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ENSURING DOMESTIC SECURITY: 

ISSUES AND POTENTIAL COSTS

HEARING

BEFORE THE

COMMITTEE ON THE BUDGET 

HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

HEARING HELD IN WASHINGTON, DC, NOVEMBER 7, 2001

Serial No. 107–18

Printed for the use of the Committee on the Budget

(

Available on the Internet: http://www.access.gpo.gov/congress/house/house04.html 

(II)

COMMITTEE ON THE BUDGET 

JIM NUSSLE, Iowa, Chairman 

JOHN E. SUNUNU, New Hampshire 

Vice Chairman 

PETER HOEKSTRA, Michigan 

Vice Chairman 

CHARLES F. BASS, New Hampshire 

GIL GUTKNECHT, Minnesota 

VAN HILLEARY, Tennessee 

MAC THORNBERRY, Texas 

JIM RYUN, Kansas 

MAC COLLINS, Georgia 

ERNIE FLETCHER, Kentucky 

GARY G. MILLER, California 

PAT TOOMEY, Pennsylvania 

WES WATKINS, Oklahoma 

DOC HASTINGS, Washington 

JOHN T. DOOLITTLE, California 

ROB PORTMAN, Ohio 

RAY LAHOOD, Illinois 

KAY GRANGER, Texas 

EDWARD SCHROCK, Virginia 

JOHN CULBERSON, Texas 

HENRY E. BROWN, Jr., South Carolina 

ANDER CRENSHAW, Florida 

ADAM PUTNAM, Florida 

MARK KIRK, Illinois 

JOHN M. SPRATT, Jr., South Carolina, 

Ranking Minority Member 

JIM MCDERMOTT, Washington 

BENNIE G. THOMPSON, Mississippi 

KEN BENTSEN, Texas 

JIM DAVIS, Florida 

EVA M. CLAYTON, North Carolina 

DAVID E. PRICE, North Carolina 

GERALD D. KLECZKA, Wisconsin 

BOB CLEMENT, Tennessee 

JAMES P. MORAN, Virginia 

DARLENE HOOLEY, Oregon 

TAMMY BALDWIN, Wisconsin 

CAROLYN MCCARTHY, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

MICHAEL M. HONDA, California 

JOSEPH M. HOEFFEL III, Pennsylvania 

RUSH D. HOLT, New Jersey 

JIM MATHESON, Utah 

PROFESSIONAL STAFF

RICH MEADE, Chief of Staff 

THOMAS S. KAHN, Minority Staff Director and Chief Counsel 

(III)

C O N T E N T S

Page 

Hearing held in Washington, DC, November 7, 2001 ........................................... 1

Statement of: 

David M. Walker, Comptroller General, U.S. General Accounting Office ... 5

Hon. Newt Gingrich, former Speaker of the House of Representatives, 

member, U.S. Commission on National Security/21st Century ................ 27

Hon. Lee H. Hamilton, former Member of Congress, member, U.S. Commission on National Security/21st Century ................................................ 29

Prepared statements and additional submission: 

Hon. John M. Spratt, Jr., a Representative in Congress from the State 

of South Carolina .......................................................................................... 4

Comptroller Walker .......................................................................................... 8

New York Times article concerning bioterrorism, submitted by Mr. Bentsen .................................................................................................................. 23

(1)

ENSURING DOMESTIC SECURITY: ISSUES AND 

POTENTIAL COSTS 

WEDNESDAY, NOVEMBER 7, 2001

HOUSE OF REPRESENTATIVES, COMMITTEE ON THE BUDGET, Washington, DC. 

The committee met, pursuant to call, at 1:20 p.m. in room 210, 

Cannon House Office Building, Hon. Jim Nussle (chairman of the 

committee) presiding. 

Members present: Representatives Nussle, Gutknecht, Thornberry, Watkins, Hastings, Schrock, Culberson, Putnam, Kirk, 

Spratt, Bentsen, Clayton, Price, Clement, Hooley, Baldwin, McCarthy, Moore, and Matheson. 

Chairman NUSSLE. Call the Budget Committee hearing to order. 

Today we begin the process of hearings for the fiscal year 2003 

budget, and for that matter, possible fiscal year 2002 supplemental 

budget requests and priorities. Today’s hearing is entitled, Ensuring Domestic Security: Issues and Potential Costs. We have two 

very distinguished panels today who will come forward and will enlighten us on a number of different topics. 

This hearing is intended to examine the broad issues and challenges in ensuring the Nation’s domestic security in the midst of 

the current war against terrorism. It is not specifically focused on 

President Bush’s Office of Homeland Security, although I have no 

doubt there will be many references to that office and to priorities 

that office may in the future bring forth. 

The hearing today will in part examine the extensive work on 

the part of the General Accounting Office in reviewing the U.S. 

Government’s antiterrorism programs, outlining the agency’s findings and presenting some specific recommendations for organizational efficiencies and management improvement. In addition, representatives of the United States Commission on National Security/

21st Century will be present and will present Commission findings 

and recommendations on defending the United States against terrorism. 

Prior to the attacks of September 11, the administration’s fiscal year 2002 request for antiterrorism programs totaled $12.8 million, 

spread across 43 different Federal agencies. Additional resources 

will, no doubt, be forthcoming and have been forthcoming, but 

funds may not be spent in the most efficient manner absent a 

strong, effective organizational plan that prioritizes these programs 

and avoids duplication. So one of the questions today will be what 

is the most effective way to consolidate and manage the government’s antiterrorist efforts. GAO has found that the government 

2

does not yet have a sound terrorist vulnerability assessment in 

place, and without such an assessment, it is probably not possible 

to target funds to correct the most critical vulnerabilities in national infrastructure. 

The second question will be how soon can a comprehensive threat 

and risk assessment be completed for this Nation. Finally, fully 

recognizing that the President needs maximum flexibility to get the 

Office of Homeland Security established quickly, many details remain to be resolved including, but not limited to, how much budgetary control will the Director request; and will the Director truly 

have a single focal point for homeland security as was promised by 

the President; how can the Director leverage State and local enforcement and public health resources for maximum effectiveness. 

In short, how can the new Office of Homeland Security operate 

with the most effective, efficient plan for the future? 

The budget for 2003 that we will be discussing and formulating 

in short order, needs to take into account an emerging new and revitalized priority for homeland security. In short, today’s hearing 

only begins the process of examining homeland security and combating terrorism. This is not meant to try and take a drink out of 

the fire hydrant all in one fell swoop. There are a number of other 

hearings, and there is, in fact, a security briefing with Secretary 

Rumsfeld at 3 o’clock that I know Members are interested in attending. But it is to begin the process. 

What I would suggest today, that our main focus be: where has 

our priority been with regard to homeland security in combating 

terrorism, and where is it today now as far as the priority for the 

Federal Government. It will serve as a preface for determining the 

priority in next year’s budget. I would recommend to Members that 

we do this in that light and that we focus the hearing in that manner so that we can hold a number of hearings in order to get to 

the bottom of this as we move forward. 

Before we begin with the panels, I would like to recognize John 

Spratt for any comments he would like to make. 

Mr. SPRATT. Thank you, Mr. Chairman. 

Mr. Chairman, Mr. Walker, Lee Hamilton and I guess the Speaker is to arrive later. First of all, we look forward to your testimony. 

It is my understanding that GAO has done almost 70 studies over 

the years on what you might today call homeland security, and we 

look forward to your sharing the fruits of that inquiry with us. 

It is my understanding, that a former colleague, Mr. Hamilton, 

and our former colleague, the Speaker, Newt Gingrich, will be talking about organizing the government in order to better protect ourselves against terrorist attacks, detecting the attacks, deterring the 

attacks, responding to them once they occur. This dialogue is long 

overdue, and I am glad we are having it here in this committee. 

I don’t want to detract from that important topic, but the Chairman said this is about priorities; what priorities have we addressed 

and what priorities haven’t we adequately addressed. I want to 

take just a minute to talk about ‘‘the fire next time,’’ the risk of 

nuclear terrorism and the need for nuclear nonproliferation programs. 

The devastation that was dealt us on September 11 was horrendous, but it could have been far worse if they used nuclear weapVerDate Feb 1 2002 18:02 Feb 25, 2002 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 H:\DOCS\HEARINGS\107-18\HBU311.000 HBUDGET1 PsN: DICK
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ons. It could have wiped out all of Manhattan. There is one element that stands between the terrorists and nuclear weapons, and 

that is fissile material, plutonium, highly enriched uranium, and 

we ought to take every possible effort to see that they do not obtain 

them. 

Just days before September 11, smugglers were apprehended in 

Turkey—not the first time—but they were apprehended there with 

what was at the time believed to be bomb-grade uranium; trying 

to smuggle it out of Russia. Yesterday, President Bush warned that 

bin Laden and al Qaeda have been actively seeking nuclear materials for some time. 

We are not doing nearly enough, nearly as much as we should 

to keep nuclear materials and nuclear know-how out of the hands 

of the terrorists. Mr. Thornberry and I have worked on it in the 

Armed Services Committee. The main program that deals with this 

whole problem is called Nunn-Lugar, but it needs more attention 

even though it has some bipartisan support. 

The fact of the matter is, nonproliferation has been a much harder sell than it really ought to be. DOE shares the mission with 

DOD—the Department of Energy. The amount of money that we 

put up in the Department of Energy, all totaled, everything that 

would fall under this rubric was $874 million last year. One of the 

line items in those accounts that is a line item is for nonproliferation and verification R&D, the sort of thing in the budget that 

doesn’t get a lot of attention. It doesn’t have any program 

connectivity back home with constituents unless you come from one 

of the States with one of the national labs. But in any event, by 

last budget year, a number of programs had been clustered under 

this particular umbrella, and the total funding for it was about 

$227 million. When this year’s budget request came over, that program, that line had been cut by $57.5 million for reasons that I 

still do not understand. 

Let me give you one out of many things that will suffer as a consequence of that reduction. That is the development of sensors that 

can detect bioterrorism activities that are taking place either in the 

production of the weapon or in the aftermath of an attack so that 

we can get a realtime readout, a quick analysis, chemical analysis, 

biological analysis of what the agent is, and then public health authorities knowing this can act quickly to stop it. 

There is a system called BASIS. It is an acronym for Biological 

Aerosol Sentry and Information System. The labs have been developing this and a lot of other systems. They field-tested this system. 

It falls under the rubric of those accounts that were cut by 27 percent, by $57 million, in this year’s budget. Now we raised the issue 

again in the Armed Services Committee. It has been raised in the 

Appropriations Committee, and we succeeded in restoring about 

$30 million, but there is still a substantial cut there, and it is the 

sort of thing we really need to call attention to. It doesn’t have a 

lot of sex appeal, a lot of drama, and it doesn’t buy you a lot of 

constituent support, but I think it is critically important. If nobody 

else will champion the cause and the need, I think this committee, 

among others, ought to take it up. 

That is why I took advantage of your indulgence, just to strike 

that particular theme. It may be totally off the script that you are 

4

going to talk about, General Walker, but I wanted to lay it on the 

record and bring it to the attention of my colleagues. 

Thank you for coming, and I look forward to your testimony. 

[The prepared statement of Mr. Spratt follows:]

PREPARED STATEMENT OF HON. JOHN M. SPRATT, JR., A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF SOUTH CAROLINA

Thank you, Mr. Chairman, and thank you, Mr. Walker, for joining us today. GAO 

has done almost seventy studies over the last 4 years on antiterrorism and homeland security, and I look forward to your testimony. 

During the hearing today, Mr. Walker and our second panel—consisting of our 

former Speaker, Newt Gingrich, and our former Chairman of the House Foreign Affairs Committee, Lee Hamilton—will focus on organizational changes needed to protect against terrorist attacks. Studies show that we are not organized to detect terrorist threats, or to deter them from occurring, or to respond to them once they do 

occur. These are vital issues and this dialog is long overdue. 

I do not want to detract from the topic, but I do want to take just a few minutes 

to talk about the ‘‘fire next time,’’ the risk of nuclear terrorism and the need for 

non-proliferation. The devastation dealt by terrorists on September 11, 2001 was 

horrendous. But had they used nuclear weapons, it would have been far worse. 

There is one element that stands between terrorists and the possession of nuclear 

weapons, and that’s fissile materials, and we should take every effort to see that 

they do not obtain them. Only days before September 11, smugglers were apprehended in Turkey trying to move weapons-grade uranium out of Russia. Yesterday, 

President Bush warned that bin Laden and Al Qaeda have been actively seeking 

nuclear materials. 

We are not doing nearly as much as we should to keep nuclear materials and nuclear know-how out of the hand of terrorists. This is not a partisan issue; Mr. 

Thornberry and I have worked on the Armed Services Committee to improve nonproliferation programs. The original program was established by Senator Nunn and 

Senator Lugar. I worked with Jon Kyl when he wa sin the House to set up the main 

DOE program. Senators Nunn, Lugar, and Domenici established the legislation to 

bolster homeland security in 1996. Bill McCollum and I introduced the bill in the 

House. These programs have enjoyed bipartisan support, but this the sad truth: 

nonproliferation has been much a tougher sell than it should be. 

The Department of Energy shares the non-proliferation mission with the Department of Defense and focuses on its particular realm: nuclear materials. DOE’s nonproliferation budget is about double DOD’s non-proliferation budget. All told, the 

DOE non-proliferation budget in FY 2001 was $874 million. The administration’s 

budget cut these programs in its ’02 budget request by $101 million, a cut of almost 

12 percent. The energy and water bill just adopted by Congress restored part of the 

cut, but only part, about $30 million, leaving these programs $70 million below the 

2001 level. 

Let me tell you the impact these cuts will have on just one program, non-proliferation and verification R&D. 

Los Alamos National Laboratory and Lawrence Livermore National Laboratory 

have been involved for years in developing sensors placed on U.S. satellites to monitor the production, testing, or use of nuclear, biological, and chemical weapons. Before 1991, the program was unfocused. It was changed in the aftermath of the Persian Gulf when inspectors discovered that Iraq’s weapons of mass destruction were 

more advanced than the U.S. intelligence community had estimated. Shortly after 

the Gulf War, Congress set up a specific line in the DOE budget for non-proliferation and verification to develop technologies to detect the production, testing, transfer, or use of such weapons. 

The President’s budget request for this critical research in FY 2002 was $170 million; that’s $57.5 million (25 percent) below the 2001 level of $227.5 million. The 

energy and water bill conference report added back some of that cut, but still left 

the program almost $20 million below last year’s level. Here are some of the projects 

that will be cut: 

New seismic monitoring devices to help ensure that Russia, China, or others are 

not improving their nuclear weapons by conducting underground tests with a yield 

below 1 kiloton. 

The Biological Aerosol Sentry and Information System (BASIS), designed to detect 

a bio-terrorism attack within hours so that public health agencies can react quickly 

to stop the spread of the agent. This capability is not in hand, but it is maturing. 

5

BASIS was field-tested at Salt Lake City in March 2001. This cut will slow down 

the development of a promising technology, and one sorely needed. 

Development of new sensors to detect atmospheric nuclear explosions. Our satellites that carry these sensors are all being retired. We do not have any of the old 

sensors on hand they were all custom built. This cut may delay the construction of 

new sensors in time to be placed on replacement satellites. If not built on time, the 

U.S. will not be assured of the ability to detect an atmospheric nuclear explosion. 

New sensors specifically geared to go on platforms to detect the production, testing, transfer, or use of WMDs. These sensors pick up various ‘‘signatures’’ telltale 

clues that may be chemical, electromagnetic, infrared, optical, or radio-nuclide, all 

absolutely critical to improving the ability of the U.S. intelligence community to 

keep watch on what countries like North Korea, Iran, Iraq, and Libya are doing. 

If these cuts stand, and if they continue, we will be depriving our intelligence 

community of the resources they need to improve the technical means of gathering 

data and tracking threats. These cuts are the exact opposite of what we should be 

doing. These programs have limped along receiving more in lip service than real 

money. This must change; and if the administration will not lead, Congress should. 

Non-proliferation is just one part in our war on terrorism, and weapons of mass 

destruction are just one aspect of our hearing today, and not the primary subject; 

but I wanted to take this opportunity to raise the issue, because I think it has not 

received the attention or funding that it clearly calls for.

Chairman NUSSLE. David Walker, who is the Comptroller General and works for us at the General Accounting Office, I welcome 

you to the committee. I also want to parenthetically—as I told you 

in private and in front of a number of Members who were involved 

in the last 3 or 4 weeks as a result of the anthrax scare on Capitol 

Hill—show our appreciation to you and the General Accounting Office for the use of your facilities. It is something that—as I told 

you—one of the things that I have learned in Washington is that 

real estate on Capitol Hill is probably one of the most prized possessions, and for you to unselfishly allow us to come over and let 

us use your hall is something that we are deeply grateful and indebted to you for, and we appreciate all your staffs’ indulgence and 

assistance as we made that transition. 

We welcome you today. Long before aviation security was a topic 

on the public’s agenda, GAO was conducting a number of investigations in issuing reports. Long before bioterrorism and weapons of 

mass destruction, back when it was just a possible theoretical possibility, you were warning us. We appreciate that you would now 

come before us and give us an update on the questions that we 

have asked, and we welcome your testimony and invite you to 

present it at this time. Welcome. 

STATEMENT OF DAVID M. WALKER, COMPTROLLER GENERAL, 

GENERAL ACCOUNTING OFFICE 

Mr. WALKER. Thank you, Mr. Chairman. Mr. Spratt and other 

members of the committee, it is a pleasure to be back before you. 

