tv Key Capitol Hill Hearings CSPAN February 20, 2015 8:00am-10:01am EST
dhs that would've been at treasury. so can you provide any insight into how you see that issue? >> there was a decision that all enforcement was leaving treasury. so the question really was at least in my involvement was justice department, homeland security, where does, where is the natural fit? when you look at the department of homeland security u.s. coast guard who regularly on a routine basis supports the secret service quite a bit, with ariel support and motorcade, other things like that. you have tsa who has been supporting the secret service with magnetometers especially during political campaigns when they are stretched very, very thin. ..
>> the tea as a is a new creation of that but obviously there was a coast guard before that. the secret service and interaction with the coast guard and the coast guard provided, and the department of homeland security. >> my sense is the cooperation is enhanced with in the same agency. >> i would like to add the panel's conclusion is we identified a substantial number
of issues that needed reform. for those issues we didn't think moving from one agency to another would address any of the issues we identified and so while we understand that was a serious debate, the focus needed to be solving the problems we had. >> if i could say one interesting piece on treasury was being an older guy, i remember well a lot of discussions treasury officials, wall street guys, finance guys don't understand the enforcement mission well, and wherever we are you think it is somewhere
else. i believe it was correct to say at that point of the director of the secret service reported u.n. assistant secretary or undersecretary of treasury and when the change was made it was clear the director of the secret service would report directly to the secretary of homeland security. we addressed it properly in the report. >> i recommend the gentleman from virginia for five minutes. >> the last point, mr. hagin, the reason it was originally in treasury was the dual mission of the secret service and i want to get into that. your report says the paramount mission is protecting the president and other high-ranking national officials and allows no error. we agree but if you look at secret service's don't document their presentation to the congressman in the budget, they carry out a unique dual mission
of protection and investigation meaning currency investigation. in their mission statement their own mission statement they say the mission is to ensure the security of the president by the president's families and protect the integrity of our currency and investigate crimes against national financial systems committed by criminals around the world so i want to ask, we are focused on the protection of senior officials, government and dignitaries in the united states but they gotta do mission and the question is, is that now a problem for the secret service? they are having trouble with the paramount mission you identified. maybe it is time to reexamine whether the dual mission thing makes sense in the long term
especially since -- >> we looked at that issue and we think it is a serious question and the investigative mission in some form is consistent with the protective mission. that said, protecting financial system of the united states a massive endeavour and limits put on it and it is likely the case, and budgeting and personal use that there has to be at a very hard look at whether investigative functions enhance the ability to protect or distract and so the issue you identified is very real. we share that concern and that is one of the most important things a new director or leadership team has to look at. >> on the acquistion, one of the
reasons is because of the need for surge capacity or additional capacity when the president or other protect these travel, particularly foreign travel as well as political campaigns, the 0 rival of the pope in the united states and those kinds of things where you need to draw on a significant force. you need a period of time, four five years in the fields to train and ultimately come to washington to be part of the protective detail. if you didn't have the investigative mission you would have a different looking organization focused solely on protection and that i think is a very substantial change with a variety of pros and cons. as a panel we decided as mr. filip said the investigative mission does support the protective mission but because we believe the protective mission is paramount the new
director has to make some serious -- >> my time will run out but i appreciate mr. filip's kantor, the currency side, i don't know that it makes sense to marry the two. it may have once. the spillover, positive externalities' about the investigative part but the protective mission need not preclude investigation. and the secret service on occasion to investigate a potential threat against a public official including the president of the united states so they have that capacity, not tied necessarily to the currency part and i would say the chairman who has invited bipartisan cooperation this may be something we need to look at whether this continues to make any sense. i would yield of my time could be frozen. >> your time can certainly be frozen. i think it was frozen at 55.
our staff has been working together. i do agree with you that i think we should seriously look at separating out the currency, protection of the currency, the investigation. i think secret service needs an investigative arm. does go hand in glove with their mission. their mission, but separating out the currency and giving that responsibility to the treasury is something we should revisit and continue to work with you and staff and we may very well jointly introduce something sooner rather than later. >> i welcome that. i absolutely welcome working with you and the ranking member. this is something that has bothered me for some time. i thank the chair, training. your report is very troubling and you actually say training is diminished to the point of being far below acceptable levels. that sent a chill down my spine when i read it. what could go wrong with that
and i wonder if you could elaborate a little bit on what we can do efficacious lead to turn that around and get it to far above acceptable levels. >> thank you for the question. i think i want to be -- >> you got to straighten out the mic. there you go. >> it is important to be very clear what we are talking about, both agents and the ppg and officers in uniform when they first go to the protective detail, there are hundreds of hours of training when they are first brought on so what we're talking about is in service training to keep you sharp, to hone instincts, to train together in an integrated way train around threats and areas and for that in terms of what we can do about it one of the things we strive to do in our report is set a benchmark, have
a standard that leaders can be measured against in terms of whether or not they were seeking to fulfill that stated that have a staffing model to support actually implementation of that so we have two benchmarks we set a return to the fourth shift concept for the ppg and we took a look at large metropolitan police forces, similar federal agencies on a protected mission their training levels are between 5 to 25% and we thought 10% for uniform division which if you think about it is two days and months, something that we should want to aspire to, we think setting benchmarks will go along way. >> thank gentleman. the gentleman from michigan for five minutes. >> thank you to the panel. your report noted that there was a common critique that you heard, that the service was too
in solar. what are the areas of greatest concern of which the agency needs to improve? >> these go to the leadership questions, the insularity goes i think in substantial part to the idea of an old boys' network for want of a better term that discipline is not always transparent or perhaps even uniform based on whether or not people have served together in the past or have familiarity with each other. the insularity also goes to the point of reaching out to a broader, intelligence community and law enforcement community to gain insights about technologies and new techniques that are available, perhaps even going so far as to reach out to sister agencies and friendly allied nations whether it be the israelis, british secret service equivalents to find out what
techniques they found helpful in real threat environment. in the past that had been done and it seemed that coordination with other folks who might have good insights and experts that diminished so of those were the main insularity is that i think we were looking at. part of it was in fusing outside expertise in areas like human-resources, budgeting, technology, congressional relations the leadership might come in those areas that is more effective and folks trained in a law-enforcement background. >> the main individuals or groups that are bringing these concerns to you? where these coming from agents on the line? >> yes but we would hear admissions to that effect from senior people. it was a uniform -- there were a lot of voices. >> you noted hearing the secret service would send low-level representatives with little
authority to interagency meetings, as that they were in your words hamstrung from deriving benefits from their participation. who was responsible for this practice? and the other question is why. >> i think it would be deputy level folks within their subject matter areas which select the people who would go to those meetings. i think it was just a lack of priority being placed on or maybe a failure to appreciate the benefits that could come from being in dialogue with other parts of law enforcement and intelligence community and the u.s.. that is a problem of insularity. >> didn't want to branch out and find anything different from what was normal. >> i think at its most benign form folks are proud of their own organization but pride can be a virtue and pride can be a failing too. there needs to be humility and appreciation you can game from
other folks too. >> how far down the chain of command does this extend? that added to extend? >> probably not uniform with each and every person. it is certainly something that is an organization, the organization has had for some time blues some people at senior levels are more open to outside perspective. some people at junior levels with the same dynamic and certainly something that is prevalent enough that a new director and that new leadership team has to we think respectfully pay serious attention to. >> thank you, i yield back. >> i recognize the gentlewoman from new york for five minutes. >> thank you, mr. chairman and ranking member for holding this hearing on a critical issue the security of the leaders of our country probing and important and all the panelists thank you for being here today and all your hard work.
