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tv   Key Capitol Hill Hearings  CSPAN  November 27, 2013 10:00am-12:01pm EST

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machine. hundreds of millions of dollars a year for the company. when the downturn came, several problems at once. one was the financing side. when from a moneymaker to a giant money loser and started to pull down the rest of the company. the car business itself was not that healthy. yes, gm would make profits when a truck or suv sold but when the vehicles were not new or one sales slow down and they had to offer rebates, and the rest of the company struggled. and they were still dealing with some of the bad decisions of the past, including the pension load. several years before the bailout, gm decided to raise the largest bond issue in u.s. history and put all of the money into pensions. what happened was when 2008 rolled around gm did not have the resources to go back to the market and get the tens of aliens of dollars it made to keep going on like ford who mortgage the entire company
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and raise the money it needed to get itself through the downturn. you can say it was locked but there will -- but sometimes you make your own lock in corporate america and it was a combination of factors that cause gm to tumble. for a much for stopping by. have a nice thanksgiving. happyh you a very thanksgiving as well and we are back tomorrow at 7 p.m. -- 7 a.m. eastern time. there is live coverage at the national press club. they are looking at holiday spending and this event is just getting underway live here on c- span. >> in fact, in every year we have conducted this survey, actual holiday spending has increased. these two years were 2008 and 2009 during the recession. interpreting the results is how the proportion says it will increase or decrease spending
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that changed over time. except for 2008, at the depth of the recession, the most frequent response in any year is that spending will stay about the same as the previous year. typically about half of respondents said they plan no change in spending. this result held true this year with 48% of respondents picking that response. of the remainder, 13% said they would increase their spending which is a slight rise from last year's 12%. said- 32% of respondents they would reduce spending which is substantially down from last year's 38%. the 2013 results are slightly stronger than last year and are the stronger as we have seen since back in 2006. our holiday spending survey has shown five years of improvement in a row following the abysmal ratings of 2008.
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year,ms of forecast last we said that based in our survey results, we predicted spending growth of somewhere between 3.5- 4%. the actual result lester was an increase of 3.6%. therefore i will take the opportunity to say that we predicted an increase of 3.5- four percent and the actual result was 3.6%. our latest survey suggests this year's increase in holiday spending will be slightly better or similar to last year's. therefore, based on the survey, we will use the same prediction we did last year that holiday spending this year will increase by 3.5-four percent over last year's results. we were able to draw some conclusions over holiday spending plans of various demographic groups. it should be noted that these results suggest of various groups intend to change their spending over their own spending the previous year. usy do not necessarily tell
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which groups will contribute the most spending. the overall proportion across all respondents of those planning to increase spending was 13%. to at 15% were more likely increase spending than women at 12%. that is a slightly lower ggg, or gender generosity gap then we found last year. by age, respond is between 18-34 to roughly the gen y or millennial's, were more likely to increase spending than. any other age group respondentseny planned to increase spending and that is double the over all finding of 13%. faced tohis group has the cultist entering the labor market but they are also in the age range were kids tend to show up in the household. this does not mean this group will do the most spending it's
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just that they're spending will increase more than any other group. considering race, african- americans at 20%, hispanics, 17% were more likely to report increased spending than non- hispanic whites at 12%. by income, upper-income households were marginally less likely to report an increase in holiday spending plans this year which is a reversal of last year's results. this higher income group was also the least likely to report a planned decrease in spending. this is not surprising since lower income households have a much smaller buffer from which to fund discretionary spending than do upper income households. i will now turn it over to steve to tell us more about our other findings. you, i'm executive director of the consumer federation of america. our survey data contains both good news and bad news.
