right now the incentive for agency is to add more staff and chase down more dollars and spend as much as you can at the end of the year. you mentioned spending caps. sequestration caps and other caps hit at every single program. there are some programs that run more efficiently than others but a cap like sequestration hits all of them with an equal amount of fury. if eui gave the agency the authority to cut 20% from their budget there is very little oversight of which programs they will cut and they will keep the ones they like best and cut those that probably i like the best. talk through different options you have seen for incentivizing agencies for reduction. >> i list 15 reasons why the public sector will never be as efficient as the private sector. the profit motive in the private

sector is usually powerful and the government doesn't have that. there's been lots of talk for pay-for-performance in the federal government for decades but it never happens and i don't think it can. the government has more rules because of structural reasons to prevent public corruption and they have no clear motive like lowering cost and maximizeing revenue. so i think the focus should be on fully illuminating programs and capping spending giving executive branch agencies more flexibility. i think executive branch agencies should and can do more to evaluate their own programs, perhaps agencies should be required to do detailed analyses and rank order their most ever efficient to the low he was priority and make it public so congress can see it and use it

for decision making. more information is always better. one thing that i find striking about federal agencies you go to their website it is all good news, all essentially propaganda about the fabulous things but that is not fair to taxpayers. they should be required to provide more balanced information about their programs, their failings, and what the low priority activities they do are. the ultimate decision of the congress but i think agencies can do more to provide information to congress about where they fail. >> i agree. it is the taxpayer's right to know. we have bipartisan input into that bill and it has passed the full house. we will send it to the senate. just the basics of knowing each program and if there are metrics would be a tremendous asset to congress to make those decisions. right now there is no description of all those

programs or listing of the programs. what was mentioned about the hundreds of duplicative programs it is difficult to go through the work of identifying them because they have all different descriptions and locations. it was mentioned earlier about the rule change in the house. that was my rule change that went through on that to try to identify some of the duplicative programs and there is not enough teeth and i appreciate you bringing it back out because that is something i hope we can add more teeth so it is more than just identifying and listing this is duplicative but a prohibition as well. are there other rule change things you have seen that would be an asset? >> it reminds me of the improper payments act the first one just identified them and the next two put teeth into it. i hope the rule that has been adopted would improve over the years.

because if you are prohibited from enacting a duplicative and overlapping program, then that happens solve that problem to start. i know rules change at the beginning of each congress and i hope that continues. it is amazing it took this long to have a rule like that because you would think an organization would want a duplicative rule. i was happy to see that because we started our research for the testimony we didn't know it was there. so, that is something else that perhaps needs to be emphasized to the committees, that this is a rule and they should be using it. because it is citizens against government waste didn't know the rest of the groups don't know. >> it is new and it is a step process to be able to push on that. one quick question. one of the items you identified was requiring d.o.d. and v.a. to

jointly buy prescription drugs. i have seen figures, you have a little over $4 billion in savings and i have seen figures as high as $7 billion in savings. the g.a.o. report came out in early 2000 suggesting d.o.d. and v.a. jointly purchase prescription drugs and they did and had millions of dollars of savings until 2005 and then 2006 d.o.d. never really cooperated again. they have looked at it but i didn't know if you have any additional detail. that is one of those bipartisan areas to say why wouldn't we try to combine the drug purchasing between d.o.d. and v.a. any other comments? >> i think you articulated it well. i don't think i have anything additional to add. something we strongly support. >> that collaborative had really declined over the past few years

and we are advocating for that to occur again. >> thank you. with that, i yield back. >> the gentlelady from illinois. >> thank you to all the witnesses for being here to share your thoughts. over the past couple of weeks we have been debating whether we can afford to extend unemployment insurance as a life line for millions of americans. in my home district of illinois thousands of families were talked about last year in cuts to the food stamps program. at the same time in this very committee we have seen the waste that happens in government. it is really infuriating to me to think that i have kids in my district who are going hungry and yet there are $900 million of unused parts in a warehouse that the military paid for but couldn't use and continue to purchase. i would like to sort of talk

more about the d.o.d. and its process. this past year my first year in congress two things have happened that really sort of crystallized in my mind the waste that happens in d.o.d. especially under the defense logistics agency. one was the hearing in this committee on the supreme food contract. the corporation supreme food services that provide all the food in afghanistan the last decade. in fact, they have now been found to have overcharged the d.o.d. by $757 million for that food contract. they continue to get extensions to the contract and in a noncompetitive award process. in is something that the d.o.d.'s i.g. itself discovered and brought to light. i talked about the striker part a result of the d.o.d. i.g.

investigation. could you give me any suggestions you might have as to how d.o.d. can develop some sort of controls over the -- we talk about the audit process and i agree, we need some teeth in the process of enforcing d.o.d. but what about the d.l.a. if the only internal i.j. is identifying these as problems what can we do? >> let me confess first of all i was a co-author of the study and i didn't work as much on the defense aspects. in terms of getting into the technical details, i would have to defer to my colleague who did a lot of work or perhaps some folks there. i don't know that i have an articulate answer for you. i would be happy to get back to you after the hearing. >> no problem. mrs. woo? >> a lot of consolidations were explicit in our report contracts

and uniform designs for the armed services or support services that are schoolconsolidated management of bases and they can add up to a lot of money. in terms of the process of how that would go about, as i mentioned before we are not defense experts and we don't have anything to say about the process by which it would lap but they need to be addressed and consolidated and cut especially because i think as senator coburn said we have so many programs, over 600 programs for other departments and the same for the defense department. when there are multiple programs for uniforms that needs to be addressed. >> the uniform thing is after my heart. i'm the individual who got passed a bill that would save $82 million by going back to a single camouflage pattern which is what we had most of my time

in the military until 2004 when the marines developed their own. let's switch gears and talk about medicare. i had an event in my district where we taught our seniors to look into medicare fraud and waste, taught them to read their own medicare statements. one thing that was shocking to me is the regional medicare representative who came to teach the course actually made the statement that they know that 10% of their payments are to fraudulent and wasteful claims, that they know and accept they have to have 10% waste and they are working to fix it. but that is like $1 billion a week. that is stunning that it is acceptable. i don't think we would accept it in business and we should not accept it in government. can you talk about medicare waste portion of it, not just fraud and abuse but the waste? >> yes, absolutely. that is appalling to me as well

that they readily knowingly accept that 10%. you said 10% goes to fraudulent claims and improper payments. there are a lot of -- as listed in the report there are reforms that we have advocated for. one is better payments to teaching hospitals feel the medicines care payment advisory commission has stated that the costs of teaching hospitals is much less than the government funding we are providing them. so better lining that would save over $10 billion the next 10 years. and there are plenty of other things. bundling medicare payments so a number of payments go to number of different soepdz would advocate for more effective use of time, more efficient and

effective services. these are important within the healthcare system that we can and should change. >> thank the gentlelady. we recognize the gentleman from michigan. >> i thank the chairman. i skwrusjust rode back from meeting with the workforce committee and was delighted to hear senator coburn talk about the skills act as being one of our greatest accomplishments even though it be limited. i think it fswas. downsizing the numbers of redundant programs 35 ineffective duplicative including 27 identified in the 2011 government accountability office. i guess i would like to ask any of you that would like to weigh in

in, the fact that this is unfortunately languished in the senate and what they are even thinking about offering includes only one of our proposals in that skills act, could you discuss further proposals to remove arbitrary roadblocks that would help get americans back to work in the jobs that are currently in demand? and i know on my own michigan website, the mijobs.gov lists 52,000 unfilled jobs right now. we know there are many more than that but that is one website, a state government website. the majority of reasons they are not being filled is people don't meet the certification requirements they have not been trained for it. could you speak to that? what proposals would you have in mind to remove further arbitrary roadblocks to making people

