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[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

 
 TRANSFORMING THE FEDERAL GOVERNMENT TO PROTECT AMERICA FROM TERRORISM
=======================================================================

                                HEARING

                               before the

                          SELECT COMMITTEE ON
                           HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 11, 2002

                               __________

                            Serial No. 107-1

                               __________

    Printed for the use of the Select Committee on Homeland Security

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house

                               __________

                           U.S. GOVERNMENT PRINTING OFFICE
83-171                          WASHINGTON : 2002
____________________________________________________________________________
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                 SELECT COMMITTEE ON HOMELAND SECURITY

                   RICHARD K. ARMEY, Texas, Chairman

TOM DeLAY, Texas                     NANCY PELOSI, California
J. C. WATTS, Jr., Oklahoma           MARTIN FROST, Texas
DEBORAH PRYCE, Ohio                  ROBERT MENENDEZ, New Jersey
ROB PORTMAN, Ohio                    ROSA L. DeLAURO, Connecticut

                                  (ii)

                         

                                C O N T E N T S
                                 _____________

                                                                    Page

Testimony of:
  The Honorable Donald Rumsfeld, Secretary of Defense............     9
  The Honorable Collin Powell, Secretary of State................    15
  The Honorable Paul H. O'Neill, Secretary of the Treasury.......    21
  The Honorable John Ashcroft, Attorney General..................    23
Material Submitted for the Record:
  Opening Statements of Select Committee Members.................     4
  Questions for the Record for Secretary Powell..................    51
  Questions for the Record for Secretary Rumsfeld................    53
  Questions for the Record for Secretary O'Neill.................    55
  Questions for the Record for Attorney General Ashcroft.........    57

                                 (iii)

 TRANSFORMING THE FEDERAL GOVERNMENT TO PROTECT AMERICA FROM TERRORISM

                              ----------                              

                        THURSDAY, JULY 11, 2002

                     U.S. House of Representatives,
                     Select Committee on Homeland Security,
                                                    Washington, DC.
    The select committee met, pursuant to call, at 10:05 a.m., 
in room 345, Cannon House Office Building, Hon. Richard K. 
Armey, chairman of the select committee, presiding.
    Members present: Representatives Armey, DeLay, Watts, 
Pryce, Portman, Pelosi, Frost, Menendez, and DeLauro.
    Chairman Armey. This meeting of the Select Committee on 
Homeland Security will come to order. The Chair will recognize 
himself for a unanimous consent request. Without objection and 
pursuant to clause 2(h)(ii) of rule 11 of the Rules of the 
House, the number of members that constitute a quorum for the 
purpose of taking testimony before the Select Committee shall 
be not less than two with a member each from both the Majority 
and the Minority. Is there any objection?
    Ms. Pelosi. No objection.
    Chairman Armey. No objection is heard. So ordered. That 
ends the business portion of our meeting.
    The Select Committee is meeting today to hear testimony on 
transforming the Federal Government to protect America from 
terrorism. Given the time constraints of our witnesses, the 
Chair would ask members, other than myself and Ms. Pelosi, to 
forego opening statements at this time so we can hear from our 
witnesses and proceed to questions. Without objection, all 
members' opening statements will be made a part of the record.
    The Chair now recognizes himself for a brief opening 
statement. Let me begin by thanking you, Secretary Powell, 
Secretary O'Neill, Secretary Rumsfeld, and General Ashcroft for 
taking time to be with us today. It is not often that we see 
the four most senior Cabinet officials to form such a 
distinguished panel. Each has gone beyond the call of duty in 
doing what is necessary to be able to speak with us today. 
Secretary Rumsfeld, for example, has come despite his need to 
recover from his recent surgery. Secretary O'Neill, in 
addition, has delayed his departure on a very important Mideast 
trip on business for this country. This testifies to the 
importance of what we are doing here.
    The President asked no less of us than to embark on the 
most significant transformation of government in half a 
century. Consolidating hundreds of agencies, services and teams 
is not a task to be taken lightly. We are being told to take a 
road that is long and difficult. It is also one filled with a 
number of significant risks. If we are to take this path, it is 
essential that we understand why it is necessary to do so. We 
must start with the precise understanding of why an enormous 
transformation of our government is required.
    The world has indeed changed. It is a much different place 
than it was in 1947 when the last transformation of government 
took place. It is a far different place than it was a mere 10 
months ago. Our place on the world stage will never be the 
same.
    What will it take to defend freedom under such 
circumstances? As the greatest, most free nation the world has 
ever known, how do we protect our citizens and our culture from 
the forces that hate us? Do we lock up the doors and bar the 
windows? Are we perhaps in danger of sacrificing our liberty in 
the name of security? These are just some of the questions we 
will be compelled to address.
    But our purpose today is not to answer every question or to 
solve every problem. We must begin at the beginning. We must 
understand the need for action as well as the price of 
inaction. Right now our standing committees are finalizing 
their work on the details of the President's proposal. It would 
be more appropriate for this committee to address the exact 
details of this legislation after they have finished their 
work. Next week we will ask other administration officials to 
explain why they believe the President's plan is the right plan 
for the challenges we face.
    So this morning, let us focus on the problem rather than 
the solution. We are fortunate today to have a panel that is 
better qualified than any others to begin this discussion. They 
will tell us the serious threat the American people face today. 
They will offer their firsthand knowledge on the face of 
terrorism and how the world has changed. They will explain the 
challenges the enemies of freedom present to our society, and 
they will tell us whether these threats are enduring.
    We welcome our distinguished guests to this committee. I 
know all of you agree that our strength is in the people and in 
the caring we have for one another. Our strength is in our 
communities and our ability to pull together. Because we share 
such an important mission, let us embody these great American 
strengths in our work here today and in the coming weeks.
    Thank you.
    The Chair now yields back the balance of my time, and I 
recognize the gentlelady from California, the Select 
Committee's ranking member, for an opening statement that she 
might have. Ms. Pelosi.
    Ms. Pelosi. Thank you very much, Mr. Chairman. I join you 
in welcoming our very distinguished panel today, Secretary 
Powell, Secretary O'Neill, Secretary Rumsfeld, and Attorney 
General Ashcroft. And as you said, their presence here in 
aggregate speaks to the enormous responsibility that we all 
have as we proceed in helping to make America a safer place. I 
join you in welcoming them, and I would like to commend our 
colleagues on both sides of the aisle on this panel for their 
leadership on this most critical issue facing our Nation today: 
protecting the American people as we protect our Constitution.
    On my side are Representatives Frost, Menendez, and 
DeLauro, with whom I am honored to serve on the Select 
Committee, and have great expertise and experience in national 
security matters as well as the mechanics and functioning of 
the Federal Government agencies. Congressman Frost has been 
ranking member of the Rules Committee. Bob Menendez has chaired 
our Homeland Security Task Force, and Congresswoman DeLauro has 
served for years on the Appropriations Committee.
    As ranking Democrat on the House Select Committee on 
Intelligence, I am very aware, sadly, of the nature of the 
threat we face. We are all united in our determination to win 
the war against terrorism. We all agree that this battle will 
be won, and that we will succeed by working together.
    Ten months ago, we were attacked here at home. We have a 
responsibility to the families of the survivors, indeed to 
every person in this country, to reduce the risk of future 
attacks. That is why when we began the joint inquiry into the 
September 11 attacks, we began with a moment of silence. That 
was an appropriate beginning for our other inquiries, of which 
this is one. I think that moment of silence carries forth to us 
today. Families of those affected by 9/11 talk of their 
continuing reaction to events that used to not be of great 
concern to them. Some feel fear with merely a plane flying 
overhead. Imagine how those families felt with the shooting at 
Los Angeles Airport last week.
    So every time an act of terrorism, whether it is defined 
that way or not, a violent act associated with an airport or, 
something like that occurs, these families have deepened pain. 
And of course we mourn for the families of those affected by 
the L.A. tragedy.
    Our government's most important responsibility is to 
protect and defend our people. Part of that protection, of 
course, is the protection of their civil liberties. Any 
proposal must be measured against the simple test: Do the 
actions we take make the American people safer and do they 
maintain our freedom?
    The President's proposal to reorganize the government has 
stimulated a healthy discussion about how our government should 
be organized best to achieve that goal. We need a Department of 
Homeland Security, based on a model for the future. I take hope 
in our meetings with the President. He has been receptive to 
congressional input on his proposal.
    I am especially pleased, Mr. Chairman, Chairman Armey, with 
your statement that you will be respectful of members' concerns 
and that you are not bound chapter and verse to the details of 
the President's proposal.
    The Department must be streamlined. It must be agile and 
able to take advantage of the technological revolution to 
improve communications between and among those who have access 
to information and those who need it. Rather than creating a 
massive new Federal bureaucracy, we must first support our 
first responders at the State and local levels with training, 
resources, equipment, and information, and the Federal 
Department that matches that.
    You know, in real estate, they always say the three most 
important issues are location, location, location. Well, in 
this case, the three most important issues are localities, 
localities, localities. For homeland security, helping our 
State and municipal governments must be where our emphasis lies 
and where our ideas spring from. That is where the threat is, 
the need, and the opportunity.
    Successful government agencies have several things in 
common. They have a clear mission, and they are provided the 
tools and a budget sufficient and targeted to meet that 
mission.
    There are still some unanswered questions about the 
President's proposal. We eagerly await the homeland security 
strategy that Governor Ridge's office has been working on for 
months, and hopefully we will see that before we finish writing 
this bill.
    Costs. Two days ago, the CBO released its official estimate 
of the cost of the proposal. Just moving departments would cost 
about $3 billion, and that is without any technological 
additions to the move. That $3 billion doesn't, as I said, does 
not bring the Department up to date technologically. Without 
the new technology, we cannot really succeed.
    And the good governance issues are ones that we must take 
very seriously. Civil service laws protecting against political 
favoritism would be waived, as I read the bill. Whistleblower 
protections would be waived. Open and competitive bidding laws 
would be waived. Government sunshine laws such as the Freedom 
of Information Act would be waived. I hope that is not part of 
our final product. Does national security really demand 
creating a second-class group of government employees? I don't 
think so, and I think that most Members of Congress share that 
view.
    These questions are only a few of the important ones facing 
us as we move forward with creating a new Department of 
Homeland Security. We are the greatest country that ever 
existed on the face of the Earth. We can and we must do things 
in a better way.
    Last week, on the Fourth of July, we celebrated, and we 
proved to terrorists that they cannot frighten us. You know, 
Mr. Chairman, that the main goal of terrorists is to instill 
fear, to have countries change the way they live their lives 
and how they regard freedom. We are the land of the free and 
the home of the brave. The American people demonstrated that 
last week when they turned out to celebrate the Fourth of July 
en masse. We can and do things in a way that respects our 
people, protects our founding principles, and protects and 
defends our communities.
    I look forward to the testimony of our very distinguished 
witnesses today and thank you, Mr. Chairman. And I yield back 
the balance of my time.
    Chairman Armey. Thank you, Ms. Pelosi.
    [Additional statements submitted for the record follow:]

             PREPARED STATEMENT OF THE HONORABLE TOM DeLAY

    We need to move forward by passing a bill that's going to 
provide the president the tools he needs to secure our 
homeland. Our current domestic security structure is clearly 
inadequate to meet the demands of an age in which the primary 
threats to the United States have shifted. While the threat of 
a conventional clash with a foreign power has diminished, new 
threats have surfaced. We now must grapple with asymmetrical 
warfare directed by rogue regimes and the related dangers posed 
by the proliferation of weapons of mass destruction and 
terrorist organizations with global reach.
    What America needs today is an overhauled, comprehensive 
agency that is engineered to accommodate the serious dangers 
unique to our time. We need to move beyond the bifurcated, 
scattered and dysfunctional dispersion of domestic security 
responsibility. We need to apply our ingenuity and experience 
to craft a combined agency whose employees will arrive at work 
each morning with a solitary defining mission: Protecting the 
people, resources, and institutions of the United States.
    To be organized effectively and function efficiently, the 
Homeland Security Department must be consolidated, flexible, 
and readily accountable to its Secretary. We simply cannot 
afford to invest this new department with the ponderous 
inefficiency that hobbles much of the federal bureaucracy. The 
safety and security of the United States is reason enough to 
design a Homeland Security Department that is responsive, 
adaptable, innovative, and aggressively focused on a single 
defining mission.
    For a host of reasons, the process of combining the 
respective components of the federal government into a combined 
entity will be difficult and contentious. But we can't allow 
our security to be sidetracked to preserve political fiefdoms 
or compromised by parochial concerns--there's simply too much 
at stake. Although this process will be grueling we often find 
that our most difficult assignments produce the work from which 
we draw the greatest pride and satisfaction. And, if it is 
successful in preempting a catastrophic attack, the creation of 
this new Department may eventually be seen as the most 
important step taken by Congress in many decades.
    The Bush administration has introduced a plan that creates 
a new Department of Homeland Security that would have over 
170,000 employees and would oversee the country's borders, 
aviation security and defense against bioterrorism among other 
responsibilities. Today is the first hearing of the Select 
Committee on Homeland security.

            PREPARED STATEMENT OF THE HONORABLE MARTIN FROST

    Thank you, M. Chairman. Since we have just a limited amount 
of time today, and since all of us want to give our witnesses a 
full opportunity to testify about the specifics of this 
proposed new department, I ask that the rest of this statement 
be inserted into the record.
    The security of the American people--at home as well as 
abroad--is a bipartisan priority for this Congress. Democrats 
have been working to make homeland security a cabinet-level 
priority since soon after September 11th.
    So we are eager to work with the Administration to create 
as quickly as possible a new federal Department of Homeland 
Security to provide a smarter, leaner and more effective means 
of protecting the public. There are a few keys to accomplishing 
this goal--good faith, honest collaboration, and, ultimately, 
an open, bipartisan process on the House Floor. If we follow 
that path, then I am confident we will succeed for the American 
people.
    Now, I am sure that each of you is quite busy these days so 
I don't want to waste your time here today re-ploughing ground 
that has already been well covered over the past 9 months.
    Everyone--around the country as well as in this room--
understands how radically the world has changed. September 
11th--and the death of some 3,000 innocent Americans--taught us 
all that in a way Congressional testimony never could have.
    In the wake of that terrible attack, a new national unity 
emerged. The people of this nation have pulled together to meet 
the first great challenge of the 21st century. Across the globe 
in Afghanistan, the men and women of the United States Armed 
Forces have proved their courage and skill on the battlefield 
once again. Here in Washington, Democrats and Republicans have 
put aside partisanship to support the war on terrorism.
    And now that President Bush and Republican Congressional 
leaders have ended their eight months of opposition to the 
idea, there is overwhelming support for the idea of making 
homeland security a cabinet-level priority.
    So now, with nearly universal agreement as to what we need 
to do, and a clear understanding of why we need to do it, there 
is only one really relevant question at this point: How can it 
be done best to ensure the American people that their 
government is doing all it can to keep them safe?
    The initial work of answering that question--and of 
improving the President's bill--is taking place in other 
hearing rooms around the Capitol as we speak. And next week, 
this Select Committee is scheduled to turn their efforts into a 
single bill.
    Based on the Speaker's assurances to the Democratic Leader, 
we expect that bill be considered under an open rule--allowing 
all Members to have amendments fairly considered on the House 
Floor. That is how we created the Department of Education in 
1979--under an open rule, over four days of amendments--and I 
believe it is a critical element to this process. Ultimately, 
the new Department of Homeland Security--if it is to be 
successful--must be the bipartisan, collaborative product of 
the entire House of Representatives.
    Therefore, I would invite each of the witness to use this 
opportunity to help the House address some of the specific 
steps the House can take to ensure the new Department of 
Homeland Security is as smart, as lean and as effective as the 
people of this great nation deserve.

          PREPARED STATEMENT OF THE HONORABLE J.C. WATTS, JR.

    The select committee has begun listening to all parties and 
points of view as we discuss the proposed Department of 
Homeland Security. The need for a centralized agency is 
certainly great. The House will continue to hear from cabinet 
secretaries, administration officials, committee chairmen and 
ranking members as we prepare to debate legislation authorizing 
the president's request.
    During my first year serving in the House, the Oklahoma 
City bombing occurred in my home state. During my last term in 
Congress, the events of September 11th have forever changed the 
world. The need for a heightened level of security in America 
has never been greater.
    Majority Leader Armey is to be commended for his leadership 
on homeland security as he chairs this important committee.
    Good government means securing all Americans. It is 
important to note that a comprehensive, organized plan of 
action taken by local governments to prevent and respond to 
terrorism will also help them better prepare for emergencies 
such as floods, earthquakes and fires.
    I hope the example set by the legislative and executive 
branches of the federal government will serve as a model for 
local communities around the country. Working with the private 
sector, all levels of government must make securing the 
homeland their number one priority.

          PREPARED STATEMENT OF THE HONORABLE ROBERT MENENDEZ

    America has never been so powerful. The world has never 
witnessed a nation so powerful. Our culture, our government, 
our commerce, our ideals, our humanity--virtually everything we 
do and all that we stand for--has a global reach that is 
unprecedented in the history of civilization.
    Yet, America has never been so vulnerable as it was on 
September 11th. Winston Churchill once said, ``You can always 
rely on America to do the right thing. Once it has exhausted 
the alternatives.''
    Let me suggest to the distinguished cabinet secretaries 
before us, and to my colleagues, that the gravity of the 
challenges we face in the wake of September 11th impels us to 
prove Churchill wrong on his latter sentiment. We must get this 
right the first time.
    America now faces the awesome responsibility to protect her 
people from terrorism.
    This hearing and the legislation before the Select 
Committee are about how we exercise that responsibility; how we 
prevent, prepare for and respond to the threat of terrorism to 
our states, urban areas and rural communities; how we organize 
ourselves as Federal, State and local governments, along with 
the private sector, to protect the American people from 
terrorism; how we preserve the rights of the people enshrined 
in the Constitution in the process of providing that 
protection; how we respect the rights and the dignity of the 
legal immigrants and permanent residents who have helped make 
this nation what it is; in short, how we secure the homeland 
while preserving our most cherished freedoms as Americans.
    How we project American power abroad determines our success 
as a global power, with all that entails, and defines us in the 
eyes of others. How we redefine the way we project American 
power domestically is an entirely different matter, and has 
profound implications for our culture and our people.
    If we are going to get this right the first time, then we 
better lay down a firm foundation. If we don't, we cannot 
expect to construct a very sturdy structure will be built on 
top of that.
    Merely moving numerous agencies under a larger department, 
as is proposed in this reorganization bill, cannot and will 
not, be a policy panacea. It is but an implementation tool--an 
implementation tool that would execute a strategy, which in 
itself should derive from a threat assessment.
    Ten months after 9/11, we have before us a reorganization 
bill, but we do not yet have a coherent strategy for homeland 
security, and we do not have a comprehensive threat assessment. 
The improved coordination and data sharing this bill seeks must 
begin with a threat assessment, followed by a strategy and 
plans to implement that strategy. That strategy should outline 
specific priorities along with a budget that would allocate the 
resources necessary to implement it. These are not proposed 
embellishments; they are basic requirements.
    The new threat warning system, the realignment of FBI agent 
duties to fighting terrorism, and establishment of a new 
military Northern Command may all prove to be advisable in the 
fight against terrorism, but these actions have appeared to be 
improvised and disjointed outside the context of an underlying 
strategy. I would be interested in learning from our witnesses 
where is the strategy Congress was promised would be delivered 
in July.
    Second, this is about people. It's about protecting our 
friends and neighbors, mother and fathers, brothers and sisters 
in America's big cities, small towns, and rural communities. 
It's about doing right by the civil service professionals that 
would comprise the rank-and-file of the new agency. It's about 
ensuring that the first responders who are on the front lines 
in all of our districts have all the resources and training 
they need. The American people are the stakeholders here. They 
need to be involved, they need the resources, and they need to 
be listened to--and their rights must be protected.
    Yes, American life has changed after September 11th--but 
American values have not, and must not. We continue to value 
liberty and freedom and justice and fairness.
    Third, the central and most glaring problem--even crisis, 
considering the consequences--with government performance 
during 9/11 was a breakdown of coordination and information-
sharing among government agencies. It simply will not do to lay 
that entire responsibility at the hands of the Joint 
Intelligence panel. Any new Department of Homeland Security 
must include mechanisms that ensure the necessary coordination 
and information sharing occurs among government agencies, 
states, localities and the private sector.
    What we do in this Committee and in this Congress is 
critical, but what happens after we pass our new laws may be 
even more important. Just consider what has happened with our 
airline security measures: We keep hearing excuse after excuse 
about why we can't get the explosive detection systems we need 
in the time-frame the law requires. What we pass here is part 
of the job, but we need to demand that the will of the people--
the people's top priority, keeping their families and our 
nation safe--is carried out effectively. We need to demand a 
can-do attitude in our government, and--yes--in our private 
sector. A nation that can put a man on the moon and lead the 
information age can surely figure out a way to get the 
detection technology we need in our airports. The same goes for 
this new agency.
    As a Congress, we need to speak with one voice that excuses 
and delays will not be tolerated.
    I have concerns about moving the TSA over to a new 
Department before it has completed even this primary task. 
Integration is important; but it must not distract an agency 
like the TSA from its mission to protect the people in the 
near-term. That is but one example among many.
    If it means we have to invest more resources to do so, than 
we should do it. If we need more human talent and better 
management, we need to get it.
    The terrorists may think they've won some sort of victory--
in fact, they have only assured their own destruction because 
we will not rest until the evil of terrorism is eliminated the 
face of the Earth. The key is how that happens.

           PREPARED STATEMENT OF THE HONORABLE DEBORAH PRYCE

    Today, exactly 10 months after the tragic events of 
September 11, this committee takes the first step in 
accomplishing the important task given to us by the President--
to create a Department of Homeland Security. As the committees 
of jurisdiction in the House complete their work today on the 
President's proposal, we meet to learn from our honored guests 
about the nature of the threat facing our nation, and the need 
for this fundamental government reorganization.
    Our nation faces what, in many ways, is the most unique and 
deadly enemy that we have faced in our history. This enemy is 
faceless, hiding in shadows and crossing international borders 
with ease, even penetrating into our own country. The enemy not 
only threatens our security, it steals from the American people 
their sense of safety and confidence. Creating this new 
Department will go a long way to both ensuring our security and 
restoring the faith and confidence of the American people.
    Our government was last reorganized on this scale in order 
to respond to a changing global environment following World War 
II. At that time, the National Security Act resulted in the 
foundation for what is our modern Department of Defense. Once 
again, we face a new global picture, and the new threat 
requires a unique response and a new way of thinking. We must 
refocus our government and enable it to match the agility of 
our enemy.
    In the days following September 11, we, as a nation, 
pledged not to let these times be remembered solely for our 
sadness and anger. We knew that these times must be marked by 
our national resolve. The American people have shown great 
resolve in pulling together to overcome this vicious attempt to 
break our national spirit.
    The government has also shown resolve in going to 
extraordinary lengths to respond to the terrorist threat. But 
as these efforts reach the limits of their bureaucracies, it is 
up to Congress to take up the President's call to rethink our 
government structure and bring together the vital preparedness, 
intelligence analysis, law enforcement, and emergency response 
functions that are currently dispersed among numerous 
departments and agencies. As the President pointed out in his 
message transmitting his proposal to Congress, our Nation is 
stronger and better prepared today than it was on September 11. 
Yet, we can do better.
    I want to thank President Bush and our distinguished 
witnesses for their leadership in fighting the war on 
terrorism. I look forward to working with my colleagues on this 
bipartisan committee as we conduct additional important 
hearings next week. We are moving quickly and deliberately to 
create the Department of Homeland Security.

