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Testimony as Delivered by Secretary of Defense Donald H. Rumsfeld before the House Select Committee on Homeland Security
Testimony as Delivered by Secretary of Defense Donald H. Rumsfeld, Secretary of State Colin Powell, Secretary of the Treasury , , Thursday, July 11, 2002

ARMEY: This meeting of the Select Committee on Homeland Security will come to order.

The chair will recognize himself for a unanimous consent request. Without objection and pursuant to the clause 2(h)(2) of Rule XI of the rules of the House, the number of members that constitute a quorum for the purpose of taking testimony before the Select Committee shall be not less than two, with a member each from both the majority and the minority. Is there any objection?

No objection is heard. It is so ordered. That ends the business portion of our meeting.

The Select Committee is meeting today to hear testimony on transforming the federal government to protect America from terrorism. Given the time constraints of our witnesses, the chair would ask members, other than myself and Ms. Pelosi, to forego opening statements at this time so that we can hear from our witnesses and proceed to questions. Without objection, all members' opening statements will be made a part of the record.

The chair now recognizes himself for a brief opening statement.

Let me begin by thanking you Secretary Powell, Secretary O'Neill, Secretary Rumsfeld and General Ashcroft for taking time to be with us today. It's not often that we see the four most senior Cabinet officials brought together to form such a distinguished panel. Each has gone beyond the call of duty in doing what is necessary to be able to speak with us today.

Secretary Rumsfeld, for example, has come despite his need to recover from his recent surgery. Secretary O'Neill, in addition, has delayed his departure on a very important Mideast trip on business for this country. This testifies to the importance of what we are doing here.

The president asks no less of us than to embark on the most significant transformation of government in half a century. Consolidating hundreds of agencies, services and teams is not a task to be taken lightly. We are being told to take a road that is long and difficult. It's also one filled with a number of significant risks. If we are to take this path, it is essential that we understand why it is necessary to do so. We must start with a precise understanding of why an enormous transformation of our government is required.

The world has, indeed, changed. It's a much different place than it was in 1947 when the last transformation of government took place. It's a far different place than it was a mere 10 months ago. Our place on the world stage will never be the same.

What will it take to defend freedom under such circumstances? As the greatest, most free nation the world has ever known, how do we protect our citizens and our culture from the forces that hate us? Do we lock up the doors and bar the windows? Are we perhaps in danger of sacrificing our liberty in the name of security?

These are just some of the questions we will be compelled to address. But our purpose today is not to answer every question or to solve every problem. We must begin at the beginning. We must understand the need for action as well as the price of inaction.

Right now our standing committees are finalizing their work on the details of the president's proposal. It would be more appropriate for this committee to address the exact details of this legislation after they have finished their work. Next week we will ask other administration officials to explain why they believe the president's plan is the right plan for the challenges we face.

So this morning let us focus on the problem rather than the solution. We are fortunate today to have a panel that is better qualified than any others to begin this discussion. They will tell us the serious threat the American people face today. They will offer their first-hand knowledge of the face of terrorism and how the world has changed. They will explain the challenges the enemies of freedom present to our society, and they will tell us whether these threats are enduring.

We welcome our distinguished guests to this committee. I know that all of you agree that our strength is in the people and in the caring for one another. Our strength is in our communities and our ability to pull together. Because we share such an important mission, let us embody these great American strengths in our work here today and in the coming weeks.

Thank you.

The chair now yields back the balance of my time, and I recognize the gentlelady from California, the Select Committee's ranking member, for an opening statement that she might have.

Ms. Pelosi?

PELOSI: Thank you very much, Mr. Chairman.

I join you in welcoming our very distinguished panel today: Secretary Powell, Secretary O'Neill, Secretary Rumsfeld and Attorney General Ashcroft. And as you said, their presence here in aggregate speaks to the enormous responsibility that we all have as we proceed in helping to make America a safer place.

I join you in welcoming them, and I'd like to commend our colleagues on both sides of the aisle on this panel for their leadership on this most-critical issue facing our nation today -- protecting the American people as we protect our Constitution.

On our side are Representatives Frost, Menendez, DeLauro, with whom I'm honored to serve on the Select Committee, have great expertise and experience in national security matters as well as the mechanics and functioning of the federal government agencies.

Congressman Frost has been ranking member on the Rules Committee, Bob Menendez has chaired our homeland security task force and Congresswoman DeLauro has served for years on the Appropriations Committee.

As ranking Democrat on the House Select Committee on Intelligence, I am very aware, sadly, of the nature of the threat we face. We're all united in our determination to win the war against terrorism. We all agree that this battle will be won and that we will succeed by working together.

Ten months ago we were attacked here at home. We have a responsibility to the families of the survivors, indeed, to every person in this country, to reduce the risk of future attacks. That is why, when we began the House-Senate inquiry, the joint inquiry, into the September 11th attacks, we began with a moment of silence. That was an appropriate beginning for our other inquiries, of which this is one. I think that moment of silence carries forth to us today.

Families of those affected by 9/11 talk of their continuing reaction to events that used to not be of great concern to them. Some feel fear with merely a plane flying overhead. Imagine how those families felt with the shooting at Los Angeles Airport last week. So every time an act of terrorism, whether it's defined that way or not, a violent act that's associated with an airport or anything like that occurs, these families have deepened pain. And, of course, we mourn for the families of those affected by the L.A. tragedy.

Our government's most important responsibility is to protect and defend our people. Part of that protection, of course, is the protection of their civil liberties. Any proposal must be measured against the simple test, do the actions we take make the American people safer and do they maintain our freedom?

The president's proposal to reorganize the government has stimulated a healthy discussion about how our government should be organized best to achieve that goal. We need a Department of Homeland Security based on a model for the future. I take hope in our meetings with the president. He has been receptive to the congressional input on his proposal.

I'm especially pleased, Chairman Armey, with your statement that you will be respectful of members' concerns that you are not bound chapter and verse to the details of the president's proposal.

The department must be streamlined, it must be agile and able to take advantage of the technological revolution, to improve communications between those and among those who have access to information and those who need it.

PELOSI: Rather than creating a massive new federal bureaucracy, we must support our first responders at the state and local levels with training, resources, equipment and information and the federal department that matches that.

You know, in real estate they always say the three most important issues are location, location, location. Well, in this case the three most important issues are localities, localities, localities. For homeland security, helping our state and municipal government must be where our emphasis lies and where our ideas spring from. That is where the threat is, the need and the opportunity.

Successful government agencies have several things in common. They have a clear mission and they are provided the tools and a budget sufficient and targeted to meet that mission.

There are still some unanswered questions about the president's proposal. We eagerly await the strategy that Governor Ridge's office has been working on for months for homeland security, and hopefully we will see that before we finish writing this bill.

Cost. Two days ago, the CBO released its official estimate of the cost of the proposal. Just moving departments would cost about $3 billion, and that is not without any technological additions to the move. That $3 billion does, as I said, not bring the department up to date technologically. Without the new technology, we cannot really succeed.

And the good governance issues are ones that we must take very seriously. Civil service laws protecting against political favoritism would be waived, as I read the bill. Whistleblower protections would be waived. Open and competitive bidding laws would be waived. Government and Sunshine laws, such as the Freedom of Information Act, would be waived. I hope that that is not part of our final product.

Does national security really demand creating a second-class group of government employees? I don't think so. And I think that most members of Congress share that view.

These questions are only a few of the important ones facing us as we move forward with creating a new Department of Homeland Security. We are the greatest country that ever existed on the face of the earth. We can and we must do things in a better way.

Last week, on the Fourth of July, we celebrated and we proved to terrorists that they cannot frighten us. You know, Mr. Chairman, that the main goal of terrorists is to instill fear, to have countries change the way they live their lives and how they regard freedom. We are the land of the free and the home of the brave. The American people demonstrated that last week when they turned out to celebrate the Fourth of July en masse. We can and we must do things in a way that respects our people, protects our founding principles and protects and defends our communities.

I look forward to the testimony of our very distinguished witnesses today.

And thank you, Mr. Chairman. I yield back the balance of my time.

ARMEY: Thank you. Thank you, Ms. Pelosi.

Gentlemen, without objection, we will put your written statements in the record and give you an opportunity summarize your testimony before us.

Also, I would like to ask the indulgence of all our witnesses so we can depart slightly from protocol. The chair would like to recognize Secretary Rumsfeld first to allow him to deliver his statement and to return to the very serious business of his recovery. And the deputy secretary would then take his place to answer members' questions.

Secretary Rumsfeld, you are now recognized for any statement you might wish to make.

RUMSFELD: Thank you very much, Mr. Chairman, members of the committee. Good morning. I do appreciate this opportunity to make a brief statement on President Bush's proposal to create the Department of Homeland Security.

In announcing the proposal, the president properly highlighted the need for unified structure. He noted that today some 100 federal entities are charged with responsibilities having to do with homeland security. As he put it, history teaches us that critical security challenges require clear lines of responsibilities and the unified effort of the U.S. government. Those new challenges, he said, require new organizational structures.

Interestingly, it was just such a challenge in 1945 that prompted President Truman to combine another collection of offices into what became the new Department of Defense.

Meeting the complex challenges of the global war on terrorism requires a direct response. It means employing all of the instruments of national power: diplomatic, economic, military, financial, law enforcement, intelligence, overt as well as covert activities.

It means also a two-pronged approach to defending our country. First, of course, is attempting to combat terrorism abroad. The president understands that a terrorist can attack at any time, at any place, using every conceivable technique. And we all know that it's not possible to defend in every place, at every time, against every conceivable method of attack.

That being the case, we simply have no choice but to take the effort to the enemy. We also have to marshal all of the nation's capabilities to attack and destroy terrorist organizations with global reach and to pressure those who harbor them.

Second is the establishment of the Department of Homeland Security, which we're discussing today, to coordinate the efforts of federal, state, local agencies to provide for security at home.

Both of those efforts are crucial, the one abroad as well as at home, and the role of the Department of Defense in each differs in important ways.

With respect to the war abroad, U.S. military forces, at the direction of the president, are charged with engaging enemy forces and governments that harbor them. In this effort, the DOD works closely with other government agencies, including the Departments of State, Treasury, Justice and the intelligence community, and in these types of operations the Department of Defense often takes the lead, with other departments and agencies working in support of those efforts.

With regard to improving security at home, there are three circumstances under which DOD would be involved in activity within the United States.

RUMSFELD: First, under extraordinary circumstances that require the department to execute traditional military missions, such as combat air patrols and maritime defense operations. In these circumstances, DOD would take the lead in defending people in the territory of our country supported by other agencies. And plans for such contingencies would be coordinated, as appropriate, with the National Security Council and with the Department of Homeland Security.

Second is the emergency circumstance of a catastrophic nature. For example, responding to the consequences of attack, assisting in response, today, for example, with respect to forest fires or floods, tornadoes and the like. In these circumstances, the Department of Defense may be asked to act quickly to provide and supply capabilities that other agencies simply don't have.