Let me say it was our pleasure to accommodate the Members of 

the House of Representatives. Obviously it was something that we 

felt was appropriate to do. It was a hardship on us, but it enabled 

us to get close to our client in new and unexpected ways. I am sure 

that you are happy to be back in your offices, and we look forward 

to continuing to work with you. 

With regard to today’s hearing, I have got an extensive statement for the record and am going to summarize the most important points and allow time for the Q&A. Obviously, we have two 

distinguished individuals who are going to be on the next panel. 

6

The terrorist attacks of September 11 have profoundly changed 

the agendas of Congress, the White House, Federal agencies, State 

and local governments and a number of private sector entities, 

while simultaneously altering the way of life for many Americans. 

As a lesson from history inscribed in the front of the National Archives states, ‘‘eternal vigilance is the price of liberty.’’ Our fight 

against terrorism is not a short-term effort, and homeland security 

will forever be a priority for our Nation. As a result, we must find 

the best ways to sustain our efforts over the significant time period 

and leverage our finite resources, both human and financial, in 

ways that will have the greatest impact. 

An effective framework to address these challenges will require 

not only leadership with a clear vision to develop and implement 

a homeland security strategy in coordination with all relevant partners, but also the ability to marshal and direct the necessary resources, both financial and human, to get the job done. The recent 

establishment of the Office of Homeland Security is a good first 

step, but a series of questions must be addressed regarding how 

this office will be structured, what authority its Director will have, 

and how this effort can be institutionalized and sustained over 

time. 

The Director will need to define scope and objectives of the homeland security strategy. This strategy should be comprehensive and 

encompass the steps necessary to reduce our vulnerabilities, deter 

attacks, manage the effects of any attacks and provide for appropriate response. The strategy must involve all levels of government, 

the private sector, individual citizens, both here and abroad, and 

other nations. This strategy should also use a risk management approach to focus finite national resources on areas of greatest need. 

We will never have zero risk. We don’t have enough money for 

zero risk. Even if we put every amount of money we could at it, 

we will never get zero risk, it is virtually impossible. 

As the first board notes, one of the challenges that former Governor Ridge, will face is that even before September 11, there were 

a lot of players on the field in the Federal Government. Mr. Chairman, you noted 43 players in this year’s budget alone receiving 

money for homeland security, and actually this is just to combat 

terrorism. I would argue that combating terrorism is a subset of 

homeland security, and arguably there are other issues that would 

come under homeland security banner, although counter terrorism 

initiatives constitute the biggest part of it. This doesn’t count State 

and local government programs, nor does it include the many other 

entities it must be coordinated with. 

While homeland security is an urgent and vital national priority, 

we should recognize that the challenges that it presents illustrate 

a range of challenges facing our government in other areas that are 

not as visible or urgent, but nevertheless important. These include 

a lack of mission clarity, too much fragmentation and overlap, the 

need to improve the Federal Government’s human capital strategy, 

difficulties in coordination and operation among levels of government across sectors of the economy, and the need to better measure 

performance and make sure that for the money that Congress appropriates, you get demonstrable results. Just because you get the 

money doesn’t mean that you are going to get results. 

7

As we respond to these urgent priorities of today and the longterm requirements of homeland security, our Nation still must address a number of other short-term and long-term fiscal challenges 

that were present before September 11, and remain today. Our history suggests that we have incurred sizable deficits when the security of our Nation or the state of our economy was at risk. We are 

fortunate to face these risks today at a time when we have some 

near-term budget flexibility. It is important to remember that the 

long-term pressures on the budget have not lessened; in fact, they 

are much worse as a result of not only the events of September 11, 

but the declining economy and continued increases in health care 

costs. As a result, the ultimate task of addressing today’s urgent 

needs without unduly exacerbating our long-range challenges has 

become much more difficult. 

As the next two boards will note, the long term budget outlook 

is daunting. Based on CBO’s latest projection in August, we have 

projected the long term budget outcomes assuming that the entire 

unified budget surplus is eliminated in the near term. Our long 

term budget model suggest that by the year 2030, there will be no 

money for discretionary spending. By the year 2050, the only thing 

the Federal Government will be doing is paying bondholders. 

The next chart demonstrates how it looked before September 11, 

and this is not just because of September 11 it is also because of 

the decline in the economy and a number of other things. Even before September 11 and before the additional decline in the economy, the long term budget outlook was already bad, even with the 

assumption that we were going to save every penny in the Social 

Security surplus. Even with this assumption, discretionary spending was going to have to be cut by 50 percent by 2030; clearly these 

are bleak and unacceptable. 

My point is simple. There are a lot of legitimate demands that 

must be addressed today because of the events of September 11, 

and there are a number of actions that Congress will undoubtedly 

want to take in order to try to stimulate our economy, but it is important that those be focused on legitimate need rather than want. 

It is important to try to avoid hitchhikers, those who want to stack 

wants on top of needs; to be able to realize that what we have here 

is a very profound long-range challenge, nothing less than a need 

to review, reassess and reprioritize everything the Federal Government does and how it does it, because the numbers do not add up. 

All too frequently, we assume that the base is acceptable, and 

therefore, the debate is about the increment, the plus or minus 

from the base. The base doesn’t work. We cannot sustain the base 

long term. We have to start figuring out what the government is 

doing, what are you getting for it, what kind of return on investment, and how does that compare with the new and competing demands, whether they are security-related or prescription drugs, 

whatever they might be. What is the most important priority? Realistically you can’t meet them all. 

In summary, the terrorist attack of September 11 was a defining 

moment for our Nation, our government and in some respects the 

world. The appointment of former Governor Ridge to head the Office of Homeland Security within the Executive Office of the President is a promising first step in marshaling the resources necVerDate Feb 1 2002 18:02 Feb 25, 2002 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6602 H:\DOCS\HEARINGS\107-18\HBU311.000 HBUDGET1 PsN: DICK
8

essary to address our homeland security requirements. It can be 

argued, however, that statutory underpinnings and effective congressional oversight are critical to sustaining broad-scale initiatives 

over the long term. Therefore, as you move beyond the immediate 

response, I think it is important that you consider the implications 

of different structures for this Office of Homeland Security, not 

only on its ability to effectively get the job done, but on your ability—the Congress’s ability—to conduct effective oversight, and our 

ability at GAO to help you to be able to do that. 

I have serious concerns that the way that this office is structured 

right now may not make it effective and could seriously compromise our ability to help the Congress engage in effective oversight. I also believe that we need to work together to figure out 

how we and others can help the Congress make sure the funds that 

you appropriate as a result of the acts of September 11 are used 

for the intended purpose with demonstrable results. The model 

that was used to track spending for Hurricane Mitch and other 

kinds of disaster assistance efforts may be something we want to 

explore with you going forward. 

We have already started talking with OMB. They are getting 

their systems together to track funds. I think it is important because we are talking about significant sums of money, and our 

long-range challenges are now much tougher. 

Obviously, we stand ready to help in any way that we can, and 

we look forward to doing so. Thank you very much. 

Chairman NUSSLE. Thank you, General Walker. 

[The prepared statement of Mr. Walker follows:]

PREPARED STATEMENT OF DAVID M. WALKER, COMPTROLLER GENERAL OF THE

UNITED STATES

Mr. Chairman and members of the committee, the terrorist attacks of September 

11, 2001, have profoundly changed the agendas of the Congress, the White House, 

Federal agencies, State and local governments, and a number of private sector entities, while simultaneously altering the way of life for many Americans. The grave 

events of September 11th not only ended the debate about whether threats to our 

homeland are real, but also shattered the false sense of invulnerability within our 

Nation’s borders. At the same time, the aftermath of the attacks also clearly demonstrates the spirit of America and the enormous capacity of this Nation to unite; 

to coordinate efforts among federal, state and local agencies, as well as among private businesses, community groups, and individual citizens in response to a crisis; 

and to make the sacrifices necessary to respond both to these new threats and the 

consequences they entail. 

Our challenge is to build upon this renewed purpose in ways that create both 

short- and long-term benefits and allow us to sustain our efforts. As the lesson from 

history inscribed on the front of the National Archives states, ‘‘Eternal vigilance is 

the price of liberty.’’ Our fight against terrorism is not a short-term effort, and 

homeland security will forevermore be a priority for our Nation. As a result, we 

must find the best ways to sustain our efforts over a significant time period and 

leverage our finite resources, both human and financial, in ways that will have the 

greatest effects. 

I appreciate the opportunity to discuss with you today a framework for addressing 

Federal efforts to improve our homeland security and the fiscal implications that 

these actions may have for our Nation. Specifically, I will discuss the nature of the 

threats posed to our Nation, key elements of a framework to address homeland security, and the potential short- and long-term fiscal implications these efforts may 

have for the Nation. 

SUMMARY

According to a variety of U.S. intelligence assessments, the United States now 

confronts a range of increasingly diffuse threats that put increased destructive 

9

power into the hands of small states, groups, and individuals and threaten our values and way of life. These threats range from incidents of terrorism and attacks on 

critical infrastructure to cyber attacks, the potential use of various weapons of mass 

destruction, and the spread of infectious diseases. Each of these threats has varying 

degrees of potential to cause significant casualties and disruption. GAO has reported 

on many of these issues over the past several years, and the changing nature of security threats in the post-cold war world remains a key theme in our strategic plan. 

Appendix I contains a summary of our work and products in this area. 

An effective framework to address these challenges will require not only leadership with a clear vision to develop and implement a homeland security strategy in 

coordination with all relevant partners but also the ability to marshal and direct 

the necessary resources to get the job done. The recent establishment of the Office 

of Homeland Security is a good first step, but a series of questions must be addressed regarding how this office will be structured, what authority its Director will 

have, and how this effort can be institutionalized and sustained over time. The Director will need to define the scope and objectives of a homeland security strategy. 

This strategy should be comprehensive and encompass steps designed to reduce our 

vulnerabilities, deter attacks, manage the effects of any successful attacks, and provide for appropriate response. The strategy will involve all levels of government, the 

private sector, individual citizens both here and abroad, and other nations. Our 

strategy should also use a risk management approach to focus finite national resources on areas of greatest need. 

While homeland security is an urgent and vital national priority, we should recognize that the challenges it presents illustrate the range of challenges facing our government in other areas not as visible or urgent—but nevertheless important. These 

include a lack of mission clarity; too much fragmentation and overlap; the need to 

improve the Federal Government’s human capital strategy; difficulties in coordination and operation across levels of government and across sectors of the economy; 

and the need to better measure performance. 

As we respond to these urgent priorities of today and the enduring long-term requirements related to homeland security, our Nation still must address a number 

of other short-term and long-term fiscal challenges that were present before September 11, 2001, and remain today. Our history suggests that we have incurred sizable deficits when the security or the economy of the Nation was at risk. We are 

fortunate to face these risks at a time when we have some near-term budgetary 

flexibility. It is important to remember, however, that the long-term pressures on 

the budget have not lessened. In fact, they have increased due to the slowing economy and the increased spending levels expected for fiscal year 2002. As a result, 

the ultimate task of addressing today’s urgent needs without unduly exacerbating 

our long-range fiscal challenges has become much more difficult. 

THE NATURE OF THE THREAT FACING THE UNITED STATES

The United States and other nations face increasingly diffuse threats in the postcold war era. In the future, potential adversaries are more likely to strike vulnerable civilian or military targets in nontraditional ways to avoid direct confrontation 

with our military forces on the battlefield. The December 2000 national security 

strategy states that porous borders, rapid technological change, greater information 

flow, and the destructive power of weapons now within the reach of small states, 

groups, and individuals make such threats more viable and endanger our values, 

way of life, and the personal security of our citizens. 

10

FIGURE 1: THREATS TO NATIONAL SECURITY

Hostile nations, terrorist groups, transnational criminals, and individuals may 

target American people, institutions, and infrastructure with cyber attacks, weapons 

of mass destruction, or bioterrorism. International criminal activities such as money 

laundering, arms smuggling, and drug trafficking can undermine the stability of social and financial institutions and the health of our citizens. Other national emergencies may arise from naturally occurring or unintentional sources such as outbreaks of infectious disease. As we witnessed in the tragic events of September 11, 

2001, some of the emerging threats can produce mass casualties. They can lead to 

mass disruption of critical infrastructure, involve the use of biological or chemical 

weapons, and can have serious implications for both our domestic and the global 

economy. The integrity of our mail has already been compromised. Terrorists could 

also attempt to compromise the integrity or delivery of water or electricity to our 

citizens, compromise the safety of the traveling public, and undermine the soundness of government and commercial data systems supporting many activities. 

KEY ELEMENTS TO IMPROVE HOMELAND SECURITY

A fundamental role of the Federal Government under our Constitution is to protect America and its citizens from both foreign and domestic threats. The government must be able to prevent and deter threats to our homeland as well as detect 

impending danger before attacks or incidents occur. We also must be ready to manage the crises and consequences of an event, to treat casualties, reconstitute damaged infrastructure, and move the Nation forward. Finally, the government must be 

prepared to retaliate against the responsible parties in the event of an attack. To 

accomplish this role and address our new priority on homeland security, several 

critical elements must be put in place. First, effective leadership is needed to guide 

our efforts as well as secure and direct related resources across the many boundaries within and outside of the Federal Government. Second, a comprehensive homeland security strategy is needed to prevent, deter, and mitigate terrorism and terrorist acts, including the means to measure effectiveness. Third, managing the risks 

of terrorism and prioritizing the application of resources will require a careful assessment of the threats we face, our vulnerabilities, and the most critical infrastructure within our borders. 


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1 Combating Terrorism: Selected Challenges and Related Recommendations (GAO-01-822, 

Sept. 20, 2001). 2 Combating Terrorism: Comments on Counterterrorism Leadership and National Strategy 

(GAO-01-556T, March 27, 2001). 3 Establishing the Office of Homeland Security and the Homeland Security Council, E.O. 

13228, Oct. 8, 2001. 

Leadership Provided by the Office of Homeland Security 

On September 20, 2001, we issued a report that discussed a range of challenges 

confronting policymakers in the war on terrorism and offered a series of recommendations.1 We recommended that the government needs clearly defined and effective leadership to develop a comprehensive strategy for combating terrorism, to 

oversee development of a new national-threat and risk assessment, and to coordinate implementation among Federal agencies. In addition, we recommended that 

the government address the broader issue of homeland security. We also noted that 

overall leadership and management efforts to combat terrorism are fragmented because no single focal point manages and oversees the many functions conducted by 

more than 40 different Federal departments and agencies.2

For example, we have reported that many leadership and coordination functions 

for combating terrorism were not given to the National Coordinator for Security, Infrastructure Protection and Counterterrorism within the Executive Office of the 

President. Rather, these leadership and coordination functions are spread among 

several agencies, including the Department of Justice, the Federal Bureau of Investigation (FBI), the Federal Emergency Management Agency, and the Office of Management and Budget. In addition, we reported that Federal training programs on 

preparedness against weapons of mass destruction were not well coordinated among 

agencies resulting in inefficiencies and concerns among rescue crews in the first responder community. The Department of Defense, Department of Justice, and the 

Federal Emergency Management Agency have taken steps to reduce duplication and 

improve coordination. Despite these efforts, state and local officials and organizations representing first responders indicate that there is still confusion about these 

programs. We made recommendations to consolidate certain activities, but have not 

received full agreement from the respective agencies on these matters. 

In his September 20, 2001, address to the Congress, President Bush announced 

that he was appointing Pennsylvania Governor Thomas Ridge to provide a focus to 

homeland security. As outlined in the President’s speech and confirmed in a recent 

executive order,3 the new Homeland Security Adviser will be responsible for coordinating Federal, State, and local efforts and for leading, overseeing, and coordinating 

a comprehensive national strategy to safeguard the Nation against terrorism and 

respond to any attacks that may occur. 

Both the focus of the executive order and the appointment of a coordinator within 

the Executive Office of the President fit the need to act rapidly in response to the 

threats that surfaced in the events of September 11 and the anthrax issues we continue to face. Although this was a good first step, a number of important questions 

related to institutionalizing and sustaining the effort over the long term remain, including: • What will be included in the definition of homeland security? What are the specific homeland security goals and objectives? • How can the coordinator identify and prioritize programs that are spread across 

numerous agencies at all levels of government? What criteria will be established to 

determine whether an activity does or does not qualify as related to homeland security? • How can the coordinator have a real impact in the budget and resource allocation process? 

• Should the coordinator’s roles and responsibilities be based on specific statutory 

authority? And if so, what functions should be under the coordinator’s control? 

• Depending on the basis, scope, structure, and organizational location of this 

new position and entity, what are the implications for the Congress and its ability 

to conduct effective oversight? 

A similar approach was pursued to address the potential for computer failures at 

the start of the new millennium, an issue that came to be known as Y2K. A massive 

mobilization, led by an assistant to the President, was undertaken. This effort coordinated all federal, state, and local activities, and established public-private partnerships. In addition, the Congress provided emergency funding to be allocated by 

the Office of Management and Budget after congressional consideration of the proposed allocations. Many of the lessons learned and practices used in this effort can 

be applied to the new homeland security effort. At the same time, the Y2K effort 

was finite in nature and not nearly as extensive in scope or as important and visible 

12

to the general public as homeland security. The long-term, expansive nature of the 

homeland security issue suggests the need for a more sustained and institutionalized approach. 

