i'd like to welcome secretary get here is before the committee to discuss the fiscal year two thousand and eight budget request for the department of commerce mr secretary this year's budget request for the commerce department is six point five five billion dollars in a dish into this request for discretionary budget authority the budget request also includes one point nine billion for the u s patent and trademark office which is fully funded by offsetting the collections there are some bright spots in the budget request including one hundred seventeen million dollars for the american competitiveness initiative and one hundred twenty three million dollar increase for the oceans initiative that will also see in the budget request a repeat of past budgets with the elimination of the advanced technology program and the steel loan guarantee program a dramatic cut to the economic development administration and the wholesale elimination a number of prior year congressional priorities we look forward to closely examining these proposed cuts as we move through the appropriations process i'd like to briefly note that this morning we heard from two experts in the economic development and competitiveness areas from the brookings institute and marcy fact hail from johns hopkins university the conversation raised a number of key issues and challenges facing the commerce department and the nation as a whole i look forward to engaging with you on some of the issues that they raised and i'd like to now call on the ranking member mr freeh and heizer thank you mr chairman i join the chairman and welcoming you this afternoon to testify before the subcommittee to discuss your two thousand aid budget request for two thousand and eight you're seeking as the chairman has stated discretionary appropriations of over six point seven billion dollars an increase of one hundred sixty three point nine million or two and two and a half percent above the about recently enact year two thousand and seven the department has a very broad jurisdictional would like to hear more details today about your top resource requirements including the preparation in planning for the senate bill census correcting the chorus of no  environmental fat allied programs and good joining the investment begun in two thousand and seven nif core research programs that are critically critical to innovation competitiveness competitiveness there are also several eliminations in your requests that will be controversial including a deep cut of more than fifty percent in the manufacturing extension partnership program and additional have some questions about the functions of the department that support key components every economic engine including the u s patent and trademark office and the international trade administration again i'm pleased to welcome mr secretary and i look forward to your testimony as to other chairman congressman freeling housing and thank you for your time and your interest in members of the subcommittee i'm pleased to present president bush's fiscal two thousand and eight six point fifty five billion dollar budget request for the commerce department with your permission i would like to briefly discuss some key elements of our budget and programs and submit my written testimony for the record  believe this is a very disciplined budget it is focused on the best use of taxpayer resources to advance america's economic and innovative leadership in what we know is an increasingly intensely competitive world among the highlights of the increases of the budget are three hundred thirty eight million dollars for the census bureau to ramp up for the two thousand and ten and re evaluate data collection programs sixty nine million dollars for the national institute of standards and technology to implement the second year of the president's american competitiveness initiative and that one hundred twenty three million dollars for the national oceanic and atmospheric administration to fund high priority oceans projects every agency in the commerce department is charged with the same critical mission to promote american innovation and competitiveness create economic opportunity and improve the lives of the american people to illustrate how commerce agencies are fulfilling that mandate by developing protecting promoting and strategically using innovative technologies i'd like to use g p s an example and chairman i brought a couple of props here to highlight as you know the global positioning system technology is now so advanced the devices a small as the cell phone here have incorporated it and g p s has also many applications of technologies used by governments businesses and individuals the world's first atomic clock which is the key innovation that enables g p s to work was invented by scientists at the national institute of standards and technology this digital clock right here contains technology that synchronizes within this atomic clock its timing is extremely accurate and it can adjust automatically to changes in daylight savings time and this is now pioneering new approaches to atomic timekeeping such as the chip scale atomic clock we expect the chip scale atomic clocks will soon be used in g p s receivers cell phones and other portable electronic devices to greatly improve performance last year alone the u s patent and trademark office issued over eight hundred g p s related patents the census bureau is adopting g p s technology to collect street coordinates and create a more accurate database for field personnel it will be incorporating g p s equipped hand held computers like this one into data collection operate easton's during the two thousand and ten census to improve productivity and reduce errors no is making multiple uses of g p s for the general welfare among these improving weather forecasts and forcing fishery boundaries and open waters to prevent overfishing surveying the nation's coastlines waterways and airport approaches and navigating its fleet of ships additionally kno has created a network of g p s tracking stations that makes available to the public minute measurements that are used to establish real estate boundaries position bridges and roads and do other geospatial work the international trade administration is working to remove trade barriers to increase exports sales of innovative u s g p s technology with no up and the national telecommunications and information administration ita is also taking the lead to ensure a level playing field for us g p s manufacturers as europe enters the satellite navigation market the bureau of industry and security continues to monitor and control dual use g p s technology export sales to protect our national security while ensuring that america's g p s industry has access to open markets measuring the impact of our economy on innovative r and d technologies like g p s to reflect new twenty first century realities is now the subject of research by our economic since its isak's administration in coordination with the private sector mr chairman i use this g p s example to tell the story of the commerce department's commitment to providing america's industries and workers with the services and tools needed to keep our country the most innovative and competitive in the world this example of g p s where we develop a technology inside of say nist and then ensure that we are using it across our departments is very reflective of the way we see on the community we develop technologies that can be applied in all industries as opposed to being in the position of picking winners winners or losers the president's fiscal year two thousand and eight budget request for the department supports this commitment it is carefully targeted a program is necessary to maintain america's competitive and technological leadership its today's global economy i look forward to working with you to achieve this important go thank you for giving me this opportunity to discuss the president's budget request in the role of the commerce department in advancing our nation's economic strength thank you mr chairman and you please take your comments questions and secretary thank you for your introductory statement and thank you for significant reductions proposed for the economic development administration you know in the coming years even the most positive projections of economic growth leave certain regions facing uncertain economic futures and distress three million manufacturing jobs have been lost in the last six years and we can only expect future manufacturing job losses there's a new round of base closings underway which will cause sudden economic  dislocations in the regions of the country and areas of the country and the recent reports about record trade deficits is bad news for communities and sectors particular in the basic industry areas which  my congressional district is is defined by really the only federal program exclusively focused on economic development and private job sector creation is economic development  that i don't believe that anything was specifically signaled out what we did do is set priorities where we knew we needed to increase funding those priorities were set primarily on the basis of the american competitiveness initiative on the fact that we have the essential census coming