employable employable? >> certainly creating pro growth policies in washington would be helpful and that do not include creating duplicative programs. he examined job training programs in oklahoma and it turned out the state was far more efficient at creating jobs because the training they were conducting was related to jobs. that is something that the government should be looking at as well. i know in the house the skills act was supported strongly by republicans, not as much by democrats. some differences in how it should be done. whether it is through legislation or pro growth policies or tax reform there are other ways. the government needs to be more out of the way than force its own view on how jobs should be created. members seem to think creating jobs is one of their major

skwrobls as opposed to getting out of the way so people that know how to create jobs know how including the states. i think that was one of the best points of the skills act. it give the flexibility and opportunity back to states to do that. mr. edwards? >> a broad comment on job training. i have looked in dames at job train -- details and the federal job training programs have never worked well. over a half century to john f. kennedy we reorganize them and try to fix them but the g.a.o. comes back and basically says you can't really so that these things work very well. i think the federal government ought to get out of the job training business. the corporate and business sector of the united states does a much more massive job training on the job than the federal government's $18 billion is a tiny drop in the bucket and hasn't worked very well. i would take the federal government out of that. in terms of pro growth policies

it is outside of the jurisdiction of there economy but in is a gigantic reform on the plate and there should be bipartisan support for corporate tax reform. we have the highest rate that makes no sense. you read every few weeks or every month or two about major corporations who are moving jobs elsewhere often because of the corporate tax problem we have. that is what president barack obama says he is for it and republicans are for it. why we can't do that i don't understand. our neighbor to the north canada has a 15 corporate income tax. we have a 35% rate. it makes no sense. that is a big thing we can do because when businesses have lower corporate rates they invest more and buy more machines and you need workers to run them and the corporate tax cut would be a huge jobs bill in my view. >> i will concur with both chris and tom and add at the state

level especially away see laws that place strong restrictions on the amount of job growth that can occur within a particular field of expertise and we understand when those are credited for surges, et cetera. but when for interior date decoratesors they are just protection inch from trade associations that limit the access of people seeking jobs to become employed. >> i'm out of town but could mrs. woo respond? >> just to add a quick note, in terms of job growth i won't say anything much just in terms of t the content of our report. but at the same time the federal government is spending billions each year on subsidizing arrange arranging a tkpwra businesses which put small businesses and farmers at disadvantages. tax loopholes and tax havens where companies can shift profit

offshore and use a zero percent tax rates or minimal tax rate puts small businesses at a competitive disadvantage and hurts taxpayers in that they have to pick up the tab through cuts of public programs or more debts or higher taxes. that can really put a damper on job growth and being able to find a job and pick up your household in that way. >> thank you. i recognize the gentleman from illinois, mr. davis. >> thank you very much mr. chairman. i really think that all of the members of this committee agree that waste in government and unnecessary spending is un unacceptable. it also appears members would agree this committee is well positioned to investigate and examine issues of waste and conduct legitimate oversight

work that holds agencies accountable and helps implement necessary reforms. despite the various examples of waste identified during today's hearing, there has been some progress in this administration that agencies an congress should continue to build upon. president obama made it a priority to reduce improper payments when he took office, and we should be pleased to see that over the past three years the federal government has avoided making $47 billion in improper payments and recaptured $4 $4.4 billion in overpayments to contractors. another initiative established by president obama is skewering americans value and efficiency award -- securing americans

value and avenue award which taps front line workers for recommendations to help improve government performance and ensure that tax expire dollars are spent wisely. in your testimony you support the save awards. why do you believe that the save awards can be effective in identifying identifying government waste? >> i did include that and i think that is something president obama includes credit for. he has included about 80 recommendations into his budgets the past several years. so language the same lines as whistle blower protection providing a structure for employees to report on waste they are seeing and devise systematic reforms to help limit those things that are wasteful. it makes a lot of sense. we can study budgets and reports

all day but we don't have that same on the ground experience that these federal employees do. so, we need to tap into their expertise as well. >> do you think that we will get from them more of an accurate accounting than other types of over oversight might provide? >> whether it is more accurate or not i don't know but it is a different perspective and very valuable perspective. >> since being a kid i have always been amazed at the amount of waste inefficiency, that was always pointed out in government. i have also been amazed that the notion that the private sector automatically is going to be more efficient than any public sector activity.

i guess because of the profit motive motive. given the profit motive though, does that mean that the level of benefit is going to be greater to the public or the benefit is going to be part of the profit that the private sector earns and there might be a kind of balance in terms of public interest in what benefits the public. i think it is just something to give thought to and consideration. but i certainly appreciate all of the areas of identification and suggestions that the government or federal government is making some progress by no means suggests that we are close to where away need to be in -- where we need to be in terms of ferreting out waste and efficiency. i thank all of you for your testimony and yield back.

>> thank the gentleman. the gentleman from texas. >> thank you very much. i have a couple of questions. the waste report points out we are potentially spending close to $700 million to promote healthcare.gov a website that doesn't work. i know that my colleague from missouri, billy long, had a bill out that would require advertising purchased by the federal government to have a disclaimer like we have on political ads, you know. this advertisement was paid for with tax dollars. sometimes it is difficult for the public to know. as somebody who worked in broadcasting we ran p.s.a.'s many of which from government agencies and we ran them for free on available commercial time. but other situations you have the federal government paying for advertising. i see a need for advertising for

recruiting for the military but driving people to a web site that doesn't work or at least wasn't working well when some of these ads were running, seems to be a problem. have any of you looked at government advertising expenditures as a source of waste? >> we've looked a little more at sponsorships having agencies sponsor nascar among others. so we have taken it from a different direction. in terms of disclosure, it is not something we have thought about but i think taxpayers deserve that kind of transparency because they should know how the money is spent. >> i think mr. long's bill would go a long way to at least raise public awareness. mr. edwards you talked about moving stuff to the private sector. i'm a big supporter of that. i think the private sector with the profit motive and unburdened by as many rules and regulations

as exist within government organizations is a good idea. but i come back to health care.gov. that was outsourced to a private company and had huge excessive cost overruns. we have talked about procurement reforms, but you can't just turn it over to the private sector and not have some sort of oversight on the contracting. can you talk about that? >> i absolutely agree with that. to go back what congressman david said it is a two-part partnership. companies want to earn profit but what we want to do is maximize competition in the private sector to peel away excess profit. some companies want to were profit and that is why the private sector works. but federal contracting is a problem. we should minimize sole source contract.

i didn't look into the details of the one for obama care but we should try to maximize competition every way we can, maximize transparency. >> we also had some hearings with respect to contracting reform where, for instance, in design build contracts you are going out and rather than coming to three or four finalists to come up with a very detailed proposal after the initial request you are ending up with 10. so you have got huge costs associated with bidding for a government contract and the regulations associated with that that have to get built in. so if you only get one of 10 contracts you are spending hundreds of thousands of dollars bidding on you have to recover that consist somewhere else. >> but the private sector, that is the way it works. the g.e. wants to spend on i.t. they have people competing to

contract. i think you are referring to the p.c.p. sort of infrastructure of commercial privatization. i'm a big fan. it works well. you look at the capital beltway in virginia. the invite sector put a billion dollars in that and it came in on time and on budget. there may be extra cost but getting the private sector in and private management and having companies compete is the way to go. >> you talked about centralize ing i.t. for the federal government. are we risking another massive bureaucracy in a government that looks like it can't compute its way out of a paper bag? are we going to create a bigger problem or solve something there? >> i don't think i mentioned the words centralizing. we talked to give agency c.i.o.'s more authority because it is their job. it is important they have more decision making power. i will point out there were no

c.i.o.'s until 1989, which begs the question why we didn't from is didn't have it prior to that. it requires continuous work because it is so large. competition is important and i think that this legislation is also very important. >> my five minutes went by a lot faster than i thought it would. >> thank you. i recognize the gentlelady from california. >> i want to thank each of you. i wonder to what extent you get fatigued coming here every congress making recommendations to us. we seem very interested and engaged and than what happens? maybe you could help us by providing me, which i would be happy to provide to the full committee, a list of all the things that we have done as a result of the work you have provided to us. you have given us tangible easy to effectuate recommendations and i think very few of them

have been embraced. let me go to the one that two of you have agreed is something that republicans and democrats can agree on. that is spare parts and obsolete parts. this is a plumbing elbow. i bought it at the hardware store for $1.41. a defense contractor charged us, the taxpayers in this country, $80 for this. this is a package of washers. $1.22 at the local hardware store. defense contractor, $196.50. that is outrageous. we have a defense logistics agency. it is our hardware store. it has parts that will be there and can be used for the next 100 years. what do the various departments do, the various operations within defense do? they go to a defense contractor to get them.