Developing a Comprehensive Homeland Security Strategy 

I would like to discuss some elements that need to be included in the development 

of the national strategy for homeland security and a means to assign roles to federal, state, and local governments and the private sector. Our national preparedness 

related to homeland security starts with defense of our homeland but does not stop 

there. Besides involving military, law enforcement, and intelligence agencies, it also 

entails all levels of government—Federal, State, and local—and private individuals 

and businesses to coordinate efforts to protect the personal safety and financial interests of United States citizens, businesses, and allies, both at home and throughout the world. To be comprehensive in nature, our strategy should include steps designed to: 

• reduce our vulnerability to threats; 

• use intelligence assets and other broad-based information sources to identify 

threats and share such information as appropriate; 

• stop incidents before they occur; 

• manage the consequences of an incident; and 

• in the case of terrorist attacks, respond by all means available, including economic, diplomatic, and military actions that, when appropriate, are coordinated with 

other nations. 

An effective homeland security strategy must involve all levels of government and 

the private sector. While the Federal Government can assign roles to Federal agencies under the strategy, it will need to reach consensus with the other levels of government and with the private sector on their respective roles. In pursuing all elements of the strategy, the Federal Government will also need to closely coordinate 

with the governments and financial institutions of other nations. As the President 

has said, we will need their help. This need is especially true with regard to the 

multidimensional approach to preventing, deterring, and responding to incidents, 

which crosses economic, diplomatic, and military lines and is global in nature. 

Managing Risks to Homeland Security 

The United States does not currently have a comprehensive risk management approach to help guide Federal programs for homeland security and apply our resources efficiently and to best effect. ‘‘Risk management’’ is a systematic, analytical 

process to determine the likelihood that a threat will harm physical assets or individuals and then to identify actions to reduce risk and mitigate the consequences 

of an attack. The principles of risk management acknowledge that while risk generally cannot be eliminated, enhancing protection from known or potential threats 

can serve to significantly reduce risk. 

We have identified a risk management approach used by the Department of Defense to defend against terrorism that might have relevance for the entire Federal 

Government to enhance levels of preparedness to respond to national emergencies 

whether man-made or unintentional in nature. The approach is based on assessing 

threats, vulnerabilities, and the importance of assets (criticality). The results of the 

assessments are used to balance threats and vulnerabilities and to define and 

prioritize related resource and operational requirements. 

Threat assessments identify and evaluate potential threats on the basis of such 

factors as capabilities, intentions, and past activities. These assessments represent 

a systematic approach to identifying potential threats before they materialize. However, even if updated often, threat assessments might not adequately capture some 

emerging threats. The risk management approach therefore uses the vulnerability 

and criticality assessments discussed below as additional input to the decisionmaking process. 

Vulnerability assessments identify weaknesses that may be exploited by identified 

threats and suggest options that address those weaknesses. For example, a vulnerability assessment might reveal weaknesses in an organization’s security systems, 

financial management processes, computer networks, or unprotected key infrastructure such as water supplies, bridges, and tunnels. In general, teams of experts 

skilled in such areas as structural engineering, physical security, and other disciplines conduct these assessments. 

Criticality assessments evaluate and prioritize important assets and functions in 

terms of such factors as mission and significance as a target. For example, certain 

power plants, bridges, computer networks, or population centers might be identified 

as important to national security, economic security, or public health and safety. 

Criticality assessments provide a basis for identifying which assets and structures 

13

are relatively more important to protect from attack. In so doing, the assessments 

help determine operational requirements and provide information on where to 

prioritize and target resources while reducing the potential to target resources on 

lower priority assets. 

We recognize that a national-level risk management approach that includes balanced assessments of threats, vulnerabilities, and criticality will not be a panacea 

for all the problems in providing homeland security. However, if applied conscientiously and consistently, a balanced approach—consistent with the elements I have 

described—could provide a framework for action. It would also facilitate multidisciplinary and multiorganizational participation in planning, developing, and implementing programs and strategies to enhance the security of our homeland while applying the resources of the Federal Government in the most efficient and effective 

manner possible. Given the tragic events of Tuesday, September 11, 2001, a comprehensive risk management approach that addresses all threats has become an imperative. 

As this Nation implements a strategy for homeland security, we will encounter 

many of the longstanding performance and accountability challenges being faced 

throughout the Federal Government. For example, we will be challenged to look 

across the Federal Government itself to bring more coherence to the operations of 

many agencies and programs. We must also address human capital issues to determine if we have the right people with the right skills and knowledge in the right 

places. Coordination across all levels of government will be required as will adequately defining performance goals and measuring success. In addressing these 

issues, we will also need to keep in mind that our homeland security priorities will 

have to be accomplished against the backdrop of the long-term fiscal challenges that 

loom just over the 10-year budget window. 

SHORT- AND LONG-TERM FISCAL IMPLICATIONS

The challenges of combating terrorism and otherwise addressing homeland security have come to the fore as urgent claims on the Federal budget. As figure 2 

shows, our past history suggests that when our national security or the state of the 

Nation’s economy was at issue, we have incurred sizable deficits. Many would argue 

that today we are facing both these challenges. We are fortunate to be facing them 

at a time when we have some near-term budgetary flexibility. The budgetary surpluses of recent years that were achieved by fiscal discipline and strong economic 

growth put us in a stronger position to respond both to the events of September 11 

and to the economic slowdown than would otherwise have been the case. I ask you 

to recall the last recession in the early 1990’s where our triple-digit deficits [in billions of dollars] limited us from considering a major fiscal stimulus to jump start 

the economy due to well-founded fears about the impact of such measures on interest rates that were already quite high. In contrast, the fiscal restraint of recent 

years has given us the flexibility we need to both respond to the security crisis and 

consider short-term stimulus efforts. 

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FIGURE 2: SURPLUSES OR DEFICITS AS A SHARE OF GROSS DOMESTIC PRODUCT (GDP)

(1800–2000)

Note: Data through 1929 are shown as a percent of gross national product (GNP); data from 

1930 to present are shown as a percent of GDP.

Sources: Office of Management and Budget and Department of Commerce.

As we respond to the urgent priorities of today, we need to do so with an eye to 

the significant long-term fiscal challenges we face just over the 10-year budget horizon. I know that you and your counterparts in the Senate have given a great deal 

of thought to how the Congress and the President might balance today’s immediate 

needs against our long-term fiscal challenges. This is an important note to sound—

while some short-term actions are understandable and necessary, long-term fiscal 

discipline is still an essential need. 

As we seek to meet today’s urgent needs, it is important to be mindful of the collective impact of our decisions on the overall short- and long-term fiscal position of 

the government. For the short term, we should be wary of building in large permanent structural deficits that may drive up interest rates, thereby offsetting the potential economic stimulus Congress provides. For the longer term, known demographic trends (e.g., the aging of our population) and rising health care costs will 

place increasing claims on future Federal budgets—reclaiming the fiscal flexibility 

necessary to address these and other emerging challenges is a major task facing this 

generation. 

None of the changes since September 11 have lessened these long-term pressures 

on the budget. In fact, the events of September 11 have served to increase our longrange challenges. The baby boom generation is aging and is projected to enjoy greater life expectancy. As the share of the population over 65 climbs, Federal spending 

on the elderly will absorb larger and ultimately unsustainable shares of the Federal 

budget. Federal health and retirement spending are expected to surge as people live 

longer and spend more time in retirement. In addition, advances in medical technology are likely to keep pushing up the cost of providing health care. Absent substantive change in related entitlement programs, we face the potential return of 

large deficits requiring unprecedented spending cuts in other areas or unprecedented tax increases. 

As you know, the Director of the Congressional Budget Office (CBO) has recently 

suggested the possibility of a Federal budget deficit in fiscal year 2002, and other 

budget analysts appear to be in agreement. While we do not know today what the 

10-year budget projections will be in the next updates by CBO and the Office of 

Management and Budget (OMB), we do know the direction: they will be considerably less optimistic than before September 11, and the long-term outlook will look 

correspondingly worse. For example, if we assume that the 10-year surpluses CBO 

projected in August are eliminated, by 2030 absent changes in the structure of Social Security and Medicare, there would be virtually no room for any other Federal 

spending priorities, including national defense, education, and law enforcement. 

(See fig. 3). The resource demands that come from the events of September 11—and 

the need to address the gaps these events surfaced—will demand tough choices. 


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4Long-Term Budget Issues: Moving From Balancing the Budget to Balancing Fiscal Risk 

(GAO-01-385T, Feb. 6, 2001). 

Part of that response must be to deal with the threats to our long-term fiscal health. 

Ultimately, restoring our long-term fiscal flexibility will involve both promoting 

higher long-term economic growth and reforming the Federal entitlement programs. 

When Congress returns for its next session, these issues should be placed back on 

the national agenda. 

FIGURE 3: AUGUST 2001 PROJECTION—COMPOSITION OF FEDERAL SPENDING UNDER THE

‘‘ELIMINATE UNIFIED SURPLUSES’’ SIMULATION

Note: Revenue as a share of GDP declines from its 2000 level of 20.6 percent due to unspecified permanent policy actions. In this display, policy changes are allocated equally between revenue reductions and spending increases.

Source: GAO’s August 2001 analysis.

With this long-term outlook as backdrop, an ideal fiscal response to a short-term 

economic downturn would be temporary and targeted, and avoid worsening the 

longer-term structural pressures on the budget. However, you have been called upon 

not merely to respond to a short-term economic downturn but also to the homeland 

security needs so tragically highlighted on September 11. This response will appropriately consist of both temporary and longer-term commitments. While we might 

all hope that the struggle against terrorism might be brought to a swift conclusion, 

prudence dictates that we plan for a longer-term horizon in this complex conflict. 

Given the long-term fiscal challenge driven by the coming change in our demographics, you might think about the options you face in responding to short-term 

economic weakness in terms of a range or portfolio of fiscal actions balancing today’s 

urgent needs with tomorrow’s fiscal challenges. In my testimony last February before the Senate Budget Committee,4 I suggested that fiscal actions could be described as a continuum by the degree of long-term fiscal risk they present. At one 

end, debt reduction and entitlement reform actually increase future fiscal flexibility 

by freeing up resources. One-time actions—either on the tax or spending side of the 

budget—may have limited impact on future flexibility. At the other end of the fiscal 

risk spectrum, permanent or open-ended fiscal actions on the spending side or tax 

side of the budget can reduce future fiscal flexibility—although they may have salutary effects on longer-term economic growth depending on their design and implementation. I have suggested before that increasing entitlement spending arguably 

presents the highest risk to our long-range fiscal outlook. Whatever choices the Congress decides to make, approaches should be explored to mitigate risk to the long 

term. For example, provisions with plausible expiration dates—on the spending and/

or the tax side—may prompt reexamination taking into account any changes in fiscal circumstances. In addition, a mix of temporary and permanent actions can also 

serve to reduce risk. 

As we move beyond the immediate threats, it will be important for the Congress 

and the President to take a hard look at competing claims on the Federal fisc. I 


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5See Congressional Oversight: Opportunities to Address Risks, Reduce Costs, and Improve 

Performance (GAO/T-AIMD-00-96, Feb.17, 2000) and Budget Issues: Effective Oversight and 

Budget Discipline Are Essential-Even in a Time of Surplus (GAO/T-AIMD-00-73, Feb. 1, 2000) 

don’t need to remind this Committee that a big contributor to deficit reduction in 

the 1990’s was the decline in defense spending. Given recent events, it is pretty 

clear that the defense budget is not a likely source for future budget reductions. 

(See fig. 4). 

FIGURE 4: COMPOSITION OF FEDERAL SPENDING

Source: Budget of the United States Government FY 2002, Office of Management and Budget.

Once the economy rebounds, returning to surpluses will take place against the 

backdrop of greater competition of claims within the budget. The new commitments 

that we need to undertake to protect this Nation against the threats stemming from 

terrorism will compete with other priorities. Subjecting both new proposals and existing programs to scrutiny would increase the ability to accommodate any new 

needs. 

A fundamental review of existing programs and operations can create much needed fiscal flexibility to address emerging needs by weeding out programs that have 

proven to be outdated, poorly targeted or inefficient in their design and management.5 Many programs were designed years ago to respond to earlier challenges. 

Obviously many things have changed. It should be the norm to reconsider the relevance or ‘‘fit’’ of any Federal program or activity in today’s world and for the future. In fact, we have a stewardship responsibility to both today’s taxpayers and tomorrow’s to reexamine and update our priorities, programs, and agency operations. 

Given the significant events since the last CBO 10-year budget projections, it is 

clear that the time has come to conduct a comprehensive review of existing agencies 

and programs—which are often considered to be ‘‘in the base’’—while exercising continued prudence and fiscal discipline in connection with new initiatives. 

In particular, agencies will need to reassess their strategic goals and priorities to 

enable them to better target available resources to address urgent national preparedness needs. The terrorist attacks, in fact, may provide a window of opportunity 

for certain agencies to rethink approaches to longstanding problems and concerns. 

For instance, the threat to air travel has already prompted attention to chronic 

problems with airport security that we and others have been pointing to for years. 

Moreover, the crisis might prompt a healthy reassessment of our broader transportation policy framework with an eye to improving the integration of air, rail, and 

highway systems to better move people and goods. Other longstanding problems also 

take on increased relevance in today’s world. Take, for example, food safety. Problems such as overlapping and duplicative inspections, poor coordination and the inefficient allocation of resources are not new. However, they take on a new meaning—and could receive increased attention—given increased awareness of bioterrorism issues. 

GAO has identified a number of areas warranting reconsideration based on program performance, targeting, and costs. Every year, we issue a report identifying 

specific options, many scored by CBO, for congressional consideration stemming 


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6Supporting Congressional Oversight: Framework for Considering Budgetary Implications of 

Selected GAO Work (GAO-01-447, March 9, 2001).1 GAO-01-822, Sept. 20, 2001. 

from our audit and evaluation work.6 This report provides opportunities for (1) reassessing objectives of specific Federal programs, (2) improved targeting of benefits 

and (3) improving the efficiency and management of Federal initiatives. 

This same stewardship responsibility applies to our oversight of the funds recently 

provided to respond to the events of September 11. Rapid action in response to an 

emergency does not eliminate the need for review of how the funds are used. As 

you move ahead in the coming years, there will be proposals for new or expanded 

Federal activities, but we must seek to distinguish the infinite variety of ‘‘wants’’ 

from those investments that have greater promise to effectively address more critical ‘‘needs.’’

In sorting through these proposals, we might apply certain investment criteria in 

making our choices. Well-chosen enhancements to the Nation’s infrastructure are an 

important part of our national preparedness strategy. Investments in human capital 

for certain areas such as intelligence, public health and airport security will also 

be necessary as well to foster and maintain the skill sets needed to respond to the 

threats facing us. As we have seen with the airline industry, we may even be called 

upon to provide targeted and temporary assistance to certain vital sectors of our 

economy affected by this crisis. A variety of governmental tools will be proposed to 

address these challenges—grants, loans, tax expenditures, direct Federal administration. The involvement of a wide range of third parties—state and local governments, nonprofits, private corporations, and even other nations—will be a vital part 

of the national response as well. 

In the short term, we have to do what is necessary to get this Nation back on 

its feet and compassionately deal with the human tragedies left in its wake. However, as we think about our longer-term preparedness and develop a comprehensive 

homeland security strategy, we can and should select those programs and tools that 

promise to provide the most cost-effective approaches to achieve our goals. Some of 

the key questions that should be asked include the following: 

• Does the proposed activity address a vital national preparedness mission and 

do the benefits of the proposal exceed its costs? 

• To what extent can the participation of other sectors of the economy, including 

state and local governments, be considered; and how can we select and design tools 

to best leverage and coordinate the efforts of numerous governmental and private 

entities? Is the proposal designed to prevent other sectors or governments from reducing their investments as a result of Federal involvement? 

• How can we ensure that the various Federal tools and programs addressing the 

objective are coherently designed and integrated so that they work in a synergistic 

rather than a fragmented fashion? 

• Do proposals to assist critical sectors in the recovery from terrorist attacks appropriately distinguish between temporary losses directly attributable to the crisis 

and longer-term costs stemming from broader and more enduring shifts in markets 

and other forces? 

• Are the proposal’s time frames, cost projections, and promises realistic in light 

of past experience and the capacity of administrators at all levels to implement? 

We will face the challenge of sorting out these many claims on the Federal budget 

without the fiscal benchmarks and rules that have guided us through the years of 

deficit reduction into surplus. Your job therefore has become much more difficult. 

Ultimately, as this Committee recommended on October 4, we should attempt to 

return to a position of surplus as the economy returns to a higher growth path. Although budget balance may have been the desired fiscal position in past decades, 

nothing short of surpluses are needed to promote the level of savings and investment necessary to help future generations better afford the commitments of an 

aging society. As you seek to develop new fiscal benchmarks to guide policy, you 

may want to look at approaches taken by other countries. Certain nations in the 

Organization for Economic Cooperation and Development, such as Sweden and Norway, have gone beyond a fiscal policy of balance to one of surplus over the business 

cycle. Norway has adopted a policy of aiming for budget surpluses to help better 

prepare for the fiscal challenges stemming from an aging society. Others have established a specific ratio of debt to gross domestic product as a fiscal target. 

CONCLUSION

The terrorist attack on September 11, 2001, was a defining moment for our Nation, our government, and, in some respects, the world. The initial response by the 

President and the Congress has shown the capacity of our government to act quickVerDate Feb 1 2002 18:02 Feb 25, 2002 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6621 H:\DOCS\HEARINGS\107-18\HBU311.000 HBUDGET1 PsN: DICK
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ly. However, it will be important to follow up on these initial steps to institutionalize and sustain our ability to deal with a threat that is widely recognized as 

a complex and longer-term challenge. As the President and the Congress—and the 

American people—recognize, the need to improve homeland security is not a shortterm emergency. It will continue even if we are fortunate enough to have the 

threats moved off the front page of our daily papers. 

