FROM: DEFENSE DEPARTMENT
CONTRACTS
DEFENSE LOGISTICS AGENCY
AMI Industries, Inc., doing business as Goodrich Interiors Specialty Seating, Colorado Springs, Colo., has been awarded a maximum $8,817,781 firm-fixed-price contract for installation of aircraft ejection seats. This contract is a sole-source acquisition. Locations of performance are Colorado, Oman, and Iraq with an Aug. 15, 2016 performance completion date. Using service is Oman and Iraq. Type of appropriation is fiscal year 2015 through fiscal year 2016 foreign military sales. The contracting activity is the Defense Logistics Agency Aviation, Robins Air Force Base, Ga., (SPRWA1-14-D-0001).
ARMY
Foresight Renewable Solutions, LLC, San Francisco, Calif. was awarded a $7,000,000,000 firm--fixed-price, indefinite-delivery/indefinite-quantity contract for use in completing and awarding power purchase agreement task orders. Funding and work performance location will be determined with each order. Estimated completion date is Jan. 28, 2014. Bids were solicited via the Internet with 114 received. Army Corps of Engineers, Huntsville, Ala. is the contracting activity (W912DY-14-D-0008).
Raytheon Co., Andover, Mass. was awarded a $107,918,011 modification (P00108) to contract W31P4Q-09-C-0057 for work on the Patriot missile system. Fiscal 2014 research, development testing and evaluation funds in the amount of $107,819,011 were obligated at the time of the award. Estimated completion date is July 31, 2014. Work will be performed at Andover, Billerica, Burlington, and Tewksbury, Mass; El Segundo Cal.; El Paso Texas; Huntsville Ala.; Norfolk Va.; Pelham N.H.; and White Sands, N.M. Army Contracting Command, Redstone Arsenal, Ala. is the contracting activity.
Trax International, Las Vegas, N.V. was awarded a $44,113,856 modification (P00119) to contract W9124R-09-C-0003 for non-personal test support services for Yuma Proving Ground, Ariz. Fiscal 2014 research, development, testing, and evaluation funds in the amount of $44,113,856 were obligated at the time of the award. Estimated completion date is Jun 30, 2014. Work will be performed at Yuma, Ariz. and Ft. Greely, Alaska. Army Contracting Command, Yuma Proving Ground, Yuma, Ariz. is the contracting activity.
Martinex Construction, Inc., Charleston, S.C. was awarded a $19,244,014 firm-fixed-price contract for dredging three-to six million cubic yards of material from the Savannah and Brunswick inner harbor. Fiscal 2014 other procurement funds in the amount of $2,500,000 were obligated at the time of the award. Estimated completion date is Feb 16, 2015. Bids were solicited via the Internet with two received. Work will be performed in Savannah and Brunswick, Ga. Army Corps of Engineers, Savannah, Ga. is the contracting activity (W912HN-14-C-0005).
Accenture Federal Service, Reston, Va. was awarded $7,523,792 modification (D00347) to contract N00104-04-A-ZF12 for general fund enterprise business system onsite support and change requests. Fiscal 2014 operations and maintenance (Army) funds in the amount of $7,523,792 were obligated at the time of the award. Estimated completion date is June 27, 2015. Work will be performed in Kingstowne, Va. Army Contracting Command, Rock Island Arsenal, Ill. is the contracting activity.
AIR FORCE
Garrett Container Systems, Accident, Md., has been awarded a $19,541,184 indefinite-delivery/indefinite-quantity contract for common Department of Defense civilian and military items. This contract includes nine distinctive pieces of equipment that all security forces personnel utilize on a daily basis, including concealable body armor, Safariland 6005 SLS M-9 Berretta drop leg holster system (with Quick Locking System (QLS), mid-ride belt loop adapter, and small MOLLE adapter plate); nickel plated steel handcuffs, 21-inch expandable baton, mini-flashlight with holder, and whistle. Work will be performed at Accident, Md., and is expected to be complete by March 2, 2019. This award is the result of a competitive acquisition and all offerors were solicited using Federal Business Opportunities and three offers were received. Fiscal 2014 operations and maintenance funds in the amount of $3,000 will be awarded for a post award. 771st Enterprise Sourcing Squadron, Joint Base San Antonio, Texas, is the contracting activity (FA8054-14-D-0002).
SelectTech Services Corp., Centerville, Ohio, has been awarded a $7,680,250 firm-fixed-price contract for engineering technical support services. This contract is to provide personnel, equipment, tools, materials, and other items and services necessary to perform maintenance and fabrication of experimental processing and test equipment. The technical support shall consist of preventive and remedial maintenance, inspection, modification, overhaul, fabrication, repair, calibration, certification and transport of experimental/test equipment, and laboratory instrumentation. Work will be performed at Wright-Patterson Air Force Base, Ohio, and is expected to be complete by Jan. 28, 2015. This award is the result of a competitive acquisition and five offers were received. Fiscal 2014 research and development funds in the amount of $111,000 are being obligated at time of award. Air Force Research Laboratory/RQKE, Enterprise Contracting Branch, Wright-Patterson AFB, Ohio, is the contracting activity (FA8650-14-4016).
NAVY
Lockheed Martin Corp., Lockheed Martin Aeronautics Co., Ft. Worth, Texas, is being awarded a $35,781,319 modification to a previously awarded cost-plus-fixed-fee contract (N00019-02-C-3002) to develop a Universal Armament Interface capability in the F-35 software for Small Diameter Bomb II F-35 Mission Systems Integration Laboratory, ground test only. Work will be performed in Fort Worth, Texas, and is expected to be completed in April 2018. Fiscal 2014 research, development, test and evaluation, Navy funds in the amount of $4,000,000 will be obligated at time of award, none of which will expire at the end of the current fiscal year. The Naval Air Systems Command, Patuxent River, Md., is the contracting activity.
Raytheon Technical Services Co., LLC, Indianapolis, Ind., is being awarded a $17,257,960 firm-fixed-price delivery order against a previously issued basic ordering agreement (N00019-10-G-0006) for the procurement of 28 LAU-115D/A missile launchers for the Government of Australia and 64 LAU-116-B/A missile launchers for the U.S. Navy (34) and the Government of Australia (30). These missile launchers are in support of the F/A-18E/F and EA-18G aircraft. Work will be performed in Indianapolis, Ind., and is expected to be completed in September 2016. Foreign military sales and fiscal 2013 and 2014 aircraft procurement, Navy funds in the amount of $17,257,960 are being obligated on this contract, none of which will expire at the end of the current fiscal year. This contract combines purchases for the U.S. Navy ($5,819,780; 34 percent) and the Government of Australia ($11,438,180; 66 percent) under the Foreign Military Sales Program. The Naval Air Systems Command, Patuxent River, Md., is the contracting activity.
CoSTAR Services, Inc.*, San Antonio, Texas, is being awarded a $9,865,087 modification under a previously awarded firm-fixed-price, indefinite-delivery/indefinite-quantity contract (N69450-13-D-7700) to exercise option one for regional base operations support services at Naval Air Station, Jacksonville, Naval Station Mayport, Naval Operational Support Center (NOSC) Atlanta, Ga., NOSC Augusta, Ga., NOSC Columbus, Ga., NOSC Bessemer, Ala., NOSC Greenville, S.C., NOSC Miami, Fla., NOSC Tallahassee, Fla., NOSC West Palm Beach, Fla., and Marine Corps Reserve Center Jacksonville, Fla. Services include, but are not limited to facility investment, custodial, pest control, integrated solid waste management, and grounds maintenance and landscaping. This contract contains options, which if exercised, will bring the contract value to $14,483,217. Work will be performed in Jacksonville, Fla. (90 percent); West Palm Beach, Fla. (2 percent); Atlanta, Ga. (2 percent); Augusta, Ga. (1 percent); Columbus, Ga. (1 percent); Bessemer, Ala. (1 percent); Miami, Fla. (1 percent); Tallahassee, Fla. (1 percent); and Greenville, S.C. (1 percent). Work is expected to be completed in January 2015. Fiscal 2014 operation and maintenance, Navy; Fiscal 2014 operation and maintenance, Navy Reserve; Fiscal 2014 operation and maintenance, Marine Corps; Fiscal 2014 Navy working capital funds; Fiscal 2014 Defense health program funds; and Fiscal 2014 family housing operation and maintenance, Navy contract funds in the amount of $5,648,935 are being obligated on this award and will expire at the end of the current fiscal year. The Naval Facilities Engineering Command, Southeast, Jacksonville, Fla., is the contracting activity.
Detyens Shipyards, Inc., North Charleston, S.C. is being awarded a $9,654,055 firm-fixed-price contract for a 55-calendar day regular overhaul and dry docking of fleet replenishment oiler USNS Leroy Grumman (T-AO 195). Work will include port main engine clutch and coupling overhaul; antenna cleaning, inspecting and refurbishing; helicopter deck sprinkler and hose reel piping renewal; fall blocks and fairlead sheaves; hull painting and cleaning; and flight deck non-skid renewal. The ship’s primary mission is to provide fuel to U.S. Navy ships at sea and jet fuel to aircraft assigned to aircraft carriers. The contract includes options, which, if exercised, would bring the cumulative value of this contract to $11,349,714. Work will be performed in Charleston, S.C., and is expected to be completed by April 2014. Fiscal 2014 working capital contract funds in the amount of $9,654,055 are being obligated at the time of award and will expire at the end of the current fiscal year. This contract was competitively procured with proposals solicited via the Federal Business Opportunities website, with one offer received. The U.S. Navy’s Military Sealift Command Norfolk, Norfolk, Va., is the contracting activity (N32205-14-C-1001).
Vigor Marine LLC, Portland, Ore., is being awarded a $6,655,679 firm-fixed-price contract for a 55-calendar day regular overhaul and dry docking availability of fleet replenishment oiler USNS Yukon (T-AO 202). Work will include port main engine overhaul, gyro replacement, number four ship’s service diesel generator overhaul, docking and undocking and underwater hull cleaning and painting. Yukon’s primary mission is to provide fuel to U.S. Navy ships at sea and jet fuel to aircraft assigned to aircraft carriers. The contract includes options which, if exercised, would bring the total contract value to $8,092,975. Work will be performed in Portland, Ore., and is expected to be completed by April 2014. Fiscal 2014 working capital contract funds in the amount of $6,655,679 are being obligated at the time of award and will expire at the end of the current fiscal year. This contract was competitively procured with proposals solicited via the Federal Business Opportunities website, with two offers received. The U.S. Navy’s Military Sealift Command Norfolk, Norfolk, Va., is the contracting activity (N32205-14-C-1009).
*Small Business
Wednesday, January 29, 2014
SEC CHARGES SCOTTRADE WITH FAILING TO PROVIDE COMPLETE INFORMATION ON TRADES
FROM: SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission today charged Scottrade with failing to provide the agency with complete and accurate information about trades done by the firm and its customers, which is commonly called “blue sheet” data.
Scottrade, which is headquartered in St. Louis, agreed to settle the charges by paying a $2.5 million penalty and admitting it violated the recordkeeping provisions of the federal securities laws.
According to the SEC’s order instituting settled administrative proceedings, broker-dealers like Scottrade are required upon request to electronically provide the SEC with blue sheet data so the agency can use it to identify and analyze trades in the course of investigations and other work. Blue sheets contain the details of each equity or options trade that is routed through clearing broker-dealers. The term “blue sheet” stems from the color of the forms originally mailed to broker-dealers to complete and return to the SEC. The process shifted to an electronic format in the 1980s.
“Blue sheet information is the lifeblood of many SEC investigations and examinations,” said Andrew J. Ceresney, director of the SEC’s Division of Enforcement. “When firms fail to provide us with accurate or complete trade data, it risks compromising our ability to detect and investigate securities law violations.”
According to the SEC’s order, the SEC staff sent electronic blue sheet requests to Scottrade in December 2011 in connection with an investigation the agency was conducting into suspicious trades made in a Scottrade online brokerage account that was the apparent victim of account intrusion. After receiving the blue sheet information, SEC staff discovered that Scottrade’s submission was incomplete as it failed to include data from a number of trades that resulted from unauthorized account intrusions. After the SEC staff contacted Scottrade questioning the data, the firm informed the agency that a computer coding error had resulted in the inadvertent omission of the trades.
The SEC’s order finds that Scottrade’s computer coding error resulted in the omission of trades from blue sheet responses it made to the SEC from March 2006 to April 2012. During that time, Scottrade failed to provide the required blue sheet information on 1,231 occasions. Scottrade has corrected the deficient code responsible for its inaccurate and incomplete blue sheet responses.
“Scottrade’s failure over six years to provide accurate and complete blue sheet trading data was egregious and violated its obligations under the securities laws,” said Daniel M. Hawke, director of the SEC’s Philadelphia Regional Office and chief of the Enforcement Division’s Market Abuse Unit. “Firms need to ensure that that they comply with their blue sheet production obligations or, as in Scottrade’s case, they will pay a heavy price if they fail to do so.”
Scottrade admits the facts underlying the charges made in the SEC’s order, which requires Scottrade to cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Exchange Act of 1934 and Rules 17a-4(j), 17a-25, and 17a-4(f)(3)(v). In addition to the $2.5 million penalty, Scottrade has agreed to undertake such remedial measures as retaining an independent consultant to review its supervisory, compliance, and other policies and procedures designed to detect and prevent securities laws violations related to blue sheet submissions.
The SEC’s investigation was conducted by Lawrence Parrish and Daniel Koster of the Philadelphia Regional Office. The case was supervised by Kingdon Kase. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.
The Securities and Exchange Commission today charged Scottrade with failing to provide the agency with complete and accurate information about trades done by the firm and its customers, which is commonly called “blue sheet” data.
Scottrade, which is headquartered in St. Louis, agreed to settle the charges by paying a $2.5 million penalty and admitting it violated the recordkeeping provisions of the federal securities laws.
According to the SEC’s order instituting settled administrative proceedings, broker-dealers like Scottrade are required upon request to electronically provide the SEC with blue sheet data so the agency can use it to identify and analyze trades in the course of investigations and other work. Blue sheets contain the details of each equity or options trade that is routed through clearing broker-dealers. The term “blue sheet” stems from the color of the forms originally mailed to broker-dealers to complete and return to the SEC. The process shifted to an electronic format in the 1980s.
“Blue sheet information is the lifeblood of many SEC investigations and examinations,” said Andrew J. Ceresney, director of the SEC’s Division of Enforcement. “When firms fail to provide us with accurate or complete trade data, it risks compromising our ability to detect and investigate securities law violations.”
According to the SEC’s order, the SEC staff sent electronic blue sheet requests to Scottrade in December 2011 in connection with an investigation the agency was conducting into suspicious trades made in a Scottrade online brokerage account that was the apparent victim of account intrusion. After receiving the blue sheet information, SEC staff discovered that Scottrade’s submission was incomplete as it failed to include data from a number of trades that resulted from unauthorized account intrusions. After the SEC staff contacted Scottrade questioning the data, the firm informed the agency that a computer coding error had resulted in the inadvertent omission of the trades.
The SEC’s order finds that Scottrade’s computer coding error resulted in the omission of trades from blue sheet responses it made to the SEC from March 2006 to April 2012. During that time, Scottrade failed to provide the required blue sheet information on 1,231 occasions. Scottrade has corrected the deficient code responsible for its inaccurate and incomplete blue sheet responses.
“Scottrade’s failure over six years to provide accurate and complete blue sheet trading data was egregious and violated its obligations under the securities laws,” said Daniel M. Hawke, director of the SEC’s Philadelphia Regional Office and chief of the Enforcement Division’s Market Abuse Unit. “Firms need to ensure that that they comply with their blue sheet production obligations or, as in Scottrade’s case, they will pay a heavy price if they fail to do so.”
Scottrade admits the facts underlying the charges made in the SEC’s order, which requires Scottrade to cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Exchange Act of 1934 and Rules 17a-4(j), 17a-25, and 17a-4(f)(3)(v). In addition to the $2.5 million penalty, Scottrade has agreed to undertake such remedial measures as retaining an independent consultant to review its supervisory, compliance, and other policies and procedures designed to detect and prevent securities laws violations related to blue sheet submissions.
The SEC’s investigation was conducted by Lawrence Parrish and Daniel Koster of the Philadelphia Regional Office. The case was supervised by Kingdon Kase. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.
PRESS STATEMENT ON NEW TUNISIAN GOVERNMENT
FROM: STATE DEPARTMENT
Formation of New Tunisian Government
Press Statement
John Kerry
Secretary of State
Washington, DC
January 29, 2014
The ratification of a new democratic constitution and the installation of an independent government to lead the country towards new elections are historic milestones in Tunisia’s democratic transition.
Three years ago this month, Tunisians inspired the world when a brave fruit vendor sparked a revolution that set the country on a path to democracy. While Tunisia’s transition to democracy is not yet complete, these are very important steps. They are proof positive that Tunisia’s democratic transition can succeed.
Tunisia’s new constitution enshrines universal human rights for all Tunisians. It continues Tunisia’s long tradition of respect for the rights of women and minorities, and it will allow the Tunisian people to realize the aspirations they expressed during their revolution three years ago: democracy, rule of law, personal security, and economic opportunity.
The installation of a new, independent government under the leadership of Prime Minister Mehdi Jomaa is an important step to ensure that the country has competent and non-partisan leadership during the period leading to the next election. I look forward to working with Prime Minister Jomaa and his colleagues during this critical period.
The United States also welcomes the establishment of the Independent Elections Commission, and we encourage the new government to move quickly to set a date for early elections so that Tunisian citizens can choose their new leaders and determine the country’s future. Just as men and women made their voices heard on the streets of Tunis, their voices must also be heard in the halls of government.
The United States will continue to support Tunisia’s transition to an enduring democracy in which the rights of all Tunisians are respected and protected.
Formation of New Tunisian Government
Press Statement
John Kerry
Secretary of State
Washington, DC
January 29, 2014
The ratification of a new democratic constitution and the installation of an independent government to lead the country towards new elections are historic milestones in Tunisia’s democratic transition.
Three years ago this month, Tunisians inspired the world when a brave fruit vendor sparked a revolution that set the country on a path to democracy. While Tunisia’s transition to democracy is not yet complete, these are very important steps. They are proof positive that Tunisia’s democratic transition can succeed.
Tunisia’s new constitution enshrines universal human rights for all Tunisians. It continues Tunisia’s long tradition of respect for the rights of women and minorities, and it will allow the Tunisian people to realize the aspirations they expressed during their revolution three years ago: democracy, rule of law, personal security, and economic opportunity.