And third, our missions or assignments that are limited in scope where other agencies have the lead from the outset. An example of this would be security at special events, like the recent Olympics, where the Department of Defense worked in support of local authorities.

The recently revised Unified Command Plan makes a number of important changes to U.S. military command structure around the world. Indeed, the chairman of the Joint Chiefs of Staff, General Dick Myers, recently said that in his view this was the most important and significant set of changes in the unified command structure for the United States during his entire military career.

The Unified Command Plan established a combatant command for homeland defense. The U.S. Northern Command, or NORTHCOM, which we expect will be up and running by October 1st. NORTHCOM will be devoted to defending the people and territory of the United States against external threats and to coordinating the provision of U.S. military forces to support civil authorities. In addition, NORTHCOM will also be responsible for certain aspects of security, cooperation and coordination with Canada and Mexico, and will help the Department of Defense coordinate its military support to federal, state and local governments in the event of natural or other disasters.

Second, we will establish a new office within the office of the Department of Defense to handle homeland defense matters to ensure internal coordination of DOD policy direction, provide guidance to the Northern Command for its military activities in support of homeland defense, and lend support to civil authorities, and coordinate with the Department of Homeland Security and other government agencies.

Third, the administration has offered legislation to establish a new undersecretary for intelligence. The primary responsibility of this office would be ensuring that the senior leadership of the Department of Defense and the combatant commanders receive the warning and actionable intelligence and counterintelligence support that they need to pursue the objectives of our new defense strategy. This new office should improve intelligence-related activities, but also provide a single point of contact for coordination with national and military intelligence activities.

Finally, I'd just like to briefly mention the two functions identified for transfer in the president's proposal from the Department of Defense to the Department of Homeland Security. The National Communications System, or NSC (ph), and the National Bioweapons Defense Analysis Center. The NSC (ph) is an interagency body of 22 departments and agencies of the federal government, in addition to its strong government and industry partnership through the president's National Security Telecommunications Advisory Committee. The transfer of the NSC (ph) into the Department of Homeland Security can be accomplished with little impact on DOD.

The National Bioweapons Defense Analysis Center, the mission of which would be to coordinate countermeasures to potential attacks by terrorists using weapons of mass destruction, does not yet exist. The administration's draft proposal would establish that center from the proposed $420 million in the DOD Chemical Biological Defense Program for biological homeland security efforts, which is included in the president's fiscal 2003 budget, and transfer it in its entirety to a new Department of Homeland Security.

Mr. Chairman, the Department of Defense welcomes the new Department of Homeland Security as a partner that can bring together critical functions in a new and needed way. Working together with the other agencies charged with U.S. national security, we will accomplish our common goal of ensuring the security of the American people, our territory and our sovereignty.

Thank you very much.

ARMEY: Thank you, Mr. Secretary.

Mr. Secretary, depending upon your comfort level, you're welcome to stay, or if you do need to move on and substitute your deputy secretary, I think we will all understand.

RUMSFELD: I think I'll excuse myself.

ARMEY: Thank you, again, Mr. Secretary.

PELOSI: Thank you, Mr. Secretary.

ARMEY: OK. Secretary Powell, we're very pleased to see that you could make it today, and anxious to hear your testimony. So please proceed.

POWELL: Well, thank you, Mr. Chairman and Mrs. Pelosi and members of the committee. It's a great pleasure for me to be here this morning with my colleagues.

I would like to ask the committee's indulgence for a moment to introduce two guests that I have brought with me. As I think most of the committee members will remember from my previous incarnation, I was chairman of America's Promise, the alliance for youth. And one of the programs that came out of that is an exchange program between the United States Department of State and the United Kingdom's Foreign and Commonwealth Office.

So today, two young Americans are in the United Kingdom traveling around with the foreign secretary of the United Kingdom, Mr. Jack Straw. He has taken them to Bratislava in Europe to attend meetings with him. And in exchange, I have two young British -- a young lady and a young gentleman, who are from Surrey, England. I'd like to ask them to stand up and be recognized, Mrs. Meli Lu (ph) and Mr. Tom Miner (ph).

(APPLAUSE)

I couldn't bring them or take them to Bratislava or anything approaching that, so I brought them here, Mr. Chairman.

(LAUGHTER)

They were at a Britney Spears concert last night. They have been to a basketball game. And this is their day with the State Department to see what a secretary of state does. And I think they're having a pretty good time here in the United States.

ARMEY: If I may just say, Mr. Secretary.

We look forward to showing you that there can be something better than Britney Spears.

(LAUGHTER)

POWELL: Well, Mr. Chairman, members of the committee, it is a great pleasure to testify before you on this very important subject. And I congratulate you on this new committee and the work that you will be doing. It is vital work with respect to the security of our nation.

And I am pleased to appear with my colleagues to indicate my total support and the total support of the department to the new Homeland Security Department and to President Bush's proposal. We are prepared to cooperate fully with the new department. In fact, we are eager to do so.

As President Bush said in announcing the creation of this new department, we are a different nation today. The tragic events of September 11th and all those events have conveyed to us, have made us a new nation, and has made us a -- given us a new situation that we really have to deal with. And I think, Mr. Chairman, you and Ms. Pelosi have spoken to this already.

Because the fight against international terrorism is different from any other war we have fought in our history, different than any other war that I tried to prepare myself for as a soldier, or that I have fought in as a soldier over the last 40 years. It is a war that will not be one principally through military might. It will be won through all of the elements of our national power that Don Rumsfeld spoke to a moment ago -- military might, diplomatic prowess, political efforts, our intelligence effort, going after financial institutions.

And as the president has said so often, we are in this fight to win, and we will not weaken, we will not lose our resolve, we will not run out of patience. We will stick with it until those enemies who come at us in this new and different and asymmetrical way are defeated. We will fight terrorist networks and all those who support these efforts to spread fear and mayhem around the world. And we will use every instrument of our national power. And we will not be cowed, we will not be made fearful.

As Ms. Pelosi said, we all gathered last July 4th, not withstanding all of the threats that were out there and the suggestions that something terrible would happen. We all came out of our homes and went to public places to show that we are not a fearful nation. We are a nation with a spine of steel and a hear that is full of courage and we will not be made fearful by terrorists.

Progress in this campaign against terrorism will come through the patient accumulation of successes, some seen, some unseen. And we will remain forever diligent against new terrorist threats. Our goal will be reached when Americans and our friends around the world can lead their lives free of fear from terrorist attacks.

We cannot, we will not let the need to fight this war make us that different a society. We have to protect ourselves, but we must not put up tall fences, sprinkle broken glass on the tops, put a guard at the gate and seal ourselves off from the rest of the world. We must not become gated America, or they will have won. We can't let that happen.

So we acquire sacrifice, dedication, energy and a great deal of wisdom to maintain this precious balance between our way of life, our openness, that which makes this America to the rest of the world. Our freedom and the security measures needed to protect our citizens to the maximum extent possible. We must fight the terrorists. We must protect the lives of our citizens, and we must not relinquish the very values that make us who we are, that have made us the greatest nation on earth.

In this regard, president Bush's proposal for a Department of Homeland Security shows the way ahead, as America does everything with its power to protect its citizens at home and abroad.

The president has also proposed that this new department assume responsibility for the policy guidance and the regulation that's required with respect to visa issuance.

As you know, our first line of defense in protecting ourselves from those who would come to our shores are our diplomats at our consulates and other locations around the world where we issue visas to people to come to America. The United States is ready to make sure that our visa system is a strong one and a secure one but, at the same time, one that encourages people to come to the United States. Once we have made sure that they are the right kinds of people to come into our nation, they are not coming in to conduct any kind of activity which would be injurious to any American.

Under the new proposal, the secretary of homeland security will determine what those policies should be. The secretary of state, the Department of State is willing, anxious to give all the authority that we currently have with respect to visa issuance, the regulations, to the secretary of homeland security. That's where it resided.

He will have access to all the intelligence information, law enforcement information, and he will make those policy judgments with respect to who should be authorized to receive a visa at our many visa-issuing facilities around the world. We will have some foreign policy input into those judgments, but I yield all of that authority willingly to the secretary of homeland security.

I consider it absolutely essential, however, that the actual issuance of the visas remain with the Department of State. We have the experience, the training, the language skills and the dedicated people to perform this mission. The State Department represents the United States at more than 200 posts around the world, where it carries out its responsibilities for conducting foreign policy, promoting trade, cooperating with foreign law enforcement authorities, and providing consular services to Americans abroad.

Our consular officers are also responsible for the issuance of visas to foreign nationals. But they have many other responsibilities. And it is difficult to shred out simply the visa- issuing responsibility from these other consular activities that take place at our various facilities.

Most visa applicants want to come here for legitimate purposes -- business, tourism, education. We want them to come to our schools. We want them to come to the United States and visit our wonderful tourist attractions. We want them to participate in healthcare activities and to come use our hospitals and other facilities.

However, some seek visas for criminal and other awful purposes, including terrorist acts. So we have been working hard to make sure that only those who mean us no ill come to this country. There is no entitlement to a visa. The judgment is that you are not entitled to a visa unless you can establish you're coming here for a legitimate purpose.

Since September 11th, we have done a lot to tighten up our system. The most important thing we have done really is to increase the size of the database available to our consular officers around the world. We will work closely with our intelligence agencies, and especially with the Justice Department and the FBI, to double the size of the database. So that when a young consular officer overseas puts a name of an applicant into that database, it comes back here and it gets the widest dissemination, so it's bounced against all the databases.

POWELL: We can do an even better job of that, and I'm very pleased at the level of cooperation that has existed between the State Department, the Justice Department, the CIA, and all of the other relevant agencies to make sure that we give the broadest screening to this name before that consular officer then makes a judgment as to whether or not an interview is required or whether or not it should just be shut down out of hand, we don't want this person here.

And so I can assure you we're doing everything possible to tighten our procedures.

We've put in place a new visa called the Lincoln Visa, which I just have a sample up here, using the latest technology. The finest experts we have in our government have tried to modify this and alter it to see if they could get through this new system, and they have failed.

And we're seeing the same thing with our passports, all using digitized data -- this is my passport, and I can assure you I have one of the newest and the best -- to make sure that we are protecting ourselves.

Our consular officers did a great job. Do we have problems from time to time, have our efforts been defeated from time to time? From time to time do we have someone who does not live up to their responsibilities? Yes, that has occurred. But when we find it we go after it, as we are doing in the current case at Doha.

But do we also have officers that do a brilliant job of spotting someone who is trying to hide, trying to defeat the system? Yes, they do. The gentleman who was arrested recently, Mr. Padilla, was spotted by a consular officer who found something unusual about this particular applicant, reported it to the regional security officer. That person, being vigilant, reported it back here. We then contacted the CIA, the FBI, and others and found enough about Mr. Padilla so that when he arrived in the United States, we are waiting for him, and he was arrested and taken into custody.

These are dedicated young men and women around the world. They have a career path, they have a career track, they have the language skills. They know all of the other consular activities that take place -- that have to take place in our embassies.