As I noted earlier, implementing a successful homeland security strategy will encounter many of the same performance and accountability challenges that we have 

identified throughout the Federal Government. These include bringing more coherence to the operations of many agencies and programs, dealing with human capital 

issues, and adequately defining performance goals and measuring success. 

The appointment of former Governor Ridge to head an Office of Homeland Security within the Executive Office of the President is a promising first step in marshalling the resources necessary to address our homeland security requirements. It 

can be argued, however, that statutory underpinnings and effective congressional 

oversight are critical to sustaining broad scale initiatives over the long term. Therefore, as we move beyond the immediate response to the design of a longer-lasting 

approach to homeland security, I urge you to consider the implications of different 

structures and statutory frameworks for accountability and your ability to conduct 

effective oversight. Needless to say, I am also interested in the impact of various 

approaches on GAO’s ability to assist you in this task. 

You are faced with a difficult challenge: to respond to legitimate short-term needs 

while remaining mindful of our significant and continuing long-term fiscal challenges. While the Congress understandably needs to focus on the current urgent priorities of combating international terrorism, securing our homeland, and stimulating 

our economy, it ultimately needs to return to a variety of other challenges, including 

our long-range fiscal challenge. Unfortunately, our long-range challenge has become 

more difficult, and our window of opportunity to address our entitlement challenges 

is narrowing. As a result it will be important to return to these issues when the 

Congress reconvenes next year. We in GAO stand ready to help you address these 

important issues both now and in the future. 

I would be happy to answer any questions that you may have. 

APPENDIX I: PRIOR GAO WORK RELATED TO HOMELAND SECURITY

GAO has completed several congressionally requested efforts on numerous topics 

related to homeland security. Some of the work that we have done relates to the 

areas of combating terrorism, aviation security, transnational crime, protection of 

critical infrastructure, and public health. The summaries describe recommendations 

made before the President established the Office of Homeland Security. 

Combating Terrorism 

Given concerns about the preparedness of the Federal Government and state and 

local emergency responders to cope with a large-scale terrorist attack involving the 

use of weapons of mass destruction, we reviewed the plans, policies, and programs 

for combating domestic terrorism involving weapons of mass destruction that were 

in place prior to the tragic events of September 11. Our report, Combating Terrorism: Selected Challenges and Related Recommendations,1 which was issued September 20, 2001, updates our extensive evaluations in recent years of Federal programs to combat domestic terrorism and protect critical infrastructure. 

Progress has been made since we first began looking at these issues in 1995. 

Interagency coordination has improved, and interagency and intergovernmental 

command and control now is regularly included in exercises. Agencies also have 

completed operational guidance and related plans. Federal assistance to state and 

local governments to prepare for terrorist incidents has resulted in training for 

thousands of first responders, many of whom went into action at the World Trade 

Center and at the Pentagon on September 11, 2001. 

We also recommended that the President designate a single focal point with responsibility and authority for all critical functions necessary to provide overall leadership and coordination of Federal programs to combat terrorism. The focal point 

should oversee a comprehensive national-level threat assessment on likely weapons, 

including weapons of mass destruction, that might be used by terrorists and should 

lead the development of a national strategy to combat terrorism and oversee its implementation. With the President’s appointment of the Homeland Security Adviser, 

that step has been taken. Furthermore, we recommended that the Assistant to the 

President for Science and Technology complete a strategy to coordinate research and 

development to improve Federal capabilities and avoid duplication. 

19

Aviation Security 

Since 1996, we have presented numerous reports and testimonies and identified 

numerous weaknesses that we found in the commercial aviation security system. 

For example, we reported that airport passenger screeners do not perform well in 

detecting dangerous objects, and Federal Aviation Administration tests showed that 

as testing gets more realistic—that is, as tests more closely approximate how a terrorist might attempt to penetrate a checkpoint—screener performance declines significantly. In addition, we were able to penetrate airport security ourselves by having our investigators create fake credentials from the Internet and declare themselves law enforcement officers. They were then permitted to bypass security screening and go directly to waiting passenger aircraft. In 1996, we outlined a number 

of steps that required immediate action, including identifying vulnerabilities in the 

system; developing a short-term approach to correct significant security weaknesses; 

and developing a long-term, comprehensive national strategy that combines new 

technology, procedures, and better training for security personnel. 

Cyber Attacks on Critical Infrastructure 

Federal critical infrastructure-protection initiatives have focused on preventing 

mass disruption that can occur when information systems are compromised because 

of computer-based attacks. Such attacks are of growing concern due to the Nation’s 

increasing reliance on interconnected computer systems that can be accessed remotely and anonymously from virtually anywhere in the world. In accordance with 

Presidential Decision Directive 63, issued in 1998, and other information-security 

requirements outlined in laws and Federal guidance, an array of efforts has been 

undertaken to address these risks. However, progress has been slow. For example, 

Federal agencies have taken initial steps to develop critical infrastructure plans, but 

independent audits continue to identify persistent, significant information security 

weaknesses that place many major Federal agencies’ operations at high risk of tampering and disruption. In addition, while Federal outreach efforts have raised 

awareness and prompted information sharing among government and private sector 

entities, substantive analysis of infrastructure components to identify interdependencies and related vulnerabilities has been limited. An underlying deficiency impeding progress is the lack of a national plan that fully defines the roles and responsibilities of key participants and establishes interim objectives. Accordingly, we have 

recommended that the Assistant to the President for National Security Affairs ensure that the government’s critical infrastructure strategy clearly define specific 

roles and responsibilities, develop interim objectives and milestones for achieving 

adequate protection, and define performance measures for accountability. The administration has been reviewing and considering adjustments to the government’s 

critical infrastructure-protection strategy and last week, announced appointment of 

a Special Advisor to the President for Cyberspace Security. 

International Crime Control 

On September 20, 2001, we publicly released a report on international crime control and reported that individual Federal entities have developed strategies to address a variety of international crime issues, and for some crimes, integrated mechanisms exist to coordinate efforts across agencies. However, we found that without 

an up-to-date and integrated strategy and sustained top-level leadership to implement and monitor the strategy, the risk is so high that scarce resources will be 

wasted, overall effectiveness will be limited or not known, and accountability will 

not be ensured. We recommended that the Assistant to the President for National 

Security Affairs take appropriate action to ensure sustained executive-level coordination and assessment of multiagency Federal efforts in connection with international crime, including efforts to combat money laundering. Some of the individual actions we recommended were to update the existing government-wide international crime threat assessment, to update or develop a new International Crime 

Control Strategy to include prioritized goals as well as implementing objectives, and 

to designate responsibility for executing the strategy and resolving any jurisdictional issues. 

Public Health 

The spread of infectious diseases is a growing concern. Whether a disease outbreak is intentional or naturally occurring, the public health response to determine 

its causes and contain its spread is largely the same. Because a bioterrorist event 

could look like a natural outbreak, bioterrorism preparedness rests in large part on 

public health preparedness. We reported in September 2001 that concerns remain 

regarding preparedness at state and local levels and that coordination of Federal 

terrorism research, preparedness, and response programs is fragmented. 

20

In our review last year of the West Nile virus outbreak in New York, we also 

found problems related to communication and coordination among and between federal, state, and local authorities. Although this outbreak was relatively small in 

terms of the number of human cases, it taxed the resources of one of the Nation’s 

largest local health departments. In 1999, we reported that surveillance for important emerging infectious diseases is not comprehensive in all states, leaving gaps 

in the Nation’s surveillance network. Laboratory capacity could be inadequate in 

any large outbreak, with insufficient trained personnel to perform laboratory tests 

and insufficient computer systems to rapidly share information. Earlier this year, 

we reported that Federal agencies have made progress in improving their management of the stockpiles of pharmaceutical and medical supplies that would be needed 

in a bioterrorist event, but that some problems still remained. There are also widespread concerns that hospital emergency departments generally are not prepared in 

an organized fashion to treat victims of biological terrorism and that hospital emergency capacity is already strained, with emergency rooms in major metropolitan 

areas routinely filled and unable to accept patients in need of urgent care. To improve the Nation’s public health surveillance of infectious diseases and help ensure 

adequate public protection, we recommended that the Director of the Centers for 

Disease Control and Prevention lead an effort to help federal, state, and local public 

health officials achieve consensus on the core capacities needed at each level of government. We advised that consensus be reached on such matters as the number and 

qualifications of laboratory and epidemiological staff as well as laboratory and information technology resources.

Chairman NUSSLE. Prior to September, the Government’s proposed fiscal year 2002 budget for all programs under the definition 

of combating terrorism was approximately $12.8 billion. As I understand it, 8.6 billion was categorized as, quote, combating terrorism; 1.8 billion was, quote, to combat weapons of mass destruction; and 2.6 billion was categorized, quote, critical infrastructure 

protection, for a total of $12.8 billion. This is, as I understand it, 

a 78 percent increase since fiscal year 1998, which was the first 

year that some of these definitions appeared in the budget and appeared in appropriations. There was slightly more than half spent 

by the Department of Defense. 

How do we measure the effectiveness of this money that has 

been spent and the priority that has been put toward combating 

terrorism, combating weapons of mass destruction and critical infrastructure protection? Are we only able to do that through the 

prism of what occurred on September 11, or is there a way to examine the effectiveness of these resources that have been spent 

and coordinated thus far, and what model would you suggest? 

I think you gave us some very good advice with regard to oversight, particularly the caveat to Congress’s often cheerful method 

of providing hitchhikers for—under the rubric of combating terrorism, just about everything has that definition attached to it, it 

seems, for stimulating the economy. How would we model the oversight for these programs? 

Mr. WALKER. First, let me say that those numbers that have 

been reported to you, is how much money was appropriated and 

how much money was spent for those activities. I think that one 

of the things that has to be done on a targeted basis, and we are 

happy to try to work with this committee and others as appropriate, is what are they actually doing with that money. In some 

cases it may be investment-oriented, or it may be R&D, and you 

may need to do R&D, and R&D may not be getting a payoff in year 

1, but it is something you need to do to stay ahead of the curve 

and ultimately will be able to demonstrate that you are getting 

some return on that over some period of time. 

21

One of the concerns I have is that there is not enough focus on 

what is being done with the money and what we are getting for the 

money. There has also been a challenge in government in that most 

of the activities that have occurred have been everybody looking at 

their silo, each of these individual 43 departmental agencies being 

responsible and accountable for what they do rather than looking 

across government. In the area of counterterrorism, homeland security, by definition, you have to take a horizontal approach across 

the Federal Government as well as across boundaries, domestically 

and internationally. I think we need to work together building off 

GPRA, but targeting in on areas of opportunity—security being one 

of the most fundamental—to try to work with the Congress and 

others to do a more thorough analysis of what actually is being 

done and what is being achieved of what is being done. 

Chairman NUSSLE. When could that analysis be completed, because what I am concerned about is that we will very cheerfully 

enter into a bidding war when it comes to—from a partisan standpoint, or even in a nonpartisan standpoint—an effort to demonstrate our desire to protect America. We have said, the President 

has said, every American has said they would be willing to pay just 

about any price to ensure that September 11 never happens again. 

That is easy to say in a speech. When the Budget Committee meets 

coming in January, February and March to actually put that on 

paper and realize the juxtaposition that it has with health care, 

welfare, the environment, transportation and everything else in the 

Federal budget, that will be a little bit harder pill to swallow and 

more difficult to sustain long-term fiscal sanity and get us back on 

an even keel in short order. 

So how quickly can we come up with that kind of analysis so that 

we are better prepared to enter into this next budget cycle? 

Mr. WALKER. We have created a GAO task team to focus horizontally on the issue of homeland security, and Randall Yim is the 

director of that group. What I would suggest is we get him and his 

people together with your staff and figure out what we can do. It 

depends upon how much you want us to do. We can make it a priority. I think it needs to be a priority, and I think it is illustrative 

of what needs to be done in a whole range of government areas. 

This happens to be the most acute need right now, and we will 

work with you. 

Chairman NUSSLE. As part of the horizontal approach, we need 

to include State and local. 

Mr. WALKER. I agree. I met this morning, with a number of State 

treasurers who are trying to work with us and will end up working 

with the administration because they want to play a part here and 

want to leverage the economic power of the States and the State 

pension funds to combat terrorism. There are things that can be 

done in that regard, and we are working with them to facilitate 

networking with the executive branch to get that done. 

Chairman NUSSLE. Mr. Spratt. 

Mr. SPRATT. Let me follow up on that idea. Would it be possible 

then for the General Accounting Office, first of all, to take something like the wiring diagram you have there and expand upon it 

and give us an inventory of all the programs in the Federal GovVerDate Feb 1 2002 18:02 Feb 25, 2002 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6602 H:\DOCS\HEARINGS\107-18\HBU311.000 HBUDGET1 PsN: DICK
22

ernment, associated agencies, that are counterterrorism, homeland 

security today, or is that—is that a doable task? 

Mr. WALKER. I think it is a doable task. Mr. Spratt, we can make 

a good faith effort to get that done. 

Mr. SPRATT. Usable. Give us a big compendium, and nobody will 

ever look at it. 

Mr. WALKER. I understand what you are saying. Yes. 

Mr. SPRATT. Obviously we would want the organizations, and we 

would want the programs associated with those organizations. In 

many cases it will be dual and triple applications. It would not just 

be homeland security. There would be other purposes. We would 

like to know, I think, the cost associated with the programs. Then 

once we get that, I guess we need to talk to you about how do you 

measure effectiveness. We use the word ‘‘cost-effective’’ all the time. 

We don’t have a good device for measuring cost-effectiveness. 

Mr. WALKER. We can come up with the agencies. We can make 

a good faith effort of coming up with what they report as the related cost. 

Obviously one of the problems with cost is how do you define it; 

are they allocating overhead to it, or is it just direct cost. So I think 

what we can do is do the best we can to get some meaningful information that gives you a baseline. But ultimately this is something 

we are going to have to do, in more depth, over time. 

Mr. SPRATT. Well, we welcome the opportunity to sit down with 

your staff and work out that project. 

Chairman NUSSLE. Mr. Gutknecht. 

Mr. GUTKNECHT. Thank you, Mr. Chairman. 

Mr. Walker, it has been said that one of the first casualties of 

war is the truth, and there have been some rumors floating around 

and I just want to find out what you know about this. I was told 

last week, for example, over the last 3 years the Federal Government has spent several hundred million dollars on consultants to 

deal with bioterrorism. In view of the rather ham-fisted way we 

seem to have dealt with anthrax, I am curious. 

Two things: First of all, can you confirm that; do you know that; 

and is there a way to find out whether or not that is true? Secondly, I think we owe it to our constituents to find out what in the 

world we have gotten for all the money we have spent. 

What the number is, we don’t know right now, but we know it 

is a pretty sizable number over the last 3 years, and I would just 

like to work with you, and I would hope that you would work with 

the Budget Committee. I do think there will be a tendency in the 

next year or so, and perhaps beyond, to be willing to spend a lot 

more money, but I agree that at some point we have to demonstrate to our constituents and to the taxpayers that in fact they 

are getting fair value for the money we spent. Do you know anything about the amount——

Mr. WALKER. I do not know the amount of money that has been 

spent on bioterrorism consultants, but hopefully at least we will get 

a feel for what is being proposed to be spent on bioterrorism as 

part of this other review. I don’t know if we have a way to figure 

that out or not. The information that we get does not break it out 

by whether or not it is, for consultants. I will see what, if anything, 

23

we can do on that, but I cannot confirm the fact that we have spent 

several hundred million dollars. 

Mr. GUTKNECHT. Mr. Chairman, let me just brag for a minute, 

if I can, on some of my constituents. For all the money we have 

spent over the last number of years on bioterrorism, the one thing 

that we learned, to our despair, that we really did not have an effective test for anthrax. A team of researchers working in my district, with no Federal funds, in the last 30 days, has developed a 

test for anthrax at Mayo Clinic which will give you results within 

30 minutes. 

I think that there is an example and I think maybe a lesson for 

us, and that is, all the money that we are throwing into some of 

the Federal agencies, we don’t seem to get the kind of results; and 

here we have some scientists working in a lab in Rochester, Minnesota with no Federal funds, and they come up with a test within 

30 days that will give us answers within 30 minutes. I hope we 

won’t lose that lesson as we go forward. I will yield back. 

Mr. WALKER. I think we also have to keep in mind that we have 

had one producer for a vaccine for anthrax, or at least one type of 

anthrax, that has not received FDA approval. So we have spent a 

tremendous amount of money on that and yet FDA hasn’t approved 

the vaccine. This is an example of something that has gone wrong. 

Chairman NUSSLE. I am going to call on Mr. Bentsen next, but 

let me propound a unanimous consent request. I would ask unanimous consent that we invite to the table, after Mr. Bentsen has an 

opportunity to ask questions, our second panel and allow them to 

make their presentation. We have a briefing at 3:00, and I think 

it would be good to get their thoughts on this as well before we go 

around. So, Mr. Bentsen, and we will call that second panel——

Mr. BENTSEN. Thank you, Mr. Chairman. And excuse my voice. 

Mr. Walker, you raised some interesting questions. And I apologize to our second panel, but I am going to have to leave to go back 

to a markup on the reinsurance bill that we are working on in response to September 11 which may well have future budget implications. But you raised some interesting questions on whether or 

not the cost—and there will be a cost associated with this—whether or not it is a supplemental cost or becomes a substitution cost 

for other programs that we might do. And I don’t know that any 

of us have that answer. 