            PREPARED STATEMENT OF THE HONORABLE ROSA DeLAURO

    I want to thank Secretary Rumsfeld, Secretary Powell, 
Secretary O'Neill, and Attorney General Ashcroft for taking the 
time to testify before our committee today.
    Since the attacks on September 11th, Congress and the 
President have come together to ensure our security. Reflecting 
our nation's renewed unity, we have committed to do what is 
necessary to win the war on terrorism. And now we are prepared 
to do what is necessary for our homeland defense. We have no 
more solemn responsibility under this Constitution.
    In that pursuit, we already enacted legislation to make our 
airlines safer, to strengthen law enforcement and intelligence 
capabilities, and to strengthen our response to bioterrorist 
attacks.
    I look forward to building on that record as we create the 
new Department of Homeland Security to ensure the safety of our 
citizens.
    Many of us have been calling for the creation of a Cabinet 
level department to oversee these efforts for months, and I am 
pleased that the Administration has responded by offering this 
proposal. Obviously, we have a lot of work to accomplish in a 
short amount of time, but we want to do this right the first 
time. I fully support the creation of this department, but 
there are a number of issues that I believe we need to address, 
including:
     How will the new Department take up 
responsibilities that are critically important, but do not 
relate to homeland security--such as functions of the Coast 
Guard, the INS, and FEMA?
     How will the Department effectively coordinate 153 
agencies, departments, and offices involved with homeland 
security? In fact that number will actually increase to 160.
     How will we ensure that the Department is able to 
prepare for future bioterrorist attacks, without disrupting the 
world class research and public health programs already in 
existence at the National Institutes of Health and the Centers 
for Disease Control?
     How will we ensure a smooth transition from the 
current organization to the new organization, without 
disrupting the ongoing war on terrorism or harming any of the 
non-security functions of agencies like the INS?
     How do we ensure that this department will operate 
effectively and efficiently and not become a bureaucratic 
obstacle to homeland security?
    I pose these questions precisely because we stand firmly 
with the President and the Administration on ensuring security. 
We face enemies who leave us no room for error, and we owe the 
American people nothing less.

            PREPARED STATEMENT OF THE HONORABLE ROB PORTMAN

    Last September 11, the terrorists who struck our homeland 
killed more civilians than did all our previous foreign enemies 
combined. The threats facing America today are different from 
the ones we faced during the arms build-up of the Cold War. We 
must learn how to make government effective in stopping 
terrorism before it strikes. This requires agility on our side, 
something we have not usually associated with large government 
agencies--at least until now.
    Last month, President Bush presented Congress with a 
visionary plan to create a new Department of Homeland Security. 
With over 100 federal agencies currently sharing responsibility 
for homeland security, the creation of such a department is 
clearly necessary. However, combining these different agencies 
and their roles in a way that matches the agility of our 
enemies will not be an easy task. It will require extraordinary 
cooperation among all those departments and agencies. It will 
require cooperation among the various committees in Congress 
that oversee these federal agencies. And perhaps most 
importantly, it will require cooperation between the 
Administration and Congress.
    Today's hearing is an example of this cooperation. I 
appreciate Secretary of State Powell, Secretary of Defense 
Rumsfeld, Secretary of the Treasury Paul O'Neill and Attorney 
General Ashcroft sharing their testimony with the Select 
Committee on Homeland Security. Their joint appearance is 
historic. Their insights will be incredibly valuable.
    This new Department will not make us immune from terrorism, 
but it will make us safer. This committee--and this Congress--
face a difficult task in the coming weeks, but our goal 
couldn't be more important. Keeping Americans safe from foreign 
threats is the most important responsibility of our federal 
government, and the creation of this new Department will help 
us carry out that responsibility.

    Chairman Armey. Gentlemen, without objection, we will put 
your written statements in the record and give you an 
opportunity to summarize your testimony before us. Also, I 
would like to ask the indulgence of all our witnesses so we can 
depart slightly from protocol. The Chair would like to 
recognize Secretary Rumsfeld first, to allow him to deliver his 
statement and return to the very serious business of his 
recovery, and the Deputy Secretary would then take his place to 
answer members' questions. Secretary Rumsfeld, you are now 
recognized for any statements you might wish to make.

  STATEMENT OF THE HONORABLE DONALD H. RUMSFELD, SECRETARY OF 
                            DEFENSE

    Secretary Rumsfeld. Thank you very, much Mr. Chairman, 
members of the committee, good morning. I do appreciate this 
opportunity to make a brief statement on President Bush's 
proposal to create the Department of Homeland Security.
    In announcing the proposal, the President properly 
highlighted the need for unified structure. He noted that today 
some 100 Federal entities are charged with responsibilities 
having to do with homeland security. As he put it, history 
teaches us that critical security challenges require clear 
lines of responsibilities and the unified effort of the U.S. 
Government. Those new challenges, he said, require new 
organizational structures.
    Interestingly, it was just such a challenge in 1945 that 
prompted President Truman to combine another collection of 
offices into what became the new Department of Defense.
    Meeting the complex challenges of the global war on 
terrorism requires a direct response. It means employing all of 
the instruments of national power: diplomatic, economic, 
military, financial, law enforcement, intelligence--overt as 
well as covert--activities. It means also a two-pronged 
approach to defending our country.
    First, of course, is attempting to combat terrorism abroad. 
The President understands that a terrorist can attack at any 
time, at any place, using every conceivable technique. And we 
all know that it is not possible to defend in every place, at 
every time, against every conceivable method of attack. That 
being the case, we simply have no choice but to take the effort 
to the enemy. We also have to marshal all of the Nation's 
capabilities to attack and destroy terrorist organizations with 
global reach and to pressure those who harbor them.
    Second is the establishment of the Department of Homeland 
Security, which we are discussing today, and to coordinate the 
efforts of Federal, State, and local agencies to provide for 
security at home. Both of those efforts are crucial, the one 
abroad as well as at home, and the role of the Department of 
Defense in each differs in important ways.
    With respect to the war abroad, U.S. Military forces, at 
the direction of the President, are charged with engaging enemy 
forces and governments that harbor them. In this effort, the 
DOD works closely with other government agencies, including the 
Departments of State, Treasury, Justice, and the Intelligence 
Community. And in these types of operations, the Department of 
Defense often takes the lead with other departments and 
agencies working in support of those efforts.
    With regard to improving security at home, there are three 
circumstances under which DOD would be involved in activity 
within the United States:
    First, under extraordinary circumstances that require the 
Department to execute traditional military missions, such as 
combat air controls and maritime defense operations, DOD would 
take the lead in defending people and the territory of our 
country supported by other agencies. And plans for such 
contingencies would be coordinated, as appropriate, with the 
National Security Council and with the Department of Homeland 
Security.
    Second is the emergency circumstance of a catastrophic 
nature. For example, responding to the consequences of attack, 
assisting in response more today, for example, with respect to 
forest fires or floods, tornadoes and the like. In these 
circumstances, the Department of Defense may be asked to act 
quickly to provide and supply capabilities that other agencies 
simply don't have.
    And, third, our missions or assignments that are limited in 
scope, where other agencies have the lead from the outset. An 
example of this would be security at a special event like the 
recent Olympics where the Department of Defense worked in 
support of local authorities.
    The recently revised Unified Command Plan makes a number of 
important changes to U.S. Military command structure around the 
world. Indeed, the Chairman of the Joint Chiefs of Staff, 
General Dick Myers, recently said that in his view this was the 
most important and significant set of changes in the Unified 
Command Structure for the United States during his entire 
military career. The Unified Command Plan established the 
Combatant Command for Homeland Defense, the U.S. Northern 
Command, or NORTHCOM, which we expect will be up and running by 
October 1st. NORTHCOM will be devoted to defending the people 
and territory of the United States against external threats and 
to coordinating the provision of U.S. Military forces to 
support civil authorities. In addition, NORTHCOM will also be 
responsible for certain aspects of security, cooperation, and 
coordination with Canada and Mexico and will help the 
Department of Defense coordinate its military support to 
Federal, State and local governments in the event of natural or 
other disasters.
    Second, we will establish a new office within the Office of 
Department of Defense to handle homeland defense matters, to 
ensure internal coordination of DOD policy direction, provide 
guidance to the Northern Command for its military activities in 
support of homeland defense, and lend support to civil 
authorities and coordinate with the Department of Homeland 
Security and other government agencies.
    Third, the administration has offered legislation to 
establish a new Under Secretary for Intelligence. The primary 
responsibility of this office would be ensuring that the senior 
leadership of the Department of Defense and the combatant 
commanders receive the warning and actionable intelligence and 
counterintelligence support that they need to pursue the 
objectives of our new defense strategy. This new office should 
improve intelligence-related activities but also provide a 
single point of contact for coordination with national and 
military intelligence activities.
    Finally, I would just like to briefly mention the two 
functions identified for transfer in the President's proposal 
from the Department of Defense to the Department of Homeland 
Security: the National Communications System, or NSC, and the 
National Bioweapons Defense Analysis Center.
    The NSC is an interagency body of 22 departments and 
agencies of the Federal Government. In addition to its strong 
government and industry partnership through the President's 
National Security Telecommunications Advisory Committee, the 
transfer of the NSC into the Department of Homeland Security 
can be accomplished with little impact on DOD.
    The National Bioweapons Defense Analysis Center, the 
mission of which would be to coordinate countermeasures to 
potential attacks by terrorists using weapons of mass 
destruction, does not yet exist. The administration's draft 
proposal would establish that Center from the proposed $420 
million in the DOD chemical, biological, defense program for 
biological homeland security efforts, which is included in the 
President's fiscal 2003 budget and transfer it in its entirety 
to the new Department of Homeland Security.
    Mr. Chairman, the Department of Defense welcomes the new 
Department of Homeland Security as a partner that can bring 
together critical functions in a new and needed way. Working 
together with the other agencies charged with U.S. National 
security, we will accomplish our common goal of ensuring the 
security of the American people, our territory, and our 
sovereignty. Thank you very much.
    Chairman Armey. Thank you Mr. Secretary. And Mr. Secretary, 
depending upon your comfort level, you are welcome to stay, or 
if you do need to move on and substitute your Deputy Secretary, 
I think we will all understand.
    Secretary Rumsfeld. I will excuse myself.
    Ms. Pelosi. Thank you, Mr. Secretary.

PREPARED STATEMENT OF THE HONORABLE PAUL WOLFOWITZ, DEPUTY SECRETARY OF 
                                DEFENSE

    Mr. Chairman, members of the committee, good morning. As 
always, it is a pleasure to be here. I appreciate this 
Committee's focus on homeland security, and I am pleased to 
testify on both the Department of Defense's relationship to the 
proposed Department of Homeland Security as well as the threats 
facing the Nation and the American people in the 21st century.
    In announcing his intention to propose a new Cabinet-level 
Department, the President clearly pointed out the need for a 
single, unified structure, noting that today numerous federal 
entities across the government are charged with 
responsibilities having to do with homeland security--far too 
many for the circumstances in which we find ourselves. As the 
President put it, ``History teaches us that critical security 
challenges require clear lines of responsibility and the 
unified effort of the U.S. government.'' Those ``new 
challenges,'' he said, ``require new organizational 
structures.'' And he is right. It was just such a challenge in 
1945 that prompted President Truman to combine another 
collection of offices into a new Department of Defense.
    Secretary Rumsfeld put it another way. He said, ``New times 
require new priorities'' and ever since the 2001 Quadrennial 
Defense Review, defense of the U.S. homeland has been the top 
priority of the Department of Defense.
    The Department of Defense strongly supports the President's 
initiative to create a Department of Homeland Security. One of 
the foremost doctrinal principles that informs how the U.S. 
military conducts operations is unity of command. Unity of 
command refers to people working together, in harmony, towards 
the same goal and under the same command. By consolidating a 
number of homeland security functions that are, at present, 
scattered across the Federal Government, the new Department of 
Homeland Security would provide unity of command. From our 
point of view, a Department of Homeland Security would:
     Provide a single focus, at the federal level, to 
facilitate DOD support when directed by the President and the 
Secretary of Defense.
     By building greater civil capacity at the Federal 
level to protect our borders, prevent domestic attacks and 
manage the consequences of attacks, a Department of Homeland 
Security would expand the President's options in times of 
crisis.
     Lastly, by reducing our vulnerabilities at home, a 
Department of Homeland Security would contribute to our ability 
to deter conflicts abroad by reducing any potential advantage 
our enemies might gain by attacking us directly in the course 
of a conflict abroad.
    The changing nature of the threats we face today--
especially the threats posed by terrorist organizations and 
outlaw states--makes such a department an urgent priority, and 
we look forward to working with the new organization to provide 
for the Nation's defense.
    As for the threat posed by terrorists and outlaw states, 
this is not--as you well know--a new phenomenon. Terrorism has 
a long and bloody history. What is new, however, is the level 
to which terrorists are willing to take their murderous deeds, 
and the weapons they have now, or may soon acquire, to ensure 
that the fear and devastation they inflict upon the innocent is 
greater than ever.
    What is also new, as has been demonstrated in Afghanistan, 
is the ability of terrorist organizations to completely 
overtake and occupy a country, co-opt a culture, and oppress an 
entire people. Left unchecked in a world where the global 
nature of finance, communications, and transportation make it 
possible for even relatively isolated individuals or 
organizations to have global reach, terrorism presents the 
potential for destabilization or, as we witnessed on September 
11th, destruction on a scale unmatched in previous eras.
    Thus, after September 11th, the world was faced with a 
challenge that could no longer be denied or ignored: Do we live 
in freedom, or do we succumb to fear?
    For the United States of America there was only one answer 
to that question. And nine months ago, President Bush answered 
it. In a bold and courageous act that recognized both its deep 
roots and its terrible potential, President Bush declared war--
not just against the perpetrators of the deadly attacks on New 
York and Washington--but against terrorists and their 
organizations and sponsors worldwide. Indeed, as the President 
has made clear, the sources of the threats we face are not 
limited to Afghanistan or the Middle East. They stretch across 
the globe.
    As September 11th so dramatically demonstrated, we are 
vulnerable to many forms of attack. Who would have imagined, 
only a year ago, that commercial airliners would be turned into 
missiles that would attack the Pentagon and World Trade Towers, 
killing thousands? But it happened. In the years ahead, we will 
undoubtedly be surprised again by enemies who will attack in 
new and unexpected ways--perhaps with weapons vastly more 
deadly than those used on September 11th.
    Our enemies know we are an open society. They suspect that 
the space assets and information networks critical to our 
security and economy are vulnerable. They know we have no 
defense against ballistic missiles, which only gives them 
further incentive to develop weapons of mass destruction and 
the means to deliver them. Our job is not only to close off as 
many of avenues of potential attack as possible but to prepare 
for others--whether from terrorist organizations or from the 
outlaw states who cooperate with them and each other, intent on 
America's destruction.
    September 11th was also a call for the military to do more 
with regard to homeland defense. The United States remains 
vulnerable to missile attack--which is why we are working to 
develop and deploy defenses against the most likely forms of 
ballistic and cruise missile attacks. But September 11 taught 
us, to our regret, that our people and our country are 
vulnerable to internal as well as external attack--from hostile 
forces who live among us, who enter our country easily, who 
remain anonymously, and who use the freedom America affords to 
plan and execute their violent deeds.
    Thus, the threat facing the United States today is multi-
faceted and multi-dimensional. Not a single adversary, as we 
faced in the Cold War, but a syndicate of enemies characterized 
by highly complex and surreptitious interactions between global 
terrorist organizations and outlaw states. Compounding the 
danger is the fact that these organizations and states are 
aggressively pursuing weapons of mass destruction.
    Meeting these complex threats requires an equally complex 
response. It means employing all the instruments of American 
power--military, economic, diplomatic, financial, law 
enforcement, and intelligence--and all the offensive and 
defensive tools of our government. It means overt as well as 
covert military operations. It means a two-pronged approach to 
defending the nation.
    The first is combating terrorism abroad. The President 
understands that a terrorist can attack at any time, at any 
place, using any conceivable technique. Because it is 
physically impossible to defend against every conceivable 
threat, in every place at every time, we must take the war to 
the enemy. We must also marshal all of the nation's 
capabilities to attack and destroy any terrorist organizations 
with global reach, and to pressure those who harbor them.
    In an era in which attacks on our homeland can result in 
tens of thousands of deaths, we cannot wait until we are 
attacked before we choose to act ourselves. Our highest 
priority must be preventing attacks from occurring by 
disrupting enemy operations, denying them sanctuary, and when 
necessary, using force preemptively.
    The second key task in our two-pronged war on terrorism is 
to secure the homeland. Immediately after last fall's attack, 
the President took decisive steps to protect America. On 
October 8, 2001, the President established the White House 
Office of Homeland Security and the Homeland Security Council 
to coordinate the federal government's efforts. On June 6th of 
this year, the President proposed the creation of a new 
Department of Homeland Security, the most significant 
transformation of the U.S. government in over a half-century 
and one more key step in the President's strategy for homeland 
security. Both efforts--prosecuting the war on terrorism abroad 
and securing the homeland--are crucial, and the role of the 
Department of Defense in each differs in important ways.
    With respect to the war abroad, U.S. military forces, at 
the direction of the President, are charged with engaging enemy 
forces and the governments or other entities that harbor them. 
In this effort, the Department of Defense works closely with 
other government agencies, including the Departments of State, 
Treasury, Justice and the intelligence community. In these 
types of operations, the Department of Defense takes the lead, 
with other departments and agencies working in support of our 
efforts.
    With regard to improving security at home, DOD may employ 
U.S. military forces as follows:
    1) Extraordinary Circumstances
    First, under extraordinary circumstances that require the 
department to execute its traditional military missions to 
deter, dissuade or defeat an attack from external entities, DOD 
and the Secretary of Defense would take the lead. Plans for 
such contingencies would be coordinated as appropriate and, to 
the extent possible, would be coordinated, as appropriate, with 
the National Security Council, the Homeland Security Council, 
the Department of Homeland Security and other affected 
Departments and agencies.
    As an example, in the case of combat air patrols, the FAA, 
a civilian agency, would provide data to assist the efforts of 
Air Force fighter pilots in the Guard and Reserve in 
identifying and, if necessary, intercepting suspicious or 
hostile aircraft.
    Also included in the category of extraordinary 
circumstances are cases in which the President, exercising his 
Constitutional authority as Commander-in-Chief and Chief 
Executive, authorizes military action. This inherent 
Constitutional authority may be used in cases, such as a 
terrorist attack, where normal measures are insufficient to 
carry out federal functions.
    2) Catastrophic Emergency Circumstances 
    Second, in emergency circumstances of a catastrophic 
nature--for example, responding to the consequences of an 
attack, or assisting in response to forest fires or floods, 
hurricanes, tornadoes and so on. The President's legislative 
proposal envisions the Department of Homeland Security will be 
the lead federal agency for domestic contingencies of national 
significance.
    In these instances, the Department of Defense may be asked 
to act quickly to provide or to supply capabilities that other 
agencies simply do not have.
    3) Limited Support to Other Federal Agencies
    Third, missions or assignments that are limited in scope or 
duration, where other federal agencies take the lead from the 
outset. An example of this would be security at a special 
event, like the Olympics, where there were literally more men 
and women in uniform in Salt Lake City than there were in 
Afghanistan at the same time.
    The first of those three categories--extraordinary 
circumstances in which DOD, at the direction of the President, 
conducts military missions to defend the people or territory of 
the United States--falls under the heading of homeland defense. 
In these cases, the Department is prepared to take the lead.
    The second and third categories are activities which are 
emergency or temporary in nature, and for which other federal 
agencies take the lead and DOD lends support. Under the 
President's proposal, the Department of Homeland Security will 
have the responsibility for coordinating the response of 
federal agencies and, as appropriate, the interaction of those 
federal agencies with State and local entities. DOD will take 
an active role in this inter-agency process.
    In the event of multiple requests for Department of Defense 
assets, the President would be the one to make the decision on 
the allocation of these assets. The coordination mechanism of 
the National Security Council (NSC) and the Homeland Security 
Council (HSC) exists to support just such a decision. The DOD 
is represented on both the NSC and HSC.
    In sum, the Department of Defense has two roles to play in 
providing for the security of the American people where they 
live and work. The first is to provide the forces necessary to 
conduct traditional military missions under extraordinary 
conditions, such as the act of defense of the Nation's airspace 
and its maritime approaches. The second is to support the 
broader efforts of the DHS and federal domestic departments and 
agencies, and indeed state and local governments.
    Before I describe the various transformation efforts of the 
Department of Defense with regard to homeland defense, I'd like 
to mention briefly the role of the National Guard.
    The National Guard supports homeland defense and provides 
support to civil authorities in several ways.
    First, in state service under the direction of State 
Governors. An example of this would be the way in which the 
National Guard in New York, New Jersey and Connecticut 
responded so heroically to the attacks on the World Trade 
Center towers on September 11th.
    Second, in state service but performing duties of federal 
interest, the so-called Title 32 status.
    Third, in federal service, or Title 10 status. For example, 
when the National Guard is mobilized to serve under the 
direction of the President or the Secretary of Defense.
    These arrangements have worked well in the past. The 
challenge today is to ensure that these arrangements remain 
relevant in the new security environment. There are many 
proposals for doing so, and the Department will continue to 
work with the Congress, the Governors, the Office of Homeland 
Security and the proposed Department of Homeland Security to 
make certain that we have an approach that meets the nation's 
needs.
    As for how the Department is organized to support these 
missions, a fundamental transformation has been underway to 
address the threats the Nation will face in the 21st century.
    The new Unified Command Plan makes a number of important 
changes to the U.S. military command structure around the 
world. Indeed, the Chairman of the Joint Chiefs of Staff, 
General Myers, has described it as the most important set of 
changes in his military career.
    The UCP established a combatant command for homeland 
defense, U.S. Northern Command, which we expect will be up and 
running on October 1st. NORTHCOM will be devoted to defending 
the people and territory of the United States against external 
threats and to coordinating the provision of U.S. military 
forces to support civil authorities.
    In addition, NORTHCOM will also be responsible for certain 
aspects of security, cooperation, and coordination with Canada 
and with Mexico, and it will help DOD coordinate its military 
support to federal, state and local governments in the event of 
natural or other disasters.
    Second, we will establish a new office, within the Office 
of the Secretary of Defense, to handle homeland defense matters 
to ensure internal coordination of DOD policy direction, 
provide guidance to Northern Command for its military 
activities in support of homeland defense, coordinate 
appropriate DOD support to civil authorities, and coordinate 
with the Office of Homeland Security, Department of Homeland 
Security, and other government agencies.
    Third, the Administration has offered legislation to 
establish a new Undersecretary for Intelligence. The primary 
responsibility of this office would be ensuring the senior 
leadership of the department and the combatant commanders 
receive the warning, actionable intelligence, and 
counterintelligence support they need to pursue the objectives 
of our new defense strategy. This new office will not only 
enhance intelligence-related activities but provide a single 
point of contact for coordination of the Secretary of Defense's 
intelligence responsibilities.
    Finally, we support the President's proposal to transfer 
two items from DOD to the Department of Homeland Security: the 
National Communications System (NCS), for which DOD is the 
executive agent, and a yet-to-be-established National Bio-
Weapons Defense Analysis Center.
    The NCS is an interagency body of 22 Departments and 
Agencies of the Federal Government, in addition to its strong 
government/industry partnership through the President's 
National Security Telecommunications Advisory Committee 
(NSTAC).
    The National Bio-Weapons Defense Analysis Center's mission 
would be to develop countermeasures to potential attacks by 
terrorists using weapons of mass destruction. The 
Administration's draft bill would establish the Center from the 
proposed $420 million in the DOD Chemical Biological Defense 
Program for Biological Homeland Security efforts, which is 
included in the President's Fiscal Year 2003 Budget, and 
transfer the Center to the Department of Homeland Security.
    Mr. Chairman, September 11th was a stark reminder that 
mortal threats to national security did not end with the Cold 
War, or with the passing of the last century but, on the 
contrary, remain, and indeed, continue to multiply. It is 
important that we recognize and respond to that fact.
    I remember well that Secretary Rumsfeld made this very 
observation in his first official remarks as Secretary of 
Defense. He said, ``We enjoy peace amid paradox. Yes, we're 
safer now from the threat of massive nuclear war than at any 
point since the dawn of the atomic age, and yet we're more 
vulnerable now to suitcase bombs, the cyber-terrorist, and the 
raw and random violence of the outlaw regime.
    ``Make no mistake: keeping America safe in such a world is 
a challenge that's well within our reach, provided we work now 
and we work together to shape budgets, programs, strategies and 
force structure to meet threats we face and those that are 
emerging, and also to meet the opportunities we're offered to 
contribute to peace, stability and freedom * * *
    ``But,'' he said, ``we need to get about the business of 
making these changes now in order to remain strong, not just in 
this decade, but in decades to come.''
    Mr. Chairman, the Department of the Defense welcomes the 
new Department of Homeland Security as a partner that will 
bring together critical functions in a new and needed way. 
Working together with the other agencies charged with U.S. 
national security, we will accomplish our common goal of 
ensuring the security of American citizens, territory, and 
sovereignty.
    I thank the Chair and the Committee and look forward to 
your questions.

