and so i understand .- he was an optometrist when i think of that as o.m.b., i think it cuts across a number of areas that are important. and one is in the regulatory space and i think that's an important role that o.m.b. has in making sure that s.b.a. and small business has a voice. and i think that's part of the oversight role. i think throughout a number of other different areas in small business, whether it's in the area of strategic sourcing, the strategic sourcing leadership council has seven of the largest contracting members and small bills. so that that voice is at the table. or as we think about questions of insourcing and those types of topics, making sure we consider

small business. so i think across the board, the issues of how different actions of government affect small business are important and one of the most important things we can do is make sure the right voices are at the table. >> what proposals have you heard coming out of -- potentially out of congress that would help modernize our regulatory burden? >> that is something that -- one of the things i'm hopeful, if confirmed, that i can get deeper into, where are the places where people think things aren't working? for instance, the lookback that has occurred, and again something related to small business in terms of the lookback and thinking about things, regulations we no longer need, that's a process that's ongoing. there were 500 things identifyified. how is that process going and should we build on that process, change that process? what are the specifics? because one of the things that i think is important in thinking through the tools that o.m.b. has or doesn't have is what's the outcome we're trying to get and what's not working right now? are there places we do have best practices that are working that we need to build on? or are there places where things

aren't working, we need to stop. so if confirmed what i would like to do is understand what that list looks like, working with this committee, to understand that so we can get at the ones that are the largest and the most important to change. >> just a quick suggestion. we heard -- we held a pretty interesting hearing chaired by senator mark warner about the british one in, one out rule. so for every new regulation you had to find one of equal or greater compliance cost to get rid of. i'd go more one in 10 out. but that's an editorial comment. one last quick question, i believe this committee has been very well served by the efforts of g.a.o. it's really one of the areas of government where we've cut their budget. fiscal conservative would be one of those areas where i'd like to increase the budget. i'd like to get your assessment on that and your level support for the g.a.o. >> i think the g.a.o. is an important for all of us as we try to move to more effective and efficient government. in the report that came out today is something i think we need to take a close look at and work on.

i think the administration has in some cases worked on those issues. i know that the congress has as well. but i think g.a.o. is an important partner to have these conversations, looking for those opportunities to make government more effective and efficient. and i welcome that opportunity if confirmed. >> thank you. look forward to seeing you tomorrow. talk about budget. thank you, mr. chairman. >> thank you, senator. >> i greatly enjoyed also our discussion. as you came to my office. and our free-flowing exchange of ideas. and i'm here today kind of ironically in a room that's not very packed with people, realizing that this is probably in my opinion one of the most important confirmation hearings that i will attend in the next four years. why do i say that? if you ask any american today, they are deeply concerned. about the fiscal condition of our country.

h -- not just because they hear it on the news but because they know that in many ways we're mortgaging our children's future. and we if we don't get a handle on, it we won't be successful into the future. i applaud you for stepping up in a very trying time. i want to make sure that you know, at least from my standpoint on this committee, i intend to be a great friend and a great advisor to you in the many circumstances that you'll confront. i just want to follow up on a couple points. one is leadership. you know, i read your resume and i know that you've been one of the folks who have been in the back passing notes forward. and i want to make you sure that you know that our expectation is that you're going to be sitting at the table, a full partner with the president and with the cabinet in solving our fiscal crisis. and that you feel that that is

in fact the authority that you've been granted by president. >> yes, senator, do i feel that. i feel very comfortable and confident that i will be a part of the president's economic team. and be a part of those conversations in a very real way and an important way. and it's been my experience probably from folks like bill gates to mike duke, the c.e.o. of wal-mart, that i am not a shrinking violet in the room. >> somehow i had that sense when you and i had that visit. i also want to piggyback on the discussion that senator johnson just had about regulatory reform. this isn't make-believe. this is real and all across all the corners of america. people believe in clean water, they believe in clean air, they believe in safety regulations. but they see things that are happening in their business that make no sense. in fact, i joke a little bit that i'm going to write a book and it's going to be entitled