up and also our commitment to follow through on the oceans policy so those were the three areas that  that absorbed any increases in the budget and of course they had to be offset in other areas as we have had to do throughout the federal government and our role now of course is to make the most with a reduced amount specially as you say in areas like e t a and others keep the program in place keep the network in place and look for ways to improve our service in spite of the fact that we have had a reduction in  dollars so i it's not so much a signaling out more so a focus on our priorities in a reduced budget context what's an awfully big i mean you're proposing eighty million dollars and that's a thirty two percent decrease in the current funding level to fifty one you know lots of folks are supporting the concept of the american competitiveness initiative but it's really disconcerting to see it come at the expense of programs that are really focused on those most needy areas economically development speaking needy and neediest areas of the tree me can we not target some prosperous areas of the country  or programs that benefit those and let me ask you specifically how are you going to replace the services that e t a provides to those areas that are the most needy s by an increase in the american competitiveness and this an issue that how are you going to reach those people are we just are we just cutting them loose well the as you know the the grants go through local authority calls us to focus on distressed communities so our challenge now is to ensure that we are getting the money not just to the best programs but to the most needy communities and ensure that that we eliminate programs and or applications that do not have a return or are not going to attract businesses as you know not all of the programs not all  applications that are approved generate results unfortunately it's just the way these these these assumptions work out our challenge at a local level at each of the regional offices is to ensure that we are focusing the money on those grants that should have a return for that community that's a little different issue i look forward to following up with you with the dave as it's something i have a great concern with but i remind members that in the first round we're doing five minutes to i'd like to talk for a minute about the trade in deficit and trade trade deficit and trade promotion the u s as we are all painfully aware the u s trade deficit raged at a record high of seven hundred sixty four billion last year this is that increase of one hundred ten percent since two thousand and one our trade deficit with china grew to two hundred thirty three billion another record although u s experts exports  up and that's good they are increasing enough to keep the trade deficit from widening even further what are the threats that go along with a trade deficit of this magnitude and what is the department's and ministrations overall strategy for closing this trade gap yes congressman our strategy has been to close the trade gap by increasing our exports and i say that to contrast it against a strategy that would suggest that we should close it by restricting imports through legislation because we believe that anything that would spell protectionism would  ely hurt the overall economy so our challenge is to grow our exports i should say in two thousand and six our exports outgrew our imports for the first time in almost a decade exports grew thirteen percent our imports grew eleven percent so we are achieving a certain level of momentum in a certain rhythm to our exports that we want to carry over into two thousand and seven and beyond our trade deficit did increase in no seven you know six sorry by forty seven billion dollars i will point out that about ninety percent of that increase was due to petroleum based products so it's primarily that the increase in price is opposed to an increase in volume that's the lowest increase we've had in a number of years that the previous year is about one hundred billion before that was brought under sixteen billion so we're making good progress and again it is about increasing exports in order to open up markets for our exports we are ensuring that our trade partners abide to their agreements whether b w t o rules or our free trade agreement rules that our intellectual property rights are respected that we have full access to their new laws that that their laws are transparent and very importantly that we enable our businesses through our commercial services to know what free trade agreements are in place to know how to export how to how to start being an export or how to go from one country to another country but essentially increasing our capacity as a nation to export i should say that growing thirteen percent of our base of one point two trillion is is quite impressive so that's what we're doing and i don't want to minimize the importance of the trade deficit but i will say that there are nations with a trade surplus and i'll use germany as one example they have a trade surplus but the  unemployment is is almost twice as high as ours and their growth rate is less than ours so a trade surplus is not a proxy for the performance of the economy it's important but i would caution about making it the number one goal because we could reduce it very quickly and we do a lot of harm one of the tools at your disposal and obviously we need to promote export  international trade administration which has a direct responsibility to work with the small immediate medium sized companies to increase exports yet if we look at your budget and this is the appropriations committee that deals with your budget  we see no significant program increases why is export promotion not why doesn't it look like you're you're making additional investments with this with the ita we've actually rearranged priorities and resources with an export promotion so it's not so much adding resources but ensuring that we have resources in the right place we have added added in our budget compliance officers to ensure that we are focused on our trade partners complying to our trade agreements but just to answer your question our challenge is to put the resources in the right place on export promotion we believe that we've got a great organization and the resources to continue to promote exports at the rate that we're doing today remember is that we're going in the in this order as we've talked about before before the gavel members arrive on the basis of seniority alternating between the sides n thank you of course targets investment assistance to attract private capital investment create higher skilled higher wage jobs and communities that suffer from economic distress and receive the second anticipated results from media investment in two thousand and five for every dollar that e t a invested private investment generated thirty one dollars that's a pretty good leverage and it created one hundred twenty five thousand jobs in parts of the country that are desperate for them so like the chairman i would urge you to reconsider the e p a request i simply don't understand it but you know it's been going on all these times the administration's request lower sums and the congress responds with larger sobs so don't be surprised if that happens this time it's not a question it's just a comm t on the on the on the matter that mr fairlie hasn't brought up with china good golly the trade gap rose to a record deficit of seven hundred sixty three and a half billion dollars that's a six and a half percent increase from the previous record and over five and they owe six it reflects an all time high economy in two thousand china produced one hundred twenty six million tons of steel about twenty million tons more than the next largest producer japan you know five they produce three hundred forty eight million tons of steel an increase of one hundred seventy five percent in just five years and the chinese government subsidizes the steel industry that's in undisputed offering cash grants and preferential longs we can't compete with a country china share of the textile and apparel market in this country expected to rise to over two thirds of the market within the next two years if that occurs we will lose six hundred thirty thousand jobs with over thirteen hundred textile plants closing in the u s china subsidizes their textile industry in the form of tax incentives knows no dispute many of us in congress believe that  congress department should seek countervailing duty against china directly government to government i know you claim you don't have that authority but  longer a non market economy and apply a c v t is against china as a market economy they say commerce has criteria for such determination second they say quote it could reverse its nineteen eighty four position which was confirmed by a federal appeals court and apply a c b days without changing china's and the status in fact the house passed legislation that would get specifically and so the case but our our position has been that because they are not a market economy it's very difficult to get at the numbers that would be able to isolate how much they're actually giving and subsidies even though we suspect that they are subsidizing