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tv   Today in Washington  CSPAN  March 27, 2012 6:00am-9:00am EDT

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>> unfortunately today, we have a chicken and egg situation where we have consumers who want to pay with their mobile device
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and are waiting for the equipment to arrive for them to use it, and that will intend, when the equivalent is available in consumers hands, and issuers of of these payment instruments will have an opportunity to get them into consumers hands. >> that's one barrier. what other barrier exists that could exhibit widespread adoption of mobile payment options? security concern? >> i would think so. one of the areas that we are addressing is security of payment card data. we look at technology agnostic at how data flows into the systems. many of the terminals that are certified have gone through laboratory testing, do have capability to accept what we're talking about here today. we're talking mostly on the consumer side. we also have the security of the merchant side and we are seeing rapid growth in emerging community so we talked about on
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bank consumers. has been on bank consumers and restrained to see a new generation of merchants that before were not accepting types of payments. other than cash. and now we're using such devices as peripheral such would plug into a smart phone or other types of mobile devices to accept payment, and we're seeing a new industry boom here in the u.s. >> my time is expired. >> thank you. mr. rooney c. for five minutes. >> i want to thank the witnesses for being here today. mr. oliver and mr. mclaughlin, 160 think the current regulatory environment will have on many of these new innovations? as the uncertainty with the changing realtor in front had effect on our slow the evolution of many of these new products? start with mr. oliver. >> that's a great question and one of the questions we discussed within this worker. one the reasons they asked us to try to rationalize the regulatory infrastructure that
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might be in place. given that most of the payments will be made using existing instruments, i think that people are pretty comfortable with where that is right now and there appears to be no serious legislation on the horizon to change that. i think the real issue here has to do with those places where gaps occur, where different parties are involved in the transaction now and having typically been involved before. the federal communications commission, for instance, overseas the wireless industry but have no experience with payment. many of the payments has no expense with that assessment is collaborative effort to try to understand whether or not any new regulation at all would be required, it's a really first important step on part of the government and should occur pretty quickly. but it's not obvious that there are serious unregulated areas at this time. >> i think it's important to recognize that the mobile phone will be one device, albeit
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incredibly compelling device that consumers will use to access their account. so from a mastercard perspective we want to make sure that all the right protections and privileges consumers have doing a transaction is the same, whether they're using their physical card, whether they are initiated the transaction from a mobile device, or they are shopping online. that's the reality for consumers. they want to be able to trust the transaction and know they are protected. so we believe making sure that we are not creating some separate and independent the world, but rather sing these devices are an extension of the rights and privileges that people have today is essential. i think it's also important that we allow innovation to flourish in this area. we need to ensure the security and consumer protections, what we can do is constrain and restrict the ability for industry to determine how to create the most value for consumers and for merchants using the new devices. >> to move into these type of
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innovations, there is a scale of investment that has to be me. and you can explain again the scale of investment that companies such as yours spent on developing these products and the underlying infrastructure? >> absolutely. one of the things i think it's important to point out if these are technologies that we've been working on for a decade and more. we knew we want to take advantage of smart devices. we knew the form factors would be changing. so the first trials we have contact with technology were in orlando and dallas in 2002. so we have continued to build and invest. in 2005 as an industry we began rolling out a fast which is the contact technology with that and we'll work with all of the participants in the change whether its handset manufacturers, security and chip companies to make sure there's a safe and secure environment to leverage that technology. so it's an ongoing and substantial investment and not only in the consumer experience in the environment at the
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underlying security. >> mr. oliver could you talk about the potential up front cost merchants will be required to accept mobile payments? is there any danger that they make an expensive transaction only for payment technology there off in a different direction? >> i'm probably not the best person to answer the question about what expense will be for the merchant, but i would like to answer the question about the long run investments here. obviously, they are confronted with the issue trying to understand what the endgame is and, therefore, make wise choices now. and are very large merchants who already have made that decision. to say what you think will happen in the next seven years, and they said we believe mobile technology using nfc contact and contactless cards as well as current instrument will be there. they've acquired the terminals to do that. the incremental cost from what i understand and added that technology to existing terminals is pretty inexpensive.
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but across a huge footprint for a large retailer, it's going to occur someone. but that's what they want to do with this roadmap is determined which the in state and let us choose how to transition and spent wisely. >> thank you. i see i'm running out of time so i yield back. >> ms. mccarthy for five minutes. >> thank you, and thank you for your testimony. i tend to think a lot of people would find this really fascinating. two things that apply to ask about. the europeans have been using this technology for a while. what are the sister six for those countries -- statistics for those countries that are more advanced than us on the breaking in, the stealing of information, their protections? you all receive the information over there, what have you done that we difference for here for us? >> so they are several underlying technologies that we have discussed today.
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the european market, particular have been using this chip technology as part of the payment card infrastructure for many more years, and they have proven dramatic reductions in their fraud because the payment cards now are unable to be counterfeited or the information on the consumer payment product can't be cloned and replicated because of the security of the chip technology. what's in hagood is that they've been ahead of the u.s. market in terms of mobile payments. in fact, the u.s. market has a much faster potential for adoption of mobile payments because we have made this investment over the last five years in contactless payment card technology, and, therefore, with hundreds of thousands of terminals already installed in the marketplace that could use now a mobile phone with the same payment capability to make the payment transactions.
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where in europe and other parts of the world who have implemented chip technology have not implemented chip technology with the ability to interface to a mobile device. so they were require a second investment. >> second thought, obviously we heard a lot about cybersecurity. i know all the nations, nato, number one issue and they're talking together. have you given any thought? we're always one step are hopefully one step in front of the criminals, and this is going to be a big area for here in the united states because we have very innovative people. they're always trying, hopefully you're hiring them but they always seem to be outsmarting us. going back to cybersecurity, when something like that possibly will happen, which many of us agree it will, and how are we going to combat that? i was told that out to anybody. >> it's written standards
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already to look ahead to where the future is. we are global standard body so we have already have our standard implemented in your. and with this type of technology, one of the standards we released last year, what this allows is for regardless of the technological whatever innovation weekly here in the u.s. or abroad, we could encrypt this information, render it at the value to a criminal, in that way the system itself can produce transact and the consumer can conference in a transaction the we've seen in the u.s., one example is merchants are taking devices to plug them into the phone and they are now swiping traditional cards are using you mobile technology and they're able to encrypt this information protected before it ever gets into it into your mobile environment and able to process that securely and safely on behalf of the consumer. we do have standards already as an industry. we're looking at new standards as well as new ways to create
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data that is of no value but even if that data is exposed i share my critical information with you. we have new technologies that are emerging that would render that nobody of, to a criminal. >> we all have our blackberries. there are government issued. but every few days we get a very long list of those that have actually broken into our blackberries and no likely spam or someone actually has got to our information. so i can understand where the american people might be a little concerned here. because we're supposed to have their protections yet we are not even supposed to use these when they go overseas. they ask us not to use them. so, you know, i could see where, you'll have a big sell for a lot of people i thing. it might take time what i do know it is used over in europe quite a bit. but with that being said, you're going to have to convince a lot of people that their checking
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account is not going to be wiped out. >> i think that is what happens anytime we introduce new technologies. people are comfortable with the familiar and that's why our obligation is to make sure every new technology we bring other is enhancing the security. it is making it safer. so consumers can understand that we can do things using the intelligence devices to make it more secure than what we could ever do with a static plastic device. that's the vantage of the new technology but we need to make sure we're smart about how we harness it. >> without i yield back the balance of my time. >> thank you. mr. grimm for five minutes. >> thank you, madam chairwoman, for holding this hearing first of all, and i appreciate edwards testimony today. -- i appreciate everyone's testimony today. how much does mastercard spend annually on fraud? i know there's quite a bit of fraud that even traditionally with cards. you have a ballpark of a bigger
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problem is for mastercard? >> i don't think we've broken a a specific fraud expenses, but what i would say is it something that we constantly battle. any change can anything we do we have to make sure that we're making the system safer for that. so one of the primary focus is of our organization is to make sure that we're eliminating fraud, or maybe getting it where ever possible. >> would you say it increased significantly with the advancements of the internet? >> i think any new technology creates challenges to make sure that it's secure. we've been able to, over the last decade, to allow to mitigate the fraud potential, what's online. but that's something we combat every day. >> i will take that as he is. don't get me wrong, i'm all for the new technologies. i just recognize that with anything that is new i slightly
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disagree with my colleague. i think criminals are a step ahead of us many times with most of these things, whether it be the internet, counterfeiting cards originally was tremendous problem than with the internet. i mean, just now there was a massive sting operation throughout the entire country, people ordering online and then fencing those items for cash at significant discounts. the affect on merchants, because i think a lot of the merchants are going to have some issues, when someone comes in and does a transaction, for example, if the order over the phone and they give their credit card over the phone, and then they get a bill and said oh, i didn't order this, the merchant usually eats it. that's been my experience. which is really unfair because
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you have seemed like, let's just say it's for food at a restaurant, you deliver to that residence many times and the deliverable actually knows the person, but it might be a college student choosing dads card and this time dad got the buildings at $45 for this. so now, becoming and a sign signed for in the merchant is protected. so are they going to be safeguards for the merchants, because there are not going to be any signatures with this. so that would be a question. >> i think you've highlighted one of the most important points of running a payments network or payments environment. and it's not so with the technologies that are available to us. and quite often when to proposals that are out there, or innovations, it's not what can the technology to, but how do you run the network itself and how do you make sure that your are balanced and fair for all the participants that are in a. that's why as i said earlier as we adopt global technology we want to make sure the same rules, the same dispute
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mechanisms are there. the goal for adopting the new technologies is to increase the level of verification and certainty. we can put around every transaction. so issuers benefit from reduced fraud. merchants also benefit from the production and fraud. so harnessing the new technologies provide enhanced security, and enhanced clarity is the objective. we can do things like providing one time cryptogram on the individual transaction so we know specifically where it was generated from. moving from static identifiers to dynamic. we can get additional certainty of who you are and the divisor transacting from when you do things like an online transaction. so what we see going forward is the distinction between what's happening at the till, how you purchase online and otherwise that your transacting. we will move more and more to intelligent devices, and looking to harness the capability of
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those devices to get us to reduce fraud is the overall goal. in the last question, just on that topic, how about the advanced phishing technology that is out there? when cell phones first came out close to phones constantly by using phishing technology to steal your idea right out of the air. i'm assuming that is built into this technology but i think it is worth mentioning since this is an information forum right now. >> absolutely. and that is why in the reference that mr. offer made, that is why we want to make sure that anything we do with the new devices is more secure than what we did in the physical card world. so things like phishing and other types of attacks were protected against. >> okay, thank you. my time is expired and i yield back. >> thank you. i will yield five minutes to the gentleman from georgia, mr. scott. >> thank you very much, mr.