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there hasews is that been the continued increase in the percentage that will say they will spend more and the decrease in the percentage who say they will spend less. the changes from 2011, in particular, are substantial from eight-14% say they will spend more and from 41-32% who say they will spend less. certainly one reason for these changes is improved family finances. most significantly, the percentage who said their financial situation had worsened declined from 37% in 2011 to 29% this year. these data are economic recovery indicators. thesurvey also suggests government shutdown and related budget controversies have tended to depress spending. over half of respondents indicated that " recent controversies over federal government spending and
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borrowing" had affected their holiday spending plans with nearly one/5 say very much. the bad news is that we have more evidence of the uneven effects of the economic recovery. and moderate income americans, those with household incomes under $50,000 which is about half of all american households, were much more likely than upper income americans, those with incomes over 100 thousand dollars, less than 20% of households, to say their financial condition had worsened. in fact, twice as many said twice as manyn -- lower income respondents said their condition was worse and only half as many said their condition was better. one reason for this difference is may be that lower income americans were much more concerned about making mortgage and consumer debt payments while over half of those with household incomes under $50,000
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of those with1/4 incomes over $100,000 express this concern. thatmes as no surprise lower income americans were more likely to say that they would be reducing holiday spending. of thosenearly 2/5 with incomes under $50,000 said they would spend less than last year and 1/4 said they would spend much less than last year. finally, our advice about adding the most bang for holiday bucks come and decide what you can afford to spend and stay within arebudget, comparison shop low and bargain prices, avoid running up credit card. it possible but pay it off as quickly as you can. just as importantly, begin preparing for next year by making regular come up preferably automatic, deposits to a savings or christmas club account at a credit union or bank.
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we are now prepared to take your questions. question from peter barnes of fox news. how did concerns about the budget battles in washington, the 51% who said it affected their holiday spending plans, show up in the topline survey numbers? what the percentage who said they would spend more, the 13%, and higher were it not for the tc budget controversies? did they create uncertainty for people? >> we are not entirely certain of the precise relationship between the budget battles on the one hand and peoples views of the economy and their own personal financial situation on the other. questionnses to the about the budget battles suggests that this created or increased a sense of economic
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insecurity by some americans, economic and security tends to depress more spending. said the concerns about the budget battle did affect their spending were less likely to say they would increase spending and more likely to say they would reduce spending. there was a slight affect their. improvement from last year to this year was less than it was the year before. the cap -- the economy is responses to our this survey are slightly better than last year whereas laster they were significantly better than 2011. that effect has likely been contributed to by the budget debate of the last couple of months. >> thank you very much.
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[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] >> tomorrow is thanksgiving and president obama will pardon the national turkey later today at 1:20 p.m. eastern. secretary chuck hagel released a thanksgiving message department employees and service members today reading to those deployed overseas.
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we continue with more from our q&a series later today. is with thee weave and can i get -- what is with the cleveland clinic at 7:00 p.m.. >> we have to understand what is going on a healthcare across the country. we have got their in a situation where we do we had to change healthcare. healthcare has become so expensive in the united states oft it is now consuming 18% the gdp. it is turning to eat into things like education and other social programs that we want to have and need to have. we are more expensive than any other country in the world.
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harness that inflation rate. we have to control it and bring the costs down so that we can remain competitive. we have been at this a long time and driving this is a process that started a few years ago and how we have begun to try to make our healthcare delivery more efficient. consolidated services in hospitals. we have closed one hospital that was two miles from a 2000 bed hospital and we consolidated services, consolidated services for obstetrics, rehabilitation, andiac surgery, pediatrics for trauma. in trauma, when we consolidated the services from five trauma centers in cleveland to three,
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we saw improvement in mortality rates of us has been a long process. we are trying to reform this. what is going on now is that many of the things are coming to a head. we have concentrated on taking out costs for the last couple of years in areas like purchasing. we took $180 million at a purchasing. we have dumb things like eliminated a redundancy. you have put in blocks in so you cannot order redundant lab tests. 1960s were different. [laughter] and there were a lot of things happening involving race, the break down in the structure in society, i was suddenly out of seminary and in new england.