We know that most of the first responders are State and local, 

but we also don’t know the answer of whether this is a Federal cost 

that the Federal Government will ultimately have to underwrite. 

So it is a very complicated issue. 

I would like to turn your attention to a story that ran Monday 

in the New York Times about the public health care system in responding to bioterrorism, and I would ask unanimous consent to insert it into the record, if I might. 

[The information referred to follows:]

STRUGGLING TO REACH A CONSENSUS ON PREPARATIONS FOR BIOTERRORISM

BY SHERYL GAY STOLBERG

[New York Times, November 5, 2001]

In his 5 years as president of Johns Hopkins Hospital in Baltimore, Ronald R. 

Peterson has spent much of his time trying to make ends meet. But now that the 

24

anthrax scare has made bioterrorism a reality, Mr. Peterson is planning to spend 

money, not save it. 

This year, Johns Hopkins will buy extra medicines, masks, ventilators and radios 

for its security force. It will retrofit a building with new air filters, to keep infectious 

germs from spreading. The price: $7 million. The question is, who will pay for it? 

‘‘The Federal Government is going to have to give us some assistance,’’ Mr. Peterson said. Last week, the American Hospital Association estimated that the Nation 

would have to spend $11.3 billion to get hospitals ready to handle a serious bioweapon attack. But the leading bioterrorism legislation in Congress proposes $3 billion for all aspects of preparedness, with $400 million earmarked for hospitals. 

The gulf between these two estimates shows how far the Nation is from a consensus on what must be done to prepare for bioterrorism. The current anthrax attacks, which have killed 4 people and sickened 14 others, have done more than 

years of reports and warnings to convince Americans that the Nation must get 

ready for a large-scale germ attack. 

But the anthrax-tainted letters, while terrifying, have not been much of a test of 

the country’s hospital network. 

The system they have tested—the public health system—has been strained to its 

breaking point. 

‘‘We have spent, in the last 3 years, one dollar per year per American on bioterrorism preparedness,’’ said Dr. Tara O’Toole, director of the Center for Civilian Biodefense Studies at Johns Hopkins University. ‘‘We are basically getting what we 

paid for.’’

Senator Bill Frist, Republican of Tennessee, and Senator Edward M. Kennedy, 

Democrat of Massachusetts, are proposing legislation that would increase that 

amount tenfold, to $3.1 billion a year, Mr. Frist said. 

Dr. O’Toole says that amount is merely a ‘‘down payment on what is going to have 

to be a long-term investment.’’ There is little agreement among lawmakers and policy experts about how much is needed. Mr. Kennedy, for instance, initially wanted to spend $10 billion on bioterrorism, including $5 billion to improve the public health system. The current Frist-Kennedy 

package, which could be taken up by the Senate this week, includes about $1 billion 

for public health. In the House of Representatives, Democrats have proposed $7 billion for bioter- rorism, including $3.5 billion for public health improvements; House Republicans 

are drafting an alternative. The Bush administration has asked Congress for $1.5 billion to fight germ attacks, most of it to stockpile antibiotics and vaccines. 

‘‘We can achieve much better preparedness very quickly,’’ Mr. Kennedy said, ‘‘but 

it will require a major national effort and a major commitment of new resources.’’

‘‘The question is not whether we have the ability to protect the American people,’’ 

he said, ‘‘but whether we have the will.’’

Having the will does not just mean having the money. It means training doctors 

and nurses and public health professionals. It will also mean a sea change in the 

way hospitals do business. 

For more than a decade, managed care companies and the Medicare system have 

pressed hospitals to squeeze the extras out of their budgets. Hospitals have cut beds 

from emergency rooms. They have eliminated laboratory technician positions and 

pharmacy jobs. They no longer stockpile medicines, and instead buy drugs each day 

as needed. These steps have eliminated what is known as surge capacity, the ability 

of hospitals to handle a sharp increase in patients. 

To prepare for bioterrorism, hospitals must build surge capacity back in. Yet because they are reimbursed by health insurers only for patient care, hospital executives say they have no way to pay for bioterrorism preparedness. And because hospitals compete for patients, most have not engaged in regional planning for a bioterrorist attack—designating one city hospital as the burn unit, for instance, and another the infectious disease ward. 

‘‘Back in civil defense days, there were regional hospital planning committees that 

had some type of a game plan,’’ said Amy Smithson, a bioterrorism expert at the 

Henry L. Stimson Center, a research organization in Washington. ‘‘Privatization of 

the hospital industry has meant that if physicians, nurses and hospital administrators could not charge their time to a health insurer or Uncle Sam, then it was difficult for them to do this type of thing.’’

The American Hospital Association estimates that, in a large-scale bioterrorist attack, each urban hospital will need to be able to care for 1,000 patients; the preparations will cost about $3 million per hospital, and more than $8 billion all told. 

Each rural hospital, the association has said, will need to be able to care for 200 

patients, at a cost of $1.4 million per hospital, a total of more than $3 billion. 

25

Some bioterrorism experts, among them Dr. Frank E. Young, the former director 

of the Office of Emergency Preparedness at the Department of Health and Human 

Services, have suggested that military field hospitals could be used to help cope with 

an attack. Others say that is not practical. 

‘‘I think it’s naive to say we don’t need to upgrade our hospital capabilities,’’ said 

Joseph Waeckerle, an expert on bioterrorism who edits the Annals of Emergency 

Medicine. ‘‘People are going to go to emergency departments of hospitals, and they 

are going to go in waves.’’ Of the current anthrax attacks, he said: ‘‘This is one 

small incident. What happens if we have a big one?’’

Senator Frist said he was reluctant to commit the government to spending a lot 

of money on hospital preparedness until the hospitals developed bioterrorism plans. 

‘‘Only one out of five hospitals even has a bioterrorism plan,’’ Mr. Frist said. ‘‘If you 

gave them a billion dollars, they don’t have a plan to spend it on.’’

There is general agreement, however, that the Federal Government needs to 

stockpile vaccines and antibiotics. The Bush administration has proposed spending 

$509 million to acquire 300 million doses of smallpox vaccine, one for every American, and $630 million to expand the National Pharmaceutical Stockpile, a cache of 

medicine and equipment that could be used in the event of a national emergency. 

Antibiotics from the stockpile are being distributed to people exposed to anthrax. 

Kevin Keane, a spokesman for Tommy G. Thompson, the secretary of Health and Human Services, called the administration’s $1.5 billion plan ‘‘a strong investment 

and a good start.’’ Mr. Keane said the health secretary is ‘‘continuing to work very 

closely with Senators Kennedy and Frist as well as other Members of Congress on 

a final package.’’

But Representative Robert Menendez, a New Jersey Democrat who is chairman 

of the House Democratic caucus’s task force on homeland security, said Mr. Bush’s 

plan did not go far enough. The Democrats’ $7 billion package, for instance, includes 

$1.1 billion to improve intelligence capabilities to detect bioterrorism, $870 million 

for law enforcement and $720 million for the military. 

‘‘The administration is way behind the curve,’’ Mr. Menendez said. ‘‘They may be 

very aggressive in their war on Afghanistan. But in my view, and in the view of 

many people, they are not as aggressive on the homeland part of this issue.’’

As the debate continues, the Nation’s public health laboratories are struggling to 

analyze tests generated by the anthrax scare. Dr. O’Toole, of Johns Hopkins, said 

laboratory workers at the Centers for Disease Control and Prevention were ‘‘literally 

sleeping in the lab,’’ while public health departments in affected states were working around the clock to analyze suspicious powders. 

‘‘We’ve been doing this for a few weeks now and people are tired,’’ Dr. O’Toole 

said. ‘‘It is not sustainable over the long term. Public health has been so frayed and 

reduced in recent years that it is very hard to rise to the occasion.’’

There is a shortage of epidemiologists who are trained to recognize and investigate outbreaks of infectious disease, said Dr. Michael T. Osterholm, a professor of 

public health at the University of Minnesota who advises Mr. Thompson, the health 

secretary, on bioterrorism. ‘‘Many health departments couldn’t hire one,’’ Dr. 

Osterholm said, ‘‘even if they had the money.’’

So no matter how much money Congress appropriates, Dr. Osterholm said, the 

United States cannot prepare for bioterrorism overnight. 

‘‘It’s going to be a multiyear building project,’’ Dr. Osterholm said. ‘‘That’s what 

people have to understand. It’s like a skyscraper. Even if you want to build it tomorrow, it’s going to take time.’’

Mr. BENTSEN. It was in response to a letter, or at least in part 

in response to a letter put out by the American Hospital Association, where they estimated that the cost of bringing the Nation’s 

hospitals up to speed to deal with bioterrorism response would be 

about $11 billion-plus. I didn’t read this article first thing Monday 

morning, because I was sitting at Baylor College of Medicine in 

Houston, and the head of the institution that I was sitting with 

had read it and mentioned it to me. All over this country, major 

hospitals and medical centers, including the Mayo Clinic, are in the 

process of figuring out what they would do and how they would respond to a bioterrorism attack. 

Where are we, and where has the Federal Government been in 

trying to deal with these issues? It is my understanding in the past 

we have had a research budget of about $200 million at the NIH 

26

and other funding at CDC, but have we taken any of the appropriate steps to ensure that the public health system is ready to address any sort of widespread bioterrorism attack, and what do you 

all estimate the costs will be? 

Mr. WALKER. Well, Jan Heinrich, who is a director of in our 

health care practice, will come up and would like to briefly respond 

to what the government has done in the area of bioterrorism, and 

then I would like to come back and talk to you about infrastructure. 

Ms. HEINRICH. On the public health side, it has only been recently that we have begun to reinvest in infrastructure that we 

need if, in fact, we are going to be able to respond adequately; that 

is our surveillance systems, our training so that we can recognize 

these biological agents. On the hospital systems side in the emergency rooms, I know there is a great deal of concern within the 

American hospital systems because all of our Federal programs 

have really been focused on efficiency and really cutting out the excess capacity. I think what we are hearing now is that we don’t 

have that excess capacity, and so we have heard varying reports 

about what in fact it will cost us to expand emergency room capability and to expand hospital beds. 

Mr. BENTSEN. Do you think that the $11 billion figure that AHA 

puts out is a ballpark figure? 

Ms. HEINRICH. I would really want to look very carefully at that 

figure. 

Mr. WALKER. I think there is a serious issue that goes beyond 

this that I would like to touch on. Based on all the work that GAO 

has done, even with the events of September 11 there is significant 

excess physical infrastructure in a range of areas that we need to 

take a look at, and I would argue that because of the events of September 11, we now need to look at it quicker, because what we are 

going to have to do is to ensure the safety and security and the 

proper equipping of a number of facilities whether they be DOD, 

VA, postal service facilities. We are going to need to do that. 

We have significant excess physical plant right now and ultimately we are going to have to rationalize that physical plant. I 

would hope that we can think about accelerating the rationalization of that, because we are going to have to invest to safeguard 

that physical plant and properly equip and staff whatever physical 

plant we have in light of the events of September 11. I know there 

are a lot of people who are coming out now saying, we would end 

up having to use all the physical facilities and rooms that we have 

to address a potentially catastrophic event. 

We have to go back to the risk assessment. What is the likelihood that that is going to happen? Can we afford to pay for and 

staff for something that might have a 1 percent or less than 1 percent probability? These are some of the issues we have to address. 

Mr. BENTSEN. Thank you, Mr. Chairman. 

Chairman NUSSLE. Thank you. I would invite Chairman Hamilton and Speaker Gingrich to the witness table. Like the GAO, the 

U.S. Commission on National Security/21st Century did not regard 

domestic use of weapons of mass destruction by terrorists as 

science fiction or as a threat that might be 20 years in the future. 

So for your farsightedness and your willingness to do some heavy 

27

lifting on the Commission to begin the thought process at that 

time, hopefully far into the future—but as we know now not quite 

so—we are very grateful for your work product. We are grateful for 

your attendance here today. 

We will begin with Speaker Gingrich. Welcome back to the Budget Committee and to the Congress, and we look forward to your 

testimony. 

STATEMENT OF HON. NEWT GINGRICH, FORMER SPEAKER OF 

THE HOUSE OF REPRESENTATIVES, MEMBER, U.S. COMMISSION ON NATIONAL SECURITY/21ST CENTURY 

Mr. GINGRICH. Mr. Chairman, and Mr. Spratt and members, I 

am grateful to be here. Chairman Hamilton and I are very grateful 

you took the time to let us chat with you. Let me start for just 30 

seconds and pick up on what General Walker started with, which 

is that this committee should, I think, take seriously; the notion 

that we have to rethink health care, rethink Social Security, have 

a profound increase in the value per dollar of government spending. DOD procurement would be the example that Mr. Gutknecht 

cited, where within 30 days we had generated a product in the private sector from a world-class institution that probably would have 

taken 10 years under normal processes. 

Fourth, I think we have to look at economic growth, because the 

difference over the 30 years you are citing between a 3 percent average and a 2 percent average is a stunning multiple. I would say 

this committee ought to take those four zones as very profound 

areas of reform without which you cannot solve the problems that 

General Walker outlined. 

We on the Hart-Rudman Commission—which I commend President Clinton for having agreed to establish, and Secretary Cohen 

for having agreed to sponsor—reached three key conclusions I want 

to cite to you. The first is, as we reported in March, that we have 

to plan on the assumption that a weapon of mass destruction will 

be used in an American city and that we have to assume that in 

the next 25 years that is the number one threat to the United 

States. 

At the time we said it, I think a lot of news media thought it 

was either science fiction or irrelevant, but around September 12 

they became more interested. I just want to emphasize what we 

cited was neither September the 11th nor the anthrax event. The 

anthrax event has involved 4 deaths and 17 infections. September 

the 11th actually understressed the system in terms of casualties, 

because so many people tragically died in the buildings, they didn’t 

need medical care. I would suggest to you, if you look at all the reports in the last 15 years, if you get a major biological problem, either a large anthrax, a reengineered smallpox, or a reengineered 

flu—the largest epidemic of the 20th century was flu in 1918. It 

killed more people than died in the 4 years of the First World War. 

So the flu can be, if properly engineered, an extraordinarily illness. 

You have to remember we may not have the correct vaccine, which 

is why buying 300 million units is probably the right thing to do. 

But we had better be building a brute force capacity to identify, 

analyze, and respond. We may have to maintain shadow factories 

that are capable of being converted rapidly, or factories that are 

28

paid to have a double capacity, because we may literally have to 

produce a brand new vaccine to a brand new engineered disease. 

These are very serious things. I agree they may only be 1 percent 

occasions, but if you have a nuclear weapon go off in an American 

city, or if you have a major biological event, people in the next 

hearing are not going to say gee, you were really prudent in not 

worrying about that. I think it requires global systems, it requires 

using a large part of the National Guard, and it requires a significant investment. 

Let me also point out the second thing we said was a danger, 

after a weapon of mass destruction in an American city, was the 

failure of American math and science education and the failure to 

invest enough in science, and I would argue the tripling of the 

budget of the National Science Foundation. I don’t care where you 

take the money from. Tripling the budget of the National Science 

Foundation is as big a national security investment as anything 

else you do, and insisting on measured productive math and 

science education is central to our survival. We said to a group, 

unanimously, this is a larger threat than any conceivable conventional war. I think that should sober anybody who cares about national security in terms of our education. 

Third, we concluded that there has to be a Homeland Security 

Agency, and our reason was simple. Based on the drug czar’s experience, having a coordinated exhortation role is in the end futile. 

There has to be real power. Now, there are a lot of different ways 

to design that real power, but if you have 44 or 52 or 60 agencies 

after Governor Ridge leaves, after the President ceases to focus on 

this crisis, the next Homeland Security Director is going to be essentially impotent. Furthermore, because homeland security is central to the Congress, the Congress had better have a position which 

is accountable to the Congress. This should be a position which is 

approved by the Senate; it should be a position by which you could 

compel testimony; I think it is a very important issue. 

Let me say two last quick things. My personal bias is, as you do 

all your planning, looking at the charts that General Walker laid 

out, you can’t get intelligence and national defense on a world basis 

for less than 4 percent of GDP; that every effort to try to do it is 

going to end up coming short, and then later you will wonder why 

that particular shortfall. I agree with what Mr. Spratt said: There 

are too many things like that we need to be doing that we are not 

right now. 

Lastly, I think the Congress right now should set a benchmark 

of September the 15th next year. You could do this in 2 weeks. Set 

a benchmark of September 15 next year, assume two major crises, 

one nuclear and the other biological, and lay out what the United 

States should be capable of doing on that date. Because if we don’t 

set right now a tough goal for September a year from now, then 

when it happens a year from now we will wonder why we are not 

capable. I hope it won’t happen, but I think it is realistic to assume 

you could have a major problem in at least one city, and we could 

be 10 percent prepared if we don’t cut through the red tape and 

the inertia and insist on a wartime kind of urgency. 

Chairman NUSSLE. Mr. Hamilton. 

29

STATEMENT OF HON. LEE H. HAMILTON, FORMER MEMBER OF 

CONGRESS, MEMBER, U.S. COMMISSION ON NATIONAL SECURITY/21ST CENTURY 

Mr. HAMILTON. Mr. Chairman and Mr. Spratt, thank you for the 

opportunity to testify. 

The Speaker was a little modest when he referred to the Commission. The idea of the Hart-Rudman Commission really originated with the Speaker—President Clinton, and Secretary Cohen 

made the appointments. We had a remarkable Commission, very 

broadly based—Republicans, Democrats, liberals, conservatives, 

across the board of the political spectrum. The unique thing about 

it was the unanimity of the recommendations. The principal point 

was in terms of conclusions that Americans will likely die on American soil, possibly in large numbers. That was written about a year 

ago, and it unfortunately turned out to be very prophetic. 