so, you have identified something and i hope to god we do something about this. this is real money. it is $4 billion, is it not? >> $3.9 billion is the number we cited in the report. that was one of the more difficult numbers we had to track down because there are so many conflicting stories about how much is wasted at the pentagon on spare parts. so, we did cite a g.a.o. report but there are are many studies that would put the number much higher. >> the g.a.o. is in a series of reports of self referral where it sis m.r.i. or imrt, a laboratory is owned by them, they end up referring more of their parents to it and the -- patients to it and the result is a savings of probably $10

billion or more over a 10-year period of time, probably closer to $20 billion over a 10-year periods -- period of time. can you respond to me separately if you have looked at that. >> that may be addressed by medicare bundling which is something we included in our report. if you have a single payment going out to a provider. >> it is not a bundling issue, it is a self referral issue. let me move to cross subsidies. g.a.o. has indicated we have seen a growth increase in cross subsidies. in 2006 it was about $3 billion each year, now this is looking at $9 billion per year. the report argue s thats that -- argues that we could safe $4 billion. but with is most stunning the g.a.o. reported the biggest recipient of the subsidy is a corporation, not the family farmer but a corporation who

received $2.2 million in premium subsidies. 75% of these subsidies are going to 4% of "farmers". who is in this "4%"? >> that is correct 75% in the crop insurance program are going to 4% of the recipients. >> but give us some names. >> i don't have that information. >> ted turner is an example. rock fellers have gotten it. jon bon jovis have farm subsidies. there are a -- >> members of congress? >> members of congress, right. >> let's be fair, mr. edwards. i want to go after anyone regardless of the political affiliation. but who are the 4%? let's get a list of who the 4% is. >> the think tank does a good

job of those that get the direct payments. the statistic that is remarkable the average farmhouse holds in the united statesers income 25% higher than the average households in the united states so farm subsidieses we are taking from average tax papers and giving to higher income people and it is unfair. >> 80% of the farmers get about $5,000 on average. so we are talking about a very small percentage who is getting the lion's share of the money and if we know who they are and they are corporations that shouldn't get it we should not be offering it. the g.a.o. has recommended a cap of no more than $40,000 of the farm subsidy. do you support that? >> absolutely. one thing i would point out about farm subsidies people who don't look at it don't really get, with the direct payment it is the landowners that get the subsidy. not even the tenant farmer. that is why the rock fellers and tedz turner.

i think turner is the largest landowner and he gets the subsidies. >> as mentioned earlier cooperating with each other the farm bill is an area where we have cooperated well over the years and we have a good coalition on that issue. unfortunately a lot of what we wanted didn't get in the farm bill. >> i thank the gentlelady and witnesses. the gentlemen from arizona is recognized. >> competition is one aspect for efficiency but also accuracy in writing contracts is another. would you not agree? >> yes absolutely. >> yes. >> would you repeat that? >> competition is one aspect to ensure fair competition but also accuracy in contracts and calculations are another part of that. >> i agree with that. >> are you familiar with the prevailing wage?

>> absolutely. it needs to be repealed in my view. >> i'm of that mindset too. but i was taken back by the g.a.o. account last year of the audit. what it showed is that we have a problem. do you believe a fair wage for a fair job is fair to the taxpayer? >> yes. we have reported appealing that. >> yes. >> yes. >> what came to my attention, i agree and we can stair step this because there is no benefit -- maybe at one time there was but i don't see feel of an aspect now. would you be surprised that 100% of the audited calculations were fraudulent? >> that doesn't surprise me. i have not seen the report but it wouldn't surprise me. >> how about you, mr. edwards? >> it would not. >> how about you? >> 100%? >> yes. >> a little surprising.

>> it is surprising, isn't it? i was prepared for maybe 50% or 60%. we actually contract calculations for the prevailing wage to the department of wages which is crappy. you heard it from me, crappy. what if we were to exchange that and say give up on the prevailing wage and let's recalculate it so it is properly done for a fair wage for a fair job fair to the taxpayer and move it to the bureau of statistics. do you know how much we would save in that calculation per year? estimate between $15 billion and $25 billion a year. would you be for this? >> that would certainly be helpful. >> i'm a scientist, a dentist. so beauty it in my detail and i like facts. the way we are doing it we have no facts to base it on. some people are being overpaid, some underpaid and we don't have a calibration it base the judgment only. is that something you could support getting accuracy back

into the prevailing wage? >> it is not just the prevailing wage but everything in terms of information but that is a good place to start. >> absolutely. the losers are the citizens because they get less highway maintenance because wages get inflated. so citizens would get more quality services and more investment that help them without this particular situation. >> i will come back. how about you? >> yes. >> >> i think the amount of money you would be getting out of that definitely helps federal government in streamlining processes. in terms of what the wage is supposed to be or how that is calculated is not within the prime minister view of our is bush not within the per -- purview of our situation. >> but prevailing wage is an average of 22% yieldlyadditionally.

so if you had better accuracy you could get five bridges for the cost of four. interesting application to our infrastructure problem. so, i have a bill that just changed those six worths. it is the responsibility in federal contracting act. we would like to see that. it is a down to earth simple thing that everybody would agree with. i have one more thing that i would like to ask you. what do you think the influence of of having a sunset clause on every bill so you see bills mandated to show their worth? >> we include that recommendation in our testimony and support what has been done and we have hrpg testified in support of the sunset commission. >> very much in favor of that. the state of stocks has long had a sunset law that works well so i'm in favor. >> arizona too. we support that and included it in my testimony. >> i'm not too familiar with

that so i can get back to you. >> i would like that. it makes accountability a process of the law. it is like three, five, seven years down the road but i would love to see the calculations based on fact. i think both sides of the aisle could benefit from that. so could our infrastructure and contracting. those savings i was telling you about didn't include homeland security or the d.o.d. because they had not been audited so the savings could be much more magazine any fiduciary. i yield become. >> i recognize the gentleman from massachusetts. >> i do want to thank the panel for your good work and willingness to come before the committee and help us. one of the strongest and most effective tools that we have on this committee and in federal government for making the government more efficient is the inspector general community. we have 70 inspectors general across the government. i have to say because many of

them testify before this committee and we work with them over the years i would say uniformly they do a great job. they do. in each of the last -- and part of the work they do, much of it, involves rooting out waste fraud and abuse in various government programs. in each of the last two years the chairman of this committee and ranking member of this committee and our members have signed a letter to the inspector general community generally asking them how many recommendations they have made within their departments and how many of those recommendationless have either -- recommendations have been left open which means unaddressed, or actually adopted. the information that our committee has received in response to that request of the inspector general is staggering. there are nearly 17,000 open recommendations across the government with a potential savings of more than $67 billion.