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there were no rules. things were falling apart. without structure, it is difficult to navigate. toas extremely fortunate still have had a residuum of the way i was raised and the structure that the nuns had given me and the structure seminary had given me. i was also extremely fortunate because i have already been in predominantly white schools. i was the only black kid in my high school in savanna. the transition to a school with very few blacks in a very difficult set of circumstances, academically and otherwise, i had sort of a jumpstart. i was ahead of the game so i had something. doallowed me to continue to well even though it was very difficult. span, heargiving on c-
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from two supreme court justices, clarence thomas at 9 p.m. followed by a elena kagan at 945 eastern. also, for days of book tv on c- span two including deborah solomon on norman rockwell. thursday at nine 30 p.m.. the 150th anniversary of the gettysburg address, james mcpherson helps commemorate the 10 sentences president lincoln spoke at the dedication of the soldiers national cemetery at gettysburg. several reports over the past year outlined the scope and scale of chinese hacking against the u.s. government and private sector companies. longress conducted a year- investigation last year of chinese telecommunications firm. of that president chinese company recently sat down at the asia society to discuss cyber espionage and attacks with the former c.i.a. officer all chad swede and an author.
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the moderator is david sanger from new york city. his is one hour, 25 minutes. much and you very thank all of you for joining us here today. because itreat group comes at this issue from a very different angle. it will be my job to try to sew together what areas they will agree on and what they disagree on. the group has been introduced. my plan for the evening is to have a conversation for 45 minutes or so and open it up to all of you and then to all who are watching this on the internet and have this way of sending in questions to the moderator.
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those are supposed to magically appear on this ipad. if they do not come is because either the nsa or chinese have hacked into it and the questions have been eliminated out there. i was on a panel recently with the head of the nsa and before we set down, he said i don't like? or five. start with tom ricks. in your book, you have to come to a definition first of what cyber war is and is not. i think we would all agree that we have seen gradations of cyber activity. ofsee cyber theft intellectual property, corporate
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secrets, state secrets, espionage that is cyber-enabled. occasional cyber attacks on infrastructure which happens in the olympic dames. we see denial of service attacks, and effort to bring or, say,ing systems frees up the entire "new york " website which happened over the summer. there is overall cyber war which .ou describe
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you use a very classic definition of cyber war. which of these will not occur? , someage is happening infrastructure attacks are happening. clearly, denial of service attacks are happening. what is it you are telling us will not happen? >> i am actually not talking about the future. the spirit of the book is the opposite. the imperial at record and the technical possibilities. i think we need to put the cyber war into context. people use the word cyber war, cyber weapon, we are talking about a method like the war on drugs or poverty and we are talking about this at the same
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time. i am trying to help distinguish between a metaphor which can be serious and the real thing. sayingying to do that by that those with computer code need to be violent or potentially violent. they need to be instrumental in the fact that someone is trying to change someone else's behavior. if you run those three criteria through cyber attacks, they don't usually meet those criteria. i am grouping these into three
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different sets. , withdrawing efficiency .rom a system only externalhe threat that actually caused damage. we are talking about very small numbers. there is espionage or intelligence. be political in nature. these are larger numbers. thirdly, i am talking about activism which is a separate problem and finally there is crime. each of those requires a andrate discussion sometimes separate technical foundations and solutions. >> i'm with you on all of that
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except the part where you say you're not trying to be predict to because the title of the book takeber war will not place. that sounds like the future. the title is a pun. there is a famous french expression that says the trojan war will not take place. it is a little bit of a play on words. let me take this to you. you have heard the discussion of these groups. yet paid by your clients to worry about the past. you get paid to seal them up for the future. it strikes me that if you sent them all copy of this book, they would stop paying you.