    Chairman Armey. Secretary Powell, we are very pleased to 
see that you could make it today and are anxious to hear your 
testimony. So please proceed.

STATEMENT OF THE HONORABLE COLLIN L. POWELL, SECRETARY OF STATE

    Secretary Powell. Thank you Mr. Chairman, Ms. Pelosi, and 
members of the committee. It is a great pleasure for me to be 
here this morning with my colleagues. I would like to ask the 
committee's indulgence for a moment to introduce two guests 
that I have brought with me. As I think most of the committee 
members will remember from my previous incarnation, I was 
chairman of America's Promise: The Alliance for Youth. And one 
of the programs that came out of that is an exchange program 
between the United States Department of State and the United 
Kingdom's Foreign and Commonwealth Office. So, today two young 
Americans are in the United Kingdom traveling around with the 
Foreign Secretary of the United Kingdom, Mr. Jack Straw. He has 
taken them to Bratislava in Europe to attend meetings with him. 
And in exchange, I have two young British--a young lady and a 
young gentlemen who are from Surrey, England. I would like to 
ask them to stand and be recognized. Ms. Mei Lai Lu and Mr. Tom 
Minor. I couldn't bring them or take them to Bratislava or 
anything approaching that, so I brought them here, Mr. 
Chairman. They were at a Britney Spears concert last night. 
They have been to a basketball game, and this is their day with 
the State Department to see what a Secretary of State does, and 
I think they are having a pretty good time in the United 
States.
    Chairman Armey. If I might just say, Mr. Secretary, we look 
forward to showing you that there can be something better than 
Britney Spears.
    Secretary Powell. Mr. Chairman, members of the committee, 
it is a great pleasure to testify before you on this very 
important subject, and I congratulate you on this new committee 
and the work that you will be doing. It is vital work with 
respect to the security of our Nation. And I am pleased to 
appear with my colleagues to indicate my total support and the 
total support of the Department to the new Homeland Security 
Department and to President Bush's proposal.
    We are prepared to cooperate fully with the new Department. 
In fact, we are eager to do so. As President Bush said in 
announcing the creation of this new Department, we are a 
different Nation today. The tragic events of September 11th and 
all those events have conveyed to us--have made us a new Nation 
and have given us a new situation that we really have to deal 
with.
    And I think you, Mr. Chairman and Mrs. Pelosi, have spoken 
to this already, because the fight of international terrorism 
is different than any other war we fought in our history, 
different than any other war that I tried to prepare myself for 
as a soldier, or that I fought in as a soldier over the last 40 
years. It is a war that will not be won principally through 
military might. It will be won through all of the elements of 
our national power that Don Rumsfeld spoke to a moment ago: 
military might, diplomatic prowess, political efforts, and our 
intelligence efforts, and going after financial institutions.
    And as the President has said so often, we are in this 
fight to win, and we will not weaken, we will not lose our 
resolve, we will not run out of patience. We will stick with it 
until those enemies that come at us in this new and different 
and asymmetrical way are defeated. We will fight terrorist 
networks, and all those who support these efforts to spread 
fear and mayhem around the world, and we will use every 
instrument of our national power and we will not be made 
fearful.
    As Mrs. Pelosi said, we all gathered last July 4th, 
notwithstanding all of the threats that were out there and the 
suggestions that something terrible would happen. We all came 
out of our homes and went to our public places to show that we 
are not a fearful Nation. We are a Nation with a spine of steel 
and a heart that is full of courage, and we will not be made 
fearful by terrorists. Progress in this campaign against 
terrorism will come through the patient accumulation of 
successes, some seen, some unseen, and we will remain ever 
vigilant against new terrorist threats.
    Our goal will be reached when Americans and our friends 
around the world can lead their lives free from terrorist 
attacks. We cannot, we will not, let the need to fight this war 
make us that different a society. We have to protect ourselves, 
but we must not put up tall fences, sprinkle broken glass at 
the tops, put a guard at the gate, and seal ourselves off from 
the rest of the world. We must not become gated America, or 
they will have won. We can't let that happen.
    So it will require sacrifice, dedication, energy, and a 
great deal of wisdom to maintain this precious balance between 
our way of life, our openness, that which makes us America to 
the rest of the world, our freedom and the security measures 
needed to protect our citizens to the maximum extent possible. 
We must fight the terrorists and protect the lives of our 
citizens, but we must not relinquish the very values that make 
us who we are, that have made us the greatest Nation on this 
Earth.
    In this regard, President Bush's proposal for a Department 
of Homeland Security shows the way ahead as America does 
everything within its power to protect its citizens at home and 
abroad. The President has also proposed that this new 
Department assume responsibility for the policy guidance and 
the regulation that is required with respect to visa issuance. 
As you know, our first line of defense in protecting ourselves 
from those who would come to our shores are our diplomats at 
our consulates, and other locations around the world, where we 
issue visas to people to come to America. The United States is 
ready to make sure that our visa system is a strong one, a 
secure one, but at the same time, one that encourages people to 
come to the United States. Once we have made sure that they are 
the right kinds of people to come into our Nation, they are not 
coming in to conduct any kind of activity which would be 
injurious to any American. Under the new proposal, the 
Secretary of Homeland Security will determine what those 
policies should be.
    The Secretary of State, the Department of State, is 
willing, anxious, to give all of the authority that we 
currently have with respect to visa issuance, the regulations, 
to the Secretary of Homeland Security. That is where it 
resides. He will have access to all of the intelligence 
information, law enforcement information, and he will make 
those policy judgments with respect to who should be authorized 
to receive a visa at our many visa-issuing facilities around 
the world. We will have some foreign policy input into those 
judgments, but I yield all of that authority willingly to the 
Secretary of Homeland Security.
    I consider it absolutely essential, however, that the 
actual issuance of the visas remain with the Department of 
State. We have the experience, the training, the language 
skills, and the dedicated people to perform this mission. The 
State Department represents the United States at more than 200 
posts around the world, where it carries out its 
responsibilities for conducting foreign policy, promoting 
trade, cooperating with foreign law enforcement authorities, 
and providing consulate services to Americans aboard. Our 
consular officers are also responsible for the issuance of 
visas to foreign nationals, but they have many other 
responsibilities, and it is difficult to shred out the visa-
issuing responsibility from these other consular activities 
that take place at our various facilities.
    Most visa applicants want to come here for legitimate 
purposes: business, tourism, education. We want them to come to 
our schools. We want them to come to the United States and 
visit our wonderful tourist attractions. We want them to 
participate in health care activities and come use our 
hospitals and other facilities.
    However, some seek visas for criminal and other unlawful 
purposes, including terrorist acts. So we have been working 
hard to be sure that only those who mean us no ill come to this 
country. There is no entitlement to a visa. The judgment is 
that you are not entitled to a visa, unless you can establish 
you are coming here for a legitimate purpose.
    Since September 11th, we have done a lot to tighten up our 
system. The most important thing we have done, really, is to 
increase the size of the database available to our consular 
officers around the world. We have worked closely with our 
intelligence agencies, and especially with the Justice 
Department and the FBI, to double the size of the database so 
that when a young consular officer overseas puts the name of an 
applicant into that database, it comes back here and it gets 
the widest dissemination, so it is bounced against all the 
databases.
    We can do an even better job of that. And I am very pleased 
at the level of cooperation that has existed between the State 
Department, the Justice Department, the CIA, and all of the 
other relevant agencies to make sure that we give the broadest 
screening to this name before that consular officer then makes 
a judgment as to whether or not an interview is required or 
whether or not it should just be shut down out of hand--we 
don't want this person here.
    So I can assure you we are doing everything possible to 
tighten our procedures. We have put in place a new visa called 
a Lincoln visa, which I just have a sample here. Using the 
latest technology, the finest experts we have in our government 
have tried to modify this and alter it to see if they could get 
through this system, and they have failed. Doing the same thing 
with our passports, all using digitized data--this is my 
passport, and I can assure you I have one of the newest and the 
best--to make sure that we are protecting ourselves.
    Our consular officers do a great job. Do we have problems 
from time to time? Have our efforts been defeated from time to 
time? From time to time do we have someone who does not live up 
to their responsibilities? Yes, that has occurred. But when we 
find it, we go after it, as we are doing in the current case at 
Doha. But do we also have officers who do a brilliant job of 
spotting someone who is trying to defeat the system? Yes, we 
do. The gentleman who was arrested recently, Mr. Padilla, was 
spotted by a consular officer, who found something unusual 
about this particular applicant and reported it to the regional 
security officer. That person, being vigilant, reported it back 
here. We then contacted the CIA, the FBI, and others, and found 
enough about Mr. Padilla so that when he arrived in the United 
States, we were waiting for him and he was arrested and taken 
into custody.
    These are dedicated young men and women around the world. 
They have a career path and track. They have the language 
skills. They know all of the other consular activities that 
take place, that have to take place, in our embassies. In 2001 
alone, we adjudicated 10 million nonimmigrant visa applications 
and allowed 7.5 million visas to be issued, allowing these 
people to come into our country. I want to assure the members 
of this committee that we take our responsibilities at the 
State Department and our consular responsibilities with utmost 
seriousness. And we are seeing what else we need to do, within 
the consular service, within the Consular Affairs Office at the 
State Department, to make sure that we are doing everything to 
guard our Nation, to guard our people, but at the same time to 
make sure we remain a Nation of openness, a welcoming Nation, 
the America we all love and the world respects.
    And we look forward to working with the Secretary of 
Homeland Security and all the elements of the Department of 
Homeland Security, just as we are now working more closely with 
all of my colleagues at the table and the other organizations 
within the United States Government, to make sure that we are 
doing these two things: protecting ourselves, while remaining 
an open society.
    And I look forward to your questions, Mr. Chairman, and 
members of the committee.
    Chairman Armey. Thank you, Mr. Secretary, and let me just 
say that your statement is very reassuring to me on several 
points.

  PREPARED STATEMENT OF THE HONORABLE COLLIN L. POWELL, SECRETARY OF 
                                 STATE

    Mr. Chairman, members of the Select Committee, I am pleased 
to testify before your committee.
    The Department of State supports President's Bush's 
proposal to create a Department of Homeland Security. We are 
prepared to cooperate fully with that department. In fact, we 
are eager to do so.
    As President Bush said in announcing the creation of this 
new department, ``* * *we are a different nation today.'' The 
tragic events of September 11 and all that those events convey, 
have made us so.
    The fight against international terrorism is different from 
any other war in our history. We will not win this war solely 
or even primarily through military might. We will fight 
terrorist networks, and all those who support their efforts to 
spread fear and mayhem around the world, using every instrument 
of national power-diplomatic, economic, law enforcement, 
financial, informational, intelligence, and military. Progress 
will come through the patient accumulation of successes-some 
seen, some unseen. And we will remain forever vigilant against 
new terrorist threats. Our goal will be reached when Americans 
and their friends around the world can lead their lives free of 
fear from terrorist attacks.
    We cannot--we will not--let the need to fight this war make 
us a different society. We will not put up tall fences, 
sprinkle broken glass on the tops, put a guard at the gate and 
seal ourselves off from the rest of the world. We will not 
become ``gated America.''
    It will require sacrifice, dedication, energy and a great 
deal of wisdom to maintain this precious balance between our 
way of life, our openness, and our freedom, and the security 
measures needed to protect our citizens to the maximum extent 
possible.
    We must fight the terrorists, we must protect the lives of 
our citizens, and we must not relinquish the very values that 
make us who we are, that have made us the greatest nation on 
earth.
    In this regard, President Bush's proposal for a Department 
of Homeland Security shows the way ahead as America does 
everything within its power to protect its citizens at home and 
abroad.
    The President has also proposed that this new Department 
assume responsibility for the policy guidance and regulation 
governing visa issuance, and I fully support that proposal.
    The Secretary for Homeland Security will determine who can 
and who cannot enter the United States. He will pass that 
guidance along to the State Department and we will faithfully 
execute it.
    I will continue to exercise authority with respect to entry 
or denial of entry where there are foreign policy 
considerations; but for all others, the new Secretary will make 
the rules.
    I consider it absolutely imperative that the actual 
issuance of visas remain within the Department of State. We 
have the experience, the training, the language skills, and the 
dedicated people to perform this mission.
    The State Department represents the United States at more 
than 200 different posts around the world where it carries out 
its responsibilities for conducting foreign policy, promoting 
trade, cooperating with foreign law enforcement authorities and 
providing consular services to Americans abroad. Our consular 
officers are also responsible for the issuance of visas to 
foreign nationals seeking to come to America. Most visa 
applicants want to come here for legitimate purposes--business, 
tourism, education. Some, however, seek visas for criminal and 
other heinous purposes, including terrorist acts against our 
people.
    Since the September 11 attacks on America, the Department 
has taken steps to better integrate the visa issuance process 
into the Federal Government's overall border security efforts. 
We have, for example, improved access to intelligence data for 
visa issuance and forged new relationships among departments 
and agencies to share real-time information impacting on 
homeland security.
    We have also imposed a mandatory 20-day hold on visa 
issuances to certain nationalities and demographic groups, to 
permit a more thoroughgoing interagency review of these 
applications.
    We have provided access to our databases so that an 
Immigration Officer sitting in the port of Baltimore, for 
example, now has access to the same information we do. This 
includes photographs of visa applicants.
    Our consular officers who do this visa work on a daily 
basis must speak more than 50 different languages and have 
tremendous drive because the amount of work on our visa lines 
around the world is staggering. In FY 2001 alone, we 
adjudicated over 10 million non-immigrant visa applications--
and out of this total we issued around 7.5 million visas, or 
about 70 per cent.
    Nearly three-quarters of our overseas consular officers are 
devoted to this visa process, either as those providing direct 
interview services or as managers of this function. Where do we 
get such people?
    Foreign Service Officers and Civil Service employees of the 
State Department come from the best talent of America. More 
Americans than ever are taking the Foreign Service Exam--over 
8,000 in September of 2000, 13,000 in September of 2001, and 
14,000 in April of this year. Our men and women are motivated 
by patriotism, a desire to serve, and a yearning to see the 
world and to meet different peoples. These are some of the best 
and the brightest America has to offer.
    These men and women learn multiple foreign languages, will 
live and work in some of the most inhospitable places in the 
world, and will face grave dangers like the recent bombings in 
Karachi and Islamabad and the deadly attacks on our embassies 
in Nairobi and Dar as Salam--all in order to protect and serve 
Americans abroad. Every day I am reminded of their willingness 
to sacrifice for their country by the plaque in the lobby of 
the Department which records the names of those who have given 
their lives. Recently, I had a tragic reminder of the dangers 
to their families as well, as the church bombing in Islamabad 
took the lives of Barbara Green and her daughter.
    Given the dimensions of their task, our consular officers 
do exceptional work. Let me give you some recent examples:
    One of our consular officers at a Latin American post 
noticed an upswing in applications for ship crewmans' visas by 
people who did not seem to have any connection to the seafaring 
life. But they all had ``certifications'' from a mariner's 
school. They also presented what appeared to be a credential 
issued by the host government. The consular officers checked 
with the local government, and learned that the supposed 
credential was false. An investigation showed the mariner's 
school was conducting sham training, sending unqualified seaman 
onto cruise ships and potentially threatening the safety of 
passengers. Eventually, consular officers in three different 
countries found links to the mariner school. As a result, local 
authorities closed down the school and charged the proprietors 
with fraud.
    Another of our consular officers, this time in Central 
America, noticed that several people had submitted visa 
applications which appeared to be filled out using the same 
typewriter. None of the people claimed to know each other. An 
investigation revealed that a visa fixer was operating a school 
to train low-income applicants to fool consular officers during 
the visa interview. The school had a psychologist on hand to 
boost applicant's confidence, a fashion expert to help them 
pick out clothes to give an impression of prosperity, and a 
coach to help them through mock interviews. The school also 
helped middle class applicants to pose as simple farm folk in 
order to qualify for seasonal worker visas. Local police were 
able to make several arrests.
    Just from these two examples it is clear that we need good, 
experienced, language-proficient people on the visa lines. And 
we have them and we are getting more of them.
    These people and all the people of the Department of State, 
stand ready to work closely and in full cooperation with the 
new Department of Homeland Security.
    I will stop here and take your questions.

    Chairman Armey. Secretary O'Neill, we know that you have 
your passport in order--let me correct myself--for your trip to 
Central Asia. And may I remind members of the panel, the 
Secretary needs to get off on that trip by 11 o'clock. At this 
time, Mr. Secretary, thank you for your being here and let me 
just turn it over to you for your statement.

 STATEMENT OF THE HONORABLE PAUL H. O'NEILL, SECRETARY OF THE 
                            TREASURY

    Secretary O'Neill. Mr. Chairman, distinguished members of 
the committee, it is a pleasure to be here today, and because 
of the shortness of time, with your permission, Mr. Chairman, I 
am going to submit my statement for the record and let you 
proceed with the Attorney General so that we can have some 
opportunity for interaction before I really must go at 11 
o'clock.

 PREPARED STATEMENT OF THE HONORABLE PAUL H. O'NEILL, SECRETARY OF THE 
                                TREASURY

    Mr. Chairman, thank you for the opportunity to address the 
Select Committee today. I am pleased to address the Committee 
on behalf of the President's proposal to establish a new 
Department of Homeland Security and to offer my wholehearted 
support for transforming our government in order to fight 
terrorism more effectively and protect our nation.
    During my tenure at Alcoa, we constantly sought to rethink 
the way we did business. Throughout the company, we tried to 
adjust our methods and models to changing circumstances. 
Companies that survive, decade after decade, do so through 
constant adaptation. In a sense, they exemplify a deep-rooted 
corporate tradition-and, truly, a deep-rooted American 
tradition-of questioning every tradition.
    Change, of course, is often difficult, whether in a 
business or in government. Some people worry that change will 
require too much from them, or that it will deprive them of too 
much clout. President Truman faced such forces in 1947 when he 
set out to reorganize the military. The entrenched interests 
argued that the American military had just defeated the Axis; 
why change what worked? But President Truman recognized that 
the nature of warfare was changing. The intense and relatively 
brief fighting of World War II was giving way to the Cold War, 
which entailed decades of surrogate warfare, positioning for 
global supremacy, and the constant possibility of total war. 
Not all of this was apparent in 1947, but President Truman 
recognized enough of it to realize that things had to change: 
It was time for a joint or unified command. He was right.
    Now, the nature of warfare has changed once again. The 
enemy is no longer necessarily a state. Instead, we face 
individuals and small groups, sometimes aided by a state, but 
not necessarily clad in its uniform or following its flag. 
Indeed, that is the great challenge of the new form of warfare-
knowing who our enemies are. As the investigation into the 
attacks of September 11 has demonstrated, they walk among us. 
Only their violent and misguided ideology distinguishes them 
from our fellow citizens, and, not surprisingly, they keep that 
ideology to themselves. Their weaponry, too, is different. 
Before September 11, passenger jetliners had never been weapons 
of war.
    But our weapons have also changed. Technology is giving us 
tools for tracking the possible terrorists among us. Flight 
manifest and passenger information, once recorded manually, now 
is automated through APIS, the Advanced Passenger Information 
System. This provides a system for tracking individuals 
entering our country. Technology also gives us the ability to 
integrate our databases and rapidly communicate our 
information. Thanks to new powers that Congress provided under 
the USA Patriot Act, Treasury's Financial Crimes Enforcement 
Network can blast-fax information about suspected terrorists to 
hundreds of financial institutions, which in turn can provide 
any pertinent information back to us. An investigation that 
might have taken weeks a few decades ago now takes hours.
    September 11 has forced on us the sort of creative thinking 
that President Truman did in 1947. We have had to ask ourselves 
how this could have happened, what might happen next, and how 
we can prevent any further attacks. And the conclusion is 
clear: We cannot fight this war using structures designed for 
the Cold War, at the military level, and the varieties of 
indigenous and foreign crimes, at the law-enforcement level. 
Now, as then, new threats require new structures and new 
responses.
    Today, responsibility for homeland security is scattered 
across the government. Lines of communication are not always 
open; lines of authority are not always sharply defined; and 
redundancies and inefficiencies are built in. One law-
enforcement agency sometimes launches an operation and then 
must step aside-not because it finds no evidence of 
criminality, but rather because it finds evidence of the wrong 
sort of criminality. Last week, for example, the Customs 
Service stopped a suspicious boat and searched it for illegal 
drugs and other contraband. However, the Customs agents found 
illegal aliens. Customs transferred the aliens to the Coast 
Guard--currently part of the Department of Transportation. The 
Coast Guard, upon reaching land, then turned over the aliens to 
the Immigration and Naturalization Service--currently part of 
the Department of Justice. Under the President's reorganization 
proposal, a single entity would be responsible for all border 
issues.
    The new Department will have homeland security as its 
primary mission. It will bring together within one Department 
the key entities to fight the war on terrorism, and ensure that 
we have a unified, coherent plan for protecting our citizens 
and our borders against the new breed of threats. And, 
crucially, it will be accountable. Citizens and public servants 
will know where the responsibility lies.
    All the parts must work together at the same time and under 
the same direction to get things done. We cannot respond to the 
terrorist threats simply by pledging more cooperation or by 
making marginal changes. We must be willing to make a dramatic 
transformation in light of the dramatic threats we face. 
Indeed, this Select Committee provides a good example. Although 
many committees have jurisdiction over the issues covered by 
the proposed new Department, you realized that responsibility 
could not be parceled out as before. This Select Committee 
centralizes authority. We must engage in this type of fresh 
thinking in order to respond to the new threats.
    Yes, the challenge is great. To defend our freedom in this 
new era, we must work together as never before. We must put 
aside notions of turf and tradition and the-way-we've-always-
done-it, and work collectively for the common security. In some 
cases, we must say goodbye to valued colleagues. I have deeply 
enjoyed my time working alongside the fine public servants in 
the Customs Service and the Secret Service, for example, two 
Treasury agencies that, under the President's proposal, will be 
part of the new Department. But by and large, these hard-
working people recognize the wisdom in centralizing 
responsibility for homeland security. They are excited over the 
prospect of helping start the new Department.
    We know that you in the Congress are faced with a 
exceedingly difficult task. We at the Treasury Department 
pledge to do all we can to help, in accordance with our common 
commitment to combat these new terrorist threats. During the 
past few weeks, we have worked closely with several of the 
House Committees in drafting legislation to create a new 
Department of Homeland Security. We have shared our concerns 
and provided our comments. We will continue to provide our 
input to ensure that the final bill:
     leverages the strengths of the many component 
parts,
     provides clear and workable lines of authority, 
and
     creates the most efficient possible structure.
    The importance of our work demands nothing less.
    Thank you for your commitment to this fight, Mr. Chairman 
and members of this Select Committee, and thank you for the 
opportunity to address you.