"that makes no sense" and the going to be 1,000-plus pages. because every day i hear things that make no sense. and we've all been, at least i've been in my life, a regulator. and i know how people who write regulations think. and i know how much leadership it requires to ratchet that zealous, i want to make things perfect in the world, behavior, when that may not be the best way to manage it. i think from my standpoint, the best way to understand regulation, the best way to understand what senator johnson's been talking about and what i've been talking about is actually reaching out to those who are regulated. not just the agencies who are zealous, but reaching out to the people at, in my case, in the grain elevator that are sweeping their floor constantly, with very little risk to anyone, because no one's ever on the ground there, but yet that's a regulation that they're required to comply with.

or our small community banks who are struggling under the regulation of -- and basically forced to no longer do mortgages. so i want to know what you're going to do to bypass what we call the beltway mentality and to actually visit with north dakota and american businesses and with those folks who work every day struggling to meet compliance burdens. >> i think as senator rockefeller mentioned, during my lifetime, minority star is being -- my north star is being from a small community and a small town and knowing and thinking about the issues from that perspective. and i will hope that during this there's never been anything but with your specifics, your point about leadership is an important

point. in terms of making sure that there is a culture and a thought process and approach. i think it is a signal that in the answer, i mention small businesses three different ways, the way they interact with o.m.b., the signals i send as a leader i think are a very important part of the application of the processes that exist in ways that get to the outthat you're talking about outcome that you're talking about. i understand it's my responsibility as part of leadership and to use those processes that exist and answer the question that senator johnson posed which is, if there aren't enough tools and we don't have think we can get it done, what tools do we need? that's what i would like to try to do. >> we would just like to believe that at the table is not just the bureaucrats who are driven to make the world perfect but that there are people who are experiencing real life conditions and conclusions as a result of these regulations. and there's legitimate fear out there. and you've seen it and i've seen it in almost a daily visit with people in my communities and my

home state and i'm sure many communities and states across this country. i want to also talk a little bit about the interaction between o.m.b. and let's say the bureau of reclamation. you know that i have a particular concern about a record of decision and this isn't even about the merits of the case. you and i can debate the merits of the case. but my concern about this is that there is a lack of decision making which absolutely frustrates people in the real world when they know they have to make decisions at a timely basis. i'd like to hear if you're willing to make a commit am to commitment to really look at those things that have been hanging for a long time at o.m.b. and don't seem to get resolved with the agencies or they get tucked away into a corner without any real attention to resolving the controversy. >> senator, you have my commitment that if i am confirmed, what i want to do is

have a relationship where we can have those conversations. where when you pick up the phone, let me know what the concerns are and i have the ability to have a dialogue and say, here's what -- look into it, understand it and have a conversation about it. and so that is what i am committed to do and believe is a very important part of relationship building. is a dialogue. an ability to hear, listen and then actually communicate back and be all right with saying, here's what my understanding of the situation is and be able to do that. >> just one final comment. i'm thrilled that you're going to be at o.m.b. i'm thrilled that you're willing to step up and take on this challenge. because i think you're probably the right woman for the job. probably the person who is going to really begin to bring some faith of the american public back into this fiscal process and i want you to know that speaking just on my behalf, but i'm sure for this committee, anything that we can do that helps you address the needs of this country and move this country forward and we look forward to working with you.