you would not have to be a security or law enforcement professional to recognize there are some very serious problems with your department, the united states secret service. you just have to read a newspaper or have some common sense to see the you are an agency in deep trouble. the repeated headline about tawdry scandals with prostitutes and secret service professionals with lapses of judgment and high-profile breaches of security including breaking into the president of the united states's home. all these examples make it clear that something is seriously wrong in the culture and in the management of the secret service. in any organization, it is not fair to assume the bad behavior
of a few is representative of the many. but we also understand that this is not just any organization. this is the united states secret service. it used to be one of the most respected agencies in our government and you are tasked with some of the most critical law enforcement missions in our country. among them, first and foremost is protecting of a president of the united states, the commander-in-chief and the leader of the free world. there is no margin for error in your job. there is no slack to be granted and absolutely no possibilities for do overs. far more important today than fixing the blame and talking about all of these reports is fixing the problem. the questions that i fear from my constituents is how in the
world did someone jump over the fence, break into though white house, roam around the home and rooms where his children play, how in the world did that happen? i don't want to know specifics, i want to know in an overall statement can we go to bed tonight and feel the secret service is going to protect the president of the united states? and i will ask this. >> i think our panel believes the secret service is doing a job protecting the president and president is safe and there are a lot of multiple layers around the president and around his personal protection but i think to your question about how could something like that happen that you hear from your constituents and the like, the report by the deputy secretary detailed a series of lapses and failures in
training and communication led to that event and that is something that we hope our recommendations going forward can address. >> how can we make sure there is no longer failure in communications and no lapses in protecting -- i find the people who are so concerned about it vote no. one goal of government is to protect our citizens and to protect our population and we created the homeland security took many strong steps in a bipartisan way after 9/11 to better protect our citizens so when our citizens see the president's home broken into it is very terrifying to them because they put themselves in the same situation of being afraid of someone breaking into their home. i find it startling that this happened in the first place and i also find your recommendation calling for a new director from
outside the secret service, i never heard of an agency that can't handle it ourselves, we need someone from the outside come in and tell us how to handle it. can you explain why you made this recommendation and why do you think it is going to work and why do you think someone with the ability -- it is hard to get the secret service and the training and everything else you have that someone from the service cannot run the service and do you now have a separate agency bookings at protecting the president as they move around in their homes. and anyone else who wants to come in. >> i think our assessment of the need for an outside director is we fought many of the challenges that will lead to addressing some of these issues in the future uniquely at this moment in time could benefit from outside leadership. one thing we see in our report is that may not have always been true but right now given the
need to have been place a staffing model so they can make decisions that reflect actual emissions given the prioritization issues we have been talking about how do you make sure that protection of the white house compound and the president are a priority of 3 year and the mission creep with other areas is not affecting the up organization. all those challenges could benefit from outside leadership at this time. >> i think the gentlewoman. recognize the gentleman from california mr. walker for five minute. >> thank you for being here today. i want to talk a little bit about what appears to be the number one glaring concern, the offense jumper but i also want to talk from a budget perspective. let me make sure i am clear on this. this breach was caused because of insufficient training? is that correct? >> i think we think that and it
is details in the report training and communication issues were a substantial component of allowing that individual to get as far as they did. we have a number of recommendations in the unclassified and classified courses that would address those issues and we also think that increasing and changing the the height of the fence would decrease the ability of somebody to get over the fence at all as well as dead as far as the individual did. >> a couple times this morning i heard it tried to be tied into a budgetary issue. my question would be if one of used guys saw someone jump the fence would you know what to do? >> there is no question. i think the service if you talk to people rank-and-file across the service they would have said, many individuals would say i know what i would have done but we did find there was
disagreement about that. in other words there were individuals in the service who is thought lethal force would deploy lethal force and others who said lethal force is not appropriate. many who said putting hands on and tackling the person was the right approach. the concern that led to for us, there was lack of training so that you would know in the instant you need to react when you were supposed to do. >> we cannot correlate that big budgetary issues. we recently passed in and trafficking bill that would train tens of thousands of agents to spot out perpetrators of the victims, there's no additional funding so sometimes training to me has no boundaries. since it is connected with money is that a fair statement in your report? >> where budget and train go together is concerned that because of training disappeared because in no small part because -- not solely because of the
excess over time individuals are working they canceled in service training particularly for the uniformed division and now training is to an unacceptable level and those folks are working very long hours but there is an aspect that relates to resources. as we tried to make clear in the report we do think long-term a new director is going to have to come to di fine the priority of the mission in a way that the service hasn't to date. the chairman put up a slide about funding. it has not been question of congress not appropriating more coming to congress and saying what it needed as well as making hard choices about other aspects of the mission. >> you used the term, part of the responsibility was to keep and home instincts. i don't think it ties into more funding. it cannot be done without additional resources. do you think that is fair? >> our view is the reason
training has reduced so significantly is because the work force is so overstretched. we do think you need more personnel and the white house in the uniformed division and special agent population and i do think that means more resources in the near term. >> let me talk about budget transparency, do you -- are you surprised that no one in the secret service could answer budgetary questions that you propose? >> we were concerned about that and as we indicated the service needs to professionalize those aspects of service so they can justify within the administration as well as here the needs that they have because we did the best we could to identify what we thought was the reasonable reasonable number of an increase they needed in the near term but we were hamstrung in making more definitive -- >> could we say that was one of
the largest surprises the there was no go to person when you had budgetary questions? >> we were disappointed we could not get a number of questions answered. >> is that part of the reason you are recommending a direct from the outside, someone who could bring a different perspective including not just the secret service side but the protection side and budgetary side? >> they need real experts in that arianna and promoting from the asian population is not the way to go. >> yield back. >> recognize mr. heights from georgia. >> one question that i have but i am trying to wrap my mind a round in relation to what you were referring to, the panel found the secret service does not have in place a system budget terribly in order to make the most prudent budget decisions and yet at the same time, we need to provide more
resources of i am trying to wrap my mind around this understanding of how can we say conclusively that more resources are needed when we are likewise admitting they don't have a system of tracking the budget that they have, they don't know how to manage or spend the money they are receiving so can you clarify that? >> it is not so much about tracking the money they receive but it is a work force and staffing model to make decisions how to deploy resources that they have so it is in the planning side where we found i think, the retention, capturing of data we found deficiencies and on this question of more resources, for us training drove resources, if we wanted, we were unable to do the analysis if we want to bring everyone down to of 55 hour week, how would you do it?
what we were able to look at is we wanted to bring everyone up to an appropriate level of training pursuant to the benchmark, how much would it take? that analysis we were able to do and that is the basis for the 200 divisional uniform and specialties. >> thank you. just going on the training issue, all of us are stunned and appalled by the fact that something as simple as an incident people didn't know what to do, seems like it is 101 type information every agent ought to know but also the panel looked at training conditions that replicate the environment in which these agents are operating and there was evidently during that joy and bing incident there was one team that reported they were not aware of the layout inside the white house.