    Chairman Armey. Mr. Attorney General, let us move on to 
you.

   STATEMENT OF THE HONORABLE JOHN ASHCROFT, ATTORNEY GENERAL

    Attorney General Ashcroft. Thank you, Chairman Armey, and 
thank you, my colleague, Secretary O'Neill, Congresswoman 
Pelosi, and members of the committee. I want to thank you for 
convening this hearing on President Bush's plan to make America 
safer through enhancement of our homeland security.
    On behalf of the Department of Justice, I welcome this 
opportunity to express our unqualified support for the 
President's vision of homeland security that is rooted in 
cooperation, nurtured by coordination, and focused on the 
prevention of terrorist attacks.
    A number of Department of Justice entities will be a part 
of this new Department, most notably the Immigration and 
Naturalization Service, but also the Office for Domestic 
Preparedness, the analysis and training functions of the FBI's 
National Infrastructure Protection Center, and the National 
Domestic Preparedness Office. The Department of Justice 
supports the prompt and effective implementation of these 
transfers, and they are critical to the Department of Homeland 
Security's success.
    I commend the Congress for its commitment to act on these 
measures prior to the first anniversary of the September 11 
attacks. Ten months ago to this day, our Nation came under 
attack by an enemy that continues to threaten the United 
States, our citizens, and the values for which we stand. Today 
the United States is at war with the terrorist network 
operating within our borders. Al Qaeda maintains a hidden but 
active presence in the United States, waiting to strike again. 
Terrorists posing as tourists, businessmen, or students seek 
also to penetrate our borders. Every year, the United States 
welcomes 35 million visitors to our country. More than 700,000 
of these visitors come from countries in which al Qaeda has 
been active. As a result, we have tightened controls at our 
borders and issued new regulations to strengthen enforcement of 
our immigration laws.
    In June, we announced the National Security Entry-Exit 
Registration System. That is the precursor to a comprehensive 
entry-exit system that Congress has mandated be in place by 
2005. This system reflects the fundamental fact on the war on 
terrorism. The fact is that information is the best friend and 
most valuable resource of law enforcement. The National 
Security Entry Exit Registration System will attract up to 
200,000 visitors in the first year, stopping suspected 
terrorists prior to entry, and verifying the activities of 
visitors and their whereabouts while they are in the country.
    For 10 months we have conducted a campaign to identify, 
disrupt, and dismantle the terrorist threat. Years ago, the 
Justice Department of Robert F. Kennedy said it would arrest a 
mobster for spitting on the sidewalk in the fight against 
organized crime. On the war on terror, it has been the policy 
of this Department of Justice to be similarly aggressive. We 
have conducted the largest criminal investigation in history; 
129 individuals have been charged, 86 have been found guilty, 
417 have been deported for violations. Hundreds more who are in 
violation of the law are in the process of being deported in 
connection with the investigation.
    For 10 months we have been successful in protecting the 
United States from another massive terrorist attack, using 
every appropriate legal weapon in our arsenal. But we are not 
under any illusions. There remain sleeper terrorists and their 
supporters in the United States who have not yet been 
identified in a way that will allow us to take preemptive 
action against them. And as we limit the access of foreign 
terrorists to our country, we recognize the terrorists' 
response will be to try and recruit U.S. Citizens and permanent 
residents to carry out their attacks, individuals like Abdualla 
al Muhajir, born Jose Padilla, who is now being detained by the 
Department of Defense as an enemy combatant. Al Muhajir, a U.S. 
Citizen with ties to the al Qaeda network, was apprehended in 
May of this year after we learned he was planning to explode a 
dirty bomb on U.S. soil.
    But as terrorists have learned to adapt to the changing 
tactics of law enforcement, so too have we learned to adapt to 
the changing needs of America's domestic security. And among 
the chief lessons we have learned in the past 10 months is that 
our ability to protect the homeland today has been undermined 
by restrictions of the decades of the past. In the late 
seventies, reforms were enacted in our judicial system 
reflecting a cultural myth, a myth that we could draw an 
artificial line at the border to differentiate between the 
threats that we face. In accordance with this myth, officials 
charged with detecting and deterring those seeking to harm 
Americans were divided into separate and isolated camps.
    Government created a culture of compartmentalization that 
artificially segregated intelligence gathering from law 
enforcement. This barred coordination of our Nation's security 
between these groups. Barriers to information sharing were 
erected between government agencies, and cooperation faltered. 
FBI agents were forced to blind themselves to information 
readily available to the general public, including those who 
seek to harm us. Information restrictions hindered our 
intelligence gathering capabilities, and terrorists gained a 
competitive technological advantage over law enforcement.
    September 11 made clear in the most painful of terms that 
there were costs associated with the myth that we could 
separate the threat internationally from the threat 
domestically. We know now that al Qaeda fragmented its own 
operation to prevent the United States from grasping the 
magnitude of its threat. The September 11 events were planned 
or trained for in Afghanistan, planned in Europe, financed 
through the Middle East, and executed in the United States. Al 
Qaeda planned carefully and deliberately to exploit the seams 
in our security, the seam between the international agencies 
and the domestic agencies.
    In the months and years preceding September 11, our 
weaknesses were among the terrorists' greatest strengths. It is 
now our obligation and our necessity to correct these 
deficiencies of the past. America's law enforcement and justice 
institutions, as well as the culture that supports them, must 
change. In the wake of September 11, America's security 
requires a new approach, one nurtured by cooperation, 
coordination, and collaboration, not compartmentalization; one 
focused on a single overarching goal, the prevention of 
terrorist attacks.
    The first crucial steps towards building this new culture 
of cooperation have already been taken. They are the steps that 
could be taken by regulation and some by legislation. The 
United States Congress is to be commended for acting swiftly to 
enact the USA PATRIOT Act which made significant strides toward 
both fostering information sharing and updating our badly 
outmoded information gathering tools. Intelligence agents now 
have greater flexibility to coordinate their antiterrorism 
efforts with our law enforcement agencies. And the PATRIOT Act 
made clear that surveillance authorities created in an era of 
rotary telephones, well, those authorities needed to be able to 
apply to cell phones and the Internet and the digital 
technology as well.
    In addition, the recently announced reorganization of the 
Federal Bureau of Investigation has refocused the FBI on 
prevention, taking a proactive approach. Instead of being bound 
by outmoded organizational charts, the FBI work force 
management and organizational culture will be flexible enough 
to launch new terrorism investigations to counter threats as 
they emerge. Five hundred agents will be shifted permanently to 
counterterrorism. Agents in the field have been given the new 
flexibility to use expanded investigative techniques. Special 
agents in charge of FBI field offices are empowered to make 
more decisions based on their specific knowledge of the 
terrorist threat.
    Finally, the creation of the Department of Homeland 
Security will be the institutionalization of the culture of 
cooperation and coordination that is essential to our Nation's 
security. Part of our reorganization is the enhancement of the 
FBI's analytical capacity and the coordination of its 
activities more closely with the CIA. The results of this 
enhanced analysis and cooperation will be shared fully with the 
Department of Homeland Security.
    For the first time, America will have under one roof the 
capacity for government to work together to identify and assess 
threats to our homeland, to match these threats to our 
vulnerabilities, and to ensure our safety and security. In 
accordance with the President's vision, creation of the 
Department of Homeland Security will begin a new era of 
cooperation and coordination in defending America's homeland.
    Mr. Chairman, history has called us to a new challenge to 
protect America's homeland, but history has also provided us 
with the lessons we would do well to heed. We must build a new 
culture of justice, in which necessary information is readily 
available to law enforcement. We must foster a new ethic of 
cooperation and coordination in government. We must make our 
institutions accountable not just to their antiterrorism 
mission but to the American people they serve. We must always 
do this while respecting our Constitution and the rights which 
America is uniquely aware of and which America uniquely 
protects.
    I thank you for your leadership and this opportunity to 
testify.

  PREPARED STATEMENT OF THE HONORABLE JOHN ASHCROFT, ATTORNEY GENERAL

    Good morning. Chairman Armey, Congresswoman Pelosi, members 
of the committee. Thank you for convening this hearing on 
President Bush's plan to make America safer through the 
enhancement of our homeland security. On behalf of the 
Department of Justice, I welcome this opportunity to express 
our unqualified support for the President's vision of homeland 
security rooted in cooperation, nurtured by coordination, and 
focused on the prevention of terrorist attacks.
    A number of Department of Justice entities will be a part 
of this new department, most notably the Immigration and 
Naturalization Service, but also the Office for Domestic 
Preparedness grant programs, the FBI's National Infrastructure 
Protection Center and the National Domestic Preparedness 
Office. The Department of Justice supports the prompt and 
effective implementation of these transfers, which are critical 
to the Department of Homeland Security's success. I commend 
Congress for its commitment to act on these measures prior to 
the first anniversary of the September 11 attacks.
    Ten months ago to this day, our nation came under attack by 
an enemy that continues to threaten the United States, our 
citizens, and the values for which we stand. Today, the United 
States is at war with a terrorist network operating within our 
borders. Al Qaeda maintains a hidden but active presence in the 
United States, waiting to strike again.
    Terrorists, posing as tourists, businessmen or students, 
seek also to penetrate our borders. Every year, the United 
States welcomes 35 million visitors to our country. More than 
700,000 of these visitors come from countries in which al Qaeda 
has been active.
    As a result, we have tightened controls at our borders, 
issuing new regulations to strengthen enforcement of to our 
immigration laws. In June, we announced the National Security 
Entry-Exit Registration System, the precursor to a 
comprehensive entry-exist system that Congress has mandated be 
in place by 2005. This system reflects a fundamental fact of 
the war on terrorism: that information is the best friend and 
most valuable resource of law enforcement. The National 
Security Entry-Exit Registration System will track up to 
200,000 visitors in its first year, stopping suspected 
terrorists prior to entry and verifying visitors' activities 
and whereabouts while in the country.
    For ten months, we have conducted a campaign to identify, 
disrupt and dismantle the terrorist threat. The Justice 
Department of Robert F. Kennedy, it was said, would arrest a 
mobster for spitting on the sidewalk if it would help in the 
fight against organized crime. In the war on terror, it has 
been the policy of this Department of Justice to be equally 
aggressive. We have conducted the largest criminal 
investigation in history. 129 individuals have been charged. 86 
have been found guilty. 417 individuals have been deported for 
violations of our laws. Hundreds more are in the process of 
being deported.
    For ten months, we have protected the United States from 
another massive terrorist attack using every appropriate legal 
weapon in our arsenal. But we are under no illusions. There 
remain sleeper terrorists and their supporters in the United 
States who have not yet been identified in a way that will 
allow us to take preemptive action against them. And as we 
limit the access of foreign terrorists to our country, we 
recognize that the terrorists' response will be to recruit 
United States citizens and permanent residents to carry out 
their attacks individuals like Abdullah al Muhajir, born Jose 
Padilla, who is now being detained by the Department of Defense 
as an enemy combatant. Al Muhajir, a U.S. citizen with ties to 
the al Qaeda network, was apprehended in May of this year after 
we learned that he was exploring a plan to explode a ``dirty 
bomb'' on U.S. soil.
    But as terrorists have learned to adapt to the changing 
tactics of law enforcement, so too have we learned to adapt to 
the changing needs of America's domestic security. And among 
the chief lessons we have learned in the past ten months is 
that our ability to protect the homeland today has been 
undermined by the restrictions of decades past.
    In the late 1970s, reforms were enacted in our judicial 
system reflecting a cultural myth that we could draw an 
artificial line at the border to differentiate between the 
threats we faced. In accordance with this myth, officials 
charged with detecting and deterring those seeking to harm 
Americans were divided into separate and isolated camps. 
Government created a culture of compartmentalization that 
artificially segregated intelligence gathering from law 
enforcement, barring coordination in the nation's security.
     Barriers to information sharing were erected 
between and within government agencies, and cooperation 
faltered.
     FBI agents were forced to blind themselves to 
information readily available to the general public, including 
those who seek to harm us.
     Information restrictions hindered our intelligence 
gathering capabilities and terrorists gained a competitive 
technological advantage over law enforcement.
    September 11 made clear in the most painful terms the costs 
of these myths and the culture they produced. We know now that 
al Qaeda fragmented its operations to prevent the United States 
from grasping the magnitude of the threat. The terrorists 
trained in Afghanistan, planned their operation in Europe, 
financed their activities from the Middle East, and executed 
their attacks in the United States. Al Qaeda planned carefully 
and deliberately to exploit the seams in our homeland security. 
In the months and years preceding September 11, our weaknesses 
were among the terrorists' greatest strengths.
    It is now our obligation and our necessity to correct the 
deficiencies of the past. America's law enforcement and justice 
institutions as well as the culture that supports them must 
change. In the wake of September 11th, America's security 
requires a new approach, one nurtured by cooperation, built on 
coordination, and focused on a single, overarching goal: the 
prevention of terrorist attacks.
    The first crucial steps toward building this new culture of 
cooperation and prevention have already been taken.
    Congress's passage of the USA-PATRIOT Act made significant 
strides toward both fostering information sharing and updating 
our badly outmoded information-gathering tools. Intelligence 
agents now have greater flexibility to coordinate their anti-
terrorism efforts with our law enforcement agencies. And the 
PATRIOT Act made clear that surveillance authorities created in 
an era of rotary phones apply to cell phones and the internet 
as well.
    In addition, the recently announced reorganization of the 
Federal Bureau of Investigation has refocused the FBI on 
prevention, taking a proactive approach. Instead of being bound 
by outmoded organizational charts, the FBI workforce, 
management and operational culture will be flexible enough to 
launch new terrorism investigations to counter threats as they 
emerge. 500 agents will be shifted permanently to counter-
terrorism. Agents in the field have been given new flexibility 
to use all expanded investigative techniques. Special Agents in 
Charge of FBI field offices are empowered to make more 
decisions based on their specific knowledge of the terrorist 
threat.
    Finally, the creation of the Department of Homeland 
Security will be the culmination of the process of restoring 
cooperation and coordination to our nation's security. Part of 
our reorganization is the enhancement of the FBI's analytical 
capability and the coordination of its activities more closely 
with the Central Intelligence Agency. The results of this 
enhanced analysis and cooperation will be shared fully with the 
Department of Homeland Security. For the first time, America 
will have under one roof the capacity for government to work 
together to identify and assess threats to our homeland, match 
these threats to our vulnerabilities, and act to insure our 
safety and security. In accordance with the President's vision, 
the creation of the Department of Homeland Security begin a new 
era of cooperation and coordination in the nation's homeland 
security.
    Mr. Chairman, history has called us to a new challenge: to 
protect America's homeland. But history has also provided us 
with lessons we would do well to heed. We must build a new 
culture of justice in which necessary information is readily 
available to law enforcement. We must foster a new ethic of 
cooperation and coordination in government. We must make our 
institutions accountable, not just to their new anti-terrorism 
mission, but to the American people they serve.
    Thank you for your leadership and thank you for this 
opportunity to testify.