>> thank you and i think you probably get a sense that i'll probably pick up the phone and call. >> thank you, senator heitkamp. senator portman, please, welcome. >> thank you, mr. chairman. and thank you, ms. burwell, for being here. you and i talked kind of more about the job than we did about the issues i'm going to raise today. but having had the honor of having that job, you said earlier, which is o.m.b. is the place where talented people want to go, ought to be your goal. and you're fortunate because you are inheritting some really talented people. of the roughly 500 people who were there when i was there, you know, i owe them a lot. they were some of the best and brightest in public service and they're drawn there for a reason, they care about government efficiency, they care about budgeting, they like balanced budgets. and so i know you will use them as great resources and having been there before, you understand the importance of

those -- of the people and the job. it's a tough job. and it's the only job in the cabinet where you can measure your success not by how popular you are but how unpopular you are among your fellow cabinet members. and if they start to like you too much you're not doing your job. so that will be a good measure for you. tomorrow we'll talk more about the fiscal challenges we face and hopefully the president's budget will offer some hope tomorrow. there will be lots to talk about. you're going to end up being there during an interesting time. but today let's talk about the m in o.m.b. which is a really critical part of the job and sometimes overlooked and probably was the most fun part of the job for me and i think will be for you, senator heitkamp and senator johnson raised great ideas on the regulatory front. you said you were looking for ideas, ways to improve the regulatory environment. let me give you three really quickly, get your response to them. one is how about having a

regulatory agenda for nearly -- agenda? for nearly three decades presidents of both parties have written their plans. it's required by executive order that was issued under president clinton. it's also required by statute, the regulatory flexibility act. the publication in the spring and fall is by statute. it's very important because it helps the public and it helps regulate parties to better understand these new rules. it helps on central compliance cost, especially for small businesses. the spring regulatory agenda as the title would suggest is supposedly published in the spring. it's under statute. april or may. last year the spring agenda never showed up, despite the fact that the commissioner said april 13 was a firm deadline for the spring regulatory plans. i think it's the first time it's not been released in decades, at least to my recollection. i wrote the president twice to ask where it was because we were very interested here in this committee to look at that regulatory agenda. i received no reply.

instead and again without any explanation, o.m.b. simply ignored it and then released a single regulatory agenda on friday, december 22, after the election incidenty. so, -- incidentally. so in your briefing for this hearing, did you learn why the administration chose not to issue a regulatory agenda in the spring or in the fall and will you commit to us today that, since this committee's interested in this information, that you will produce these regulatory agendas on time as required by law and executive order? >> senator, i think at the root of your question, there are two parts, one is responsive in terms of some of your interactions with o.m.b. i look forward if i am confirmed to be responsive in terms of getting back to you, in terms of answering questions in the form of a dialogue. >> my letter was to the president, not to the o.m.b. director. but i didn't hear back from the president. do you commit to sending us those regulatory agendas on time?

>> what i commit to is understanding i don't know what the reasons were. as a private citizen, one of the things that's different than the last time that i was here for confirmation for a position at o.m.b. is i was in the government. and so as a private citizen, i've not had the opportunity to be briefed on deliberations within the government. >> i would suggest a simple yes. this is something that's always been done, very well when you were there it was done. are you saying you cannot commit? that will you give this committee and the american people the regulatory agenda that's required by law? >> because i don't know the reason that it wasn't done, what i can commit to do is do my best to get it here. because i don't know the facts behind what happened. that's why i'm uncomfortable making a commitment when i don't know the facts around the issue. my commitment is -- >> let's talk about something ost-benefit analysis .

as you know, for 30 years, presidents of both party have required executive agencies to go through this cost-benefit analysis. it's a bipartisan project initiated in the carter administration, formalized by president reagan and updated by president clinton when you were there, i believe. re-affirmed by president obama in january, 2011. and a central emment of that is to look at significant rules, look at the cost benefits, look at reasonable alternatives. what are your views on the importance and impact? do you think it's improved the quality and cost effectiveness of major regulations? >> i do think that the cost- benefit analysis is an important part of getting to some of the issues that were part of the earlier question and ensuring that we understand how we think through that balance of providing safety, public health and protecting our environment at the same time we balance economic growth and job creation and innovation in our economy. >> great. there's one major gap, as you know, we talked about it. doesn't apply to independent agencies. and the president's talked about that. even though those agencies are now responsible for a quarter of all major rules and critical sectors of our economy, from