this is amazing. just respond to that as well. what plan is there in the training aspect if any to not only provide more training but specific training birdies agents are operating. >> thank you for the question. our report attempted to address what i call the quality of training in issues you are raising in two different ways. one is more integrated training. one of the things the deputy secretary's report found is some of the uniformed division officers were not fully aware of the roles other officers were playing and those standing at the door those on e r t and the k-9 units, different roles and responsibilities in terms of intercepting that person so that in part reflect a lack of sufficient integrated training, training as teams, that was one recommendation that goes to that. on the of familiarization with
the white house as you noted there was indication in the the report that members of the secret service responding to the incident were not familiar with the inside lay out of the white house. if one of our recommendations we don't think should be hard to do but one of our recommendations is the service invests in a replica so you could have training in a real-time environment. >> i want to go to mr. philip. mr. filip mentioned the human-resources issue and fact that you believe there needs to be at human-resources director from the outside coming in. i am assuming from that the method of to this point has been agents from within who have been overseeing human resources. is that true? >> yes, historically the agents occupied senior leadership positions in a number of areas
that perhaps their background and experience doesn't best prepare them to perform. the fbi for example under director miller benefited substantially. we think there is broad consensus by bringing in folks from the outside is spent their careers in those areas perhaps outside in the private industry or other areas and coming in to lead those and that is something that would be beneficial here. >> one final question. i understand there has been changing over the last several years in the hiring process. among other things on line hiring. pushing these changes. were you able -- where is this coming from? >> i don't think we have a keen sense of where those changes were coming from. it seems people sincerely were trying to find methods that would be better and they did not work and that is part of the reason we think of bringing in somebody from the outside does
this for a living will be able to improve things and if i could please answer one question number of folks asked i don't want to have us fighting people on this but the events of the offense jumper were up failure. even -- we are not part of the secret service but the secret service does not dispute those events were a failure and at some level you can train for 100 years maybe things would have been different. under any scenario they were a failure so we are not trying to say the events with a fence jumper but they should never be a situation where they get in front of the white house with the knife or otherwise. i don't want to leave the impression we have any ambiguity about that this or the secret service acknowledged that too and it can never happen again. >> recognize the gentleman from oklahoma, mr. russell for five minute. >> i appreciate the hard work the panel is done and it is a tough task that you have dug
into in the great bipartisan fashion. my question will focus specifically on the training aspects because that is what is crucial in getting the job done. if the personnel are too deployed to train, how will the additional uniform and the other agents be tracked? >> this is where our staffing recommendations and training recommendations interlink. part of what we were attempting to do is start with asking the question what would be the ideal training benchmark we want to achieve and try to back out of that staffing numbers you could achieve without having people -- without having to navigate around and forced overtime and other staffing issues and that is the answer to that. >> so with the increase in additional agents obviously you are going to have to absorb
those to train them which is almost counterproductive because they're too deployed to, you are going to put a bunch of new agents to make the recommendation that happens and that is the focus of the question, how would that be absorbed? >> probably the way it is likely to happen, the new leadership team to make specific choices about this you would bring in an additional special agent population, what those individuals would come on board would go to the fields and begin their training period before they come to the president's detail and bring individuals in from the fields to increase levels at the white house and special agents. >> i think all of us are taken
aback by the 25 minutes beverage training as a former combat infantryman that is astounding when you are entrusted with so many things that will protect somebody's life that seems totally inadequate. did any of that 25 minutes of training include sustaining accurate employment of firearms? >> the data we were given from the secret service did not include the time spent on firearms or qualifications and the like. 42 hours of training in fiscal year 13 25 minutes on average for the uniformed division, that was apart from firearms qualification. >> so what specifically was the training focus on if it was -- if you had other aspect of training according 25 minutes but obviously firearms training
or drills training or protecting people or whatever it might be, what aspects of training were you looking at? >> the date that the we received gave us aggregate training data and we briefed on the different training protocols and we want to talk about that here but for example to give an example of one of the things the report talked about, lack of training around communications equipment and how to use that. that is inappropriate subject of training and there is indication there has not been a lot of that in recent years. >> word there any training recommendations you may have focused on proper reduction of for rats and uniform rules of engagement? >> we looked at the question
which were discussed quite a bit in the report. what we found was very different views, notwithstanding the words on the page, very different views of what force was appropriate in very circumstances and we found the additional training was needed and also that they needed integrated training so each individual knew what their role was, who was the person who was the last line of defense at the door? who was doing the cackling? how do you work in an environment where k-9 has been released? those kinds of things, we felt sept. nineteenth indicated needed to be addressed. >> there were parts of the classified report speaking to threat reduction as well. >> i appreciate that and the sensitivity on fat and my question was focused on did you recommend a standard uniform
rules of engagement? >> the rules that the secret service uses comes from supreme court law about dealing with appropriate use of force that is pretty uniform whether we're looking at metropolitan police and a big city or the secret service for the fbi or what not. it is not so much there is ambiguity about the policy but the execution. >> that answers it and i yield back my time. >> this is a big area that needs to continued to be looked at. the use of force, legal if necessary has got to be well understood by every single person and it can never make a mistake. in this day and age of isil and other terrorist you don't know what is underneath them and is unfair to assume somebody doesn't have anything underneath their clothing. in this day and age we have to
assume that person might have an explosive device or chemical agents or what not and we should deal with appropriately. that is a good point. the gentleman from georgia, mr. carter's recognize. >> and thank all of you for being here and what you do and this has helped us out tremendously so we appreciate your efforts on this. i want to concentrate for a couple minutes on staffing because i am concerned here. can you tell me how we are doing as far as new recruits go, and are we getting new recruits in? >> i referred to the chairman at the outset there was certainly a period of time when services hiring process was not functioning as intended for budgetary or other reasons because problems with the hiring process they were not getting classes through. our sense is that has improved. they are using different hiring practices again and we think
that is improving. as mr. philip indicated we continue to believe having some of the mistakes that were made in the past related to not having professionalize human-resources function led by professionals in that area we think is an important change going forward. >> you are acknowledging there has been an increase in the number of new hires, people coming? >> there was a gap, two three years where they were not bringing classs through at the levels they needed to sustain the work force. >> but your assertion was that was not caused by lack of interest of applicants but instead by the hiring process itself? >> there were budgetary issues and also the hiring process, it wasn't then they lacked for applicants but did they struggled to get them through the process in a timely way. you would have people start the process or go through the process of 2-year and fallout of the process because they failed the polygraph or other reasons. >> hang with me real quick.
what about the forces today. where are we with the labor pool? what percentage will we see returned in the next 5 to 10 or be eligible to retire and i am willing to talk about the fact the we get to situation where we don't have enough secret service agents. >> our concern looking at that gap, looking three or four years from now where the individuals who in an ordinary year would have been hired, would have been starting their rotation in washington as president or vice president's protective detail but a new director needs to start planning now known for that and that also includes as you look forward, 2020 is going to be the year with the 75anniversary of the u.n. presidential campaign, that will be a year when service is going
to be quite busy and we need to make sure they have the personnel ready to go and train for that period and that takes preparation now. >> would you say the white house recognizes this? because it is my understanding the last budget have been submitted by the white house, congress put more money in there in order to address this scenario. >> as we talked about in our report i think the issue we will release of was the service having difficulty in defining what it needed and seeking resources for that so it wasn't so much that it wasn't that congress was saying we are not going to provide the president's budget, but as this was working through the process the surface was approaching its budget by saying here is how much we have may we ask for a little bit more rather than saying here's what the mission and what we need to
achieve it and pursuing those resources. >> for myself and i suspect and hope for you as well one of the most disappointing things that occurred to me in this report was low morale. do they not watch these movies and get you excited about being a secret service agents. >> these folks are working extremely long hours. in our leadership recommendations, and lack of confidence and other decisions. and has an impact. if we met with uniformed division just shortly before it sank skipping, and they didn't know they think they would know whether they were working on thanksgiving until thanksgiving morning. those kinds of things and long hours as forced overtime they take a toll on the work force.
>> a business owner, that sounds a dimension problem that needs to be addressed immediately. thank you again for everything you have done and we appreciate your efforts. i yield the remainder of my time. >> recognize the gentleman from south carolina for five minute. >> i want to thank you for your consistently hard work on this issue. while you have been the chairman and even before that when you were on the committee. i will throw this question to any of the panelists who can answer it. explain to me how working counterfeit currency cases prepares you for personal protection. >> when a new agent comes out of basic training assigned to a field office for four five years
but during that assignment they have investigative rules, serving as manpower for protective stops. of the president, vice president comes in to your region you are assigned from your investigative role to be part of the manpower squad which is how they start to become familiar with protective operations. >> i get how practicing protection details helps you with protection details but i am trying to figure out how investigating someone using an inkjet printer to print counterfeit $100 bills prepares you for that. i'm trying to understand how those missions are combined. >> they developed law enforcement skills, they develop a sense of when someone is to be
-- >> which leads to this question. your applicant pool do you draw heavily from those women and men already in law enforcement and already have those skills? >> i believe in the previous hiring practice over the last few years that that is not the case. they were hiring the u.s. a jobs. >> why not hire ex military? i know there is an age cut off but why not hire ex military, state and local law enforcement, a field that already has that basic invested the fluid -- investigatory school package instead of someone who is an accounting majors at decided they want to join federal law enforcement? >> i think you are likely to see with the change in hiring process some of those shifts to draw more from local law enforcement and ex military which i think has been more common to the service prior to
the period when we think they're hiring practices became problematic. >> the u.s. marshals have the broadest of any federal law enforcement agency but they don't use it. face search for fugitives, security and the court room, they provide security for courthouses but they have very broad jurisdiction but just don't use it. they are experts in a narrow field. i love all of my years working the secret service. i felt they were really good on the currency and accountability cases. i never understood how those two skill sets go together. searching for missing persons and doing personal protection i see how those go together but investigating the use of an inkjet printer to print fake $100 bills and providing protection for the president or vice president i don't see how those skills sets go together but it seems to me you are already on top of that.