The installation of a new, independent government under the leadership of Prime Minister Mehdi Jomaa is an important step to ensure that the country has competent and non-partisan leadership during the period leading to the next election. I look forward to working with Prime Minister Jomaa and his colleagues during this critical period.
The United States also welcomes the establishment of the Independent Elections Commission, and we encourage the new government to move quickly to set a date for early elections so that Tunisian citizens can choose their new leaders and determine the country’s future. Just as men and women made their voices heard on the streets of Tunis, their voices must also be heard in the halls of government.
The United States will continue to support Tunisia’s transition to an enduring democracy in which the rights of all Tunisians are respected and protected.
SPYEYE MALWARE DISTRIBUTOR PLEADS GUILTY TO FRAUD CHARGES
FROM: JUSTICE DEPARTMENT
Tuesday, January 28, 2014
Cyber Criminal Pleads Guilty to Developing and Distributing Notorious Spyeye Malware
Aleksandr Andreevich Panin, a Russian national also known as “Gribodemon” and “Harderman,” has pleaded guilty to conspiracy to commit wire and bank fraud for his role as the primary developer and distributor of the malicious software known as “SpyEye,” which, according to industry estimates, has infected over 1.4 million computers in the United States and abroad.
Acting Assistant Attorney General Mythili Raman of the Department of Justice’s Criminal Division, U.S. Attorney Sally Quillian Yates of the Northern District of Georgia and Acting Special Agent in Charge Ricky Maxwell of the FBI’s Atlanta Field Office made the announcement.
“Given the recent revelations of massive thefts of financial information from large retail stores across the country, Americans do not need to be reminded how devastating it is when cyber criminals surreptitiously install malicious codes on computer networks and then siphon away private information from unsuspecting consumers,” said Acting Assistant Attorney General Raman. “Today, thanks to the tireless work of prosecutors and law enforcement agents, Aleksandr Panin has admitted to his orchestration of this criminal scheme to use ‘SpyEye’ to invade the privacy of Americans by infecting their computers through a dangerous botnet. As this prosecution shows, cyber criminals – even when they sit on the other side of the world and attempt to hide behind online aliases – are never outside the reach of U.S. law enforcement.”
“As several recent and widely reported data breaches have shown, cyber-attacks pose a critical threat to our nation’s economic security,” said U.S. Attorney Yates. “Today’s plea is a great leap forward in our campaign against those attacks. Panin was the architect of a pernicious malware known as ‘SpyEye’ that infected computers worldwide. He commercialized the wholesale theft of financial and personal information. And now he is being held to account for his actions. Cyber criminals be forewarned: you cannot hide in the shadows of the Internet. We will find you and bring you to justice.”
“This investigation highlights the importance of the FBI’s focus on the top echelon of cyber criminals,” said Acting FBI SAC Maxwell. “The apprehension of Mr. Panin means that one of the world’s top developers of malicious software is no longer in a position to create computer programs that can victimize people around the world. Botnets such as SpyEye represent one of the most dangerous types of malicious software on the Internet today, which can steal people’s identities and money from their bank accounts without their knowledge. The FBI will continue working with partners domestically and internationally to combat cyber-crime.”
According to the charges and other information presented in court, SpyEye is a sophisticated malicious computer code that is designed to automate the theft of confidential personal and financial information, such as online banking credentials, credit card information, usernames, passwords, PINs, and other personally identifying information. The SpyEye virus facilitates this theft of information by secretly infecting victims’ computers, enabling cyber criminals to remotely control the infected computers through command and control (C2) servers. Once a computer is infected and under their control, cyber criminals can remotely access the infected computers, without authorization, and steal victims’ personal and financial information through a variety of techniques, including “web injects,” “keystroke loggers,” and “credit card grabbers.” The victims’ stolen personal and financial data is then surreptitiously transmitted to the C2 servers, where it is used to steal money from the victims’ financial accounts.
Panin was the primary developer and distributor of the SpyEye virus. Operating from Russia from 2009 to 2011, Panin conspired with others, including codefendant Hamza Bendelladj, an Algerian national also known as “Bx1,” to develop, market and sell various versions of the SpyEye virus and component parts on the Internet. Panin allowed cyber criminals to customize their purchases to include tailor-made methods of obtaining victims’ personal and financial information, as well as marketed versions that specifically targeted designated financial institutions. Panin advertised the SpyEye virus on online, invitation-only criminal forums. He sold versions of the SpyEye virus for prices ranging from $1,000 to $8,500. Panin is believed to have sold the SpyEye virus to at least 150 “clients,” who, in turn, used them to set up their own C2 servers. One of Panin’s clients, “Soldier,” is reported to have made more than $3.2 million in a six-month period using the SpyEye virus.
According to industry estimates, the SpyEye virus has infected more than 1.4 million computers in the United States and abroad, and it was the preeminent malware toolkit used from approximately 2009 to 2011. Based on information received from the financial services industry, over 10,000 bank accounts have been compromised by SpyEye infections since 2013 alone. Some cyber criminals continue to use SpyEye today, although its effectiveness has been limited since software makers have added SpyEye to malicious software removal programs.
In February 2011, pursuant to a federal search warrant, the FBI searched and seized a SpyEye C2 server allegedly operated by Bendelladj in the Northern District of Georgia. That C2 server controlled over 200 computers infected with the SpyEye virus and contained information from numerous financial institutions.
In June and July 2011, FBI covert sources communicated directly with Panin, who was using his online nicknames “Gribodemon” and “Harderman,” about the SpyEye virus. FBI sources then purchased a version of SpyEye from Panin that contained features designed to steal confidential financial information, initiate fraudulent online banking transactions, install keystroke loggers, and initiate distributed denial of service (DDoS) attacks from computers infected with the malware.
On Dec. 20, 2011, a Northern District of Georgia grand jury returned a 23-count indictment against Panin, who had yet to be fully identified, and Bendelladj. The indictment charged one count of conspiracy to commit wire and bank fraud, 10 counts of wire fraud, one count of conspiracy to commit computer fraud, and 11 counts of computer fraud. A superseding indictment was subsequently returned identifying Panin by his true name.
Bendelladj was apprehended at Suvarnabhumi Airport in Bangkok, Thailand, on Jan. 5, 2013 and was extradited from Thailand to the United States on May 2, 2013. His charges are currently pending in the Northern District of Georgia.
Panin was arrested by U.S. authorities on July 1, 2013, when he flew through Hartsfield-Jackson Atlanta International Airport.
The investigation also has led to the arrest of four of Panin’s SpyEye clients and associates in the United Kingdom and Bulgaria.
On Jan. 28, 2014, Panin pleaded guilty to conspiring to commit wire and bank fraud. Sentencing for Panin is scheduled for April 29, 2014, before United States District Judge Amy Totenberg of the Northern District of Georgia.
The case is being investigated by the FBI. Assistant United States Attorney Scott Ferber of the Northern District of Georgia, Trial Attorney Ethan Arenson of the Criminal Division’s Computer Crime and Intellectual Property Section and Senior Litigation Counsel Carol Sipperly of the Criminal Division’s Fraud Section are prosecuting the case. Former Assistant United States Attorney Nicholas Oldham also participated in the prosecution while with the Criminal Division.
Valuable assistance was provided by the Criminal Division’s Office of International Affairs and the following international law enforcement agencies: The United Kingdom’s National Crime Agency, the Royal Thai Police-Immigration Bureau, the National Police of the Netherlands - National High Tech Crime Unit (NHTCU), Dominican Republic’s Departamento Nacional de Investigaciones (DNI), the Cybercrime Department at the State Agency for National Security-Bulgaria and the Australian Federal Police (AFP).
Valuable assistance also was provided by the following private sector partners: Trend Micro’s Forward-looking Threat Research (FTR) Team, Microsoft’s Digital Crimes Unit, Mandiant, Dell SecureWorks, Trusteer and the Norwegian Security Research Team known as “Underworld.no”.
Tuesday, January 28, 2014
Cyber Criminal Pleads Guilty to Developing and Distributing Notorious Spyeye Malware
Aleksandr Andreevich Panin, a Russian national also known as “Gribodemon” and “Harderman,” has pleaded guilty to conspiracy to commit wire and bank fraud for his role as the primary developer and distributor of the malicious software known as “SpyEye,” which, according to industry estimates, has infected over 1.4 million computers in the United States and abroad.
Acting Assistant Attorney General Mythili Raman of the Department of Justice’s Criminal Division, U.S. Attorney Sally Quillian Yates of the Northern District of Georgia and Acting Special Agent in Charge Ricky Maxwell of the FBI’s Atlanta Field Office made the announcement.
“Given the recent revelations of massive thefts of financial information from large retail stores across the country, Americans do not need to be reminded how devastating it is when cyber criminals surreptitiously install malicious codes on computer networks and then siphon away private information from unsuspecting consumers,” said Acting Assistant Attorney General Raman. “Today, thanks to the tireless work of prosecutors and law enforcement agents, Aleksandr Panin has admitted to his orchestration of this criminal scheme to use ‘SpyEye’ to invade the privacy of Americans by infecting their computers through a dangerous botnet. As this prosecution shows, cyber criminals – even when they sit on the other side of the world and attempt to hide behind online aliases – are never outside the reach of U.S. law enforcement.”
“As several recent and widely reported data breaches have shown, cyber-attacks pose a critical threat to our nation’s economic security,” said U.S. Attorney Yates. “Today’s plea is a great leap forward in our campaign against those attacks. Panin was the architect of a pernicious malware known as ‘SpyEye’ that infected computers worldwide. He commercialized the wholesale theft of financial and personal information. And now he is being held to account for his actions. Cyber criminals be forewarned: you cannot hide in the shadows of the Internet. We will find you and bring you to justice.”
“This investigation highlights the importance of the FBI’s focus on the top echelon of cyber criminals,” said Acting FBI SAC Maxwell. “The apprehension of Mr. Panin means that one of the world’s top developers of malicious software is no longer in a position to create computer programs that can victimize people around the world. Botnets such as SpyEye represent one of the most dangerous types of malicious software on the Internet today, which can steal people’s identities and money from their bank accounts without their knowledge. The FBI will continue working with partners domestically and internationally to combat cyber-crime.”
According to the charges and other information presented in court, SpyEye is a sophisticated malicious computer code that is designed to automate the theft of confidential personal and financial information, such as online banking credentials, credit card information, usernames, passwords, PINs, and other personally identifying information. The SpyEye virus facilitates this theft of information by secretly infecting victims’ computers, enabling cyber criminals to remotely control the infected computers through command and control (C2) servers. Once a computer is infected and under their control, cyber criminals can remotely access the infected computers, without authorization, and steal victims’ personal and financial information through a variety of techniques, including “web injects,” “keystroke loggers,” and “credit card grabbers.” The victims’ stolen personal and financial data is then surreptitiously transmitted to the C2 servers, where it is used to steal money from the victims’ financial accounts.
Panin was the primary developer and distributor of the SpyEye virus. Operating from Russia from 2009 to 2011, Panin conspired with others, including codefendant Hamza Bendelladj, an Algerian national also known as “Bx1,” to develop, market and sell various versions of the SpyEye virus and component parts on the Internet. Panin allowed cyber criminals to customize their purchases to include tailor-made methods of obtaining victims’ personal and financial information, as well as marketed versions that specifically targeted designated financial institutions. Panin advertised the SpyEye virus on online, invitation-only criminal forums. He sold versions of the SpyEye virus for prices ranging from $1,000 to $8,500. Panin is believed to have sold the SpyEye virus to at least 150 “clients,” who, in turn, used them to set up their own C2 servers. One of Panin’s clients, “Soldier,” is reported to have made more than $3.2 million in a six-month period using the SpyEye virus.
According to industry estimates, the SpyEye virus has infected more than 1.4 million computers in the United States and abroad, and it was the preeminent malware toolkit used from approximately 2009 to 2011. Based on information received from the financial services industry, over 10,000 bank accounts have been compromised by SpyEye infections since 2013 alone. Some cyber criminals continue to use SpyEye today, although its effectiveness has been limited since software makers have added SpyEye to malicious software removal programs.
In February 2011, pursuant to a federal search warrant, the FBI searched and seized a SpyEye C2 server allegedly operated by Bendelladj in the Northern District of Georgia. That C2 server controlled over 200 computers infected with the SpyEye virus and contained information from numerous financial institutions.
In June and July 2011, FBI covert sources communicated directly with Panin, who was using his online nicknames “Gribodemon” and “Harderman,” about the SpyEye virus. FBI sources then purchased a version of SpyEye from Panin that contained features designed to steal confidential financial information, initiate fraudulent online banking transactions, install keystroke loggers, and initiate distributed denial of service (DDoS) attacks from computers infected with the malware.
On Dec. 20, 2011, a Northern District of Georgia grand jury returned a 23-count indictment against Panin, who had yet to be fully identified, and Bendelladj. The indictment charged one count of conspiracy to commit wire and bank fraud, 10 counts of wire fraud, one count of conspiracy to commit computer fraud, and 11 counts of computer fraud. A superseding indictment was subsequently returned identifying Panin by his true name.
Bendelladj was apprehended at Suvarnabhumi Airport in Bangkok, Thailand, on Jan. 5, 2013 and was extradited from Thailand to the United States on May 2, 2013. His charges are currently pending in the Northern District of Georgia.
Panin was arrested by U.S. authorities on July 1, 2013, when he flew through Hartsfield-Jackson Atlanta International Airport.
The investigation also has led to the arrest of four of Panin’s SpyEye clients and associates in the United Kingdom and Bulgaria.
On Jan. 28, 2014, Panin pleaded guilty to conspiring to commit wire and bank fraud. Sentencing for Panin is scheduled for April 29, 2014, before United States District Judge Amy Totenberg of the Northern District of Georgia.
The case is being investigated by the FBI. Assistant United States Attorney Scott Ferber of the Northern District of Georgia, Trial Attorney Ethan Arenson of the Criminal Division’s Computer Crime and Intellectual Property Section and Senior Litigation Counsel Carol Sipperly of the Criminal Division’s Fraud Section are prosecuting the case. Former Assistant United States Attorney Nicholas Oldham also participated in the prosecution while with the Criminal Division.
Valuable assistance was provided by the Criminal Division’s Office of International Affairs and the following international law enforcement agencies: The United Kingdom’s National Crime Agency, the Royal Thai Police-Immigration Bureau, the National Police of the Netherlands - National High Tech Crime Unit (NHTCU), Dominican Republic’s Departamento Nacional de Investigaciones (DNI), the Cybercrime Department at the State Agency for National Security-Bulgaria and the Australian Federal Police (AFP).
Valuable assistance also was provided by the following private sector partners: Trend Micro’s Forward-looking Threat Research (FTR) Team, Microsoft’s Digital Crimes Unit, Mandiant, Dell SecureWorks, Trusteer and the Norwegian Security Research Team known as “Underworld.no”.
MAN CONVICTED OF TAX FRAUD FACES UP TO 23 YEARS IN PRISON, $1.2 MILLION IN FINES
FROM: JUSTICE DEPARTMENT
Wednesday, January 22, 2014
Florida Man Convicted of Tax Fraud
The Justice Department and the Internal Revenue Service (IRS) announced today that on Jan. 21, 2014, a federal jury in Palm Beach, Fla., convicted Paul F. Wrubleski, a resident of Weston, Fla., of one count of corruptly impeding the due administration of the internal revenue laws and four counts of filing false claims for tax refunds. Wrubleski was remanded into custody yesterday.
According to court documents and the evidence presented at trial, Wrubleski had a decade-long pattern of filing false documents with the IRS. Wrubleski impeded the IRS by filing false W-4 forms that claimed he was exempt from income tax withholding and by filing false tax returns, including four tax returns that requested over $1.5 million in federal refunds. Wrubleski also sent obstructive letters, tax returns and other false documents to the IRS between 1999 and 2010. In addition, the indictment alleged and the evidence proved that Wrubleski filed for bankruptcy in 2006 in order to impede IRS collection actions.
Sentencing is scheduled for April 3, 2014. Wrubleski faces a statutory maximum potential sentence of 23 years in prison and faces a fine of up to $1.2 million.
Assistant Attorney General Kathryn Keneally of the Tax Division commended the efforts of special agents of IRS – Criminal Investigation who investigated the case, as well as Tax Division Trial Attorneys Charles Edgar Jr. and Jed Silversmith, who prosecuted the case, with local assistance from the U.S. Attorney’s Office for the Southern District of Florida.
Wednesday, January 22, 2014
Florida Man Convicted of Tax Fraud
The Justice Department and the Internal Revenue Service (IRS) announced today that on Jan. 21, 2014, a federal jury in Palm Beach, Fla., convicted Paul F. Wrubleski, a resident of Weston, Fla., of one count of corruptly impeding the due administration of the internal revenue laws and four counts of filing false claims for tax refunds. Wrubleski was remanded into custody yesterday.
According to court documents and the evidence presented at trial, Wrubleski had a decade-long pattern of filing false documents with the IRS. Wrubleski impeded the IRS by filing false W-4 forms that claimed he was exempt from income tax withholding and by filing false tax returns, including four tax returns that requested over $1.5 million in federal refunds. Wrubleski also sent obstructive letters, tax returns and other false documents to the IRS between 1999 and 2010. In addition, the indictment alleged and the evidence proved that Wrubleski filed for bankruptcy in 2006 in order to impede IRS collection actions.
Sentencing is scheduled for April 3, 2014. Wrubleski faces a statutory maximum potential sentence of 23 years in prison and faces a fine of up to $1.2 million.
Assistant Attorney General Kathryn Keneally of the Tax Division commended the efforts of special agents of IRS – Criminal Investigation who investigated the case, as well as Tax Division Trial Attorneys Charles Edgar Jr. and Jed Silversmith, who prosecuted the case, with local assistance from the U.S. Attorney’s Office for the Southern District of Florida.
FTC ISSUES CONSUMER GUIDE ON TALKING TO KIDS ABOUT THE INTERNET
FROM: FEDERAL TRADE COMMISSION
FTC’s ‘Net Cetera’ Advises Parents on How to Talk to Their Kids About Internet Use
Newly Released Update Includes Advice on Mobile Apps, Wi-Fi, Text Message Spam and More
The Federal Trade Commission has issued an updated version of the popular free consumer guide, “Net Cetera: Chatting with Kids About Being Online.” The revised booklet contains updated information for parents and other adults to use when talking with kids about how to be safe, secure and responsible online.