that is where our inspector generals have gone out and looked at things that you have talked about and some of the members on both sides of the aisle have talked about, they have said we have to make these changes and yet in 17,000 instances the department has basically refused and there's been no change. fulfilling these unimplemented recommendations is really probably a good place to start for many of the things we are talking about here. did you agree on that? >> we not only agree but we have noted that funding for i.g.'s has not been up to where it should be. we have written on that extensively the last few years. it is a good place to start between the i.g.'s and g. aofplt hundreds of billions a year could be saved. >> i agree. generally the i.g.'s i agree they do the superb job. it is one area of federal spending i would increase substantially. they do a great job. >> i agree. often times the problem they did a great job pointing out the

waste and problems but there's not enough incentive structure for the managers at the federal level to implement them. i certainly applaud the work of the inspectors general. >> i agree with more cooperation within the feds government to root out fraud in waste and abuse. >> when you think what we are doing right now with sequestration, which is indiscriminate across the board, we are giving good programs a haircut as well as programs that should be completely eliminated, it would seem to me rather than doing this indiscriminate cutting to try to reduce the size of government and amount of spending we should probably target these programs that we all agree and inspector generals have identified as being completely completely completely wasteful. one thing i have been working on and with some of the members on the other side is lack of transparency in d.o.d. contracting and our inspector

general there have even the special inspector generals and more general ones, have identified billions of dollars in savings but we have had a very difficult time getting transparency for the inspector general and also an ability to actually go in and make the changes. one of the ancillary issues is prescription drugs that the gentleman from oklahoma earlier brought up. while the v.a. and d.o.d. each have the ability to negotiate drug prices, because of the -- i don't know how to describe it -- just nonfunctioning nature of this system, you have the v.a. on some drugs paying 100% higher

prices for the same drug as compared to department of defense defense. mostly that is in the area of brand name drugs. in many cases there it is 239% higher than what the d.o.d. is spending. in other cases on generic drugs you have the opposite situation where d.o.d. is spending 200% of what the v.a. is getting on their prices. if they were all paying the lowest price there would be billions of dollars in savings year to year. what i'm hoping for is we also have eight million federal employees, and right now they don't even have the ability to negotiate lower drug prices. so, imagine if we were to add first of all get both the d.o.d.

and v.a. down to the lowest reasonable price, and then add in the eight million employees that are working for the federal government and have them make the same price, it would be tens fof billions of dollars per year in terms of what our pharmaceutical costs would be across the government. it would be incredible. in these days when we're facing -- maybe not tens of billions but several billions of dollars a year for prescription drugs that are being purchased by the federal government, i'm just bid myself with the inability of the federal government to really get at this. there may have been a time -- i don't believe so but there may have been a time when we could overlook things like there. >> but now that we are facing sequestration and trying to cut $1.2 trillion out of the budget and you have unacceptable costs

across the board like this i just hope that you continue to work with us in terms of trying to get some of this stuff -- the prescription drug price issue is one i have been working on a long time and unfortunately there are problem 10 drug lobbyists for every member of congress so it is an uphill fight. but i think the fight is worth it and it is more attainable because of the good work that you all are doing and people who support you are. i thank you for that. >> i thank the gentlemen. i would like to recognize mr. woodall the gentleman from georgia. >> i have gotten to work with most of you on other projects and venues and i appreciate the work that i do. i put your work in the category of those things that the government could be doing instead of you doing it though i suspect you do a better job at it and do it for less.

i want to come back to something mr. edwards said in his testimony because it has been fascinating to listen to the back and forth and amplifies for me why the work that the two of you are doing together, why those collaborative efforts are so important. i heard mrs. speier talk about waste and fraud and abuse in the defense department and we ought to be able to agree to get that out and then it was said we have the davis bacon issue. you had three categories if i can paraphrase you of spending. i think you had silly projects those absolutely horrendous things we can all agree are -- have no place on the taxpayer's dimement you have those projects for which the benefit does not outweigh the kscost.

then you have those projects that just perhaps the federal government shouldn't be doing any way. i listened to mr. lynch who is talking about the prescription drugs and he is right when the federal government is picking up two-thirds of the healthcare bills in america you use that monopoly power you can drive down the cost of prescription drugs. though using the government's map powers to manipulate the marketplace i would argue isn't the role of government. it would fall into that third category of things the government shouldn't be working on. mr. cummings was talking about the legal services cooperation and i really appreciated your answer because what you said was not folks who can't afford legal services shouldn't get them, what you said is there are other opportunities to get those legal services and can't we utilize those nongovernmental channels. dr. coburn sitting in

mr. arnold's chair was talking about the army and they have these software problems because they by software and try to mold it to the army's model instead of being good off the shelf software and molding their needs to that. what has happened to the justice system in america that i cannot walk into court as a citizen and avail myself of the protections? should we be changing the government to adapt to a very complicated legal system or change the complicated legal system to make it accessible to us as individuals. i don't know how to get started without the projects. but let me ask you rbgs you have timber sales of the service. they are not in the conservation business they are in the management business. one of your opportunities for savings is to say the forest

service is losing more money on their timber sales than they begin gain. is that anning of something that -- is that an example of something that should go away because it is a bad use of government resources or still needs to be done? we needs to manage federal timber lands. is the solution to get rid of timber lands or to farm it out to the private sector when we identify wasteful spending? what is next? whether do we do to fill that void void? in that example do you have a "what is next" vision? >> i think in that example your suggestion that moving that it private industry is one we support. taxpayers shouldn't be subsidizing for things that can be done by the private industry especially when the government

is losing money in there kiss. so i think the taxpayer shouldn't be subsidizing profit making ventures for private companies in the timber industry. >> that becomes the question. the access program for the farmers is in there. it sis providing markets overseas is that in the category of things the government shouldn't be doing. both should fend for themselves. or is it things we are doing but not getting an extra dollar of benefit for our dollar of taxpayer burden so it is just inefficient? would you characterize the things in your book as things the government shouldn't be involved in or things that perhaps we should be involved in but we are just not doing well? >> i think it would be the first one. in this case especially, it also is depending on the type benefit that is being provided. it is a combination of both. in this case, the market access

program is funding trade associations to have wine tasting wants in europe or to have a reality tv show in india to show kiss different designs. that doesn't really benefit the taxpayer who is paying the $20 million a year for that reality show. i think that it is partially not the government's responsibility to do that but there is no benefit for the average taxpayer. >> i hope you will all keep doing with the same fervor what you continue it do. i see a real opportunity this year. i appreciate the chairman's commitment to moving bills forward and i hope he will take us up on it. >> now waiting most patiently the last member of our committee, i believe the gentlelady from new mexico, you are recognized. >> thank uyou, mr. chairman. i too want to thank the panel

for being here today and your work prior to your testimony today. i don't think you are hearing from any member that we disagree that this is a fundamental responsibility of this committee, a fundamental responsibility of congress and fundamental responsibility of any administration. as that trickled down no investments of the private sector or other bodies of the government those are all fundamental responsibilities. i also agree regardless of the climate, whether we have resources that we can do anything we desire or in the climate that we have today where we know that we have a fiscal crisis in this country that we have to address that we should be mindful about making sure we are not wasting any of our resources. i hope that having this hearing and this committee will return to a partnership with you and

others at looking at ways to make sure we are not wasteful and we are getting the bang for the buck that we deserve and our taxpayers and citizens deserve for their investments. so aware clear about that and i know you touched on this in the written testimony there is not anybody -- i cannot imagine anyone that will disagree that paying $900 for a hammer is a good idea. i know that myy browse raised and -- my eye brows rise every time i look at helmet care spending and -- at healthcare spending to know i can buy a band-aid or aspirin for 1/100 the cost i will get in a hospital or clinic. so there are so many areas. i want us to focus today on, in your report in that low hanging fraught because i think that -- fruit because i think plmany

program issues are in the eye of the beholder and create debate this prevent us often from dealing with easy decisions and responsibilities by congress and administration in listening to recommendations for you. some may think tax breaks for millionaires and billionaires are unnecessary and others feel extending emergency unemployment is wasteful. so we will continue to debate those programs. i can give you another example based on some of the testimony today. i come from a state where we don't have a sunset clause but we have done sunset clauses on some legislation because of the political climate that technique issue or program needs to be reauthorized doesn't get reauthorized and we spend wasteful money on a special session trying to get it addressed. so it depends on what is happening . but we are not doing anything on that low hanging fruit so i need

to you grade us on congress. i have been here only a year. on adopting sensible good government reforms outlined in your report every year, how are we doing on picking up on that low hanging fruit? a to f? >> not so well. >> is that an f? >> that would be an f. although as i mentioned the bill out of this kpwhraoe would be helpful -- committee with be helpful to procuring. that would be a positive step. the senate hasn't agreed to that. >> i think congress is doing poorly. one big problem as you know if you have only been here a year the government is so vast there can be 6080% agreement but members don't have time to dig in and look at them. i think there could be a lot more agreement if we structured, restructured the way congress works so members could focus on some of these issues. there could be more agreement.