if we're able to do that then we will be able to file the case and we'll be able to get out to get at the subsidies problem  it really comes down to a matter of capability are we able to get in there get the numbers isolate them knowing that they're not a market economy so this one case i believe will be very important as the first one since one thousand nine hundred one and then  i should say as well that we have engaged with us t r in concert consultations with the w c o on china subsidies in general not any specific industry but the fact that we believe that china subsidizes a number of industries and your point on steel is one that that we brought up with the chinese government when we were there last they're building a lot of steel plants we're very concerned about not just the fact they may be subsidized but this overcapacity and that if there is overcapacity we're going to have a significant problem in the marketplace so we have discussed it with them and we believe that both of these cases the specific case some c v t as well as  consultations will start to get us at this problem of subsidization which which we agree is sort of the next step in the china in the china discussions well i mean as time passes as your atomic clock clicks jobs go down the drain never to be recovered we've practically wiped out the textile industry in the us china has steel is on the verge of the same and on and ocean negotiations of since we started and we're pushing to get those through as quickly as possible and get some sort of a w t o response but the c v t case which i think will be very representative and very symbolic  i believe will be concluded in march of this year so we're getting we're getting close this month yes or now in that proceeding do you have the if i'm not familiar with the proceedings do you have the ability in those proceedings like a civil lawsuit to take depositions to find out whether or not there are subsidies we in the case of action we are taking a case against china we would need to do so with one industry and in response to a petition from one of our companies or one of our industries so what we're doing is we're engaging the w t o on the subject of subsidies in general and not waiting for industries to come forward and frankly we would like our industries to be a little bit more aggressive and they're not as aggressively as we'd like so we don't have as many industries petitioning as you might imagine so we're trying both angles we're doing the specific case which would be a specific industry but we're also going to the w c o and saying we have a general problem with subsidies at large with china and hoping the w c o will take action well that's what i was hoping here you say you would do that the that the commerce department the u s government would initiate the c v the as opposed to requiring an individual industry to take on the world if you will is the proceeding you're in now is that a government proceeding yes it's u s t r in the commerce department with w t o the specific case is an industry specific petition so we're doing we're trying both godspeed to you indicated that the intellectual property our intellectual property accounts for over a third of the value of all us corporations in my district is probably quite a bit higher my district is the home of disney warner dream works  c as well as a very vibrant engineering and scientific community centered around cal tech and a lot of bio so cal tech in particular like to ask you coordinator in your office but i'm not able to see yet the concrete results from this office and hard to ascertain the value that is added can you tell us a little bit about  the role what tangible role the i p r enforcement coordinator or the national intellectual property law enforcement coordination council has played and also since the president stop an issue that is focused mostly on seizure of counterfeit goods at the questions if you could address the challenges that we're having in russia and china and russia was supposed to make a series of improvements as part of the extension process in the w t o this has not happened things that were supposed to be enac law have not been enacted into law web sites that were supposed to be shut down of been reopened and we may think this mistake with china and expecting china's actions to improve for the better after expansion which didn't materialize and i wonder for making the same mistake with russia i used to say with respect to the entertainment industry that it was the only industry that enjoyed a positive balance of trade with every other nation on earth i can't say that anymore because of china not only because of the extent of piracy in china but also because of the quotas and china when they have films like hidden tiger crouching hidden dragon crouching tiger i get that backwards they actually make more money on their film industry in the united states than we do with our film industry in china which is quite astounding and shows the level of the market access restrictions in china so if you could address those issues both organizationally within to me by some in the entertainment industry is that we might empower local law enforcement local police departments to prosecute or investigate and prosecute more select ip oriented violations and retain the fines that are collected since we have so limited resources in the federal system to go after the camcorders and the and the those who are massively uplifting on the internet pirated content what would you think about empowering the local law enforcement to go after more of those offenses retain the fines and therefore have a mechanism for enforcement address thank you just on the subject of the intellectual property rights coordinator he essentially coordinate the activities of the niblick which is a body that meets quite frequently on intellectual property and force and throughout the federal government so we'll have commerce r state justice and the way i think about their results is through actual prosecutions or action taken against i p r because we could be issuing documents and talking about this but unless we are prosecuting we're really not taking enough actions and our prosecutions are up fifty seven percent unfortunately what we're seeing at the border add one way to measure very specifically what is happening on i p r's is our seizures at the border and the share of china of of our seizures has gone from sixty nine percent to eighty one percent so i suppose the positive aspect is that all other countries have declined in percent of our seizures while china has continued to grow and i've seen the types of products i've been at at a couple of borders the types of products that they're that they're getting through our border and we're talking about everything from cigarettes lighters clothes shoes running shoes it's quite quite remarkable the sophistication that they're now using to produce and manufacture these products and we agree this is this is a tremendous problem we have ten percent the world's medicines are counterfeit so it's a that's an economic problem it's a safety problem in china about ninety percent of the software eighty ninety percent of software is pirated we just achieved a an agreement from china from the chinese government to ensure or mandate that all p c s are sold within bedded software because one of the problems we're having is that china sold a lot of p c s but our sales of software are very low and we're following up on whether they're actually complying with that because one thing is to agree to it the next thing is to obviously deliver on it and we're going to follow up to ensure that the are delivering you mentioned quotas and i agree that in terms of the motion picture industry that's the one single aspect that we were constantly looking to improve with china is the quota system and we believe that the reason they sell counterfeit products in their streets is because they can't the consumers can't get them legitimately in a movie theater i believe it's a cultural aspect as most as opposed to commercial aspect and it's the cultural minister who's actually standing in the way of lifting the quotas and there bit of a fight going on between commerce and culture having said that it is on every single one of our agendas with china and it will be again when they come over and may your comment on law enforcement is interesting because we just had a recommendation actually from our p t o office to add resources that p t o law enforcement or at least people who would identify infringements of i p r the local level domestically and then tell law enforcement about it and our sense is that that is the job of law enforcement so we know that if you go to a major city around the country that you can find certain parts of the city where you can buy watches and t shirts and what have you we believe that that should be tackled head on by local law enforcement we don't need someone from washington to go say look you've got a and i p r infringement so from that regard i agree with you and we're working with the folks who can have an impact with law enforcement and trying to get the message to them that they should be taking action in terms of keeping the fees i'm not sure how that works and i'm not sure  the