The revision adds new topics that reflect changes in the online world since the guide was first issued in 2009. In the revised booklet, adults can find advice on how to talk with kids about mobile apps, using public Wi-Fi securely and how to recognize text message spam. The booklet also includes information about the recent changes to the Children’s Online Privacy Protection Act Rule.
“We’re pleased to put this incredibly popular free booklet back in the hands of parents, teachers and others who can help kids make good decisions about their online habits,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “If the last version is any indication, this booklet will inspire good discussions with children about this important issue.”
More than 9.3 million copies of the original version of the booklet were distributed, making it one of the Commission’s most-requested publications. The new version can be ordered for free on the FTC’s bulk order site.
Information from the booklet is also available online at OnGuardOnline.gov, the federal government’s website to help Americans be safe, secure and responsible online, as well as on consumer.ftc.gov, the FTC’s consumer information site.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.
FTC’s ‘Net Cetera’ Advises Parents on How to Talk to Their Kids About Internet Use
Newly Released Update Includes Advice on Mobile Apps, Wi-Fi, Text Message Spam and More
The Federal Trade Commission has issued an updated version of the popular free consumer guide, “Net Cetera: Chatting with Kids About Being Online.” The revised booklet contains updated information for parents and other adults to use when talking with kids about how to be safe, secure and responsible online.
The revision adds new topics that reflect changes in the online world since the guide was first issued in 2009. In the revised booklet, adults can find advice on how to talk with kids about mobile apps, using public Wi-Fi securely and how to recognize text message spam. The booklet also includes information about the recent changes to the Children’s Online Privacy Protection Act Rule.
“We’re pleased to put this incredibly popular free booklet back in the hands of parents, teachers and others who can help kids make good decisions about their online habits,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “If the last version is any indication, this booklet will inspire good discussions with children about this important issue.”
More than 9.3 million copies of the original version of the booklet were distributed, making it one of the Commission’s most-requested publications. The new version can be ordered for free on the FTC’s bulk order site.
Information from the booklet is also available online at OnGuardOnline.gov, the federal government’s website to help Americans be safe, secure and responsible online, as well as on consumer.ftc.gov, the FTC’s consumer information site.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.
POLICY UPDATE ON WORLD WITHOUT NUCLEAR WEAPONS
FROM: U.S. STATE DEPARTMENT
Next Steps in U.S. Arms Control Policy
Remarks
Frank A. Rose
Deputy Assistant Secretary, Bureau of Arms Control, Verification and Compliance
Stockholm, Sweden
January 17, 2014
Thank you for that kind introduction.
Today, I would like to provide an update on our work on implementing the agenda laid out nearly four years ago by President Obama in Prague, when he committed the United States to seek the peace and security of a world without nuclear weapons, a goal that he reaffirmed in his speech in Berlin this past June.
As President Obama noted in Prague and repeated in Berlin, this will not be easy. It will require persistence and patience, and may not happen in his lifetime. Still, over the last four years we have succeeded in moving closer to this goal.
In 2010, the Administration concluded a Nuclear Posture Review, or NPR, which outlines the President’s agenda for reducing nuclear dangers, as well as advancing the broader security interests of the United States and its allies. As the NPR states, the international security environment has changed dramatically since the end of the Cold War: the threat of global nuclear war has become remote, but the risk of nuclear attack has increased. The traditional concept of nuclear deterrence — the idea that a country would not initiate a nuclear war for fear of nuclear retaliation — does not apply to terrorists. While our nuclear arsenal has little relevance in deterring this threat, concerted action by all states to uphold their NPT obligations – including those related to disarmament – is important for building a sense of common purpose that helps maintain support from partners around the world to uphold and strengthen the nuclear nonproliferation regime. Securing sensitive nuclear materials worldwide will also make it harder for terrorists to acquire those materials.
Russia has been a key partner in our efforts to secure or eliminate these materials. For instance, the downblending of highly enriched uranium (HEU) to low enriched uranium (LEU) by Russia under the 1993 U.S.-Russia HEU Purchase Agreement has now been completed. The final delivery of the resultant LEU to the United States took place in December. Under this agreement, 500 metric tons of HEU from dismantled Russian weapons has been converted into LEU and delivered to the United States to fuel U.S. commercial nuclear power plants. The HEU that was converted by downblending was enough to produce approximately 20,000 nuclear warheads.
In the United States, an additional 374 metric tons of U.S. HEU has been declared excess to nuclear weapons needs; most of which will be downblended or used as fuel in naval or research reactors. In 2011, the United States and Russia brought into force the Plutonium Management and Disposition Agreement and its 2006 and 2010 protocols, which require each side to dispose of 34 metric tons of weapons-grade plutonium – enough in total for about 17,000 nuclear weapons – and thus permanently remove this material from military programs. Russia has also been an essential partner in the U.S. Global Threat Reduction Initiative efforts to convert research reactors worldwide from HEU to LEU and repatriate those reactors’ HEU to the country of origin. These efforts have now converted or verified the shutdown of over 88 research and test reactors and isotope production facilities, and removed over 5,017 kg of HEU for secure storage, downblending and disposition.
In addition to working on the prevention of nuclear proliferation and nuclear terrorism, we have taken steps to reduce the role of nuclear weapons in U.S. national security strategy. We are not developing new nuclear weapons or pursuing new nuclear missions; we have committed not to use or threaten to use nuclear weapons against nonnuclear weapon states that are party to the NPT and in compliance with their nuclear nonproliferation obligations; and we have clearly stated that it is in the U.S. interest and that of all other nations that the 68-year record of nonuse of nuclear weapons be extended forever.
In June of 2013, in conjunction with his Berlin speech, President Obama issued new guidance that aligns U.S. nuclear policies to the 21st century security environment. This was the latest concrete step the President has taken to advance his Prague agenda and the long-term goal of achieving the peace and security of a world without nuclear weapons. After a comprehensive review, the President determined that we can ensure the security of the United States and our allies and maintain a strong and credible strategic deterrent while safely pursuing up to a one-third reduction in deployed strategic nuclear weapons from the level established in the New START Treaty.
Let me now address what we believe our next steps should be.
The United States and Russia still possess the vast majority of nuclear weapons in the world, and we have a shared responsibility to continue the process of reducing our nuclear arms. With that in mind, we have a great example in the New START Treaty. The implementation of New START, now in its third year, is going well. When New START is fully implemented, the United States and the Russian Federation will each have no more than 1,550 deployed strategic nuclear warheads – the lowest levels since the 1950s. Our overall nuclear stockpile is 85% below Cold War levels.
Going forward, the United States has made it clear that we are committed to continuing a step-by-step process to further reduce nuclear arsenals.
To this end, we are engaged in a bilateral dialogue with Russia to promote strategic stability and increase transparency on a reciprocal basis. We are hopeful our dialogue will lead to greater reciprocal transparency and negotiation of even further nuclear weapons reductions.
The President also said in Berlin, that we will work with our NATO Allies to seek bold reductions in U.S. and Russian nonstrategic nuclear weapons in Europe. The NPR underscores the U.S. position that decisions on NATO’s nuclear posture should be made by consensus among Allies. As you may know, NATO has already dramatically reduced its holdings of, and reliance on, nuclear weapons since the end of the Cold War. Allies made clear in the 2012 Deterrence and Defense Posture Review that NATO is prepared to consider further reducing its requirement for nonstrategic nuclear weapons assigned to the Alliance in the context of reciprocal steps by Russia, taking into account the greater Russian stockpiles of nonstrategic nuclear weapons stationed in the Euro-Atlantic area. Allies have also affirmed their desire to work with Russia on reciprocal transparency steps. While seeking to create the conditions for further nuclear reductions, NATO will continue to ensure that the Alliance’s nuclear deterrent remains safe, secure, and effective, as NATO is committed to remaining a nuclear alliance for as long as nuclear weapons exist.
There are still further initiatives that are part of this Administration’s nuclear agenda. In Berlin, President Obama called on all nations to begin negotiations on a treaty that ends the production of fissile materials for use nuclear weapons. A Fissile Material Cutoff Treaty or FMCT would codify an end to the production of weapons-grade fissile material needed to create nuclear weapons, cap stockpiles worldwide, and provide the basis for further, deeper, reductions in nuclear arsenals.
Beginning multilateral negotiations on the FMCT is a priority objective for the United States and for the vast majority of states, and we have been working to initiate such negotiations at the Conference on Disarmament in Geneva. An overwhelming majority of nations support the immediate commencement of FMCT negotiations. The United States is consulting with China, France, Russia, and the United Kingdom, as well as others, including India and Pakistan, to find a way to commence negotiations of an FMCT. And we will, of course, participate in the upcoming Group of Government Experts, which will begin its work this Spring.
In 2009, the five nuclear-weapon states, or “P5,” began to meet regularly for discussions on issues of transparency, mutual confidence, and verification. Since the 2010 NPT Review Conference, these discussions have expanded to address P5 implementation of our commitments under the NPT and the 2010 Review Conference Action Plan. Russia hosted the most recent P5 conference in Geneva, Switzerland in April 2013, where the P5 reviewed progress towards fulfilling the commitments made at the 2010 NPT Review Conference, and continued discussions on issues related to all three pillars of the NPT: nonproliferation, disarmament, and the peaceful uses of nuclear energy, including confidence-building, transparency, and verification experiences. We are looking forward to continued discussions at a fifth P5 conference in 2014 in Beijing.
In addition to providing a senior level policy forum for discussion and coordination among the P5, this process has spawned a series of discussions among policymakers and government experts on a variety of issues. China is leading a P5 working group on nuclear definitions and terminology. The P5 are discussing approaches to a common format for NPT reporting, and we are also beginning to engage at expert levels on some important verification and transparency issues. As we proceed, we would like the P5 conferences and intersessional meetings to develop further practical transparency measures that build confidence and predictability.
I should add at this point that when discussing areas to broaden and deepen our cooperation and to advance our common interests, it’s necessary to address the question of missile defense. Over the past twenty years, both Democratic and Republican administrations have concluded it is in our national interest to cooperate with Russia on missile defense.
While the United States and Russia continue to have our differences on this issue, the United States remains convinced that missile defense cooperation and transparency between the United States and Russia (and between NATO and Russia) is in the national security interests of all countries involved. For that reason, the United States remains open to missile defense cooperation with Russia. To be clear, U.S. missile defense efforts are focused on defending our homeland as well as our European, Middle Eastern, and Asian allies against ballistic missile threats coming from regional actors. These are threats that are growing, and must be met.
In meeting those threats, it is important to note that U.S. missile defenses are not designed for, or capable of, undermining the Russian or Chinese strategic deterrents. For its part, Russia has been insistent on receiving legally binding guarantees that our missile defenses will not threaten its strategic deterrent. The United States has been clear that we cannot agree to limit our missile defenses, but we believe that cooperation and transparency can provide Russia the visibility and predictability it seeks to confirm that U.S. and NATO missile defenses in Europe do not and will not undermine Russia’s strategic deterrent. In addition to making all of us safer, cooperation on missile defense would send a strong message to proliferators that the United States, NATO, and Russia are working together to counter proliferation. With regard to China, the United States welcomes the opportunity to engage in a more robust dialogue about strategic stability, including missile defense.
As our work together with Russia over the past four years has shown, we can produce significant results that benefit both countries. Our ongoing cooperation in implementing the New START Treaty is a great example of this.
None of this will be easy, but the policies the Administration is pursuing are suited for our security needs and tailored for the global security threats of the 21st century. By maintaining and supporting a safe, secure and effective stockpile — sufficient to deter any adversary and guarantee the defense of our allies — at the same time that we pursue responsible verifiable reductions through arms control, we will make this world a safer place.
Thank you and I look forward to your questions.
Next Steps in U.S. Arms Control Policy
Remarks
Frank A. Rose
Deputy Assistant Secretary, Bureau of Arms Control, Verification and Compliance
Stockholm, Sweden
January 17, 2014
Thank you for that kind introduction.
Today, I would like to provide an update on our work on implementing the agenda laid out nearly four years ago by President Obama in Prague, when he committed the United States to seek the peace and security of a world without nuclear weapons, a goal that he reaffirmed in his speech in Berlin this past June.
As President Obama noted in Prague and repeated in Berlin, this will not be easy. It will require persistence and patience, and may not happen in his lifetime. Still, over the last four years we have succeeded in moving closer to this goal.
In 2010, the Administration concluded a Nuclear Posture Review, or NPR, which outlines the President’s agenda for reducing nuclear dangers, as well as advancing the broader security interests of the United States and its allies. As the NPR states, the international security environment has changed dramatically since the end of the Cold War: the threat of global nuclear war has become remote, but the risk of nuclear attack has increased. The traditional concept of nuclear deterrence — the idea that a country would not initiate a nuclear war for fear of nuclear retaliation — does not apply to terrorists. While our nuclear arsenal has little relevance in deterring this threat, concerted action by all states to uphold their NPT obligations – including those related to disarmament – is important for building a sense of common purpose that helps maintain support from partners around the world to uphold and strengthen the nuclear nonproliferation regime. Securing sensitive nuclear materials worldwide will also make it harder for terrorists to acquire those materials.
Russia has been a key partner in our efforts to secure or eliminate these materials. For instance, the downblending of highly enriched uranium (HEU) to low enriched uranium (LEU) by Russia under the 1993 U.S.-Russia HEU Purchase Agreement has now been completed. The final delivery of the resultant LEU to the United States took place in December. Under this agreement, 500 metric tons of HEU from dismantled Russian weapons has been converted into LEU and delivered to the United States to fuel U.S. commercial nuclear power plants. The HEU that was converted by downblending was enough to produce approximately 20,000 nuclear warheads.
In the United States, an additional 374 metric tons of U.S. HEU has been declared excess to nuclear weapons needs; most of which will be downblended or used as fuel in naval or research reactors. In 2011, the United States and Russia brought into force the Plutonium Management and Disposition Agreement and its 2006 and 2010 protocols, which require each side to dispose of 34 metric tons of weapons-grade plutonium – enough in total for about 17,000 nuclear weapons – and thus permanently remove this material from military programs. Russia has also been an essential partner in the U.S. Global Threat Reduction Initiative efforts to convert research reactors worldwide from HEU to LEU and repatriate those reactors’ HEU to the country of origin. These efforts have now converted or verified the shutdown of over 88 research and test reactors and isotope production facilities, and removed over 5,017 kg of HEU for secure storage, downblending and disposition.
In addition to working on the prevention of nuclear proliferation and nuclear terrorism, we have taken steps to reduce the role of nuclear weapons in U.S. national security strategy. We are not developing new nuclear weapons or pursuing new nuclear missions; we have committed not to use or threaten to use nuclear weapons against nonnuclear weapon states that are party to the NPT and in compliance with their nuclear nonproliferation obligations; and we have clearly stated that it is in the U.S. interest and that of all other nations that the 68-year record of nonuse of nuclear weapons be extended forever.
In June of 2013, in conjunction with his Berlin speech, President Obama issued new guidance that aligns U.S. nuclear policies to the 21st century security environment. This was the latest concrete step the President has taken to advance his Prague agenda and the long-term goal of achieving the peace and security of a world without nuclear weapons. After a comprehensive review, the President determined that we can ensure the security of the United States and our allies and maintain a strong and credible strategic deterrent while safely pursuing up to a one-third reduction in deployed strategic nuclear weapons from the level established in the New START Treaty.
Let me now address what we believe our next steps should be.
The United States and Russia still possess the vast majority of nuclear weapons in the world, and we have a shared responsibility to continue the process of reducing our nuclear arms. With that in mind, we have a great example in the New START Treaty. The implementation of New START, now in its third year, is going well. When New START is fully implemented, the United States and the Russian Federation will each have no more than 1,550 deployed strategic nuclear warheads – the lowest levels since the 1950s. Our overall nuclear stockpile is 85% below Cold War levels.
Going forward, the United States has made it clear that we are committed to continuing a step-by-step process to further reduce nuclear arsenals.
To this end, we are engaged in a bilateral dialogue with Russia to promote strategic stability and increase transparency on a reciprocal basis. We are hopeful our dialogue will lead to greater reciprocal transparency and negotiation of even further nuclear weapons reductions.
The President also said in Berlin, that we will work with our NATO Allies to seek bold reductions in U.S. and Russian nonstrategic nuclear weapons in Europe. The NPR underscores the U.S. position that decisions on NATO’s nuclear posture should be made by consensus among Allies. As you may know, NATO has already dramatically reduced its holdings of, and reliance on, nuclear weapons since the end of the Cold War. Allies made clear in the 2012 Deterrence and Defense Posture Review that NATO is prepared to consider further reducing its requirement for nonstrategic nuclear weapons assigned to the Alliance in the context of reciprocal steps by Russia, taking into account the greater Russian stockpiles of nonstrategic nuclear weapons stationed in the Euro-Atlantic area. Allies have also affirmed their desire to work with Russia on reciprocal transparency steps. While seeking to create the conditions for further nuclear reductions, NATO will continue to ensure that the Alliance’s nuclear deterrent remains safe, secure, and effective, as NATO is committed to remaining a nuclear alliance for as long as nuclear weapons exist.
There are still further initiatives that are part of this Administration’s nuclear agenda. In Berlin, President Obama called on all nations to begin negotiations on a treaty that ends the production of fissile materials for use nuclear weapons. A Fissile Material Cutoff Treaty or FMCT would codify an end to the production of weapons-grade fissile material needed to create nuclear weapons, cap stockpiles worldwide, and provide the basis for further, deeper, reductions in nuclear arsenals.
Beginning multilateral negotiations on the FMCT is a priority objective for the United States and for the vast majority of states, and we have been working to initiate such negotiations at the Conference on Disarmament in Geneva. An overwhelming majority of nations support the immediate commencement of FMCT negotiations. The United States is consulting with China, France, Russia, and the United Kingdom, as well as others, including India and Pakistan, to find a way to commence negotiations of an FMCT. And we will, of course, participate in the upcoming Group of Government Experts, which will begin its work this Spring.