often members reflexively don't want to get involved in certain issues if they don't understand them and i don't know how to overcome that problem. but there could be more agreement if there is more understanding. >> i would say congress is doing pretty poorly as well. the problem with eliminating waste is that no matter how wasteful ridiculous, unnecessary, duplicative a program is -- and we can agree on that -- there is somebody that is benefiting from it and maybe in genuine terms but somebody is benefiting and they are going to fight taofrpt and nail to -- tooth and nail to keep it. >> i agree with mr. arnold's statement in i believe that congress is doing quite poorly because when congress or we the federal government gives a tax break or subsidize a corporation or advertiseing abroad or such things as the market access program somebody is benefiting

and it is typically wealthy corporations. as was mentioned earlier it sis also members of congress people who are not necessarily helping the average taxpayer who has to shoulder that burden. >> with the chairman's indulgence i agree and i appreciate that and i believe we are all interested in getting the right work done. this committee, i think, has an incredibly important role. it may be a consequence of working in one of the most partisan areas of congressional history i'm confident we can move these forward. we have the chairman and congressman connolly's i.t. reform act that passed this committee on a bipartisan basis. we need this committee to put by a bipartisan low hanging fruit

bill and take the information we have readily available to us that we are looking at and we are all agreeing on much of it but we are not doing anything really about it. this committee still finds those and you do, the $900 hammers. i look forward to many more hearings like there and finding real areas of cooperation. thank you very much for being here. >> i thank the gentlelady. i thank all the members. i know the chairman appreciates everyone's cooperation. i want to thank our witnesses for their extensive testimony and participation today and for their work beyond this. we look forward to working with you in this new year and this is a great way to start off the new year particularly for our oversight committee. there being no further business before the government reform and oversight committee, this meeting is adjourned.

thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] >> on the next "washington journal," the latest on the senate races in 2014. with jennifer duffy and nathan gonzales. a look at class mobility. and we will talk about security

concerns ahead of the olympics. less, your calls, tweets, and facebook comments. beginning at 7:00. >> c-span we bring public affairs evidence directly to you. putting you in the room at congressional hearings, white house events, briefings and conferences, and offering complete gavel-to-gavel coverage of the u.s. house. all as a public service of private industry. we are c-span, created by the cable tv industry and funded by your local satellite provider. like us on facebook and follow us on twitter. >> the former chair of the joint chiefs of staff spoke last week. he talked about the united states's future in afghanistan and edward snowden.

the talk was hosted by concerned about her in some america. it is about one hour. >> thank you to the veterans of america for putting on these events. i've been to a lot of events and i think the quality has been very high at the events i have been at. hopefully we will keep to that this morning. he needs no introduction, he was the chief of naval operations from 2005-2007. and then he was the joint chiefs chairman, capping a very successful decade. thank you for being here this morning. we'll have a brief discussion talk about the debt, --

>> it was a random question that the reporter asked me. [laughter] >> always a mistake, answering those questions. in 2010 and a random reporter in the pentagon said what is the greatest threat we face in the united states? he said the greatest threat is our national debt. that got a lot of attention. our national debt is a little above her team trillion dollars -- was a little above $13 trillion, and is now above $17 trillion. what would you say now? >> thank you for doing this. i think what you are doing is critical and i would say it is good you are young because this is a long haul.

it is not going to happen quickly, but leaves persist -- please persist. this seat affords me an opportunity to watch my car gets towed away because it is in the snow emergency route, i am sure. [laughter] i was telling bill earlier, i cannot remember the for him -- forum that was there when the reporter asked me that question. but i have given it a lot of thought. from a very strategic level i believe that the military is part of the solution to better outcomes throughout the world. and i higher level it is about the economy. i focus a lot of my time on relationships with countries who were key economic engines in the world.

weather was rebooted -- whether it was brazil, china, or the middle east, or india, i try to spend some of my time in that regard. i believe that you can create stability in a peaceful environment, people's standard of living will improve and the economy will thrive. i really did believe that as the debt ticker went up substantially. people were doing handstands as it went down as if it went away, and it has not. we cannot be the country that we are capable of, in a time in the world where we as needed -- are needed as much as we are, if we send ourselves into oblivion. we will not make the

investments, and we will continue to lose what i consider to be credit, if you will, on the international stage. it is something that has to turn around. it is something that will take second five the part of everybody -- sacrifice on the part of everybody. you could take the whole pentagon budget, pour it into the debt, and it would have a minimum impact. it has to be the entitlement beast that we all know about -- piece that we all know about and have talked about for years. very specifically, from a retirement standpoint, the whole coal issue right now. i am happy to be means tested for my health care payments, i'm happy to be tested for other entitlements.

i do not want to hurt the 20 staff sergeants who are just bumping along. those who can afford and will more need to pay a little more as far as i concert -- and concerned -- am concerned. i get asked what keeps me awake at night? number one is still the debt because we have not done much about it. >> when the paul ryan and patty murray budget deal was in induction, the reaction to that was based on the judgment concerns and partly on misunderstanding of what the actual proposal was. it shows how hard it is to form environment -- reform entitlements. >> i would like to see them means tested. i'm very conflicted about that because when i was asked these

questions on active duty, when we look at retirement for the military, for example, all of the chiefs, myself, and vice-chairman lined up in this position that we supported that long-term, but we wanted to grandfather it to anyone who had come in and had an actual contract for their career. those that clearly indicated that they may stay for 20 years evolution grandfather any change like that. that does not increase any money into 15, or 2016, or for a significant amount of time. i get back to that we need to means test it, and everyone has to pitch in. we talk about entitlements in so

many different -- it has the specific meaning of "you owe me this." i think it has a broad definition at different levels. people who are doing very well at the heart of their envelope of life, they feel entitled to do this whether they are or not. they need to some degree, for of that i owe -- and owed this -- i am owed this. >> ever since he made that statement, we have not really had intent but reformed the but spending has leveled off. -- we have not really had entitlement reform, but the spending has leveled off. are you alarmed about the

consequences of $17 trillion and can be kindly move on it -- can we finally move on it? >> i was delighted with the budget agreement, that it took place. i worry that it sends the signal that this is over, and this short term is out there in so many ways brought the country -- throughout the country. there is so much more work to do. i would hope it is a harbinger of the work to be done. i am a glass half old guy. i hope that it is the beginning of a turnaround. >> let's hope so. i have the same instinct. your comment there really struck me.