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chairman. this is a real fascinating hearing. i mean, we are moving so fast with technology that it's even hard to keep up with it. and now we have a real challenge here, it seems to me, and i have a number of questions, particularly that 91% of the american people now, 91% of the american people own a mobile phone. that's a phenomenal situation. so, you know, first of all i have questions about who is to regulate this? let's start with right now people are paying their phones through their mobile units. what a regulatory agency, who regulates this now? where does it come under? mobile payments.
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is there regulation now? >> well, i think you pose a great question but as one kind of goes, there really isn't when it comes to mobile payments specifically. the use of a phone to make a noncommunication type of transaction, the fingers are pointing all different direction. the federal communications commission doesn't at least perceive it has jurisdiction over these type of transaction but as i pointed out earlier i think when a consumer's phone gets told they will go to the wireless carrier and expect the wireless carrier has made some in the country, maybe has a policy, maybe there's a phone agency that is supposed to be in charge. but that is at best unclear right now. >> yeah, because the, that concerns me because people lose their phones all the time. i mean, the point i'm making is if you have 91% of the american people, 91% of the american people means young people, old people, senior people.
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i mean, people who are getting adjusted to it. so i think that there's some very serious questions here about the regulatory function of it. i also think that there are some issues about the bigness, the complexity of this issue. and with that comes a great concern about my other major concern is that, who really is responsible for monitoring the security risk that are here? i mean, all these questions really have to be carefully examined. and i think that we have like the consumer protection bureau. we have the fcc. we have the ftc. they would have this little thing in their where these
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bills, who pays them, where did he get the money from, how is a transacted? and in some cases the telecommunications company pays the bill for them, adds that to their monthly bill, and then you have i'm sure within their all kinds of fee structures, late payments that are piled upon, if they don't pay their phone bill, let alone the other bill, it just seems to me the consumer can really get bamboozled here with a lot of, a lot the financial burden. and yet right now this is going on and we don't have a regulator for it. so my question is, where do you all believe this would fall? is there one agency? should there be several? who is going to regulate this? who's going to do the oversight for this?
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and particularly right now i'm sure there are problems in this area. so my concern is, this technology is moving so fast, we really have got to put a priority in how we are going to protect the american consumer, because it's going to move very, very fast. even right now, my own cell phone, i have problems just trying to figure out how to get all of this information i am receiving. and the other point is, this love and economic economic impact someplace to there's a lot of businesses that are in business now out of business. it will certainly expedite putting the post office for the out of business but then there is no paper trail here. if i get my bill and i'm paying my bill, i like to have something in my hand and says hey, i pay this bill, i've got a paper trail here. there's nothing here. it's all in space it's i'm just making this point to say we have
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got some work to do. thank you. >> thank you. ideal five minutes to the gentleman from delaware, mr. carney. >> thank you, mr. chairman, and thank you to the panel for coming today. i would just like to pick up on what my colleague left off, and ask the question, what is driving this move to mobile payments? why don't we start with mr. mclaughlin? >> let me open by saying louisiana, class of 83. >> all, you would have to do that, wouldn't you. my arch rival. >> i think it's absolutely driven by the demand we are seeing from consumers. want to recognize is mobile and transforming their life. particularly younger consumers. they expect to be connected. expect to immediate access to information. they expect to have more information and richer information about where they can shove, what deals and offers our of able to them and have
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immediate access. >> so that information would be available on their cell phone and that they within make some purchase, and then make the payment through the phone, is that -- >> personally i don't want my cell phone to do anything more. i had a hard time keeping track of what it does now. then when i leave it home i feel completely lost and naked without my phone. >> in fact when you do consumer research they use expressions like losing a limb, which i found disturbing, when they don't have their phone with an. i think you're right. it's become your gps. it's become personal assistance. it's your alarm clock. it will progressively always be with you. >> several of you touched on it. is it more secure? >> that is absolutely the objective. we would not move towards this payment environment and thus we could enhance the security of what we're doing. and keep in mind, what we've been able to do with plastic cards and the online authorization, it's a great way
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to combat fraud. we believe by harnessing mobile devices we can enhance that even further by using the intelligence that is available to it. and secondly, i incorporate and consumers deeper into the process of monitoring their finances, so even without a payment we can use the phone today, mastercard has a technology called in control where i can say let me know on my mobile if an international transaction occurs or an online payment occurs or a transaction over a certain amount. so that connectivity gives consumers more information, how much money is in my account before i make this payment. it gives them more information -- >> that was one of my, will be one of my questions, would help you not make a payment that you don't have, you didn't have money to cover. one of the big things that aggravates folks is when the overdraft their account and get a charge for that. this would help you not do that? >> we can do even better than that. we can take exactly, working with mobile banking and other applications the current status
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of your account. we can say here is how much you spent against the budget is set in certain categories, and provides real-time access to information. so a lurch and controls i think are essential to the mobile payments experience. and keep in mind, it's the mastercard network and the underlying account that pulls us together. so my experience -- >> i'm breaking in because my time is running. so how about the unbanked are under bank, and move to ms. martindale. what is the bench and how does it work? i think you mentioned in your opening statement because that's an important group of my constituents. >> i think the way you can set it up now so don't even need a bank account to do these type of transactions is you could have a prepaid debit card, right, which is not a bank account, and you could link your mobile payment application to that prepaid card so you are drawing down funds from repeat -- prepaid deposit
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but this is way that unbank or underbank consumers could. >> so you have to set something of? >> you would have to set something up. again, we have a whole host of other concerns about prepaid cards just and it will because they are as of yet not regulate in the same way that he debit card link to a bank or credit card union account part is. so prepaid card itself doesn't inadequate protections against fraud, so if you're at it and asked a layer of the mobile payment transactions and each of prepaid card, we do have a concern that this could, this has a great, this is a great opportunity to again provide the information in the way that consumers will actually use it. unbank or underbank consumers are adopting cellphones and smartphones. at the same time we need to make sure the payment transaction is covered by some guaranteed legal protections against fraud, from the consumer financial
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protection side. >> i have 15 seconds left to how do the interchange fees work for this? we had a big debate about that, dispute about that over the last year. how do the fees work for, would they work for mobile payment? >> from massacres perspective what if initiated from a card or initiated from the phone it's the same transaction. >> same transaction. thank you. thank you. >> thank you. i recognize the gentleman from missouri, for five minutes. >> thank you, mr. chairman. i guess, you know, i probably want to start out with what kind of timeframe is easy, and once the timeframe for general acceptance, what d.c. the timeframe for the problems to pop up and occur here so we know what kind of timeframe we have for some sort of rail tour effects or of this? >> i'll take a first shot at that. there's a lot of elements of
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change involved in this and a lot of parties that will have to collaborate, released technology, implement technology, educate the consumer and so forth. and so my sense, just as a personal estimate is that you will see significant deployment to the five year range. because many of the pilots that are currently going on are not going to be completed until sometime next year. so i think they will see a slow growth curve for an extended period of time. >> do you anticipate that same? >> we've been talking about the consumer side of the phone. i think from a mobile payment acceptance we see that today. we have stashed accept certain types of mobile technology took sent traditional payment card, plastic card. we have seen a first products come through, lab tested, certified, listed on our website. so for mobile acceptance, payment acceptance, it is here today. >> excuse me, i would just add that the solution for mobile
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payment that you are hearing from the well-known, well recognized brand that have a clean sense of security and the certification requirements of this technology are going to evolve slower than the internet startups of the world who might come up with an application that you can download on your phone and be in business basically overnight. but for consumers i think they have to pay attention to who is behind the technology that they might be interested in using, and what safeguards exist. and it's always probably the wisest choice to look at the established companies that are backing this, and reasons why they are moving at the pace that they're moving in in order to maintain security. >> i'm not very technologically savvy, so this is just kind of a three steps above my great here, but it would seem to me that you will have to have a platform here within which all these transactions can occur with the
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same sort of technology to be able to talk to each other. i mean, i as soon as possible. i assume everyone is already working on the same platform or the same land or whatever it takes to make this all work. is that a safe assumption? >> i think you see a strong movement that we work together as an industry to make sure that this will work, that it is safe and secure. so that's why some of the standards that we've talked about about earlier, like the underlying technology, the pci standards that are out there and things of that nature provide a baseline that consumers and merchants know they can trust. having the standards out there also allows us to compete vigorously on who can deliver the best consumer experience and the best value that is out there. so we have to make sure there is a foundation that works so we can all compete on the works better spent on to other places in the world, any place in a world where this is being done already? are we deleting country?