telecom to agriculture, to financial services that are exempt. from 12866 as you know. and the economic analysis have suffered as a result. here's a letter in december that was sent to this committee by a bipartisan group of former administrators. they said that the legal advisors to both president reagan and clinton, the president has the power but both presidents chose not to do. so many of us have urged reconsideration of this decision. our concern is agencies typically do not engage in the economic analysis that we've come to expect from executive agencies. in 2003 they wrote a larger article saying that the commitment to cost-benefit analysis has been far too narrow, it should be widened to include independent agencies. so my question to you today is, we have legislation as you know, senator mark warner and i have introduced, along with susan collins and other members of this committee have supported it, to close that gap, to give the president the authority to do what he says he wants to do.

could you -- do you think the independent agencies would benefit from that kind of analysis? >> senator, what i would like to understand is why do we think the independent agencies are not doing the appropriate cost- benefit analysis and what is the best way to get that done? that's the question, if i'm confirmed, that i would want to understand. and understand what is the best way -- because i think at the core of the issue is we want the independent agencies to be pursuing cost-benefit analysis in an appropriate way. there's a question about whether or not that's being done. and then the question i would have is what is the best way to get there? at the same time we respect the congress' decision to make those agencies independent at various times and that all comes with it that. whether that's the budget process or the regulatory process. >> they're not doing it because they're not required to do so unless there's a specific authorizing statute which does require them. this would be a requirement for them to follow the same rigorous discipline that other agencies are subject to and the president

has spoken favorably. i hope you will work with us to give you all this that you need. i've got some other questions on reform and other ways to help the regulatory process side, federal property, that i'm working with the chairman on. look forward to doing some follow-up questions with you on those and again i look forward to seeing you at the budget committee tomorrow. and i believe you will be our next o.m.b. director and this committee looks forward to working closely with you. >> thank you for your advice and counsel in our meeting. >> i have one question of my colleague. which seat did you prefer sitting? -- did you prefer sitting in? the one she sits in today or the one you're sitting in today? >> it's much more fun being on this side. the seat that she will have is the one i prefer. honestly, it's a great opportunity. you'll be surrounded by some incredible public servants and you intend to do some truly important things for the country right now. >> thank you. >> i'm going to recognize senator ayotte first. glad you're here.

>> thank you. i want to congratulate you on your nomination. appreciate it. you're very important position and even nominating for. and i wanted to ask you about, there was a third annual g.a.o. report on duplication issued today and it identified 31 areas where agencies may be able to achieve greater efficiency or effectiveness. have you had a chance to review that report? >> i haven't had a chance to review the report but we discussed it briefly in senator johnson's question in terms of the relationship with g.a.o. and i mentioned it specifically, proactively, because i think g.a.o. is an important part of the partnership between the executive branch and the legislative branch on increasing efficiency and effectiveness in government. >> i appreciate that. because in the report it does identify, particularly an area that o.m.b. would have some oversight and a

role in, going back to recommendations that g.a.o. made in 2011 and 2012, updating where things are on those recommendations. and the specific issue is, the o.m.b. guidance calls for agencies to analyze whether their information technology investments are continuing to meet business and consumer -- customer needs and are contributing to the agency's strategic goals, and that is something that o.m.b., the g.a.o. has recommended that o.m.b. take action on, to prevent agencies from making duplicative investments in that area and as you know from your prior experience, i'm sure, those technology investments can really be very expensive and so making sure cross agencies know duplicative investments, adjudication systems, and yet apparently o.m.b. has not followed through on the g.a.o. recommendations. so, i know you haven't seen the report but i guess i would ask