it did have a good effect. let's hope that both parties get more serious about sacrifices. what about the other things to keep you awake at night? >> one is the debt. two is our k-12 education system. in my life, we have talked about problems with it for a good 20 or 30 years. there have been good significant efforts taken in terms of charter schools. by and large, it is still in bad shape. almost like there is a parallel to the debt issue. you have to have resources to invest for the future. if you do not have them, you will not have much. we have to have education systems that are functioning at a very junior, if you well --

the competitive advantage that america has is right here. if we invest in that, we will be ok. if it continues to a road, we will not be competitive. you cannot -- you cannot scale charter schools to the public school system. i do not know what the answer is. i am one who believes you have to do this to teachers. they were the most impactful people in my life. among coaches and parents etc. we have to channel that. we do not pay them very well. i talked for one year up at princeton. i did not run into a graduate who is going to go teach. but does not mean that there are not any. that is not the path that so many choose. it is not valued in the country. we need to turn around, or this slow erosion will wake up -- we

will wonder what happened. third thing is the political here. i have been in washington since the 1990's. i asked friends and historians some are quick to say we have been through this before. two years ago, i asked that question and i said when? 1938 or 1939. it was not overly uplifting. about one year ago, i asked the same question of another historian. he says we have. i said when was the last time? the civil war. the point is, this is really tough. i think everybody knows that. i do not know how it gets broken. i think that we will continue to build -- dig the hole. i hope that somehow the leadership can figure out a way to get us moving in a much more positive direction, before we

have a catastrophic event. that piece concerns be a great deal. the fourth is cyber. i will not talk much about that, but it scares me to death. i thought that threat when i was chairman. i understand how capable it is. how lethal the potential is. not just from a security pentagon perspective. literally, from a national perspective. it is capable of shutting down our grid and financial system. it impacts our logistics. it almost has no bounds. i thought that the target incident over christmas -- the initial reports were 40 million that it was 70 million. it speaks to the scale and the capabilities in the cyber world. that many, that quickly. i talk about in terms of leaders. they need to understand this. you have to have them -- line

leaders make decisions on people and investments and policies. that is a huge concern. the last is veterans. we are not doing well for the veterans. just because i was chairman in the iraq and afghanistan war, i focused heavily on iraq and afghanistan. they are coming back to us. very tough deployment numbers. the economy is bumping along and getting better. hiring them is difficult. unemployment numbers are notionally -- 18 to 24-year-olds are half of the national average. half of them are married. they need to put food on the table. i'm not convinced you can do it from washington. there are lots of folks associated with that. i try to engage local leaders in communities throughout the country. in a rural or urban community -- we need support for veterans.

remember that they have been extraordinary in these wars. they are two income families. they have huge capabilities they can offer. i find this sea of goodwill out there and the american people. you need local leaders to galvanize that. we have seen significant progress in parts of the country. i do worry notionally that they're coming home and leaving the military. about 1000 per day. that is normal. we are hiring them at 100 per day. it is better than it was in vietnam. it is better than the past. we are just beginning. as we come out of afghanistan, america did not have to buy into these wars. america does not have a stake in is worth. combat troops are out in a few months. america will accelerate away from our veterans. giving visibility to this and making sure that this young group -- 2.2 million men and

women, the best i have ever seen. they are the best. they are going to make a difference in the future. i see them by the thousands. they will make a huge difference. investing in them is a great investment. that is where i spend a lot of my free time. >> i am into. thank you for spending your time on that. one of the distractions -- there are people who are bouncing along. actually, the people who need the most help are the people getting out after 4, 6, 8, 12 years. they do not have a college degree. i do not know how that sets up in the business world. my sense is that the officers do pretty well. they have college degrees and networks to help them. i worry more about the others. >> i love my officers, but that

is not my focus. when you look at the pyramid, it is the sergeant. it is the second class petty officers. we have seen in our lives from vietnam to korea to world war ii -- that is where they start. extraordinarily strong group of talented individuals. it is that investment. they do not want to hand out. we need to just guide them to the opportunities. once they get in, they will knock it out of the park. i really believe that. get them to the opportunity. translate the scales. medics or quarrymen have to go to state x y, zand z --they have been insurgents. they have to do the whole recertification process to become a medic.

there are a lot of examples of those. we are making some progress. 1000 per day are getting out. 100 or so are getting hired. the idea is that all of this is for about 17% of those who join the military. they stay in. they stand for 20 years. it has been that way for a long time. there is a significant effort, i hope that is underway to look at reforming the retirement process. i applaud that. that does not mean i have an answer. we did that once, it did not go well. can you invest in young people earlier is the question? there is work that needs to be done. the retirement system is very generous. the benefits for the military compared to the mid-90's -- this has been a bipartisan issue. we're in much better shape than

we were back then. >> when you are downsizing and pushing people out, there is something weird about the system that values the 20 years of service. there's almost no value retirement value, on 14 years. interesting. let me mention -- you mentioned cyber. you should not talk about anything classified or the nsa controversy. you obviously don't with these levels -- matters at the highest level. do you want to reassure americans that they're doing the job that they should be or are you alarmed by the stories? >> i spent a lot of time at nsa. they're an extra ordinary group of perhaps most. to the best of my understanding, i do not claim to be inside, but from what i knew, they are charged with -- two aspects. they were flying -- complying

with the law. they have the united states of the -- america at the top of their list. it was a beneficial undertaking in terms of figuring out what the threat was. i have said for a long time, i hate what snowden did. i think he is a traitor. >> good morning. that said, i think that the debate that has ensued is an important debate. this debate about the balance between privacy and security. it was long coming. i was worried that we would get to a cyber 9/11 before the laws were changed. as the pendulum has swung too far -- i think the healthy debate -- there were two congressional cycles. two budgets ago, lieberman and collins were the first homeland security discussions.

it did not go very far. i think we need to continue that. there is more life and oxygen in that approach. i think that is a very healthy debate and i hope we continue to have that. the threat is not going away. the dangers out there. how do we balance that? >> afghanistan, you mentioned. your chairman during the search. no compost a lot in the limits of what it could do. how worried are you about what is going to happen this year? do you think we should leave residual force their? >> i have tried to stay out of the policy world. i was talking to bill earlier today. i have appreciation for how hard these jobs are. i worry a great deal about this region.

i said when i was chairman and i repeat that -- many of us -- everyone would like afghanistan to go away. i do not think they will go away soon. the challenge that exists there from a terror standpoint and instability standpoint will continue. the question is, how do we at large -- what is the position in terms of a longer-term outcome? as important as the security forces have been in afghanistan to train the police and the security forces, the larger issue from my perspective that we struggle to dare -- deal with -- there are very few citizens

that do not look at us and undermine our particular position. even though we are there to help. that is not a military piece. that is the political piece. i think that addressing that in a much more aggressive way, we have to figure out how to do that. one of the things that this course did teach me or her mind me is that we have to figure out in the future, how do we deal with these people? how do we deal with corrupt governments? different from how we have in the past. it is too transparent. there is too much information out there. we know they are too corrupt. in a time that is generally chaotic, i fall back on the values that are true to us as a country. the back framework.

make sure that the kinds of things -- the human rights and mike of corruption -- i am not saying that we could go anywhere and totally eliminate corruption. that is not the idea. there are different kinds. how do you address? how do you lead in that space? i think afghanistan will be problematic. i am certainly -- the whole issue which is in discussion, that is a smart move. we are creating some kind of continued relationship and long-term stability. i do not know what the outcome is. i think understanding what the president has in mind is very difficult. >> one or two last questions.