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are we technologically leading the world with this? >> actual we are one of, we are behind on mobile. >> we are behind? >> yes. impact of the country, people have mentioned europe but in developing countries this is taken off like wildfire but with a different set up, and granted the infrastructure in those countries may be different. i'm not saying we would be up to relegate. i use king as an example. african concept in adopting mobile payments but you don't have to be smart phone. a regular cell phone were basically you're getting a deposit to the wireless carrier and the wireless carrier is helping you manage your funds. that's something that i've not heard the industry is interested in going that direction right now. i think it is more the nac enabled google walled type of scenario where you have your different payment card linked up to the application. other countries has been doing
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it for some years now and it has been away. but however it is also involved a great deal of collaboration between the central bank of nigeria, for example, and the major telecom. is a very different centralized setup than we would have here. >> i think the key is providing the appropriate technology for consumers. consumers and u.s. today have access to electronic payments. and many of these countries they don't. so mastercard has been working hard to work with the telecommunication providers and financial institutions in those countries to provide appropriate technology. one quick example. the mobile association last year gave us their mobile money innovation of the year award for what we've done in kenya working with standard chartered bank and eric yow to put virtual mastercard numbers. so sudden a whole swath of the population that wasn't able to access anything online now have access to it.
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by harnessing the existing pavement networks and tailoring precisely for what was used in these networks. >> that's interesting. i know the death knell has been sounding for cashing checks many, many years and it seems that they are still there. maybe you guys are taking a first step down that road to do away with those. thank you, mr. chairman. >> i want to thank all the members of the panel for testifying this one. the chairman of the summer must have additional questions for the panel, which they may wish to submit in writing. without objection the record will remain open for 30 days for members to submit questions to these witnesses and place their responses in the record. this hearing is adjourned. >> [inaudible conversations]
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>> [inaudible conversations] >> live this morning, on c-span3 the senate armed services committee hears military commanders in charge of cyberspace, missile defense, the nation's nuclear arsenal, space operations and other areas. they will be testifying about
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defense programs for 2013, and the years ahead. >> you had calls going all up and down the mississippi delta. and saying that blacks were now in revolt. and the next morning, between 601,000 men, white men, poured into phillips county to begin shooting down blacks spent and on american history tv on
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c-span3, sunday at 5 p.m. bruce lindsey on integration and north little rock high school. >> they know what's going to happen but we don't know it's going to happen. we don't realize what's going to happen when we get up those steps. but they seem to, because the crowd is with us now. the momentum is behind us. they are pushing us up the steps. >> the story centers from c-span's local content vehicles in little rock this weekend on c-span2 and three. >> the supreme court continues its oral arguments on the health care law. today the court will consider whether the individual mandate which requires americans to buy health insurance or pay annual penalties is constitutional. on wednesday morning, the court will examine whether the individual mandate is separable from the rest of the law. and if not, whether the entire law should be invalidated.
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later that afternoon, the justices will hear arguments on whether the expansion of medicaid coverage is constitutional. the supreme court will continue to provide same-day audio. today and wednesday. uk the oral arguments and they are released. expected around 1 p.m. each day and also at 4:00 on wednesday. we will have coverage on c-span3, c-span radio, and at c-span.org where you can listen and add your comments. >> republican senators who are all former governors came to the senate floor monday to give their perspectives on the 2010 health care law. among them, senator mike johanns, tennessee senator lamar alexander, and john hoeven of north dakota. they spoke for just under 30 minutes. number of aspects of the health care law, but to start, i
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would point out that this law actually enacted the largest expansion of medicaid since its its -- inception in 1965. the law dramatically increases government spending, it ties the hands of states, it's going to bankrupt state budgets, and it traps nearly 26 million americans in a broken system. last week's medicaid actuary report indicates that 25.9 million more americans will be dumped on medicaid under the new law. and the week before, the nonpartisan congressional budget office pointed out that federal spending on medicaid will increase by $168 billion. that's just compared to last year's projection.
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that means that this expansion alone is projected to cost the federal taxpayers $795 billion through 2021. that's at a time when not only our federal budget is struggling, but in addition to that, our state budgets are in trouble. added up, the federal government will spend $4.6 trillion on medicaid over the next ten years, a staggering number, $4.6 trillion. medicaid spending is projected to increase 35% once the law is fully implemented. so with our national debt now approaching $16 trillion and compounding exponentially, as we borrow 42 cents of every dollar we spend every day,
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while instead of reining in costs, the health care law is doubling down with spending. but the medicaid expansion did not stop with wrecking the federal budget. it hammers state budgets as well. this program already consumes 24% of state budgets. the law's medicaid expansion will force $118 billion in additional unfunded mandates on our states through 2023. the national governors' association has weighed in on this issue, and they said -- quote -- "spending on medicaid is expected to consume an increasing share of state budgets and grow much more rapidly than state revenue growth, resulting in slow or no growth in education,
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transportation, or public safety." the nebraska impact tells the story. the governor commissioned a study in nebraska to see what the impact would be of the health care law on the state budget. nebraska will spend an additional $526 million to $766 million over the next ten years, on its medicaid program. the expansion could add up to 145,000 -- could add up to 145,000 nebraskans to the medicaid program over the next decade. currently, one in nine nebraskans are enrolled in medicaid. the new provisions of the law will expand eligibility to one in five nebraskans, 20%.