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but you have a real concern and your concern goes the range of crimes, espionage, sabotage. tell us, at the far end of this, whether you see attacks on to be a one off or a wave of the future. and then, whether you think it could fit into the definition of war, violence or potentially violent. thanks again say to the asia society. i was a student at columbia here in new york just down the street for many years. relationsnternational with a concentration in east asia so it is an honor being here and i appreciate the work that the asia society does. it is fitting we have this
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discussion on the heels of the very important address regarding our relationship not only with asia as a whole but with china in particular on the topic of cyber. respect tom's international work and i have appreciation for the in depth analysis he did and i would commend his book to you to read. i would respectfully disagree with the fundamental definition. violent and intended to change behavior and someone claiming definition, that when i was in the cia and we used to do cold war, there were a number of things we had to do to protect the united states that did not rise to the level did it violence nor
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get to claire. we did not claim credit for it. there were many things that thatned behind the scenes were involved in the game of nations and the art of war. he says war is politics by another means. i would have a slight definitional difference. mentionnd thing i would is there are many terrorist attacks that take lace around the world and some of them are claimed and some of them are not. dc what maytoday in be a violent terrorist event. there may have been multiple actors involved. time will tell. bombing,ston initially, we did not see a claim of responsibility for that
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event but it was clearly a terrorist attack. in my view, if we define war as politics by another means or diplomacy is politics by another means than terrorist attacks are the poor man's way of a -- of inflicting their desired outcome on another power. we go to the point about stuxnet, that is an example of where you define violence are claiming credit, it would not have qualified as an act of war. nobody has officially claimed credit for that. depending on how you define violence either as killing people, connecticut force in that respect, it did rise to that level. if violence can simply mean
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destruction of physical property or systems, maybe that would be the definition. future,uestion of the when tom said the rand report said cyber war is coming, that was very prescient, almost like all revere. -- almost like paul revere. when he says cyber war is not happening, my position will be that not only is he wrong, it's happening every day around the will go through more examples tonight to discuss it. cyber war is happening or cyber conflict? >> i would say cyber war is happening.
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directed att is china but i want to be very clear that -- let's take saudi arabia, the single most important thing to have as a nation is your national oil reserves. hat happened in the shamun attack? andsaudi's were attacked may iranians believed they were collaborating with other powers to stop their nuclear program. essentially, they extracted retribution through the physical destruction, over 30,000 computers, which not only did they enter the computers and trace the data, it literally destroyed those systems and blinded the saudi's. millions of records under seismic imaging of their oil reserves, it would be the
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equivalent of blinding yourself if you are a core source of national strength. that is an act of war and was done by the iranians. it's a great example of how this is happening, not in theory, but in practice. on, let mei go and sayack to dr. rid into examples we have discussed, in the olympic games, centrifuges are made to low up, -- were made to blow up. centrifuges are devices that spin at supersonic speed and when they blow up, it is like setting a bomb off. you don't want to stand next to one. to this day, we don't know if anybody was killed or not in the course of those. describedeard chqad
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the attack on saudi aramco. beyondneed to be definitions. we need a concept and solutions for this. by talking about war and violence, i think we are not getting any closer to what needs to be done. if we want to discuss the possibility of a specific tack, we need to get more technical. we will come back to that. mr. palmer, you are in the foreign service for seven years. we are not, tonight, going to to explain chinese
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foreign policy or represent the government of china. >> will that's good because i served in latin america. [laughter] >> all the better reason. we are going to ask you to explain why it is the united states government gets so where built bytechnology other companies and their concern is that if you bring up hese equipment and wahway makes the skeleton backbones of the internet and you bring them in from a country you believe is searching at least on the espionage and antilock jewel property set -- and intellectual property side of things.
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then you are inviting into the united states hardware that a foreign country can exploit whether they are with wahway's permission or not and can use that to help ex-filtrate the data they want or understand the networks in a country. that is why you have had such trouble in recent times in selling them the u.s. market and you had one of your executives say they were not that interested in the u.s. market because of these restrictions. hardware a back door in for a government like china? secondly, how do you change the perception of the u.s. government on that issue? a great deal of
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questions in that opening. is here today because we are a leader in this industry. it is a $35 billion company. it does is nisan 150 markets. its customers over 500 telecommunications operators in the world including nation operators and virtually every ocd country. you can't leave us not knowing. >> we have business here. is a resource to understand the challenges we face in today's cyber -- in today's cyber age. those are challenges raised by globalization and the
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interdependence of this industry. there are benefits to that globalization. companies bring this to markets where they do business. you made an interesting point with your concern about hardware coming from a certain market. arehbuwei or cisco or ericsson, in this day and age, you are a global company. you are conducting research and development, and coding software and building product and relying common spying and you are subject to, and global vulnerabilities from state or nonstate actors.