i will let peak,. you mentioned iraq. you all hoped to keep residual forces. how much do you regret -- how much of a price do you think we are paying? >> i am watching them like everyone else. i am disappointed, extremely disappointed. i worry a great deal about the politics. that is what prime minister malachi is going through. i am not shocked. i would not want to overstate the impact of a residual force. that was certainly pass that was generally free -- pre-syria. so, i actually believe and this

goes back to how does the military fit in? i would like it to fit in as part of an overall strategy. if there is political endeavors diplomatic endeavors to create an outcome, then you figure out how to create force. i think about that with syria. the political structure, the diplomatic structure needs to be there. it is not perfect. it needs to be there. they are committed to stopping the killing. we're getting those camps -- all of those who are out of the country, getting those people back to their homes. the military needs to be a part of that and that is ok. it is just too easy to pick up a stick and do something and figure out what happens after the case. i feel that way. in iraq, as all the discussions

about giving them assistance. i think that is a good opening. we know their leaders. i think there's an opportunity to do them. i certainly would not want to see it fall apart. >> final question i will ask you were also chairman when president obama announced the pivot to asia. i was in asia myself a couple of months ago. we talked with the friendly leaders there. they welcomed the idea. i'm not sure they are convinced there's reality behind it. i was surprised have a nervous they were by what they see as a sense of withdrawal. it reminds me of what happens of the middle east does not stand the middle east. people think what about our redlines here? i am just curious -- you spent a lot of time there. what is your general sense of what is happening there? what should we do there? >> i visited last fall and have

the same reaction from our friends in japan and south korea. there was -- the tension was much higher than i expected. particularly between japan and china. i have been to japan a lot. i heard nothing more -- i did not hear about anything other than china. back to what i said earlier about focusing on the economy that is an economic zone that feeds the world. it needs to be stable. we have the second-biggest economy in the world with china. it is the fourth in the world with japan. we need to be engaged there. i was surprised by the rebalance. that said, the middle east will not go away. i do not know how long we're in. a 30 or 40 year run? one of the things that we do not understand well enough is what it is light to grow up in the

middle east and think about a single thing when you wake up, which is surviving. whether in the village or the palace. what does that mean? we have these leadership changes that occur in these countries. whether libya or iraq or yemen or syria. we expect another leadership to show up. they are not there. those leaders have told the mom. or they jailed the mall or they are out of the country. the long-standing investment that is required to create leaders and institutions -- we need to be modest in terms of what we mean by democracy and taking steps toward democracy in terms of our expectations when changes like this occur. the middle east will not go away. the rebalancing, i think it is very important. i do not think we can do it and

not focus on the middle east. from a security standpoint pentagon standpoint, it is my belief that all of the resources we have in this downturn -- if you look at budgets through decades, it will turn around at some point. we will not have a lot of ability to focus on the continent of africa or latin america or other things in the next few years. we are on years three of the 10 year cycle. the budget eventually comes back. we should stay engaged as best we can. the impact is really important. our relationship with our friends, particularly in the pacific -- our relationship with india, can we emerge in a constructive way with china? i just did a commission with energy security. having a policy. with aware -- blair and john

hanna --we have an opportunity in the energy world to work with china. they are becoming the biggest consumer in the world. we have found resources -- the right word is energy abundance in the united states, not energy independence. we do not have enough to control the price of a barrel of oil. that is the middle east. that is saudi arabia or iran or iraq, depending on what happens in those countries in the future and with things like sanctions. we need to have a policy. we need to have a strategy and recognize that. i think there is a great opportunity to help china in that regard. the economic relationship with china -- we do not need to get into a fight with china. that does not mean it will not happen. that should be the objective. that is really important. a new leader in china.

a new leader in south korea. a new leader in japan. and it is very tense. it is a very worrisome -- we need to stay engaged. as we isolate out of four hash that is normal for us as a country. i think we need to be very careful about what we isolate ourselves from. there is an expectation out there that the united states lead. whether someone mups also hate sus, they have that expectation. if we are not meeting that, things are changing. i do not know the we can predict what the outcome will be except generally worse then it has been. >> that is such an important message. there is a conceit at washington think tanks that we get to choose where we focus.

the middle east is a difficult part of the world. why don't we liberate ourselves from that? a friend of ours road in a couple weeks ago -- we think that the middle east is not losing interest in us. the message that people do not want to hear sometimes -- it has implications about difficult things. keeps budgets higher than people would like. i think it is an important message. pete, do you want to repeat some questions? pete has questions from virtual watchers. then we will take questions from real people here. >> we promised them they would. only a couple and then we will open it up. mr. chairman the first is from robert from texas. active military. he says we have an issue when

the congress continues to buy tanks that the army does not want. or cargo planes that the air force sense to the barnyard. can congress police that situation? >> as i listen to your agenda, one of the things i heard you talk about with acquisition reform. i could fill this room with studies on acquisition reform. >> you could empty this room quickly by talking for two or three hours. >> it is a lot of money. i do not have any answer. i spent a lot of my money -- time in the money and program world. i think it has to be done in congress. the service has a lot -- a critical part with respect. my own view is that we make things much more expensive because requirements creep over time. on the face of it, let's just

detach from constituents. that is a type dream. it will not happen overnight. i have seen it with persistent pressure over time. those would argue -- there would be those that argue that it takes too long. i have seen programs and. you have to keep that pressure on in terms of cargo tanks warp lanes. -- or planes. we had a debate about how many do we need. you need to go through all of that. if we could accelerate that process, that would be good. it would make everybody -- put everybody in a better place. you cannot disregard that we are a country where they represent their people in their district. >> senator mccain calls at the military-industrial congressional complex. in many ways, it can be. on reform, it is difficult.

as an organization, we talk about defense spending reform because we understand it more intuitively. spending reform wrongly equates to entitlements. our belief is you have to clean your own backyard before going to others. what are the most tangible ways that organizations could attempt to find ways to cut the fat? we talk about cutting fat to spare muscle. it is getting rid of waste or inefficiencies to provide more. we have talked about auditing the pentagon. is that useful? what tangible steps that we can take. >> i think the biggest inside the pentagon -- there are two things. one is the overhead piece. it has grown enormously. on the order of twice what it was 10 or 20 years ago. i cannot remember the date.

we need to reduce that. it is just too easy to cut. that is where people end up going. i think we need to be -- getting at the overhead is very hard. there are notionally twice as many civilians working in the pentagon as there were 10 or 20 years ago. what happens is if you cannot get at that, what happens is we cut the size of the force. 50 or 60% of economists are tied up in our people. if you are going to make changes, you have to go where the money is. the money is there. it will get smaller. i do not know how small. i hope it is not across the board. everybody take the same cut. we need to customize our force for the world that we live in. we have to be careful about that. we need to learn the lessons about these wars and not just

incorporate them into the future. we have a bad history in this country of ignoring the lessons and moving forward and starting all over. we need to see what translates to the future and what does not. how much technology and how many people? what are their capabilities? does i have relevance? it did not in these wars until we went to baghdad. then it was relevant. all of that -- there is no easy answer. i would start the overhead. bob gates and i worked on these efficiencies. the system rolls when you do that. i tell a story -- gordon englund came in. i was a programmer for the navy. he said we're going to cut 10,000 civilians out of the navy. i took the money out. three years later, we were down one civilian. because they -- there are

civilians who have worked their whole life, they are great people. it is how do you get at solving that kind of problem? it is very tough. >> questions? yes, sir? way for the mike. back there? sl this gentleman first. >> good morning. my question is about, there has been much written recently about a coming war between the active force in the national guard and reserves. the national guard reserves spent 27% of the dod budget and 40% of deployment days. what do you think is ahead of this battle between the reserve force and the active-duty with fewer resources? and how do you think they're reserve forces are going to fare? >> i had no preparation for dealing with the national guard and reserve and active forces

but actually having handled the marine corps money and aviation, my whole life -- it is all about money in the end. i had some background in this and i worked hard as chairman to bring these groups together and bring the leaders together routinely. i was really disturbed in a story that i saw on the 17th of december that was talking about airplanes, not surprisingly. i think leaders in all organizations, active guard and reserve, have to figure out what the future holds. i worry a great deal about hanging onto the past. eventually, you are going to do yourself in. as money gets tighter, i worry a great deal about that fight separating the services. it gets solved in congress -- and back to my navy and marine corps piece, i didn't want congress solving that problem

for me. i wanted to solve it and eventually the head of the navy with jim conway who i work for -- the other thing is when we do that constantly, we are just training our kids. when they grow up, they don't know any other behavior. it perpetuates itself. there is a rich history here. i think the answer that is more efficient is overstated. we would be nowhere in these wars without the guard and reserve. they have been incredible. their rotations have been more than they expected. at the same time i think it is going to slow down. the leadership has to focus on this. i worry about spokesmen from the past saying this is the answer. i think everybody has got to be all in to solve these difficult budget issues as opposed to creating great fissures inside a