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governor hien aman addressed this issue and said this unfunded and unparalleled expansion of medicaid is an unfair and unsustainable mandate on nebraska and other states. the federal health care law is an extraordinarily large and excessive unfunded mandate for states. it is potentially devastating to our state budget. now, today with me on the floor i am joined by two former governors. all three of us have had to deal with balancing budgets, and we have no choice but to make sure that at the end of our legislative sessions, our budgets are in fact balanced. senator alexander, you were vocal in speaking out against this policy during the health care debate. you've got a rather unique
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perspective because not only are you a former governor, you're a former u.s. secretary of education. i'd like you to take a few minutes and explain how this law is going to affect the health care system, our educational system, our states, and for that matter, our country. mr. alexander: thank you. thank you, senator johanns. you have a unique perspective yourself as a former cabinet member, governor, and now senator. but all three of us here today, including the former governor of north dakota have wrestled with this business of the rising cost of medicaid paid for partly by the states according to rules set in washington, and how do we deal with public education, especially higher education. i remember during the debate last year, i suggested to our colleagues on the other side of the aisle who were supporting the health care law which i thought was an historic mistake, because it expanded a
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health care delivery system that we already know is too expensive instead of taking steps to reduce it. i suggested to them that they go home and run for governor, they ought to be sentenced to go home and run for governor if they vote for it and see if they can implement it over an eight-year period of time. here's why the senator from nebraska is suggesting this and let me try to be very specific and that is the effect of the health care law on -- the effect of the health care law on higher education in the states. now, this isn't all president obama's problem. 30 years ago, when i was a young governor, i was still struggling with saying you get down to the end of the budget process and you have money either to put in higher education or to medicaid, and the rules from washington say it has to go to medicaid. i remember going to see president reagan and saying why don't we just swap it, mr. president? you take all of medicaid, let
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me -- we states take elementary and secondary education. i wish we had done that. but we didn't do it. and gradually the increasing washington-directed costs have distorted state budgets until as the senator from nebraska said 24% of state budgets foe for medicaid. now we're in the process where because of the health care law we're going to have millions of americans on medicaid. employers -- and we don't know the number but we know it's going to happen, pliers are going to decide 50eud rather pay my $2,000 penalty and let my employees go into the change or in medicaid. then costs to states go up, the senator from nebraska talked about what the current governor of nebraska said, our former governor, governor baaddeson estimated between 2013 and 2014 it will be $1.2 billion in new tost for the state of tennessee
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from the medicaid expansion. what most people don't realize is the effect this has on higher education and student tuition. i hear a lot of talk about let's see if we can lower student tuition. one weway we could lower sit not take money from stloans and -- student loans and pay for the health care bill. most people aren't aware we spent $8.7 billion of so-called profits the government makes when it boreos money at 2.8% and loans it to students at 6.8%, the government took some of that money to pay for the health care bill. if it didn't do that, it could lower the interest rates on student loans aceert the congressional budget office and safe $2,200 per student. so the health care law is costing students who borrow money more on their loans. and in addition i'll close with this example, it's raising
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college tuition. you say how could the health care law cause tuition to go up in california or tennessee? well, if in tennessee as last year, increases for medicaid went up 15%, that's how much more state tax dollars it had to go up, and spending for the university of tennessee and community colleges went down 15%, then the result of that was tuition went up in our state by about 8%. and that was true all across our country. so the effect -- and i'll come back to this later if we have more time -- is that the health care law mandates that the states spend more money on medicaid and as a result, the state has -- it cuts the money it's spending for the university of tennessee or nebraska or north dakota and in order to keep the quality of education
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up, tuition goes up and so students are paying more for tuition and they're paying more for interest rates on their student loans directly because of the health care law. president obama shouldn't be blamed for 30 years of rising costs of medicaid but he should be held responsible and this health care law held responsible for making it worse. mr. johanns: senator alexander, you raise some excellent points there. because governors only have so much revenue they can deal with. this they can't invent it, if you know what i'm saying. so governors sit down, they've got to figure out what the needs of the state are, and if the federal government is taking that decision away from governors by forcing them into expanding their medicaid, there's going to be less money available for programs like k-12 education, higher education. let me, if i might, turn to
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our colleague, senator hoeven. you were a governor for ten years in the state of north dakota. please explain the impact that medicaid expansion would have on your budget decisions as governor, and just the impact the health care bill is going to have on your state. mr. hoeven: thank you senator johanns. it's good to be but and -- with you and also lamar alexander from the great state of tennessee. we share the common experience of serving as governors and bring that perspective to our work here in the senate. and as senator alexander just said, there's no question that obamacare is making the health care challenge in the united states worse. he's making it worse. and we've got to find a way to empower our people, and really in our roles as governors before serving in the united states
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senate, that's what we tried to do. when it came to medicaid, when it came to health care, how do we empower our people whether it's health care or anything else, in a way that not only makes their lives better but that makes sure that we are fulfilling our responsibility as good stewards of the state's treasury on behalf of the citizens of our respective states. you know, last week was the second anniversary of the obama health care legislation, the second anniversary, and the fact is thins that law was passed -- that since that law was passed and just a minute ago senator alexander expressed some of the things that he talked about when that debate was had here in the congress. but since that law was passed, over the past two years americans have become more unhappy with the legislation. the obama health care legislation has actually become
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more unpopular over the last two years as time has gone by because quite simply americans don't want government-run health care. americans don't want government-run health care, and that's what obamacare is. americans want to be free to choose their own health care provider, their own doctors, their own hospitals, and they also want to be able to be free to choose their own health care insurance. and frankly, they're going to do a lot better job than having the federal government do it for them. that's just the fact. and of course that's very much at issue now with the supreme court deliberations, the judicial review they're undertaking now on the constitutionality of the individual mandate in the obama health care legislation. of course, the question is, is that individual mandate constitutional? and if it is, if they find that
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that individual mandate is constitutional, then is there any limit to the government's ability to intrude into the lives of our citizens? this is a huge question. and if so, what happened to the concept of limited government that was so carefully developed by our founding fathers in our constitution? it seems to me that that concept of limited government really is -- is gone. and that's an incredible problem for all of us that extends far beyond health care. as former governors, we understand the need to limit government. whether it's the local level -- you were a mayor. senator johanns, you were a mayor in lincoln, nebraska, before you were the governor of nebraska, now a senator from nebraska, and you understand that one of the fundamental responsibilities of a mayor, of a governor, of a senator, is to make sure we honor the constitution and we limit the
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power of government at the local, the state, and the federal level to intrude into the lives of our citizens. that's exactly -- that is exactly what our founding foundation were -- founding fathers were striving to do in the constitution, the concept of checks and balances. we have a legislative branch and a judicial branch and an executive branch because that creates checks and balances on the respective powers of each branch. why? to protect our citizens. to limit the reach of government. we have a bicameral congress, a house and a senate, to make it harder to pass laws, not easier. to make it harder to pass laws. again, to protect the people of this country. we have the 10th amendment that reserves powers to the state not expressly provided to the federal government, again, to limit the power of government and protect the people of this
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great country. and, of course, that's what we have in our bill of rights. that's what it's all about. so here we have obama-care. it raises taxes by half a trillion dollars. it raises taxes $500 billion. it cuts medicare half a trillion dollars. it cuts medicare by $500 billion and yet at the same time it places huge costs, a huge burden on the states. the c.b.o. now estimates, congressional budget office now estimates that over the next ten years, it will cost the states $118 billion -- that's a $118 billion cost to the states when they're trying to balance their budgets. they're already facing challenges balancing their budgets and we put that kind of huge cost on them. at the same time, think of what
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it does to our small businesses. now, again, as governors, i mean, i know how it was in my state. i think it was true when you were governor of nebraska of the i think it was true when senator alexander was governor alexander in tennessee. we understood that job creation was job one, that you've got to make sure that your businesses are able to -- to work effectively, to compete and to employ people. that's the engine that drives our economy, that small business base. and so when we look at obama-care, we look what it does to the states, $118 billion over ten years. look at the costs it creates for small business. look at the confusion it creates trying to comply with all of this. so what do small businesses do? what do they do? you talked about it just a minute ago. senator johanns in your comment,s, you said,s -- in you,
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you said okay, so what does a small business do? either, a, they try to comply. that drives up their costs. or, b, they cancel their insurance and they default to the government-run insurance. but it not only creates a problem for them in determining whether or not they're going to continue their health care for their citizens, which our citizens have shown over and over again they want that employer-based health care, but it goes to their very decisions as to whether or not they hire more people. so here we are with 8.3% unemployment, 13 million people looking for work, and we're going to make it harder for small businesses across this country to put them to work because they don't know if they can comply with obama-care, let alone stand the costs. and that affects every single american. so, look, we need to change the approach and that's what we're here talking about today. we're talking about an approach where we can empower people to choose their own health insurance and their own health care provider, an approach that encourages competition, competition that will help bring
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costs down, give our consumers more -- giving our consumers more choice. we're here to talk about how we help the states, working with our citizens and our small businesses, reduce costs, reduce waste and fraud and abuse. the president of aarp, president barry rand, estimates that $180 billion are lost annually in waste, fraud and abuse under medicaid. now, think what our states could do on behalf of their citizens in all 50 states if we here in the congress, working with an administration that will work with us, would empower the states to go after that waste, fraud and abuse by giving their citizens more say over their health care and by encouraging competition among insurance companies to really provide more choice, to provide more access, and to go after that waste, fraud and abuse. look, there are so many things we can do but it's not through a big monolithic government-run