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note challenged how we acknowledge that era benefits from globalization that we want to continue driving? there are economic and competitive benefits and then address the challenges of globalization in our industry which are threats to the supply chains of information/ communication/information technology companies. unless you raise the bar for everyone with appropriate standards and disciplines that are certifiable, you accomplish nothing in terms of better securing networks and the integrity of data. let me take you back to why the u.s. government has such a concern about huwei. it has been blocked from various
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acquisitions in the u.s.. you yourself say that american telecommunications companies will put the equipment in even other you have had others countries that would. they are doing that because they have a specific concern that the chinese government is acting not as a global -- not with your global market in mind but with their own narrow interest in mind. are you telling us that is a completely false way to think does andt hua wei what their relationship is with the government? >> absolutely, great deal of i great deal of the things we have to deal with our geopolitical and that is beyond this company. we are 150,000 people strong. we are remarkably diverse,
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almost 90,000 non-chinese now and 70% of our businesses outside of china. we are a multinational company. we are not china. the suggestion that we can better secure networks or the integrity of data by taking one isyer or anyone player wrong. it is distracting because it turns a blind eye to all the other lawyers who are equally vulnerable to compromise. >> until a few months ago, we would have said that huawei is the perfect example of a company that the u.s. government will not want to purchase from because they believed the geopolitics outweigh the global market description. in the aftermath of the edwards
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noted investigations, you could argue that google, verizon, at&t -- anybody who has ever received a warrant on the pfizer court and turned over data can essentially be charged with doing, under a legal pretext, exactly what the u.s. government is charging in this situation. this is the mirror the u.s. government has been looking into. has never been asked by any government to compromise its goods or services or facilitate any appropriate activities. it has not happened. we had a witness testify in congress last year and the expression he used was " it would be commercial suicide to do so.
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oh as you pointed out, in the wake of the edward snowden revelations, what we read on a is that these companies that were compromised unwillingly in most cases, are a rathering devastating impact on the current business. it is a rather remarkable demonstration of why you should not do this. it does reflect a potential for corporate suicide and it's exactly of the thing that while would not letei happen itself. you could say the edward snowden , in spite of a devastating impact on the company's compromised, the revelations may mark the knowingg of the end of corporate complicity whether
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willingly or not and government espionage. there is an opportunity now for industry to move forward and establish pragmatic and rational and commercial and true standards to better secure and to undo this crisis of confidence in this industry globally. you were chief of staff at homeland security that thee time definitions of what the u.s. government wanted to get out of the internet providers, all the companies we have been talking about, was expanded. court issued secret orders to turn over data including the telephone logs,
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not the conversations of every phone call made in the united states which is a haystack with which you could pull needles. that clamping into this giant data pipeline differs , if at all, from what the u.s. government charges companies likehua wei does every day. i have been out of the united states government since 2000 and nine. what we will discuss will be classified. >> we will keep him going with the vodka. method data program or what is called 215 which is the program that david referred to
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that accumulates the haystack, i would tell you to yet a sample of why the u.s. government actually visited the system. because the phone companies delete these records after 90 days, that is precisely why the united states government asked for them to be retained and not to search them until they go through congressional it ias approved report. the government has the ability to search but what we say is they cannot have the right to an unreasonable search without probable cause. that means in order to have a search, you have to have something to search so the itselfation of the data
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in and of itself is an example of why the government is not sitting in the system today and has to ask for the voluntary agreement of the companies to hand over -- [inaudible] this is voluntary as you go to jail. >> the government cannot technically be inside the hardware. isconcern with huawei that the chinese are inside the hardware. that's different from the method data program. -- meta data program. >> you are telling us the u.s. is not in the hardware because they issue these orders to turn over the material that runs through the hardware? >> correct. >> supposing the chinese
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huawei t went to in beijing and said you have a lot of data throat -- flowing through your service and summer outside of china and some of them are for china. we will give you whatever order you want us to work up and we would like to put this in a repository in shanghai so that if we need to go back in and see what ibm is planning or so forth about the next defense system they are building, we have a way of getting added. would you see a distinction between whatchad just described which is the u.s. government pulling in the state and is chinese government seeking the same kind of thing?