In 2009, the five nuclear-weapon states, or “P5,” began to meet regularly for discussions on issues of transparency, mutual confidence, and verification. Since the 2010 NPT Review Conference, these discussions have expanded to address P5 implementation of our commitments under the NPT and the 2010 Review Conference Action Plan. Russia hosted the most recent P5 conference in Geneva, Switzerland in April 2013, where the P5 reviewed progress towards fulfilling the commitments made at the 2010 NPT Review Conference, and continued discussions on issues related to all three pillars of the NPT: nonproliferation, disarmament, and the peaceful uses of nuclear energy, including confidence-building, transparency, and verification experiences. We are looking forward to continued discussions at a fifth P5 conference in 2014 in Beijing.
In addition to providing a senior level policy forum for discussion and coordination among the P5, this process has spawned a series of discussions among policymakers and government experts on a variety of issues. China is leading a P5 working group on nuclear definitions and terminology. The P5 are discussing approaches to a common format for NPT reporting, and we are also beginning to engage at expert levels on some important verification and transparency issues. As we proceed, we would like the P5 conferences and intersessional meetings to develop further practical transparency measures that build confidence and predictability.
I should add at this point that when discussing areas to broaden and deepen our cooperation and to advance our common interests, it’s necessary to address the question of missile defense. Over the past twenty years, both Democratic and Republican administrations have concluded it is in our national interest to cooperate with Russia on missile defense.
While the United States and Russia continue to have our differences on this issue, the United States remains convinced that missile defense cooperation and transparency between the United States and Russia (and between NATO and Russia) is in the national security interests of all countries involved. For that reason, the United States remains open to missile defense cooperation with Russia. To be clear, U.S. missile defense efforts are focused on defending our homeland as well as our European, Middle Eastern, and Asian allies against ballistic missile threats coming from regional actors. These are threats that are growing, and must be met.
In meeting those threats, it is important to note that U.S. missile defenses are not designed for, or capable of, undermining the Russian or Chinese strategic deterrents. For its part, Russia has been insistent on receiving legally binding guarantees that our missile defenses will not threaten its strategic deterrent. The United States has been clear that we cannot agree to limit our missile defenses, but we believe that cooperation and transparency can provide Russia the visibility and predictability it seeks to confirm that U.S. and NATO missile defenses in Europe do not and will not undermine Russia’s strategic deterrent. In addition to making all of us safer, cooperation on missile defense would send a strong message to proliferators that the United States, NATO, and Russia are working together to counter proliferation. With regard to China, the United States welcomes the opportunity to engage in a more robust dialogue about strategic stability, including missile defense.
As our work together with Russia over the past four years has shown, we can produce significant results that benefit both countries. Our ongoing cooperation in implementing the New START Treaty is a great example of this.
None of this will be easy, but the policies the Administration is pursuing are suited for our security needs and tailored for the global security threats of the 21st century. By maintaining and supporting a safe, secure and effective stockpile — sufficient to deter any adversary and guarantee the defense of our allies — at the same time that we pursue responsible verifiable reductions through arms control, we will make this world a safer place.
Thank you and I look forward to your questions.
DEFENSE OFFICIAL SAYS MILITARY COMPENSATION GROWTH RATE MUST BE SLOWED
 |
| DOD photo by Erin A. Kirk-Cuomo. |
FROM: DEFENSE DEPARTMENT
Fox Says DOD Must Slow Growth of Military Compensation
By Jim Garamone
American Forces Press Service
WASHINGTON, Jan. 28, 2014 – The Defense Department must slow the rate of growth in military pay and compensation or the organization will not be able to fight and win the nation’s wars, Acting Deputy Defense Secretary Christine H. Fox said here today.
Fox, testifying before the Senate Armed Services Committee, said DOD must get a handle on pay and benefits or risk sending service members into harm’s way unprepared.
The deputy thanked the senators for supporting the Bipartisan Budget Act, which she said mitigates the worst of the problems DOD faces under the Budget Control Act of 2011. Still, she added, it only goes through the next two years, and this is a long-term problem.
“Beyond those two years, the BCA remains the law of the land,” she said. “If sequestration is allowed to persist, our analysis shows that it will lead to a force that is too small, inadequately equipped and insufficiently trained to fully defend the nation’s interests.”
Given this budgetary background, DOD civilian and military leaders have said time and again that the one-third of the defense budget consumed by military compensation cannot be exempt as an area of defense savings. “We must find ways to slow the rate of growth,” Fox told the committee.
Inflation-adjusted pay and benefit costs are 40 percent higher than in 2001, even though the active force today is just slightly larger. Defense health care costs alone have grown from less than $20 billion in 2001 to nearly $50 billion in 2013. Payments for housing costs also have increased faster than inflation.
“If this department is going to maintain a future force that is properly sized, modern and ready, we clearly cannot maintain the last decade’s rate of military compensation growth,” Fox said.
Military service is about more than just a paycheck. The jobs and service military personnel perform are as important. If the department doesn’t have money to maintain equipment, or supply the latest technology, or get service members the latest and best training “then they are being done a disservice,” the deputy said.
“When they’re sent into harm’s way, this disservice can quickly transition into a breach of trust,” Fox said. “Here I am referring to our collective, sacred obligation to provide our troops with the finest training and equipment possible, so that they can deploy to combat able to accomplish their mission and return to their families.”
The department does have recommendations for slowing the growth of compensation fairly and effectively, Fox said. “Most notably, just this year, Congress accepted a 1 percent basic pay raise, even though the employment cost index called for an increase of 1.8 percent. We are currently reviewing all military pays and benefits, and may offer further proposals.”
Fox spoke directly to the “COLA-minus-one” or “CPI-minus-one” provision included as part of the Bipartisan Budget Act. The provision required capping cost-of-living raises in retirement pay for working-age military retirees at 1 percent below inflation, as measured by the Consumer Price Index.
“To my knowledge, no DOD officials were consulted on the details of the BBA, including the CPI-minus-one provision,” she said. “The department fully supported the changes made to the provision to exempt military disability retirement and survivors.”
The department does support a comprehensive review of this provision, the acting deputy defense secretary said, including its effect on retirees not currently exempted. “If the Congress decides to retain the CPI-minus-one approach, we strongly recommend it be modified to include ‘grandfathering,’” she said.
Fox called on Congress to refrain from changing military retirement until the Military Compensation and Retirement Modernization Commission presents its final report in February 2015.
“There are many ways we might change military retirement, including more fundamental reforms,” she said. “Because the CPI-minus-one provision does not go into effect until December 2015, there is ample time for such a careful review, including waiting for the commission to provide its input.”
EXPORT-IMOIRT BANK CHAIRMAN'S STATEMENT TO SENATE BANKING COMMITTEE
FROM: EXPORT-IMPORT BANK
Chairman Hochberg's Statement to Senate Banking Committee on Ex-Im Bank’s Oversight and Reauthorization
Washington, D.C. – Today Export-Import Bank of the United States (Ex-Im Bank) Chairman and President Fred P. Hochberg delivered the following remarks to the Senate Committee on Banking, Housing, and Urban Affairs at the beginning of a hearing titled “Oversight and Reauthorization of the Export-Import Bank of the United States” in the Dirksen Senate Office Building.
Chairman Hochberg offered testimony today highlighting many of the Export-Import Bank’s achievements in recent years and its numbers from 2013. Highlights of the testimony include:
• Ex-Im supported an estimated 205,000 U.S. jobs in FY 2013
• Ex-Im generated more than $1 billion for the U.S. taxpayers in FY 2013
• Exports from the United States were up in 2013, but authorizations from Ex-Im Bank were off from the prior year, indicating that as the global economy continues to strengthen, exports are being financed not only by commercial banks but also by capital markets
• In FY 2013, the Bank financed a record 3,413 small businesses - nearly 90 percent of Ex-Im’s transactions.
• Ex-Im financed more small businesses in the last five years than the prior eight years combined.
• The Bank also financed more minority and woman-owned businesses in the last five years than the prior sixteen years combined.
His full written testimony is attached and pasted below.
*As prepared for delivery
Chairman Johnson, Ranking Member Crapo and distinguished members of the Banking Committee, thank you for inviting me to testify before you as the Committee considers the progress of the Export-Import Bank of the United States (“Ex-Im Bank” or “the Bank”) has made in supporting U.S. jobs through exports since our last reauthorization.
Today, American exports are at an all-time high. The United States exported a record $194.9 billion in November, 2013. Never before has the U.S. exported more goods and services in a single month. Our trade gap is the lowest it has been since 2009, when U.S. exports totaled $1.9 trillion. In 2012, U.S. exports totaled a record $2.2 trillion. The “Made in America” brand has never been stronger.
I am proud of the job our 400+ employees do each and every day. Ex-Im Bank has supported nearly 1.2 million private sector U.S. jobs since 2009, including 205,000 jobs in FY 2013 alone. The Bank operates at no cost to the taxpayers, and in FY 2013, the Bank generated more than $1 billion for the U.S. taxpayers above and beyond the cost of all operations and loan loss reserves. This $1 billion goes toward deficit reduction. We do this while maintaining a default rate of 0.267.
Ex-Im Bank has at its core ensuring that small businesses – the foundation of our economy – are at the forefront of U.S. exports. We cannot grow our economy – or our exports for that matter – without fully supporting the small businesses of America. In 2013, the Bank financed a record 3,413 small businesses - nearly 90 percent of Ex-Im’s transactions. In addition, Ex-Im financed more small businesses in the last five years than the prior eight years combined. The Bank also financed more minority and woman-owned businesses in the last five years than the prior sixteen years combined.
As the global economy continues to strengthen, exports are being financed not only by commercial banks but also by capital markets. This is an encouraging trend. In 2013, the total dollar amount of transactions financed by Ex-Im was significantly lower than in 2012, yet exports as a whole from the U.S. were up during that timeframe.
Ex-Im Bank is the official export credit agency of the United States. The mission of the Bank is to enable U.S. companies – large and small – to turn export opportunities into sales that help maintain and create U.S. jobs which contribute to a stronger national economy. The Bank achieves its mission, when needed, by providing export financing through its loan, guarantee, and insurance programs in cases where the private sector is unable or unwilling to do so.
For example, we provide trade credit insurance to Miss Jenny’s Pickles in North Carolina so they don’t need to worry about foreign buyers not paying. We provide a working capital guarantee to Auburn Leather in Kentucky so they can build the inventory necessary to meet large foreign purchase orders. And, we provide direct loans to foreign buyers of GE locomotives so the sales and jobs will benefit workers in Pennsylvania rather than a foreign competitor.
Ex-Im Bank also provides support if necessary to level the playing field when financing is provided by foreign governments to their companies who compete against U.S. exporters. We assume commercial, country, and liquidity risks that are reasonable and responsible, but currently beyond the still-recovering appetite of private lenders. Ex-Im Bank does not compete with private sector lenders, but rather provides financing for transactions that would otherwise not take place because commercial lenders are either unable or unwilling to accept the political or commercial risk inherent in the deal.
Ex-Im Bank offers a variety of products to help U.S. businesses export around the world. Our working capital financing supports small business exporters to obtain loans which facilitate the exports of goods or services made by commercial lenders and backed by our guarantee. These loans provide small businesses the liquidity and confidence to accept new international contracts, grow export sales, and compete more effectively in the international marketplace. Export credit insurance allows U.S. businesses to increase their export sales by limiting their international risk, offering credit to international buyers, and enabling American businesses to access working capital funds.
Ex-Im Bank continues its prudent oversight and due diligence standards to protect taxpayers through its comprehensive risk management framework. It begins with effective project underwriting, including detailed documentation and financial structuring to ensure the Bank’s rights are protected. It continues long after a transaction is approved and disbursed with pro-active monitoring efforts to ensure timely payment.
During all of FY 2013, the Ex-Im Bank paid, from the fees we collect, new gross claims of just $48.8 million on a total portfolio greater than $110 billion. The Bank recovered more money - $62.6 million - than it had in new claims for the fiscal year. The Bank is also appropriately reserved to cover expected loan losses. The Bank’s reserve methodology has been reviewed, by GAO, our internal auditors, KPMG, and our external auditors Deloitte & Touche. As a result of provisions included in the Bank’s charter during last year’s re-authorization, Ex-Im Bank submits a quarterly default rate report to Congress. As of December 31, 2013, the Bank's default rate was 0.267 percent. At the same time, over the past five years Ex-Im Bank has generated more than $2 billion for U.S. taxpayers, above and beyond all administrative operating costs, claims and loan loss reserves we set aside. We operate at no cost to the taxpayers.
Moreover, we are committed to providing “Government at the Speed of Business,” which means top-notch service and a relentless focus on our customers and a drive to innovate. In FY 2013, 89 percent of all transactions were completed within 30 days and 98 percent within 100 days. The time required to process long-term transactions dropped to an average of 88 days in FY 2013, down from an average of 163 days in FY 2009.
In 2013, the Bank named Mr. Charles J. Hall as our new Executive Vice President and Chief Risk Officer. Prudent risk-management is one of our foremost priorities. As chief risk officer, Mr. Hall reports directly to me and is responsible for ensuring that the Bank continues to be properly protected as it fulfills its mission of supporting jobs through exports.
Comprehensive risk management and continuous improvement is what we strive towards, and our default rate reflects that. The Bank has made many improvements over the past few years including:
Modernizing credit monitoring;
Creating a Special Assets unit to address emerging credit issues;
Expanding our pro-active monitoring efforts;
Improving our underwriting; and
Enhancing credit loss modeling with qualitative factors
We also have plans to implement additional risk management improvements identified over the past two years from our internal analysis of best practices, outside expert advice, audit recommendations, and from our Inspector General.
Ex-Im Bank has met all of the reporting requirements set forth in our reauthorization bill. We produced several reports to this committee including:
Our Business Plan;
Our Small Business Report;
Our Content Review;
Our Report on Financing of Textiles; and
Our Quarterly Default Rate Reports
We have added a textile industry representative to our Advisory Committee from Frontier Spinning in Greensboro, NC, which I visited earlier this month. We have fully implemented all Iran sanctions provisions, as required under the most recent reauthorization. In certain instances we have gone beyond the requirements of our reauthorization. For example, Congress required us to simply post our economic impact policies. The Bank went beyond the requirement by re-evaluating our economic impact procedure process and making changes to that process, which included the review of airline services.
As part of the reauthorization we are working in a transparent and cooperative way with GAO. I personally met with the Comptroller General to express my strong desire to work collaboratively and make the Bank more efficient and effective. I received very positive feedback from the Comptroller General about the cooperation between the GAO and Ex-Im.
Four reviews were required under our last reauthorization. To date, three reviews have been completed: risk management; business plan; and jobs supported calculation. In each of these reviews, the Bank agreed with the GAO’s recommendations and we have implemented or are in the process of implementing each of them. We continue to work closely with the GAO as they seek to complete the final audit, due diligence process, which is due in May 2014.
Small businesses are critical to our economy and comprise a significant number of net new jobs. Congress has mandated we make available 20 percent of our financing to meet their needs. In FY 2013 we financed a total of $6 billion in small business exports, of which $5.2 billion was for the direct support of American small-business exporters. Total small business exports include those directly exported by small business to a foreign buyer, plus small business inputs into the supply chain of larger U.S. companies’ products which are ultimately exported. At Ex-Im Bank, small business accounted for a record-high 3,413 authorizations – nearly 90 percent of the total number of Ex-Im transactions.
To put this in perspective, we have financed more small business in the past five years than in the previous eight years combined.
Another area that we are particularly proud of is our financing to woman and minority-owned businesses. In FY 2013, authorizations for woman-owned and minority-owned small businesses reached a historic high of 761 transactions, totaling $815.5 million. One in five of total authorizations supported woman-owned and minority-owned businesses. In fact, over the past five years we have financed more woman and minority owned businesses than the Bank did in the previous sixteen years combined.
To address the needs of our small business customers, Ex-Im Bank has implemented a number of new financial products. Our most popular product, Express Insurance, received an innovation in government award from Harvard’s Kennedy School and has helped more than 800 small businesses get a prompt response to their application.
The key to expanding exports is marketing and communicating to small businesses. Three years ago, Ex-Im in partnership with Tom Donohue at the U.S. Chamber of Commerce, Jay Timmons at the National Association of Manufacturers (NAM) and commercial banks, launched Global Access for Small Business. To date, we have held over 60 Global Access forums across America. From Billings to Boise and from Shreveport to Charlotte, more than five thousand businesses have learned how to access foreign markets and use Ex-Im Bank to give them a competitive edge when exporting. For example, in November 2013, Ex-Im and FedEx announced an innovative new alliance that will help U.S. small and medium-sized businesses (SMEs) reach the 95% of the world’s customers who live overseas. As part of this agreement, FedEx international customer representatives will make their clients aware of the Bank’s abilities to protect against the risk of nonpayment and to extend credit to buyers, eliminating the need for expensive letters of credit or cash-in-advance payments. Customers who are interested in this service will then be connected to Ex-Im Bank’s managers for trade finance counseling. This alliance with FedEx will help businesses increase sales, create jobs, and succeed in international markets.
At Ex-Im Bank we have worked to ensure significant progress in supporting our other congressional mandates to finance more renewable energy exports and exports to sub-Saharan Africa. Our support for renewable energy has increased nearly than tenfold from $30.4 million in FY 2008 to $257 million in FY 2013.
I am proud of our work in sub-Saharan Africa which is home to seven of the ten fastest growing economies in the world. In the past four years, Ex-Im Bank has authorized more than $4 billion in financing for U.S. exports to sub-Saharan Africa, including $604 million in authorizations in FY 2013.
The Bank approved a record 188 authorizations to sub-Saharan Africa in FY 2013. This financing supported U.S. exports to 35 of 49 sub-Saharan African countries, including Cameroon, Ethiopia, Ghana, Kenya, Mozambique, Nigeria, South Africa and Tanzania.
Ex-Im Bank is a key player in the Power Africa initiative, involving other U.S. government agencies including the U.S. Agency for International Development (USAID), U.S. Trade and Development Agency (USTDA), the Overseas Private Investment Corporation (OPIC) and the Departments of State and Energy. Ex-Im Bank pledged support of up to $5 billion over the next five years in support of the President’s goal of doubling sub-Saharan Africa’s access to electricity.
As a destination market, Sub-Saharan Africa receives about one percent of U.S. exports, but the region receives a higher percentage of Ex-Im’s financing. As of FY 2013, almost five percent of Ex-Im’s total exposure consisted of exposure to sub-Saharan Africa.