one question that arose with the former director of that i am not sure i got a good answer to, you mentioned training. i don't think the failure to secure and search a crime scene is the training issue. i say that because i believe the housekeeper who did not train their new enough to alert someone, you might want to come and serge this part of the white house. if you have to be trained to secure and searched the potential crime scene you are probably not in the right line of work so what explanation were you able to uncover for how they missed that? >> you are putting your finger on something important that it also relates to the man of god inside the front door of the white house with the knife. there are adequate explanation for failure to secure that
evidence the shooting in the residence or you can talk about things forever and you can talk about training forever. if there were never another hour of training for ten years no one should get in the front door of the white house again. we are not here to defend either of those. those were both grave mistakes and neither one should happen. >> i appreciate your candor and full work that you did. secret service has a very rich deep good reputation and history and i would like to seek it get back to the days where i remembered it. an important agency we have to get right. thank you mr. chairman. >> recognize the gentleman from alabama for five minutes. >> thank you, mr. chairman. you mentioned the excessive amounts of overtime. do you have an idea how many overtime hours have been worked
annually? >> i think when we look at with respect to the aging population we don't think there are accurate records for that because what we found was agents routinely enter eight hours two hours of law enforcement availability pay time even when they're working 17, 18, 20 hours so that we think the accurate records for that are difficult to find. >> let me ask you this. if the agents are not logging the hours they are working are they and compensated for over time? >> they are getting paid for their paid hours. frankly we went on high performance culture. we don't want a group of individuals, i don't think they view it as uncompensated time but certainly they are working extraordinarily long hours well beyond what anybody has
measured. >> i don't think i am communicating this correctly. i'm trying to find out in your budget process you have so much budgeted for salaries and benefits. in certain professional, certain professions when you work beyond not beyond eight hours but beyond 40 hours you are compensated for your overtime. some is time and half and some is straight time. that is what i'm trying to find out. >> in the uniformed division they are compensated for over time. what we found in the uniformed division side is there were wide variations. some people were working extraordinary amounts of overtime. i think the precise number i don't have that my fingertips but 58 hours on average but again with a wide variation. >> that is almost 50% more than what they should normally work
and at has implications for stamina overtime. if you are working consistent hours, working those hours on a consistent basis and also has the budget impact. generally you should be budgeting personnel to work those kinds of hours so what i want to know, does it make sense to pair for overtime? when we convert what we are spending on that new personnel? >> a new finding of the report is rather than bring on new personnel and get them ready what happened was the need kept increasing the personnel on board did not keep increasing and they essentially substituted over time for bringing on new personnel so you are looking at the chairman's target to see the gap in hiring the number of classes they go through is made
up through overtime and we think a less tired work force, some of that would be compensated in bringing on new people, some of that would be compensated. >> even on but training site you have them trained that but if you are working that many hours you are reducing their effectiveness but the thing that gets me is a management issue. spending money on overtime and someone is making a decision to pay overtime rather than bring in these new hires which would reduce the demand on your personal. that doesn't make sense. >> we agree with that. >> the clock change. i thought for a moment i was out of time. the things that keeps coming up
from some of the other testimony i have heard is this seems to be an overall decline in more route in the service and i commend you for the work you are doing. i don't know how much input you had in the report on the recommendations for reforms, but i will support what is in the report particularly bring in someone from the outside. i am a big believer in bringing people from the outside into a huge organization because they see things no one on the inside seas. you develop a culture over time where you start to miss the obvious so once to encourage, to pursue someone outside the agency. and the transitional type setting to make the changes that will bring the agency back up to the standard of excellence you
enjoy for years and years. >> i recognize the gentleman from wisconsin for five minutes. >> thank you. very good. a couple questions, really appreciate you doing that. a lot of discussion how the new director is going to be. you ought to come from outside the agency. the next director should come from outside the agency. >> basically the first crack at it. all things equal is easier for an outsider to achieve some of the things that are important, taking a fresh look at priorities, discipline, and
bringing in outside folks and the congressional relations budgeting areas as appropriate. it is easier for an outsider to do that. the fbi does that historically the cia does that historically. to underscore this, that is the president's choice ultimately. sometimes all things in the world someone from the inside brings in and outside leadership team and they are the right person at the right time. we will support whoever the president chooses to accept, we can be supportive of that but we do think an outsider would be able to do some of those things easier. >> the other thing i would add is the report goes into detail, the budget and administrative function of the organizations that need to have a priority to support the productive mission
of the agency. >> i would echo that. one of the opportunities we had as a panel was to talk broadly across the federal government, technology and management and there's a lot of talent that could help the service and certainly promoting from within for certain positions is important and we think there should be more people at senior levels to come from outside the service with a different background. >> having someone who has the experience that changing an organization and aggressively drive the changes that are needed here, the use of technology, management of technology, human-resources and budget issues need a change agent. there are a lot of people and the secret service and we met and talked with quite a few
people, dealing with further experience in education in terms of management training could be great directors of the service going forward but at this point in their history we need someone to aggressively drive change and our view was that person does come from the outside. >> that is kind of eliminating, somebody from the outside. you guys, somebody others in the acting director, would have that outside view would be an improvement. >> we did not do any personnel review of the acting director. he has done a great job and a great public servant and we didn't do a review to that affect. all things equal there are certain parts of the job that are easier on average for an outsider but we all have great respect for him. >> one other question because
we're running out of time. right now you fly in agents to get to the white house. it is very impressive. can you comment on that practice? >> it does reflect the service short-term trying to ensure there is adequate manpower at the white house that is not a cost-effective long-term strategy for dealing with these issues and that is why we recommend them, permanent hires, the 200 additional, 85 additional special agents, we think that is a better way to do this, more expensive ways to do it that only for short-term. >> you feel we are spending money unnecessarily by doing
things this way. >> thank the gentleman, mr. cummings. >> thank you for all you have done. i want to zero in on some of the things, and the maritime transportation of the coast guard. the situation where the coast guard was purchasing both of them afloat. and what we discovered, the coastguard, constructed their contracts and did their procurement. the major problem is they didn't have people in the house who knew about procurement.
can you tell me the significance of that? and have i got that right? >> you do, sir. i think the significance of it is real. i guess the way i would put it i think the nicest way to put it is that in life you try to put people in a position where they have the best chance of succeeding both for themselves and for the organization. and if you have somebody who's an a+ protective person or law enforcement person they may not be an a+ person at media relations or congressional relations. we all have our strengths and weaknesseses. what the fbi has done did under director mueller and it seemed to be a material improvement in their endeavors was to try to recruit -- and it's not always easy. it's hard to get people to leave their positions, to move things of that sort. but to put a real focus on recruiting experts who would come into the secret service, they were attracted -- in that case the bureau.
they were attracted to the mission, it was a way to engage in public service, it was a way to make a difference in america and be involved in human relations, be involved in i.t. efforts for the bureau, and they improved things. the bureau has a well publicized history where it wasn't that great at i.t. for a while. they had a lot of expensive challenges and, frankly failures, and they got better. and we think, respectfully again, that this is an area that would merit serious consideration, because bringing in senior-level people in human resources and budgeting and technology congressional relations could really move the needle for the whole organization, and it would be something that would be great public service for the senior folks who came in. >> to be fair, the service does employ experts in human resources, technology and other areas. they do not ever occupy the senior-most spot. and when you are trying to again, drive change, it's hard
when the top guy, top person holding that holding that responsibility is not the expert. >> i think it -- and just to ec eco, i also think you need to bring in those experts and give them a seat at the leadership table. >> last but not least, we talk about morale. one of the things we find in hiring people even here on the hill, people like to know that they have a chance to move up in an organization. i guess the military's sort of like that, i guess. the people that you talk to the agents, did they say that they would prefer somebody from the outside? i'm just curious. >> we got a mix of views on that. and, again i think very, very telling that there were a number of individuals who talked to us who said, you know that, you know, we really needed -- that would be a sign of change and that we think as an organization
we would benefit from that. so we did get a mix of views on that. there's, you know, within the agent population i think as we talked about in the report there were questions about promotions and was this one being fairly applied and were promotions being fairly applied. and i think that's something that a new director has got to regain the confidence of the work force on. over time there have been eras in the secret service where it was possible to move up from the t uniform division up through the special agent ranks. even to the director of the service. what we see at least today a view of the uniform division is that pathway isn't really open, and i think a new director's got to think about opening that up again. >> relate me just say -- let me just say this the chairman and i have been working very hard on this issue and your report and your work without a doubt has
been a guiding light. and i cannot tell you how much we appreciate it. it's allowed us to be able to delve into some things that we probably would not even have known about. and the way you -- and your recommendations, all of that will help us tremendously. and i think your report serves as an example of where when we have crises like this -- and i do consider it a crisis -- that it's the kind of thing we probably need to start with so that we can then delve even deeper. so again, i want to thank you, and i want you to know that, you know i think what you have done will make the secret service a much stronger organization. and as someone said, restore the honor that we have known for many, many years.