jurisdiction to that works and what the regulations are but i'd be glad to follow up because that could be an additional incentive for local law enforcement to be going after these i p r infringe are any major gaps in our areas i mean you determine the policy as far as the department's concerned but in our efforts to guard against intellectual property theft and i mean is there something we need to be doing patching in here is are very wholesome place that they're walking through anything that we can do i would say that the the big opportunity one of the opportunities continues to be the awareness in society that intellectual property rights violations are just as much of a crime as say counterfeiting money and we still have an ongoing battle in making people consumers aware that this is a serious crime it's not a joke it's not fun it's not an adventure to go out and buy a you know five dollar rolex watch and in that regard i believe we can be doing more in terms of the actual fines and in terms of the the the penalties that we slap on these intellectual property rights violations this is a serious crime and i believe we need to convey it as such and there's still a perception that perhaps this isn't as bad as other forms of of of theft and things for dual use going overseas and i'm sure you're aware but you know recently there's been some concern about the as far as research information coming out of our information and is there anything that you're doing as far as working with the universities to make them more aware of the sensitivity of information and what can we do in that regard where we are and that's that's an ongoing effort to ensure that universities are aware of our regulations and that we're communicating we actually have an advisory committee set up now that will be especially with a focus on foreign students who come to study in our country and then who work at specific organizations on the subject of export what type of organizations you talk about well for example a if a student would work a foreign student would work at a what would apply for a job at an air aircraft or defense we laded industry would be a problem that that would be one of the areas that would come up so we we hope the advisory committee will help us to get a grip on this even better and to be able to look at any loopholes that may still exist out there this is  t and work and where they can work in work they they can apply their knowledge so yes we have this advisory committee and if you'd like we can we can continue to inform you on any and the findings and conclusions from the advisory committee for the one big thing in my mind like a lot of people here research universities in their districts and just to make sure the university is themselves are fully aware and it's clear a federal agencies depend upon this high quality data that comes from this program to survey and evaluate effectiveness of government assistance programs the prescription drug benefits state children's health insurance program other programs and i'm greatly concerned that the department plan to terminate the program before having a replacement that is that has been field tested and peer reviewed i know i think that you're pretty high on the new dues i think it's called which is dynamics of economic well being but i'm concerned that we need to use this data on a yearly basis and it seems that you want to do away with it and move the dues before it really has been field tested before we know where it is can you tell me what your plans are there why you want to go from one to another and what happens if it's not if your dues isn't where this is thank you sir the the reason for the move from soup to do's is really just one of improving our methodology and improving our our survey technology the the sipp is so it tends to happen is that the families either lose interest so the attrition rate is very intense very high you don't get the same level of response or you don't get responses at all after a while they just lose interest in the study families move when this method was designed it wasn't uncommon to have families live in a same town for quite a while sometimes in the same household the same home of course for scene today as people are moving and that also adds to the attrition so the new the do was we believe is a lot more reliable it will enable us to rely less on this long just to them longitudinal method it will give us a one simple question there for families and then will enable us to use data that we have from other studies to get at this this important subject of who should be getting monies who should be getting grants who should be getting attention there is as you say a four month gap and we believe that we can manage that we wouldn't want to see it get larger than that but we have had instances in the past where we've had gaps if you'd like we can we can we be glad to to walk you through specifically how we intend to deal with that and why we believe that it's not a problem but we don't believe that will be sacrificing any any effectiveness of our programs because of that form of get let me ask you this though you say you don't believe but i mean have you field tested lose i mean you have a four month gap why would you want what terminate steps until you knew that that dude was ready it was field tested ready to go i say we believe my my experts tell me that they can do this if they didn't we wouldn't we wouldn't have this gap because we take the state of very seriously we know how you use it and how much it means to you again responses in under said by you changing the questions in order to get the current data or is that what you're doing and dues we believe that what we can do is the the sip questionnaire is quite extensive it's almost like an ongoing panel where the same families are responding to a very long and cumbersome questionnaire and that's why over time we've had  more tristian than we'd like we just haven't had the quality of the data that we'd like not understand the answer from previous one but are you do you change your approach on sip in terms of gathering information if you have a large into would you want to ask the same question year after year because you're not gonna make you don't have a sense of progress so don't you go back to the questions and really arrange them and give them information as to the past years you have been using technology in different techniques to continue sip it's more techniques as you say for i mean one way to think about it is that doos is a new and improved sip and it is taking sippin using all of the learnings and everything we've learned in experience with that method to create twos and came perhaps that can be explained to us from your staff that i was i'd be glad to do that the other one else here discussions industries that we subsidize in order to be more competitive in certain areas and are the subsidies that other countries as we do here i think the subsidize in the sense that they have certain goals for their own country in order to attain certain levels of progress as we try to do that despite three questions i guess we have some subsidy in subsidies in agriculture which which have been the focus of intense discussion with n and some of our trading partners so that we we do some other other areas besides ag primarily ag there may be some but but i would say that the bulk of our subsidies go to agriculture and  we believe that they are incentives not subsidies subsidies for example would be in the that when you have a government sponsored no interest loans that would be a subsidy in your department when you look at the big picture and you look at the changes occurring globally other changes occurring because we retain a certain level of development where other countries haven't and so they're trying to promote a certain negativities erm subsidies is that is that a term that we sometimes need to look at ourselves much as outsourcing would be a term that we might be more precise and i think it's a good question if i understood it correctly let me just answer it this way there have been changes going on a significant changes in the world economy what we have seen is that more and more our jobs in the us are higher value jobs jobs that can't be replicated easily manufacturing has focused on products that also are differentiated and can't be sold only on the basis of cost and price countries like china asia vietnam countries in latin america focused on manufacturing of products that are come out of these where it almost doesn't matter who does it as long as whoever does it does it is inexpensively as possible we've sort of moved away from that and have been able to create jobs that that rely on higher value products eventually one day china will have to do the same but that in terms of a shift in the economy as it refers to manufacturing i would say that's been one one shift that's been taking place over twenty thirty years now again just the reason i'm asking this because i'm troubled by this in news appears that some countries have a national direction these supported in and i know in our country i'm not sure we have a national direction that we support it like the industries like steel textiles they're hurting and  and we talk about education and changing