I want to thank this committee for their work on our reauthorization in 2012 and stress the importance of a timely reauthorization in 2014. There are some 60 Export Credit Agencies (ECAs) around the globe. Make no mistake, these foreign governments want the 205,000 American jobs Ex-Im financing helped support last year for themselves. As I travel the world on behalf of American companies, I know that my counterparts in China, Brazil, Russia and South Korea, are right behind me. These nations, and many others, are serious competitors in the global marketplace. For example, the South Korean government, with an economy less than one tenth of our size finances more than 3 times the exports for South Korean companies than the United States finances for U.S. companies.. There is a strong drive to increase exports from many countries around the globe. We need to send the same signal to competitor nations that we stand behind American workers and ensure they are operating on a level playing field. In order for U.S. businesses to be able to compete based on the price and quality of their exports, Ex-Im needs to be there to level the playing field when it comes to meeting foreign ECA competition. The thousands of businesses that benefit from Ex-Im Bank financing – almost 90 percent of which are small businesses - appreciate the fact that Congress was able to reach an agreement to reauthorize the Bank in 2012 and they need to know that we will be around in the years ahead to help them meet foreign competition and grow their exports and create more jobs here at home.
I thank you for this opportunity to provide you with an update on the excellent work Ex-Im Bank is doing to support U.S. jobs. I want to commend the outstanding, professional work of our 400+ employees who are committed to supporting American jobs and increasing U.S. exports. I look forward to working with you to reauthorize the Bank and continue to grow U.S. exports.
Chairman Hochberg's Statement to Senate Banking Committee on Ex-Im Bank’s Oversight and Reauthorization
Washington, D.C. – Today Export-Import Bank of the United States (Ex-Im Bank) Chairman and President Fred P. Hochberg delivered the following remarks to the Senate Committee on Banking, Housing, and Urban Affairs at the beginning of a hearing titled “Oversight and Reauthorization of the Export-Import Bank of the United States” in the Dirksen Senate Office Building.
Chairman Hochberg offered testimony today highlighting many of the Export-Import Bank’s achievements in recent years and its numbers from 2013. Highlights of the testimony include:
• Ex-Im supported an estimated 205,000 U.S. jobs in FY 2013
• Ex-Im generated more than $1 billion for the U.S. taxpayers in FY 2013
• Exports from the United States were up in 2013, but authorizations from Ex-Im Bank were off from the prior year, indicating that as the global economy continues to strengthen, exports are being financed not only by commercial banks but also by capital markets
• In FY 2013, the Bank financed a record 3,413 small businesses - nearly 90 percent of Ex-Im’s transactions.
• Ex-Im financed more small businesses in the last five years than the prior eight years combined.
• The Bank also financed more minority and woman-owned businesses in the last five years than the prior sixteen years combined.
His full written testimony is attached and pasted below.
*As prepared for delivery
Chairman Johnson, Ranking Member Crapo and distinguished members of the Banking Committee, thank you for inviting me to testify before you as the Committee considers the progress of the Export-Import Bank of the United States (“Ex-Im Bank” or “the Bank”) has made in supporting U.S. jobs through exports since our last reauthorization.
Today, American exports are at an all-time high. The United States exported a record $194.9 billion in November, 2013. Never before has the U.S. exported more goods and services in a single month. Our trade gap is the lowest it has been since 2009, when U.S. exports totaled $1.9 trillion. In 2012, U.S. exports totaled a record $2.2 trillion. The “Made in America” brand has never been stronger.
I am proud of the job our 400+ employees do each and every day. Ex-Im Bank has supported nearly 1.2 million private sector U.S. jobs since 2009, including 205,000 jobs in FY 2013 alone. The Bank operates at no cost to the taxpayers, and in FY 2013, the Bank generated more than $1 billion for the U.S. taxpayers above and beyond the cost of all operations and loan loss reserves. This $1 billion goes toward deficit reduction. We do this while maintaining a default rate of 0.267.
Ex-Im Bank has at its core ensuring that small businesses – the foundation of our economy – are at the forefront of U.S. exports. We cannot grow our economy – or our exports for that matter – without fully supporting the small businesses of America. In 2013, the Bank financed a record 3,413 small businesses - nearly 90 percent of Ex-Im’s transactions. In addition, Ex-Im financed more small businesses in the last five years than the prior eight years combined. The Bank also financed more minority and woman-owned businesses in the last five years than the prior sixteen years combined.
As the global economy continues to strengthen, exports are being financed not only by commercial banks but also by capital markets. This is an encouraging trend. In 2013, the total dollar amount of transactions financed by Ex-Im was significantly lower than in 2012, yet exports as a whole from the U.S. were up during that timeframe.
Ex-Im Bank is the official export credit agency of the United States. The mission of the Bank is to enable U.S. companies – large and small – to turn export opportunities into sales that help maintain and create U.S. jobs which contribute to a stronger national economy. The Bank achieves its mission, when needed, by providing export financing through its loan, guarantee, and insurance programs in cases where the private sector is unable or unwilling to do so.
For example, we provide trade credit insurance to Miss Jenny’s Pickles in North Carolina so they don’t need to worry about foreign buyers not paying. We provide a working capital guarantee to Auburn Leather in Kentucky so they can build the inventory necessary to meet large foreign purchase orders. And, we provide direct loans to foreign buyers of GE locomotives so the sales and jobs will benefit workers in Pennsylvania rather than a foreign competitor.
Ex-Im Bank also provides support if necessary to level the playing field when financing is provided by foreign governments to their companies who compete against U.S. exporters. We assume commercial, country, and liquidity risks that are reasonable and responsible, but currently beyond the still-recovering appetite of private lenders. Ex-Im Bank does not compete with private sector lenders, but rather provides financing for transactions that would otherwise not take place because commercial lenders are either unable or unwilling to accept the political or commercial risk inherent in the deal.
Ex-Im Bank offers a variety of products to help U.S. businesses export around the world. Our working capital financing supports small business exporters to obtain loans which facilitate the exports of goods or services made by commercial lenders and backed by our guarantee. These loans provide small businesses the liquidity and confidence to accept new international contracts, grow export sales, and compete more effectively in the international marketplace. Export credit insurance allows U.S. businesses to increase their export sales by limiting their international risk, offering credit to international buyers, and enabling American businesses to access working capital funds.
Ex-Im Bank continues its prudent oversight and due diligence standards to protect taxpayers through its comprehensive risk management framework. It begins with effective project underwriting, including detailed documentation and financial structuring to ensure the Bank’s rights are protected. It continues long after a transaction is approved and disbursed with pro-active monitoring efforts to ensure timely payment.
During all of FY 2013, the Ex-Im Bank paid, from the fees we collect, new gross claims of just $48.8 million on a total portfolio greater than $110 billion. The Bank recovered more money - $62.6 million - than it had in new claims for the fiscal year. The Bank is also appropriately reserved to cover expected loan losses. The Bank’s reserve methodology has been reviewed, by GAO, our internal auditors, KPMG, and our external auditors Deloitte & Touche. As a result of provisions included in the Bank’s charter during last year’s re-authorization, Ex-Im Bank submits a quarterly default rate report to Congress. As of December 31, 2013, the Bank's default rate was 0.267 percent. At the same time, over the past five years Ex-Im Bank has generated more than $2 billion for U.S. taxpayers, above and beyond all administrative operating costs, claims and loan loss reserves we set aside. We operate at no cost to the taxpayers.
Moreover, we are committed to providing “Government at the Speed of Business,” which means top-notch service and a relentless focus on our customers and a drive to innovate. In FY 2013, 89 percent of all transactions were completed within 30 days and 98 percent within 100 days. The time required to process long-term transactions dropped to an average of 88 days in FY 2013, down from an average of 163 days in FY 2009.
In 2013, the Bank named Mr. Charles J. Hall as our new Executive Vice President and Chief Risk Officer. Prudent risk-management is one of our foremost priorities. As chief risk officer, Mr. Hall reports directly to me and is responsible for ensuring that the Bank continues to be properly protected as it fulfills its mission of supporting jobs through exports.
Comprehensive risk management and continuous improvement is what we strive towards, and our default rate reflects that. The Bank has made many improvements over the past few years including:
Modernizing credit monitoring;
Creating a Special Assets unit to address emerging credit issues;
Expanding our pro-active monitoring efforts;
Improving our underwriting; and
Enhancing credit loss modeling with qualitative factors
We also have plans to implement additional risk management improvements identified over the past two years from our internal analysis of best practices, outside expert advice, audit recommendations, and from our Inspector General.
Ex-Im Bank has met all of the reporting requirements set forth in our reauthorization bill. We produced several reports to this committee including:
Our Business Plan;
Our Small Business Report;
Our Content Review;
Our Report on Financing of Textiles; and
Our Quarterly Default Rate Reports
We have added a textile industry representative to our Advisory Committee from Frontier Spinning in Greensboro, NC, which I visited earlier this month. We have fully implemented all Iran sanctions provisions, as required under the most recent reauthorization. In certain instances we have gone beyond the requirements of our reauthorization. For example, Congress required us to simply post our economic impact policies. The Bank went beyond the requirement by re-evaluating our economic impact procedure process and making changes to that process, which included the review of airline services.
As part of the reauthorization we are working in a transparent and cooperative way with GAO. I personally met with the Comptroller General to express my strong desire to work collaboratively and make the Bank more efficient and effective. I received very positive feedback from the Comptroller General about the cooperation between the GAO and Ex-Im.
Four reviews were required under our last reauthorization. To date, three reviews have been completed: risk management; business plan; and jobs supported calculation. In each of these reviews, the Bank agreed with the GAO’s recommendations and we have implemented or are in the process of implementing each of them. We continue to work closely with the GAO as they seek to complete the final audit, due diligence process, which is due in May 2014.
Small businesses are critical to our economy and comprise a significant number of net new jobs. Congress has mandated we make available 20 percent of our financing to meet their needs. In FY 2013 we financed a total of $6 billion in small business exports, of which $5.2 billion was for the direct support of American small-business exporters. Total small business exports include those directly exported by small business to a foreign buyer, plus small business inputs into the supply chain of larger U.S. companies’ products which are ultimately exported. At Ex-Im Bank, small business accounted for a record-high 3,413 authorizations – nearly 90 percent of the total number of Ex-Im transactions.
To put this in perspective, we have financed more small business in the past five years than in the previous eight years combined.
Another area that we are particularly proud of is our financing to woman and minority-owned businesses. In FY 2013, authorizations for woman-owned and minority-owned small businesses reached a historic high of 761 transactions, totaling $815.5 million. One in five of total authorizations supported woman-owned and minority-owned businesses. In fact, over the past five years we have financed more woman and minority owned businesses than the Bank did in the previous sixteen years combined.
To address the needs of our small business customers, Ex-Im Bank has implemented a number of new financial products. Our most popular product, Express Insurance, received an innovation in government award from Harvard’s Kennedy School and has helped more than 800 small businesses get a prompt response to their application.
The key to expanding exports is marketing and communicating to small businesses. Three years ago, Ex-Im in partnership with Tom Donohue at the U.S. Chamber of Commerce, Jay Timmons at the National Association of Manufacturers (NAM) and commercial banks, launched Global Access for Small Business. To date, we have held over 60 Global Access forums across America. From Billings to Boise and from Shreveport to Charlotte, more than five thousand businesses have learned how to access foreign markets and use Ex-Im Bank to give them a competitive edge when exporting. For example, in November 2013, Ex-Im and FedEx announced an innovative new alliance that will help U.S. small and medium-sized businesses (SMEs) reach the 95% of the world’s customers who live overseas. As part of this agreement, FedEx international customer representatives will make their clients aware of the Bank’s abilities to protect against the risk of nonpayment and to extend credit to buyers, eliminating the need for expensive letters of credit or cash-in-advance payments. Customers who are interested in this service will then be connected to Ex-Im Bank’s managers for trade finance counseling. This alliance with FedEx will help businesses increase sales, create jobs, and succeed in international markets.
At Ex-Im Bank we have worked to ensure significant progress in supporting our other congressional mandates to finance more renewable energy exports and exports to sub-Saharan Africa. Our support for renewable energy has increased nearly than tenfold from $30.4 million in FY 2008 to $257 million in FY 2013.
I am proud of our work in sub-Saharan Africa which is home to seven of the ten fastest growing economies in the world. In the past four years, Ex-Im Bank has authorized more than $4 billion in financing for U.S. exports to sub-Saharan Africa, including $604 million in authorizations in FY 2013.
The Bank approved a record 188 authorizations to sub-Saharan Africa in FY 2013. This financing supported U.S. exports to 35 of 49 sub-Saharan African countries, including Cameroon, Ethiopia, Ghana, Kenya, Mozambique, Nigeria, South Africa and Tanzania.
Ex-Im Bank is a key player in the Power Africa initiative, involving other U.S. government agencies including the U.S. Agency for International Development (USAID), U.S. Trade and Development Agency (USTDA), the Overseas Private Investment Corporation (OPIC) and the Departments of State and Energy. Ex-Im Bank pledged support of up to $5 billion over the next five years in support of the President’s goal of doubling sub-Saharan Africa’s access to electricity.
As a destination market, Sub-Saharan Africa receives about one percent of U.S. exports, but the region receives a higher percentage of Ex-Im’s financing. As of FY 2013, almost five percent of Ex-Im’s total exposure consisted of exposure to sub-Saharan Africa.
I want to thank this committee for their work on our reauthorization in 2012 and stress the importance of a timely reauthorization in 2014. There are some 60 Export Credit Agencies (ECAs) around the globe. Make no mistake, these foreign governments want the 205,000 American jobs Ex-Im financing helped support last year for themselves. As I travel the world on behalf of American companies, I know that my counterparts in China, Brazil, Russia and South Korea, are right behind me. These nations, and many others, are serious competitors in the global marketplace. For example, the South Korean government, with an economy less than one tenth of our size finances more than 3 times the exports for South Korean companies than the United States finances for U.S. companies.. There is a strong drive to increase exports from many countries around the globe. We need to send the same signal to competitor nations that we stand behind American workers and ensure they are operating on a level playing field. In order for U.S. businesses to be able to compete based on the price and quality of their exports, Ex-Im needs to be there to level the playing field when it comes to meeting foreign ECA competition. The thousands of businesses that benefit from Ex-Im Bank financing – almost 90 percent of which are small businesses - appreciate the fact that Congress was able to reach an agreement to reauthorize the Bank in 2012 and they need to know that we will be around in the years ahead to help them meet foreign competition and grow their exports and create more jobs here at home.
I thank you for this opportunity to provide you with an update on the excellent work Ex-Im Bank is doing to support U.S. jobs. I want to commend the outstanding, professional work of our 400+ employees who are committed to supporting American jobs and increasing U.S. exports. I look forward to working with you to reauthorize the Bank and continue to grow U.S. exports.
PRESIDENT OBAMA'S STATE OF THE UNION ADDRESS FOR 2014
FROM: THE WHITE HOUSE
President Barack Obama's State of the Union Address
Mr. Speaker, Mr. Vice President, Members of Congress, my fellow Americans:
Today in America, a teacher spent extra time with a student who needed it, and did her part to lift America’s graduation rate to its highest level in more than three decades.
An entrepreneur flipped on the lights in her tech startup, and did her part to add to the more than eight million new jobs our businesses have created over the past four years.
An autoworker fine-tuned some of the best, most fuel-efficient cars in the world, and did his part to help America wean itself off foreign oil.
A farmer prepared for the spring after the strongest five-year stretch of farm exports in our history. A rural doctor gave a young child the first prescription to treat asthma that his mother could afford. A man took the bus home from the graveyard shift, bone-tired but dreaming big dreams for his son. And in tight-knit communities across America, fathers and mothers will tuck in their kids, put an arm around their spouse, remember fallen comrades, and give thanks for being home from a war that, after twelve long years, is finally coming to an end.
Tonight, this chamber speaks with one voice to the people we represent: it is you, our citizens, who make the state of our union strong.
Here are the results of your efforts: The lowest unemployment rate in over five years. A rebounding housing market. A manufacturing sector that’s adding jobs for the first time since the 1990s. More oil produced at home than we buy from the rest of the world – the first time that’s happened in nearly twenty years. Our deficits – cut by more than half. And for the first time in over a decade, business leaders around the world have declared that China is no longer the world’s number one place to invest; America is.
That’s why I believe this can be a breakthrough year for America. After five years of grit and determined effort, the United States is better-positioned for the 21st century than any other nation on Earth.
The question for everyone in this chamber, running through every decision we make this year, is whether we are going to help or hinder this progress. For several years now, this town has been consumed by a rancorous argument over the proper size of the federal government. It’s an important debate – one that dates back to our very founding. But when that debate prevents us from carrying out even the most basic functions of our democracy – when our differences shut down government or threaten the full faith and credit of the United States – then we are not doing right by the American people.
As President, I’m committed to making Washington work better, and rebuilding the trust of the people who sent us here. I believe most of you are, too. Last month, thanks to the work of Democrats and Republicans, this Congress finally produced a budget that undoes some of last year’s severe cuts to priorities like education. Nobody got everything they wanted, and we can still do more to invest in this country’s future while bringing down our deficit in a balanced way. But the budget compromise should leave us freer to focus on creating new jobs, not creating new crises.
In the coming months, let’s see where else we can make progress together. Let’s make this a year of action. That’s what most Americans want – for all of us in this chamber to focus on their lives, their hopes, their aspirations. And what I believe unites the people of this nation, regardless of race or region or party, young or old, rich or poor, is the simple, profound belief in opportunity for all – the notion that if you work hard and take responsibility, you can get ahead.
Let’s face it: that belief has suffered some serious blows. Over more than three decades, even before the Great Recession hit, massive shifts in technology and global competition had eliminated a lot of good, middle-class jobs, and weakened the economic foundations that families depend on.
Today, after four years of economic growth, corporate profits and stock prices have rarely been higher, and those at the top have never done better. But average wages have barely budged. Inequality has deepened. Upward mobility has stalled. The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by – let alone get ahead. And too many still aren’t working at all.
Our job is to reverse these trends. It won’t happen right away, and we won’t agree on everything. But what I offer tonight is a set of concrete, practical proposals to speed up growth, strengthen the middle class, and build new ladders of opportunity into the middle class. Some require Congressional action, and I’m eager to work with all of you. But America does not stand still – and neither will I. So wherever and whenever I can take steps without legislation to expand opportunity for more American families, that’s what I’m going to do.