thank you. >> thank the gentleman. i have a couple just procedural questions for you, and then we'll wrap up. and let me first highlight how much we appreciate homeland security secretary johnson others who made this a priority made it happen and were smart enough to engage you all in putting this together. because it's, it is a first rate panel, and we appreciate the depth in which you were able to get information in the report. it is so valuable to us. we can't thank you enough for your time. what types of documents, how many -- can you give me a sense of the documents that you were able to review the size the quantity? what types of documents? >> we -- thousands of pages of documents. everything from, you know prior reports sort of of the kind in the 1990s, for example, there was the plane that went down on
the white house property, so there were a series of reports that came out of that. >> right. >> as well as lots of budgetary documents, you know, certainly manuals about everything from training to how to, you know undertake certain operational activities. so i think a pretty wide range of information. certainly with respect to our classified report we did detail some specific classified documented -- >> and how were they produced to you? on paper? electronically? did you -- >> i think both. >> and how long did it take from the time you made the request until you actually got the documents? >> i think that we got terrific response from the service when we asked for things, and so i think we were very happy with the responsiveness both of the documents and, frankly folks came to us with a lot of candor and gave can us their unvarnished view.
>> so if you were to ask for documents, how long did it take to get that to you? >> i'd probably have to ask your staff on time frames because i wasn't as focused -- >> i'm just looking for a generality. you started your work, day one was -- >> we were brought onboard at end of october and then we worked through december 15th. >> yeah. that's an amazing amount of time. did the secret service ever complain about giving you these documents? >> no, sir. >> any challenges with getting these documents? any personnel issues that they cited? >> no. i think as we indicated, i think one of the challenges was trying to get the kind of budget -- >> right. >> -- the kind of resource documents with respect to evaluating some of the staffing issues that we were concerned about. so as i think we noted, trying to get that information was challenging, and i think in no small part because i don't think
they have it in a form that is you know, would be sort of useful to use. and so i think that, you know, i would identify that as a challenge that we had. >> the budget? >> those documents, because i think -- or that information. i think of it more as information than documents. we wanted to make some, you know, even more specific recommendations about the appropriate size of the service, and because it was difficult to get information about manpower usage and about particular staffing, you know, as i think i indicated to one member, you know, we were able to assess from the bottom up what you would need to bring the training level up, but it was much more difficult to assess if you wanted to bring everybody's hours down to a reasonable level, what would that, what would that take. and we weren't able to do that. >> right. again, on behalf of this committee, we want to thank you for your good work. you put a lot of time and effort in it. we appreciate you being here
today, made quite a sacrifice. but it is truly valuable. i think the service is listening to you, i think homeland security is listening to you certainly we are, and i hope that we find as time goes on that all of these recommendations are implemented. so we thank you again for your participation today. >> [inaudible] >> sir, mr. cummings? >> this is for ouren own sake, mr. chairman. for our own sake, mr. chairman. mr. filip? >> yes, sir. >> you said something a moment ago, you said -- you were answering our question and you said, you were talking about the president making a selection, but then you went on to say we could support that. what does that mean? in other words, not necessarily that particular question. i mean what do you see as you all's role now? that's what i'm trying to to get -- >> yes, sir. >> yeah. >> i don't mean to sort of arrogate our expertise or elevate it unnecessarily, but we did put a lot of time into it, our staffs put a lot of time
into it. we hope that folks think we generated some insights that are useful. whoever gets picked to be the next director, if it would be useful for them to meet with us or their chief of staff or whoever it is so long as it's okay under the rules of appointment and all that, i can speak with great confidence for everybody involved that we would be happy to try to be supportive and useful to hem in whatever role -- to them in whatever role they would find useful. >> with was it your understanding when you were appointed that that would be part of it, or is that something that you all are basically saying we're willing to do? are you following me? >> i think we're just willing to do it. to be honest, sir there's all sorts of rules and bureaucracy about how many days you can serve and all that and to beness to, i don't know how that all works out. i'm just saying if we can do it consistent with the regulations and the rules and stuff, we've developed a great respect for the secret service in this process and, obviously, this is an issue that, you know, anybody who cares about the country --
and we all truly do in the most bipartisan way that you all have embodied -- can feel very proud to have any small contribution towards. and if we can make any further small contribution, we'd be proud to do it. >> that makes me quadruple my thanks. i'm serious. that you would do your duty and then say that we, you know, we're willing to follow up to help make this organization the very best it can be. and i think this is what america's all about. this is what you all are what make this country the great country that it is. i don't say that lightly, and i really appreciate it, and i know that our committee does too. >> again we thank you, we thank your staff. we appreciate the great work that was done. this committee stands adjourned. [inaudible conversations]
[inaudible conversations] >> today on c-span2 the washington institute for near east policy hosts a discussion about how isis recruits foreign fighters. participants include the european union's counterterrorism coordinator and the u.s. general who oversaw detainee operations in iraq. watch it live at noon eastern here on c-span2. >> the barbed wire guard towers are gone but the memories come flooding back for so many people who, until today, had lost such a big part of their childhood. for many released after the war,
some buried the memories and with it the history of this camp. now more than 60 years later -- >> this sunday on "q&a," the only family interment camp at crystal city texas, and what she says is the real reason for this camp. >> so the government comes to the fathers and said we have a deal for you. we will reunite you with your families in the crystal the city interment camp the family interment camp, if you will agree to go voluntarily. and then i discovered what the real secret of the camp was. if you -- they also had to agree to voluntarily repatriate to germany and to japan if the government decided they needed to be repatriated. so the truth of the matter is that the crystal city camp was humanely administered by the ins. but the special war divisions of the department of states used it
as roosevelt's primary prisoner exchange in the center of roosevelt's prisoner exchange program. >> sunday night at 8 eastern and pacific on c-span's "q&a." >> the political landscape has changed with the 114th congress. not only are there 43 new republicans and 15 new democrats in the house and 12 new republicans and 1 new democrat in the senate there's also 108 women in congress including the first african-american republican in the house and the first woman veteran in the senate. keep track of the members of congress using congressional chronicle on c-span.org. the page has lots of useful information there including votes results and -- voting results and statistics. new congress best access on c-span c-span2 c-span radio and c-span.org. >> a new economic report from the white house touts gains in
employment and gdp growth and argues for some of the administration's policy priorities including traded promotion authority. at a christian science monitor breakfast, jason furman, chair of the white house council of economic advise ors, discussed the reports and other economic topics including corporate tax reform, the health care law and deficit reduction. this is an hour. [inaudible conversations] >> okay. we're going to start and have people join us in progress, as they say. thanks for coming. i'm dave cook from the monitor. our guest today is jason furman,
chairman of the president's council of economic advisers. his last visit here was in january of 2014. we're glad he came back. his first association with the council came in 1996 during the clinton administration when he was still a graduate student at harvard and was hired as a staff economist at the council. since then he's served as senior adviser to the chief economist at the world bank, as special assistant to president clinton for economic policy at the national economic council and as senior fellow in economic studies and director of the hamilton project at brookings. along the way he's earned three degrees including a doctorate from harvard and one from the london school of economics. he's been a visiting scholar at nyu's wagner graduate school a public service and a visiting lecturer at yale and columbia. earlier in the obama administration our guest was principal deputy director of the national economic council before being named to his current post in june of 2013. no introduction would be
complete without the obligatory mention of our guest's youthful ability to earn money on the streets of new york, juggling apples eggs, bowling balls torches and knives. according to the washington post, it's a skill he's employed to considerable positive effect at a talent show at his children's school. and with that, we'll move to this morning's mechanics. as always we're on the record. please no live blogging or tweeting. in short, no filing of any kind while the breakfast is underway to give us time to actually listen to what our guest says. there's no embargo when the session ends. to help you resist that relentless selfie urge we'll e-mail several pictures of the session to all the reporters here as soon as the breakfast ends. as regular attendees know, if you'd like to ask a question please send me a subtle, nonthreatening signal, and i'll happily call on one and all. we're going to start off by offering our guest the opportunity to make some opening comments and then we're going to move to questions around the
table, and again, thanks for doing this sir. floor is yours. >> okay. thanks for being here this morning. we're releasing the 69th annual economic report of the president. here is one of the 20 copies that we currently have. i'll have a few more later and you can download as many as you want from the internet for free. the report situates the president's approach of middle class economics in the context of the increasingly strong economic recovery that the united states is currently having and the challenges that we have going forward to make sure we can have further wage growth and the benefits translating for middle class families. the united states has now had 59 consecutive months of private sector job growth. that is the longest streak on record. the pace of that job growth has accelerated from year to year.