the workforce and i'm not sure we have been to support it properly for these communities that are experiencing these changes and they're hurting and they're angry and when people get angry and hurt they look for someone to blame and you know we're bringing over industries over from asia they're all auto industries which was unheard of in the past when we used to do that overseas and so the whole globalization thing seems to me that we should start thinking in a little bit differently so that we can solve a problem that's more complex than what it presents itself to be one if you have any comments relative to national direction and standards and investing in our own country and where should that be yes or again also a very good question there is a i would say a difference in philosophy between the way we have grown and the way we have developed as an economy in other economies one is as you say the idea of a national a national plan strategic industries where the government actually picks where we should invest and where we should create jobs and allocates money in that direction our sins educate our people education work in both our system is is sort of create the environment so that the marketplace can pick winners and losers and ensure that we have the skills the education the talent to lead the marketplace and use market based signals to grow that has served us very well because in spite of globalization in spite of how competitive the world has become we're actually outperforming any g seven economy our unemployment is quite low and i'm not dated back on july the twenty seventh two thousand and five it's been over a year and a half and has about a year since caf to actually went into effect with hundred or s of course on doors is the country that poses the greatest threat to our domestic industry here in the united states since then the district i represent has lost somewhere around the thousands of jobs and over a thousand have been a lost in other places in the country a canadian company by the name of gilding and is building a massive factory currently in honduras that will produce the quibble of one fail for the production that we currently make here in the united states the company has a sells office in barbados i understand and they only pay about four percent income tax rate once the factory is complete it may be too like to save a sock industry  when can the sock producing areas here in the united states like the district i represent expect to see some kind of relay from this predatory hunter and imports congress and we had and i recall very well on the letter and the best reported and i signed we had three areas one was ensuring that the sox were included in the safeguard agreement with china which they have been and then we had within kept to two specific areas one was to amend the rules of origin and the other one was to include sox in the gradual phase out of t s and i i have to be i have to admit that the goshi asians have not gone as smoothly as we would like we still have one country two to conclude the  the group of countries which is costa rica so we don't have all of cafe in place which has been one setback we thought we would have all of kept in place a lot sooner costa rica has just taken a lot longer than we expected once we have the six countries in place that will enable us to address the issue of amending rules of arjen for all caps the countries and i don't know when course the ricoh be in place i'm hoping that they move as quickly as possible especially after the dominican republic has just come in and has been certified last week the other issue which is to include socks in the gradual phase out of of  tariffs we are negotiating that and we're hoping that once vehicles to reagan will be able to make more progress i do regret though that we haven't been able to make as much progress as we would have hoped and once we get costa rican place i'm hoping we can do  that well i would appreciate if you would send a message back to the u s t r that you know how important this issue is not just made it to many members of congress to members of this committee that have a sock industry that is very dependent on that let me follow with one question recently there's in the last few days there was an article in inside u s trade that said i believe it was last week and an unnamed u s government official was quoted in saying the administration does mentioned that ports from honduras are up sixty six percent since they joined backed just about a year ago had what point do you feel that there would be safeguards safeguards would be warranted and if were there any specific criteria that will trigger this yes congress and this this should be pretty straightforward because it is somewhat formulaic there are numbers domestic production domestic sales foreign imports and we need a specific we need a reasonable period of time and some specific benchmarks that we set but it should be fairly straightforward getting the numbers in place because it is it is somewhat of a formula i'll go back and look at that i hadn't seen that article that you're talking about but i'd be glad to go back and look at that and get you updated numbers and show you what we're looking at play though i would be there since today and getting those updated numbers and and  know the cause like i said this is a no it's not this is an issue that that i've discussed with yourself and with the department com arsonist t r quite a bit but it's but it is an issue that affects many members on this subcommittee and also  the entire full committee and full congress itself so we appreciate your diligence and trust that you will get paid to work with us on this congress and i just want to recognize once again that your support for  was absolutely necessary and i haven't forgotten that and i just want to acknowledge that well and as certainly you know appreciate all that your work could do to try to make sure that this sock industry is as paid concerns with respect to the ocean science part of this budget and no that i'd like to ask you to answer in writing because they're more complex in nature and a more detailed response would be more appropriate than we have time for right now and one has to do with the northeast observer program which was initially funded in zero five and over eight million nearly nine million dollars and  then quite frankly this year although increased is still comparable to the over five level and what i'd like to know is how does the national marine fisheries service intend to provide the precise estimates of catch composition and bycatch rates given the funding levels for the national ocean observer and regional observer programs and  two given the same kinds of issues with the national sea grant college program we have seen money restored but not to the levels that we need given inflation so that  even the the cuts that were made before the levels in this year's budget don't even match five so i like to delve into where does no intend to work with other science programs especially in conjunction with nasa with respect to earth science satellites and funding streams with that because obviously you were content with one another and ocean science is heavily dependent on what nasa budget is going to be in the mission to planet earth program and their earth sciences program and that they've cut back heavily in their climate and weather programs so if we could talk further at some other point about that but if i could ask you to comment more generally about obviously i think the biggest challenge to our economy which is health care and the cost of health care and see what your role as secretary of commerce is in terms of commenting on you know what what you think there should be there should be a role in this in the role of secretary of commerce for someone like yourself to make policy recommendations given the fact health care seems to have become such an enormous yoke around our competitiveness as a nation and and particularly the unfunded liabilities that we have not only in pensions for the future but given the fact the biggest unfunded liabilities are in health care and health care investment vehicles need to be looked at there needs to be conferences you know organized businesses need to be prodded and businesses need to come to the table and take an active role in this  discussion and yet i only get very peripherally businesses come up to the hill and lobby us on health care issues it's usually just on a on a plan like you know health savings accounts or you know shifting different of insurance but it's never about how do we literally look at structurally changing our health care system to deal with the long term systemic problems of health care how our own address some of the major systemic problems that we have so maybe you could tell us what you think your role is in addressing these bigger issues of health care and if you could comment to on an issue that i brought up last time and that is what role you think speaking out on on a competitiveness issue and that is mental health parity would be because of the role that businesses have in terms of costs for untreated mental health costs in this country if you would just on health care and i know this is this could be a very long