    Chairman Armey. Thank you and let me thank all our 
panelists.
    We are now going to proceed to questions under the 5-minute 
rule, and I might advise the committee that I will try to stick 
as strictly as possible to that. Also, I want to exercise the 
prerogative of the chairman and reserve the right for me to ask 
my questions at the end of the process so that we can involve 
our other committee members.
    So at this time, with the indulgence of the committee, I 
would defer to my friend and colleague, Mr. DeLay, to open 
questions on our side of the aisle.
    Mr. DeLay. Thank you, Mr. Chairman, and welcome to the 
House of Representatives. What a distinguished panel. Since the 
Chairman is going to adhere to the 5-minute rule, I want to 
jump into questions. And I know your time is short, Mr. 
Secretary O'Neill, so I start with you. Can you talk about the 
impact that terrorism concerns have had on our financial 
markets and what might be done to lessen that impact?
    Secretary O'Neill. Yes, indeed. I think what we have seen 
in our financial markets is in effect an increase in the risk 
premium that investors attach to investments, so that the 
uncertainty that is created by the reality of the attacks of 
September 11 and the heightened probability that future acts 
can occur has in effect been discounted into the marketplace, 
so that people are requiring higher rates of return than they 
did before September 11. I think as we go through time, most 
hopefully without any new events, the risk premium will shrink; 
but it won't ever go away completely, I think, because it is a 
new reality of our world that we have to anticipate and know 
that these terrible kinds of things could be repeated.
    But there are some things that we can do--and the House of 
Representatives has already acted on one of those things--such 
as passing so-called terrorist risk insurance. By taking the 
action that you did, hopefully soon to be followed by a 
complete action of the Senate and by conference committee, I 
think we can take the exorbitant costs that are associated with 
trying to buy terrorist risk insurance in the private sector 
and appropriately move it above the consideration and concern 
of the private marketplace, so that if there is another 
terrorist event we will have to pay the costs, but it won't be 
baked into every single transaction that takes place in the 
private sector.
    So I think we are beginning to--we haven't quite completed 
that activity, but, again, I think only time will heal this. I 
don't think time will ever completely heal the sense that we 
have and the risk premium that will now be inevitably baked 
into our future market considerations.
    Mr. DeLay. Thank you.
    Mr. Attorney General, as I travel around the country the 
question that is asked most often about the Department of 
Homeland Security is if we are creating this Department in 
order to protect the homeland, why is not the FBI and the CIA 
within the Department of Homeland Security? Maybe you could 
answer that question.
    Attorney General Ashcroft. Well, one of the important 
things about the FBI is to understand the breadth of its 
responsibility, and its responsibility was substantial before 
we had the elevated awareness that has been part of the 
national understanding since September 11. It is involved in 
general law enforcement investigation and in the provision of 
the information and evidence necessary for prosecutions. It is 
important to note that frequently those involved in terrorist 
activities, though, have other connections to criminal 
activities. So an integrated approach is appropriate so that 
the FBI can both develop information regarding terrorism, but 
also provide a basis for prosecuting individuals, including 
suspected terrorists, on things like document fraud, credit 
card fraud, and the other kinds of criminal activities in which 
we found that many of these individuals who are associated with 
the population of terrorists have been engaged. Those 
activities can go forward.
    It is with that in mind that we think that a coordinated, 
integrated effort in the FBI remains a part of the Justice 
community. After all, terrorism is criminal activity, and 
frequently those associated with terrorism are involved in 
other criminal activities as well.
    Mr. DeLay. Mr. Secretary Powell, could you talk about the 
threat from State-sponsored terrorism and maybe identify our 
Nation's greatest concern today?
    Secretary Powell. That is one of our greatest concerns, Mr. 
DeLay. There are those States that have not come to the 
realization that the way to provide for your people in the 21st 
century is through democratic practices, get rid of 
totalitarian forms of government. There are those states that 
continue to believe that they can get an advantage by 
developing weapons of mass destruction, weapons of mass 
destruction that they might consider using. And some of these 
states have used these weapons against their own people or 
perhaps these weapons of mass destruction can be used by non-
state terrorists.
    And that is why the President has taken a very strong 
position on this. He has identified what we call the ``axis of 
evil,'' several specific states, North Korea, Iran, and Iraq, 
that clearly fit this category, and why we are remaining 
especially vigilant and looking constantly at what our policies 
should be with respect to such states. And we should be--we 
should be concerned, more than concerned. We should be very, 
very concerned about these states, and we conveyed to our 
friends and allies around the world why they should be 
concerned.
    When you look at a state such as Iraq, the first target for 
these types of weapons is not the United States, but more 
likely their own neighbors. And they have demonstrated 
previously they will use it on their neighbors and they will 
use it on their own people. So we should have no illusions 
about the nature of these states and why they are developing 
these weapons.
    There are other states that are not so identified on the 
``axis of evil'' which are also concerns to us, for example 
Libya, Syria. And we are constantly looking for this kind of 
activity and taking all of the action appropriate to make sure 
that we can counter, deter, and, if necessary, find ways to 
defeat these kinds of threats.
    Chairman Armey. The gentleman's time has expired.
    Secretary O'Neill, I promised you and made a commitment 
that we would be able to release you to begin your travel by 11 
o'clock. Your time has come for this departure, and I want to 
thank you again for the effort that you have made to come to 
this hearing, and excuse you at this time.
    Secretary O'Neill. Mr. Chairman, I was very pleased to 
amend my plans to have left last night at 9:30 in order to be 
here. If I may, and if the gentlelady doesn't mind, may I say 
just a couple of things that may be a useful contribution to 
your thought process before I leave?
    Chairman Armey. That would be great.
    Ms. Pelosi. We welcome it.
    Secretary O'Neill. I would make this plea. As you all do 
your important work in considering the proposal from the 
President. Beginning with this idea, I think it is critically 
important that as this new Department is formed, that while the 
principles be clearly established of what its mission will be 
and what the expectations will be, that the new Secretary--that 
you give the new Secretary a substantial grant of authority for 
flexibility.
    And the reason I make this plea to you is this: I think 
simply collecting the organizations that have been named under 
one new title is not what we need to do. We need to deploy the 
resources that are going to be made available in a way that is 
consistent with the mission that needs to be performed, and I 
would submit to you it is not simply a continuation of the 
missions as they have been performed in the past.
    And then I would offer you from my experience in assembling 
an organization, a growing organization from a little over 
40,000 to 140,000 people, it is really true that it doesn't 
need to be more expensive to have a bigger organization than a 
smaller organization. And even though it is not a direct 
analogy, I would suggest this thought process to you. As I 
bought operations all over the world in Hungary, Italy, Spain, 
China, and all over Latin America, I have to tell you, I never 
spent any money except the amount of money required to hire 
sign painters to put our name over the door, in order to 
integrate them into what is by all accounts the best 
organization of its kind in the world. And in fact, in the 
process of assembling those organizations, it was possible to 
achieve very substantial cost improvements not at the expense 
of the human beings; because we were mindful of the need to 
recognize the contributions that people had made in their 
previous incarnation and previous organizational structure.
    But I do not believe that it takes substantial amounts of 
money, because I think, for example, the notion of co-locating 
160,000 people is, frankly, crazy, because most of the people, 
in fact--particularly those that are associated with the 
Customs Service and the Secret Service that I know about--they 
are appropriately deployed today in a geographic sense for the 
most part. A change into a new organization will not require 
huge redeployments.
    So I would urge you to be skeptical of the idea that this 
new formulation requires huge amounts of resources. Rather, it 
requires for the new Secretary substantial flexibility to 
organize in order to work at the critical mission.
    And then I would offer you one example of this that we 
already moved forward with in the Customs Service. Customs 
Service is a great organization. It began in 1789. The 
traditions are strong. The people are so dedicated and loyal to 
the mission that they have, and I know that they will carry 
that with them to the new Department of Homeland Security. But 
I want to tell you this little story. For more than 200 years, 
these people have been doing their work. And I think everyone 
felt they did it with distinction to the day of September 10. 
On September 11, everyone in the society recognized that we had 
a new set of forces that we had to deal with. And as the 
Customs Service looked at the proposition of dealing with 
traffic coming across the borders, they had a new thought 
process that was really important, and I was fortunate enough 
to go to Detroit a few months ago to witness the introduction 
of a new process for how Customs deals with goods coming across 
the Ambassador Bridge in Detroit, which is a bridge that 
transports millions of trucks every year, largely for the 
automobile industry.
    We thought we were doing a good job in the Customs Service 
before September 11th. But what we thought is we have got to do 
a better job now of making sure that weapons of mass 
destruction, in pieces or parts or in totality, don't come 
across our borders. So we have to do a better job of 
inspection. But the thought process changed after September 
11th to say, let us think about this in a more holistic way and 
let us not think about it as a government thing. Let us think 
about it as a process of goods coming across our border. And so 
the Customs Service people worked with the automobile industry 
in Canada, and agreed that the manufacturer of the goods which, 
in effect, do security work at the plant site where the goods 
are loaded and then when the goods were completely loaded and 
inspected, they would be, in effect, electronically bonded so 
that no one could open the container without setting off an 
alarm.
    And as a consequence of this rethinking of the process, 
what used to be an average 54-minute waiting time as trucks 
came across the Ambassador Bridge now happens like this: The 
goods are inspected, they are electronically bonded at the 
plant, the driver drives them to the border. When he gets close 
to the border there is an electronic transmission of all of the 
bill of lading information, where it came from, where it is 
going, and when the driver approaches the Customs station, they 
hand their driver's license to the official, who looks at the 
driver's license, makes sure it is the person that it says, and 
the time now has gone from 54 minutes for this important 
traffic to come across the border to 17 seconds.
    What I said when I had the pleasure to represent my great 
people at the Ambassador Bridge the day we opened this service 
was, ``In your face, terrorists,'' because we have figured out 
a way with existing technology to improve the economics of 
commerce across our border while significantly improving the 
security we provide. And for me, that is the test of this new 
department, not to have added cost because of terrorism but to 
demonstrate to the world we can use our technology and our 
brain power, and we will both be safer and more economically 
powerful than we have ever been.
    Mr. Chairman, with that--.
    Ms. Pelosi. Mr. Chairman, if I may, since the distinguished 
Secretary has raised a couple of questions in his comments I 
think it would be only fair if we were able to have a question 
from our side of the aisle to the Secretary if you have just 
another moment.
    Chairman Armey. May I ask the Secretary if I may prevail on 
you for one question from the Democrat side of the aisle. I 
yield to you, and I take it you yield to Mr. Frost.
    Mr. Frost. Mr. Secretary, you talked of course about the 
cost of this new department. The Congressional Budget Office 
has just released a study indicating that in their judgment the 
cost of the new department would include 3 billion in 
additional cost, in additional amounts over the next--between 
now and 2007. My question is do you agree with the study just 
released by the Congressional Budget Office and, if so, where 
are we going to find that additional $3 billion in light of 
your comments?
    Secretary O'Neill. I really do wish I could stay longer but 
I do want to answer your question, and let me say I have not 
seen their study but I would say as a matter of experience I 
think it is--it is unbelievable to me that anyone thinks this 
should cost $3 billion over the next 4 or 5 years. But in order 
for it not to cost $3 billion you can't simply take as a given 
everything as it is and then have a conception that you are 
going to freeze everything as is and then you are going to 
assemble people into new space with new titles. You know, for 
the people who are in the Customs Service now who are in the 
Treasury building, there is no reason I can't be their 
landlord. I mean, why do they have to move anywhere? They don't 
have to move anywhere. But I tell you a mindset, and this is 
really important. This is not just about homeland security, 
this is about getting value for public service.
    When I came to the Treasury Department I said to our 
people, how long does it take us to close the books at the 
Treasury Department? And to put this in context you should know 
Alcoa closes its books in 2\1/2\ days. They close their books 
faster than anybody else in the world. And they don't do it 
because they have more people. In fact, they have fewer people. 
It is because they have a brilliantly designed collection 
process that gets data from 350 locations that never has to be 
changed or amended. All the other people spend lots of time 
doing what I call repair work because they don't understand how 
essential it is to get things right so that data collection 
systems are friendly to the people who are supposed to do the 
work. And there is a high value placed on getting it right the 
first time.
    So in the context of 2\1/2\ or 3 days to do the books for 
Alcoa at 350 locations around the world, I came to Treasury and 
said how long does it take to close the books? And they said 5 
months. And I said why bother? And then I said, I know that it 
doesn't have to take 5 months and it doesn't take more people 
to do it right, it takes a new concept of how to do it fast. 
And I want the Treasury Department to demonstrate that public 
service can be as good as the private service. The last 3 
months the Treasury Department people have closed our books in 
3 days.
    Now, if we don't bring that mentality and let the Secretary 
of Homeland Security have the ability to challenge the 
government to work at benchmark level processes, it will 
probably cost more than the $3 billion the Congressional Budget 
Office is talking about. If you let the Secretary have the 
flexibility to work to develop a benchmark organization, public 
service or private service, it will not cost more money. And 
the value created by these people will be staggeringly greater 
than what we have been able to do with the current collection.
    Mr. Frost. I appreciate the Secretary for his response. 
This is something that Congress will pay a great deal of 
attention to.
    Secretary O'Neill. Thank you, Mr. Chairman. Thank you, 
members of the committee.
    Mr. Frost. Mr. Chairman, I do have another question for 
another witness if I may.
    Chairman Armey. You may.
    Mr. Frost. And I want to a direct this to Secretary 
Wolfowitz. The President on July 4th announced a new program by 
Executive Order that I am sure you are very familiar with, to 
provide citizenship for people who are in this country legally 
and who join the military services. My question to you is 
rather specific about this, and I have an interest in this 
because I have introduced legislation on this subject. I have 
introduced it several months ago, which has bipartisan support. 
It is unclear to me under the program that the President 
announced how we would guard against someone who is in this 
country legally but who may be a terrorist and who decides that 
he or she wants to join the military to immediately become a 
citizen.
    Now, my question to you is have you given any thought to 
how this program would be administered? Would the person who 
joins the military be required to complete basic training and 
advanced individual training which could stretch over a period 
of a year before he or she actually begins his duty assignment 
in the military? Do you have any concern that some people who 
may want to do harm to the country would try and use this 
program to immediately gain citizenship?
    Dr. Wolfowitz. Congressman Frost, let me get you a detailed 
answer for the record. We are still developing procedures here. 
You raise very important questions.
    It is also the case as I think you are acknowledging in the 
substance of the questions that we have a great resource here 
in our immigrant communities. It is a resource of enormous 
value in fighting terrorists. We have people who are loyal 
Americans or who would like to be loyal Americans who know the 
languages that we need to know to fight these people, who 
understand the cultures that we need to fight them. So at the 
end of the day there is some balancing of risks here, but it is 
not all risk on one side. If we don't take advantage of that 
national resource we are running a risk as well.
    I will try to get back to you as soon as possible with how 
we propose procedures that will deal with that problem. It is a 
real one and you are right to raise it.
    [The information follows:]

    With respect to gaining citizenship immediately, the 
Department of Defense does not become involved in the 
citizenship process, does not sponsor individuals for 
citizenship, and does not support applications for citizenship 
or entry into the United States. That process remains and 
individual responsibility, under the purview of the U.S. 
Immigration and Naturalization Service (INS).
    The Executive Order (EO) announced by President Bush on 
July 4, 2002, concerned military service and eligibility of 
active duty members to immediately apply for U.S. citizenship. 
Prior to that announcement, members of the military were 
eligible to apply for U.S. citizenship after 3 years. Legally 
admitted, non-citizen civilians still must wait 5 years before 
they are eligible to apply for citizenship. The INS establishes 
these waiting periods.
    The EO does not alter military enlistment standards or 
training requirements. Non-citizen applicants for military 
service must still be lawfully admitted to the United States 
for permanent residence. In addition, an INS files check is 
conducted for resident aliens. All recruits, regardless of 
citizenship status, must successfully complete basic and 
advance individual training before being sent to their first 
duty assignment. This period of time varies, depending on the 
length of training, but could take a year or so.
    Just as military service does not guarantee U.S. 
citizenship, U.S. citizenship does not automatically earn a 
security clearance. The Deputy Assistant Secretary of Defense 
for Security and Information Operations is responsible for 
processes determining security clearance eligibility among 
military service members.
    While the Executive Order permits faster citizenship 
eligibility for military members, it did not lower or remove 
standards of eligibility for enlistment or security clearance. 
Therefore, we do not anticipate an increased vulnerability to 
harm.