service or between the army and the guard because if you do that, those that actually get to solve the problem, they write a check and nobody wins. >> john? >> thank you admiral for your remarks. going back to your original topic about the budget, my question is twofold. was sequestration a good or bad idea? second, with the influx of people on medicaid under the affordable care act, can we say that the affordable care act obamacare, is actually enhancing the entitlements that you say should be reformed? >> i am not smart enough on the impact of it and actually, one

of the areas i stay out of his obamacare. [laughter] one, i am not very smart on it. i have read a lot about it -- secondly, we are just finding out in execution what it really is. i think predicting what the impact will be in terms of health care for those men and women in service and those who have retired, i just don't know. that said, back to my experience in the budget world, the numbers as i recall, the amount of money in the dod budget in 2001 for health care was $19 billion. in 2011, i think it was $51 billion. it is going to $65 billion, the last number i had, in 2015. it is not sustainable. i used to say we were going to have a healthy, small force. it just keeps going through the

roof. i testified and supported an increase in co-pays for years. in terms of those who could afford it, we could test that but we need to do that. we are just trading off the size of our force. we are trading off the capabilities of our force for billions of dollars of health care. it is good health care, i am not arguing that. how that fits into where we are going as a country other than costs continue to rise, i am not sure. as you said that, the silver lining of sequestration was that spending was reduced. i hated it. i know what that does inside a service in terms of the impact. people, the green eye shade men

and women start pulling back money far before anybody really knows it. they don't have any kind of certain outcome. they don't know where we are going. so yes, we have a budget now, a budget agreement where there isn't going to be sequestration for a year i think, but i can tell you inside the services and the pentagon, nobody knows where this is going. our budget that is over there now was based on the 2014 budget which was based on a continuing resolution from fiscal year 2000 well with no certainty. if you are trying to plan more than 12 months in advance, you have nothing to plan against. the downside of that in terms of uncertainty was just incredible. the other thing -- i do worry about this and i would be interested in your view -- after every war, we lose really good people.

i worry a great deal about losing our best young sergeants and junior officers after these wars. particularly as the economy improves, they are going to leave. we can't afford to do that. we need to keep the best that we have in the military, not just numbers but qualities have got to be there. sequestration went into execution -- we were halfway through the fiscal year. where -- you have to go to where the money is. where do you get it? you take it out of training. you're not flying airplanes, driving ships or running up tank miles in training and these young j.o.'s are saying, this -- they can't maintain their systems and that is the easiest place to get money.

it has a retention impact that i think we don't really understand. i am not a fan of sequestration. i think getting our arms around somehow reducing the spending was important. the worry some thing about this is there were extremes from both parties that met on the other side and found common ground to put that in effect. that isn't the bipartisan approach that i grew up with. it needs to be on this side, the more reason side of the world not the extreme side. >> my sense on that is, the defense department didn't do as good a job. how much damage it was doing operationally -- you could take $20 billion out of the budget but to do it in the incredibly arbitrary way that sequestration

did, unless you were an insider, you didn't understand it. i got a little understanding talking to people in the pentagon on that. it is easy to sit there and say, let's just cut some of the fat but that is not how it works. >> the mechanisms and how we spend money are arcane. you lose interest. and about the third sentence you're trying to explain this to somebody, they are not interested. the real impact is on people's lives. >> over here? young lady there? >> good morning, i am the executive director of a foundation which is dedicated to bridging civilian-military divides. i have a question for admiral mullen about the balance of philanthropy in government and

what some of the challenges are to that. we find in the work that we do to leverage the full spectrum of resources across the country, it typically takes us anywhere between five to 10 organizations to cover one family. you talk a lot about that sea of goodwill. i am wondering how you see that balance play out. >> i did talk about america moving away from those who served because the war is over. i do see this sea of goodwill filled with great americans who want organizations in local governments throughout the country that want to figure out how to do this. it is my view, we have got tens of thousands of these organizations chasing the same dollar. we need to consolidate efforts. that is hard. passionate people about their organization have to figure out

how to either incorporate other leaders from other organizations that are focused in the same way so that we can reduce the overall overhead with respect to that and have an impact of the dollars that are out there. once you get into philanthropy a little bit, there is a lot of it. there are a lot of causes. how does the veterans' piece of this fit in? the colonel that used to work for me started the dixon center here in town. he is focused on these kinds of issues. i don't think there is anybody in the country that knows more about this space then he does per se. it is that consolidation that we see. i will give you a specific example. we convened a group that focused on scholarships for kids, for military kids. there were 30 or 40 organizations there.

there were some organizations that couldn't figure out how to get a scholarship. there were some organizations that had nothing but fellowships and didn't have the money to get it. i know a lot of these people. how do we get them to work together? that was the idea. you can do that in education health care, employment, all of those kind of things. i think leaders in the community and these charitable organizations need to figure out how to help us get to some consolidated level. >> thank you -- >> this is jane. she is a gold star wife. [applause] once again, i want to say thanks for all the sacrifice that you

and your husband made for our country. i promised you before that we will never ever forget. >> thank you. >> now ask me an easy question. [laughter] >> that means the world to me and thank you for your support of the goldstar community. admiral mullen came to my husband's burial at arlington. one of my favorite things that you read about is the civilian military divide. as a war widow, it has been something that has been very close to me, trying to relate to a world that -- civilian can't relate to any of us and there is a huge divide. i want to ask you as the war comes to an end, how you think -- it has got me a little emotional here, i apologize -- how do you think we can close that divide? >> one of the things that i learned as a senior officer was

about our culture. the reason what jane is doing and others who are working to support goldstar families is because i found that our culture is a culture of, if you are here, we love you. if you are not, please carry on whatever it is. the best and worst example of that were goldstar families. my wife in particular would meet with goldstar families -- and i would as well -- found that the support for them was stunningly thin. the main line of connection was the military member who had passed away. we have tried to keep focus on that and jane and others have now put themselves in positions to remind us to make sure that

we don't ever forget those who paid that ultimate sacrifice. i am a vietnam vet so i grew up in a draft. i remember all of that and how bad it was to be disconnected from the country in terms of being politically blamed for the war and, the quality of the force was almost not comparable. compared to the quality of the force we have today, it is night and day. all volunteer. some people -- we are out of neighborhoods. we are not teaching in schools. we are not coaching teams. people in the northeast don't know us anymore. there is a good reason that we did that but that is overhead i

think you have to pay as opposed to becoming more isolated. when you get to these wars, i worry that america has paid us very well, the compensation is very good, please go off and fight our dirty little wars and let us get on with our lives. one of the lessons i have learned is, we need to figure out a way to get americans to buy into those, into them. i don't know. i don't have an answer for that. i am not a fan of going back to a draft but i am a fan of creating national service for every 18-24-year-old for two years because i just haven't seen an 18-year-old that hasn't benefited from that kind of service and commitment. then they can get on with their lives. i like the effects of the draft meaning it affects everybody. i would like to keep the quality up and that is a challenge. for me, it is a real inflection

point in terms of how we do that in the future. i think the outcome of the military becoming more and more isolated from the american people is a disaster for america. >> on that note, since we are out of time, i think it is appropriate to let jane have the last question. one reason we have been pleased to partner is precisely out of this concern. they are not active-duty anymore. but they are trying -- by being so active, i think you're doing a great job of trying to tie together what has become a worrisome divide between those who serve and have served and the rest of us who observe from afar. i want to thank you so much for taking the time to be here. [applause] thank you all for coming.

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with scott winship. later, security concerns ahead of the olympics. "washington journal" is next. ♪ host: good morning. one week after the recess, congress is back in session this week. tuesday night the president will fulfill one of his constitutional obligations i delivering his state of the union address. in the week ahead the president will hit the road in a series of campaign style rallies to pay attention to specifics in what the white house is calling a year of action. will you be watching tuesday night? do state of the union speeches matter? we will begin with calls and comments ahead. our phone lines are open.