you to commit to addressing these recommendations if you're confirmed as director. >> senator, the c.i.o. role is something that has changed since i was at lat -- since i was last at o.m.b. i think it's an important and exciting change that has occurred in terms of the responsibility that o.m.b. has to work across government on a number of the things that i think you're mentioning, i think are extremely important. i think we need to move from the hundreds of data sents that are we've already gotten rid of to hundreds more. i think we need to think about the i.t. part of the role of o.m.b. in a couple of different ways. one is about increasing effectiveness and efficiency and i think that gets to the core of what you're talking about, with the g.a.o. report. i think there are many places and whether that's using the cloud as cheaper operationally. there are nam of things that can be done in that space that i think are important. the second thing is transparency and transparency in terms of technology i think has a number of different elements to it. it has elements that are related to how we serve the american

people and let them know what's being spent, but also within government. when you can use information technology, one department can know what another department is spending on things. and so we can move toward that efficiency and effectiveness through transparency. the last theory that i think is very important is innovation. because i actually think there's great opportunity, when the federal government has had the opportunity to move data, whether that's what we all use in g.p.s. or weather. those are opportunities for innovation in the government. so, i expanded a bit on what you mentioned because i think it is beyond efficiency and effectiveness as we think about that position and that role and what can be done. one of the important things that i think we need to do, though, is make sure when we are moving towards transparency or thinking about those things, that we carefully target so that we can do the cost-benefit analysis to achieve whatever it is we're trying to achieve. when we think about usaspending.gov which there are issues with, what is the target audience we're talking about?

is it people who are seeking funds or the american people? because how you'd design that site and use money will differ. >> i think that certainly we need to be in a position where the american people can understand clearly. so as you look at that site going forward, i would err on the side of making sure the american people can understand how their taxpayer dollars are being spent. and i appreciate your taking an interest on this case management issue because i think there's cost savings we could achieve there and that's obviously important in light of our fiscal climate. the one issue i wanted to ask you about that i know has already been touched upon is the important role you have with the office of information and regulatory affairs. senator portman asked you and you're responsible for reviewing agencies' regulatory actions to ensure that the agency has adequately addressed all the information, risks, costs and benefits. the reason i asked you about

that is how do you view your role, your role to be in that regard, because i've had numerous examples, one of them that i will raise to your attention, is a potential role rule that the department of labor is issuing changing the definition of fiduciary under ar simbings, a that will have a very -- ariza that will have a very dramatic impact on stock ownership programs across this country. many small companies that have this. i use this as an example because it seems to me that the role of o.m.b. in the factors that have to be reviewed this happens to be a rule d.o.l. issued, has withdrawn and is now because of the concerns that people have raised from the ground, and will be reissuing in july, but it seems to me that in your proposed new role, that you have very important position that you can raise these types of concerns up front so we're not in this position and companies aren't put in this position or average americans put in this position that are

part of these plans. so can you let me know, first of all, how you view your role in that? and how you will review these types of regulations to mike sure you're fulfilling this function -- to make sure you're fulfilling this function that we're not issuing regulations that are more harmful than helpful? >> senator, the issue of how that process of when things come into oira, the process of things i would oversee, is something i would take seriously. in terms of the application of how we do see, have the appropriate voices been there? the other thing it does attempt to do and -- is to at least have conversations with the departments as the process is going forward. so, when we know about concerns or that sort of thing, can have those conversations as we go. one of the most important things i think i can do in terms that have process work something make sure that i have strong relationships with the cabinet secretaries so that the conversations -- first of all,

it's me setting an example for how i hope that the rest of the department will work. but also having those relationships where we can each pick up the phone and call. so that will be an important part of my leadership. i think the other thing that will be important is strong management of a team. >> thank you very much. i also am on the budget committee. so i might see you tomorrow as well. >> thank you. >> i would just add, on the issue, tech stat and portfolio stat, two places where we are reviewing those i.t. probablies because i agree with you about the importance of those costs and when i was in government before, i saw the incredible cost and i've seen it in the private sector, when people are trying to do i.t. changes. it can become incredibly costly. so, to review specific i.t. probablies is i think a process that's going to catch some of those things earlier. and portfolio stat is a means by which we look at the different pieces to make sure they interact well, are things that i