    Mr. Frost. I appreciate it because it is a laudable 
objective and, as I said, in fact I and others on both sides of 
the aisle have introduced legislation to facilitate this and 
make this happen.
    Chairman Armey. Thank you. The gentleman's time has 
expired. The Chair recognizes the gentleman from Oklahoma, Mr. 
Watts, who has been involved with these matters of concern for 
some time.
    Mr. Watts. Thank you, Mr. Chairman, and I want to thank our 
panel for being with us this morning. And Secretary Powell, I 
want to say to you how proud I have been as an American citizen 
to see you perform on the international stage with great 
patience and great composure, as you have been dealing with 
some very difficult circumstances and some very challenging 
times, as has the Department of Defense and the Attorney 
General's Office, the Treasury, the Secretary of the Treasury, 
all of our government. All of our citizens as well have been 
dealt some challenging blows, and it is always good to know you 
have got a steady hand at the wheel over at the State 
Department.
    I would like for you and all of our witnesses this morning 
to respond to the question I am about to ask. And as the 
chairman said, I have been working on this issue now for some 
time, probably over the last 3, 4 years, because of what I saw 
in Oklahoma City in April of 1995, and there have been numerous 
studies of blue ribbon panels that have looked into issues of 
terrorism and the future threats to our security. Over 3 years 
ago one of those bipartisan panels, the United States 
Commission on National Security in the 21st Century, known as 
the Hart-Rudman Commission, accurately predicted that, 
``Attacks on American citizens on American soil possibly 
causing heavy casualties are likely over the next quarter 
century because both the technological means for such attacks 
and the array of actors who might use such means are 
proliferating.''
    Can each of you speak to the changes in threat that you 
have seen in your respective department and the steps that you 
are taking to address these threats or those changes?
    Secretary Powell. Well, I think the members of that 
commission were absolutely right and we have seen their 
predictions come to fruition, regretfully. And, I think, in the 
Department of State we recognize that we have to do much more 
to identify these threats long before they get anywhere near 
the United States. We have to identify the bad actors who are 
out there, we have to do a better job of identifying those 
state and non-state actors who would use this kind of 
indiscriminate terror and violence to hurt our people.
    And that is why, I think, in all of our missions around the 
world, all of our diplomatic missions around the world, we are 
working more closely with representatives who are there from 
the Department of Justice, from other agencies of government, 
residents in our missions, to essentially put out this front 
line of defense.
    And as I have increasingly called it within the State 
Department, front line of offense, as Secretary Rumsfeld said, 
it begins far away from our shores. Do a better job of 
identifying those who would try to hurt us, to go after them 
early, to take it up with the governments concerned. When we 
see terrorist organizations out there who mean us great harm, 
start now to discuss it with those governments.
    And I think in another session, if it was a closed session, 
I think Paul Wolfowitz and I could describe some of the actions 
we have ongoing to go after terrorists in other nations who we 
know are resident. Now, a few years ago, we would have just 
sort of known they were there and not done much about it. But 
now we are aggressively going to the leaders of those countries 
and saying ``We don't want to wait until they surface in a way 
that will hurt us or hurt you and we want to work with you now 
so that you can go after them. We will give you the 
intelligence, we will give you the information we have, we will 
give you the resources. We will help train your people.''
    An example of what Secretary Wolfowitz can talk about is 
what we have been doing in the Philippines. So we are being far 
more aggressive using our diplomatic, political, intelligence 
and law enforcement means to identify these threats and to work 
with the countries where these threats reside and, frankly, put 
a great deal of pressure on them to do something about them 
now, before they become real and present dangers to the United 
States a few months or year or so later.
    Dr. Wolfowitz. Congressman Watts, I would say even before 
September 11th we were addressing terrorism as a major concern 
of the Department of Defense in two respects, I suppose one 
could say defensively and offensively, particularly with the 
attack on the Cole. But going back to Khobar and even to 
Beirut, we have put more and more resources into force 
protection. We had become aware long before September 11th that 
our force is a potential target of terrorists.
    But also last summer, when we did the Quadrennial Defense 
Review, we took heed of some of the advice that you just gave 
us from the Hart-Rudman Commission and other sources and 
intelligence sources and identified homeland security as the 
top priority for DOD transformation. That development was 
accelerated enormously, as you might imagine, by the events of 
September 11th. And among major things that I would say we have 
done first of all is creating the Northern Command, which we 
will be coming with a detailed planning on October 1st.
    General Meyers, the Chairman of Joint Chiefs, has said this 
is the most significant change in the command structure in the 
Defense Department during his career as an officer. It will 
greatly improve our capability to do those things that are 
unique military roles in the defense of the country. But also 
we increasingly recognize that terrorists are both a potential 
target of the U.S. military and that we are a potential target 
of terrorists.
    Let me start with that second piece. When we are at war, 
and we are at war with them now, one of the most important 
things on their agenda is going to be not only how to kill 
American soldiers in barracks or in bases, but also how to 
attack the key capabilities. Especially things like cyber 
terrorism become a major concern for us at the Defense 
Department but, secondly, from the offensive point of view, 
that we need to have a very broad and flexible range of 
capabilities. This is a shift we began last summer, also.
    The terrorists do not present the kind of definable 
predictable threat that the old Soviet Union did. They hide, 
they come from unpredictable directions. When you flush them 
out of Afghanistan, they try to work from somewhere else. It 
means we have to have a military that is correspondingly 
flexible and agile, and that is what we are working toward.
    But a final point that I would make, which I sense most 
dramatically, we have always depended on intelligence. 
Intelligence and the military have always been close partners. 
But in the fight against terrorism it is impossible to 
exaggerate the importance of that partnership. We can't do our 
job without extraordinarily good intelligence, and they also 
can't do their job without the kinds of capabilities we 
provide. We have seen synergisms of that kind coming out of 
Afghanistan. It was our military operation that drove Abu 
Zubaydah out of Afghanistan, but that by itself would not have 
accomplished what it did had it not been for the work of the 
CIA and the Justice Department and the cooperation with foreign 
governments and State Department to capture that man. He in 
turn led us to Mr. Padilla, whom the Attorney General referred 
to earlier. There are many examples of this kind, and it is why 
we have to integrate these different elements of national power 
to be successful.
    Chairman Armey. I am going to have to call time so we can 
get on to Mr. Menendez from New Jersey.
    Mr. Menendez. Thank you, Mr. Chairman. I want to thank our 
distinguished panelists for their testimony. Winston Churchill 
once said you can always depend upon America to do the right 
thing after they have exhausted all the other alternatives. And 
in the spirit of trying to disprove him, make him wrong in this 
context, we need to get this done right the first time. And in 
that spirit let me ask the following questions.
    Mr. Attorney General, if could you answer this particular 
question with just a simple yes or no. Do we need to reform the 
INS?
    Attorney General Ashcroft. Yes.
    Mr. Menendez. And I agree with you. And in that context 
then an unreformed INS being transferred into theDepartment of 
Homeland Security is as poorly functioning as it might be under 
the existing circumstances at the attorney general's Office?
    Attorney General Ashcroft. Well, the need to reform the INS 
is something that is being addressed too. The administration 
did present a program for reforming the INS. It is under way 
administratively. And as a matter of fact the administration 
urged the passage of a reform measure by the House of 
Representatives in anticipation of the Senate working to do the 
same. So we believe that the reform and improvement of INS is 
an ongoing process that should not be discontinued.
    Mr. Menendez. So we ultimately need to reform the INS to 
make it efficient whether it continues to be in the Attorney 
General's Office or the Department of Homeland Security?
    Attorney General Ashcroft. Absolutely.
    Mr. Menendez. In that context let me ask you, how do we 
ensure that the rights of American citizens to claim their 
mothers and fathers, brothers and sisters, sons and daughters 
is preserved in a Department of Homeland Security whose focus 
is security and not necessarily the service side of what is 
being proposed to be transferred in its entirety, which is the 
entire INS to Homeland Security?
    Attorney General Ashcroft. Well, obviously the policy as 
developed in the Congress of the United States and portrayed in 
the laws of the United States will be carried forward in the 
new department like it would in any other department, and these 
are important considerations. And I believe that the Department 
of Homeland Security will have the capacity to provide that the 
intent of the Congress and the policy expressed in the law will 
be carried forward.
    Mr. Menendez. Couldn't you achieve, still providing the 
security we need, keeping INS at the Attorney General's Office 
or could you not do that?
    Attorney General Ashcroft. I believe that it is best to 
integrate these agencies in the Department of Homeland Security 
so that we have the kind of focused effort that relates to our 
borders, that relates to preventing terrorism, that assesses 
the threat, that integrates the assessed threat with the 
assessed vulnerabilities and the hardening of various assets 
around the country in order to prevent an attack from being 
successful and to sustain the protection, the safety of the 
people. And I believe the optimal approach is the one 
recommended by the administration and proposed in the 
President's plan.
    Mr. Menendez. So you would not support the determination of 
the Judiciary Committee yesterday that divided the INS, sent 
the enforcement department to the new Department of Homeland 
Security and kept the service aspect of it in your department.
    Attorney General Ashcroft. The President has clearly stated 
that he believes that we should have separate capacities within 
the INS, one for enforcement and one for service, so that we 
have a culture that is service oriented and a culture that is 
enforcement oriented. But I believe that it is very important 
that they be connected because there are frequently overlaps, 
and to have them in different departments might make very 
difficult the kind of coordination that is necessary.
    I will give you an example. In the service area we want to 
serve people well, but when someone comes and presents false 
documents in the service area or makes a fraudulent claim for 
citizenship or indicates that they have a legitimate document 
which was falsely obtained, perhaps like something that was 
illegally provided, it is important to be able to coordinate 
from that service responsibility the need to enforce the law.
    Mr. Menendez. But that coordination needs to go on whether 
it is in one department or another?
    Attorney General Ashcroft. That is exactly right. It does 
need to go on.
    Mr. Menendez. The real issue is coordination and 
information sharing.
    Attorney General Ashcroft. Absolutely. It is an issue, and 
I believe that is best undertaken if you don't have these two 
functions in different cabinet agencies, but that they remain 
in a single cabinet agency although they have this separate 
capacity to operate, so that you have a culture of service in 
one and a culture of enforcement in the other.
    Mr. Menendez. Thank you.
    Chairman Armey. The gentleman's time has expired.
    Ms. Pryce from Ohio.
    Ms. Pryce. Thank you, Mr. Chairman and gentlemen, for 
joining us today. This is one of the greatest endeavors that 
our country has undertaken. It is a very difficult one and your 
cooperation in being here to help us get started is extremely 
important, and I am very grateful that you are here today.
    Terrorists represent, in my mind anyway, a very mobile and 
agile enemy. It is clear that there has to be international 
cooperation and coordination to successfully track them and 
defeat them. What obstacles are we encountering with our 
efforts with our allies and others, to what extent must we 
depend on cooperation from others, and have you sensed any 
changes in the attitudes of other nations and states across the 
globe as we address terrorism from our country's perspective 
and from their own?
    And I guess any of you who care to--Secretary Powell, it is 
probably--.
    Secretary Powell. I would be delighted to start, Ms. Price. 
Every ally that we have has come to the realization that 
terrorism does not respect boundaries, cultures, or any of the 
other normal elements of statehood that keep us separate. So we 
have found a high level of cooperation with our friends and 
allies. We passed U.N. Resolution 1373 that dealt with 
financial transactions of terrorism. And more and more we find 
nations willing to cooperate with us to share information.
    It is going to take quite a bit of time to get it exactly 
where we want it because of individual laws and other problems 
that have to be resolved within individual countries. But there 
is a spirit of cooperation. We are not the only ones who have 
seen a terrorist incident in the last year. The Russians, so 
many other nations, have been exposed to this kind of horrible 
activity that I think there is a new spirit of cooperation.
    We are very pleased at the level of cooperation we see from 
our allies around the world, some of course more so than 
others. And where we still have obstacles to overcome we are 
working with those nations. But generally, I sense and see and 
work within a new spirit of collaboration and cooperation with 
respect to diplomatic exchanges, political exchanges, law 
enforcement exchanges, and intelligence exchanges, and I am 
pleased with that level of cooperation, but we are pressing for 
even more.
    Ms. Pryce. Thank you. And Attorney General Ashcroft, 
perhaps you could expound upon my question in that we have seen 
just lately in the incident of Jose Padilla our own citizens 
becoming enemy combatants. And do you still feel that our 
government is limited in dealing with this type of enemy combat 
and/or were the changes made through the PATRIOT Act sufficient 
to deal with it, meet these needs? Do you feel equipped enough 
at this point?
    Attorney General Ashcroft. Obviously there are differing 
considerations when we deal with U.S. citizens and the way we 
deal with U.S. citizens here. There are different frames of 
protections afforded by our Constitution that do not extend to 
the way our government would deal with persons on a 
battlefield. But let me just indicate that the general 
constitutional provisions that relate to court proceedings and 
the judicial system don't necessarily apply to battlefield 
circumstances and the exercise of the President's war powers. 
And I believe that the President has sufficient power under the 
Constitution to act against enemy combatants to curtail their 
activities against the United States.
    The terrorist community has, I believe, stated its 
intention to try and recruit individuals in the United States, 
and we know that it has in some measure been successful in 
doing so, and we will work very hard to make sure that we take 
every step necessary to disrupt activities that are designed to 
destabilize the United States or disrupt our safety even when 
those activities would be taken by someone who is legally 
resident here or a United States citizen.
    Ms. Pryce. Thank you. One final question. It is not the 
mission of the select committee nor is it our intention to 
reorganize the structure of this Congress, we are here in our 
mission to reorganize the structure of the agencies that deal 
with terrorism. And so the authorizing and the appropriating 
and the oversight responsibilities may not coincide with what 
we will do here.
    Do you have any advice for us as we go through this and 
make these changes, and that may be a question for another day, 
but--I know my time has expired but if anybody has something 
right off the top of their head.
    Secretary Powell. No thoughts off the top of my head, but 
the one simple observation that follows something Secretary 
O'Neill said earlier, we have to make sure that the new 
Secretary of Homeland Security is given sufficient flexibility, 
both in terms of law and in terms of the degree of oversight 
that he is exposed to that does not constrain him. He is going 
to have a very difficult job, or she, is going to have a very 
difficult job as they try to put these pieces together. Not 
just making a wedding cake out of it, but making a new entity 
out of it, with a new culture. And I hope the Congress will be 
sensitive to that need for flexibility as you organize yourself 
to oversee this new department.
    Ms. Pryce. Thank you very much.
    Chairman Armey. I thank the gentlelady. The gentlelady, Ms. 
DeLauro.
    Ms. DeLauro. Thank you, Mr. Chairman. Just to follow up my 
colleague Ms. Pryce, will we be able to submit questions that 
we don't get a chance to answer today?
    Chairman Armey. Maybe this would be an appropriate time for 
me to take care of this item of business. We won't take this 
out of your time.
    Ms. DeLauro. Thank you, Mr. Chairman.
    Chairman Armey. Without objection, the hearing record will 
remain open for 30 days to allow members to submit questions to 
our witnesses and receive their responses.
    Ms. DeLauro. Thank you very much. Let me just welcome this 
distinguished panel. I thank you for your time and for your 
thoughtfulness in the process. I want to address the question 
and ask that any or all the Secretaries to respond. So it is a 
general question.
    We currently have 153 agencies, departments, offices that 
are involved with homeland security. After the creation of this 
new department that number is going to increase to 160. One 
critical issue is how is information going to be shared not 
only within the new Homeland Security Department, but among the 
various agencies and departments? No matter what kind of 
organization is developed, failure to address this issue is 
going to result in a failure in the war on terrorism.
    So in that regard, in that context let me just pose three 
questions. There could be more but let me first just deal with 
these three. How do you recommend that the new department 
ensure that its needs and priorities for intelligence 
collection are reflected by the various intelligence providers? 
Secretary Wolfowitz talked about the issue of intelligence 
being key to whatever we do in the future.
    Secondly, while reorganization is a start, that does not 
guarantee that we have the capability to combat terrorism. 
Example, 10 months after the anthrax attacks which hit the 
Wallingford Post Office in my district, forensic analysis still 
has not revealed the source either of powder, mailer, no agency 
has a database to solve this crime. How does the Federal 
Government intend to address the issue of building a shared 
database? And my understanding is, and correct me if I am 
wrong, that there is nothing to prevent the sharing of those 
databases today.
    For instance, Treasury could combine Customs databases with 
a Federal law enforcement with the FBI database. That is okay. 
We could do that now if we wanted to, and we have not done 
that, I guess.
    The President's proposal exempts the new department from 
complying fully with the Freedom of Information Act. If non-
Federal entities like private corporations provide information 
voluntarily to the new department, that information is not 
subject to FOIA. Are there existing measures to prevent 
companies from hiding information they do not want public in 
such submissions and how do you plan to prevent this kind of 
effort from happening?
    Let me just throw those questions out.
    Secretary Powell. Let me take the first swing at it, Ms. 
DeLauro. I think your questions are of such a nature that they 
should be presented to the Office of Homeland Security, the 
director of that office, as he brings forward the 
reorganization proposal. But let me say since September 11th, 
we have been doing a better job of sharing these databases. I 
can say to you something today that I probably would not have 
been able to say last summer, is that when somebody, for 
example, applies for a visa now at one of our consular offices, 
the database that it is bounced against is two, three times 
larger than the database it would have been bounced against 
last year. Now that should have been fixed last year and it 
wasn't, but it is fixed now.
    The information that our consular officer has in that 
application that comes to him or to her and the results of that 
interview and the photo of the visa applicant is now available 
to every one of the INS inspectors who are waiting at Dulles 
Airport to see this person come through.
    So, I think a lot has happened. I think it can happen in a 
more effective way in the future and we can do an even better 
job as these different pieces are brought under the Secretary 
of Homeland Security. So, we haven't just been waiting for the 
new department to come along. I think there has been a great 
deal of progress in the last 10 months. But I think progress 
will be even greater in the future with a Cabinet officer, with 
this as a sole responsibility, to make sure that he can put all 
of these organizations together, and with the authority that 
the Secretary of Homeland Security will have over the policies, 
under which I will operate with respect to the consular 
officers, I think will be a much more effective arrangement 
than what frankly was an ad hoc arrangement. These had to be 
handshake deals between myself and John Ashcroft and a lot of 
us over the last 10 months that we should have fixed much 
earlier and they are now being fixed. And I think there will be 
a more effective fix when there is a Cabinet officer who has 
sole responsibilities for these kinds of activities.
    Attorney General Ashcroft. May I make a few comments? I 
note that time is waning quickly. But the FBI has undergone a 
major revision of its approach to information. The FBI had a 
culture of being able to reassemble an event that happened in 
the past, serving sort of like a forensic dentist who could 
tell you what happened to a crime victim by virtue of 
reassembling sort of the fragments of the skull. We need for 
the FBI to evolve from that prosecution function exclusively 
which it had into the area of prevention, being able to 
anticipate things. And we need in that event to be able to 
coordinate our information, which the Secretary has indicated 
is the best friend to prevention, and it is with entities like 
the CIA.
    Let me give you an idea of some of the reforms at the FBI 
that are already well under way that would help us do that. An 
Office of Intelligence has been established there. And in order 
to get oriented to the future like the CIA, which has been more 
of a forecasting organization, anticipating events, than the 
FBI, which has been reconstructing events for purposes of going 
to trial and prosecuting, the new Office of Intelligence is 
headed by a CIA person. Twenty-five CIA individuals are there 
to help us develop that culture of anticipation and 
preventative information. The reporting and information flow in 
the FBI is now under consideration for reformatting so that the 
format of reports would be compatible with the format of 
reports in intelligence agencies so that the kinds of 
information could be exchanged easily.
    Similarly, the upgrades in the computer programs which you 
all have authorized and have been funding, Director Mueller is 
making sure that the computers would be able to be conversant 
with other intelligence agencies so that when we have the 
databases that are available that they can speak to each other 
and they can be integrated.
    Much has happened since September the 11th. We now have a 
combined or joint threat matrix. It used to be the FBI would 
develop a sense of what it thought might happen and the CIA 
developed an independent sense. And this was in part because 
the CIA and FBI were to address this mythological sort of 
context of different threats, one overseas and one at home. But 
we now have a cooperating joint threat matrix. We have shared 
databases.
    I have recently authorized the FBI to use some commercial 
databases that are available to the public that had previously 
been off limits for the FBI just as it had been off limits for 
the FBI to seek information that is available to the public on 
the Internet. These kinds of things are precursors to the kinds 
of coordination that can happen at the direction of the new 
Secretary running the Department of Homeland Security, and I 
believe they are all steps in the right direction. The 
completion of those steps and the institutionalization of this 
culture of collaboration, cooperation and coordination should 
have happen most effectively in the new department.
    Ms. DeLauro. Can anyone address the FOIA question?
    Chairman Armey. I have to pull the gavel on the gentlelady 
from Connecticut. The time has expired. The gentleman from 
Ohio.
    Mr. Portman. I thank the chairman. I thank the very 
distinguished panel for being with us here this morning, now 
this afternoon. Thank you for your insights. There is no higher 
calling for any of us on this side of the dais--or that side--
than protecting our citizens, and that is what we are all about 
here. I do have a couple of general questions, first just on 
the concept.
    Each of you represents men and women who are on the front 
lines against international terrorism today. And Attorney 
General, you have people who are out there collecting 
information, tracking down suspicions, which is homeland 
security. Secretary Wolfowitz, you have people out there 
tracking down terrorists literally overseas, finding them. 
Secretary Powell, of course you are working closely with our 
neighbors to the south and north and around the globe, much of 
which is homeland security. And many of your functions and many 
of those personnel who are doing a great job and working 
overtime to protect us will not be part of the new Department 
of Homeland Security. At least it is not proposed in the 
President's proposal nor any of the drafts that we are working 
on here in Congress.
    One concern that has been expressed now is that there will 
be a new department where there would be one person, as you 
say, who would be responsible for homeland security. Does this 
mean that you and your people would ease up on your vigilance 
and on the hard work you are doing here in the States and 
around the world with regard to homeland security? I wonder if 
you could address that concern.
    Secretary Powell. In my case, I think it is quite the 
contrary. The fact that I will now be getting policy direction 
from the Secretary of Homeland Security for me to execute 
through my existing consular affairs system makes me a part of 
the homeland security function in a more important way than 
might have been the case if someone had taken or if someone--
still some people believe this is the right way to go. But if 
you were to take this function and this activity and these 
people away from all of our embassies out there and give it 
over to the Department of Homeland Security, then I obviously 
have less to do with it. And I would feel myself somewhat 
removed from this activity and this function and very important 
mission.
    The President's proposal, I think, is structured in a way 
that is balanced and appropriate. Using the resources of the 
department and the very talented people we have there who are 
coming up with all kinds of new ways to protect ourselves, and 
giving proper policy authority to the Secretary of Homeland 
Security seems to me to be a way of taking advantage of the 
strengths of both departments, the Secretary of State and his 
department and, of course, the new Department of Homeland 
Security.
    Dr. Wolfowitz. The answer is absolutely not. We have, as 
Secretary Rumsfeld outlined, been undertaking major changes 
within our department, particularly the creation of a Northern 
Command, and those efforts will continue.
    But I would like to emphasize how much we welcome the 
creation of a Department of Homeland Security that gives us one 
department where we can go to address what our responsibilities 
are instead of 153 different agencies. I think it is not 
inappropriate to think about the analogy that was referred 
early to the post-Cold War organization and the 1947 National 
Security Act. It is not difficult--it has vastly, I think, 
improved the ability of State Department to work with the 
military branches to support national security abroad.
    I mean, I don't know, Collin, how you would possibly deal 
if you had to deal with an Air Force, an Army and a Navy 
Department that included the Marine Corps. Instead there is a 
Department of Defense. There are enormous issues that Secretary 
Powell and Secretary Rumsfeld coordinate every single day. To 
be able to do it between two Cabinet officers instead of the 
State Department and multiple ones. And I think the same 
analogy applies here on the homeland security side. And I 
believe we are going to work through this.
    There have been huge changes in the Department of Defense, 
including the Goldwater-Nickles Act, which was another landmark 
piece of legislation. I don't think we have got the final 
answer here and it is going to take a long time. But I think 
this is a very important step that will allow our department to 
play its role in homeland security in a way that we have not 
been able to before.
    Attorney General Ashcroft. Congressman Portman, the 
Department of Justice obviously as the home of the FBI is very 
involved in the development of the kind of information that 
will help us secure America more profoundly and protect America 
better, and we look forward to the kind of coordinating and 
integrating involvement that this new department will have in 
terms of intelligence generally. So that while we are improving 
our ability to communicate with the Central Intelligence Agency 
and other intelligence agencies, whether they be in the 
Department of Defense or in other aspects in the culture, 
having an analysis center that relates the intelligence we get 
to the vulnerabilities we have so that you have a threat 
assessment with a vulnerability assessment and then the ability 
to move that in a coordinated way into the culture to have, 
say, hardening of our assets so that we are less vulnerable, we 
welcome that, and we see the Department of Homeland Security as 
taking this information, as helping organize it, and as helping 
move it effectively into the public domain where necessary for 
private citizens and concerns to be effective in using the 
information to secure safety, and we see ourselves as a major 
supplier of information, among others, in a coordinated way in 
the new department.
    We think this is a formula for a much improved service.
    Chairman Armey. Thank you. The gentleman's time has 
expired.
    The gentlelady from California, Ms. Pelosi.
    Ms. Pelosi. Thank you very much, Mr. Chairman. Again I 
thank our distinguished witnesses for being here today and 
their testimony, which I have found to be very helpful. I had a 
few specific questions, but first I will quickly make a couple 
of observations.
    In the beginning of the hearing I mentioned that I hoped 
that at the end of the day we would come out with a Department 
of Homeland Security that was lean, that was agile, that 
relied, exploited, shall we say, telecommunications, sharing of 
databases, et cetera, that has been discussed here. And what I 
hear you saying is something that would be consistent with a 
leaner model than with a more old-fashioned model of--a big 
model--of agencies under one heading.
    I was encouraged by what Secretary O'Neill said when he 
said it wouldn't have to cost so much money because there was 
no need for him to--why couldn't he be the landlord for the 
Customs Service? And Mr. Chairman, I will have a number of 
questions for the record for the distinguished Secretary of the 
Treasury regarding the Customs Service and why ATF isn't moving 
as well--judging from their responsibilities domestically. So I 
am hoping that with the wisdom of the Secretaries and the 
wisdom of the committee chairmen who will be submitting their 
proposals to this select committee, that at the end of the day 
we can reduce risk to the American people in a more modern way.
    I had a specific question for you, Mr. Secretary of State. 
I guess I have to be specific here with all the Secretaries. I 
listened very attentively to what you said about the visas, and 
you seem to be satisfied with the arrangement that is in the 
new Homeland Security Department. I wondered if would you 
comment on the proposal made in the International Relations 
Committee yesterday, I don't know if you are fully aware of it, 
as to what you think of their refinement on the visa issue.
    Secretary Powell. The refinement is acceptable, if you are 
referring to the proposal that the Homeland Security Department 
might have some presence in our regions and in our embassies to 
make sure that what we are doing is consistent with the 
policies promulgated by the Secretary of Homeland Security.
    Ms. Pelosi. It is the Hyde amendment.
    Secretary Powell. Yes, we are supportive.
    Ms. Pelosi. You would be supportive of that? So when our 
committee takes up that suggestion it is something that you 
would support. I appreciate that very much.
    Mr. Secretary Wolfowitz, I was very interested in your 
response to Mr. Portman. Certainly force protection is 
something that we will never relax on. I know in your 
department that is for sure and I am sure the Secretary of 
State agrees with that. So as the ranking on Intelligence I 
know that at the end of the day with all of this, not only 
would there not be less activity on your part, but a 
synergistic impact on force protection.
    Dr. Wolfowitz. That is right.
    Ms. Pelosi. Attorney General, I guess I call you General, 
General Ashcroft, I was pleased that in the--.
    Secretary Powell. What am I, chopped liver?
    Ms. Pelosi. The Secretary--can't say General. Everyone 
responds.
    Senator, Governor, Secretary, General, I was pleased in the 
Department of Homeland Security that it did not include an MI-5 
type of new agency separate from the FBI which would spy on the 
American people. There have been some who have advocated such 
an independent agency. Would you in the short amount of time we 
have take a moment to comment on that?
    Attorney General Ashcroft. Well, let me just refer to some 
of the remarks I made earlier about the fact that the FBI is a 
broad criminal investigative agency, and its association with 
the prosecution community and the Department of Justice is very 
important for an efficient prosecution of our laws.
    Secondly, there is a balance in the Department of Justice 
that relates to an awareness of and a sensitivity to and a keen 
affection for the rights of American citizens, and the 
Department of Justice has a very aggressive Civil Rights 
Division that enforces civil rights and prosecutes those who 
infringe them. And to have that sensitivity to civil rights 
there in the same department where you have the responsibility 
for developing information and conducting investigations is a 
healthy thing.
    Ms. Pelosi. So you would oppose such an MI-5?
    Attorney General Ashcroft. I really believe it is most 
effective to leave the FBI in the Department of Justice where 
we have that sensitivity and responsibility to protecting the 
rights of individuals.
    Ms. Pelosi. I appreciate your direct response, General, 
Governor, Senator, all of the above.
    Mr. Chairman, I would like to submit for the record the 
questions that I have for the Secretary of Treasury, but I 
wanted to say what they are--why is the ATF, as I mentioned, 
not a part of Homeland Security when the Customs Service is? 
How are the ATF, the FBI and CIA going to communicate with the 
Department of Homeland Security?
    Yesterday, the Ways and Means Committee reported out a bill 
that protects the pay benefits of only a select group of 
Customs employees, revenue experts, attorneys, et cetera. These 
employees represent 25 percent of Customs workers, but these 
select Customs employees whose benefits are protected still do 
not enjoy assurances that they have Title V rights and 
protections, the right to bargain collectively, whistleblower 
protections, anti-discriminations, pensions, et cetera, will 
continue. Further, the remaining 75 percent of the Customs 
employees do not have any assurances that the benefits, rights 
and protections that they currently enjoy will remain.
    That is a question directly to the Secretary in that 
regard. I don't know, I think that these, although they are 
addressed to Customs, really apply across the board to any of 
the employees who will come under the new Homeland Security 
Department.
    And I would--if any of the Secretaries here have any 
observations--oh, I see my time has expired. I would be happy 
to receive them for the record. But as we all know, many of our 
first responders were public employees and if we want to have 
mission success we have to respect the President's mission, we 
have to respect the work of the committees of Congress, we have 
to respect the people who will execute the plan. And I don't 
see that yet in the proposal that is being made.
    So if have you any observations on that I would be happy to 
receive them. I will please yield back the balance of my time.
    Chairman Armey. I want to thank the gentlelady for that. 
Let me assure the gentlelady we will work with you in getting 
those questions to the Secretaries and encouraging a prompt 
response because, as you know, our work goes on. Also I might 
suggest to the gentlelady from California I will recommend a 
Harvard solution to our dilemma and just say ``gentlemen'' .
    It has been for me a pleasure to have you here today. I 
have listened with great interest and considerable 
encouragement to your testimony. I have long felt that the 
single thing that most sets America aside from all the nations 
in the history of the world is our love of liberty in America. 
In fact, I have made the observation that all too many times 
our American heroes have spent their life and their limb in the 
defense of liberty of people other than ourselves. No nation I 
know has been willing to make such a sacrifice for the love of 
liberty. That is why when we first heard of the Department of 
Homeland Security I had some pause.
    Secretary Powell, you spoke with great eloquence about our 
commitment to the liberties of the citizens of this great 
Nation. I have now heard you, General Ashcroft, reaffirm that. 
But I guess my question is whether you can give me a sense of 
how we strike the balance between our Nation's need--indeed our 
requirement--for safety and security on one hand and personal 
liberties on the other?
    For I fear a free nation will always be a nation that is at 
some risk, and it would be to me so tragic that we would create 
a Department of Homeland Security with such rigorous 
investigative abilities or protocols that we would trespass 
against our liberties.
    Can you help me to see where I might search for that 
balance as we move forward with that committee, any chapter and 
verse or general observations you could give me. And maybe at 
this time we will reverse the process, Secretary, and start 
with General Ashcroft.
    Attorney General Ashcroft. I think these are very important 
concerns. I agree with you completely that liberty is the 
chemistry that provides the basis for America's uniqueness. It 
allowed Emma Lazarus in her poem on the base of the Statue of 
Liberty to say ``Give me your tired, your poor.'' She didn't 
ask for the top 10 percent. She knew that liberty was so 
powerful a catalyst that anybody could come here and this would 
be a place for opportunity.
    It is the thing we must safeguard. And for those that say 
we have got to make a choice between liberty and security, I 
always want to say liberty is what we are securing. If we are 
not securing liberty we have got our eyes on the wrong 
objective.
    So in the aftermath of September the 11th, when I convened 
people in the Justice Department, I put it this way: We have 
got to think outside the box. We can't do the things the way we 
have always done them because we must change in order to be 
able to better protect. But while we think outside the box we 
can never think outside the Constitution. And I think that is 
important here. The Constitution is the enshrinement of the 
civil liberties of the American people, and we must always 
respect that and must never be infringed. And frankly, the new 
department can't infringe the Constitution. It is not within 
the power even of the Congress of the United States or the 
President of the United States to change the Constitution. We 
are sensitive to those rights.
    I have indicated that I think maintaining the FBI in the 
Justice Department where the rights are protected as well as 
the investigations conducted is the right place for balance. 
But the Constitution--this may sound rather fundamental, it is 
to me--the Constitution is the guarantor and this does not 
adjust those rights.
    Chairman Armey. Thank you, General.
    Secretary Powell. What I would say, Mr. Chairman, is that 
we will never be without risk totally. We should recognize that 
we are living in a new world that has risk, but let's not be 
terrified by that risk. Let's not say don't come to our shores, 
we are not issuing a visa to anybody else, we are not willing 
to take a risk, everybody stay where you are, you are not 
coming to the United States.
    What a crime that would be! What a tragedy that would be! 
What would that be saying to the rest of the world? How many of 
our forefathers might not have gotten to this country? Would my 
parents have been able to come into the Port of Philadelphia 
and the Port of New York in the 1920s if that attitude 
prevailed?
    So what we have to do is make sure the rest of the world 
understands that America remains an open society, we want you 
to come to this country, we want you to immigrate here, we want 
to take in refugees as we have in the past. We want people to 
come here and enjoy themselves, see the beauty of this land, 
see the beauty of our value system, and take it back with you 
across the oceans to your homes.
    We are enriched by people coming to this Nation to visit 
and to become American citizens. At the same time we have to 
make sure that we are doing everything to protect ourselves, 
but not to the point of zero defect, zero fault, we cannot 
accept any risk whatsoever. And we can do a better job than we 
have done in the past.
    We are hard at work on that at the department now by some 
of the little things I have shown you today and some of the new 
training we will be giving to our people who are out there 
doing such a great job. And when we find fraud, we find people 
are not living up to the responsibilities, we will take action.
    So we can do a better job. But in doing that better job, 
let's not shut down America. Then they will have won. We can't 
let them win.
    Chairman Armey. Thank you. I don't think I could have said 
it better. Let me suggest to the committee that we have I think 
a generous willingness on the part of our witnesses today to 
receive our written questions and respond to us in a timely 
fashion. And in lieu of that, let me just suggest to the 
members of this panel if you have a burning desire for a quick 
follow-up question, I would certainly want to honor that. Other 
than something that is pressing for you, I think we might be 
inclined to thank our panelists and excuse them.
    The gentlelady from California indicates that--.
    Ms. Pelosi. Mr. Chairman, I think that is perfectly fine. I 
do want to just say one thing, and that is Secretary O'Neill, 
when he was here, in one of his comments he said we are an 
example to the world. I think he was referencing how we 
proceed, and I think that is something that we all should 
remember as we proceed and certainly the testimony that we have 
here today supports, I think, a great example to the world.
    Chairman Armey. I see the gentleman from New Jersey seeking 
recognition.
    Mr. Menendez. Mr. Chairman, if I may just very briefly 
direct a question to Secretary Powell, because of the unique 
ability that he will have to give us an answer, I think would 
serve us well in our deliberations if I may.
    Mr. Secretary, drawing upon your past experiences as the 
Commander of the Joint Chiefs of Staff, as the head of the 
Joint Chiefs of Staff, when you would look at the world in that 
role and look at America's military challenges abroad in terms 
of its defense, you would do a threat assessment and decide how 
you would recommend to the Commander in Chief, the President, 
how to respond to that. Is that correct?
    Secretary Powell. Yes.
    Mr. Menendez. And then you would seek to marshal your 
forces and everything that you have to be responsive to that 
threat assessment, is that correct?
    Secretary Powell. Yes.
    Mr. Menendez. Does it not seem to you odd then with that 
experience that what we are doing here is before we have a 
national threat assessment in place deciding that the creation 
of this department and the movement of all of these different 
agencies is the appropriate response to a threat assessment 
that we have not determined yet?
    Secretary Powell. I think the threat is relatively clear. 
The threat is more than a threat. It is reality. We saw it at 
Khobar Towers, we saw it at the Cole incident that my colleague 
Paul Wolfowitz mentioned, and we certainly saw it in Washington 
and New York and in Pennsylvania last September 11th. It is 
clear to me that we do need a reorganization.
    When I think back, as you say, to when I was Chairman of 
the Joint Chiefs of Staff, my threat was the Soviet Union, my 
threat was wondering where China might be going, my threat was 
12,000 strategic nuclear weapons pointed at the United States. 
But during my tenure as Chairman of Joint Chiefs of Staff, most 
of those threats went away with the Cold War.
    We have been examining new threats, and there is no threat 
that has come along that it seems to me is as real, as 
impressive, as the threat of asymmetrical terrorism.
    Mr. Menendez. Clearly we can agree that the United States 
has a threat in terms of terrorism. Nobody would dispute that. 
But the nature of the extent of that threat, the quality of 
that threat, the diversity of that threat and in the context of 
a threat assessment whether or not the biological and chemical 
weapons are among our highest concern is--or whether a 
different form of a terrorist attack is among our highest 
concern or whether or not, as we already discussed here, the 
greatest way to achieve protecting against any of that is the 
greatest integration and provisions of intelligence information 
and sharing that truly would come from a threat assessment, and 
then would you respond to that? And so that is the context in 
which I am asking the question.
    And my second and final point is what will--I sit on the 
International Relations Committee. So I certainly have been 
looking at this whole question of consular visas.
    I heard you say in response to Mr. Portman that you are 
looking forward to the policy direction, but you did not need 
policy direction as a Secretary of State to pursue the question 
of providing security as part of the consideration of issuing 
visas to come to the United States. You obviously had that as 
part of your own provisions.
    What is it that the Department of Homeland Security is 
going to do differently than what you did and previous 
Secretaries of State did in ensuring that consular offices 
issuing visas abroad ensure the security of the United States? 
I fail to see what is the difference, and if you could share 
with that in the context of a threat assessment, it might be 
very helpful to this committee.
    Secretary Powell. I think what will be different and what 
will be important is that the person now establishing the 
specific policy as to who will be allowed into, or not allowed 
into, the United States by means of a visa will have available 
to him not just the foreign policy perspective. That will be 
there because I will give it--I will help the Secretary of 
Homeland Security with that.
    But he will also have a domestic perspective to it. He will 
have access to all the agencies that are now within the 
Department of Homeland Security and will be within the 
Department of Homeland Security, and I think will have a much 
better way of integrating all of the things we have been 
talking about during the course of this hearing. So that the 
policy direction that will be coming down, I think, will be 
more holistic, more integrated, and will not just have solely 
the sort of foreign policy considerations that exist when it is 
the Secretary of State and the Attorney General solely who are 
putting together the policy with respect to who should be 
allowed into the country. So I think it will be a much more 
holistic, integrated--.
    Mr. Menendez. But that new secretary will still have to 
pursue the law, and the law instructs us as to how one can seek 
to come to this country, whether it is through family 
reunification of a United States citizen. So I still fail to 
understand, and maybe you will be able to submit it for the 
record, is what is going to be the difference? If you are 
pursuing the law and the law says here are the circumstances 
under which you can legally come to the United States, how are 
we differentiating it?
    Chairman Armey. I have to encourage the gentleman to follow 
up with correspondence. The Chair has been signaled by Mr. 
Watts, Ms. DeLauro and Mr. Frost that they would have a final 
observation or comment and I would recognize you then, Mr. 
Watts, at this time.
    Mr. Watts. Mr. Chairman, I will be very brief. I would just 
echo what Secretary Powell said and add one thing to that. We 
can also throw in the Oklahoma City, April 19 of 1995. I mean, 
what we are dealing with is reality, and I proposed this very 
structure about two years ago to say that we have got over 140 
Federal agencies, departments that have some jurisdiction in 
homeland security. We needed one agency whose sole function 
would be to protect, defend our homeland, and I think that is 
what the President has done. I think it is long overdue. In my 
closing remarks, I say thank you very much for coming to be 
with us this morning.
    Chairman Armey. Ms. DeLauro.
    Ms. DeLauro. Thank you, Mr. Chairman. I would like to go 
back a second, if I might, and under the context of just 
generally, the legislation does include really broad exemptions 
to good government laws, government sunshine laws, if you will. 
And in that context, I talked about the Freedom of Information 
Act. There are other issues that have been brought up with 
regard to civil service employees. But with regard to the 
Freedom of Information Act, how in fact are we going to--
because there is an exemption from fully complying with these 
laws--how are we going to--how in your view are we going to 
prevent the agency from not being forthcoming with information 
and hiding information that they don't want to make public?
    Secretary Powell. I think there will be a presumption on 
the part of the Secretary of Homeland Security that it is his 
or her responsibility to make information public not only for 
purposes of congressional oversight, but because it is a 
responsibility to let the public know what we are doing in the 
public's name. With respect to specific laws, the Freedom of 
Information Act and similar acts, I really must yield to the 
director of the Office of Homeland Security, who can give you 
the rationale for why they have proposed the authorities that 
they have proposed, or not have proposed, for the new 
department.
    Dr. Wolfowitz. We do know very well from all of our foreign 
experience that in the business of collecting information on 
people like terrorists in order to be able to collect it you 
have to be able to protect it, you have to be able to protect 
the sources of it. You won't get a lot of information that is 
extremely important in catching terrorists if everything is 
deemed to be at risk of public exposure.
    Like Secretary Powell I can't give you the details of how--
I mean obviously, there are--we deal with plenty of classified 
information with the Freedom of Information Act. You need a 
lawyer to explain the differences. But the basic thing to be 
balanced is the need to protect sources of information in order 
to collect it, and at the same time guarantee the public's 
right to know. And sometimes the mechanism for achieving that 
balance is through the oversight of congressional committees 
that have access to everything.
    Ms. DeLauro. Would you not concur that it would be useful 
to have that thought out in some way before we embark and not 
just put it off for another day, but to think it through? I am 
not suggesting that that be done here, but that there be some 
thought and reflection as to the--we spend a lot of time and a 
lot of effort in looking at government and the sunshine laws 
and private business and sunshine laws, and we are looking at a 
whole lot of things that have happened in corporate America 
over the last several years that no one has known about and has 
had some very devastating effects, particularly on our economy.
    And now wouldn't we want to not be engaged in prevention of 
difficulty before we just kind of go off the edge of the cliff 
in this area? I just leave that with you and--.
    Secretary Powell. I am sure that is what the Select 
Committee will want to do.
    Chairman Armey. I thank the panel, and I thank Ms. DeLauro 
on this point. I can assure you that this committee is, in 
fact, deeply interested in this and we will be pursuing it. I 
have, right now, Mr. Portman is seeking an opportunity for a 
final short word. And I am sure if he returns in time, we will 
recognize Mr. Frost. The chairman will reserve the right for 
the last word. But may I ask the audience at the conclusion of 
our hearing would you please hold your seats long enough for 
our distinguished panelists to exit the room. It is not right 
to leave until Elvis has left the building. So, Mr. Portman.
    Mr. Portman. Just briefly, Mr. Chairman, I want to thank 
the panelists for their responses and to my colleague and 
friend from Connecticut. If you look at section 204 on the FOIA 
part, I think it is very narrowly drawn and it is drawn exactly 
to what Secretary Powell and General Ashcroft talked about, 
which is matching the risks out there, domestically with what 
the threat is and on the risk side, of course, you want the 
private sector to provide us what those risks are, including 
infrastructure risks, and what the private sector needs, of 
course, is some protection that they are not going to provide 
this kind of information and have it subject to FOIA. Look at 
section 204. I think it is very narrowly drawn. I think it is 
consistent with what we are hearing here.
    What I am struck by, Mr. Chairman, today, is that everybody 
is focusing on the same thing, which is flexibility and 
agility. And Mrs. Pelosi talked about it early on and followed 
on it with her question. And Secretary Wolfowitz talked about 
it in terms of the terrorist threat globally, that this threat 
is literally moving from country to country and agility is the 
key to your response.
    Secretary Powell talked about it in terms of dealing with 
the threat from a diplomatic point of view, and General 
Ashcroft talked about it in terms of our domestic threat, and 
then of course, Secretary O'Neill talked about it in terms of 
management. But it really is more than just putting the pieces 
together, which Ms. Pelosi talked about. It is also what the 
terrorist threat is here. It is just as agile here if not more 
so than it is globally.
    And so I would hope that we can balance what our legitimate 
concerns raised by the gentleman from Connecticut and others 
with regard to FOIA, with regard to personnel issues and so on. 
By the way, whistleblowers are protected in the statute, at 
least the proposal as I read it. But we need to balance that 
against the need to provide this agility. To give the agility 
of this department to be able to not just organize and 
implement, but then respond to the threat. And with that, I 
thank you for a very constructive hearing.
    Chairman Armey. I am sorry Mr. Frost did not make it back, 
but let us seize the moment and thank you, this fine panel. We 
so deeply appreciate your willingness to be here this morning 
and appreciate again your testimony. Without objection, the 
Select Committee stands adjourned, and again, let me remind you 
to make room for our distinguished guests to leave.
    [Additional material submitted for the record follows:]