We also concluded that the Federal Government was very poorly 

organized to deal with the question of homeland security and mentioned, as the Chairman did a moment ago, the number of agencies 

that are involved. As a matter of fact, I think 43 probably understates it. I think it is a good many more than that if you look at 

it carefully, and we said that the Federal Government had a very 

fragmented, ad hoc approach to the question of homeland security. 

Let me summarize very quickly some of the other recommendations and I will not go into any detail, just try to cover them as 

quickly as I can. The President had to develop a comprehensive 

strategy and I think that is underway now. The three elements to 

it are: 

Prevention. Preventing possible terrorist attacks from taking 

place. That is the best defense, of course. 

Protection. Protecting all kinds of critical infrastructure across 

this country. 

And, of course, the response mechanism for responding to a disaster after it strikes. 

We proposed, as the Speaker suggested, the National Homeland 

Security Agency. I will want to say a little more about that. The 

director would be a member of the Cabinet. He would be confirmed 

by the Senate. He would have his own budget and staff. The core 

of it would be what is today FEMA, but you would add the Customs Service, the Border Patrol, and the Coast Guard. 

We also made a recommendation with regard to the Congress, 

and we think the Congress is not very well organized either to deal 

with homeland security. The problem here is not just with the executive branch, but trying to explain to the Congress or testify before the Congress on homeland security is an enormously complicated task, because you split all over the place jurisdictions with 

regard to homeland security, and you have to get your act together 

in the United States Congress, just as clearly as the executive 

branch has to get its act together. 

Now, on the point of organization, the threshold question is how 

serious is the threat of terrorism to the national security? If you 

believe that is the number one threat to the United States, as the 

Commission unanimously believed, then it has enormous implications as to the way you organize the government and the way you 

allocate your resources. There are plenty of other threats to the naVerDate Feb 1 2002 18:02 Feb 25, 2002 Jkt 000000 PO 00000 Frm 00033 Fmt 6633 Sfmt 6602 H:\DOCS\HEARINGS\107-18\HBU311.000 HBUDGET1 PsN: DICK
30

tional security, some of them very serious indeed. We would like 

to deal with all of them, put all the resources against each of them, 

but you can’t do that. You have to establish priorities. 

If this is the number one threat, then you had better begin to allocate your budget and your resources and organize your government in such a way that you deal with the number one threat. At 

the moment, there are two schools of thought. One envisions White 

House Office, National Security Council, or the National Economic 

Council that has been put into place now by the President. Mr. 

Walker, I think, was exactly right when he said that is an excellent 

first step. I also agree with him that is not sufficient. 

The second approach, a Cabinet official, direct control over department, direct control over budget, direct control over staff. The 

Commission is pretty solid on this; we were very solid. We thought 

you needed a department of government with Cabinet status. Does 

the person in charge have the clout, does he have the money, does 

he have the staff to get things done? That is the key. 

Now, I think Governor Ridge, an excellent choice, will have total 

support of the President, good access to the President. But over the 

long term you have got to look at this problem beyond the Bush 

administration. You have got to look at it in terms of years, not in 

terms of a few months or even 4 years’ time. I think it is terribly 

important, if you want to move this Federal bureaucracy, you have 

got to have someone in that position that has clout. You can’t do 

it the balance of this year, you have got a heavy schedule for the 

remaining few weeks, but you certainly ought to be thinking about 

setting up a Cabinet agency when you come back. 

When Don Rumsfeld was the Secretary of Defense the first time, 

not this time, he made this statement on one occasion when he got 

into a conflict with the Intelligence Community. He said, ‘‘if it is 

in my budget, I control it.’’ That is a statement that every one of 

us can fully appreciate. If we are running the Defense Department, 

any other department, agency, if it’s in our budget we would want 

to control it. 

That is precisely the problem that Governor Ridge is going to 

confront. He is going to be sitting around that table with a lot of 

very powerful actors in this town, as powerful as you can get 

around a single table, and the only way he is going to be able to 

move that bureaucracy over a period of time, Governor Ridge and 

his successors, will be to have his budget and to be able to control 

that budget. 

I know there is a lot of arguments here for coordination and we 

have to deal with a lot of problems through interagency coordination and cooperation. It is an important thing to do in ordinary 

times, but these are not ordinary times. This is a national emergency and we are at war, and the business of national homeland 

security is an urgent national priority. 

So I think—my time is concluded. You have got to look at this 

in terms of clout, in terms of budget, in terms of strategy, or in 

terms of staff. And the point that has been made by both the 

Speaker and Mr. Walker is this: If you want to leave the Congress 

out of the action, do it by Executive order. The National Security 

Adviser is tough to get up before this Congress. You cannot compel 

the National Security Adviser to come up here. They often cooperVerDate Feb 1 2002 18:02 Feb 25, 2002 Jkt 000000 PO 00000 Frm 00034 Fmt 6633 Sfmt 6602 H:\DOCS\HEARINGS\107-18\HBU311.000 HBUDGET1 PsN: DICK
31

ate, they are often very generous in that. If you are a department 

head, the Congress can compel him to be here and you can ask him 

the tough questions which it is your duty to do in your oversight 

responsibilities. If you want to leave the Congress out of all of this, 

just let it drift along for a period of years and months under an 

Executive order. If you want to put the Congress into the action, 

give it a statutory base. 

Chairman NUSSLE. I thank our witnesses. Mr. Sununu. 

Mr. SUNUNU. Thank you, Mr. Chairman. Thank you for joining 

us. 

I would like the panel members to address or at least begin by 

addressing in a little more detail one of the Commission recommendations dealing with establishing an independent Agency for 

Homeland Security. There is also a recommendation to establish an 

Assistant Secretary of Defense for Homeland Security. How would 

those two interact? And the proposal is to move Customs, Border 

Patrol and the Coast Guard into Homeland Security. Would they 

report within the Department of Defense to the Undersecretary, 

would they report to the Homeland Security Director, or are they 

one and the same? 

Mr. HAMILTON. I think with respect to the Coast Guard, Border 

Patrol, and Customs, they would report to the director of the 

Homeland Security Agency. When you are dealing with the Federal 

Government with all of these cross-cutting responsibilities, it is literally impossible to bring everything under one person. We did not 

recommend that the intelligence functions be put under the director of Homeland Security. We did not recommend the defense functions—we kept that different. We did say that the DOD, as you 

have suggested, Mr. Sununu, should have an Assistant Secretary 

reporting directly to the Secretary of Defense on homeland security, 

which I think the Department of Defense does not have today. So 

we try to elevate it within the Department of——

Mr. SUNUNU. What elements within DOD would that individual 

be responsible? 

Mr. HAMILTON. I don’t think I can respond to that other than to 

say those elements that have responsibility for homeland security 

defense. We did believe that the primary DOD agency or bureau 

that would have responsibility here would be the National Guard. 

The National Guard is in place. The infrastructure is in every 

State. They already perform functions that are very similar to what 

we are asking here. So that becomes the primary DOD body that 

you would deal with. 

Mr. SUNUNU. Speaker Gingrich, you talked a little bit about bioterrorism and, I guess, the scope of the threat; the technology that 

is out there that we would even have a difficult time imagining at 

this point, modified bugs, whether it is flu or smallpox or other. 

There are a number of key elements to dealing with a bioterrorism 

threat where I think there were probably—we could argue there 

are some weaknesses: the R&D side, developing vaccines and treatment; the distribution and logistics associated with providing vaccines and treatment where it might be needed; the first responders, 

their need for equipment and training and technology. 

My question is, is there a particular area here, or one that I 

haven’t mentioned, where you see the greatest technical weakness 

32

or the greatest need for resources that we as a Congress ought to 

focus our attention first? 

Mr. GINGRICH. That is a very good question and I am going to 

give you a very discouraging answer. If you go back and watch the 

movie Titanic, there is a fateful moment where the designer of the 

ship tells the heroine that he actually designed the ship to have the 

full number of lifeboats, but they didn’t want to crowd the promenade so they only put half of them on, a decision which ultimately 

cost well over 1,000 lives. 

Before the First World War, outside the professional military, nobody understood the change in scale, and you can read all sorts of 

books before the First World War that said no war could last more 

than 60 days because the economies would collapse, et cetera. Before the Second World War, to have suggested either the Holocaust 

and the deliberate massacre of 6 million people or to have suggested nuclear weapons, or, for that matter, fire-bombing which actually killed more people than nuclear weapons, would have been 

unthinkable. People would have said that is not at all likely. 

You are in the same boat now. The challenge is to say to—to just 

go back and have your staff put together the seven to ten best reports of the last 10 years on biological events and put it on a chart 

and stare at it. It probably won’t occur. It is probably not really a 

threat. But the study that said a lay-down by airplane of an aerosol 

anthrax over Washington would kill 1,100,000 people—look what 4 

deaths and 17 total people involved did to this economy, to the 

Congress, to staffing, to buildings, and then imagine a serious 

event. We have not seen by the standard of our Commission a serious event yet. 

So I would just say to you, you have to look at all of it and be 

ruthless about the notion that you can’t necessarily know what will 

hit you because we don’t today understand biological knowledge. So 

you have got to have a very fast response time, which is why the 

breakthrough that Mr. Gutknecht mentioned was so important. I 

would say you have got to look at the whole system, because it is 

the piece that you don’t fix that is going to kill a lot of people. 

Mr. HAMILTON. If I may respond. 

Mr. SUNUNU. Please. 

Mr. HAMILTON. The one that worries me most in the biological 

area is smallpox. Smallpox is, of course, exceedingly contagious. 

The American population, if you are under—I don’t know the age—

30, 40 years of age, you have not been vaccinated. If you have a 

breakout in smallpox you will have devastating numbers of dead 

from smallpox in the younger population. Those of us who are my 

age had a smallpox vaccination, and the percentages are that we 

would experience a very small number of deaths even though the 

vaccination was many, many years ago. Smallpox is the killer biological weapon. 

I agree with Mr. Spratt’s comments earlier about nuclear weapons. That I would rank even higher probably in the total list. 

Mr. SUNUNU. Thank you. 

Mr. WALKER. I think it is important to bring these together. First 

you have to look at a risk assessment. You have to do a comprehensive risk assessment; what is the spectrum of risk? I would like to 

piggyback on what Speaker Gingrich said. You may assess that the 

33

risk of a certain thing happening is not very high, but nonetheless 

we have got to be able to deal with it. But how you deal with it 

is important. 

For example, Speaker Gingrich talked about the fact that in 

order to address the adverse implications of a particular weapon of 

mass destruction in city X, maybe we should have a national capability that has the ability that can be moved to city X, because we 

don’t know where city X will be. So, we need a national response 

team to respond very quickly. In the absence of looking at it that 

way, let me tell you how people are going to treat it. Every city and 

every department and agency will want to end up building their 

own infrastructure, which is totally irrational and unaffordable. So 

we have to do the risk assessment, set the priorities, and then figure out how best to respond to that risk. Certain things may be 

local, certain things may be regional, certain may be national, certain may be Federal. 

Mr. HAMILTON. But we should begin now to vaccinate everybody 

in the country for smallpox. 

Mr. SUNUNU. Thank you. 

Chairman NUSSLE. Mr. Clement. 

Mr. CLEMENT. Thank you, Mr. Chairman. This is a wonderful 

panel. All of you are great leaders and you have given us a lot of 

food for thought. 

General Walker, I will start with you first. You mentioned the 

role of government almost as if you were saying that you feel like 

your hands are tied right now when it comes to moving forward 

with effective oversight. Were you saying that? 

Mr. WALKER. What I am saying is, that what is clear to me when 

you look at these numbers and you project them out is that in addition to entitlement reform—which Speaker Gingrich talked about—

there are current and future priorities that Congress is going to 

want to fund and that the American people are going to want to 

fund and it would be prudent for it to fund. But, because of what 

is in the baseline right now, the numbers just don’t work. Growing 

the economy obviously will help but it is not going to close the gap 

that we are talking about here. So if you want to close the gap that 

I showed between what current tax burdens will allow and what 

the projected spending is going to be. You are going to have to look 

at the base departments, agencies, programs, and activities; you 

are going to have to review, reassess and reprioritize. Some programs may be doing things that are worthwhile, but they are not 

generating decent results and you may have higher priorities that 

you want to be able to fund or need to be able to fund. 

In addition, with regard to homeland security, I am very seriously concerned about how you are going to conduct effective oversight and how we are going to help you do that unless this agency 

is a statutory agency. 

Mr. CLEMENT. We could get into the position of being almost a 

drunken sailor, spending money as if there is no tomorrow, with no 

accountability, because we are spending it for national security or 

counterterrorism. 

Mr. WALKER. It is amazing how many things can be cloaked 

under the rubric of national security or counterterrorism. I will just 

leave it at that. 

34

Mr. CLEMENT. Speaker Gingrich, I know you can say more things 

in fewer words than any fellow I have ever worked with, even 

being a Georgian. That is pretty good, being a Tennesseean myself. 

I know you mentioned rethinking Social Security and health care. 

I could argue that is a national security, too, because if people don’t 

have enough money to live on or if they don’t have the proper 

health care, they can’t survive either. That is national security. Am 

I wrong or right? 

Mr. GINGRICH. Well, no. I think, first of all, President Eisenhower, who had a fair background in the military, always emphasized that financial security and financial strength were a key particular part of how we would ultimately defeat the Soviet Union. 

He was very frugal with defense spending and tough-minded about 

having a strong economy and a strong society. I think certainly you 

have to look at a range of issues where I would argue this committee, if you take General Walker’s charts, which said even without the problems since September 11 there were certain inevitable 

long-term challenges you are faced with. I have spent most of the 

last 3 years looking at health care and I will say flatly, if we don’t 

transform the health care system, you can’t possibly make the current structure work when the baby boomers retire. It is going to 

fall apart. You go down a list of things. I think that is another 

hearing for another day. 

Your point is exactly right. For the long-term future of the country, there are Social Security issues, there are financial issues, 

there are health issues that are as profound for the country as national security, and unless they are all working, the country does 

not work. I think that is a more than fair point, which is why I 

would argue you want to think carefully and cleverly about as 

much of your civil defense being either volunteer or part time. 

Let me give you three quick examples. We ought to have a public 

health corps of volunteers so if you got to a biological event—in a 

city like New York, you can absorb 100,000 people dealing with 

smallpox. So you want those to be part-time volunteers who get 

trained twice a year and are doing it because there is a crisis like 

the World War II bomb shelter wardens were in Britain. 

Second, you probably want a civil defense system much like in 

the fifties, where FEMA would organize people so if you had a big 

nuclear event or a big bomb event, you could have people who could 

go to it. 

Third, I believe notionally—and I wouldn’t defend the number 

precisely—but you would probably want 40 percent of the National 

Guard redirected to medical and construction challenges, which 

frankly the Guard hierarchy will probably fight, but for the country’s future that is where you imbed it at lowest cost to have the 

local response capability. 

Mr. CLEMENT. Mr. Hamilton, no one have I learned more from 

when it comes to international relations than you. You have become my mentor over the years. I want to ask you to diffuse the 

situation we have right now. Is there something that could break 

where we could have peace in the Middle East or between the 

Israelis and the Palestinians? I know we have Afghanistan to deal 

with right now, but knowing we are not going to get to zero risk, 

35

ever, as General Walker said, is that the key that unlocks the door 

if we truly are going to grasp terrorism today? 

Mr. HAMILTON. No, I don’t think it is a key that unlocks the 

door. Like it or not, the Arab countries today do in fact link the 

war on terrorism with progress in the Israeli-Palestinian dispute. 

So it is a factor, but I think you could remove that very troublesome factor, the Palestinian-Israeli dispute, and you still will have 

the phenomenon of terrorism because it is much more deep-seated 

than just the Israeli-Palestinian dispute. 

Mr. CLEMENT. Thank you. 

Chairman NUSSLE. Mr. Thornberry. 

Mr. THORNBERRY. Thank you, Mr. Chairman, and I appreciate 

this hearing and those which are to follow. I agree with Mr. Spratt 

on the issue of nonproliferation, but I also believe that is but one 

example in our government where one can question whether our 

priorities are right, whether they have changed since September 

11, and whether they are right going into the rest of the century. 

I think this committee has a role in helping focus on those priorities. 

I guess I would like to ask each of you to comment on two questions. One question is, it seems to me that the Hart-Rudman recommendations are not necessarily inconsistent with Governor 

Ridge’s office. In other words, I see Governor Ridge, as described 

by the White House, as a national security adviser. The National 

Security Adviser has departments to implement this coordinated 

policy which he or she formulates, and it does seem to me that a 

Department of Homeland Security to implement at least those policies dealing with the border and cyberterrorism and emergency response makes some sense, so it is not inconsistent with Governor 

Ridge’s position. Indeed, it could help him do his job better. If Governor Ridge is going around making sure the Border Patrol radios 

talk to the Customs Service radios, then he is functioning at the 

wrong level, but somebody has got to do it. 

General Walker, it seems to me that arrangement is not inconsistent with the principles you laid out, and I would like to know 

if anybody disagrees with that. 

My second question is more difficult. How do we impart this 

sense of urgency that is necessary to make the changes here and 

in the executive branch? I am circulating an editorial from USA 

Today from last week that basically says there is no way Congress 

is ever going to do the Hart-Rudman recommendations, because 

Congress will not step on toes here or the executive branch to rearrange. It is just too politically difficult. I agree with the Speaker, 

we have not yet gotten to the big event. 