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insurance program that puts costs on the states and puts costs on our citizens. and that's what we need to change, and we need to change it now. so, again, i want to thank senator alexander for being here today and for his work to empower people when it comes t to -- to health care. and also, i particularly want to thank senator johanns for calling us together to discuss this very important issue on behalf of the people of america. mr. johanns: senator hoeven, thank you for your comments. you mentioned that job one for every governor is job creation, and before i turn to senator alexander, let me just congratulate you. whatever you did in that capacity worked. you have the lowest unemployment rate of any state in the united states. i'm proud to say nebraska is number two in that regard. but i'll guarantee one thing you
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learn is that you don't create jobs by putting a big, wet blanket of more regulations on the job creators. and i just used a phrase that i think was coined by senator alexander. senator alexander, i worry that all of these rules and regulations are going to have a -- a very damaging impact on job creation. i'd like you to talk about that. what do you see this impact -- this health care bill's impact on job creation in our states? mr. alexander: well, thank you, senator johanns. i listened with interest to the governor -- former governor of nebraska, former governor of nebraska. let me give you a specific example. i met -- in response to your question, i met after the passage of the health care law with a number of representatives from -- from chain restaurants. chain restaurants -- and we
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all -- the kind we go out to dinner at modest costs -- are among the largest employers in america. they employ largely low-income and young people, people who are the waiters and the waitresses that you see when you go into ruby tuesday's or o'charley's or one of these places is someone with a part-time job or someone working their way up. many of these companies offer some health insurance to their -- to their employees. at one of the companies, ruby tuesday's, which is headquartered in tennessee, the chief executive officer told me that the cost of the health care law to his company would exactly equal the profit of the company that year. now, this is a company of several billion dollars in revenues. one of the -- one of the companies that's even more successful than ruby tuesday's in terms of profit over the last few years and is larger told me
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that their goal was to have 90 employees per store but after the health care law, they'd have 70 employees per store in order to comply with the costs of the health care law. now, this not only raises the cost of business but it reduces employment in the united states. and, unfortunately, senator johanns, i'm afraid what we may find is these restaurant companies, after 2014 -- we're about one year away from a ticking time bomb for state budgets and for businesses but also for people with employer health insurance. i'm afraid that these companies are going to look at the penalty and say, i'd rather pay $2,000 per employee and let them find their way into one of these state exchanges, or into the medicaid program, and millions of americans, because of the health care law, are going to lose their employer-sponsored insurance and millions of americans are not going to have
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as many jobs because of the costs imposed on businesses like these restaurants. mr. johanns: senator alexander, you raise a good point and i'm mindful of our time limit here and i'm just going to take a minute or two here to wrap up because i do think senator alexander, senator hoeven, you've both raised very good points. i look at this health care law and i often wonder, whoever wrote this law, who were they talking to? they certainly were not talking to our small- and medium-sized basis cross this country. why? -- businesses across this country. why? because, just as senator alexander points out, there's going to be a point here where that business owner, large or small -- and every spot inbetween -- is going to look at the penalty, $2,000 per employee, and say, you know what? it is vastly cheaper for me to
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drop coverage and pay the penalty. in fact, we figured out for a large retailer in the united states what that savings would be and it was over a billion dollars a year. does anybody believe for a moment that they're not going to do what's right by their shareholders and pay that penalty and save a billion dollars a year by dropping health care coverage? well, once that dam breaks, the dam breaks. and then you remember that promise so often made, 4747 time-- 47times the president sau like your plan, you're going to get to keep it. well, you're not going to get to keep your plan, you're going to lose your plan. well, they certainly were not talking to gofners when they wrote this bill. any governor will tell you that medicare is a broken system. it literally is bankrupting state budgets under current circumstances, and then you add 26 moremill million peoplmill n
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people and they're going to have a serious access problem. 46 million docs do not take medicaid patients. so where are they going to find their health care? as many of us pointed out, it's like saying to someone, here's your bus ticket, travel anywhere you want. and oh, by the way, there aren't enough buses to haul the people that we've given a ticket to. and that's exactly what we're going to be facing here, is a growing access problem. and then with the cuts in medicare, well, they sure could not have been talking to medicare providers, because you start cutting reimbursement rates, which is exactly what they're doing -- a half a trillion dollars cut out of medicare -- and you're going to have access problems there, too. and so all of a sudden, senior citizens can't find a doctor. and don't believe my statement on that, read the reports from richard foster, who is the chief
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actuary at c.m.s., who has studied this and said, look, this is the consequences of this legislation. well, at the end of the day, it's pretty clear to all of us that this is failed policy. it was quickly put together to try to ram it through to roll the minority to get this done and we ended up with a very failed piece of legislation. the american people do not like this legislation any better than the day it was passed. in fact, they like it less. the more they learn about this legislation, the less they like it. i'll just wrap up with one not thought. we all know that these days the supreme court is hearing arguments on this case. it is my hope that the supreme court will intervene, will decide that this law is, in fact, unconstitutional and then we can build a health care law the way it should be done, a step at a time, consulting with
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medical providers and governors all across this country to build a policy that makes sense for our health care system and for our citizens. that's what should have been done in the first place. that's what we need to do. with that, mr. president, i'll with that, mr. president, i'll >> the supreme court continues with oral arguments on the health care law. today the court will consider whether the individual mandate which requires americans to buy health insurance or pay annual penalties is constitutional. on wednesday morning the court will examine whether the individual mandate is severable for an arrest of the law, and if not, whether the entire law should be invalidated. later that afternoon, the justices will hear arguments on whether the expansion of medicaid coverage is constitutional. the supreme court will continue to provide same-day audio today
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and wednesday. you can hear the oral arguments when they're released. expect it around 1 p.m. eastern today and also at 4:00 on wednesday. we'll have coverage on c-span3, c-span radio and at c-span.org where you can listen and add your comments. live this morning on c-span3 the senate armed services committee hears from military commanders in charge of cyberspace, missile defense, the nation's nuclear arsenal, space operations and other areas. they'll be testifying about defense programs for 2013 and the years ahead. that gets under way 9:30 eastern, again on c-span3. in march of 1979, c-span began televising the u.s. house of representatives to households nationwide, and today our content of public affairs,
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nonfiction books and american history is available on tv, radio and online. >> we're talking now about the supreme court! but they are the ones that changed this country inevitably with what we call the march toward progress. the march towards knocking down the walls of discrimination. that permitted us to pass the 1964 civil right acts and public accommodations so people whose skin was not white could go into restaurants and go into hotels, public accommodation. the '65 act for voting rights, '68 act, public accommodations, the 1973 act to say that women are going to be treated differently. the disabled act, all of that is the march to progress and, my friends, the one organization, the one institution that protects it is the supreme court of the united states! >> c-span, created my america's cable companies as a public service.
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virginia congressman bobby scott in february reintroduced the youth promise act. the bill implements recommendations from crime policymakers, practitioners and law enforcement officials concerning strategies to reduce gang violence and crime. congressman scott hosted a discussion monday about the legislation. [inaudible conversations] >> thank you and good afternoon, and thank you for joining us this afternoon for an important briefing on critical youth violence prevention legislation, the youth promise act. several of our panelists have come across the country to be with us today, and we're very grateful for their support for this legislation. when it comes to crime policy, we have a choice: we can reduce crime, or we can play politics.
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for far too long, congress has chosen to play politics by enacting tough on crime slogans such as three strikes and you're out or mandatory minimums and things like that. although these policies sound appealing, their impact ranges from negligible reduction to crime to actually increasing the crime rate. these slogan-based policies have led to the creation of what the experts at the children's defense fund have called the cradle-to-prison pipeline. and a report on this subject, the children's defense fund, has identified various contributing factors to the pipeline including poverty, struggling education system and an unresponsive, punitive juvenile justice system. the results of this pipeline are staggering. in its report the cdf has estimated that for boys, black boys born in 2001 one in three have a chance of going into prison during their lifetime if
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we don't make any changes while white boys have a one in 17 chance. national prison statistics also reflect the pipeline's construction. since 1970 the number of individuals incarcerated in the united states has risen from approximately 900,000 to -- 300,000 to over two million. that makes the united states the world's leading incarcerator by far with an average incarceration rate seven times the international average. this chart, um, this chart shows the average incarceration rate. the green bars show the incarceration rate of most countries that you could name. the purple, the first reddish bar is the united states average, and the purple bar is 2200, the average african-american incarceration rate, and the top bar, almost
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4,000, the african-american incarceration rate in the top ten states. now, the american -- the united states rated over 700 per 100,000 is not only the highest in the world, but it's also above that which the pew research center shows is counterproductive. they calculate that any incarceration rate over 350 per 100,000 gives you diminishing returns, and anything over 500 per 100,000 becomes counterproductive. and if you look at the chart, you can see how far off these we are. other statistics indicate that the pipeline is also expensive. the costs for prisons have gone from about $9 billion in 1982 to over $65 billion this year, and the increase, the rate of increase for prison costs was six times greater than the rate of increase for higher education. now, evidence is clear that if we want to reduce crime, we need
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to invest in research-based programs for at-risk youth, programs such as teen pregnancy prevention, prenatal care, new parent training, nurse home visits, head start and other early childhood education programs, quality education, after-school programs, summer recreation and jobs, access to college, job training. all of them work effectively to get young people on the right track and keep them on the right track. and by doing so we actually save more money than we spend. we also need to invest in research-based, effective interventions for young people already caught up in the cycle of delinquency. we should be focusing not on playing politics, but what actually works in order to get young people on the right track and keep them on the right track. one of the aspects that we have found that is highly correlated with incarceration is the
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dropout rate, and this chart is a chart for african-american males 25-30. green is high school graduates, reddish is high school dropout. and you can see a significant change between 1970 and 2000. 1970 you could drop out of school and go get a job and not get in trouble, but by 2000 with an information-based, high-tech economy, if you dropped out of school, the likelihood of you being employed today african-american males 25-30 is about 30%. about a third are out in the street, and about a third are actually in jail today. not just probation, parole and all that. behind bars today according to this study. and so once someone drops out of school, the trajectory they're on is a trajectory towards misery. and that's why i've once again