think are very important to implement strongly and well. >> i appreciate it. i know my time is up. i think all of us having worked in government have had an experience where substantial investment in a case management program and then it doesn't do what it was reported to do and so that's what we want to avoid across agencies in the federal government. i appreciate your answers on that. thank you. >> thank you. >> senator baldwin, thank you, welcome. >> thank you, chau for appearing before the committee. welcome to the committee. i joined a couple of my other colleagues on this committee, both sitting on the budget committee and this committee. and as somebody who also on the house side sat on the budget committee, i'm very well familiar with the importance of the role of the o.m.b. director on the budget side of things. but i was really pleased to see in your testimony your emphasis on what you call the m side, the management side of o.m.b.

because even with the best of intentions in the budget process, if we don't have efficiencies and if we don't have an effective federal government, our budget work can be for naught. are you nominated for this role as a very exciting time, at a tremendously challenging time for our nation. and i think about daily, as a senator, i think about the enormous challenges that we face in this country. i regard them as dual or twin challenges. stabilizing our debt and deficit without shortchanging our future, butals continuing with but also continuing in every man that are we can to move our economic recovery forward. grow our middle class again. now, under president clinton, we showed that these two goals can be accomplished. and i'm encouraged you that you

were part of a team that helped preside over three years of budget surpluses. my first term in the house of representatives was spent on the budget committee and i remember in fact we talked about this, people worrying allowed about the dangers of running surpluses. and i would really like to see our country get back to having that as one of our primary worries. but that said, i wonder if you could just start by talking big picture and telling all of us what your priorities are for leading the office of management and budget. what's your vision? >> as i think about the priorities, thank you, senator, as i think about the priorities, the first thing i should probably say is my experience is you you can think a lot about them. once you get into the job, one will be informed of what you find when you get into the job, but i would start at the first level, number one, with regard to what i would refer to as

regular order and relationship. and i think those two things are very interrelated. and regular order comes to some of the issues senator portman raised and others have raised about timeliness from the executive branch, responsiveness and then flowing through to however i can support the processes of budget committee, the appropriations committee, to returning to that order in terms of the processes. i think relationships are an important part of that and that's something that i think you've heard as a theme throughout the conversation this afternoon. i think that's a very important part of how we get there. the second priority if i'm confirmed would be to use both the m and the b of o.m.b. to make sure that we're doing our best to deliver for the american people an economy that's healthy in both the short and the long-term. and priority one under that is i believe a comprehensive approach

to deficit reduction and moving through that and how we do that and making sure that we can make the commitments that we have made over time. and a part of that we've discussed is on the m side, that efficiency and effectiveness. the third priority and we touched upon it with senator portman a bit is the institution. i believe that, because visit opportunity to go back to o.m.b., that is something that i started where the understanding of the institution gives me the opportunity to commit, to do my best, to continue to build that organization. >> thank you. i wanted to just dovetail on a question that was asked -- well, senator ayotte. in terms of transparency with regard to o.m.b.'s review of rules. timeliness and transparency, i mean, o.m.b. has 90 days to review most rules, 120 if head of o.m.b.

and the head of the relevant agency aagreed to an extension. we know that -- agreed to an extension. we know some rules have been sitting at o.m.b. for much longer periods of time. with little information on where or why the process seems to have ground to a halt. so, how would you approach this challenge of transparency and the need for the public to know? >> i think that there are a number of different pieces to that. and one of them is understanding why the rules are there, the ones that have been there for an extended period of time, is it related to complexity or other issues, what are the critical past things you can do? there's the overall, what is the timetable for rules as they come in and how we should think about signaling perhaps when rules come in that are of great complexity, making to your point about transparency, that we are communicating. that the expectation is because of the complexity of the rule,