discussion but we started out with the policy question of should we let the marketplace help us sort out health care or should the government play a more intense role in health care policy and delivery and we chose the the road of the market and that's essentially what the president talked about in his state of the union address we know that we have a tax policy in place that gives tax deductibility to to businesses if they provide health care insurance for their employees can i stop you just yes or i think our health care system is the least capitalistic system we have in the world it doesn't respond to efficiency and it doesn't respond to value and obviously it's a subsidized system and it's perverted it doesn't keep people out of the hospital it only reimburses them after they get sick it's not a health system it's a sick system it's a war it's the most inefficient care not the most efficient care and valuable care so it's not a capitalist system if we had a true capitalist system mr secretary of commerce we'd have a system that would be chasing after trying to keep people out of the hospital and healthy and long term you know prevention and all of but that's exactly order and i would agree with that it's also you have a situation where the buyer decides what the consumer is going to buy and the consumer doesn't really know what price are paying people really don't know how much they pay for x rays  don't know how much they pay for a visit to the doctor there isn't price transparency there isn't a demand and supply quezon that is determined by the marketplace i understand that in some states we still have limits as to how many types of  medical doctors universities can produce it is not a market based systems right there is so much work to be done to make it one we believe that with the president's tax proposals and allowing concerns patients to be consumers to take hold of their their health care is a start and a very important start and getting it out of this this gray area of the insurance will pick it up so i don't have to worry about it and the doctors know that the insurance will pick it up so they can ask you to get a second x ray another prescription and it's just it's a very distorted market it is not a market to your point i have said elevate headquartered in my district they tell me that ironically leaving it up to the consumers to do their own investment pensions is the reason why we don't have a savings rate in this country speak us unless you have automatic  checkoff which is what we did with the page the pension protection act last year you're going to have low savings rates you have to have been essence big brother government some paternalistic role here where government's going to help step in and simplify things so this notion that we're going to put it all on the consumer to choose and have health care literacy where every consumer in america's going to be choosing amongst the team plans and be able to juggle all these different tax proposals and credits and choose amongst a myriad of things i think goes against all the psychology we know about what drives people and their choices so you know we have to get people covered and that doesn't that flies in the face of what we know works in terms of saving rates i think your health care literacy is is a noble goal but it is long term and it's going to take years and years but we have been on this specific path since the mid forty's or early forty's so and it took us years to get here but we should get started and we should get started on having more transparency is very little transparency the only market place i can think of where people buy things that they don't know how much they're pain and they don't know who's pain so i understand your point and i and i think what you've said is very insightful but i think we've got to get started even though it's go take us quite a bit of time mental care by the way coming out of the private sector stress is a very major issue and i just i mentioned to you last time and  having come from companies it is a very major issue that impacts productivity and national productivity thank you you know secretary since nineteen i'm sorry since two thousand and one it is a lemonade half of the professional staff and its headquarters reasonal office staff levels have declined by thirty percent the number of field based economic development representatives has that climbed from fifty to twelve and during this time funding for e d s salaries thanks spence's has remained steady yet the agency  continues to take the position that it's unable to sustain its current staffing levels what is happening at e t a mr secretary we have reduced the i believe the the dollars have gone from i'm going to say four hundred fifty million to about one hundred seventy which is what we're proposing the reduction in personnel has not been as steep as the reduction in dollars so one could make the case that the productivity isn't as high as it once was but we've tried to keep the system in place actually in years past we would propose a certain budget and congress would use to the just the opposite which would be would not give us the money that we requested well most say that again in the previous for you would you propose a budget and congress what we would not get are that amount actually this year's a bit of a change where we are requesting a smaller amount in what congress believes we should have but to your point we have reduced our staff but we have not reduced our staff as quickly as our dollars have been reduced your program matic dollars the yes the the well actually the whole budget dollars we've got we're proposing one seventy we were at four fifty if you go back i believe to two thousand and one or two thousand on the sector this has to have a dramatic impact on your ability to carry out your mission to the extent you worked on that in the past in west virginia we have recently seen the retirement of our regional our state coordinator when can we expect that position of the failed state coordinator and west virginia chairman i'll have to get back specifically on that how many of those positions across the country are unfilled today i don't know how much how how many vacancies we have i would i would venture to say that we don't have higher vacancies than we typically would run that there isn't a problem that is that is bigger than what you could expect in an organization the kind of turnover that you'd have but i'd be glad to respond to that get back to writing ok thank you for the record that would be fine i just want to note that this is a pattern that doesn't reflect support for a vibrant economic development minister action program and i anticipate that lets you wonderful collector of statistics and in so doing performs a very important service for the nation collects manages dissemination of the statistics and the information based on that is i would suggest somewhat lacking the o t p is supposed to produce a statistics and technical and indicators document is that going to be produced this year i believe it is confirm that you know it hasn't been ita u s industry and trade outlook is that going to be produced this year i'll check that i'll check that jim well for almost a decade now important regional data series have been cut back where they have been eliminated and this information is really very important to national but also to local economic development folks  state and science and technical indicators i think is folks at the local level an indication of what their economy is doing and this clearinghouse function which is title forty two section thirty one ninety two the the department through e d a is charged with maintaining an economic development information clearinghouse is that function being carried out by a now we have information that in fact we have we have more information that we're actually disseminating we have all the information you can ever imagine it's a matter of getting out and we're constantly looking at new ways of cutting the information new ways of reporting the information but we have we have a wealth of information that we're constantly trying to get into the hands of people who can use it that's really what we do and what we try to do  to to survey how the department is doing that because there are a lot of concerns the department is not producing these reports that has in the past or that it's being required to statutorily this economic development information clearing house census mr secretary a question about the leadership in the census when can we expect the these leadership positions to to be filled understand we have some some retirements anticipate retirements what what what what the status of that we have just promoted a very talented career person by name of j wait be deputy director position and actually a very good thing that he has career so that he has he'll be able to provide continuity and then we have someone in the pipeline sort of speak for the director job and we should have that person set for confirmation sume so and with mr weight i actually feel very comforted that we have someone leading that who understands census and who's been there for a long time and who will be there in the future such an important position as director position