 Questions Submitted for the Record to the Honorable Collin L. Powell, 
          Secretary of State, by the Honorable J.C. Watts, Jr.

    Question. I think it is vital for the government to use all 
tools in our arsenal, diplomatic, military, or informational, 
to stop terrorism. What type of diplomatic action have we 
undertaken with our friends in the Arab world since 9/11 to 
prevent future acts of terrorism in America and what 
impediments have you encountered?
    Answer. Diplomatic cooperation with our friends and allies 
in the Middle East and North Africa to prevent future acts of 
terrorism in America and elsewhere has been extensive since 9/
11. Regional nations have worked with the USG to implement the 
counterterrorism initiatives of multilateral fora, like UNSCRs 
1267, 1390 and 1373. We have worked closely with Middle Eastern 
governments to freeze assets and designate individuals and 
organizations with financial links to terrorists. Bilaterally, 
we have engaged regional governments to move forward on 
fighting terrorism and have offered technical assistance to 
bolster their ability to do so.
    Steps taken by regional governments, often in concert with 
us, and ongoing counterterrorism relationships with regional 
countries have had a direct and positive impact on the security 
of the continental United States and our interests overseas. 
For example, the Bahrain Monetary Authority, in compliance with 
UNSCR 1373, took quick action in 2001 to freeze terrorists' 
financial assets--money that could have funded attacks against 
the United States or elsewhere. Saudi Arabia has moved to 
freeze the assets of the terror-linked Somali and Bosnian 
branches of the Al Haramain charity. Likewise, enhanced 
diplomatic engagement with Algeria has produced a mutually 
beneficial counterterrorism relationship between our two 
countries. Persistent, focused diplomacy has enabled us to 
maintain and enhance assistance from Gulf countries in the war 
on terrorism.
    The ongoing Israeli-Palestinian violence, and popular 
negative reaction to it in the region, has made our 
counterterrorism efforts more challenging, especially with 
regard to the ongoing terrorist activities of HAMAS and 
Hizballah.
    Question. As Afghanistan was an incubator for terrorists 
and their organizations what gaps are there in the way America 
addresses other third world countries. For example, do you 
think that there can be better coordination between U.S. Trade 
policy and U.S. Aid policy? It has been my experience that the 
trade people and aid people do not communicate. Plain and 
simple, it is the political instability of the third world that 
provides the incubators for terrorists.
    Answer. Although terrorists can exist in any society, they 
are especially adept at exploiting conditions of poverty, 
political instability, and ethnic and religious conflict. 
Deprivation and despair make it easier for terrorists to 
manipulate target audiences, draw in fresh recruits, and build 
a support network for extremist activities. Ongoing U.S. 
programs to promote social, political, and economic development 
in Asia, Africa, the Middle East, Central Asia and Latin 
America play a key part in the global campaign to fight 
terrorism. In promoting development, the rule of law, and good 
governance, the United States, along with its friends and 
allies, is helping to diminish the appeal of terrorists and 
other violent extremists who challenge national security 
interests. Addressing the problem of failed and failing states 
is a particularly important challenge. As was demonstrated in 
the case of Afghanistan, such states have all too often served 
as terrorist sanctuaries. Thus, efforts to identify and 
ameliorate conditions that contribute to state failure are an 
important part of U.S. foreign policy. The United States is 
committed to fighting terrorism with a long-term and 
comprehensive strategy that integrates all the tools of 
statecraft--not just economic, but also law enforcement, 
intelligence, military, and diplomatic.

 Questions Submitted for the Record to the Honorable Collin L. Powell, 
           Secretary of State, by the Honorable Nancy Pelosi

    Question. You will be losing extraordinarily talented and 
dedicated Federal workers as they transfer over to the new 
department. Don't those employees deserve the same civil 
service protections in the new department as they now currently 
enjoy?
    Answer. No State Department employees would be transferred 
to the Department of Homeland Security under the President's 
proposal.

  Questions Submitted for the Record to the Honorable Collin Powell, 
          Secretary of State, by the Honorable Rosa L. DeLauro

    Question. This legislation gives you the power to refuse a 
visa if you deem it ``necessary or advisable in the interests 
of the United States.'' How will the State Department 
coordinate with the Department of Homeland Security to look 
over visa applications to determine whether one should be 
refused? Who determines if an application will be bumped to 
State for review, or will they all go to your department? Who 
will resolve the conflict if the Secretary of Homeland Security 
disagrees with your recommendation, or do you have final veto 
power?
    Answer. [A response was not received in time for the 
printing of the hearing. The response, when received, will be 
retained in the Select Committee files.]

 Questions Submitted for the Record to the Honorable Donald Rumsfeld, 
           Secretary of Defense, by the Honorable J.C. Watts

    Question. Five to ten years from now, how do you envision 
the military acting as a supporting Federal agency to 
mitigating or helping America recover from another act of 
catastrophic terrorism?
    Answer. We expect that the Department of Defense will 
continue to support of a lead Federal agency in mitigating or 
recovering from acts of terrorism within the United States.
    The National Strategy for Homeland Security outlines a plan 
for increasing the capabilities of other Federal, State, and 
local entities. If the goals laid out by the plan are met, we 
expect that the requirements for military support will 
decrease. The Department will continue to stand ready to 
support where and when it is needed.

 Questions Submitted for the Record to the Honorable Donald Rumsfeld, 
          Secretary of Defense, by the Honorable Nancy Pelosi

    Question. Please describe how you envision the relationship 
between NORTHCOM and the new Department. How will the chain of 
command work? Will NORTHCOM have staff detailed to the 
Department? Will the Department have staff based at NORTHCOM?
    Answer. As is the case for all other combatant commands, 
there will be no direct link between Northern Command and the 
Office of Homeland Security or the proposed Department of 
Homeland Security for operational tasking on national policy-
related issues, unless directed by the Secretary of Defense.
    Once policy has been established or specific support has 
been authorized by the Secretary of Defense, coordination 
between USNORTHCOM and subordinate agencies or bureaus of the 
Office of Homeland Security or the proposed Department of 
Homeland Security authorized to meet on specific operational/
tactical issues or on planning, training, or exercise 
requirements.
    NORTHCOM will not have staff detailed to the proposed 
Department of Homeland Security. Liaisons may be shared between 
NORTHCOM and the proposed Department of Homeland Security, as 
appropriate, for the purpose of coordinating authorized 
planning or operational/tactical issues.
    Question. You will be losing extraordinarily talented and 
dedicated Federal workers as they transfer over to the new 
Department. Don't these employees deserve the same civil 
service protections in the new Department as they currently 
enjoy?
    Answer. The Department of Defense is losing no personnel to 
the proposed Department of Homeland Security. The transfer of 
the National Communication System and the programs that would 
constitute the proposed ``National Bio-Weapon Defense Analysis 
Center'' entail the transfer of funds, not personnel. 
Additionally, in the case of the former, executive agency would 
transfer from the Department of Defense to the proposed 
Department of Homeland Security. Consequently, the Department 
has no concerns about its employees maintaining their civil 
service protections.

 Questions Submitted for the Record to the Honorable Donald Rumsfeld, 
         Secretary of Defense, by the Honorable Rosa L. DeLauro

    Question. Regarding the Department of Defense's role in 
Homeland Security, there remain critical questions about how 
the Pentagon--responsible for fighting terrorism abroad--will 
work with the new Department--responsible for fighting 
terrorism at home. Perhaps most crucial to resolve is the issue 
of how will the two departments handle their competing demands 
for the services of the Coast Guard and the National Guard. Has 
this issue been discussed? Is there a process for coordination? 
Has any thought been given to whether the two Guard services 
will have the necessary capabilities to meet both department's 
demands?
    Answer. When the President signs into law the Homeland 
Security Bill, the Transition Planning Office, established by 
Executive Order on June 20, 2002, will begin planning the 
formation of the new Department of Homeland Security. The 
Department of Defense will participate in this planning and 
attempt to address and resolve many issues of mutual concern 
with the Department of Homeland Security--including the 
National Guard and the Coast Guard.
    Regarding competing demands for the National Guard, Title 
10 clearly establishes the relationship with the Department of 
Defense: the Army National Guard and the Air National Guard of 
the United States are reserve components of the armed forces 
(10 U.S.C. 10101). When in the service of the United States, 
the Army National Guard of the United States is a component of 
the Army (10 U.S.C. 10106), and the Air National Guard of the 
United States is a component of the Air Force (10 U.S.C. 
10111). The Administration's proposal for a Department of 
Homeland Security does not establish a direct relationship 
between the Department of Homeland Security and the National 
Guard.
    The U.S. Constitution establishes a direct relationship 
between the National Guard and State governors. State 
governors, through their respective adjutants general, have a 
direct relationship with the National Guard forces posted in 
their respective states. Governors may call upon their National 
Guard forces to serve the State during local or statewide 
emergencies, natural or man-made.
    There exists a well-established, well-exercised process for 
Federal departments and agency heads, which would include the 
proposed Department of Homeland Security, to request DOD 
support through the Secretary of Defense. These requests 
include those for the National Guard in the service of the 
United States. Most recently, for example, the Secretary of the 
Treasury and the Attorney General used this process to secure 
DOD support at the borders for the Immigration and 
Naturalization Service, the Customs Service, and the Border 
Patrol.
    The current process is intentionally deliberate, and 
factors such as the impact on military readiness are weighed 
before deciding to support any Federal agency request for 
National Guard support in Federal status. As a result, requests 
for support are approved exclusively for exceptional needs when 
support rendered does not affect adversely National Guard 
readiness to preform its warfighting responsibilities.
    Regarding the Coast Guard, the Administration's proposal 
maintains the traditional direct relationship with the 
Secretary of the Navy, as defined in title 14, United States 
Code. Historically, the Department of Transportation and the 
Department of Defense have balanced successfully the Coast 
Guard's dual peacetime and wartime responsibilities. We 
anticipate a similar relationship would continue between DOD 
and the proposed Department of Homeland Security.
    Question. The Pentagon remains largely outside this 
historic merger of agencies. However, the President's plan does 
include the creation of a new chemical and biological weapons 
defense analysis center. How would this new center improve 
Americans homeland security? What would this new center do that 
the Pentagon is not already doing?
    Answer. According to the President's plan, the mission of 
the proposed National Bio-Weapons Defense Analysis Center 
(NBWDAC) would be to ``develop countermeasures to potential 
attacks by terrorists using weapons of mass destruction.'' The 
actual basis for the NBWDAC is an element of the President's 
FY03 Budget Request for the DOD Chemical and Biological Defense 
Program (CBDP) to fund two key initiatives: (1) Biological 
Counterterrorism Research Program, and (2) Biological Defense 
Homeland Security Program. These two programs would further 
enhance homeland security through the establishment of a Center 
specifically focused on countering biological terrorism and by 
initiating a comprehensive program to create and deploy a 
national, multi-component, multi-organization defensive 
capability targeted to urban areas, other high-value assets, 
and special events--a National Biological Defense System.
    These two new programs--to be executed by DOD in 
partnership with the Office of Homeland Security--target two 
critical needs for the United States: countering biological 
terrorism and biological homeland security. The first program, 
targeting research, will support national security, law 
enforcement, and medical communities by improving understanding 
of biological agent pathogenesis and how potential pathogens 
may be weaponized and disseminated for the purpose of improving 
our ability to assess the threat, analyze and attribute, and 
develop effective countermeasures. The goal is to establish an 
interagency research program and analysis capability that 
focuses on science-based bioterrorism/biological weapons 
defense threat assessments and microbial forensics. The second 
program aims to create and deploy a national, multi-component, 
multi-organization defense capability targeted to urban areas, 
other high-value assets, and special events. This program seeks 
to provide an integrated homeland security capability to 
detect, mitigate, and respond to biological-related incidents. 
These homeland security capabilities would include: enhanced 
biological detection capabilities and the fusion of medical 
surveillance systems, wide-area environmental sensors, access 
control points and information systems; and deployed systems to 
exploit existing technology supplemented with new capabilities 
resulting from accelerated development. Representatives from 
DOD are working closely with representatives in the Office of 
Homeland Security to ensure the development of an appropriate 
detection system. Under the Administration's proposal, no 
personnel would transfer from DOD to the proposed Department of 
Homeland Security.
    Question. I commend you and the Bush Administration for the 
leadership and commitment you have shown to preventing 
terrorism since September 11th. But before that attack, I 
understand that you reportedly threatened a presidential veto 
if funding for counterterrorism was increased at the expense of 
national missile defense. Do you still have these concerns? How 
have funding priorities changed since September 11th?
    Answer. I strongly support full funding of the President's 
budget for missile defense and continue to be concerned about 
any proposals that would restrict development of DOD missile 
defense programs.
    After the September 11th attacks, the war on terrorism 
obviously emphasized the importance of proper funding 
priorities. Specifically, the attacks reinforced the importance 
of the funding priorities already established: taking good care 
of our military men and women and their families, the readiness 
of our fighting forces, and transforming America's defense 
posture to enable us to counter 21st century threats, such as 
terrorism, more effectively.
    ``Counterterrorism'' and ``national missile defense'' are 
two of many mission areas that are critical--and 
complimentary--to the Department's overall ability to defend 
our Nation and its interests. To increase any one mission area 
at the expense of another jeopardizes this ability.