In 2001 alone, we adjudicated 10 million non-immigrant visa applications and allowed 7.5 million visas to be issued, allowing these people to come into our country.

And so I want to assure the members of this committee that we take our responsibilities in the State Department and our consular responsibilities with utmost seriousness. And we are seeing what else we need to do within the consular service, within the Consular Affairs Office at the State Department, to make sure that we are doing everything to guard our nation, to guard our people, but at the same time to make sure we remain a nation of openness, a welcoming nation, that America that we all love and the world respects.

And we look forward to working with the secretary of homeland security and all the elements of the Department of Homeland Security, just as we are now working more closely with all of my colleagues at the table and the other organizations within the United States government, to make sure that we are doing these two things: protecting ourselves, but remaining an open society.

And I look forward to your questions, Mr. Chairman and members of the committee.

ARMEY: Well, thank you, Mr. Secretary. And let me just say that your statement here is very reassuring to me on several points.

Secretary O'Neill, we know that you have your passport in order -- let me correct myself -- for your trip to Central Asia.

And I may remind members of the panel, the secretary does need to get off on that trip by 11 o'clock.

So, at this time, Mr. Secretary, again, thank you for your being here, and let me just turn it over to you for your statement. Thank you.

O'NEILL: Mr. Chairman, distinguished members of the committee, it's a pleasure to be here today. And because of a shortness of time, with your permission, Mr. Chairman, I'm going to submit my statement for the record and let you proceed with the attorney general, so that we can have some opportunity for interaction before I really must go at 11 o'clock.

ARMEY: OK, I appreciate that.

POWELL: Thank you.

ARMEY: Mr. Attorney General? Let's then move on to you.

ASHCROFT: Thank you, Chairman Armey, and thank you, my colleague Secretary O'Neill, Congresswoman Pelosi and members of the committee. I want to thank you for convening this hearing on President Bush's plan to make America safer through enhancement of our homeland security.

On behalf of the Department of Justice, I welcome this opportunity to express our unqualified support for the president's vision of homeland security that's rooted in cooperation, nurtured by coordination, and focused on the prevention of terrorist attacks.

A number of Department of Justice entities will be a part of this new department, most notably the Immigration and Naturalization Service, but also the Office for Domestic Preparedness, the analysis and training functions of the FBI's National Infrastructure Protection Center, and the National Domestic Preparedness Office.

The Department of Justice supports the prompt and effective implementation of these transfers, and they are critical to the Department of Homeland Security's success. I commend the Congress for its commitment to act on these measures prior to the first anniversary of the September 11th attacks.

Ten months ago to this day, our nation came under attack by an enemy that continues to threaten the United States, our citizens and the values for which we stand. Today the United States is at war with the terrorist network operating within our borders. Al Qaida maintains a hidden but active presence in the United States, waiting to strike again.

Terrorists, posing as tourists, businessmen or students, seek also to penetrate our borders. Every year the United States welcomes 35 million visitors to our country. More than 700,000 of these visitors come from countries in which Al Qaida has been active.

As a result, we have tightened control at our borders, in issuing new regulations to strengthen enforcement of our immigration laws. In June, we announced the National Security Entry-Exit Registration System.

ASHCROFT: That's the precursor to a comprehensive entry-exit system that Congress has mandated be in place by 2005.

This system reflects a fundamental fact of the war on terrorism. The fact is that information is the best friend and most valuable resource of law enforcement. The National Security Entry-Exit Registration System will track up to 200,000 visitors in the first year, stopping suspected terrorists prior to entry and verifying the activities of visitors and their whereabouts while they are in the country.

For 10 months we have conducted a campaign to identify, disrupt and dismantle the terrorist threat. Years ago the Justice Department of Robert F. Kennedy, it was said, would arrest a mobster for spitting on the sidewalk in the fight against organized crime. Well, in the war on terror it's been the policy of this Department of Justice to be similarly aggressive. We have conducted the largest criminal investigation in history; 129 individuals have been charged, 86 have been found guilty, 417 individuals have been deported for violation; hundreds more who are in violation of the law are in the process of being deported in connection with the investigation.

For 10 months we've been successful in protecting the United States from another massive terrorist attack, using every appropriate legal weapon in our arsenal. But we are not under any illusions. There remain sleeper terrorist and their supporters in the United States who have not yet been identified in a way that will allow us to take preemptive action against them. And as we limit the access of foreign terrorists to our country, we recognize that the terrorist response will be to try and recruit U.S. citizens and permanent residents to carry out their attacks.

Individuals like Abdullah al Muhajir, born Jose Padilla, who is now being detained by the Department of Defense as an enemy combatant. Al Mulhajir, a U.S. citizen with ties to the Al Qaida network, was apprehended in May of this year after we learned he was exploring a plan to explode a dirty bomb on U.S. soil.

But as terrorists have learned to adapt to the changing tactics of law enforcement, so too have we learned to adapt to the changing needs of America's domestic security. And among the chief lessons we have learned in the past 10 months is that our ability to protect the homeland today has been undermined by restrictions of the decades of the past.

In the late '70s, reforms were enacted in our judicial system reflecting a cultural myth, a myth that we could draw an artificial line at the border to differentiate between the threats that we faced. In accordance with this myth, officials charged with detecting and deterring those seeking to harm Americans were divided into separate and isolated camps. Government created a culture of compartmentalization that artificially segregated intelligence- gathering from law enforcement.

This barred coordination of our nation's security between these groups. Barriers to information-sharing were erected between government agencies, and cooperation faltered. FBI agents were forced to blind themselves to information readily available to the general public, including those who seek to harm us. Information restrictions hindered our intelligence-gathering capabilities, and terrorists gained a competitive technological advantage over law enforcement.

September 11th made clear in the most painful of terms that there were costs associated with the myth that we could separate the threat internationally from the threat domestically.

We know now that Al Qaida fragmented its own operation to prevent the United States from grasping the magnitude of its threat. The September 11th events were planned -- or trained for in Afghanistan, planned in Europe, financed through the Middle East, and executed in the United States. Al Qaida planned carefully and deliberately to exploit the seams in our security, the seam between the international agencies and the domestic agencies.

In the months and years preceding September 11th, our weaknesses were among the terrorists' greatest strengths. It's now our obligation and our necessity to correct these deficiencies of the past. America's law enforcement and justice institutions, as well as the culture that supports them, must change. And in the wake of September 11th, America's security requires a new approach; one nurtured by cooperation, collaboration, coordination, not compartmentalization. One focused on a single over-arching goal, the prevention of terrorist attacks.

The first crucial steps toward building this new culture of cooperation have already been taken. They are the steps that could be taken by regulation and some by legislation. The United States Congress is to be commended for acting swiftly to enact the USA Patriot Act, which made significant strides toward both fostering information-sharing and updating our badly outmoded information- gathering tools. Intelligence agents now have greater flexibility to coordinate their anti-terrorism efforts with our law enforcement agencies. And the Patriot Act made clear that surveillance authorities created in an era of rotary telephones, while those authorities needed to be able to apply to cell phones and the Internet and the digital technology, as well.

In addition, the recently announced reorganization of the Federal Bureau of Investigation has refocused the FBI on prevention, taking a proactive approach. Instead of being bound by outmoded organization charts, the FBI work force, management and organizational culture will be flexible enough to launch new terrorism investigations to counter threats as they emerge.

Five hundred agents will be shifted permanently to counterterrorism. Agents in the field have been given the new flexibility to use expanded investigative techniques. Special agents in charge of FBI field offices are empowered to make more decisions based on their specific knowledge of the terrorist threat.

ASHCROFT: Finally, the creation of the Department of Homeland Security will be the institutionalization of the culture of cooperation and coordination that's essential to our nation's security. Part of our reorganization is the enhancement of the FBI's analytic capacity and the coordination of its activities more closely with the CIA. The results of this enhanced analysis and cooperation will be shared fully with the Department of Homeland Security.

For the first time, America will have under one roof the capacity for government to work together to identify and assess threats to our homeland, to match these threats to our vulnerabilities, and to ensure our safety and security. In accordance with the president's vision, creation of the Department of Homeland Security will begin a new era of cooperation and coordination in defending America's homeland.

Mr. Chairman, history has called us to a new challenge -- to protect America's homeland. But history has also provided us with the lessons we would do well to heed. We must build a new culture of justice in which necessary information is readily available to law enforcement. We must foster a new ethic of cooperation and coordination in government. We must make our institutions accountable, not just to their antiterrorism missions, but to the American people they serve. We must always do this in respecting our Constitution and the rights which America is uniquely aware of and which America uniquely protects.

I thank you for your leadership and this opportunity to testify.

ARMEY: Thank you.

And let me thank all my panelists -- our panelists.

We're now going to proceeding for questions under the five-minute rule, and I might advise the committee that I will try to stick as strictly as possible to that.

Also, I want to exercise the prerogative of the chairman and reserve the right for me to ask my questions at the end of the process so that we can involve our other committee members.

So at this time, with the indulgence of the committee, I would defer to my friend and colleague, Mr. DeLay, to open questions on our side of the aisle.

DELAY: Thank you, Mr. Chairman, and welcome to the House of Representatives. What a distinguished panel.

The chairman's going to adhere to the five-minute rule, so I want to just jump into the questions.

And I know your time is short, Secretary O'Neill, so I will start with you.

Can you talk about the impact that concerns about terrorism have had on our financial markets, and what might be done to lessen that impact?

O'NEILL: Yes, indeed. I think what we've seen in our financial markets is, in effect, an increase in the risk premium that investors attach to investments. So that the uncertainty that's created by the reality of the attack of September 11th and the heightened probability that future acts could occur has, in effect, been discounted into the marketplace so that people are requiring higher rates of return than they did before September the 11th.

I think, as we go through time, most hopefully, without any new events, the risk premium will shrink. But it will never go away completely, I think, because it is a new reality of our world, that we have to anticipate and know that these terrible kinds of things could be repeated.

But there are some things that we can do, and the House of Representatives has already acted on one of those things -- to pass so-called terrorist risk insurance. By taking the action that you did -- hopefully, soon to be followed by a complete action of the Senate and by a conference committee -- I think we can take the exorbitant costs that are associated with trying to buy terrorist risk insurance in the private sector and appropriately move it above the consideration and concern of the private marketplace, so that if there is another terrorist event, we will have to pay the costs, but it won't be baked into every single transaction that takes place in the private sector.

So I think we're beginning to -- we haven't quite completed that activity. But, again, I think only time will heal this. I have to tell you, I don't think time will ever completely heal the sense that we have and the risk premium that will now be inevitably baked into our future market considerations.

DELAY: Thank you.

Mr. Attorney General, as I travel around the country the question that's asked most often about the Department of Homeland Security is, if we are creating this department in order to protect the homeland, why is not the FBI and the CIA within the Department of Homeland Security? Maybe you could answer that question.

ASHCROFT: Well, one of the important things about the FBI is to understand the breadth of its responsibility, and its responsibility was substantial before we had the elevated awareness that has been part of the national understanding since September the 11th. It is involved in general law enforcement investigations and in the provision of the information and evidence necessary for prosecutions.