As usual, our First Lady sets a good example. Michelle’s Let’s Move partnership with schools, businesses, and local leaders has helped bring down childhood obesity rates for the first time in thirty years – an achievement that will improve lives and reduce health care costs for decades to come. The Joining Forces alliance that Michelle and Jill Biden launched has already encouraged employers to hire or train nearly 400,000 veterans and military spouses. Taking a page from that playbook, the White House just organized a College Opportunity Summit where already, 150 universities, businesses, and nonprofits have made concrete commitments to reduce inequality in access to higher education – and help every hardworking kid go to college and succeed when they get to campus. Across the country, we’re partnering with mayors, governors, and state legislatures on issues from homelessness to marriage equality.
The point is, there are millions of Americans outside Washington who are tired of stale political arguments, and are moving this country forward. They believe, and I believe, that here in America, our success should depend not on accident of birth, but the strength of our work ethic and the scope of our dreams. That’s what drew our forebears here. It’s how the daughter of a factory worker is CEO of America’s largest automaker; how the son of a barkeeper is Speaker of the House; how the son of a single mom can be President of the greatest nation on Earth.
Opportunity is who we are. And the defining project of our generation is to restore that promise.
We know where to start: the best measure of opportunity is access to a good job. With the economy picking up speed, companies say they intend to hire more people this year. And over half of big manufacturers say they’re thinking of insourcing jobs from abroad.
So let’s make that decision easier for more companies. Both Democrats and Republicans have argued that our tax code is riddled with wasteful, complicated loopholes that punish businesses investing here, and reward companies that keep profits abroad. Let’s flip that equation. Let’s work together to close those loopholes, end those incentives to ship jobs overseas, and lower tax rates for businesses that create jobs here at home.
Moreover, we can take the money we save with this transition to tax reform to create jobs rebuilding our roads, upgrading our ports, unclogging our commutes – because in today’s global economy, first-class jobs gravitate to first-class infrastructure. We’ll need Congress to protect more than three million jobs by finishing transportation and waterways bills this summer. But I will act on my own to slash bureaucracy and streamline the permitting process for key projects, so we can get more construction workers on the job as fast as possible.
We also have the chance, right now, to beat other countries in the race for the next wave of high-tech manufacturing jobs. My administration has launched two hubs for high-tech manufacturing in Raleigh and Youngstown, where we’ve connected businesses to research universities that can help America lead the world in advanced technologies. Tonight, I’m announcing we’ll launch six more this year. Bipartisan bills in both houses could double the number of these hubs and the jobs they create. So get those bills to my desk and put more Americans back to work.
Let’s do more to help the entrepreneurs and small business owners who create most new jobs in America. Over the past five years, my administration has made more loans to small business owners than any other. And when ninety-eight percent of our exporters are small businesses, new trade partnerships with Europe and the Asia-Pacific will help them create more jobs. We need to work together on tools like bipartisan trade promotion authority to protect our workers, protect our environment, and open new markets to new goods stamped “Made in the USA.” China and Europe aren’t standing on the sidelines. Neither should we.
We know that the nation that goes all-in on innovation today will own the global economy tomorrow. This is an edge America cannot surrender. Federally-funded research helped lead to the ideas and inventions behind Google and smartphones. That’s why Congress should undo the damage done by last year’s cuts to basic research so we can unleash the next great American discovery – whether it’s vaccines that stay ahead of drug-resistant bacteria, or paper-thin material that’s stronger than steel. And let’s pass a patent reform bill that allows our businesses to stay focused on innovation, not costly, needless litigation.
Now, one of the biggest factors in bringing more jobs back is our commitment to American energy. The all-of-the-above energy strategy I announced a few years ago is working, and today, America is closer to energy independence than we’ve been in decades.
One of the reasons why is natural gas – if extracted safely, it’s the bridge fuel that can power our economy with less of the carbon pollution that causes climate change. Businesses plan to invest almost $100 billion in new factories that use natural gas. I’ll cut red tape to help states get those factories built, and this Congress can help by putting people to work building fueling stations that shift more cars and trucks from foreign oil to American natural gas. My administration will keep working with the industry to sustain production and job growth while strengthening protection of our air, our water, and our communities. And while we’re at it, I’ll use my authority to protect more of our pristine federal lands for future generations.
It’s not just oil and natural gas production that’s booming; we’re becoming a global leader in solar, too. Every four minutes, another American home or business goes solar; every panel pounded into place by a worker whose job can’t be outsourced. Let’s continue that progress with a smarter tax policy that stops giving $4 billion a year to fossil fuel industries that don’t need it, so that we can invest more in fuels of the future that do.
And even as we’ve increased energy production, we’ve partnered with businesses, builders, and local communities to reduce the energy we consume. When we rescued our automakers, for example, we worked with them to set higher fuel efficiency standards for our cars. In the coming months, I’ll build on that success by setting new standards for our trucks, so we can keep driving down oil imports and what we pay at the pump.
Taken together, our energy policy is creating jobs and leading to a cleaner, safer planet. Over the past eight years, the United States has reduced our total carbon pollution more than any other nation on Earth. But we have to act with more urgency – because a changing climate is already harming western communities struggling with drought, and coastal cities dealing with floods. That’s why I directed my administration to work with states, utilities, and others to set new standards on the amount of carbon pollution our power plants are allowed to dump into the air. The shift to a cleaner energy economy won’t happen overnight, and it will require tough choices along the way. But the debate is settled. Climate change is a fact. And when our children’s children look us in the eye and ask if we did all we could to leave them a safer, more stable world, with new sources of energy, I want us to be able to say yes, we did.
Finally, if we are serious about economic growth, it is time to heed the call of business leaders, labor leaders, faith leaders, and law enforcement – and fix our broken immigration system. Republicans and Democrats in the Senate have acted. I know that members of both parties in the House want to do the same. Independent economists say immigration reform will grow our economy and shrink our deficits by almost $1 trillion in the next two decades. And for good reason: when people come here to fulfill their dreams – to study, invent, and contribute to our culture – they make our country a more attractive place for businesses to locate and create jobs for everyone. So let’s get immigration reform done this year.
The ideas I’ve outlined so far can speed up growth and create more jobs. But in this rapidly-changing economy, we have to make sure that every American has the skills to fill those jobs.
The good news is, we know how to do it. Two years ago, as the auto industry came roaring back, Andra Rush opened up a manufacturing firm in Detroit. She knew that Ford needed parts for the best-selling truck in America, and she knew how to make them. She just needed the workforce. So she dialed up what we call an American Job Center – places where folks can walk in to get the help or training they need to find a new job, or better job. She was flooded with new workers. And today, Detroit Manufacturing Systems has more than 700 employees.
What Andra and her employees experienced is how it should be for every employer – and every job seeker. So tonight, I’ve asked Vice President Biden to lead an across-the-board reform of America’s training programs to make sure they have one mission: train Americans with the skills employers need, and match them to good jobs that need to be filled right now. That means more on-the-job training, and more apprenticeships that set a young worker on an upward trajectory for life. It means connecting companies to community colleges that can help design training to fill their specific needs. And if Congress wants to help, you can concentrate funding on proven programs that connect more ready-to-work Americans with ready-to-be-filled jobs.
I’m also convinced we can help Americans return to the workforce faster by reforming unemployment insurance so that it’s more effective in today’s economy. But first, this Congress needs to restore the unemployment insurance you just let expire for 1.6 million people.
Let me tell you why.
Misty DeMars is a mother of two young boys. She’d been steadily employed since she was a teenager. She put herself through college. She’d never collected unemployment benefits. In May, she and her husband used their life savings to buy their first home. A week later, budget cuts claimed the job she loved. Last month, when their unemployment insurance was cut off, she sat down and wrote me a letter – the kind I get every day. “We are the face of the unemployment crisis,” she wrote. “I am not dependent on the government…Our country depends on people like us who build careers, contribute to society…care about our neighbors…I am confident that in time I will find a job…I will pay my taxes, and we will raise our children in their own home in the community we love. Please give us this chance.”
Congress, give these hardworking, responsible Americans that chance. They need our help, but more important, this country needs them in the game. That’s why I’ve been asking CEOs to give more long-term unemployed workers a fair shot at that new job and new chance to support their families; this week, many will come to the White House to make that commitment real. Tonight, I ask every business leader in America to join us and to do the same – because we are stronger when America fields a full team.
Of course, it’s not enough to train today’s workforce. We also have to prepare tomorrow’s workforce, by guaranteeing every child access to a world-class education.
Estiven Rodriguez couldn’t speak a word of English when he moved to New York City at age nine. But last month, thanks to the support of great teachers and an innovative tutoring program, he led a march of his classmates – through a crowd of cheering parents and neighbors – from their high school to the post office, where they mailed off their college applications. And this son of a factory worker just found out he’s going to college this fall.
Five years ago, we set out to change the odds for all our kids. We worked with lenders to reform student loans, and today, more young people are earning college degrees than ever before. Race to the Top, with the help of governors from both parties, has helped states raise expectations and performance. Teachers and principals in schools from Tennessee to Washington, D.C. are making big strides in preparing students with skills for the new economy – problem solving, critical thinking, science, technology, engineering, and math. Some of this change is hard. It requires everything from more challenging curriculums and more demanding parents to better support for teachers and new ways to measure how well our kids think, not how well they can fill in a bubble on a test. But it’s worth it – and it’s working.
The problem is we’re still not reaching enough kids, and we’re not reaching them in time. That has to change.
Research shows that one of the best investments we can make in a child’s life is high-quality early education. Last year, I asked this Congress to help states make high-quality pre-K available to every four year-old. As a parent as well as a President, I repeat that request tonight. But in the meantime, thirty states have raised pre-k funding on their own. They know we can’t wait. So just as we worked with states to reform our schools, this year, we’ll invest in new partnerships with states and communities across the country in a race to the top for our youngest children. And as Congress decides what it’s going to do, I’m going to pull together a coalition of elected officials, business leaders, and philanthropists willing to help more kids access the high-quality pre-K they need.
Last year, I also pledged to connect 99 percent of our students to high-speed broadband over the next four years. Tonight, I can announce that with the support of the FCC and companies like Apple, Microsoft, Sprint, and Verizon, we’ve got a down payment to start connecting more than 15,000 schools and twenty million students over the next two years, without adding a dime to the deficit.
We’re working to redesign high schools and partner them with colleges and employers that offer the real-world education and hands-on training that can lead directly to a job and career. We’re shaking up our system of higher education to give parents more information, and colleges more incentives to offer better value, so that no middle-class kid is priced out of a college education. We’re offering millions the opportunity to cap their monthly student loan payments to ten percent of their income, and I want to work with Congress to see how we can help even more Americans who feel trapped by student loan debt. And I’m reaching out to some of America’s leading foundations and corporations on a new initiative to help more young men of color facing tough odds stay on track and reach their full potential.
The bottom line is, Michelle and I want every child to have the same chance this country gave us. But we know our opportunity agenda won’t be complete – and too many young people entering the workforce today will see the American Dream as an empty promise – unless we do more to make sure our economy honors the dignity of work, and hard work pays off for every single American.
Today, women make up about half our workforce. But they still make 77 cents for every dollar a man earns. That is wrong, and in 2014, it’s an embarrassment. A woman deserves equal pay for equal work. She deserves to have a baby without sacrificing her job. A mother deserves a day off to care for a sick child or sick parent without running into hardship – and you know what, a father does, too. It’s time to do away with workplace policies that belong in a “Mad Men” episode. This year, let’s all come together – Congress, the White House, and businesses from Wall Street to Main Street – to give every woman the opportunity she deserves. Because I firmly believe when women succeed, America succeeds.
Now, women hold a majority of lower-wage jobs – but they’re not the only ones stifled by stagnant wages. Americans understand that some people will earn more than others, and we don’t resent those who, by virtue of their efforts, achieve incredible success. But Americans overwhelmingly agree that no one who works full time should ever have to raise a family in poverty.
In the year since I asked this Congress to raise the minimum wage, five states have passed laws to raise theirs. Many businesses have done it on their own. Nick Chute is here tonight with his boss, John Soranno. John’s an owner of Punch Pizza in Minneapolis, and Nick helps make the dough. Only now he makes more of it: John just gave his employees a raise, to ten bucks an hour – a decision that eased their financial stress and boosted their morale.
Tonight, I ask more of America’s business leaders to follow John’s lead and do what you can to raise your employees’ wages. To every mayor, governor, and state legislator in America, I say, you don’t have to wait for Congress to act; Americans will support you if you take this on. And as a chief executive, I intend to lead by example. Profitable corporations like Costco see higher wages as the smart way to boost productivity and reduce turnover. We should too. In the coming weeks, I will issue an Executive Order requiring federal contractors to pay their federally-funded employees a fair wage of at least $10.10 an hour – because if you cook our troops’ meals or wash their dishes, you shouldn’t have to live in poverty.
Of course, to reach millions more, Congress needs to get on board. Today, the federal minimum wage is worth about twenty percent less than it was when Ronald Reagan first stood here. Tom Harkin and George Miller have a bill to fix that by lifting the minimum wage to $10.10. This will help families. It will give businesses customers with more money to spend. It doesn’t involve any new bureaucratic program. So join the rest of the country. Say yes. Give America a raise.
There are other steps we can take to help families make ends meet, and few are more effective at reducing inequality and helping families pull themselves up through hard work than the Earned Income Tax Credit. Right now, it helps about half of all parents at some point. But I agree with Republicans like Senator Rubio that it doesn’t do enough for single workers who don’t have kids. So let’s work together to strengthen the credit, reward work, and help more Americans get ahead.
Let’s do more to help Americans save for retirement. Today, most workers don’t have a pension. A Social Security check often isn’t enough on its own. And while the stock market has doubled over the last five years, that doesn’t help folks who don’t have 401ks. That’s why, tomorrow, I will direct the Treasury to create a new way for working Americans to start their own retirement savings: MyRA. It’s a new savings bond that encourages folks to build a nest egg. MyRA guarantees a decent return with no risk of losing what you put in. And if this Congress wants to help, work with me to fix an upside-down tax code that gives big tax breaks to help the wealthy save, but does little to nothing for middle-class Americans. Offer every American access to an automatic IRA on the job, so they can save at work just like everyone in this chamber can. And since the most important investment many families make is their home, send me legislation that protects taxpayers from footing the bill for a housing crisis ever again, and keeps the dream of homeownership alive for future generations of Americans.
One last point on financial security. For decades, few things exposed hard-working families to economic hardship more than a broken health care system. And in case you haven’t heard, we’re in the process of fixing that.
A pre-existing condition used to mean that someone like Amanda Shelley, a physician assistant and single mom from Arizona, couldn’t get health insurance. But on January 1st, she got covered. On January 3rd, she felt a sharp pain. On January 6th, she had emergency surgery. Just one week earlier, Amanda said, that surgery would’ve meant bankruptcy.
That’s what health insurance reform is all about – the peace of mind that if misfortune strikes, you don’t have to lose everything.
Already, because of the Affordable Care Act, more than three million Americans under age 26 have gained coverage under their parents’ plans.
More than nine million Americans have signed up for private health insurance or Medicaid coverage.
And here’s another number: zero. Because of this law, no American can ever again be dropped or denied coverage for a preexisting condition like asthma, back pain, or cancer. No woman can ever be charged more just because she’s a woman. And we did all this while adding years to Medicare’s finances, keeping Medicare premiums flat, and lowering prescription costs for millions of seniors.
Now, I don’t expect to convince my Republican friends on the merits of this law. But I know that the American people aren’t interested in refighting old battles. So again, if you have specific plans to cut costs, cover more people, and increase choice – tell America what you’d do differently. Let’s see if the numbers add up. But let’s not have another forty-something votes to repeal a law that’s already helping millions of Americans like Amanda. The first forty were plenty. We got it. We all owe it to the American people to say what we’re for, not just what we’re against.
And if you want to know the real impact this law is having, just talk to Governor Steve Beshear of Kentucky, who’s here tonight. Kentucky’s not the most liberal part of the country, but he’s like a man possessed when it comes to covering his commonwealth’s families. “They are our friends and neighbors,” he said. “They are people we shop and go to church with…farmers out on the tractors…grocery clerks…they are people who go to work every morning praying they don’t get sick. No one deserves to live that way.”
Steve’s right. That’s why, tonight, I ask every American who knows someone without health insurance to help them get covered by March 31st. Moms, get on your kids to sign up. Kids, call your mom and walk her through the application. It will give her some peace of mind – plus, she’ll appreciate hearing from you.
After all, that’s the spirit that has always moved this nation forward. It’s the spirit of citizenship – the recognition that through hard work and responsibility, we can pursue our individual dreams, but still come together as one American family to make sure the next generation can pursue its dreams as well.
Citizenship means standing up for everyone’s right to vote. Last year, part of the Voting Rights Act was weakened. But conservative Republicans and liberal Democrats are working together to strengthen it; and the bipartisan commission I appointed last year has offered reforms so that no one has to wait more than a half hour to vote. Let’s support these efforts. It should be the power of our vote, not the size of our bank account, that drives our democracy.
Citizenship means standing up for the lives that gun violence steals from us each day. I have seen the courage of parents, students, pastors, and police officers all over this country who say “we are not afraid,” and I intend to keep trying, with or without Congress, to help stop more tragedies from visiting innocent Americans in our movie theaters, shopping malls, or schools like Sandy Hook.
Citizenship demands a sense of common cause; participation in the hard work of self-government; an obligation to serve to our communities. And I know this chamber agrees that few Americans give more to their country than our diplomats and the men and women of the United States Armed Forces.
Tonight, because of the extraordinary troops and civilians who risk and lay down their lives to keep us free, the United States is more secure. When I took office, nearly 180,000 Americans were serving in Iraq and Afghanistan. Today, all our troops are out of Iraq. More than 60,000 of our troops have already come home from Afghanistan. With Afghan forces now in the lead for their own security, our troops have moved to a support role. Together with our allies, we will complete our mission there by the end of this year, and America’s longest war will finally be over.
After 2014, we will support a unified Afghanistan as it takes responsibility for its own future. If the Afghan government signs a security agreement that we have negotiated, a small force of Americans could remain in Afghanistan with NATO allies to carry out two narrow missions: training and assisting Afghan forces, and counterterrorism operations to pursue any remnants of al Qaeda. For while our relationship with Afghanistan will change, one thing will not: our resolve that terrorists do not launch attacks against our country.
The fact is, that danger remains. While we have put al Qaeda’s core leadership on a path to defeat, the threat has evolved, as al Qaeda affiliates and other extremists take root in different parts of the world. In Yemen, Somalia, Iraq, and Mali, we have to keep working with partners to disrupt and disable these networks. In Syria, we’ll support the opposition that rejects the agenda of terrorist networks. Here at home, we’ll keep strengthening our defenses, and combat new threats like cyberattacks. And as we reform our defense budget, we have to keep faith with our men and women in uniform, and invest in the capabilities they need to succeed in future missions.