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introduced the youth promise act in the 112th congress. it puts evidence-based and cost effective programs into play at the community level. the act would mobilize community leaders by requiring the community to come together and form a committee consisting of everyone who has anything to do with young people getting in trouble. it's obviously law enforcement, but it's also the school system, the health and mental health agencies, social services, faith-based communities, community organizations, after school programs like the boys and girls' clubs and the business community. everybody get together to decide what the problem is and what can be done on an evidence-based, with evidence-based strategies to reduce gang violence and youth violence. the community would then apply for a grant to implement that policy. one of the interesting aspects of that is the people around the table also have to agree that as
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they save money as they will, they will reinvest the money to make sure that the programs can continue after the initial grant. the one question occurs is whether we can afford all of these programs, and we would just point out that if you just do the back of the envelope arithmetic and look at a 2200 incarceration rate when 500 and above is counterproductive and take those 1700 people that should not be in jail, the counterproductive incarceration level, and look at the amount of money times about $30,000 you're spending, about 30,000 children out of 100,000 people and do the back of the envelope arithmetic, and you will notice that if you spent the money you're wasting on counterproductive incarceration, you could be spending $5,000 per child every year. with the wasted,
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counterproductive incarceration. ten states, you go through that same arithmetic, and you find that they're wasting about $10,000 per at-risk child per year. so, obviously, we're spending the money now, and it's a question not of whether we can afford it, but how we spend the money that we're spending. the youth promise act in the last few years has gathered the support of over 250 national, state and local organizations, many cities have passed resolutions endorsing it including los angeles and pasadena and san francisco, california, santa fe, new mexico, new york, east cleveland, ohio, pittsburgh, pennsylvania, and several cities in virginia. the u.s. conference of mayors at the 77th annual meeting in 2009 adopted a resolution urging the passage of the youth promise act, and we're working to gather even more support today. but we have a distinguished panelist today, and before i
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recognize the panelist let me just recognize a couple of people in the audience. judge barnett who is a retired juvenile court judge in washington, d.c., very active in drug prevention, is with us. and aaron voldman with the student peace alliance is in the audience. he's been very active in helping with the youth promise act and corrine has also been very helpful, and she's in the audience today too. our first panelist we will hear from is hill harper, an american film, television and stage actor and author. he plays dr. sheldon hawkes on the cbs drama series "csi: new york." he has created a nonprofit organization, um, nonprofit organization manifest your destiny to provide at-risk teens opportunities for empowerment and education in excellence. he is a best-selling author and has written several books
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including "letters to a young brother" and "letters to a young sister." he has graduated cum laude from brown university, earned a law degree from harvard roof and a master's of administration from john f. kennedy school of government at harvard university. after we hear from him, we'll hear from john prendergast, a human rights activist who has worked for peace in africa for over 25 years. he is co-founder of the enough project, an initiative to end genocide and crimes against humanity affiliate with the the center for american progress. he has worked for the clinton white house, the state department, two mens of congress -- members of congress and many other organizations promoting peace and human rights. he's been a big brother for over 25 years as well as a youth counselor and basketball coach, and he is a co-author of ten books, and he co-authored "unlikely brothers" which he has a copy here today.
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"unlikely brothers" which with his first little brother in the big brothers program, michael mattocks, who is also on our panel today. michael mattocks is the co-author of the "unlikely brothers" with prendergast. he merged from a homeless situation as a child, then becoming a husband and father of five boys often working two jobs at once in order to support his family. he also helps coach his sons on their football teams. we'll then hear from dr. catherine gallagher, the director of the cochran collaboration college for policy at george mason university where she is the associate professor of criminology and law in society. her research focuses on improving the intersection between health care and justice systems to better address the needs of at-risk populations and public health in larger commitments. she also provides guidance to
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numerous federal agencies, she holds a ph.d. in behavioral and social science from the university of maryland. then we'll hear from dr. jorja leap, an adjunct associate professor of social welfare at ucla. she has worked nationally and internationally in violence, in violence postwar settings with major focus on gangs and youth violence. she currently serves as senior policy adviser on gangs and youth violence for the los angeles county sheriff, lee baca, who is a strong supporter of the youth promise act, and she works in partnership with california wellness foundation, the california endowment and the advancement project. she is author of a new book, "jumped in: what gangs taught me about violence, drugs, love and redemption." and we have a copy of that book. then we'll hear from bobby kipper who is a former police officer in newport news, virginia, founder of the
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national center for the prevention of community violence and bestselling author of "no colors: 100 ways to stop gangs from taking away our communities." he is also -- he has also consulted for universities in our area and for the virginia department of justice. and last, um, certainly not least, we will hear from frankie carrillo, a restorative justice activist and student at loyola in california. after spending 20 years behind bars for a crime he did not commit, he has been exonerated, and he has now dedicated himself to promoting juvenile and criminal justice reform. and before we hear from our speakers, we're going to hear there the former chairman and now-ranking member of the judiciary committee, a gentleman from michigan, who has a long
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career of advocating for justice. mr. john conyers. >> thank you, chairman bobby scott. i would ask everyone to give you a round of applause. matter of fact, it's a forum. let's thank chairman bobby scott of virginia. [applause] for all that he's doing. [applause] and with the tragic loss of one young man in our country, trayvon martin, which has electrified the nation here comes chairman bobby scott with a forum on the youth promise act. that's worth another round of applause because it's right on time. [applause] and what this bill does -- and on top of it it's cost effective, and it brings greater
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hope and justice for our youth. as chairman scott said, we incarcerate more people than any other country on earth. and it's way too many, and i celebrate what we're doing here today. i close with this observation: hill harper was late coming to this forum, wasn't he? and attorneys bobby vassar and attorney carol shawdrau and i were trying to determine whether we should issue a warrant or a subpoena to bring him here one way or the other. [laughter] i'm glad we don't have to do that now, and i thank you, chairman scott. >> thank you, mr. conyers. and now for equal time, we'll recognize hill harper. >> thank you so much, chairman. [laughter] i was wearing my hoodie, and i got stopped on the way.
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[laughter] you know, it's an honor to appear and speak on behalf of the youth promise act. and we talk about educational opportunities, mentoring, intervention and all types of wrap around services for our youth. i'm a founder of a foundation called the manifest your destiny foundation, and we seek to serve traditionally underserved youth across this country. and we hope to empower them to give them access to college skills, training, academic programming and also pass along lessons i learned coming out of the public school system and being able to go on, as the chairman said, to brown and to harvard for grad school. and i wouldn't be able to make that transition from our public school system to these great private institutions if it wasn't for interventionist programs. that served me and helped me
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overcome certain obstacles that i came across. but i want to really start my remarks with a letter i received recently. as you can probably see here, it's a handwritten letter from a young man. and i get a lot of, you know, different types of mail comes through my office, and, you know, it's fan mail, folks want csi paraphernalia, all sorts of things. but this particular letter had a very circuitous path to me. it didn't come directly to my office because this young man didn't have access to finding out where my office or what it was. and so this letter went on a very long path and finally found it way to me. and i'm just going to read a bit of it to sort of set the stage for my remarks. and it reads, dear hill harper: my name is brian. i'm 16 years old, and i am in jail. i can't use a computer, so i can't e-mail you. i wrote these to someplace in new york, and i hope and pray
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they fax this letter to you or give it to you some way because i really want to talk to you about a lot of stuff, hill. i just finished reading your book, "letters to a young brother," it was the best book i ever read in my life, and i really mean that. like you said in your book, many young people don't have a role model. i didn't have one, that's why i'm in jail. letter continues: i want to stop right there. like you said in your book, many young people don't have role models. i didn't have one, that's why i'm in jail. the main focus of my foundation right now is to deal with the drop outcry sis in america. as many of you know, there's a direct correlation between the dropout rates and incarceration rates. if i was to offer up a graph and lay it over our increasing incarceration rates, those graphs would almost look
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identical. since there is this one-to-one relationship and we can literally identify it, then it would seem to me if we take a senator approach -- smart approach, we can say let's deal with this dropout crisis firsthand, let's do something, and to me, the youth promise act represents that. as was mentioned earlier, the u.s. now has the highest incarceration rate of any nation in the world, and the slogan-driven law enforcement disproportionately falls on minorities, african-americans and hispanics. the dropout rate is driving the nation's increasing prison population. it's one of the country's costliest problems. researchers at the center for labor market studies at northeastern found the collective cost to the nation over the working life of every high school dropout is $292,000 per person. we lose too many of our youth to a lifetime cycle of
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incarceration way too early, and to me, the youth promise act directly addresses these root causes. the promised model intervenes in the lives of our youth before they end up in the juvenile correction facilities which is critical because my foundation we work in conjunction with many juvenile correction facilities. most of those facilities, unfortunately, they focus on punishment rather than treatment and rehabilitation. and in a certain way what is said is they foster environments that often harden our youth, thus making it more difficult for them to productively reintegrate into their families and communities in a healthy way. and in a way this crisis that we're talking about can be called a pipeline from the cradle to the prison. my work with my foundation and other organizations has proven to me that we can solve this problem, that we can deal with the crisis, and there's overwhelming evidence to show
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that it is entirely possible to move children from a cradle-to-prison pipeline to a cradle-to-college-jobs pipeline. but to deal with this crisis like any other crisis, we need all hands on deck. and what does that mean? it means, number one, foundations and nonprofits like mine working in conjunction with private entities, corporations. recently, i've been working, my foundation's been working with at&t and their aspire campaign where they've dedicated over $250 million over a five-year period. corporations are willing and open to help like at&t if we come at them with something that's provable. research has shown that youth who spend time with a caring adult mentor regularly for at least one year are five times more likely to graduate. 46% less likely than their peers to start using illegal drugs, 27% less likely to start
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drinking alcohol, 52% less likely than their peers to skip a day of school. you know, without effective intervention as many as 70% of children with incarcerated parents or care givers become involved in the criminal justice system. this letter came from a young man who is incarcerated, and i'm going to seek to close with finishing from where i left off. he wrote: you said in your book many young people don't have a role model, i didn't have one, that's why i'm in jail. but i have one now, his name is hill harper. i really hope penguin inc. get me this letter first class, and if you do get it, could you, please, write me back? i read in your book that you play in csi: new york. i also like csi: miami, but i like your show a little better.