that's that's what we're doing that that's what we're doing. this is getting to communicating clearly where there are issues and what those issues are. i think with regard to transparency and the american people, i think there are some tools that we are using with regard to the ability for people to comment. i think that's a part of transparency, using technology as a tool there. and what we need to understand is, what's not working about that? is it who connects us, where are the parts? and so if i am confirmed i hope to, one, look closely at the commamples -- examples that you're giving, understand why that's happening, and then as a general point, think through, how can we communicate more quickly and often where we see these things happening? >> thank you. i want to get a last question in the record. feel free to follow up as my time will elapse before you may have the chance to fully respond. but in your testimony you stated

how important it is that we are operating the government at the most efficient and effective manner possible and i agree and i believe that one mechanism to do this is the use of something called energy savings performance contracts. these are -- these contracts allow federal facilities to improve their energy efficiency using private sector investments with a guarantee of energy savings. this contracting vehicle has been supported and encouraged by the last four administrations but is consistently challenged because it is not a typical or traditional contracting vehicle. so i would like to hear either now or in the days to follow your position on the energy savings performance contracts and will they be encouraged by the o.m.b. under your leadership? >> feel free to go ahead and respond at this time. >> thank you. with regard to the issue of energy-saving contracts, having been in the private sector and

seen some of the opportunities that exist with regard to the type of investment and the return on that investment that you can achieve over a period of time, the concept of having means by which we as a groff can get those investments made, get the savings, which i think is about efficient and effective government, and contributions to the environment, i think those are very important concepts. and how one things about -- one thinks about application of those at o.m.b., that's one thing i would want to make sure i understand. i'm enthusiastic and excited about energy savings, how one determines that return on investment over a period of time. and ensuring that those investments in the way the contracts are done really do focus on the energy element. so those are the kinds of things that i would like to have -- be able to consider if i am confirmed and looking at those. >> thanks. senator levins joins us. i'm going to recognize him next. >> thank you very much, mr. chairman. welcome to our nominee. i know you've talked about the deficit and how to go about

addressing it and how you would recommend that we proceed with deficit reduction, whether we do it just by looking at the spending side or whether we also look at the revenue side as well. can you give us your general view as to whether or not there ought to be either a exclusive focus on spending which is what the house is proposing to do or whether we have a more balanced approach which would include both additional revenues and targeted spending reductions? >> senator, it's my belief that in an effort to get to the levels of deficit reduction that i believe we need over the long- term, that we need to have a combination of spending reductions as well as revenue to get to the numbers that i think we are trying to do. because i think the most important thing is that we continue on that path of reduction of the debt to g.d.p. ratio. we've started on that path, we need to continue on that path and think about how we do that

in a way that connects to the american people. each of these numbers and things that we talk about are not ends in and of themselves. they are related to people, their lives and their jobs and 3things like our nation's national security. >> the percentage, you talked about g.d.p., the percentage of our g.d.p. that comes to the federal government in the form of revenues, we've been told, is at an historic low. 14% to 15%. typically it's about 18% or 19% of g.d.p. are those numbers -- are you familiar with those numbers? and that approach to looking at revenues as a percentage of g.d.p.? >> yes, sir, i am familiar with the different numbers and different points in time. >> is it true that we are at a very low point in terms of revenues when you look at revenues as a percentage of our economy.

of our gross domestic product? >> yes, sir, the numbers when i was in the clinton administration on average in the three years that we balanced the budget, it was 20%. >> and you know what they are now? >> they are in a much lower range, in the teens. >> about 15%? >> around 15%. >> something like that. in terms of the corporate contribution, corporate tax payments as a contribution to the total revenues, corporate profits are now at an all-time high. corporate taxes now account for an historically low percentage of all federal revenue, something like 9%, i believe. somewhere between 9% and 10% of corporate revenue, total revenues coming into uncle sam come from the corporate world. do you believe thap additional corporate revenues need to be part of the revenue picture which inur