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>> there are many different levels to that. what chad has described and you're talking about is the distinction between a company that provides the water and a service provider that runs the water. rather than drill random holes to get something out of the plumbing, the u.s. government decided to drill into the reservoir. >> while you build hardware, there some countries in which huawei will run the entire network. >> that's correct. >> so you are a hardware and services company? >> we are.
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i think it goes back to the , there has question never been any substantiation of any current or past penetration ir compromise of huawer company. there has never been any evidence of any issue. what may happen someday in the -- i will resist the temptation to go up -- you go out and talk about other potential compromises. huawei has made a conscious decision that it is in our best interest to maintain the integrity of our customers, networks, and their subscribers
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data. going to commit commercial suicide by violating that integrity or those networks. >> if you receive a legal warrant, you got to do the same thing that verizon and at&t have done. there is not a country in the -- they each have each of their regimes. as taxpayers, we, collectively, gave a subsidy to the total -- to the phone company to pay for the hardware and software that allows phone taps to take place. that because under our constitution and article four,
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you cannot have unreasonable searches but you can have reasonable searches. if you watch "the sopranos" we have the phone's of suspected mafia don so we -- we cannot be critical of the chinese. just the keyuake question is being put on the sable is it a question of lawful intercept? -- question is whether that what are purported to be private enterprises are tools of a foreign government for the purposes of espionage. suggest whether huawei is or is not. back when we were worried about the threat from the japanese against -- when they bombed
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rockefeller center and everyone thought the world was coming to an end. of the great things i admire from one of my professors from columbia is that if we did not have the japanese, we should have invented them because they made a that are. it made us more competitive and the right reaction was not protectionism, it was learning to have a more competitive auto industry. let's consider china for a moment. we know that microsoft is incorporating with the chinese government and have provided various forms of help to the chinese security establishment into skype listen
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chats, the chinese government is good at intercepting keywords from social media's. government that is .ble to get help from american this is a fundamental and ethical question. it is the flip side of what you are mentioning. if somebody gets caught in china helping american companies,, that has a real consequence for that individual. these questions can mean people are being interrogated. >> this is not very theoretical.
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>> cyber wars is an example. let me pursue that with you. if steve jobs was alive today and looked at modern warfare, i suspect, having suffered through those thousand pages, he would be fascinated by the concept of information war. that is to say that you can have conflicts between states that is an extension of politics by other means without blowing things up or sending 100,000 troops in. by either it manipulating for economic or political advantage for or thate as a category you could begin to effect
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infrastructure and you want to congress case. when they fascinating chinese base concrete case. it is the offshoot of a company that controls about 60% of the gas pipeline networks in the united states down to new mexico. they come in to work one day a year ago and they discover that all of their code has been taken. they conclude is taken by some of government origin. if you ares stolen in a conflict with united states,, it might be useful to have the coding to turn off the gas to 60% of the country. where does that fit into this
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aspect? cyber weapons is often used in that context. what are cyber weapons?" let's imagine that the only big example we have. if matt -- imagine a petition oh person. you would have generic bomber belts is that struck through. hit 100. able to it affected 100,000 computers
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but assume one of your laptops were affected, you would not because this was developed for their industrial control systems. these are highly specific systems for many reasons. mostly unique components. shot device.s a one- the payload was one short which as one of the arguments i i am testing in the book. are you minimizing the target? we are doing so. that is a tough question to answer.