It's important to note that frequently those involved in terrorist activities, though, have other connections to criminal activities, so an integrated approach is appropriate. So that an FBI that can develop information regarding terrorism, but also can provide a basis for prosecuting individuals, including suspected terrorists, on things like document fraud, on things like credit card fraud and the other kinds of criminal activities in which we have found that many of these individuals who are associated with the population of terrorists have been engaged, those activities can go forward.

It's with that in mind that we think that a coordinated, integrated effort in the FBI remains a part of the justice community. After all, terrorism is criminal activity, and frequently, very frequently, those associated with terrorism are involved in other criminal activities as well.

DELAY: Thank you.

Secretary Powell, could you talk about the threat from state- sponsored terrorism and maybe identify nations of greatest concern today?

POWELL: That is one of our greatest concerns, Mr. DeLay. There are those states that have not come to the realization that the way to provide for your people in the 21st century is to adopt democratic practices, get rid of totalitarian forms of government.

POWELL: There are those states that continue to believe that they can get an advantage by developing weapons of mass destruction, weapons of mass destruction that they might consider using -- and some of these states have used these weapons against their own people -- or perhaps these weapons of mass destruction can be used by non-state terrorists.

And that's why the president has taken a very strong position on this, why he has identified what we call the axis of evil, several specific states -- North Korea, Iran and Iraq -- that clearly fit this category, and why we are remaining especially vigilant and looking constantly at what our policy should be with respect to such states.

And we should be concerned -- more than concerned -- we should be very, very concerned about these states, and we convey to our friends and allies around the world why they should be concerned.

When you look at a state such as Iraq, the first target for these kinds of weapons is not the United States; more than likely, their own neighbors. And they've demonstrated previously they will use it on their neighbors and they will use it on their own people. And so we have no illusions about the nature of these states and why they're developing these weapons.

There are other states that are not so identified on the axis of evil which are also of concern to us, states such as Libya, Syria. And we are constantly looking for this kind of activity and taking all of the action appropriate to make sure that we can counter, deter and, if necessary, find ways to defeat these kinds of threats.

DELAY: Thank you.

ARMEY: Gentleman's time has expired.

Secretary O'Neill, I promise you, made a commitment that we would be able to release you to begin your travel by 11 o'clock. Your time has come for this departure. I want to thank you again for the effort that you made to come to this hearing, and excuse you at this time.

O'NEILL: Mr. Chairman, I was very pleased to amend my plans to have left last night at 9:30 in order to be here.

If I may, and if the gentlelady doesn't mind, may I say just a couple of things that may be a useful contribution to your thought process before I leave?

ARMEY: I think that would be fine.

PELOSI: It would be great. We'd welcome it.

ARMEY: Appreciate it. Thank you.

O'NEILL: I would make this plea as you all do your important work in considering the proposal from the president. I'd begin with this idea.

I think it is critically important that, as this new department is formed, that while the principles be clearly established of what its mission will be and what the expectations will be, that the new secretary have -- that you give the new secretary a substantial grant of authority for flexibility.

And the reason I make that plea to you is this. I think simply collecting the organizations that have been named under one new title is not what we need to do. We need to deploy the resources that are going to made available in a way that's consistent with the mission that needs to be performed. And I would submit to you, it is not simply a continuation of the missions as they have been performed in the past.

And then I would offer you, from my experience in assembling an organization, growing an organization from a little over 40,000 to 140,000 people, it is really true that it doesn't need to be more expensive to have a bigger organization than a smaller organization.

And I know, while it's not a direct analogy, I would suggest this thought process to you. As I bought operations all over the world, in Hungary and Spain and Italy and China and all over Latin America, I have to tell you, I never spent any money except the amount of money required to hire sign painters to put our name over the door, in order to integrate them into what is, by all accounts, the best organization of its kind in the world.

And in fact, in the process of assembling those organizations, it was possible to achieve very substantial cost improvements, not at the expense of the human beings, because we were mindful of the need to recognize the contributions that people had made in their previous incarnation and previous organizational structure. But I do not believe that it takes substantial amounts of money, because I think, for example, the notion of co-locating 160,000 people is, frankly, crazy, because most of the people, in fact, particularly those that are associated with the Customs Service and the Secret Service that I know about, they're appropriately deployed today in a geographic sense. For the most part, a change into a new organization will not require huge redeployments.

I would urge you to be skeptical of the idea that this new formulation requires huge amounts of resources. Rather, it requires for the new secretary substantial flexibility to organize in order to work at the critical mission.

And then I would offer you one example of this that we've already moved forward with in the Customs Service. You know, the Customs Service is a great organization. It began in 1789, the traditions are strong. The people are so dedicated and loyal to the mission that they have. And I know that they will carry that with them to the new Department of Homeland Security.

But I want to tell you this little story. For more than 200 years, these people have been doing their work. And I think everyone felt they did it with distinction to the day of September the 10th.

On September the 11th, everyone in the society recognized that we had a new set of forces that we had to deal with. And as the Customs Service looked at the proposition of dealing with traffic coming across the borders, they had a new thought process that was really important.

And I was fortunate enough to go to Detroit a few months ago to witness the introduction of a new process for how Customs Service deals with goods coming across the Ambassador Bridge in Detroit, which is a bridge that transports millions of trucks every year, largely for the automobile industry.

O'NEILL: Now, we thought we were doing a good job in the Customs Service before September the 11th, but what we thought is we've got to do a better job now of making sure that weapons of mass destruction in pieces or parts or in totality don't come across our borders, so we've got to do a better job of inspection. But the thought process changed after September 11th to say, let's think about this in a more holistic way and let's not think about it as a government thing. Let's think about it as a process of goods coming across our border.

And so, the Customs Service people work with the automobile industry in Canada and agreed that the manufacturers of goods would start, in effect, doing security work at the plant site where the goods are loaded. And then, when the goods are completely loaded and inspected, they would be, in effect, electronically bounded so that no one could open the container without setting off an alarm.

And as a consequence of this re-thinking of the process, what used to be an average 54-minute waiting time as trucks came across the Ambassador Bridge now happens like this: The goods are inspected. They are electronically bounded at the plant. The driver drives them to the border. When he gets close to the border, there is an electronic transmission of all of the bill of lading information, where it came from, where it's going. And when the driver approaches the Customs station, they hand their driver's license to the official who looks at the driver's license and makes sure it is the person that it says.

And the time now has gone from 54 minutes for this important traffic to come across the border to 17 seconds.

Now, what I've said when I had the pleasure to represent my great people at the Ambassador Bridge the day we opened this service was, "In your face, terrorists," because we have figured out a way, with existing technology to improve the economics of commerce across our border while significantly improving the security we provide.

And for me, that's the test of this new department. Not to have added costs because of terrorism, but to demonstrate to the world, we can use our technology and our brain power, and we will both be safer and more economically powerful than we have ever been.

Mr. Chairman, with that, I'm...

PELOSI: Mr. Chairman, if I may. Since the distinguished secretary has raised a couple of questions in his comment, I think it would only be fair if we were able to have a question from our side of the aisle to the secretary, if we have just another moment.

ARMEY: May I ask the secretary if I may prevail on you for one questioner from the Democrat side of the aisle.

And I yield to you, and I take it you're going to yield...

PELOSI: ... yield to Martin Frost.

ARMEY: OK.

FROST: Mr. Secretary, you've talked of course about the cost of this new department. The Congressional Budget Office has just released a study indicating that, in their judgment, the cost of the new department would include $3 billion in additional costs -- in additional amounts over the next -- between now and 2007.

My question is, do you agree with the study just released by the Congressional Budget Office? And if so, where are we going to find that additional $3 billion in light of your comments?

O'NEILL: You know, I really do wish I could stay longer but I do want to answer your question. And let me say, I have not seen their study. But I would say, as a matter of experience, I think it's unbelievable to me that anyone thinks this should cost $3 billion over the next four or five years.

But in order for it not to cost $3 billion, you can't simply take as a given everything as it is, and then have a conception that you're going to freeze everything as is, and then you're going to assemble people into new space with new titles.

You know, for the people who are in the Customs Service now who are in Treasury buildings, there is no reason I can't be their landlord. I mean, why do they have to move anywhere? They don't have to move anywhere.

But I'll tell you a mindset, and this is really important. And this is not just about homeland security, this is about getting value for public service.

When I came to the Treasury Department, I said to our people, "How long does it take us to close the books at the Treasury Department?" And to put this in context, you should know, Alcoa closes its books in two and a half days. They close their books faster than anybody else in the world. And they don't do it because they have more people. In fact, they have fewer people. It is because they have a brilliantly designed collection process that gets data from 350 locations that never has to be changed or amended.

All the other people spend lots of time doing what I call repair work, because they don't understand how essential it is to get things right so that data collection systems are friendly to the people who are supposed to do the work. And there is a high value placed on getting it right the first time.

So, in the context of two and a half to three days to do the books for Alcoa, 350 locations around the world, I came to Treasury and said, "How long does it take to close the books?" And they said five months, and I said, "Why bother?"

(LAUGHTER)

And then I said, "I know that it doesn't have to take five months, and it doesn't take more people to do it right. It takes a new concept of how to do it, to do it fast. And I want the Treasury Department to demonstrate that public service can be as good as the private service." And the last three months, the Treasury Department people have closed out books in three days.

Now, if we don't bring that mentality and let the secretary of homeland security have the ability to challenge the government to work at benchmark-level processes, it will probably cost more than the $3 billion the Congressional Budget Office is talking about.

If you let the secretary have the flexibility to work to develop a benchmark organization, public service or private service, it will not cost more money. And the value created by these people will be staggeringly greater than what we've been able to do with the current collection.

FROST: I appreciate the secretary for his response. This is something that Congress will pay a great deal of attention to.

O'NEILL: Thank you.

Thank you, Mr. Chairman. Thank you, members of the committee.

FROST: And, Mr. Chairman, I do have another question for another witness, if I may.

ARMEY: Yes, you may.

FROST: And I want to direct this to Secretary Wolfowitz. The president, on July 4th, announced a new program by executive order, that I am sure you are very familiar with, to provide citizenship for people who are in this country legally and who joined the military services.

My question to you is rather specific about this. And I have an interest in this because I have introduced legislation on this subject. I have introduced it several months ago, which has bipartisan support.

It is unclear to me, under the program that the president announced, how we would guard against someone who is in this country legally, but who may be a terrorist, and who decides that he or she wants to join the military to immediately become a citizen.

Now, my question to you is, have you given any thought to how this program would be administered? Would the person who joins the military be required to complete basic training and advanced individual training, which could stretch over a period of a year before he or she actually begins his duty assignment in the military?

FROST: Do you have any concern that some people who may want to do harm to the country would try and use this program to immediately gain citizenship?

PAUL WOLFOWITZ, DEPUTY SECRETARY OF DEFENSE: Congressman Frost, let me get you a detailed answer for the record. We're still developing procedures here. You raise very important questions.