it was 199,000 jobs per month in 2013 260,000 jobs per month in 2014. a range of other indicators have accelerated. we point to gdp which grew at a 2.1% average rate in the first three and a half years of the recovery, accelerating to a 2.8% annual rate in the last two years. and all of that's happening while the economy's in a more sustainable footing vis-a-vis the lowest current account deficit since the 1990s, high national savings, low -- a substantial amount of deleveraging by consumers and businesses all of which put us in a position to be able to have sustainable growth going forward. the report analyzes the trends in middle class income the very rapid growth through 1973 and then the slowdown in income
growth starting around 1973. and it situates that slowdown in the context of three factors. one, productivity growth; two, the growth of inequality; and three, labor force participation. and points out the number of different policies the president has that would affect all three of those levers of economic growth. in terms of productivity there's a substantial analysis of what expanded trade would do for productivity. and i'd note, for example, one of the points in the analysis that export-intensive industries have total factor productivity that is 50% higher than nonintensive industries, and that translated into higher wages, and that's one of the reasons why it's so important to pursue trade with our partners in the pacific and in europe. it talks about the importance of business tax reform and
infrastructure also for raising our productivity. in terms of insuring that those gains are more shared, everything from the minimum wage to a progressive set of tax reforms that put the middle class first with tax credits for child care, college and secondary earners. and finally, labor force participation has been a challenge for the u.s. economy for decades. and a number of the president's policies in terms of paid leave more flexible workplaces and again, those tax incentives to help with child care to help encourage second earners to work are all about getting more people who want to participate in the economy doing so. there's every reason to believe that the united states can have another good year economically in 2015. to make sure that happens it's
important that we avoid brinksmanship, that we avoid unnecessary austerity and that instead we're taking advantage of the many opportunities we have to both strengthen our economy in the short run but even more important lay the foundations for productivity growth, more shared growth, more participation in the economy going forward. so -- >> thank you. i'll do one or two, and then i'll go to nick of the journal john wiseman of the times, david jackson of "usa today," kevin hall mcclap think and neil monroe from the daily caller. so i'll argue that glass half empty case just in hopes of provoking you. [laughter] >> half full to me but -- >> there was a report morning in the "wall street journal" -- well your report notes that difficulties by consumers in
obtaining low interest loans is, for mortgages is creating headwinds for the economy. on the other side of the scale, the journal reports this morning that loans to consumers with low credit scores have reached their highest level since the start of financial crisis, almost four out of ten loans on the personal side went to subprime customers in the first 31 months of -- 11 months of 2014. does that worry you? is that a sign -- do you see it as a sign of recovery or do you see this as a sign of froth where the fed needs to do something? >> uh-huh. i think if you step back and look at the overall balance sheet of consumers you see it in the strongest place it's been in a long time in terms of for several years now there's been reduced borrowing, there's been increased savings and the combination of that means that the debt-to-income ratio is back to where it was i think, around
2002. and then if you combine that with the fact that interest rates are low, the debt service -- how much you have to pay in interest as a practice of your income -- is the lowest it's been on record. and those data go back to 1980. now, all of that is averages and for many households that are definitely still struggling to get by and many households in the meddle certainly are -- middle certainly are. but on average aggregate consumer balance sheets are quite strong. if anything, you know we remain concerned that credit conditions could be overly tight especially in the housing market where, for example, average fico scores for borrowers are substantially higher than they were in, you know 2002 2003 2004 before lending standards deteriorated
in the housing bubble. and that's why the administration as well as fhfa have taken a number of steps to ease those standards. and i think we'll start -- we've seen some of the easing. i think we'll see further easing as a result of, for example clarifying the circumstances under which guarantees apply in a so-called putback risk harmonizing qm and qrm and a number of other steps that we've taken to increase the -- [inaudible] >> let me ask you one oh -- other. sort of on the bullish side mark zandi of moody's is arguing that we're on our way back to full employment by mid 2016. and i was wondering whether that's an assumption or that's a forecast you would agree with. it would, obviously, be great news for democrats to be in a full employment situation in 2016. what's your sense? >> yeah. i mean, first of all i'd note
that to date the unemployment rate has fallen much further, much faster than anyone predicted. be you look at the fore -- if you look at the forecasts as recently as 2013 they said it would take us until 2017 or later to get to where we already are today with an unemployment rate below 6%. and that accelerating economic growth i talked about in part because in the last year we didn't have brinksmanship we didn't have unnecessary austerity put us in a position where that unemployment rate was falling a lot faster than people thought. we have a forecast underlying the budget in terms of the trajectory of the unemployment rate, and it has us over the next, i think over the next two years getting back to something like our long run unemployment rate. we also would like to see, you know draw more people back into the labor force, continue to see
the record we have seen of all the jobs being created being full-time jobs and, you know, continue to see the long-term unemployment rate coming down as it has over the last year. >> nick? >> jason, several years ago there was a lot of talk from this administration about doing more on the mandatory spending, entitlements, social security on out years of the budget with picture. the administration's now saying we need to turn away from austerity, so i wonder has the entitlement and mandatory spending picture improved, or was the, were the concerns of a but years ago overstated? >> oh, i think the approach that we have is very consistent now with what we've always had and what the administration has always said is the deficit's coming down rapidly in the short run, that the debt is stabilized over the next couple of years,
but then thereafter it'll start to rise so that we need to take steps both to increase our investment in growth with things like infrastructure, but also to reduce the deficit over the medium and long run. in terms of that deficit reduction, some of it's on the spending side some of it's on the revenue side. in terms of the spending side, the approach that we took in the affordable care act that we proposed in the fiscal negotiations in 2011 and '12 and it's in our budget today is based on what can we do to reduce total national health expenditures by making our system more efficient. when you do that, you can save money for the government, you can translate into savings for for consumers s and you can extend the life of medicare. and the budget includes about $400 billion of savings in medicare. they'd be something that we
would want to do in conjunction with changes on the tax side that would make the tax code more progressive, raise additional revenue especially by closing loopholes for high income households in terms of their tax expenditures and capital gains. but it's the same integrated, balanced approach we've supported for years in medium and long run deficit reduction from revenue and spending. i also note, by way that the health savings that we've proposed if you look in the tenth year are the same as both what bowles simpson proposed in the tenth year of their proposal. so it phases into the same place they are. >> jonathan? >> you mentioned jason, you were talking about that the president's trade agenda, and you talk about its impact on gdp and productivity. but if you talk to a lot of democrats who are opposing the president's agenda they say that the disconnect here is between gdp and middle class income growth.