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i also read that you went to school with barack obama. would you, please, tell him hello? i'll tell you why i'm in jail if you write me back. well, that's everything for now. hope you write back. your friend and brother, brian. when i got this letter, i actually read it on a plane, and i got kind of choked up, and i decided by the time i was going to land i was going to do something for this young man, this young brian. tracked him down, and i found him. and i decided i was going to use the weight of my foundation to intervene in his life. i was going to do whatever it took to make a difference. and as i spoke to his warden, his warden told me, he said, you know, mr. harper, you sound like a very well intentioned young man. i said i want to change this young man's life. he had the courage to write me
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this letter, and if you listen to the way it's written, it's actually at a third or fourth grade level. it made me think about did we fail brian, or did brian fail us? and i didn't want to fail us, and the warden said, well, mr. harper, you're not going to be able to do much. he said i'm going to help him as soon as he gets out. he said, you must not understand something. he was tried as an adult. he committed a heinous crime, and he's going nowhere. i won't be the warden anymore when he gets out, and you won't be alive. what that -- set me back in a way to realize that there's so many brians and briannas out there. there's so many of them. and it's up to us to catch them before we actually lose them. to grab them before they're gone, before it's too late. and so i celebrate the youth
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promise act in that regard because it seeks to do those things. and i promise that i will not stop fighting, that my foundation won't stop fighting to grab every brian, every brianna out there before it's too late. so i appreciate the work that's being done so far, but we have so much more to do. and the youth promise act represents a step in that direction. thank you. >> thank you. [applause] can i introduce the esteemed, amazing, the best, number one freshman congressperson. >> in history. >> in history of congress. my class mate from harvard, and everyone talks about our
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president being an outstanding student. she was my class mate as well, and let me just tell you, she was better than both of us. [laughter] she was smarter than both of us, and i can't necessarily speak -- she didn't get as good grades as the president and myself, but that's not because of her lack of intellect. it was more of the fact that she was focused on so many things, you understand. [laughter] congresswoman terry sewell. i love her. [applause] [inaudible conversations] >> we started hill around harper's -- hill harper's presentation with an opportunity
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for equal time. i guess we'll provide the same opportunity for representative terry sewell. >> thank you so much, mr. chairman. let me just say thank you so much, hill harper, for your beautiful introduction said just like my mother wrote it. [laughter] no, seriously, i am, um, honored to not only be a part of this program today and to support the youth promise act, but equally as proud of you and your work not only on the screen, but equally as important in our communities. you have been a role model not just for me and lots of young black boys and girls, but all youth. and for that your work should be commended. mr. chairman, i just want to say thank you so much for inviting me to be a part of this today and, also, just bringing attention to how important the youth promise act is, um, and i think that all of us will agree that in the waning days after
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trayvon martin, the incident with trayvon martin, all of us need to be looking at our youth in a different way and trying to do all that we can do to make sure that they keep and live up to their own promises. thanks. >> thank you. thank you. john prendergast. >> be well, thank you, congressman scott, congressman conyers, congresswoman sewell, for your unswerving leadership on these terribly important issues. i'm humbled to actually be on this panel, and like the other panelists, we can only hope that we will get some paraphernalia from "csi: new york." [laughter] by qualification largely stems from stumbling onto a life-changing path at the age of 20 years old when i was visiting a friend of mine who was working in a homeless shelter right here in washington d.c. and i ran into this guy right here to my left, michael mattocks, who was all of 7 years
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old. so since my experience as a mentor is why i'm here on this panel, i want to tell you about three of the ten guys that i've worked with over the last 25 years and the very different trajectories which resulted, i would argue, from their varying access to the kinds of programs, the very programs that this youth promise act would be supporting. first story i want to tell you about is nassir. he was, actually, the biological brother of my first formal little brother in the big brother/big sisters program in philadelphia. i worked intensively with his brother, but we would often bring nassir along with us on the various outings and adventures we'd go on in philadelphia. from a very young age, though, nassir had an explosive temper.
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there were no programs that addressed the kind of need that he had, and after i moved away from philly to africa and then down to d.c., he slowly transitioned from the formal system to the streets. he dropped out of school, no one followed up on it. he entered the. juliet: justice system until, tragically, he was shot to death on the very street i used to pick him up when he was a little boy with an unforget my brilliant smile. the second story i want to tell you is about michael here, right to my left. as i said, i met michael and his family when they were living out of plastic bags, literally out of hefty bags at a homeless shelter eight blocks away from the white house. we started going to the library together, and i became his big brother. though not formally with the big brother/big sister program. at one point he and two of his siblings even came and lived with me in philadelphia for the
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summer. i was the 22, and i had to grow up really fast. mike l will tell you -- michael will tell you his story, but suffice it to say from my perspective when i left for africa and sort of left michael hanging, eventually, he dropped out of school, and lots of stuff happened that we'll leave to him to tell. but in effect, again, the formal system abandoned him. but i don't think i can ruin the end offing of that story because he's right here, a husband, a father of five boys, coach and a mentor himself now if i tell you this: michael's told me many times over the last few years that if he hadn't had a big brother, someone investing and believing in him particularly in his early years, he might never have made the choice to leave the streets behind. for years michael had someone who challenged him and cared about what he was doing. that's what mentors do. the third story i want to tell you is about jamar. he's from right here in d.c.,
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right up on georgia avenue. when i first met him, he was extremely withdrawn but very volatile. he on the couldn't play more than a few points in a basketball game or have a touchdown score inside a football game before he'd end up either in a fight or on the sidelines quitting because of some kind of perceived slight. his grades or -- for poor and his conduct at school was worse. jamar was different only insofar as his mother was enrolling him in every possible alternative or supplemental program out there that she could find. so besides big brothers/big sisters and my relationship with jamar through that, he was also part of the boys and girls' club -- another after school program -- and even the aau football league. now jamar's got a scholarship to one of the best high schools in d.c. his grades are good, and he plays on the football and
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basketball teams. none of the programs he participated in cost much. they worked. small investments, huge payoff, life saved. that's what i found over and over again with the kids i coached and mentored over the past 25 years. for the most part, the formal system abandons them. rarely do they have access to the kind of alternative programming that has proven to make a difference time and again, the kind that the youth promise act is going to support. children constantly fall through our nation's tattered safety net as they leave or are pushed out of segregated schools or passed around in foster care, suffer abuse and trauma, enter the juvenile justice system, cycle through that, seven time for a felony, eventually become second class citizens, face discrimination in their attempts to get employment, housing and schooling. after doing so little for these kids as they are growing up with abuse and single parenthood, our government finally steps in and starts really spending money on
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these kids once they make a big mistake to prosecute them and put them away in prison for a long time like the story hill told about. all kinds of evidence, there's all kinds of evidence that big brother/big sister-type programs, mentoring programs have a remarkable effect over time on kids' development and their self-esteem, and there are countless other school and community-based programs that have made a difference in preventing crime, preventing dropout rates. all, again, the kind of things hill was talking about. but they are chronically underfunded. so in conclusion, back to what i know, mentorship, mentoring and mentorship. i've seen firsthand how mentoring can really make a difference in young people's lives mostly because it addresses that critical missing ingredient for so many young people from difficult backgrounds. self-esteem, the self-worth that they experience. without it, there's no foundation. mentors can help develop that
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fundamental requirement in life, and mentors come in many forms. big brothers/big sisters, teachers, coaches, tutors, supervisors, program assistants, camp counselors, all the kinds of programs the youth promise act would support. most importantly, mentors in the program -- and the programs that they're part of provide a light that helps a young person navigate through difficult waters. sometimes that light can make the difference between freedom and incarceration or even between life and death. thank you very much. [applause] >> thank you for having me. um, i'm here to tell my story about, you know, how mentoring is so important. i had a brother who got shot on washington, d.c. street, and be
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he basically fell through the cracks, you know? i mean, the school system let us, like, suffer. we didn't drop out. they didn't come round and see that, you know, what was going on with the school thing or nothing. and if we had programs in the school that really cared then, we wouldn't have been out there doing the things on the streets that we was doing. um, there came a time with john, you know, he was out in africa, and he wasn't there to mentor or us, but if he was there to mentor us, we wouldn't have fell through the cracks. it's really important for males and females to mentor the younger kids. you know, i've got five boys of hi own, and i mentor them really good. i even have a little brother, i got me a little brother, you know? and, um, it's just sad the way
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that, you know, things happen. you know, i basically was on the streets at the age of 11 years old, you know? when i should have been in school, but didn't nobody care at all. didn't nobody you need to go to school this, no teachers came to the house or nothing. but, you know, like now these days from me doing a lot of things that i do the teachers really know the kids that's in school that need the help. a lot of the teachers know that these kids need help, these kids need help. some kids don't need the help, but there's a lot of kids out there that need the help. um, i just wish that, um, you know, like the young guy who did shoot my brother, if there was programs out there that help
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serve the commitment a little better, the -- the community a little better, the guy, he probably would have never shot my brother. i had another little brother fell through the cracks too where he ended up dying himself. you know, if it wasn't for john half of the time, you know, i wouldn't even be here from him mentoring me. you know, i've been knowing john for, since i was 7 years old. he could tell you the stuff i've been through in life. and when i really, really needed him in life, he was there to mentor me. and my life was a sad situation, but now i'm proud of myself. from john prendergast mentoring me. you know, and we really need these programs out here for these kids. you know, the kids is the future. you know, um, they really, you know, they need help. you know, there's a lot of kids
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out there need help. and we can help. we can help with the programs, you know? and i do my little helping too. me and my wife, we run a football program with, like, 300 kids, you know? and i never dreamed that i would be running a football -- where my wife is the president of the football program, where she be running a program with 300 kids. that's amazing, you know? and i think i'm a good role model to my boys. you know, they watch everything i do. um, and i would love to see more programs out there for the kids. i would love to see way more programs out there for the kids. and that's very important, very important, you know? um, that's all i gotta say. [applause] >> thank you, michael.