professional objective a nonpartisan leader would look forward to coming forward with that and i know that you know how time is of the essence  zeroing out out it's safer for no other reason than to process and master and be able to respond to modifications from previous grants it's very important to keep that program going and you i believe in this budget requesting zeroing out yes are we have not had any applications for a while now and there was a time when the steel industry was was hurting badly and we felt that we needed that in place there's been a lot of consolidation i believe the industry's quite profitable and but we have not had we have not had a need for we haven't had demand for well you're right in the funding if for nothing else  the no a satellite program has been flagged as a top management challenge for your department there are no increases for fiscal year two thousand and eight but see very significant as i've reviewed them life cycle cost increases that lurk in the out years on the and pose program which is the national poet polar orbiting satellite program there been a number of congressional hearings as you're aware of g a o no i g reviews even a non mccurdy review triggering triggered by a twenty five percent cost increase their technical problems cost overruns launch delays how is your department moving ahead with restructuring the program and how specifically are you working to strange strains in the management of the program we have had we spent quite a bit of time on this and we will continue to spend time and just for your information i've met quite dramatic we have had significant process changes the way the whole picture mint process is managed the way the development process is managed we've had unfortunately to reduce the scope of that specific projects or now we're paying more money and we have a satellite with fewer sensors we're waiting for the national research council to get back to us on their evaluation of whether that's that can work or not  but we are all over this i get a briefing probably once a week from my deputy on this project and we are we continue to be very focused and frankly very concerned that we percent compared to original estimates do you have confidence in the new estimates and as you said you've already scale back the program content within the satellite program but what will have to be cut to make i can't tell you that i am totally comfortable with that because we're so close to this that we see that once in a while there are concerns on the supplier side so at this point it's twelve billion dollars of new lifecycle cost that's significantly higher than what we had goes are by the ways is a little bit earlier in the process so we're still working our way through those are but the end post is the one that i have tell you we are constantly looking at that supervising it and there i cannot tell you that we are comfortable with this project and we won't be comfortable until we see it to its conclusion are we talking  about launch delays what we've and what do they mean terms of the coverage everybody very focused on the accuracy of weather for crafts and things of that nature and climate prediction we believe we can cover that because we're actually seeing  a longer life cycle to our existing satellites so in terms of having coverage and having the information that part i feel good about it's the cost and and the quality of the satellite that will be getting that we continue to be concerned with contingency plans of things don't work out we're working with the national research council to see if at some point if you're sensors will work out if that is an option for us  we are looking at what would we have to do not that we believe that there's something we have to do survey but in the event that we do we would probably look at reducing the scope and still having a satellite that is a degree ahead of what we have today i understand you're in there pre op was ition stage for there goes our program and this is the first satellite acquisition where the department is taking the lead and like and pose which is co manager with the air force or previous programs way the process has been managed we've had a number of sort of silos within the process as opposed to a seamless process which which can cause these types of the so there are significant lessons that we've learned one of the big lessons as well as continuity of people having the right people but then keeping those people in place throughout the course of the project if we have people stick around for two years they leave somebody else comes in that doesn't work as well as having the same people in place so a big part of our job is ensuring continuity and minimizing turnover among the people who are actually managing the project conduct this year's preparation it would have come out on that and as well as what we're doing relative to the what's called the full dress rehearsal yes the the the amount that we have in our own weight and what was approved should get us the the the the preparatory work that we needed our big concern was that we would not be able to move forward with our with our  handheld computers and that would save us money in the short term but it would add a tremendous amount of money in two thousand and ten and the figure that i have is what one point three billion dollar billion dollars that's correct so  we're heading toward the original plan the way we had it planned with the handhelds and that should prevent us from having a and overrun of a billion dollars in two thousand and ten but a short term savings so we're we're we're on plan and lastly there are other questions i have which i may submit for the record there was an issue raised in this morning's hero herring and i know your people are monitoring that the issue of local partnerships in other words i participated as a member of congress in the last census and we got all sorts of people involved across the board  participatory is there money for that type of partnership there was some question this morning whether there's a line item that would allow for sure type of work and that type of promotion in public education we plan to do it as intensively as we've done in the past that will most likely be a no nine budget requests but will have a national communications effort and then local partnerships depending on the characteristics of specific communities that will require perhaps a second language campaign that we quire a specific targeted campaign will also have that in the plan so absolutely we will have it as intensely as we've done in the past and hopefully better given what we've learned over the telecommunications and information administration that your principal telecommunications policy advisor on february last year the president signed the deficit reduction act which contained a provision to establish a billion dollar public public safety interoperability grant program with incomers to be funded through spectrum auction used by n t a to employment that program using the existing d h s grants infrastructure and expertise but not of the funds have been obligated not a penny to my knowledge on february sixteenth last month commerce and d h assigned to an agreement to transfer just under a billion dollars from india to the office of grants and training at the h s and late march the d h s s safe com office is supposed to released draft guidance for state communication plans and expect to finalize that grant guidance by june of zero seven that just leaves three months for states to apply  understanding congressman rogers and i have until i believe it's september to commit the funds to the regions of the country and then after that there's a specific period of time  which it would have the plans would have to be executed but we are work homeland security has the lead but i can assure you that the department of commerce is a is is an important part of the operations and we are part of the decision making as to where that money goes and how it gets awarded how all that work as i understand it with this under with this agreement has ceded to d h the money and i retain some involvement with the grants process and what is it yes we are involved and  and we have a significant amount of control over the decisions which is why we signed the memorandum of understanding with the h s so that the money was transferred but we are very much in partnership and sharing control of how that money gets spent so it's not just the h s it's department of commerce with d h as well i would i would urge you to act with haste states and locales are desperate for interoperability and we're being besieged with requests for grants and no one knows where the program is i happen to be involved with the department of homeland security and other subcommittee and we've been working on this for years and it just seems to me that it's time to get on with this very i agree totally agree and this is very important we have as you know we have seventy five regions in the country we have separate of the country in the seventy five regions each of them has is has a different stage of development but we have to complete this task this is a major recommendation it was a nine eleven commission recommendation it's a very important task