It is also the case, as I think you're acknowledging in the assumption of the questions, that we have a great resource here in our immigrant communities. And it's the resource of enormous value in fighting terrorists. We have people who are loyal Americans, who would like to be loyal Americans, who know the languages that we need to know to fight these people, who understand the cultures that we need to fight them.

So at the end of the day there is some balancing of risks here, but it's not all risk on one side. If we don't take advantage of that national resource, we're running a risk, as well.

And I'll try to get back to you as soon as possible with how we propose procedures that will deal with that problem. It's a real one, and you're right to raise it.

FROST: Well, I appreciate it, because it is a laudable objective. And as I said, in fact, I and others on both sides of the aisle have introduced legislation to facilitate this and to make this happen.

Thank you.

ARMEY: The gentleman's time has expired.

Gentleman from Oklahoma, Mr. Watts, who has been involved with this matter of concern for some time.

WATTS: Thank you, Mr. Chairman.

And I want to thank our panel for being with us this morning.

And, Secretary Powell, I want to say to you how proud I've been as an American citizen to see you perform on the international stage with great patience and great composure, as you have been dealing with some very difficult circumstances in some very challenging times, as has the Department of Defense and the attorney general's office, the secretary of the treasury. All of our government, all of our citizens, as well, have been dealt some challenging blows. And it is always good to know you've got a steady hand at the wheel over at the State Department.

And I would like for you and all of our witnesses this morning to respond to the question I'm about to ask. And as the chairman said, I've been working on this issue now for some time, probably over the last three or four years, because of what I saw in Oklahoma City in April of 1995. And there have been numerous studies and blue ribbon panels that have looked into issues of terrorism and the future threats to our security.

Over three years ago, one of those bipartisan panels, the United States Commission on National Security in the 21st Century, known as the Hart-Rudman commission, accurately predicted that, quote, they said, "Attacks on American citizens on American soil, possibly causing heavy casualties, are likely over the next quarter century, because both the technical means for such attacks and the array of actors who might use such means are proliferating," end quote.

Can each of you speak to the changes in threat that you've see in your respective departments and the steps that you're taking to address these threats or those changes?

POWELL: Well, I think the members of that commission were absolutely right. And we've seen their predictions come to fruition, regretfully.

And I think in the Department of State, we recognize that we have to do much more to identify these threats long before they get anywhere near the United States. We have to identify the bad actors who are out there. We have to do a better job of identifying those state and non-state actors who would use this kind of indiscriminate terror and violence to hurt our people.

And that's why I think, in all of our missions around the world, all of our diplomatic missions around the world, we are working more closely with representatives who are there from the Department of Justice, from other agencies of government resident in our missions to essentially put out this front line of defense -- and as I've increasingly called it within the State Department, front the line of offense. As Secretary Rumsfeld said, it begins far away from our shores. Do a better job of identifying those who would try to help us to go after them early, to take it up with the governments concerned. When we see terrorist organizations out there who mean us great harm, start now to discuss it with those governments.

And I think in another session, if it was a closed session, I think both Paul Wolfowitz and I could describe some of the actions we have ongoing to go after terrorists and other nations who we know are resident now.

Now, a few years ago, we would have just sort of known they were there and not done much about it. But we are now aggressively going to the leaders of those countries and saying, "We don't want to wait until they surface in a way that would hurt us or hurt you. And we want to work with you now so that you can go after them. We'll give you the intelligence. We'll give you the information we have. We will give you the resources. We will help train your people." An example of what Secretary Wolfowitz can talk about, we've been doing in the Philippines.

And so, we are being far more aggressive using our diplomatic, political, intelligence and law enforcement means to identify these threats and to work with the countries where these threats reside and, frankly, put a great deal of pressure on them to do something about them now before they become real and present dangers to the United States a few months or a year or so later.

WOLFOWITZ: Congressman Watts, I would say even before September 11th we were addressing terrorism as a major concern of the Department of Defense in two respects. I suppose one could say defensively and offensively, particularly with the attack on the Cole, but going back to Khobar and even to Beirut.

WOLFOWITZ: We have put more and more resources into force protection. We've been -- come away long before September 11th of our forces as a potential target of terrorists.

But also last summer, when we did the Quadrennial Defense Review, we took the heat of some of the advice that you just gave us from the Hart-Rudman commission and other sources in intelligence sources and identified homeland security as the top priority for DOD transformation. That development was accelerated enormously, as you might imagine, by the events of September 11th.

And among the major things that I would say we have done, first of all, is creating the Northern Command, which we'll be coming with a detailed plan on October 1st. General Myers, the chairman of the joint chiefs, has said this is the most significant change in the command structure in the Defense Department during his career as an officer. It will greatly improve our capability to do those things that are unique military roles in the defense of the country.

But also we increasingly recognize that terrorists are both a potential target of the U.S. military and that we are a potential target of terrorists.

Let me start with that second piece, that, if we -- when we're at war -- and we're at war with them now -- one of the most important things on their agenda is going to be not only how to kill American soldiers in barracks and in bases, but also how to attack the key capabilities, especially things like cyber-terrorism become a major concern for us as a Defense Department.

But secondly, from the offensive point of view, that we need to have a very broad and flexible range of capabilities. This is a shift we began last summer also.

The terrorists do not present the kind of definable, predictable threat that the old Soviet Union did. They hide, they come from unpredictable directions. When you flush them out of Afghanistan, they try to work from somewhere else. It means that you have to have a military that is correspondingly flexible and agile, and that is what we're working toward.

But a final point I would make, which I sense most dramatically, we have always depended on intelligence. Intelligence and the military have always been close partners. But in the fight against terrorism, it's impossible to exaggerate the importance of that partnership. We can't do our job without extraordinarily good intelligence, and they also can't do their job without the kinds of capabilities we provide.

We've seen synergisms of that kind coming out of Afghanistan with our military operation that drove Abu Zubaydah out of Afghanistan, but that by itself would not have accomplished what it did had it not been for the work of the CIA and Justice Department, in cooperation with foreign governments and the State Department to capture that man. He, in turn, led us to Mr. Pedilla, whom the attorney general has referred to earlier.

There are many examples of this kind, and it's why we have to integrate these different elements of national power to be succesful.

ARMEY: I'm going to have to call time so we can get on to Mr. Menendez from New Jersey.

MENENDEZ: Thank you, Mr, Chairman, and I want to than our distinguished panelists for their testimony.

You know, Winston Churchill once said, you can always depend upon America to do the right thing after they have exhausted all the other alternatives.

(LAUGHTER)

And in the spirit of trying to disprove him, make him wrong in this context, we need to get this done right the first time. And in that spirit, let me ask the following questions.

Mr. Attorney General, if you could answer this particular question with just a simple yes or no, do we need to reform the INS?

ASHCROFT: Yes.

(LAUGHTER)

MENENDEZ: I agree with you. And in that context, then, an unreformed INS being transferred into the Department of Homeland Security is as poorly functioning as it might be under the existing circumstances at the Attorney General's Office?

ASHCROFT: Well, the need to reform the INS is something that is being addressed. The administration did present a program for reforming the INS. It's under way administratively. And as a matter of fact, the administration urged the passage of a reform measure by the House of Representatives in anticipation of the Senate working to do the same.

So we believe that the reform and improvement of INS is an ongoing process that should not be discontinued.

MENENDEZ: So we ultimately need to reform the INS to make it efficient, whether it continues to be in the Attorney General's Office or the Department of Homeland Security.

ASHCROFT: Absolutely.

MENENDEZ: Now, in that context, let me ask you, how do we ensure that the rights of American citizens to claim their mothers and fathers, brothers and sisters, sons and daughters is preserved in a Department of Homeland Security whose focus is security and not necessarily the service side of what is being proposed to be transferred in its entirety, which is the entire INS, to Homeland Security?

ASHCROFT: Well, obviously the policy, as developed in the Congress of the United States and portrayed in the laws of the United States, will be carried forward in the new department like it would in any other department.

These are important considerations, and I believe that the Department of Homeland Security will have the capacity to provide that the intent of the Congress and the policy expressed in the law will be carried forward.

MENENDEZ: Couldn't you achieve still providing the security we need keeping INS at the Attorney General's Office, or could you not do that?

ASHCROFT: I believe that it's best to integrate these agencies in the Department of Homeland Security so that we have the kind of focused effort that relates to our borders, that relates to preventing terrorism, that assesses the threat, that integrates the assessed threats with the assessed vulnerabilities and the hardening of various assets around the country. That's in order to prevent an attack from being successful and to sustain the protection and safety of the people.

And I believe the optimal approach is the one recommended by the administration and proposed in the president's plan.

MENENEZ: So you would not support the determination of the Judiciary Committee yesterday that divided the INS, sent the enforcement department to the new Department of Homeland Security and kept the service aspect of it in your department?

ASHCROFT: The president has clearly stated that he believes that we should have separate capacities within the INS -- one for enforcement and one for service, so that we have a culture that's service-oriented and a culture that's enforcement-oriented.

But I believe that it's very important that they be connected, because there are frequently overlaps, and to have them in different departments might make very difficult the kind of coordination that's necessary.

I'll give you an example. In the service area, we want to serve people well, but when someone comes and presents false documents in the service area, or makes a fraudulent claim for citizenship, or indicates that they have a legitimate document which was falsely obtained, perhaps, like something that was illegally provided, it's important to be able to coordinate from that service responsibility the need to enforce the law against...

MENENDEZ: But that coordination needs to go on whether it's in one department of another.

ASHCROFT: Exactly right, it does need to go on. And my view is that...

MENENDEZ: The real issue is coordination and information sharing.

ASHCROFT: Absolutely, it is an issue. And I believe that is best undertaken if you don't have these two functions in different Cabinet agencies, but that they remain in a single Cabinet agency, although they have this separate capacity to operate so that you have a culture of service in one and a culture of enforcement in the other.

MENENDEZ: Thank you.

ARMEY: The gentleman's time has expired.

Ms. Pryce from Ohio?

PRYCE: Thank you very much, Mr. Chairman and gentlemen, for joining us today. This is one of the greatest endeavors that our country has undertaken. It's a very difficult one, and your cooperation in being here to help us get started is extremely important, and I am very grateful that you're here today.

Terrorists who represent, in my mind anyway, a very mobile and agile enemy -- it's clear that there has to be international cooperation and coordination to successfully track them and defeat them.

What obstacles are we encountering with our efforts, with our allies and others? To what extent must we depend upon cooperation from others? And have you sensed any changes in the attitudes of other nations and states across the globe as we address terrorism from our country's perspective and from their own?

And I guess any of you who care to, but Secretary Powell is probably...

POWELL: I'd be delighted to start, Mrs. Pryce.

Every ally that we have has come to the realization that terrorism does not respect boundaries, cultures or any of the other normal elements of statehood that would keep us separate. And so we have found a high level of cooperation with our friends and allies. We passed U.N. Resolution 1373 that dealt with financial transaction of terrorists. And more and more, we find nations willing to cooperate with us to share information.