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can you just use the generic components and apply it to another target? it's a controversial question among engineers. >> that takes us to one of the first questions we have gotten on e-mail. i feel like we are doing an advice column. asks -- if theyn united states wanted to conduct a cyber attack against the shanghai military site -- she is refuted -- referring to 63198, could we do so? could we do it technically and politically? this is a chinese military unit that is believed responsible for a number of the attacks on u.s. dueuter systems but mostly
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to the theft of intellectual property and state secrets and follow plans things like that. could we do it technically an could we do it politically>? >> aren't we all off the record? [laughter] >> yes, that's why the cameras are rolling. just between us. >> i cannot say whether the government has the capability. if you can take down nuclear to a specific location in iran, you probably target a specific building in shanghai and the specific actors. from the objective point --
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in any military doctrine, if you attribution and retribution. that goes back to the cold war. destroyedd mutually destruction which help -- kept us remaining safe. in this case, the objective is the definition i is the last requirement claiming responsibility. part of the appeal of this particular weapon is its lack of ability to attribute data. attribution, in this threat vector, is unbelievably complicated.
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behind -- ifo hide you can have multiple jump servers like the clout and a few people have the forensic capability to penetrate the multiple layers -- i am speaking this storybecause happened. that particular unit of the people's liberation army attacked my firm tummy tuck. we were one of the 140 companies wet were outlying successfully dissected and stopped it whenever to penetrate above the point is this is a real threat and we could extract richer bhushan. the problem you have today is , it islitically
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difficult because of the united states did to we would have to directly to the chinese. we see the tremendous skepticism of being asked by the american people of presidentpeople and pt weapons of mass destruction in, their suspicion about is the evidence strong enough to warrant a limited strike on syria. i would argue you would find it to be even more difficult for president obama to put forth the people of this country a similar proposition that he just put forward on chemical weapons, which are, frankly, physical, more visible, there's more ability to produce victims and symptoms and signatures that you can get hair follicles that actually have the chemicals in it. my point is attribution is extremely difficult and richard
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b should makes it even more so. maybe later we could talk about this is why a modern doctrine for this threat is so needed. i think dr. rid has done a good service by putting a forward. thised a new version of for the cyber age. >> is that possible? can you design a system in which the perfect attribution, when one of the reasons the world loves the internet is they can operate more anonymously? going havee are another half-hour of questions from folks here and online, and for some reason i imagined many of those questions are going to focus on china as much of this conversation has, so let me first interject that cyber conflict, cyber mischief, cyber
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what have you is borderless. there are states and there are non-states. whether the u.s. is hacking china or china hacking the u.s. or russia hacking both were israel hacking everyone, as is all taking place. threats toook at the network security and data integrity in the context of one country and another country and those countries versus each other. done is there such a thing as a perfectly secure network? no, there never will be, but we can make a more secure. there are grossly speaking sort of three different domains. there is what i do, which is on the equipment side and the coding of the equipment side. orrything we built at huawei no caps on ericsson, others, is
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all with typical standards. our customers, operators, want to be up to have a competitive environment. i will take a widget from him and they can rationalize the market prices. they keep us honest. but that means what we build is essentiallyis interoperable. so when you drop this equipment into the network, if you have not raised the security bar for everyone in terms of best practices and standards from ideation through end of life, your contest nothing. so the first domain is, how can we find and develop in a public/private partnership standards to raise the bar of the equipment that companies like ours deliver? the second is in the realm of service providers and data management. it has become apparent over the last couple of months that what we need in that space is more transparent regulation and a more transparent legal