We have to remain vigilant. But I strongly believe our leadership and our security cannot depend on our military alone. As Commander-in-Chief, I have used force when needed to protect the American people, and I will never hesitate to do so as long as I hold this office. But I will not send our troops into harm’s way unless it’s truly necessary; nor will I allow our sons and daughters to be mired in open-ended conflicts. We must fight the battles that need to be fought, not those that terrorists prefer from us – large-scale deployments that drain our strength and may ultimately feed extremism.
So, even as we aggressively pursue terrorist networks – through more targeted efforts and by building the capacity of our foreign partners – America must move off a permanent war footing. That’s why I’ve imposed prudent limits on the use of drones – for we will not be safer if people abroad believe we strike within their countries without regard for the consequence. That’s why, working with this Congress, I will reform our surveillance programs – because the vital work of our intelligence community depends on public confidence, here and abroad, that the privacy of ordinary people is not being violated. And with the Afghan war ending, this needs to be the year Congress lifts the remaining restrictions on detainee transfers and we close the prison at Guantanamo Bay – because we counter terrorism not just through intelligence and military action, but by remaining true to our Constitutional ideals, and setting an example for the rest of the world.
You see, in a world of complex threats, our security and leadership depends on all elements of our power – including strong and principled diplomacy. American diplomacy has rallied more than fifty countries to prevent nuclear materials from falling into the wrong hands, and allowed us to reduce our own reliance on Cold War stockpiles. American diplomacy, backed by the threat of force, is why Syria’s chemical weapons are being eliminated, and we will continue to work with the international community to usher in the future the Syrian people deserve – a future free of dictatorship, terror and fear. As we speak, American diplomacy is supporting Israelis and Palestinians as they engage in difficult but necessary talks to end the conflict there; to achieve dignity and an independent state for Palestinians, and lasting peace and security for the State of Israel – a Jewish state that knows America will always be at their side.
And it is American diplomacy, backed by pressure, that has halted the progress of Iran’s nuclear program – and rolled parts of that program back – for the very first time in a decade. As we gather here tonight, Iran has begun to eliminate its stockpile of higher levels of enriched uranium. It is not installing advanced centrifuges. Unprecedented inspections help the world verify, every day, that Iran is not building a bomb. And with our allies and partners, we’re engaged in negotiations to see if we can peacefully achieve a goal we all share: preventing Iran from obtaining a nuclear weapon.
These negotiations will be difficult. They may not succeed. We are clear-eyed about Iran’s support for terrorist organizations like Hezbollah, which threaten our allies; and the mistrust between our nations cannot be wished away. But these negotiations do not rely on trust; any long-term deal we agree to must be based on verifiable action that convinces us and the international community that Iran is not building a nuclear bomb. If John F. Kennedy and Ronald Reagan could negotiate with the Soviet Union, then surely a strong and confident America can negotiate with less powerful adversaries today.
The sanctions that we put in place helped make this opportunity possible. But let me be clear: if this Congress sends me a new sanctions bill now that threatens to derail these talks, I will veto it. For the sake of our national security, we must give diplomacy a chance to succeed. If Iran’s leaders do not seize this opportunity, then I will be the first to call for more sanctions, and stand ready to exercise all options to make sure Iran does not build a nuclear weapon. But if Iran’s leaders do seize the chance, then Iran could take an important step to rejoin the community of nations, and we will have resolved one of the leading security challenges of our time without the risks of war.
Finally, let’s remember that our leadership is defined not just by our defense against threats, but by the enormous opportunities to do good and promote understanding around the globe – to forge greater cooperation, to expand new markets, to free people from fear and want. And no one is better positioned to take advantage of those opportunities than America.
Our alliance with Europe remains the strongest the world has ever known. From Tunisia to Burma, we’re supporting those who are willing to do the hard work of building democracy. In Ukraine, we stand for the principle that all people have the right to express themselves freely and peacefully, and have a say in their country’s future. Across Africa, we’re bringing together businesses and governments to double access to electricity and help end extreme poverty. In the Americas, we are building new ties of commerce, but we’re also expanding cultural and educational exchanges among young people. And we will continue to focus on the Asia-Pacific, where we support our allies, shape a future of greater security and prosperity, and extend a hand to those devastated by disaster – as we did in the Philippines, when our Marines and civilians rushed to aid those battered by a typhoon, and were greeted with words like, “We will never forget your kindness” and “God bless America!”
We do these things because they help promote our long-term security. And we do them because we believe in the inherent dignity and equality of every human being, regardless of race or religion, creed or sexual orientation. And next week, the world will see one expression of that commitment – when Team USA marches the red, white, and blue into the Olympic Stadium – and brings home the gold.
My fellow Americans, no other country in the world does what we do. On every issue, the world turns to us, not simply because of the size of our economy or our military might – but because of the ideals we stand for, and the burdens we bear to advance them.
No one knows this better than those who serve in uniform. As this time of war draws to a close, a new generation of heroes returns to civilian life. We’ll keep slashing that backlog so our veterans receive the benefits they’ve earned, and our wounded warriors receive the health care – including the mental health care – that they need. We’ll keep working to help all our veterans translate their skills and leadership into jobs here at home. And we all continue to join forces to honor and support our remarkable military families.
Let me tell you about one of those families I’ve come to know.
I first met Cory Remsburg, a proud Army Ranger, at Omaha Beach on the 65th anniversary of D-Day. Along with some of his fellow Rangers, he walked me through the program – a strong, impressive young man, with an easy manner, sharp as a tack. We joked around, and took pictures, and I told him to stay in touch.
A few months later, on his tenth deployment, Cory was nearly killed by a massive roadside bomb in Afghanistan. His comrades found him in a canal, face down, underwater, shrapnel in his brain.
For months, he lay in a coma. The next time I met him, in the hospital, he couldn’t speak; he could barely move. Over the years, he’s endured dozens of surgeries and procedures, and hours of grueling rehab every day.
Even now, Cory is still blind in one eye. He still struggles on his left side. But slowly, steadily, with the support of caregivers like his dad Craig, and the community around him, Cory has grown stronger. Day by day, he’s learned to speak again and stand again and walk again – and he’s working toward the day when he can serve his country again.
“My recovery has not been easy,” he says. “Nothing in life that’s worth anything is easy.”
Cory is here tonight. And like the Army he loves, like the America he serves, Sergeant First Class Cory Remsburg never gives up, and he does not quit.
My fellow Americans, men and women like Cory remind us that America has never come easy. Our freedom, our democracy, has never been easy. Sometimes we stumble; we make mistakes; we get frustrated or discouraged. But for more than two hundred years, we have put those things aside and placed our collective shoulder to the wheel of progress – to create and build and expand the possibilities of individual achievement; to free other nations from tyranny and fear; to promote justice, and fairness, and equality under the law, so that the words set to paper by our founders are made real for every citizen. The America we want for our kids – a rising America where honest work is plentiful and communities are strong; where prosperity is widely shared and opportunity for all lets us go as far as our dreams and toil will take us – none of it is easy. But if we work together; if we summon what is best in us, with our feet planted firmly in today but our eyes cast towards tomorrow – I know it’s within our reach.
Believe it.
God bless you, and God bless the United States of America.
President Barack Obama's State of the Union Address
Mr. Speaker, Mr. Vice President, Members of Congress, my fellow Americans:
Today in America, a teacher spent extra time with a student who needed it, and did her part to lift America’s graduation rate to its highest level in more than three decades.
An entrepreneur flipped on the lights in her tech startup, and did her part to add to the more than eight million new jobs our businesses have created over the past four years.
An autoworker fine-tuned some of the best, most fuel-efficient cars in the world, and did his part to help America wean itself off foreign oil.
A farmer prepared for the spring after the strongest five-year stretch of farm exports in our history. A rural doctor gave a young child the first prescription to treat asthma that his mother could afford. A man took the bus home from the graveyard shift, bone-tired but dreaming big dreams for his son. And in tight-knit communities across America, fathers and mothers will tuck in their kids, put an arm around their spouse, remember fallen comrades, and give thanks for being home from a war that, after twelve long years, is finally coming to an end.
Tonight, this chamber speaks with one voice to the people we represent: it is you, our citizens, who make the state of our union strong.
Here are the results of your efforts: The lowest unemployment rate in over five years. A rebounding housing market. A manufacturing sector that’s adding jobs for the first time since the 1990s. More oil produced at home than we buy from the rest of the world – the first time that’s happened in nearly twenty years. Our deficits – cut by more than half. And for the first time in over a decade, business leaders around the world have declared that China is no longer the world’s number one place to invest; America is.
That’s why I believe this can be a breakthrough year for America. After five years of grit and determined effort, the United States is better-positioned for the 21st century than any other nation on Earth.
The question for everyone in this chamber, running through every decision we make this year, is whether we are going to help or hinder this progress. For several years now, this town has been consumed by a rancorous argument over the proper size of the federal government. It’s an important debate – one that dates back to our very founding. But when that debate prevents us from carrying out even the most basic functions of our democracy – when our differences shut down government or threaten the full faith and credit of the United States – then we are not doing right by the American people.
As President, I’m committed to making Washington work better, and rebuilding the trust of the people who sent us here. I believe most of you are, too. Last month, thanks to the work of Democrats and Republicans, this Congress finally produced a budget that undoes some of last year’s severe cuts to priorities like education. Nobody got everything they wanted, and we can still do more to invest in this country’s future while bringing down our deficit in a balanced way. But the budget compromise should leave us freer to focus on creating new jobs, not creating new crises.
In the coming months, let’s see where else we can make progress together. Let’s make this a year of action. That’s what most Americans want – for all of us in this chamber to focus on their lives, their hopes, their aspirations. And what I believe unites the people of this nation, regardless of race or region or party, young or old, rich or poor, is the simple, profound belief in opportunity for all – the notion that if you work hard and take responsibility, you can get ahead.
Let’s face it: that belief has suffered some serious blows. Over more than three decades, even before the Great Recession hit, massive shifts in technology and global competition had eliminated a lot of good, middle-class jobs, and weakened the economic foundations that families depend on.
Today, after four years of economic growth, corporate profits and stock prices have rarely been higher, and those at the top have never done better. But average wages have barely budged. Inequality has deepened. Upward mobility has stalled. The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by – let alone get ahead. And too many still aren’t working at all.
Our job is to reverse these trends. It won’t happen right away, and we won’t agree on everything. But what I offer tonight is a set of concrete, practical proposals to speed up growth, strengthen the middle class, and build new ladders of opportunity into the middle class. Some require Congressional action, and I’m eager to work with all of you. But America does not stand still – and neither will I. So wherever and whenever I can take steps without legislation to expand opportunity for more American families, that’s what I’m going to do.
As usual, our First Lady sets a good example. Michelle’s Let’s Move partnership with schools, businesses, and local leaders has helped bring down childhood obesity rates for the first time in thirty years – an achievement that will improve lives and reduce health care costs for decades to come. The Joining Forces alliance that Michelle and Jill Biden launched has already encouraged employers to hire or train nearly 400,000 veterans and military spouses. Taking a page from that playbook, the White House just organized a College Opportunity Summit where already, 150 universities, businesses, and nonprofits have made concrete commitments to reduce inequality in access to higher education – and help every hardworking kid go to college and succeed when they get to campus. Across the country, we’re partnering with mayors, governors, and state legislatures on issues from homelessness to marriage equality.
The point is, there are millions of Americans outside Washington who are tired of stale political arguments, and are moving this country forward. They believe, and I believe, that here in America, our success should depend not on accident of birth, but the strength of our work ethic and the scope of our dreams. That’s what drew our forebears here. It’s how the daughter of a factory worker is CEO of America’s largest automaker; how the son of a barkeeper is Speaker of the House; how the son of a single mom can be President of the greatest nation on Earth.
Opportunity is who we are. And the defining project of our generation is to restore that promise.
We know where to start: the best measure of opportunity is access to a good job. With the economy picking up speed, companies say they intend to hire more people this year. And over half of big manufacturers say they’re thinking of insourcing jobs from abroad.
So let’s make that decision easier for more companies. Both Democrats and Republicans have argued that our tax code is riddled with wasteful, complicated loopholes that punish businesses investing here, and reward companies that keep profits abroad. Let’s flip that equation. Let’s work together to close those loopholes, end those incentives to ship jobs overseas, and lower tax rates for businesses that create jobs here at home.
Moreover, we can take the money we save with this transition to tax reform to create jobs rebuilding our roads, upgrading our ports, unclogging our commutes – because in today’s global economy, first-class jobs gravitate to first-class infrastructure. We’ll need Congress to protect more than three million jobs by finishing transportation and waterways bills this summer. But I will act on my own to slash bureaucracy and streamline the permitting process for key projects, so we can get more construction workers on the job as fast as possible.
We also have the chance, right now, to beat other countries in the race for the next wave of high-tech manufacturing jobs. My administration has launched two hubs for high-tech manufacturing in Raleigh and Youngstown, where we’ve connected businesses to research universities that can help America lead the world in advanced technologies. Tonight, I’m announcing we’ll launch six more this year. Bipartisan bills in both houses could double the number of these hubs and the jobs they create. So get those bills to my desk and put more Americans back to work.
Let’s do more to help the entrepreneurs and small business owners who create most new jobs in America. Over the past five years, my administration has made more loans to small business owners than any other. And when ninety-eight percent of our exporters are small businesses, new trade partnerships with Europe and the Asia-Pacific will help them create more jobs. We need to work together on tools like bipartisan trade promotion authority to protect our workers, protect our environment, and open new markets to new goods stamped “Made in the USA.” China and Europe aren’t standing on the sidelines. Neither should we.
We know that the nation that goes all-in on innovation today will own the global economy tomorrow. This is an edge America cannot surrender. Federally-funded research helped lead to the ideas and inventions behind Google and smartphones. That’s why Congress should undo the damage done by last year’s cuts to basic research so we can unleash the next great American discovery – whether it’s vaccines that stay ahead of drug-resistant bacteria, or paper-thin material that’s stronger than steel. And let’s pass a patent reform bill that allows our businesses to stay focused on innovation, not costly, needless litigation.
Now, one of the biggest factors in bringing more jobs back is our commitment to American energy. The all-of-the-above energy strategy I announced a few years ago is working, and today, America is closer to energy independence than we’ve been in decades.
One of the reasons why is natural gas – if extracted safely, it’s the bridge fuel that can power our economy with less of the carbon pollution that causes climate change. Businesses plan to invest almost $100 billion in new factories that use natural gas. I’ll cut red tape to help states get those factories built, and this Congress can help by putting people to work building fueling stations that shift more cars and trucks from foreign oil to American natural gas. My administration will keep working with the industry to sustain production and job growth while strengthening protection of our air, our water, and our communities. And while we’re at it, I’ll use my authority to protect more of our pristine federal lands for future generations.
It’s not just oil and natural gas production that’s booming; we’re becoming a global leader in solar, too. Every four minutes, another American home or business goes solar; every panel pounded into place by a worker whose job can’t be outsourced. Let’s continue that progress with a smarter tax policy that stops giving $4 billion a year to fossil fuel industries that don’t need it, so that we can invest more in fuels of the future that do.
And even as we’ve increased energy production, we’ve partnered with businesses, builders, and local communities to reduce the energy we consume. When we rescued our automakers, for example, we worked with them to set higher fuel efficiency standards for our cars. In the coming months, I’ll build on that success by setting new standards for our trucks, so we can keep driving down oil imports and what we pay at the pump.
Taken together, our energy policy is creating jobs and leading to a cleaner, safer planet. Over the past eight years, the United States has reduced our total carbon pollution more than any other nation on Earth. But we have to act with more urgency – because a changing climate is already harming western communities struggling with drought, and coastal cities dealing with floods. That’s why I directed my administration to work with states, utilities, and others to set new standards on the amount of carbon pollution our power plants are allowed to dump into the air. The shift to a cleaner energy economy won’t happen overnight, and it will require tough choices along the way. But the debate is settled. Climate change is a fact. And when our children’s children look us in the eye and ask if we did all we could to leave them a safer, more stable world, with new sources of energy, I want us to be able to say yes, we did.
Finally, if we are serious about economic growth, it is time to heed the call of business leaders, labor leaders, faith leaders, and law enforcement – and fix our broken immigration system. Republicans and Democrats in the Senate have acted. I know that members of both parties in the House want to do the same. Independent economists say immigration reform will grow our economy and shrink our deficits by almost $1 trillion in the next two decades. And for good reason: when people come here to fulfill their dreams – to study, invent, and contribute to our culture – they make our country a more attractive place for businesses to locate and create jobs for everyone. So let’s get immigration reform done this year.
The ideas I’ve outlined so far can speed up growth and create more jobs. But in this rapidly-changing economy, we have to make sure that every American has the skills to fill those jobs.
The good news is, we know how to do it. Two years ago, as the auto industry came roaring back, Andra Rush opened up a manufacturing firm in Detroit. She knew that Ford needed parts for the best-selling truck in America, and she knew how to make them. She just needed the workforce. So she dialed up what we call an American Job Center – places where folks can walk in to get the help or training they need to find a new job, or better job. She was flooded with new workers. And today, Detroit Manufacturing Systems has more than 700 employees.
What Andra and her employees experienced is how it should be for every employer – and every job seeker. So tonight, I’ve asked Vice President Biden to lead an across-the-board reform of America’s training programs to make sure they have one mission: train Americans with the skills employers need, and match them to good jobs that need to be filled right now. That means more on-the-job training, and more apprenticeships that set a young worker on an upward trajectory for life. It means connecting companies to community colleges that can help design training to fill their specific needs. And if Congress wants to help, you can concentrate funding on proven programs that connect more ready-to-work Americans with ready-to-be-filled jobs.
I’m also convinced we can help Americans return to the workforce faster by reforming unemployment insurance so that it’s more effective in today’s economy. But first, this Congress needs to restore the unemployment insurance you just let expire for 1.6 million people.
Let me tell you why.