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dr. gallagher. >> good afternoon and, as always, thank you, congressman scott, for your great leadership on these issues. and i'm thrilled to be in this really, really esteemed panel. it's very exciting for me as an academic, so you'll have to forgive my enthusiasm over here. my job, i think, is to bring the evidence to bear on the issues surrounding the youth promise act, so i titled my presentation "evidence," which hopefully won't be as boring as it sounds. for any of you who have seen these briefings that i've done before, forgive me. it's part of our seven-minute graduate seminars, and i'll
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review what we covered last time and move into some new territories as well. i've also never been a big brother, but i have spent quite a lot of time in facilities, and i think that that experience has really shaped my research, how i understand the problems and the complexities, um, but also what these kids are asked to persevere and to survive. and so with that i'll move ahead to the evidence at hand. um, so i promised a review of our last lecture, and i'll keep these to less than three minutes total. but in previous discussions we've covered things like the organization, the oversight and the youth who are involved in the juvenile justice system. sometimes we forget that not everyone's familiarized with the complexities and the irregularities of the system. we also talked about costs and
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what it actually does cost to keep kids in the system versus prevent kids from getting in the system and also what happens when we fail them at each level. we talked about that in terms of taxpayer burden, and we talked about it in terms of a cost effectiveness study that we're about to conduct, we're actually in the process of conducting with the pew center for the states. we also went through the evidence surrounding the promise act and in some of our briefings we've gone piece by piece through the different components and conclude on the whole that there is significant evidence. today i'm going to be talking along a different vein. considering the company we're keeping here, i thought it might be interesting and important to remind ourselves about not just prevention and cost, but what the human rights and the human loss is when we fail to do our job in the juvenile justice system.
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so i'm going to bring in some evidence that our group has compiled about the deleterious effects of crowding, what we see in terms of health care and what we see in terms of avenues of relief for youth who are in facilities and who are failed when they are there. and i'll conclude this bit of our lecture, and i don't know what our next lecture will hold, with the risks of maintaining our status quo and some action items i hope that will help us move forward. the next few slides i'm going to go over in rapid speed. they're available elsewhere, but it's just a reminder about major milestones in juvenile justice. what you see on this screen is a lot of different stripes. the blue stripes represent major court interventions in juvenile justice policy. and what you see in yellow is legislative interventions in
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juvenile justice policy. and considering it spans over a century, you can see that there haven't been many major interventions. one of them, of course, is the youth promise act. another is the supreme court is hearing or considering at the moment with the cases of miller v. alabama and jackson v. hops which considers life without parole. we also talked about what the system looks like, and even if you could read this slide, you'd know that it's very complex, hard to understand as an organization and its processes. and despite being an academic who loves conceptual models, it's still actually very hard to depict it in a meaningful way. so it's hard to imagine people who are unfamiliar with the juvenile system trying to navigate it and manage it and especially people who don't have
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the resources or the constituency to manage it effectively to get their children safely through to the other side. we also talked about the numbers of kids who go through these systems. these facilities and not to mention probation and parole systems. but facilities process over a million kids a year. this is a lot of potential lost and a lot of lifetime spent for these kids. and we see most of our kids who are passing through our detention centers where security is extremely high and services are very low. we also taughted at a different brief -- talked at a different briefing about some costs, and we looked at it in terms of firearm injuries. we thought, well, if we can't put a dollar figure on how much it costs to keep a kid in the system, we can begin to chip away at the cost for what
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happens to kids when we fail them. and one way in which we fail them is if they're a victim of a firearm injury. what you can see from this graph you don't really even need to be able to read it to see at the top the blue stripe is the, sorry, firearm injuries for black males between the ages of 13-19. the red stripe is for hispanic males of the same age group, and the white stripe for white males of the same age group. between the years of 2001 and 2010. what is alarming about this graph despite, in addition to the gross disparities is also the fact that it's not evident necessarily from this picture, but these rates have remained stable over the last decade. many of us have celebrated reduced crime rates, but this is an area in which we've not seen a reduction. um, i can talk more about what this graph means at a different time, and we have resources
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available for you. but we moved along, and we considered what the firearm injuries mean in terms of costs not just to these kids, but to their families and to society as a whole. and we used as a benchmark measure the entire federal budget spent on delinquency prevention which is the sole arm mandated for guiding the states and providing funding for prevention and some minimal standards and protections. and what we came to realize is that we spend more on hospital bills for adolescents who have been shot in a year than the entire federal budget combined to support these programs. and if we consider not just kids who have been victims of firearm injuries, but victims of other violent injuries, we can make that almost quadruple the amount
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of the federal budget from 2012. um, so we also conclude in this, sorry, and i'm going to not overstep my time boundaries, but we also concluded that even the hospital bills do get passed back to taxpayer through medicaid billing, through the reabsorption of unpaid bills to community hospitals. the taxpayers are getting double billed not just through, well, whatever we have spent in the federal funds, but through being charged again for treating these injuries. so what we came up with was, once again i use a lot of analogies to health care because that's really our area of expertise in addition to juvenile justice. but in terms of the true cost of the juvenile justice system, we're still a ways away from truly understanding a per-kid cost across all systems and all
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providers. as i mentioned, we're working on that with the pew center for the states, but the same analogy is we don't understand what it costs to tritt -- treat a patient across all systems of care in all provider types for a specific condition. moving along, i'll just say crime's complex. it meets -- it's entangled with other social, health, educational, economic problems, and it's impossible to disentangle it and pretend as though it is a separate phenomenon. and we covered at the end, and this summarizes our prior lectures, that the youth promise act really provides a rational structure for local leadership. and it also conforms to our scientific understanding about what the best means of intervention is, at what point what great local discretionary decision making and a lot of variation to support, to support
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what the local community's assets and strengths are. so, again, i mentioned i have more detail on this, but i'm going to move along to keep on time. today i just wanted to talk a little bit about, okay, what happens when we fail in prevention which, clearly, we have failed in prevention in many, many, many cases. and i thought i would speak a little bit on the human rights protections and risks that are faced by these kids, um, really what happens at the deep end. and i use three examples here. we're going to talk a little bit about crowding, a little bit about health care and a little bit about seeking relief through the courts for violations of rights. um, first of all, and i'll do this in rapid-fire, happy to give you more information in a separate forum, but we first look at the issue of crowding. so crowding, first of all, we have been 5 and 7% of facilities in the united ste

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