It's going to take quite a bit of time to get it exactly where we want it because of individual laws and other problems that have to be resolved within individual countries. But there is a spirit of cooperation. We're not the only one who has seen a terrorist incident in the last year. The Russians have seen, and so many other nations have been exposed to this kind of horrible activity, that I think there is a new spirit of cooperation.

We're very pleased at the level of cooperation we see from our allies around the world, some of course more so than others. And where we still have obstacles to overcome, we're working with those nations. But generally, I sense and see and work within a new spirit of collaboration and cooperation, with respect to diplomatic exchanges, political exchanges, law enforcement exchanges, and intelligence exchanges. And I'm pleased with that level of cooperation, but we are pressing for even more.

PRYCE: Thank you.

And, Attorney General Ashcroft, perhaps you could expound upon my question, in that we have seen, just lately in the incident of Jose Padilla, our own citizens becoming enemy combatants. And do you still feel that our government is limited in dealing with this type of enemy combatant, or were the changes made through the Patriot Act sufficient to deal with it and meet these needs? Do you feel equipped enough at this point?

ASHCROFT: Obviously, there are different considerations when we deal with U.S. citizens and the way we deal with U.S. citizens here. There are different frames of protections afforded by our Constitution that do not extend to the way our government would deal with persons on a battlefield.

But let me just indicate that the general constitutional provisions that relate to court proceedings and the judicial system don't necessarily apply to battlefield circumstances and the exercise of the president's war powers. And I believe that the president has sufficient power under the Constitution to act against enemy combatants to curtail their activities against the United States.

Now, the terrorist community has, I believe, stated its intention to try and recruit individuals in the United States, and we know that it has in some measure been successful in doing so. And we will work very hard to make sure that we take every step necessary to disrupt activities that are designed to destabilize the United States or disrupt our safety, even when those activities would be taken by someone who is legally resident here or a United States citizen.

PRYCE: Thank you. And one final question. It's not the mission of the Select Committee, nor is it our intention, to reorganize the structure of this Congress. We're here and our mission is to reorganize the structure of the agencies that deal with terrorism, and so the authorizing and the appropriating and the oversight responsibilities may not coincide with what we will do here.

And do you have any advice for us, as we go through this and make these changes? And that may be a question for another day. I know my time has expired, but if anybody has something right off the top of your head.

POWELL: No thoughts off the top of my head, with the one simple observation that follows up on something Secretary O'Neill said earlier: We have to make sure that the new secretary of homeland security is given sufficient flexibility, both in terms of law and in terms of the degree of oversight that he is exposed to, that it does not constrain him.

He is going to have a very difficult job, or she is going to have a very difficult job, as they try to put these pieces together, not just making a wedding cake out of them, making a new entity out of it with a new culture. And I hope that Congress will be sensitive to that need for flexibility as you organize yourself to oversee this new department.

PRYCE: Thank you very much.

ARMEY: I thank the gentlelady.

The gentlelady, Ms. DeLauro?

DELAURO: Thank you very much, Mr. Chairman.

Just to follow up my colleague, Mrs. Pryce, will we be able to submit questions that we don't get a chance for an answer today?

ARMEY: Maybe this would be an appropriate time for me to just take care of this item of business.

PELOSI: Not out of Ms. DeLauro's time.

ARMEY: We will not take this out of your time.

DELAURO: Thank you very much.

ARMEY: But without objection, the hearing record will remain open for 30 days to allow members to submit questions to our witnesses.

DELAURO: Thank you very much.

Let me just welcome this distinguished panel, and I thank you for your time and for your thoughtfulness in the process.

I want to address a question and ask that any or all the secretaries to respond, so it's a general question.

We currently have 153 agencies, departments, offices that are involved with homeland security. After the creation of this new department, that number is going to increase to 160.

The critical issue is, how is information going to be shared, not only within the new Homeland Security Department, but among the various agencies and departments?

No matter what kind of organization is developed, failing to address this issue is going to result in a failure in the war on terrorism. So in that regard and in that context, let me just pose three questions. There could be more, but let me just deal with these three.

How do you recommend that the new department ensure that its needs and priorities for intelligence collection are reflected by the various intelligence providers? Secretary Wolfowitz talked about the issue of intelligence being key to whatever we do in the future.

Secondly, while reorganization is a start, that does not guarantee that we have the capability to combat terrorism. Example: Ten months after the anthrax attacks, which hit the Rollinsford Post Office in my district, forensic analysis still has not revealed the source either of powder, mailer, no agency has a database to solve this crime.

How does the federal government intend to address the issue of building shared databases?

And my understanding is, and correct me if I'm wrong, that there's nothing to prevent the sharing of those databases to date. For instance, Treasury could combine Customs databases with federal law enforcement, with the FBI database. That's OK. We could do that now if we wanted to, and we have not done that, I guess.

The president's proposal exempts the new department from complying fully with the Freedom of Information Act. If non-federal entities like private corporations provide information voluntarily to the new department, that information is not subject to FOIA.

Are there existing measures to prevent companies from hiding information they do not want public in such submissions? And how do you plan to prevent this kind of effort from happening?

Let me just throw those questions out.

POWELL: Let me take a first swing at it, Ms. DeLauro.

I think your questions are of such a nature that they should be presented to the Office of Homeland Security and the director of that office, as he brings forward the reorganizational proposal.

But let me say that, since September 11th, we have been doing a better job of sharing these databases.

And I can say to you something today that I probably would not have been able to say last summer, is that when somebody, for example, applies for a visa now at one of our consular offices, the database that that is bounced against is two, three times larger than the database it would have been bounced against last year. Now, that should have been fixed years ago, but it wasn't. But it's fixed now.

The information that our consular officer has in that application that comes to him or to her and the results of that interview and the photocopy of the visa applicant is now available to every one of the INS inspectors who are waiting at Dulles Airport to see this person come through.

So I think a lot has happened. I think it can happen in a more effective way in the future and we can do even a better job as these different pieces are brought under the secretary of homeland security.

So we haven't just been waiting for the new department to come along. I think there's been a great deal of progress in the last 10 months, but I think progress will be even greater in the future with a Cabinet officer with this as a sole responsibility to make sure that he can put all of these organizations together and with the authority that the secretary of homeland security will have over the policies under which I will operate with respect to the consular offices, I think will be a much more effective arrangement than, frankly, was an ad hoc arrangement.

These had to be handshake deals between myself and John Ashcroft and a lot of us over the last 10 months that we should have fixed much earlier, and they're now being fixed. And I think it'll be a more effective fix when there is a Cabinet officer who has sole responsibility for these kinds of activities.

ASHCROFT: May I just make a few comments? I notice the time is waning quickly, but the FBI has undergone a major revision of its approach to information. The FBI had a culture of being able to reassemble an event that happened in the past. It was sort of like a forensic dentist who could tell you what happened to a crime victim by virtue of reassembling sort of the fragments of a skull.

We need for the FBI to move from that prosecution function exclusively, which it had, into the area of prevention, being able to anticipate things. And we need, in that event, to be able to coordinate our information, which the secretary has indicated is the best friend of prevention, and it is, with entities like the CIA.

Let me give you an idea of some of the reforms at the FBI that are already well under way that would help us do that. An Office of Intelligence has been established there, in order to get oriented to the future like the CIA, which has been more of a forecasting organization anticipating events than the FBI, which has been to reconstruct events for purposes of going to trial and prosecuting.

The new Office of Intelligence is headed by a CIA person; 25 CIA individuals are there to help us develop that culture of anticipation and preventive information.

The reporting and information flow in the FBI is now under consideration for reformatting, so that the format of reports would be compatible with the format of reports in intelligence agencies, so that the kinds of information could be exchanged easily.

Similarly, the upgrades in the computer programs which you all have authorized and have been funding. Dr. Mueller is making sure that the computers would be able to be conversant with other intelligent agencies, so that when we have the databases that are available that they can speak to each other and they can be integrated.

Much has happened since September the 11th. We now have a combined or joint threat matrix. It used to be that the FBI would develop a sense of what it thought might happen and the CIA developed an independent sense, and this was in part because the CIA and the FBI were to address this mythological sort of context of different threats -- one overseas and one at home -- but we now have a cooperating joint threat matrix.

We have shared databases. I have recently authorized the FBI to use some commercial databases that are available to the public that had previously been off limits for the FBI, just as it had been off limits for the FBI to seek information that's available to the public on the Internet.

These kinds of things are precursors to the kinds of coordination that can happen at the direction of the new secretary running the Department of Homeland Security. And I believe they're all steps in the right direction, that the completion of those steps and the institutionalization of this culture of collaboration, cooperation and coordination should happen most effectively in the new department.

DELAURO: Can anyone address the FOIA question...

ARMEY: Afraid I'm going to have to pull the gavel on the gentlelady from Connecticut. Time has expired.

The gentleman from Ohio?

PORTMAN: I thank the chairman, and I thank our very distinguished panel for being with us here this morning -- now this afternoon. Thank you for your insights. There is no higher calling for any of us on this side of the dais or than side than protecting our citizens, and that's what we're all about here.

I do have a couple of general questions. First, just on the concept, each of you represent men and women who are on the front lines against international terrorism today.

PORTMAN: And, Attorney General, you have people who are out there collecting information, tracking down suspicions, which is homeland security.

Secretary Wolfowitz, you have people out there tracking down terrorists, literally, overseas, finding them.

Secretary Powell, of course, you're working closely with our neighbors to the south and north and around the globe, much of which is homeland security.

And many of your functions and many of those personnel, who are doing a great job and working over time to protect us will not be part of the new Department of Homeland Security, at least it's not proposed in the president's proposal, nor in any of the drafts we're working on here in Congress.

One concern that has been expressed is, now that there will be a new department, where there would be one person, as you say, who would be responsible for homeland security, does this mean that you and your people would ease up on your vigilance and on the hard work you're doing here in the states and around the world with regard to homeland security? I wonder if you could address that concern.

POWELL: In my case, I think it's quite the contrary. The fact that I will now be getting policy direction from the secretary of homeland security for me to execute through my existing consular affairs system makes me a part of the homeland security function in a more important way than might have been the case if someone had taken or if someone had -- some people believe this is the right way to go.

But if you were to take this function and this activity and these people away from all of our embassies out there and give it over to the Department of Homeland Security, then I obviously have less to do with it. And I would feel myself somewhat removed from this activity and this function and very important mission.

The president's proposal, I think, is structured in the way that is balanced and appropriate, using the resources of the department and the very talented people we have there, who are coming up with all kinds of new ways to protect ourselves.

And giving proper policy authority to the secretary of homeland security, seems to me to be a way of taking advantage of the strengths of both departments, the secretary of state and his department and, of course, the new Department of Homeland Security.

WOLFOWITZ: The answer is absolutely not. We have, as Secretary Rumsfeld outlined, undertaken major changes within our department, particularly the creation of the Northern Command, and those efforts will continue.

But I would also like to emphasize how much we welcome the creation of a Department of Homeland Security that gives us one department where we can go to address what our responsibilities are, instead of 153 different agencies.