How do we impart that sense of urgency in order to better prepare for that big event? I would like for each of you to give us some 

advice on how we can do that. 

Mr. WALKER. First, with regard to the Office of Homeland Security, we issued this report which ironically came out very shortly 

after September 11, because we had done a lot of work before September 11 on combatting terrorism. In fact, we issued it on the day 

that the President came up here and spoke to the joint session of 

Congress, and the first recommendation was that they create an office similar to what he did the night that we issued the report. We 

36

obviously had talked to the administration several weeks in advance. It was a partial adoption. We were clear that we thought it 

needed to have a statutory basis, and that it would be preferable 

if it was a PAS appointment. 

Why? Two reasons. Number one, history has told me that whether you are in the public or private sector, if you don’t have significant control over financial and human resources, if all you have is 

an outbox and not an inbox, you are not going to be effective over 

time. 

Number two, there is no question that Governor Ridge and President Bush know each other well, like each other, work effectively, 

and in this environment maybe there is a good chance that this 

model could work. However, that is looking at it on an individual 

basis, not an institutional basis, and I think that Congress needs 

to look at it on an institutional bases. 

Number three, I am very concerned if this office does not have 

a statutory basis, less about whether or not it is PAS or Cabinet 

level, if this office does not have a statutory basis. I care about the 

Congress and because we are an instrument in helping you to do 

your job. Some of the problems we have experienced already in conjunction with the energy task force and the Vice President, you are 

going to have problems and we are going to have problems getting 

access to information to help you do your job, and in an area like 

homeland security I would argue that is unacceptable to the American people. 

Mr. GINGRICH. I agree with everything General Walker just said. 

I would simply add, on the issue of being a national security adviser, it is a profound misunderstanding of why the National Security Adviser matters. The National Security Adviser matters because the President of the United States talks with his or her counterparts all over the world virtually every day, and in order to do 

that, the National Security Adviser is the first person to brief them 

every day, and is with them at different times every day. That will 

never be true of a Homeland Security Office. They will never be 

comparable in centrality to the President. 

Second, we have got to decide whether we are going to be a comfortable country until the crisis, or a serious country. This is at the 

core of your urgency question. I think hearings matter. I think the 

Congress ought to hold a series of threat-based hearings and then 

say OK, do we want to be the people who take the right steps before there is a catastrophe or would we rather just wait and hold 

the hearings after the catastrophe? 

There is a very real—not gigantic—but real possibility of something really bad happening and I think I agree with you, the reason people don’t feel urgency is they are told over and over again 

by the government things are under control. This is not like Desert 

Storm. We are not sending professionals half a world away while 

we get to watch it on TV. This is a very complicated long-term 

struggle that has direct life-and-death implications at home. We 

are not today functioning that way. I think the President gets it. 

I think the Vice President gets it, I think the Secretary of Defense 

gets it. I am not sure, frankly, much beyond there that people have 

a sense of driving urgency that there could be a crisis tomorrow 

morning and we are not prepared for that crisis. 

37

Mr. HAMILTON. I should say, first of all, that Mr. Thornberry recognized this problem far before his other colleagues did, and we on 

the National Security Commission are grateful to you for your recognition of that and your leadership. He was talking about this 

months and months ago, and I think has been an effective voice of 

leadership. 

I agree with your observation. There is nothing inconsistent here. 

The President deserves a lot of credit for moving this forward. He 

did what he had to do. He has created an Executive order and 

started the process. Now the Congress has to do what it is supposed to do. It is an evolving matter. 

I don’t think there is a right or wrong way to deal with this organizational question necessarily. There may be a more effective way 

to do it than the other way, but whatever we do it is going to be 

an improvement over what we had before. I am sure of that. 

Secondly, on imparting a sense of urgency, let me make this observation. I think the people of this country today are in the grip 

of fear and they want information and they want leadership today, 

and the domestic situation proved more serious than our public officials initially indicated, I believe. This is a function of leadership. 

You have to disclose fully what you know and what you don’t know. 

We don’t know everything about anthrax. We have all learned, 

even the scientists have learned a lot about anthrax in the last few 

days. You have to avoid speculation. You have to make sure your 

facts are straight and you have to recommend specific steps that 

people can take. They are out there today, they hear all of you talking about it, they hear the President talking about how urgent the 

situation is and how great the risk is. My gosh, they had it demonstrated graphically on September 11. What they are really saying to themselves is, what do I need to do for myself and my family? You have got to give them some direction. You are the leaders. 

I think the President is making a genuinely good effort to do this, 

and I know Governor Ridge is. 

The President and Governor Ridge are not going to get it right 

every time. There are too many things we are not sure of here. So 

how do you impart the sense of urgency? That is your job. You are 

the leaders and the rest of us have to do the best we can to try 

to give you support. 

Chairman NUSSLE. Ms. McCarthy. 

Mrs. MCCARTHY. Thank you, and I find the testimony of everyone really extremely interesting. I agree with the sense of urgency. 

I don’t know whether it is my nursing training—and I will be very 

honest with you—even when we were here without an office, and 

I thank you for sharing space, and I’m looking at my colleagues—

everyone is saying like oh, this is nothing. It is something. 

On the health care needs, smallpox, I mean that is what we 

should be worrying about. You know, obviously we didn’t get the 

message across on anthrax. An awful lot of people did know some 

things about it but not to the extent of what was happening. Buildings didn’t have to be closed, in my opinion, because the spray at 

the beginning is usually depleted at that time. The other stuff 

would be negative or positive on the swabs. We spent so much 

money and time and fear among people, and we have to get that 

38

right and we have to have one spokesperson, as far as I am concerned, giving that education out there. 

I agree with you, Mr. Gingrich, that we have to start educating 

the people. They are scared. Yet when I give a speech and say we 

have a long haul ahead of us and we are going to have to be careful, and yet we are sending a message out there, ‘‘oh, go to the 

movies and everything,’’ and that is fine because we have to keep 

the economy going, but I also happen to agree that it is almost like 

we are taking care of children. We don’t want them to know too 

much, and yet they know a lot more, and then their fears are built 

on their imagination and that is what we are seeing with our 

adults, our families. 

As far as home security, we have to get this right and that is 

going to be the toughest job, in my opinion, here in Congress, because it is going to become political, and you know it and everyone 

else knows it. Once politics get involved in what we are trying to 

do as far as the right thing, unfortunately I think that we might 

lose in the end. I happen to think there is a sense of urgency. I 

happen to think that something is going to happen whether it is 

next week, whether it is next month, and we are not prepared for 

it. We are not, and that is a sad thing, but we will learn from it. 

I hope they listen to you when we look to see how to set up the 

correct formula for home security. I hope everyone works together 

on it. 

This is the biggest challenge this Nation has faced in a long, long 

time. Other nations are going to be looking toward us to see if we 

do it right. So we have a lot at stake in this. The biggest problem, 

as far as I am concerned with the budget that we are talking about 

is taxes. Whether you agree that we need tax stimulus or not, our 

moneys right now should be going for national security and everything else has to be put on hold, and just at the basic line as far 

as I am concerned. 

Mr. WALKER. Real quickly on that, Ms. McCarthy. First, after 

these events happened, I thought back to my undergraduate days 

where I was taught about Maslov’s theory. Some of us might remember that. At the base of his hiearachy of needs was self-preservation; at the pinnacle was self-actualization. I would argue that 

prior to September 11, a lot of people in this country were focused 

on the word ‘‘me’’ and self-actualization; how can I maximize what 

I get out of life? Today there are a lot of people focused on selfpreservation, which is a concern, but they are also focused on the 

word ‘‘we,’’ both family and country, which is a positive. 

The other side is—I agree with Mr. Hamilton, because of the fact 

that if you look at risk with regard to smallpox from the standpoint 

of mortality and its infectious nature. It is a very serious issue. 

Even those of us who had the vaccine, evidence notes that if it was 

years ago, it is not likely to be as effective. 

Mrs. MCCARTHY. Actually after 10 years it doesn’t have any effect. I was lucky. After nursing school, we had to get another shot. 

So I had it twice in my life. 1964 was the last time. 1974 was when 

they gave the last shots, if I am not mistaken. 

Mr. GINGRICH. Can I just comment, because I think you put your 

finger on something very important. We are very likely to have 

overreacted to the relatively small anthrax event and be underVerDate Feb 1 2002 18:02 Feb 25, 2002 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6602 H:\DOCS\HEARINGS\107-18\HBU311.000 HBUDGET1 PsN: DICK
39

reacting to the scale of the threat simultaneously. So we are spending an enormous amount of energy running in circles and not nearly enough energy on tough, deep decisions that would enable this 

country to survive a serious problem. 

Mrs. MCCARTHY. Thank you. 

Chairman NUSSLE. Mr. Hastings. 

Mr. HASTINGS. Thank you, Mr. Chairman. I found the testimony 

of all three of you to be fascinating. It probably wouldn’t have been 

as fascinating if it were held on September the 10th, but nevertheless that is where we are. 

I guess one observation—I would like to ask all three of you. 

General Walker, you were talking about the idea that it will never 

get to zero risk, you can never attain that 100 percent. Yet at the 

same time, you are all talking about an inventory of some sort of 

risk assessment on a variety of areas, and I haven’t fully looked 

into your reports, so I can’t respond to everything that you have 

suggested. The question then becomes: If you can’t get zero risk, at 

what percentage is it acceptable to be on guard? Then in that process, what do we do or how do we respond to maybe the threats that 

different political philosophies will have as it relates to us in a free 

and open society? 

So I invite you, if hopefully understand what I am saying, to respond to that, to give us some sort of guidance on that. 

Mr. GINGRICH. Let me draw a distinction. I don’t think you would 

want to live in a society that was so tightened down that you had 

no risk of anything bad happening, just as people don’t want to buy 

a car which is so heavy and structured that nothing could ever 

hurt you. It would be a tank. It would be effective, but it wouldn’t 

sell very much. 

I think the biggest challenge from a homeland security standpoint is to think through the responses and, as General Walker 

said, to design them to be mobile and fluid and, as we have argued, 

to make them as much as possible Reserve, Guard, and civil defense oriented, so that you recognize most of the time you don’t 

need them, but to actually build them to be pretty robust. Because 

if you have a big problem—and a large anthrax exposure would be 

a big problem, smallpox or another engineered contagion would be 

a big problem, one or more nuclear weapons would be a big problem—what you want to have is enough response capability that you 

could smother a problem of that size. You want to build it in such 

a way that most of the time you are not paying for it to be on 

stand-by. Most of the time it is a reserve capability built into the 

society, rather than a full-time agency standing by, waiting for 

what could be a once-in-30-year event. The same thing as carrying 

lifeboats, what you don’t want to do is find out you are at the oncein-30-year event and you have no capacity to respond. 

Mr. HAMILTON. I think your question, Mr. Hastings, is really on 

the mark because it raises the most difficult task I think the President and Governor Ridge confront, and that is the question of priorities. You have got the nuclear attack, you have got the biological, you have got the chemical, you have got conventional. I think 

what they have to do is determine what kind of attacks are most 

likely and what can be done to prevent those attacks. 

40

Now, that is a very, very tough call because what you would like 

to do is say, OK, we are going to defend against all of it, and we 

have got enough money to do it. But we don’t have. Where do you 

put your resources? And that is tough. Most people now put chemical down the list, for example, but it was a chemical attack that 

blew up the building in Oklahoma City. The materials used in that 

attack were the materials that are used every day on the farm, so 

you can’t just ignore that. 

I would put the nuclear first. I would put biological and, as I 

have indicated, smallpox at the head of the list. There are about 

eight or nine, what do you call them, pathogens or whatever; and 

I would rank them, and then I would begin to identify what kind 

of things should be done to prevent each one. You may get the list 

wrong because you can’t predict it. I have sat in on 100 meetings 

on terrorism. Nobody at any time ever suggested to me that somebody would fly a jet airliner into the Trade Towers or the Pentagon. So you can’t hit it every time, but the tough job is priorities 

and allocating resources. 

Mr. WALKER. A couple things that I think are important. First, 

there is no single right answer. There is no minimum acceptable 

percentage. You have to do a risk assessment. You have to assess 

your threats, vulnerabilities, their criticality, and you have to compare that against the resources that you have. Governor Ridge is 

the one who has to be responsible for doing that for the executive 

branch. I would argue that since the Congress appropriates the 

money and since the Congress is also going to be accountable for 

what happens or what doesn’t happen, all the more reason why it 

is important that you have the ability to conduct effective oversight, not micromanagement, with regard to these activities. So 

that comes back to the bulk of my testimony. Thank you. 

Mr. HASTINGS. That leads to a follow-up here. I found your testimony on figure 2 of page 10 of the spikes that you had of the deficits throughout our history, they all showed up in times of war. 

Maybe there is a study on this elsewhere but you don’t mention 

it—at least what I read here—is what I call the ‘‘unintended consequences’’ of other legislation. For example, we are still trying to 

repeal the telephone tax of 1898 that is still on the books—but also 

because of the wage and price controls of the Second World War, 

which led to health care being delivered by employers, an ‘‘unintended consequence.’’

Is there a study that you have within GAO where you have 

looked at statutes that were passed during this period of time that 

may still be on the books that have had consequences that are contrary or causing this problem right now? I mean, you put up the 

Medicare chart. You probably could have put Medicaid up there. 

And I would suggest that part of that is at least linked to the policies of the Second World War. 

Mr. WALKER. We haven’t done that. If you look on page 10, figure 

2, that talks about deficits and surpluses as a percentage of GDP 

and properly points out that in times of war or serious economic 

recession or depression, we have had deficits, but we have come out 

of it. 

There are two things that we face now that we never faced before. Number one, demographics are working against us, not for us; 

41

and number two, health care costs are out of control. The system 

is fundamentally broken. So, therefore, we didn’t face those issues, 

and we better do something about them. 

Mr. HASTINGS. Thank you, Mr. Chairman. 

Chairman NUSSLE. Thank you. 

Mrs. Clayton. 

Mrs. CLAYTON. Thank you, Mr. Chairman, for having the hearing. I would like to thank the panelists for their thoughtful presentations. Also, it is appreciative in both instances that your studying 

and deliberation was prior to the events of September 11, and you 

have been giving a considerable amount of thought to it. 

I was struck by the Commission’s report on the national security’s preface. It says that the U.S. Commission on National Security 21st Century was born more than 2 years ago out of the conviction that the entire range of the U.S. national security policies 

and processes required reexamination in light of the new circumstances. The question is that when you looked at the stretch, 

your more extensive one gave all kinds of reasons for the threat. 

Yet, when we look at responding to the threats, we correctly looked 

at how do we need to make an assessment, but also, how do we 

detect and stop it. We do not look at the causes of which we can 

prevent these threatening events from occuring. 

You describe the new circumstances as the advancement of information, the globalization, the quick access to information, the lack 

of stability in certain countries. You describe also in some instances 

about our failure to invest in science and education because we are 

not possibly keeping up. When I look at the recommendations initially from Mr. Walker, as well as the initial part from the Commission, Mr. Walker doesn’t mention them at all. You put those 

kind of recommendations in the back of your report, investment in 

science and education—not the back, but it is not the first. 

My question is, is it important to talk about the root causes of 

these, or is it important to talk about the organization and the 

leadership? Back to the question of how urgent is urgent; who describes the urgency of the situation? Is it the talking heads on the 

media who describes it? That is why we have the anthrax anxiety 

rather than having all of the anthrax facts. And when we also 

begin to try to examine the structure at the lower level of our 

health department and try to get them engaged in it, they are fearful because the science is changing so fast. 

We do need homeland security. It is very, very important. It is 

the same threats in part that have threatened us abroad that is 

really threatening us here. The difference is that we as Americans 

have never suffered from that. So now we are now trying to find 

out how the current infrastructure can respond to these new circumstances. So it seems to me that we also have to not only create, 

but coordinate one who can bring all these little boxes together to 

respond to it, but to think of how we should respond to that. In 

fact, one of you talked about a new paradigm of thinking. I have 

not heard enough today to make me feel that I understand the 

basis of the recommendations of the U.S. Commission’s report. I 

did read some part of it earlier when it first came out with the 

commissioners talking about it, because I was interested in the 

42

science and education component of it, and there was a lot of emphasis on that. Can you speak to those? 

Mr. GINGRICH. When we first sat down with the President to create the Commission, our point was that the world was changing so 

dramatically that we wanted an unconstrained look at the future. 

So it doesn’t start with defense. It doesn’t start with intelligence. 

It doesn’t start with any narrow position. It says, what is going to 

affect American security in the next 25 years. In that sense it was 

the broadest commission since 1947. As Mr. Hamilton pointed out, 

it was one that was very bipartisan and very serious and took us 

the 3 years to think these things through. 

As I pointed out earlier, I thought it was remarkable the Commission on National Security would list science and math and 

science education as the number two problem, and every commission member signed off on it. This is a bigger threat that any conceivable conventional war. In that sense there is a root challenge 

that we tried to highlight. I know you were very helpful. One is, 

I believe, the long-term overseas threats we are dealing with are 

vastly beyond al Qaeda and bin Laden and require a very profound 

look at how we encourage modernity and how we encourage the 

rise of states that are compatible with the world we live in. It is 

a much harder problem than we have dealt with, and it is a topic 

I would be glad to talk to you about sometime. 