it's not finish that's not happening -- it's not, that's not happening. how do you make the pitch to them and how do you make the pitch to us that a higher gdp actually will translate into stronger middle income growth when that has not happened, basically, for to 20 years. >> well, i think one of the important lessons that we have in chapter one of this report we look at middle class income growth from 1948 through 2013. and a lot of -- frankly, both democrats and republicans are increasingly aware that over the last several decades we haven't seen as fast income growth as we had in the decades before that. the important analysis here is that's due to a combination of slower productivity growth since 1973 in part because we ran out of the pent-up inveptions and innovation that went into world war ii that was commercialized in the 50s and '60s in part
because of disruptions with the oil shocks and the collapse of the bretton woods system. and, you know, a number of other reasons why productivity growth has been lower in the last couple decades. so the pie hasn't been expanding as fast. at the same time there's an increase in ip equality which is -- ip equality which is widely understood. and if we want to get middle class incomes growing, we have to make sure that pie is growing faster, and we have to make sure it's sliced more fairly. so i think if you go back and diagnose what the challenge is in terms of income growth and appreciate that part of that challenge is that we need more productivity growth it will bring you back to it. in terms of trade, the second thing i'd say is it's really important how you expand trade. and a big part of the argument is that we're negotiating higher
labor and environmental standards with the countries that we're trading with. and we already have extremely low tariffs at 1.5 on average. we have very low non-tariff barriers, so we're already doing substantial trade with all of these countries. what we're trying to do is make sure they raise their labor standards and that the other countries who tend to have higher tariffs than us and higher non-tariff barriers are bringing those barriers down so that we can export more so that we can support or -- more high-paying jobs. trade is very much do you want to manage globalization better with higher standards and lower barriers in our trading partners? >> [inaudible] the republicans will certainly and certainly the republican leadership and the committee leadership will play with you on these trade negotiations, but that second aspect the
president's proposals to boost middle class incomes they don't, they're not showing any sign of negotiating with you on that. so how do you make that a package deal? >> i'll leave it to others to do the political packaging of these things. but, you know, as you know a lot of what we're pushing for is things that could happen in washington, could happen in states, could happen in cities can happen in companies. so more than seven million workers have gotten a raise or are in the process of getting a raise as a result of states or cities that have raised their minimum wage since the president first called for it in the state of the union. you see cities and states across the country moving forward on paid leave and sick leave. you see ways in which our budget creates funding that helps support them doing that. you, you know, i'd certainly hope republicans would want to
the work with us on some of the ideas that we have in common. a lot of our tax proposals, cathy mcmorris rodgers, itc is something paul ryan has sported tax -- supported tax credits for child care the republican leadership has talked about, you know, their willingness to work on. so there shouldn't be any barrier to working together on, you know, specific policies we agree on and specific goals that are, you know, should be widely shared. >> do you agree with, again, the moody's forecast that our net export position will continue to worsen as the economy improves? they see it going to $517 billion this year and $607 next is that a likely scenario? >> uh-huh. we don't publish forecast for net exports. of it's certainly the case that the most important determinant of our exports is growth in the
rest of the world, and the imf and others are forecasting that that would slow. and then the most important determinant of our imports is the strength of the u.s. economy and that is strengthening. as we look forward we see most of the strength in the u.s. economy over the next year or two being the domestic momentum we have in terms of consumer spending, business investment and residential construction. and then, um, you know, if we adopt the right policies making sure that austerity federal fiscal policy isn't getting in the way, but instead is enabling american consumers and businesses to drive forward. >> david jackson, "usa today". >> yes. following up on trade politically speaking, i mean, we know the democrats have some problems with these deals in asia and europe, and there's some questions whether the republicans really want to work with you guys. i mean, given that, why would you be confident these deals are going to be able to get done in
the next two years? >> uh-huh. the case that we're making is that these deals are a better way to manage globalization, that we're knocking down a lot more barriers to our exports overseas than we are here because we're already very open in the united states. they also give us the tools to enforce. if you look at the wto, the united states has brought 19 cases, 9 of those 19 cases have been against china. they've been in important areas like cars, suvs, rare earth. we've consistently won those cases. it's more cases than anyone's brought. so if you put rules and trade agreements -- in trade agreements, we're already a country that's transparent that abides by those rules. a lot of other countries in the world aren't. bringing them into a system like that so we can take the type of enforcement actions that you've seen us take since 2009 just
puts us in a better position with more leverage and a better ability to expand our exports and economy. >> just in the terms of the raw politics of getting these deals are you very confident or just semi-confident that they're going to come through? >> i'm on the economic side of the operation, so i'm not going to make a political prediction for you, but i'm very confident it would be good for american workers, and i'm very confident that we have a strong case that these trade deals are good for -- >> and what are you hearing from allies in asia and -- [inaudible] are they worried about congress getting -- >> i hear a lot of support about how important it is, you know for the global economy and for the u.s. economy. and we were talking before about our net exports. you know trade can be win/win. in fact, trade by definition is win/win, that's why you engage in it. and it's important for our exports and our wages but it also is, for example, you know, a step that would help japan
strengthen its economy which would in turn help our ec ports to japan -- exports to japan and help the united states even more. >> kevin hall, mcclatchy. >> maybe we can get to this terror alert, maybe just red, green or blue. [laughter] a couple questions, i don't know if it speaks highly or lowly of me that i actually read the entire report and i'm not going to ask any questions about it -- >> did you get any sleep at all last night? >> the last two days. the actual trade numbers since you're talking about trade, that talk about the percentage of trade happening with places that have trade agreements with the united states, it's a number that i think most people would be surprised by, how much trade happens between trade agreement countries. the questions have to do with your colleague, sean donovan, when was here at this table a couple weeks ago. said -- >> i agree with him. [laughter] >> well, good. you may want to hard the question first. [laughter] he had suggested that we're going to have to get used to the 70% debt to gdp numbers, twice
the historical average. at the end of your baseline it's 74%, at the end of cbo's, it's 81. that's the first time i've heard anybody articulate that we're going to have twice the historical average for the fore see bl future. diss he misspeak, or is -- did he misspeak, or is the administration assuming we're going to have debt to gdp in those numbers? and second in a real world question residential lending not happening, but commercial real estate seems to be doing rather good. any thoughts to why commercial has really taken off so much? is. >> uh-huh. so on your first question what we had set from the very beginning of this administration as our fiscal goal was getting the deficit under 3% of gdp and that wasn't picked as some arbitrary number. that was picked because that's where you need to be in order to have your debt falling as a shower of the economy. as a share of the economy.
so we look more at the trajectory and ask ourselves is it sustainable for the economy. our deficit has fallen by more than 70%, and last fiscal year was 2.8 percent of gdp. both cbo and omb project it will stay generally in that neighborhood, drifting slightly lower over the next couple of years and that as a result we will be stabilizing the debt and getting it on a downward path. i'm not aware of any economic analysis that tells you, you know, this is optimal level of debt, this is the level of debt you immediate to have. what i -- you need to have. what i do know is you want a situation where you look out and this is true by the way not just looking out over the next couple years in the analytical perspectives of the budget if you really read everything our administration has produced there's a chapter on the long run deficit outlook and it
shows that this concept economists call the fiscal gap, how much you'd need to change revenue and spending as a share of gdp in order to stabilize the debt over a period of time that we actually don't have a fiscal gap under the president's policies as long as we took the steps on revenues and spending that i was talking about. >> so does it matter that we're twice the historical average on debt to gdp? that's not the number we should be looking at? >> the number i would focus on is where we are relative to the historical average on deficit which right now is below the average for the last 40 years and is our debt moving in a sustainable direction, is it falling as a share of the economy or rising as a share of the economy? right now it's falling as a share of the economy. so our deficit's below average our debt is falling relative to the size of our economy. and that's what i think is economically important. >> in answer to your second
question, there were a lot more problems on -- i think it's an interesting question and worth looking into more. i think part of the answer is probably that in the housing bubble and bust much more of that happened on the consumer side. as a result in the wake of that bust, there was overcorrection on the consumer side tighter lending standards than we needed to have on the consumer side, and that's why we've taken so many steps to try to ease that lending. and you didn't have as much of a bubble, as much of a bust or as much of an overcorrection on the commercial real estate side. but there's more to the story than that. >> mr. schlesinger -- [inaudible] >> thank you for coming this morning. understanding that the administration assumes that it will win the -- [inaudible] if the court comes down on the other side and knocks out the tax incentives, can you describe what kind of economic december resumption you're hooking at --
disruption you're looking at and are you guys doing any game planning to figure out how to mitigate that? >> >> yeah. the administration believes that the law is very clear, the history is very clear, and the consequences of, you know, are also very clear. and, you know, i can just tell you you can see how the affordable care act is working right now. you have about 11.4 million people that have signed up this year, a substantial increase over last year. premiums are well below what the congressional budget office had originally projected. this is having economy-wide benefits contributing to the fact that health people -- premiums are the lowest they've been in a decade. driving impraw.s in qualities with reduced hospital