Misty DeMars is a mother of two young boys. She’d been steadily employed since she was a teenager. She put herself through college. She’d never collected unemployment benefits. In May, she and her husband used their life savings to buy their first home. A week later, budget cuts claimed the job she loved. Last month, when their unemployment insurance was cut off, she sat down and wrote me a letter – the kind I get every day. “We are the face of the unemployment crisis,” she wrote. “I am not dependent on the government…Our country depends on people like us who build careers, contribute to society…care about our neighbors…I am confident that in time I will find a job…I will pay my taxes, and we will raise our children in their own home in the community we love. Please give us this chance.”
Congress, give these hardworking, responsible Americans that chance. They need our help, but more important, this country needs them in the game. That’s why I’ve been asking CEOs to give more long-term unemployed workers a fair shot at that new job and new chance to support their families; this week, many will come to the White House to make that commitment real. Tonight, I ask every business leader in America to join us and to do the same – because we are stronger when America fields a full team.
Of course, it’s not enough to train today’s workforce. We also have to prepare tomorrow’s workforce, by guaranteeing every child access to a world-class education.
Estiven Rodriguez couldn’t speak a word of English when he moved to New York City at age nine. But last month, thanks to the support of great teachers and an innovative tutoring program, he led a march of his classmates – through a crowd of cheering parents and neighbors – from their high school to the post office, where they mailed off their college applications. And this son of a factory worker just found out he’s going to college this fall.
Five years ago, we set out to change the odds for all our kids. We worked with lenders to reform student loans, and today, more young people are earning college degrees than ever before. Race to the Top, with the help of governors from both parties, has helped states raise expectations and performance. Teachers and principals in schools from Tennessee to Washington, D.C. are making big strides in preparing students with skills for the new economy – problem solving, critical thinking, science, technology, engineering, and math. Some of this change is hard. It requires everything from more challenging curriculums and more demanding parents to better support for teachers and new ways to measure how well our kids think, not how well they can fill in a bubble on a test. But it’s worth it – and it’s working.
The problem is we’re still not reaching enough kids, and we’re not reaching them in time. That has to change.
Research shows that one of the best investments we can make in a child’s life is high-quality early education. Last year, I asked this Congress to help states make high-quality pre-K available to every four year-old. As a parent as well as a President, I repeat that request tonight. But in the meantime, thirty states have raised pre-k funding on their own. They know we can’t wait. So just as we worked with states to reform our schools, this year, we’ll invest in new partnerships with states and communities across the country in a race to the top for our youngest children. And as Congress decides what it’s going to do, I’m going to pull together a coalition of elected officials, business leaders, and philanthropists willing to help more kids access the high-quality pre-K they need.
Last year, I also pledged to connect 99 percent of our students to high-speed broadband over the next four years. Tonight, I can announce that with the support of the FCC and companies like Apple, Microsoft, Sprint, and Verizon, we’ve got a down payment to start connecting more than 15,000 schools and twenty million students over the next two years, without adding a dime to the deficit.
We’re working to redesign high schools and partner them with colleges and employers that offer the real-world education and hands-on training that can lead directly to a job and career. We’re shaking up our system of higher education to give parents more information, and colleges more incentives to offer better value, so that no middle-class kid is priced out of a college education. We’re offering millions the opportunity to cap their monthly student loan payments to ten percent of their income, and I want to work with Congress to see how we can help even more Americans who feel trapped by student loan debt. And I’m reaching out to some of America’s leading foundations and corporations on a new initiative to help more young men of color facing tough odds stay on track and reach their full potential.
The bottom line is, Michelle and I want every child to have the same chance this country gave us. But we know our opportunity agenda won’t be complete – and too many young people entering the workforce today will see the American Dream as an empty promise – unless we do more to make sure our economy honors the dignity of work, and hard work pays off for every single American.
Today, women make up about half our workforce. But they still make 77 cents for every dollar a man earns. That is wrong, and in 2014, it’s an embarrassment. A woman deserves equal pay for equal work. She deserves to have a baby without sacrificing her job. A mother deserves a day off to care for a sick child or sick parent without running into hardship – and you know what, a father does, too. It’s time to do away with workplace policies that belong in a “Mad Men” episode. This year, let’s all come together – Congress, the White House, and businesses from Wall Street to Main Street – to give every woman the opportunity she deserves. Because I firmly believe when women succeed, America succeeds.
Now, women hold a majority of lower-wage jobs – but they’re not the only ones stifled by stagnant wages. Americans understand that some people will earn more than others, and we don’t resent those who, by virtue of their efforts, achieve incredible success. But Americans overwhelmingly agree that no one who works full time should ever have to raise a family in poverty.
In the year since I asked this Congress to raise the minimum wage, five states have passed laws to raise theirs. Many businesses have done it on their own. Nick Chute is here tonight with his boss, John Soranno. John’s an owner of Punch Pizza in Minneapolis, and Nick helps make the dough. Only now he makes more of it: John just gave his employees a raise, to ten bucks an hour – a decision that eased their financial stress and boosted their morale.
Tonight, I ask more of America’s business leaders to follow John’s lead and do what you can to raise your employees’ wages. To every mayor, governor, and state legislator in America, I say, you don’t have to wait for Congress to act; Americans will support you if you take this on. And as a chief executive, I intend to lead by example. Profitable corporations like Costco see higher wages as the smart way to boost productivity and reduce turnover. We should too. In the coming weeks, I will issue an Executive Order requiring federal contractors to pay their federally-funded employees a fair wage of at least $10.10 an hour – because if you cook our troops’ meals or wash their dishes, you shouldn’t have to live in poverty.
Of course, to reach millions more, Congress needs to get on board. Today, the federal minimum wage is worth about twenty percent less than it was when Ronald Reagan first stood here. Tom Harkin and George Miller have a bill to fix that by lifting the minimum wage to $10.10. This will help families. It will give businesses customers with more money to spend. It doesn’t involve any new bureaucratic program. So join the rest of the country. Say yes. Give America a raise.
There are other steps we can take to help families make ends meet, and few are more effective at reducing inequality and helping families pull themselves up through hard work than the Earned Income Tax Credit. Right now, it helps about half of all parents at some point. But I agree with Republicans like Senator Rubio that it doesn’t do enough for single workers who don’t have kids. So let’s work together to strengthen the credit, reward work, and help more Americans get ahead.
Let’s do more to help Americans save for retirement. Today, most workers don’t have a pension. A Social Security check often isn’t enough on its own. And while the stock market has doubled over the last five years, that doesn’t help folks who don’t have 401ks. That’s why, tomorrow, I will direct the Treasury to create a new way for working Americans to start their own retirement savings: MyRA. It’s a new savings bond that encourages folks to build a nest egg. MyRA guarantees a decent return with no risk of losing what you put in. And if this Congress wants to help, work with me to fix an upside-down tax code that gives big tax breaks to help the wealthy save, but does little to nothing for middle-class Americans. Offer every American access to an automatic IRA on the job, so they can save at work just like everyone in this chamber can. And since the most important investment many families make is their home, send me legislation that protects taxpayers from footing the bill for a housing crisis ever again, and keeps the dream of homeownership alive for future generations of Americans.
One last point on financial security. For decades, few things exposed hard-working families to economic hardship more than a broken health care system. And in case you haven’t heard, we’re in the process of fixing that.
A pre-existing condition used to mean that someone like Amanda Shelley, a physician assistant and single mom from Arizona, couldn’t get health insurance. But on January 1st, she got covered. On January 3rd, she felt a sharp pain. On January 6th, she had emergency surgery. Just one week earlier, Amanda said, that surgery would’ve meant bankruptcy.
That’s what health insurance reform is all about – the peace of mind that if misfortune strikes, you don’t have to lose everything.
Already, because of the Affordable Care Act, more than three million Americans under age 26 have gained coverage under their parents’ plans.
More than nine million Americans have signed up for private health insurance or Medicaid coverage.
And here’s another number: zero. Because of this law, no American can ever again be dropped or denied coverage for a preexisting condition like asthma, back pain, or cancer. No woman can ever be charged more just because she’s a woman. And we did all this while adding years to Medicare’s finances, keeping Medicare premiums flat, and lowering prescription costs for millions of seniors.
Now, I don’t expect to convince my Republican friends on the merits of this law. But I know that the American people aren’t interested in refighting old battles. So again, if you have specific plans to cut costs, cover more people, and increase choice – tell America what you’d do differently. Let’s see if the numbers add up. But let’s not have another forty-something votes to repeal a law that’s already helping millions of Americans like Amanda. The first forty were plenty. We got it. We all owe it to the American people to say what we’re for, not just what we’re against.
And if you want to know the real impact this law is having, just talk to Governor Steve Beshear of Kentucky, who’s here tonight. Kentucky’s not the most liberal part of the country, but he’s like a man possessed when it comes to covering his commonwealth’s families. “They are our friends and neighbors,” he said. “They are people we shop and go to church with…farmers out on the tractors…grocery clerks…they are people who go to work every morning praying they don’t get sick. No one deserves to live that way.”
Steve’s right. That’s why, tonight, I ask every American who knows someone without health insurance to help them get covered by March 31st. Moms, get on your kids to sign up. Kids, call your mom and walk her through the application. It will give her some peace of mind – plus, she’ll appreciate hearing from you.
After all, that’s the spirit that has always moved this nation forward. It’s the spirit of citizenship – the recognition that through hard work and responsibility, we can pursue our individual dreams, but still come together as one American family to make sure the next generation can pursue its dreams as well.
Citizenship means standing up for everyone’s right to vote. Last year, part of the Voting Rights Act was weakened. But conservative Republicans and liberal Democrats are working together to strengthen it; and the bipartisan commission I appointed last year has offered reforms so that no one has to wait more than a half hour to vote. Let’s support these efforts. It should be the power of our vote, not the size of our bank account, that drives our democracy.
Citizenship means standing up for the lives that gun violence steals from us each day. I have seen the courage of parents, students, pastors, and police officers all over this country who say “we are not afraid,” and I intend to keep trying, with or without Congress, to help stop more tragedies from visiting innocent Americans in our movie theaters, shopping malls, or schools like Sandy Hook.
Citizenship demands a sense of common cause; participation in the hard work of self-government; an obligation to serve to our communities. And I know this chamber agrees that few Americans give more to their country than our diplomats and the men and women of the United States Armed Forces.
Tonight, because of the extraordinary troops and civilians who risk and lay down their lives to keep us free, the United States is more secure. When I took office, nearly 180,000 Americans were serving in Iraq and Afghanistan. Today, all our troops are out of Iraq. More than 60,000 of our troops have already come home from Afghanistan. With Afghan forces now in the lead for their own security, our troops have moved to a support role. Together with our allies, we will complete our mission there by the end of this year, and America’s longest war will finally be over.
After 2014, we will support a unified Afghanistan as it takes responsibility for its own future. If the Afghan government signs a security agreement that we have negotiated, a small force of Americans could remain in Afghanistan with NATO allies to carry out two narrow missions: training and assisting Afghan forces, and counterterrorism operations to pursue any remnants of al Qaeda. For while our relationship with Afghanistan will change, one thing will not: our resolve that terrorists do not launch attacks against our country.
The fact is, that danger remains. While we have put al Qaeda’s core leadership on a path to defeat, the threat has evolved, as al Qaeda affiliates and other extremists take root in different parts of the world. In Yemen, Somalia, Iraq, and Mali, we have to keep working with partners to disrupt and disable these networks. In Syria, we’ll support the opposition that rejects the agenda of terrorist networks. Here at home, we’ll keep strengthening our defenses, and combat new threats like cyberattacks. And as we reform our defense budget, we have to keep faith with our men and women in uniform, and invest in the capabilities they need to succeed in future missions.
We have to remain vigilant. But I strongly believe our leadership and our security cannot depend on our military alone. As Commander-in-Chief, I have used force when needed to protect the American people, and I will never hesitate to do so as long as I hold this office. But I will not send our troops into harm’s way unless it’s truly necessary; nor will I allow our sons and daughters to be mired in open-ended conflicts. We must fight the battles that need to be fought, not those that terrorists prefer from us – large-scale deployments that drain our strength and may ultimately feed extremism.
So, even as we aggressively pursue terrorist networks – through more targeted efforts and by building the capacity of our foreign partners – America must move off a permanent war footing. That’s why I’ve imposed prudent limits on the use of drones – for we will not be safer if people abroad believe we strike within their countries without regard for the consequence. That’s why, working with this Congress, I will reform our surveillance programs – because the vital work of our intelligence community depends on public confidence, here and abroad, that the privacy of ordinary people is not being violated. And with the Afghan war ending, this needs to be the year Congress lifts the remaining restrictions on detainee transfers and we close the prison at Guantanamo Bay – because we counter terrorism not just through intelligence and military action, but by remaining true to our Constitutional ideals, and setting an example for the rest of the world.
You see, in a world of complex threats, our security and leadership depends on all elements of our power – including strong and principled diplomacy. American diplomacy has rallied more than fifty countries to prevent nuclear materials from falling into the wrong hands, and allowed us to reduce our own reliance on Cold War stockpiles. American diplomacy, backed by the threat of force, is why Syria’s chemical weapons are being eliminated, and we will continue to work with the international community to usher in the future the Syrian people deserve – a future free of dictatorship, terror and fear. As we speak, American diplomacy is supporting Israelis and Palestinians as they engage in difficult but necessary talks to end the conflict there; to achieve dignity and an independent state for Palestinians, and lasting peace and security for the State of Israel – a Jewish state that knows America will always be at their side.
And it is American diplomacy, backed by pressure, that has halted the progress of Iran’s nuclear program – and rolled parts of that program back – for the very first time in a decade. As we gather here tonight, Iran has begun to eliminate its stockpile of higher levels of enriched uranium. It is not installing advanced centrifuges. Unprecedented inspections help the world verify, every day, that Iran is not building a bomb. And with our allies and partners, we’re engaged in negotiations to see if we can peacefully achieve a goal we all share: preventing Iran from obtaining a nuclear weapon.
These negotiations will be difficult. They may not succeed. We are clear-eyed about Iran’s support for terrorist organizations like Hezbollah, which threaten our allies; and the mistrust between our nations cannot be wished away. But these negotiations do not rely on trust; any long-term deal we agree to must be based on verifiable action that convinces us and the international community that Iran is not building a nuclear bomb. If John F. Kennedy and Ronald Reagan could negotiate with the Soviet Union, then surely a strong and confident America can negotiate with less powerful adversaries today.
The sanctions that we put in place helped make this opportunity possible. But let me be clear: if this Congress sends me a new sanctions bill now that threatens to derail these talks, I will veto it. For the sake of our national security, we must give diplomacy a chance to succeed. If Iran’s leaders do not seize this opportunity, then I will be the first to call for more sanctions, and stand ready to exercise all options to make sure Iran does not build a nuclear weapon. But if Iran’s leaders do seize the chance, then Iran could take an important step to rejoin the community of nations, and we will have resolved one of the leading security challenges of our time without the risks of war.
Finally, let’s remember that our leadership is defined not just by our defense against threats, but by the enormous opportunities to do good and promote understanding around the globe – to forge greater cooperation, to expand new markets, to free people from fear and want. And no one is better positioned to take advantage of those opportunities than America.
Our alliance with Europe remains the strongest the world has ever known. From Tunisia to Burma, we’re supporting those who are willing to do the hard work of building democracy. In Ukraine, we stand for the principle that all people have the right to express themselves freely and peacefully, and have a say in their country’s future. Across Africa, we’re bringing together businesses and governments to double access to electricity and help end extreme poverty. In the Americas, we are building new ties of commerce, but we’re also expanding cultural and educational exchanges among young people. And we will continue to focus on the Asia-Pacific, where we support our allies, shape a future of greater security and prosperity, and extend a hand to those devastated by disaster – as we did in the Philippines, when our Marines and civilians rushed to aid those battered by a typhoon, and were greeted with words like, “We will never forget your kindness” and “God bless America!”
We do these things because they help promote our long-term security. And we do them because we believe in the inherent dignity and equality of every human being, regardless of race or religion, creed or sexual orientation. And next week, the world will see one expression of that commitment – when Team USA marches the red, white, and blue into the Olympic Stadium – and brings home the gold.
My fellow Americans, no other country in the world does what we do. On every issue, the world turns to us, not simply because of the size of our economy or our military might – but because of the ideals we stand for, and the burdens we bear to advance them.
No one knows this better than those who serve in uniform. As this time of war draws to a close, a new generation of heroes returns to civilian life. We’ll keep slashing that backlog so our veterans receive the benefits they’ve earned, and our wounded warriors receive the health care – including the mental health care – that they need. We’ll keep working to help all our veterans translate their skills and leadership into jobs here at home. And we all continue to join forces to honor and support our remarkable military families.
Let me tell you about one of those families I’ve come to know.
I first met Cory Remsburg, a proud Army Ranger, at Omaha Beach on the 65th anniversary of D-Day. Along with some of his fellow Rangers, he walked me through the program – a strong, impressive young man, with an easy manner, sharp as a tack. We joked around, and took pictures, and I told him to stay in touch.
A few months later, on his tenth deployment, Cory was nearly killed by a massive roadside bomb in Afghanistan. His comrades found him in a canal, face down, underwater, shrapnel in his brain.
For months, he lay in a coma. The next time I met him, in the hospital, he couldn’t speak; he could barely move. Over the years, he’s endured dozens of surgeries and procedures, and hours of grueling rehab every day.
Even now, Cory is still blind in one eye. He still struggles on his left side. But slowly, steadily, with the support of caregivers like his dad Craig, and the community around him, Cory has grown stronger. Day by day, he’s learned to speak again and stand again and walk again – and he’s working toward the day when he can serve his country again.
“My recovery has not been easy,” he says. “Nothing in life that’s worth anything is easy.”
Cory is here tonight. And like the Army he loves, like the America he serves, Sergeant First Class Cory Remsburg never gives up, and he does not quit.
My fellow Americans, men and women like Cory remind us that America has never come easy. Our freedom, our democracy, has never been easy. Sometimes we stumble; we make mistakes; we get frustrated or discouraged. But for more than two hundred years, we have put those things aside and placed our collective shoulder to the wheel of progress – to create and build and expand the possibilities of individual achievement; to free other nations from tyranny and fear; to promote justice, and fairness, and equality under the law, so that the words set to paper by our founders are made real for every citizen. The America we want for our kids – a rising America where honest work is plentiful and communities are strong; where prosperity is widely shared and opportunity for all lets us go as far as our dreams and toil will take us – none of it is easy. But if we work together; if we summon what is best in us, with our feet planted firmly in today but our eyes cast towards tomorrow – I know it’s within our reach.
Believe it.
God bless you, and God bless the United States of America.
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