for our country well as i understand it you're going to finalize the great guidance by june of zero seven that would leave states july august and september three months to get their application get their plan together get the application together to get it through the bureaucracy up here get the money back obligated before the end of the fiscal year which is you know in th fall so how can we do this well i believe we can get the the money awarded and allocated the actual spending and execution would have more time and there's a specific date i think it goes out to two thousand and nine but we'd have more time to actually spend the money and what we're saying that has to be done by september of zero seven is to have it awarded i'd be glad to get back to you sir with specifics and last discussion it was the american competitiveness initiative is really driving our priorities and the commerce department one of our big priorities is to put more money behind basic research at the national institute of standards and technology the advanced technology program while it's a very it's a very good program it was intended to invest behind high risk potentially high reward technologies that is essentially what the the private sector venture capital funds do and it was a matter of where do we put the money do we put it behind basic research where we know that the private sector usually does not invest because they don't have the time to wait for ten or fifteen years or they don't have a competitive environment whereas venture capital that usually does get get  get done by the private sector so you have this discussion with the venture capital capital long community not specifically but what we have seen is that the venture capital community usually fills the void when when there is a void they're using all the answers no you have no but i'd be glad to take that up and wish you would because the little bill to venture capital is not the answer the question as  program because i continuously hear from companies and venture capitalism my silicon valley district that the venture firms are facing great pressures to deliver returns to their investors and so they're reluctant to invest in very risky work which you have described though you want to invest in a nearly mature technologies and so early stage projects are just moving research results out of the lab does not get funded  we're going to compete against others nations that are fun in their own companies to do this word or we're going to continue to give up industries like we did with flat panel displays which we it reinvented but which are now ma overseas the way we're thinking about this is we are investing in basic research in very long term basic research that will benefit many nanotechnology energy new energy sources quantum research things that we know the private sector will not do the other part that's happening today that may have not been happening i don't know five or ten years ago is  universities partnering with private sector companies we've seen some high technology companies funding research development inside universities so what i'm saying is that the that that void will be filled however the void that we are investing behind which is basic research hard dollars behind basic research projects will not be filled by the private sector because they just don't have the money or the time to do that which is exactly the opposite which is that at the beginning i thought i've been very consistent when you said the venture cavil's do not put part money on a other budget process to back fill them so that they get the monies but ill if that's the case we should we should just say that what it is it's a specific company on the west coast would say we have this idea we need funding community and asking what their what their position is on this in assuming the we already now and then making those kinds of decisions so i think it behooves us to do that if we think  venture capital will then start to have confidence in that timeline and able to put their money and but as we did in the internet which became the internet which became you know the big thing  that we can't live without anymore and if i may say that's a great example of the government putting the hard dollars in the basic research and then enabling that technology to benefit many industries but what i'd be glad to do is get a  venture capitalist point of view on the a t p program and whether how that would eventually just filter into the economy in the marketplace and i can also describe how that differs from what we're doing which is investing hard dollars in basic research that will benefit many many industries a little help you put together the group that does all those together and have that discussion please to do that thank you but i would secretary the recently released national research councils the cable study on our science satellite sensors at nasa and no updates of particularly grim picture of the funding future for satellite systems and their contribution to earth sciences in this environment we're all concerned about global warming and the fact of climate change there are some particular concerns about major data gaps and the earth sciences due to inadequate earth observing sensors one particular concern of course from the scientific community is that critical sensors have been dropped from and pose the national polar orbiting satellite system because cost overruns in the picture meant process are you concerned that the scientific community believes the earth sciences portion of the satellite program is an adequate stream and i would be concerned if if at the conclusion comes out that our new scope for the end poses not adequate in terms of sensors i would be concerned i have not seen that a conclusion that that categorically states that how are you addressing the impose problem there are a lot of a lot of sensors being dropped off of that what whatever future plans for for getting those sensors up or in some way accommodating that problem we have the assumption at this point is that we can operate a much advanced satellite with fewer sensors than the original design that more satellites or sensors on more satellites over time it would be but at least this one specific satellite can achieve its purpose with fewer sensors and we were waiting for a very you know point of view on that oh someone's looking at that yes looking at the national umbrella headquarters for nist and for m e p what we've seen is that in today's world technology is no longer one silo but technology is present in literally every one of our departments and literally throughout the federal government so we've taken what was once the technology administration policy office and created a policy office in  office so oversee the whole department and then we'll have an advisory committee that will enable us to ensure that technology being spread throughout the department as opposed to having a silo which would keep it inside technology assigning responsibilities to a council but i would submit that they're not the same responsibilities advising the commerce department and house isn't quite the same thing as the responsibilities that the a now has  managing these overarching programs and communicating results and and i'm not sure that this council is is a real substitute or an adequate  direction it will still have the policy making muscles which really is what what t a what made t a effective well do you propose to carry out the section three seven zero four functions mandated pac congress for analysts and coordinate technology policies across the federal government in this coun which is was a statutory mandate forty eight i believe we have a want to go back and verify that but i believe we have taken into account that mandate with other programs but i'd like to verify that have you begun implementing this this reorder station as would be reflected in your budget we have been at this technology ministration for quite a while in fact i say that i have been a big supporter of doing this because it's not it just doesn't make sense to have a an office managing to direct reports at a time when technology is broader than just one department now i say have you begun implementing i'm sorry  happened not not full speed where x we're waiting to ensure that we have the budget in place and whatever we do is chairman we do it with with your knowledge so we'd like to to work with you ok could you put your name in the record if you're speaking could you go on the record closely working with you as we work this goal a budget request i'd like to ask you mr secretary for your assistance the subcommittee will be moving quickly to complete our bill by july the fourth in order for us to meet this schedule which is aggressive we need your assurances that the hearing record in any questions for the record in the supporting information requested by the subcommittee are returned within two weeks of receipt we could have your help we will do every i can see what would stand in the way of that ms chairman and we will do everything possible to make sure that we do that and we've taken note of all the requests and all the get backs hopefully we will have a question so complicated that you couldn't get that done with all your good