readmissions and a range of other things all of which are working, all of which are pursuant to the way the law was written and what the history and context for the law says should happen. >> so if the tax a breaks get knocked out, the cop intentions are clear. -- consequences are clear. can you go into them a little bit? >> i talked about the way the law is clear right now and producing those outcomes, and we think the history of the law is very clear in terms of what it says about the eligibility for those tax credits for millions of americans across the country. >> so on the question of mitigation, if it goes the other way, you guys -- >> we're what we've been doing is applying the law as it's written and as the, you know, history and context for the law. i mean, i participated in the writing, you know, of the affordable care act, and it was very clear at time that there were tax credits that would be available to every state whether they set up their own exchange
or they're in a federal hi-facilitated marketplace. you've seen the success of that approach borne out just as recently as year. >> bill monroe, "daily caller." >> thanks for doing this. so weeding out my questions, forgive me if i -- [inaudible] in the first chapter of your 2015 economic report identified two problems low labor participation -- [inaudible] but you barely mentioned how new labor supply which is now roughly above 50% of the supply of young americans contributes to these problems. can you tell me why the huge supply of labor is not a contributor to these three problems, and if you do rely on -- [inaudible] immigration specialism, can you please explain why the u.s. trucking industry is able ore deuce pressure by hiring more foreign-born workers and can you explain why -- can you explain bill clinton's great success in causing a tight labor market for lower income workers
in '98 and '99? >> why don't i take those this reverse. order. that one of the things that did work successfully in the 1990s was the unemployment rate got down quite low. that put upward pressure on wages, and that was a positive period for wage growth. we're seeing the beginnings of something like that now with the unemployment rate coming down and real wages grew in 2013 and grew again in 2014. and, in fact, the pace of real wage growth in those two years exceeded the average pace of real wage growth for the entire economic expansion from 2001 through 2007. and so that highlights why it's so important to do everything we can to bring the unemployment
rate down. and i've talked about both some of the problems we should avoid you know, brinksmanship and unnecessary austerity and some of the aofficialtive things we can do -- affirmative things we can do like invest in infrastructure and create more certainty. to jump back to your first question, the answer is supply creates demand. when you expand your labor force, you're not just creating, you know new people, you're also have new consumers who are going to buy things and that strengthens the overall economy and puts upward pressure in a way that roughly offsets and equals the new people. when you look at something like immigration, when you bring in people with high skills, you don't just, you don't just get additional labor, you get additional total factor productivity growth associated
with the innovations that they contribute to. and then with a lot of people who are here in the united states right now who are undocumented, they face substantial uncertainty. it might lock them into the wrong job are, make them -- job make them unwilling to invest to start a business to to go to school and to contribute to their fullest to the economy. so reducing that uncertainty for them also can be a positive. and then finally the work of giovanni perry and others you've cited has documented a range of empirical evidence that works workers are real, workers can be a real -- and immigrants can be a real complement to domestic labor and raise the wages of both. we've seen a number of experiments, for example the mario boat list resulted in a substantial increase in the less skilled population in miami. much, much larger than anything that's contemplated here. and you didn't see wages fall in miami after that, and david card
has researched that. research in israel, france and other countries have found similar things when you saw similar abrupt large increases in labor supply. the president's administrative action isn't an abrupt large increase in labor supply. it's people who are already here giving them that greater certainty to -- >> we're going to do a quick with follow-up, then we've got to move. >> the president's proposed change would -- [inaudible] the president's also dramatically increased the supply of work permits for people not on regular immigration lists. 7.4 million mostly low skilled who earn less than -- [inaudible] so you doesn't really answer my question. does the, you said the best you said was offset. does the large increase in lower skilled labor supply drive up wages? not the size of the economy --
>> right. >> -- wages. >> yes, it does drive up wages. and we did a analysis of the president's administrative action and grounded it in a range of the economic research that i was just describing. and i think, um i might be misremembering, but i think it was about a 0.3% increase in wages on average as a result of the president's action, but we looked, and those wage increases would be across the board. >> we've got about 20 minutes left. we're going to go to luca from tax analysts then we're going to go to brian from gannette, john ward from yahoo! -- [inaudible] and we're going to finish up with mike dohrning from bloomberg. >> that's my favorite publication represented here. regular reader of tax analysts. >> never apologize. [laughter] so i have a couple but, you know, we'll see what david lets me get away with. the big one i want to ask you
here i asked paul ryan on friday about nontraditional tax reform approaches because it's awfully hard to compete with the other oecd countries that rely on more efficient consumption taxation for a lot of to its revenue, for their revenue when we obviously rely on an income tax base. it's less efficient and has all these different peculiarities that people always want to cut when they're trying the to broaden the base. so i don't know if this is more a question for your personal view as the president's economic adviser or the administration's view more broadly but how do y'all look at nontraditional tax reform approaches, things like devon nunez has a de facto cash flow tax that uses an income tax base but has a lot of deductions and expensing. so how do you guys approach that different way of looking at things? >> right. so i'll give two parts to that. first, our focus is um our focus in the business area is on
where there's a reasonably broad set of agreement which is cutting the rate to the mid to upper 20s, broadening the the tax base by getting rid of loopholes and shifting to a hybrid system internationally. and i think broadly speaking those are all things that republicans in congress support, that we would support and making sure that all of that's a part of a plan to pay for infrastructure as well and cut taxes and simplify taxes for small businesses. so all of those are important areas of agreement. we have a chapter here on the economics of business tax reform that documents the ways in which that would help with the productivity growth which is one of the challenges for middle class incomes i was describing. and i think there's a classical economic analysis of the way in which it lowers the cost of capital and increases the quantity of investment. i think it's important. i think perhaps even more important is increasing the
quality of investment, the way in which distortions in where we allocate our capital, how we finance our investment, the form that a businesses take -- that businesses take and encouraging more research. so i think it could have substantial economic benefits going down that route. in terms of some of the nontraditional approaches, towards the end of chapter five in this report we describe, you know, a number of those approaches when you look at them more carefully turn out to have a number of different issues and problems with them. just as a technical economics level part of why we're focused on lowering the rate and broadening the base is in a global economy that rate matters a lot more than in a traditional closed economy where, you know, something like expensing, you know, might have made sense. but when you're concerned with location decisions and when
you're concerned with, you know where the supernormal returns are located in the united states, then you're going to care about the rate not about the way you're doing expensing, for example. >> the statutory rate, not the marginal effective rate? >> you want to look at both, but that statutory rate matters a lot for decisions like are we going to locate a business in the united states or abroad, especially a business that carries with it what an economist would call supernormal returns. >> sure. do we have time for a second? >> i'll come back to you if we end up having -- >> sure. >> i just want to make sure we get everybody asked one round. brian -- >> my question is about renewable energy and your outlook in light of low gasoline prices petroleum prices, abundance of natch ago gas -- natural gas. what's your outlook for wind and solar and are they depend on federal tax preferences to continue growing?
>> uh-huh. so outlook for renewables is remains positive and it remains positive because of the steps we're taking. so the clean power plan is going to require substantial emissions reductions by existing power plants and rules for new power plants in states. it gives states a tremendous amount of flexibility in terms of how they meet those targets. but we expect a lot of states would want to meet those targets by encouraging and increasing investments in renewables. and we simply wouldn't be able to hit those targets if we continued producing power, you know, in exactly the same way that we're doing it today. we're going of to continue to make improvements -- we're going of to have to continue to make improvements in the carbon efficiency of power to meet that rule. so i think that rule is sort of
more important than any of the short run changes in prices. it is going to shape where we're getting and how we're producing power over the next 10 20, 30 years. in terms of the tax incentives, they're quite important and that's why we've proposed to make them permanent as part of business tax reform. because this is an exeter nationality associated with carbon emissions, and one of the ways of dealing with that externality is subsidize things like wind and solar that don't produce carbon as a by-product for the power that's associated with them. so yeah, we very much think they're important. and they're complimentary too. they'll help you reach the goals that we're setting -- >> and the administration's proposed that wind energy tax credit be redeemable. can you describe what redeemable is and how it differs from what has been the policy in the past? >> yeah. in the past you get a tax credit
against your tax liability. if you had tax liability in the past and don't have it today, you could carry it back. a lot of these are start-ups so is they can't do that. they can carry their tax credits forward and use them to offset future taxes. for a cash-constrained, smaller business start-up, this can put them in the place of they know the tax credits are coming but they're not getting them yet, they're getting them in the future. you can't necessarily borrow against them. and as a result, they don't have the full benefit that they're intended to have. in order for them to have that full benefit, we propose to both make it permanent so people know they can count on it but also insure that you're getting that tax credit essentially, in realtime and not having to wait in order the get it. >> john ward yahoo!. >> hey, jason. has the administration ever sought to calculate the economic impact from the domestic increase in energy production
particularly on gdp or unemployment, and secondly has inequality increased under this president? "the new york times" wrote the other day that it had not, but they also noted that higher income americans have still benefited the most from growth since the recession. >> uh-huh. thanks for your questions. on page 253, figure 6-10 is the contribution of oil and natural gas production to gdp growth through 2014, and it shows that through 2008 it was basically making a contribution rounded to zero. ..