Second, when you start talking about the civil defense of the future, I believe the Internet, the capacity to reach every single doctor, including every retired doctor, every single nurse, including retired nurses, if you have planning in advance, you could have a 

web page that was highly authoritative that the National Institutes 

of Health and the Centers for Disease Control jointly produced that 

was exactly accurate, that gave you the most accurate information 

as of 3 minutes ago. People could build a high sense of certainty. 

That requires a willingness to cut through the baloney of the current bureaucracies and the current pork barrel and the current unwillingness to reach outside normal institutions, which in part goes 

back to the earlier question that was raised about the sense of urgency. 

We are still behaving as though politics as usual and bureaucratic infighting as usual is tolerable, and is a very real risk that 

we are going to kill a lot of Americans, because we can’t get people 

to understand we are in a modern world with modern technologies, 

and those technologies cut across all of the bureaucracies and create totally new capabilities if you organize around them instead of 

cutting them off by your bureaucratic channels. 

Mr. HAMILTON. I might say a word, Mrs. Clayton, about why the 

Commission reached the conclusion it did with respect to Americans dying on American soil. You raised the question of root 

causes. We went to 28 different countries. One of the things we 

found there was resentment and hostility against the United 

States, not just in countries that are adversaries of ours, but almost every country. Now, sometimes that was expressed more 

strongly than others. Sometimes there was a deep hostility, but always a resentment, and we came to recognize that though it is 

hard for us to believe in this country, an awful lot of people in this 

43

world have grudges against us, some of them to the extent that 

they want to kill us and kill innocent people. 

Secondly, we determined that the terrorists have—and this is obvious, I guess—greatly expanded their capabilities and their sophistication in using those capabilities. Third, we found that the 

American communities are very vulnerable. You put all of this together, and we said terrorism is the number one threat. 

Now, your question about root causes or organization or leadership, here I move into an area that is admittedly controversial, but 

I do believe myself that to deal with terrorism, you have to look 

at the question of root causes. I don’t want to suggest for a moment 

that that is easy to do. I know how difficult it is to deal with those 

problems, but I think we have to look at the reasons why people 

turn to terrorism, and we have to understand that there is a lot 

of misery, and there is a lot of despair. There is a lot of hopelessness. There are a lot of governments out there that just are not responsive to the needs of their people and who serve only a very few 

people in the country, and that is part of why people turn to terrorism. 

Now, I don’t suggest for a moment we can deal with that easily. 

I know how complicated that is. On the other hand, you have to 

be sensitive, I think, to it and have to try to understand this phenomenon of terrorism better than we do. 

Why do these people do these things? A partial answer is that 

foreign policy has consequences. It has been the unanimous view 

of every Member of Congress I have known, every President that 

I have known that the United States should put forces in Saudi 

Arabia. I have never, ever heard a speech against it. That is what 

triggered Osama bin Laden. What really made him mad was American forces’ presence in Saudi Arabia. From our standpoint, that is 

a given. We have to have forces there to protect the supply of oil. 

From his standpoint, he sees it as defiling everything that he holds 

sacred. 

Mrs. CLAYTON. One final question, please. 

Mr. GUTKNECHT [presiding]. There are three other members who 

would like to ask questions. 

Next we have the gentleman from Florida Mr. Putnam. 

Mr. PUTNAM. Thank you, Mr. Chairman. 

I read the report, and I think General Boyd did an outstanding 

job as your Executive Director for that Commission. And quite honestly, I am a little bit envious of the opportunities that you all had 

to participate in this and deal with the best epidemiologists and 

the best demographers and the best sociologists and the best educators and the best foreign policy folks in every possible region of 

the world to come up with a broad-based, comprehensive plan in 

dealing with technology and everything all over the map. 

One of the things that you highlighted in the report that you 

have just mentioned, Mr. Hamilton, is that one of the greatest 

threats the United States faces in the next decade is resentment. 

You said that the Nation was not prepared for a terrorist attack 

on its own soil. Then you took it a step further and then said not 

only is the Nation not prepared, but it is less prepared than it 

thinks it is. 

44

How has the reaction of the United States to the attacks in New 

York and Washington fit within your expectations for the American’s public’s response? 

Mr. HAMILTON. I must say I have been favorably impressed. As 

I look at the response in New York City, which was the principal 

focus of the attack, it was better than I would have anticipated—

the manner in which they dealt with that horrible tragedy. As I 

see, what I think is happening across the country now is every 

community says, well, my hospital prepared to deal with an attack 

in my hometown. I am encouraged by this, and I think the President deserves credit in alerting the country to it. 

I don’t want to be Pollyanna-ish about this. We have a long, long 

way to go to be prepared, but September 11 has had a profound 

impact on the American people, and I think that we are seeing the 

American people respond as we would expect them to, very constructively and favorably. Overall I have been well impressed with 

the way they have responded. 

Mr. GINGRICH. I guess I want to agree, but with a very deep condition. I draw a distinction between how people responded to the 

World Trade Center and how they responded to anthrax, because 

there have been very different responses so far. If we had had a 

really big attack, I think the odds-on even money, we would be in 

a total mess. The weapons of mass destruction is a totally different 

event than even the World Trade Center, which was a confinable 

and definable event in one small part of New York City. It was not 

an event that had a 2, 3, or 4-mile radius with all sorts of secondary and tertiary damage. 

Second, if we had been hit by a wave of attacks every other day 

for a week, we would have been in a totally different situation. 

And third, if we get hit by a biological on a big scale, whether 

it is infectious or it is simply widely disbursed aerosols, we will be 

in a different situation. 

I would say the American people have responded in a very positive way to a threat that is very real, but we should not in any way 

underestimate how rapidly this system would break down in its 

current structures if we were hit by a really serious attack. 

Mr. WALKER. First I think the U.S. has always done a great job 

in responding to crises. Both at the Pentagon and in New York 

City, people came together to do what had to be done, whether they 

worked for the Federal, State, local government, whether they were 

public sector, private sector or not-for-profit sector. It is amazing. 

From that standpoint I think it is a positive. 

Personally, I have been disappointed with regard to the public’s 

reaction with regard to the anthrax situation. I think there has 

been more fear and more concern and more of a potentially emotional adverse reaction than potentially should be justified. We 

haven’t done enough to really focus on some of the other areas, 

whether it be smallpox or whatever else that could, frankly, have 

more profound with regard to the implications. 

In summery, I have a positive view on crisis management response and was disappointed with regard to the reaction to the real 

nature and extent of the threat for anthrax. Let us hope we can 

end up moving forward from here. 

45

Mr. PUTNAM. Recognizing that the psychology—the motivation of 

these terrorists and your focus, quite understandably, on low-risk, 

high-consequence events, how much attention or focus did the Commission have on low-risk, low-casualty types of low-tech terrorist 

events that would have a fundamental impact on public confidence, 

food safety, food supply, quality of public health, things of that nature, which would have much less of an impact than a nuclear 

weapon, but tremendous economic and psychological ramifications? 

Mr. HAMILTON. Mr. Putnam, I think we just didn’t go into that 

kind of detail. We did not try to speculate on which types of terrorist attacks would be employed by the terrorists. I don’t recall extensive discussions as to, for example, poisoning the American food 

supply. 

Mr. PUTNAM. Thank you. 

Mr. GUTKNECHT. Mr. Kirk. 

Mr. KIRK. Thank you. Just ask a rhetorical question. Can we 

have Social Security without national security? If a bomb hit the 

Social Security Administration, would we be able to secure the future retirement of Americans? Or maybe what happened to the social security system of Poland as the German Army swept over 

with their plains. We are not used to domestic damage in the 

United States. When you look at the bloody destruction of France 

or Britain in the last wars, this is something that passed us by, 

something the United States has not seen since 1865 on a large 

scale. 

I am worried about your chart, General Walker, about how debt 

can threaten democracy, that we have seen various French Republics vote themselves into debt, depression and dictatorship by 

transferring such a huge burden onto a future generation. 

So I wonder if the panel can comment on that, that we haven’t 

suffered domestic damage before. It lifts the costs by quantum levels above the damage that we delivered against Germany or Japan 

because we were not being hit back. How can we conduct a vast 

social program if a foreign army is able to destroy large amounts 

of real estate in our country? What about a vast amount of debt? 

I am wondering if you could give us for the record a comparison 

with huge levels of debt that other countries have run up in the 

past and what happened to their political dynamic. 

Mr. WALKER. Let me try to reinforce a couple of points from my 

testimony. It is clear that, with regard to today, that Congress is 

going to have to respond to the effects of September 11, but it is 

also clear that before September 11 we had a big problem. Now it 

is a much bigger problem that we have got to figure out how to 

deal with, and it is a structural problem. It is a structural problem 

that should cause us to reexamine what government does and how 

government does business in the context of how the world has 

changed in the last 20 years and how it is going to change even 

more in the future. I don’t think we have done that. 

Mr. KIRK. Did you perceive the key point of where we reach such 

a level of debt that people won’t buy it? 

Mr. WALKER. Theoretically that is possible. We are not close to 

that at this point in time. One of the issues you have to ask yourself, it is not just the level of debt, it is the level of tax burden and 

the level of flexibility that the Congress will have to make choices 

46

on discretionary programs and for future generations to make 

choices about what they want government to do. 

That is part of the problem. Mandatory spending has gone from 

one-third of the Federal budget when Kennedy was President to 

two-thirds now, and it is getting worse. So it is a combination of 

all these things that I think represent a risk. 

Mr. GINGRICH. If I could, let me put it in a little different context. I think we have some real problems. I think we have some 

real problems in national security. I think we have some real problems structurally, particularly as it relates to health, Social Security and the core and competency of the government as a bureaucratic delivery system that is now increasingly out of date with the 

way we organize to do things in the rest of society. 

I am strategically a 100 percent optimist. Gil Gutknecht years 

ago gave me a study of the 1st Minnesota, which took 82 percent 

casualties at Gettysburg, stopping the last great charge that might 

have broken the Union. Chairman Nussle and I used to participate 

in a period of seeming hopelessness when we had this fantasy that 

you could not only have a change of 40 years power structure in 

the Congress, but you could balance the budget, reform welfare and 

do a whole range of fantasies that people often laughed at us 

about. 

This is a country which emerged on the edge of a continent; defeated the most powerful nation in the world in order to become a 

country; had a very restrictive President who personified limited 

government—Jefferson—who sent the Marines to Tripoli, where 

part of their song comes from, bought all of the Louisiana territory, 

dramatically expanded the Nation. We survived the Civil War. We 

survived Imperial Germany. We defeated Fascist Italy, Nazi Germany and Imperial Japan simultaneously, and we outlasted the Soviet Union in a 45-year conflict that was strategically one of the 

most profound and brilliant campaigns ever fought. 

If you were asking my bet, my bet is we will reform Social Security. We will reform health care. We will defeat terrorism. We will 

complete the job of modernizing the underdeveloped world. Your 

grandchildren will live in a country and on a planet that is remarkably prosperous, healthy and safe. But it takes your generation 

now having the same courage as the 1st Minnesota or the same 

courage as that band of people in past generations, and Chairman 

Hamilton will agree. We have seen bleak moments, and there were 

periods when the Congress was confused. We cheerfully participated in the confusion. But over time the system does do a remarkable job of forcing very big reforms. 

Mr. KIRK. Thank you, Mr. Chairman. 

Chairman NUSSLE. In that context, first of all, thank you for all 

of the substantive discussion we have had today. 

I would like to turn to process for a moment because the Budget 

Committee, Mr. Speaker, is where much of those reforms begin in 

setting the predicate and determining so much of the process that 

put us on the track to at least the most recent reforms. Let me ask 

your opinion as well as Chairman Hamilton, who also has a very 

distinguished career as a chairman of a committee, your advice to 

me and to Mr. Spratt and the committee members here as we begin 

to formulate the budget for 2003 and try to take into consideration 

47

all of these very important matters, juxtaposed with the other challenges, health care, Social Security, how do we do it? What is your 

recommendation to us making these big changes? We are going to 

start that process. If it isn’t successfully started here, it may not 

begin at all. So what would be your recommendation on how we organize ourselves and this committee to change the budget paradigm for 2003? 

Mr. GINGRICH. Well, if I might, first of all, thank you for inviting 

us. And let me say I think you are doing exactly what this committee ought to do, which is to intellectually look at the totality, 

because that is the one great virtue this committee has the over 

the entire rest of the House and the rest of the institution. 

I will go back to what I said earlier. I think this committee ought 

to look at the total reform of health care, not just the pieces, not 

just Medicare, but the total structure of how we deal with health 

in America, because if you get another doubling of GDP for health, 

we won’t be able to afford anything not just in government, it will 

have a profoundly distorting effect, and it is mostly unnecessary. 

We can find ways to do that. 

Second, I do think you ought to look at retirement security, because you have to cope with the scale of the baby boomer generation and the burden that if it is not done correctly, it will be on 

their children. 

Third, I think there is a need for a profound rethinking of how 

government operates. If you look at the Ford Motor Company now 

laying off 20 percent of its white collar employees, look at all the 

different efforts to rationalize, modernize, downsize, make more 

productive, and then you look at the bureaucracies at the State, 

Federal and local level, they are just unconscionable. And all the 

bureaucracies will explain to you why they can’t change. 

I want to cite one example that ought to be a case study. The 

Indian Trust Fund is a multibillion-dollar fiasco that it would be 

a comedy if it weren’t so tragic. Just take that one example where 

the taxpayers end up on the hook for billions of dollars for a process run by thousands of bureaucrats, run badly, that would be 

outsourced to an agency like Schwab or Merrill Lynch. There are 

hundreds of agencies that handle this kind of information without 

scandal. In the Federal Government, the answer to a scandal is to 

double the number of people engaged in the scandal. 

I think you have to really look at a profound rethinking of the 

structure of government because you cannot micromanage your 

way through these systems. I would say that before September 11, 

Secretary Rumsfeld is moving in the right direction with enormous 

opposition, but he needs a profound overhaul of the procurement 

system, the management system and the R&D system of defense 

as a predicate to being able to effectively transform the defense 

system. That is the scale of change I think you have got to be looking at. This committee ought to try to contextualize all the budget 

decisions in terms of these very large changes. 

Mr. HAMILTON. Mr. Chairman, I don’t think I can give you much 

advice. The Commission led by Senators Rudman and Hart had the 

easy job in a sense. We are looking at the fairly narrow question 

of national security. We didn’t have to worry about money. You 

have to worry about the money, and you have to worry about lots 

48

of things other than national security narrowly defined. We all 

know that the toughest job in government is setting priorities, but 

if there is anyplace in the world where that ought to be done it is 

in the Budget Committee. That is why you were established, to 

look at the big picture, as the Speaker said a moment ago, and to 

establish the priorities for the American people in light of the resources that are available. 

Let me just conclude with this. When I first came to the Congress, I was in a room about two or three doors down and listened 

to then New York Times bureau chief Scottie Reston. He said, ‘‘Always take time in the Congress to put your feet up on the table 

and to look out the window and ask yourself what is good for the 

country.’’ There are so many things that press upon you as a Member of Congress every single day, so many people after you, so 

many groups that want to get your ear, and that is good because 

it gives you a lot of good information. Somewhere along the line 

every Member of Congress has to put their feet up on the table, 

so to speak, look out the window, take time to reflect and to think 

and to be honest with yourself, what are the most important things 

that this country needs to be doing at the moment. If you do that, 

you will not hit it right every time, and you will not always persuade your colleagues that you are right, but you are at least approaching it in the right way. 

Mr. WALKER. Two words and some examples: leadership and 

stewardship. We need leadership to focus on what should the priorities be, what should government be doing, how should government 

be doing business today and tomorrow; and secondly, there needs 

to be stewardship to think about the long-term implications of decisions that are made today, both actions and inaction. 

One of the problems you have right now is you are flying without 

instruments. Where are your metrics? Should you establish some 

type of metrics as to, for example, debt as a percentage of GDP; 

mandatory spending as a percentage of the overall budget? What 

are not only the short-range implications of actions that are taken 

today, what are the implications beyond 10 years, because guess 

what? The first baby boomer doesn’t reach 65 until 11 years from 

now, and the crest of the wave doesn’t come until about 2016. We 

don’t live on a flat Earth, so we can’t cut our budget view off 10 

years from now. 

Setting priorities is tough work. Changing how government does 

business is tough work. But this committee is uniquely positioned. 

Along with the Government Reform Committee to try to track the 

issues about how government does business. 

Secretary Rumsfeld ironically on September 10 had an historic 

speech in which he announced an agenda to reform DOD’s bureaucracy, and we have been working very closely with the Secretary 

and others to try correct long standing problems. Needless to say, 

that is no longer as high a priority today, but that was an example 

of the type of courage and conviction it is going to take. It is going 

to take years, but this committee and other committees are going 

to help make it happen. 

Chairman NUSSLE. Well, none of that advice was very helpful—

no, I appreciate that. There is obviously a lot of work that we are 

going to have to do. It is a different world, and the Budget ComVerDate Feb 1 2002 18:02 Feb 25, 2002 Jkt 000000 PO 00000 Frm 00052 Fmt 6633 Sfmt 6602 H:\DOCS\HEARINGS\107-18\HBU311.000 HBUDGET1 PsN: DICK
49

mittee will be the first step in that process. I appreciate the comments, as sobering as they are. I think they are realistic, and they 

are given straightforward with a lot of heart of true patriots. I have 

no doubt that you will continue to be in touch with us as we continue to navigate these uncharted waters. 

With that, if there aren’t any other questions for this panel, I appreciate your time today, and this committee will stand in recess. 

[Whereupon, at 3:30 p.m., the committee was adjourned.]

Æ