 Questions Submitted for the Record to the Honorable Paul H. O'Neill, 
      Secretary of the Treasury, by the Honorable J.C. Watts, Jr.

    Question. Your efforts in Operation Greenquest are 
laudable, but as terrorist find new ways to hide their 
financing, what can your Department and other federal agencies 
do to drain the terrorists' funding pool?
    Answer. Since September 11th, Treasury Enforcement, 
including its component bureaus, has launched a number of new 
initiatives to identify, disrupt, and dismantle terrorist 
financial networks both domestically and abroad. I am pleased 
to report that Treasury has named 213 individuals and entities 
as financiers of terrorism pursuant to the President's 
September 23rd Executive Order, and has blocked over $34.3 
million in assets. Our coalition partners have blocked another 
$77.9 million. A portion of that amount has since been 
unblocked for the new Afghan Interim Authority to assist in its 
critical period of rebuilding. Perhaps more importantly, we 
believe our actions are disrupting flows of funds and deterring 
potential supporters of terrorist groups from providing 
financial support.
    We have come to appreciate that terrorism has been 
nourished by ample funding channeled from and through a 
plethora of sources, including banks, charities, hawalas,* 
narcotics traffickers, and money launderers. We are attacking 
these means and methods of raising and moving money with all 
our authorities. In this effort, the Treasury Department and 
component bureaus are working closely with the National 
Security Council, the Office of Homeland Security, the Federal 
Reserve, the State Department, the CIA, the NSA, the Justice 
Department, and the FBI. Also, Treasury has been working with 
International diplomatic and law enforcement organizations.
---------------------------------------------------------------------------
    * Hawala is a type of alternative remittance system that is common 
in many parts of the world, including the Middle East and Far East.
---------------------------------------------------------------------------

 Questions Submitted for the Record to the Honorable Paul H. O'Neill, 
        Secretary of the Treasury, by the Honorable Nancy Pelosi

    Question: Why is ATF (also part of the Treasury Department) 
not part of Homeland Security when the Customs Service is? 
Didn't WACO illustrate that threats often come from within the 
country? Wasn't ATF a central agency in that conflict? It seems 
like the new department is more oriented toward border 
protection. Is that true?
    Answer. As you indicated, the President's proposal does not 
include moving the Bureau of Alcohol, Tobacco and Firearms 
(ATF) to the new Department of Homeland Security. While a 
number of options were considered, the President's proposal is 
designed to cover the changes that need to be made immediately 
to accomplish the priority goal of securing the homeland as 
quickly as possible.
    Question: Yesterday, the Ways and Means Committee reported 
out a bill that protected the pay and benefits of only a select 
group of Customs employees (revenue experts, attorneys etc * * 
*). These employees represent only about 25 percent of Customs 
workers. But these select Customs employees whose benefits are 
protected still do not enjoy assurances that their Title 5 
rights and protections (the right to collectively bargain, 
whistleblower protection, anti discriminations, pensions etc * 
* *) will continue. Further, the remaining 75 percent of 
Customs employees do not have any assurances that their pay, 
benefits, rights and protections that they currently enjoy will 
remain with them. Do you agree that this is a fair thing to do?
    Answer. Under the President's legislative proposal, when 
Customs becomes part of the new Department of Homeland 
Security, employees will transfer with existing pay and 
benefits intact. Employees can expect to enjoy the same 
benefits--health, retirement, life insurance and the new long-
term care insurance plan--that are available to them today. 
When the Department is established, employees represented by 
unions will continue to be represented because their bargaining 
units will move with them to the Department.
    The Office of Personnel Management has committed to work 
with the Committee on specific personnel issues such as the one 
you raise during Congressional consideration of the homeland 
security legislation.
    Question: Do you think that the new department will be able 
to retain and recruit quality personnel by removing these types 
of work rights, protections, pay and benefits?
    Answer. The President's legislation provides the Department 
of Homeland Security with the ability to attract and retain 
quality personnel, to offer incentives for exceptional 
contributions, to get the right people to the right jobs in 
time to make a difference. The legislation allows the Secretary 
of Homeland Security, working in conjunction with the Director 
of the Office of Personnel Management, to develop a new, agile 
personnel system which will reflect and support the 
Department's overriding security mission. To retain and recruit 
the quality personnel you mention, the new Secretary of 
Homeland Security will have the ability to reward outstanding 
employees and bring in new talent quickly to fill vacancies in 
critical positions whether created by retirements or changing 
missions.
    Question. Many Members of Congress are concerned that the 
non-homeland security activities and functions of the Customs 
Department may be shortchanged when they are forced to compete 
for resources in the Department of Homeland Security. Apart 
from the money needed to move the Customs Service to the new 
Department, what additional resources do you think will be 
necessary to ensure that the non-homeland defense functions are 
adequately funded?
    Answer. The Administration fully expects that the Customs 
Service will continue to discharge its trade and revenue 
function upon its transfer to the new Department, and this 
function will be adequately funded. In fact, Customs performing 
its trade and revenue collection function in the new Department 
is critical to improving border security.
    Question. How are ATF, the FBI, the CIA, and other agencies 
going to communicate with DHS? Considering the difficulty that 
just two agencies (FBI and CIA) have with communicating with 
each other, will adding an additional department help?
    Answer. The FBI and CIA have already taken important steps 
to improve the way they collect, share, analyze, and 
disseminate information to protect America. The new Department 
of Homeland Security will benefit from these reforms as a user 
of analysis and information provided by the CIA and the FBI. 
The Department will analyze the information it receives from 
all sources, including ATF and other agencies, and will develop 
its own assessment of the current and future terrorist threats 
against the United States.
    It is important to note that the new Department will not 
have any new intelligence collection responsibilities or 
authorities beyond those traditionally conducted by the 
component services which will join it, such as the Customs 
Service. As for analysis, the new Department will have a 
different strategic focus, and will fulfill an important 
responsibility that did not clearly rest with any executive 
department or agency prior to September 11. The new Department 
will integrate its own and others' threat analysis with its 
comprehensive vulnerability assessment for the purpose of 
identifying protective priorities and promoting protective 
steps to be taken by all Federal, state, and local agencies and 
the private sector.
    Question. You will be losing extraordinarily talented and 
dedicated federal workers as they transfer over to the new 
Department. Don't those employees deserve the same civil 
service protections in the new Department as they now currently 
enjoy?
    Answer. The Treasury employees who may be moving over to 
the new Department are indeed extraordinarily talented and 
dedicated. In fact, on May 7, 2002, Secretary O'Neill 
recognized the hard-working Treasury employees at a 
Departmental Offices awards ceremony during Public Service 
Recognition Week.
    As noted above, under the President's legislative proposal, 
when Customs and the Secret Service become part of the new 
Department of Homeland Security, employees will transfer with 
existing pay and benefits intact. Employees can expect to enjoy 
the same benefits--health, retirement, life insurance and the 
new long-term care insurance plan--that are available to them 
today. The President's legislation also provides the Secretary 
of Homeland Security with the ability to attract and retain 
quality personnel, and to offer incentives for exceptional 
contributions.

 Questions Submitted for the Record to the Honorable Paul H. O'Neill, 
      Secretary of the Treasury, by the Honorable Rosa L. DeLauro

    Question. Focusing on terrorists' financial networks is yet 
another way to eventually disrupt, degrade, and take down 
terrorists networks. As you know, tracking these funds is very 
difficult, because money is raised in a variety of forms, 
through charitable donations, through direct solicitations, 
through legal businesses, and criminal enterprises. This money 
is then moved through cash smuggling, regular banking systems, 
other money-laundering havens, and through underground banking 
systems. A disturbing trend we witnessed in the past was 
agencies intentionally hiding their activities in this 
dangerous field from each other. How do you recommend the 
Homeland Security coordinate with local law enforcement, the 
FBI, and the State Department in eliminating this problem?
    Answer. [A response was not received in time for the 
printing of the hearing. The response, when received, will be 
retained in the Select Committee files.]
    Question. The security of our nation's ports is a critical 
piece of homeland security. In my home town of New Haven, the 
Harbor is a critical entry point for oil, sand, sheet metal and 
other products and while the City is working to coordinate 
security, the local government needs back-up from federal law 
enforcement. Currently, Customs is only able to screen 2 to 3 
percent of the large cargo containers that enter the United 
States. That leaves us highly vulnerable to the importation of 
any number of threats from abroad. How will moving Customs into 
the new department improve performance? Does the President's 
proposal include adequate funding to inspect all Customs-
related products?
    Answer. [A response was not received in time for the 
printing of the hearing. The response, when received, will be 
retained in the Select Committee files.]

  Questions Submitted for the Record to the Honorable John Ashcroft, 
           Attorney General, by the Honorable J.C. Watts, Jr.

    Question. Knowing that all terrorism is local, how do you 
plan to work more closely with state and local law enforcement 
officials in the future to better coordinate the nation's 
efforts to address terrorism?
    Answer. While we do not agree that all terrorism is local--
either in terms of its organization, location of operatives and 
resources, or its manifestations--we do agree that working more 
closely with State and local law enforcement officials is a key 
aspect of our counter-terrorism efforts. In September 2001, the 
Attorney General announced an initiative creating Anti-
Terrorism Task Forces (ATTFs) under the leadership of each of 
the 94 U.S. Attorneys across the country. Each ATTF brings 
together the Federal, State and local officials in each 
jurisdiction to pool their resources and their expertise in a 
coordinated approach to fight terrorism as it impacts the 
particular locale. These ATTFs are working together 
successfully, sharing information and pursuing operational 
goals in conjunction with their Joint Terrorism Task Forces 
(JTTFs) under the direction of the FBI. Through these 
mechanisms, Federal officials work effectively with the 
associated JTTF's, State and local partners.
    Question. Are there law enforcement lessons we can learn 
from other countries regarding how they address the threat of 
terrorism on their shores?
    Answer.: We regularly exchange information and expertise on 
terrorism issues with our allies at various international fora. 
These exchanges include meetings at the ministerial level as 
well as meetings of experts of the G-8, the European Union, the 
Organization of the American States, and the Financial Action 
Task Force. Through such discussions, we can draw upon the 
experiences of our allies in addressing the threat of 
terrorism. In addition, bilateral meetings and joint training 
sessions with other countries afford the opportunity to 
exchange law enforcement information for our mutual benefit. In 
addition, the FBI's Legal Attaches, as well as attorneys from 
the Department's Criminal Division Terrorism and Violent Crimes 
Section and Office of International Affairs, interact on an 
ongoing basis with their counterparts abroad to coordinate 
anti-terrorism efforts and learn about how other countries are 
addressing the terrorist threat.
    Question. As terrorists become more innovative in their 
attack profiles, how do you view the threat of cyber terrorism 
against America's people, critical infrastructure, and 
financial markets? What are we doing to mitigate that threat?
    Answer. Exposure. As our economy and infrastructure become 
more dependent on computers, our potential vulnerability to 
terrorist attacks against our cyber systems grows. The United 
Statesrelies increasingly upon information technologies and the 
Internet to conduct business, manage industrial and 
governmental activities, engage in personal communications, and 
perform scientific research. These technologies have resulted 
in enormous gains in efficiency, productivity, and 
communications and have spurred tremendous growth in the U.S. 
economy. They have also become essential to our society's 
ability to function. Although terrorist organizations may have 
the desire to conduct a cyber attack, it is unclear whether 
such organizations possess the resources or skill to 
successfully mount a cyber attack. Almost any computer is 
capable of causing a serious cyber incident, especially since 
tools used to conduct cyber attacks are all too available 
online, but the ability to stage an effective cyber attack 
requires up-to-date intelligence about the target network and 
its architecture that would likely require stealthy intrusions 
conducted over a time. While nation states are likely to invest 
in such intelligence-gathering, most terrorist organizations 
are not. However, this situation could change.
    Notwithstanding the debate over the probability of a cyber 
attack, we must prepare for the possibility of such an attack. 
In the aftermath of the September 11th terrorist attacks, it 
would be difficult, and irresponsible, to ignore the risk posed 
by a cyber attack on the critical infrastructure. Since the 
potential consequences of a cyber attack are too serious to 
ignore, Critical Infrastructure Protection (CIP) efforts that 
began in the mid-1990'shave recently culminated into a large 
government-wide effort to create a coherent and effective CIP 
policy.
    Protection Efforts. The U.S. cyber security effort depends 
upon the collaboration of multiple Federal departments and 
agencies who contribute resources, skills, and disciplines to 
the protection information systems. Federal law enforcement 
investigates and prosecutes violations of Federal computer 
crime statutes that protect the confidentiality, integrity, and 
accessibility of information networks.
    Furthermore, a broad array of Federal agencies and public 
organizations provide training and resources to help secure and 
protect U.S. networks. Most of these protection efforts come 
under our efforts to protect our critical infrastructure (which 
includes the banking and financial sector).
    The government has focused on the issue of ensuring the 
uninterrupted operation of certain key infrastructures since at 
least 1996, when a presidentially-appointed commission began to 
study the issue of CIP. The commission formulated CIP policy 
that the previous administration adopted as Presidential 
Decision Directive 63 (PDD-63). PDD-63 supplied a framework for 
initial U.S. CIP efforts. It assigned overall responsibility 
for policy development and coordination for critical 
infrastructure assurance to the National Coordinator for 
Security, Infrastructure Protection, and Counter-Terrorism at 
the National Security Council. It also created the National 
Infrastructure Protection Center (NIPC) at the FBI that united 
representatives from FBI, DOD, USSS, Energy, Transportation, 
the Intelligence Community, and the private sector in an 
unprecedented attempt at information sharing among agencies in 
collaboration with the private sector. Furthermore, PDD-63 
established the Critical Infrastructure Assurance Office (known 
as CIAO) as an interagency office located at the Department of 
Commerce to support the National Coordinator in carrying out 
these policy development and coordination functions.
    In October 2001, President George W. Bush signed Executive 
Order 13231 establishing a new entity to further U.S. CIP 
efforts and initiatives and amending some of the structures 
created by PDD-63. The Order established the President's 
Critical Infrastructure Protection Board (``PCIPB'') as a part 
of the White House's Office of Homeland Security and the 
National Security Council. The Board has responsibilities for 
Federal programs involving cooperation with, and protection of, 
private sector infrastructure, State and local governments' 
critical infrastructure, and Federal departments and agencies 
critical assets and information systems. The Special Advisor to 
the President for Cyberspace Security chairs the Board.
    Since most departments and agencies in the Federal 
government contribute to the objective of critical 
infrastructure assurance, the PCIPB consists of more than 20 
senior executive branch leaders including deputy secretaries, 
White House advisers, as well as other senior government 
leaders. The heads of executive departments and agencies are 
responsible and accountable for providing and maintaining 
appropriate levels of information systems security, emergency 
preparedness, continuity of operations, and continuity of 
government for programs under their control.
    The President's proposed Department of Homeland Security 
would unify the responsibility for coordinating cyber and 
physical infrastructure protection efforts. Currently, the 
Federal government divides responsibility for cyber and 
physical infrastructure, and key cyber security activities are 
scattered in multiple departments. While securing cyberspace 
poses unique challenges and issues, requiring unique tools and 
solutions, our physical and cyber infrastructures are 
interconnected. The devices that control our physical systems, 
including our electrical distribution system, 
transportationsystems, dams, financial markets, and other 
important infrastructure, are increasingly connected to the 
Internet. Thus, the consequences of an attack on our cyber 
infrastructure can cascade across many sectors. Moreover, the 
number, virulence, and maliciousness of cyber attacks have 
increased dramatically in recent years. Accordingly, under 
thePresident's proposal, the Department of Homeland Security 
will place an especially high priority on protecting our cyber 
infrastructure by working with the Federal departments and 
agencies, State and local governments, and the private sector 
to develop and coordinate the implementation of flexible 
protective measures that can rapidly adjusted to the threat.
    Similarly, the PCIPB is currently developing the National 
Strategy to Secure Cyberspace. The Strategy is an implementing 
strategy of the broader Homeland Security Strategy and provides 
a framework for securing the information technology networks 
that are necessary for the nation's economy, defense, and 
critical services to run. A network of networks directly 
supports the operation of all sectors of our economy-energy 
(electric power, oil, gas), transportation (rail, air, merchant 
marine), finance and banking, information and 
telecommunications, public health, emergency services, water, 
chemical, defense industrial base, food, agriculture, and 
postal and shipping. The Strategy will provide a roadmap to 
empower all Americans to secure the part of cyberspace they 
control, including a variety of new proposals aimed at five 
levels: the home user and small business; large enterprises; 
sectors of the economy; national issues; and globalissues.
    In addition, the Justice Department continues to expand its 
ability to investigate and prosecute computer crime, including 
cyber attacks. These efforts include the formation of CHIP 
(``Computer Hacking and Intellectual Property'') units in 
eleven U.S. Attorney'sOffices. The Department will also work 
with Congress to ensure that laws protecting our computers and 
networks are adequate.

 Questions Submitted for the Record to the Honorable Paul H. O'Neill, 
        Secretary of the Treasury, by the Honorable Nancy Pelosi

    Question. The FBI's NIPC and the NDPQ are to be transferred 
to the new Department. Will you have to replace or replicate 
these functions at DOJ after the transfer?
    Answer. The FBI will not need to replace or replicate the 
functions of the National Domestic Preparedness Office. 
However, the FBI will need to continue to have a training 
program for its own personnel, and that training is currently 
handled by personnel identified for transfer. Within the 
interagency National Infrastructure Protection Center(NIPC), 91 
FBI positions in the Training Outreach and Strategy Section and 
the Analysis and Warning Section, have been identified for 
transfer to the Department of Homeland Security. The FBI 
support this transfer, however, of these positions, 33 (5 
agents, 28 support) provide important collateral training to 
both the NIPC and to the FBI. This support includes providing 
computer intrusion investigative training to FBI personnel and 
reviewing and analyzing related investigative data. To minimize 
the potential impact on important FBI training, the FBI would 
plan to assign new personnel to perform this training function.
    Question. Will you need to replace the FBI employees who 
are being transferred to the new Department?
    Answer. Please see answer to the first question above.
    Question. How are the ATF, the FBI, the CIA, and other 
agencies going to communicate with Department of Homeland 
Security? Considering the difficulty that just two agencies 
(FBI and CIA) have with communicating with each other, will 
adding an additional department help?
    Answer. Intelligence support for the Department of Homeland 
Security (DHS) will be provided through the new FBI Office of 
Intelligence and will include support from the Foreign 
Terrorist Tracking Task Force (FTTTF) and from 56 Joint 
Terrorism Task Forces (JTTF) around the country. Among the 
full-time Federal participants on JTTFs are the Central 
Intelligence Agency (CIA), Immigration and Naturalization 
Service (INS), the Marshal's Service (USMS), the Secret 
Service, the Transportation Security Administration (TSA), the 
Customs Service, the Bureau of Alcohol, Tobacco and Firearms 
(ATF), the State Department, the Postal Inspection Service, the 
Internal Revenue Service (IRS), and the U.S. Park Police. 
Representatives from the DHS will be included as soon as 
possible. The JTTFs constitute a national counterterrorism 
effort and have created a very real force multiplier effect. 
They provide for very effective, real time information sharing 
among the participants, fundamental to effective intelligence 
support.
    The Information and Requirements Group in the Office of 
Intelligence will serve as the central information 
clearinghouse, or hub, for all information between the 
Counterterrorism Division and FBI field offices, Legal 
Attaches, and between the Counterterrorism Division (CTD) and 
other agencies. The group will serve as the singlefocal point 
through which other FBI entities and external agencies 
communicate with CTD. All incoming FBI communications from 
field offices, JTTFs, and Legal Attaches on terrorism cases, as 
well as cables, reports, and other intelligence products from 
external agencies will flow into the hub. Communications will 
be reviewed by a duty officer and his staff, logged, parsed, 
and routed to appropriate units. An administrative tickler 
system will affix accountability and ensure that taskings are 
completed on schedule.
    Question. You will be losing extraordinarily talented and 
dedicated federal workers as they transfer over to the new 
Department. Don't those employees deserve the same civil 
service protections in the new Department as they now currently 
enjoy?
    Answer. The Justice Department employees who would be 
transferred to the new Department are highly skilled and 
exceptionally dedicated public servants. The President's 
legislation is designed to enable the new Department to attract 
and retain employees of this caliber, and to offer incentives 
for especially significant contributions. It enables the 
Secretary of Homeland Security, working with the Director of 
the Office of Personnel Management, to develop a new and 
flexible personnel system that will support the Department's 
central security mission. To attract and retain high-quality 
personnel, the Secretary will have the ability both to reward 
outstanding employees and to bring in new talent quickly to 
fill vacancies in critical positions.
    Moreover, employees will transfer with their existing pay 
intact, and can expect to enjoy the same benefits--health, life 
insurance, retirement, and the new long-term care insurance 
plan--that they have available to them today. When the new 
Department is established, employees represented by unions will 
continue to be represented because their bargaining units will 
move with them to the Department.
    The Office of Personnel Management has committed to work 
with the Committee on specific personnel issues during 
Congressional consideration of the homeland security 
legislation.

  Questions Submitted for the Record to the Honorable John Ashcroft, 
           Attorney General, by the Honorable Rosa L. DeLauro

    Question. As we construct this new Department, it is vital 
that every effort be made to maintain the civil rights and 
privacy of hard working families who play by the rules. While 
not included in the President's proposal, one proposal is to 
create an Office of Civil Rights, Immigration, and Privacy in 
the Department of Homeland Security--similar to the office in 
place at the Department of Justice. Would you comment on this 
proposal? What recommendations do you have for protecting 
Americans' civil rights and privacy?
    Answer. [A response was not received in time for the 
printing of this hearing. The response, when received, will 
retained in the Select Committee's files.]

    [Whereupon, at 12:20 p.m., the committee was adjourned.]

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