I think it's not inappropriate to think about the analogy that was referred earlier to the post-Cold War organization and the 1947 National Security Act. It has vastly, I think, improved the ability of the State Department to work with the military branches to support national security abroad.

I mean, I don't know, Colin, how you would possibly deal if you had to deal with an Air Force, an Army and a Navy Department that included the Marine Corps. Instead, there's a Department of Defense.

There are enormous issues that Secretary Powell and Secretary Rumsfeld coordinate every single day. And to be able to do it between two Cabinet officers, instead of the State Department and multiple ones. And I think the same analogy applies here on the homeland security side. And I believe we're going to work through this.

There have been huge changes in the Department of Defense, including the Goldwater-Nichols act, which was another landmark piece of legislation. I don't think we've got the final answer here, and it's going to take a long time.

But I think this is a very important step that will allow our department to play its role in homeland security in a way that we have not been able to before.

PORTMAN: Attorney General?

ASHCROFT: Congressman Portman, the Department of Justice, obviously, as the home of the FBI, is very involved in the development of the kind of information that will help us secure America more profoundly and protect America better. And we look forward to the kind of coordinating and integrating involvement that this new department will have in terms of intelligence, generally.

So that while we are improving our ability to communicate with the Central Intelligence Agency and other intelligence agencies, whether they be in the Department of Defense or in other aspects in the culture, having an analysis center that relates the intelligence we get to the vulnerabilities we have, and so that you have a threat assessment with a vulnerability assessment, and then the ability to move that in a coordinated way into the culture to have a hardening of our assets so that we are less vulnerable, we welcome that.

And we see the Department of Homeland Security as taking this information, as helping organize it, as helping moving it effectively into the public domain where necessary for private citizens and concerns to be effective in using the information to secure safety. And we see ourselves as a major supplier of information among others in a coordinated way in the new department.

We think this is a formula for much-improved service.

ARMEY: Thank you. The gentleman's time has expired.

PORTMAN: Thank you.

ARMEY: The gentlelady from California, Ms. Pelosi?

PELOSI: Thank you very much, Mr. Chairman.

Again, I thank our distinguished witnesses for being here today and for their testimony, which I have found to be very helpful.

I have a few specific questions, but first, I'll use my -- quickly, to make a couple of observations.

At the beginning of the hearing I mentioned that I would hope that at the end of the day we would come out with a Department of Homeland Security that was lean, that was agile, that relied -- exploited, shall we day, telecommunications, sharing of databases, et cetera, that has been discussed here. And what I hear you saying is something that would be consistent with a leaner model than what I think to be a more old-fashioned model of a big moving of agencies under one heading.

I was encouraged by what Secretary O'Neill said, when he said it wouldn't have to cost so much money because there was no need for him -- I mean, why couldn't he be the landlord for the Customs Service.

And, Mr. Chairman, I have a number of questions for the record for the distinguished secretary of the treasury regarding the Customs Service and why ATF isn't moving, as well, judging from their responsibilities domestically.

PELOSI: So I'm hoping that, with the wisdom of the secretaries and the wisdom of the committee chairmen who will be submitting their proposals to this Select Committee, that at the end of the day we can accomplish what we want to do to reduce risks to the American people in a more modern, in-the-future, into-this-century way.

I had a specific question for you, Mr. Secretary of State -- I guess I have to be specific here with all the secretaries. I listened very attentively to what you said about the visas, and you seem to be satisfied with the arrangement that is in the new Homeland Security Department.

I wondered if you would comment on the proposal made in the International Relations Committee yesterday, I don't know if you're fully aware of it, as to what you think of their refinement on the visa issue.

POWELL: The refinement is acceptable, if you're referring to the proposal that the Homeland Security Department might have some presence in our regions and in our embassies to make sure that what we are doing is consistent with the policies promulgated by the secretary of homeland security.

PELOSI: It's the Hyde amendment and...

POWELL: Yes. We're supportive.

PELOSI: You would be supportive of that. So when our committee takes up that suggestion, it's something that you would support. I appreciate that very much.

Mr. Secretary Wolfowitz, I was very interested in your response to Mr. Portman. Certainly force protection is something that we will never relax on. I know in your department that's for sure, and I'm sure the secretary of state agrees with that. So I, as the ranking on Intelligence, know that at the end of the day with all of this not only will there not be less activity on your part, but a synergistic impact on force protection.

WOLFOWITZ: That's right.

PELOSI: Mr. Attorney General -- I guess I call you General -- General Ashcroft, I was pleased that in the...

(LAUGHTER)

You can't say "secretary," you can't say "general." Everyone responds.

(LAUGHTER)

Senator Governor Secretary General...

(LAUGHTER)

... I was pleased in the Department of Homeland Security that it did not include an MI5 type of new agency separate from the FBI which would collect -- that is, spy on the American people. There have been some who have advocated such an independent agency.

Would you, in the short amount of time we have, take a moment to comment on that?

ASHCROFT: Well, let me just refer to some of the remarks I made earlier about the fact that the FBI is a broad criminal investigative agency and its association with the prosecution community in the Department of Justice is very important for an efficient prosecution of our laws.

Secondly, there is a balance in the Department of Justice that relates to an awareness of and a sensitivity to and a keen affection for the rights of American citizens, and the Department of Justice has a very aggressive civil rights division that enforces civil rights and prosecutes those who infringe them. And to have that sensitivity to civil rights in the same department where you have the responsibility for developing information and conducting investigations is a healthy thing.

PELOSI: So you would oppose such an MI5...

ASHCROFT: I really believe that it's most effective to leave the FBI in the Department of Justice, where we have that sensitivity and responsibility to protecting the rights of individuals.

PELOSI: I appreciate your direct response -- General Governor Senator...

(LAUGHTER)

... all of the above.

Mr. Chairman, I would like to, because I have a moment now, to submit for the record the questions that I have for the secretary of treasury, but I wanted to say what they are.

And why is the ATF, as I mentioned, not a part of Homeland Security when the Customs Service is? How are the ATF, the FBI and the CIA going to communicate with the Department of Homeland Security?

Yesterday, the Ways and Means Committee reported out a bill that protected paid benefits of only a select group of Customs employees -- revenue experts, attorneys, et cetera. These employees represent 25 percent of Customs workers, but these select Customs employees whose benefits are protected still do not enjoy assurances that their Title V rights and protections -- the right to collectively bargain, whistleblower protections, anti-discrimination, pensions, et cetera -- will continue. Further, remaining 75 percent of the Customs employees do not have any assurances that their pay, benefits, rights and protections that they currently enjoy will remain. And a question directly to the secretary in that regard.

I don't know how -- I think that these, although they're addressed to Customs, really apply across the board to any of the employees who will come under the new Homeland Security Department. And if any of the secretaries here have any observations -- oh, I see my time has expired -- I would be happy to receive them for the record.

But as we all know, many of our first responders were public employees. And as we proceed and we want to have mission success, we have to respect the president's mission, we have to respect the work of the committees of Congress, we have to respect the people who will execute the plan. And I don't see that yet in the proposal that is being made.

So if you have any observations on that, I'd be happy to receive them.

And now I'm pleased to yield back the balance of my time.

ARMEY: I want to thank the gentlelady for that. And let me assure the gentlelady we will work with you in getting those questions to the secretaries and encouraging a prompt response, because, as you know, our work goes on.

ARMEY: And also, I might suggest to the gentlelady from California, I will recommend the Harvard solution to our dilemma and just say, "gentlemen."

It is for me, too, a pleasure to have you here today and have listened with great interest and considerable encouragement to your testimony.

I have long felt that the single thing that most sets America aside from all the nations in the history of the world is our love of liberty in America. In fact, I have made the observation that, all too many time, our American heroes have spent their life and their limb in the defense of liberty of people other than ourselves. No nation I know has been willing to make such a sacrifice for the love of liberty.

And that's why, when we first heard of the Department of Homeland Security, I had some pause.

Secretary Powell, you spoke with great eloquence about our commitment to the liberties of the citizens of this great nation. I have now heard you, General Ashcroft, reaffirm that.

But I guess my question would be, can you give me a sense of how do we strike the balance between our nation's need, indeed our requirement, for safety and security on one hand, and personal liberties on the other?

For I fear a free nation will always be a nation that's at some risk. And it would be, to me, so tragic that we would create a Department of Homeland Security with such rigorous investigative abilities or protocols that we would trespass against our liberties.

Can you help me to see where I might search for that balance as we move forward with this committee? Any chapter or verse or general observations you could give me?

Maybe at this time we'll reverse the process, Secretary, and start with General Ashcroft.

ASHCROFT: Well, I think these are very important concerns.

And I agree with you completely that liberty is the chemistry that provides the basis for America's uniqueness. It allowed Emma Lazarus, in her poem at the base of the Statue of Liberty, to say, "Give me your tired, your poor." She didn't ask for the top 10 percent. She knew that liberty was so powerful a catalyst that anybody could come here and this would be a place for opportunity. It is the thing we must safeguard.

And for those who say that we've got to make a choice between liberty and security, I always want to say, "Liberty is what we are securing." If we're not securing liberty, we've got our eyes on the wrong objective.

And so, in the aftermath of September the 11th, when I convened people in the Justice Department, I put it this way, "We've got to think outside the box. We can't do the things the way we've always done them, because we must change in order to be able to better protect. But while we think outside the box, we must never think outside the Constitution."

And I think that's important here. The Constitution is the enshrinement of the civil liberties of the American people, and we must always respect that, and it must never be infringed. And frankly, the new department can't infringe the Constitution. It is not within the power even of the Congress of the United States, or the president of the United States, to change the Constitution.

We are sensitive to those rights. I've indicated that I think maintaining the FBI in the Justice Department where the rights are protected, as well as the investigations conducted, is the right place for balance. But the Constitution -- this may sound rather fundamental, it is to me -- the Constitution is the guarantor, and this does not adjust those rights.

ARMEY: Thank you.

General?

POWELL: What I would say, Mr. Chairman, is that we will never be without risk, totally. We should recognize that we're living in a new world that has risk, but let's not be terrified by that risk. Let's not say, "Don't come to our shores. We're not issuing a visa to anybody else. We don't want to take any risk. Everybody stay where you are, you're not coming to the United States." What a crime that would be. What a tragedy that would be.

What would that be saying to the rest of the world? How many of our forefathers might not have gotten in this country? Would my parents have been able to come into the Port of Philadelphia and the Port of New York in the 1920s if that attitude prevailed?

So what we have to do is make sure the rest of the world understands that America remains an open society. We want you to come to this country, we want you to emigrate here. We want to take in refugees, as we have in the past. We want people to come here and enjoy themselves, see the beauty of this land, see the beauty of our value system, and take it back with you across the oceans to your homes. We are enriched by people coming to this nation, to visit and to become American citizens.

At the same time, we have to make sure that we are doing everything to protect ourselves, but not to the point of zero defect, zero fault, we cannot, you know, accept any risk whatsoever. And we can do a better job than we have done in the past. We are hard at work at that in the department now, by some of the little things I have shown you today and some of the new training we will be giving to our people who are out there doing such a great job.

And when we find fraud, when we find people who are not living up to their responsibilities, we will take action. So we can do a better job. But in doing that better job, let's not shut down America. Then they will have one, we can't let them win.

ARMEY: Thank you. I don't think I could have said it better.

But let me suggest to the committee that we have, I think, a generous willingness on the part of our witnesses today to receive our written questions and respond to us in a timely fashion. And in lieu of that, let me just suggest to the members of this panel, if you have a burning desire for quick follow-up question, I would certainly want to honor that. Other than something that's pressing for you, I think we might be inclined to thank our panelists and excuse them.

The gentlelady from California indicates that...

PELOSI: Mr. Chairman, I think that's perfectly fine.

I do want to just say one thing, and that is, Secretary O'Neill, when he was here, in one of his comments, he said, "We are an example to the world." And I think he was referencing how we proceed, and I think that's something that we all should remember as we proceed. And certainly, the testimony that we have here today supports our being a great example to the world.

Thank you, Mr. Chairman.

ARMEY: I see the gentleman from New Jersey seeking recognition now.

MENENDEZ: Mr. Chairman, if I may just very briefly to Secretary Powell, because of the unique ability that he'll have to give us an answer I think would serve us well in our deliberations. So if I may...

ARMEY: Sure.

MENENDEZ: Mr. Secretary, drawing upon your past experiences as the commander of the Joint Chiefs of Staff, the head of the Joint Chiefs of Staff, when you would look at the world in that role, and look at America's military challenges abroad in terms of defense, you would do a threat assessment and decide how you would recommend to the commander in chief, the president, how to respond to that. Is that correct?

POWELL: Yes.

MENENDEZ: And then you would seek to marshal your forces and everything you had to be responsive to that threat assessment. Is that correct?

POWELL: Yes.

MENENDEZ: Does it not seem to you odd, then, with that experience, that what we are doing here is before we have a national threat assessment in place, deciding that the creation of this department and the movement of all of these different agencies is the appropriate response to a threat assessment that we have not determined yet?

POWELL: I think the threat is relatively clear. The threat is more than a threat, it's a reality. We saw it at Khobar Towers. We saw it in the Cole incident that my colleague, Paul Wolfowitz, mentioned. And we certainly saw it in Washington and in New York and in Pennsylvania last September the 11th. It's clear to me that we do need reorganization.

And I think back, as you say, to when I was chairman of the Joint Chiefs of Staff, my threat was a Soviet Union. My threat was wondering where China might be going. My threat was 12,000 strategic nuclear weapons pointed at the United States. But during my 10 years as Chairman of Joint Chiefs of Staff, most of those threats went away with the Cold War. And we have been examining new threats.

And there is no threat that has come along that, it seems to me, as real and impressing as the threat of asymmetrical terrorism from both the state and non-state actors.

MENENDEZ: Clearly we can agree that the United States has a threat in terms of terrorism. Nobody would dispute that.

But the nature of the extent of that threat, the quality of that threat, the diversity of that threat, and whether, in the context of the threat assessment, whether or not biological and chemical weapons are among our highest concern, or whether a different form of a terrorist attack is among our highest concern, or whether or not, as we have already discussed here, the greatest way to achieve protecting us against any of that is the greatest integration and provisions of intelligence information and sharing, that truly would come from a threat assessment, and then you would respond to that. And so, that's the context in which I am asking the question.

And my second and final point is, what will -- I sit on International Relations Committee, so I certainly have been looking at this whole question of consulate visas. What will -- I heard you say in response to Mr. Portman that you're looking forward to the policy direction. But you do not need policy direction as a secretary of state to pursue the question of providing security as part of the consideration of issuing visas to come to the United States. You obviously had that as part of your own provisions.

What is it that the Department of Homeland Security is going to do differently than what you did and previous secretaries of state did in ensuring that consular officers issuing visas abroad ensure the security of the United States? I fail to see what is the difference. And if you could share with that, in the context of a threat assessment, it might be very helpful to this committee.

POWELL: I think what will be different and what will be important is that the person now establishing the specific policy as to who will be allowed in or not allowed into the United States by means of a visa will have available to him not just the foreign policy perspective -- that will be there, because I will help the secretary of homeland security with that -- but he will also have a domestic perspective to it. He will have access to all of the agencies that are now within the Department of Homeland Security and will be in the Department of Homeland Security, and I think will have a much better way of integrating all of the things we have been talking about during the course of this hearing.

So that the policy direction that will be coming down, I think, will be more holistic, more integrated and will not just have solely the sort of foreign policy considerations that exist when it is the secretary of state and the attorney general solely who are putting together the policy with respect to who should be allowed into the country. So I think it will be a much more holistic, integrated way of looking at the problem.

MENENDEZ: But that new secretary will still have to pursue the law, and the law instructs us as to how one can seek to come to this country, whether it's through family reunification of a United States citizen.

So what I still fail to understand, and maybe you'll be able to submit it for the record, is, what is going to be the difference? If you are pursuing the law, and the law says "Here are the circumstances under which you can legally come to the United States," how are we differentiating?

ARMEY: I'm afraid I may have to...

MENENDEZ: Thank you, Mr. Chairman.

ARMEY: ... encourage the gentleman to follow that up in correspondence.

I have -- the chair has been signaled by Mr. Watts, Ms. DeLauro, and Mr. Frost that they would have a final observation or comment.

And I would recognize you then, Mr. Watts, at this time.

WATTS: And, Chairman, I will be very brief. I will just echo what Secretary Powell said and add one thing to that. We can also throw into that, Oklahoma City, April 19th of 1995. I mean, what we are dealing with is reality.

And I proposed this very structure about two years ago, to say that we've got over 140 something different federal agencies, departments, that have some jurisdiction in homeland security. We needed one agency whose sole function would be to protect, to defend our homeland.

And I think that's what the president has done. I think it's long overdue. And in my closing remarks, I say thank you very much for coming to be with us this morning.

ARMEY: Thank you.

Ms. DeLauro?

DELAURO: Thank you, Mr. Chairman.

I'd like to go back a second, if I might, and under the context of just generally, the legislation doesn't include really broad exemptions to basic good government laws, the government and Sunshine laws, if you will. And in that context, I talked about the Freedom of Information Act. There are other issues that have been brought up with regard to civil service employees.

But with regard to the Freedom of Information Act, how in fact are we going to -- because there's an exemption from fully complying with these laws -- how are we going to -- how, in your view, is this going to -- are we going to prevent the agency from not being forthcoming with information and hiding information that they don't want to make public?

POWELL: I think there will be a presumption in the part of the secretary of homeland security that it is his or her responsibility to make information public, not only for purposes of congressional oversight, but because it's a responsibility to let the public know what we are doing in the public's name.

With respect to specific laws, the Freedom of Information Act or other similar acts, I really must yield to the director of the Office of Homeland Security who can give you the rationale, ma'am, for why they have proposed the authorities that they have proposed or not have proposed for the new department.

DELAURO: Doesn't it make some sense...

WOLFOWITZ: Well, we do know very well from all of our foreign experience that in the business of collecting information on people like terrorists, in order to be able to collect it, you have to be able to protect it. You have to be able to protect the sources of it. You will get a lot of information that is extremely important in catching terrorists if everything is deemed to be at risk of public exposure.

Like Secretary Powell, I can't give you the details of how -- I mean, obviously there are -- we deal with plenty of classified information with the Freedom of Information Act. So you need a lawyer to explain the differences.

But the basic problem, the basic thing to be balanced, is the need to protect sources of information in order to collect it and, at the same time, guarantee the public's right to know. And sometimes the mechanism for achieving that balance is through the oversight of congressional committees that have access to everything.

DELAURO: Well, did this not concur that it would be useful to have that thought out in some way before we embark and just put it off for another day but to think it through. I'm not suggesting that that be done here, but that there be some thought and reflection as to the -- we have spent a lot of time and a lot of effort in looking at government in the Sunshine laws and private business and Sunshine laws. And we're all looking at a whole lot of things that have happened in corporate America over the last several years that no one has known about. And it's had some very devastating effects, particularly on our economy.

DELAURO: And now, wouldn't we want to not -- to be engaged in prevention of difficulty before we just kind of go off the edge of the cliff in this area? I just leave that with you, and I'm...

POWELL (?): I presume that's what the Select Committee will want to do, as you go forward.

ARMEY: If I may thank the panel and thank the -- Mr. DeLauro, I'm disappointed. I can really assure that this committee is in fact deeply interested in this and will be pursuing it.

I have -- right now Mr. Portman is seeking an opportunity for a final short word. And should he return in time, we would recognize Mr. Frost. The chairman would of course reserve the right for the last word.

But may I ask the audience, at the conclusion of our hearing, would you please hold your seats long enough for our distinguished panelists to exit the room? It is not right to leave until Elvis has left the building.

(LAUGHTER)

And we have standards here.

So, Mr. Portman?

PORTMAN: General Elvis, Secretary Elvis.

Just briefly, Mr. Chairman, I want to thank the panelists again for their responses.

And to my colleague and friend from Connecticut, if you look at Section 204 on the FOIA part, I think it's very narrowly drawn. And it's drawn to exactly what Secretary Powell and General Ashcroft talked about, which was matching the risks out there, domestically, with what the threat is.

And on the risk side, of course you want the private sector to provide us what those risks are, including infrastructure risks. And what the private sector needs, of course, is some protection if they're not going to provide this kind of information then have it subject to FOIA.

Look at Section 204. I think it's very narrowly drawn. I think it's consistent with what we're hearing here.

What I'm struck by, Mr. Chairman, today, is that everybody is focusing on the same thing, which is flexibility and agility. And Mrs. Pelosi talked about it early on and followed with it on her questions. Secretary Wolfowitz talked about it in terms of the terrorist threat globally, that this threat is evolving, literally moving from country to country, and agility is the key to your response. Secretary Powell talked about it in terms of dealing with the the threat from a diplomatic point of view, and General Ashcroft talked about it in terms of our domestic threat. And then, of course, Secretary O'Neill focused on it terms of management.

But it really is more than just putting the pieces together, which Mrs. Pelosi talked about, it's also what the terrorist threat is here. It's just as agile here, if not more so, than it is globally.

And so, I would hope that we can balance what are legitimate concerns raised by the gentleman from Connecticut and others with regard to FOIA, with regard to personnel issues and so on.

By the way, whistleblowers are protected in the statute, at least the proposal as I read it.

But we also need to balance that against a need to provide this agility -- it's probably a better word than flexibility, because that may have some other meanings that are counterproductive here. But to give the agility of this department to build, and not just organize and implement, but then respond to the threat.

And with that, again, Mr. Chairman, I thank you for a very constructive hearing today.

ARMEY: Let me -- sorry Mr. Frost did not make it back, but let us seize the moment.

And thank you, this fine panel. We so deeply appreciate your willingness to be here this morning and appreciate, again, your testimony.

Without objection, the Select Committee stands adjourned.

And again, let me remind you to make room for our distinguished guests to leave. Thank you again.

END

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