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environment that is better geared to protecting the integrity of data. the third domain is the one that chad was speaking about, and that is governments. i would like to believe -- i would like to believe that using the example of mutually assured destruction, when two adversaries came together in the 1960s and recognized they could blow each other up umpteen different times of mutually decided -- i'm almost done. the mutually decided, who are we commonly vulnerable to? you have the treaties and what you got was the lowest common denominator of acceptable behavior. it didn't stop floor for age and, but is loaded. if governments can agree on lowest common denominator acceptable behavior, it won't stop espionage, but it may restrict disruption for potential disruption, neck and the will to lateralized. >> this give us a little more
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ground. something that should be obvious but is not obvious, computer code can only affect computer code. words, as i'm sitting here on the podium, i assume the same applies to the rest of you. we are invulnerable to computer attack. i have a pacemaker with an ip address. statement, butn very important. could the u.s., -- could the u.s. attacked that particular headquarters building in shanghai? it could serve breach the information system. it is probably not too difficult to do if it has an internet connection, etc. but he can only affect physical damage at the time he could weapon eyes and turn into -- it
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has to crash, burn, explode, whatever. stuxnet and centrifuge are good examples. thatt's all think about when we admire the electronics on our new cars. audience for the first question. just wait one moment. there's a microphone coming your way. sure. hello? >> you are working. >> steve rodriguez, fellow at torch down. ,hat are the escalation options attribution or nonintervention, and as a commercial entity, what are the options for de- escalation and receiving remediation for the physical attacks of a country or another nonstate actor? >> the question is one about escalation.
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there is an attack, you perceive an attack on a company in the united states. who attacks back? right. if i'm the company that is attacked, do they have a right to attack back? should a government attack back on their behalf? can we only play defense? forhat is a big debate weather hacking back works -- that is a big debate, weather hacking back works. one, is it allowed legally? and the other one, does it deliver results? let's ignore the legal question for a moment entirely. does it deliver results? i had a conversation with a couple of companies -- let's not name them here. i've yet to see -- >> come on. [laughter] >> i've yet to see the evidence
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that it delivers results. the only example we have of someone hacking back is a quite a funny one. it happened in georgia about three years ago where somebody, apparently from russia, hacked a georgian ministry and try to get documents. the computer emergency response team found out something was put a pdfactually file that was rigged with now where abetted in it on the servers and had something like nato agreement on it. [laughter] the russian hacker a purely stepped into the trap and they have to and immediately took webcamf the guy with his . it turns out it was a guy sitting there with his wife. >> if anyone hasn't seen the photo, go home tonight and dig
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it up. it's exactly what you think it would be. it is an interesting point because it doesn't solve the attribution problem. they still did not who it was. they had a picture, but did not know who it was. >> chad, back in your days at dhs, let's say company x got attacked. they call you up and say, i know my government. they're not going to attack back on my behalf because they don't want to escalate into a cyber war. do you have any problem if we think we know who attacked us, if we don't blow up their servers? >> is a fair question. we got asked that a dhs and now that i'm out i'm being asked it. the analogy i would use is if we somebodyut a bank, if walks into a bank with a weapon and tries to take the money, going out the door, there is
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well-established precedents that a private security -- an armed private security guard legally can in fact order the individual to stop. if they refuse to cease and desist, they can in fact use lethal force. for whatever reason in the digital world, we don't allow that. and what you're saying across the commercial environment for my clients is a number believable -- unbelievable feeling of being left 10 out to dry by your -- left-hand out to dry by your own government. what is happening is if we sit here in the asia society, we are starting to see historically the business community like the chamber of commerce and think about a sailboat, they were like , any time they started to act up against china, they would dampen things down to keep the sailboat afloat. there's so much anger and frustration about the theft
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taking place by state-sponsored actors including china, that we are actually seeing the business community demanding they be allowed -- if the government is going to step in and play the role of defending them, then they need to be allowed to do it. i would respectfully disagree doesdr. rid that not only the ability to hack back or do active distance allow for change of behavior, we are seeing -- i can tell you firsthand we have seen it. if you think about it logically, there are so many soft targets were people are not responding that if they have someone who just does no level, basic, active defense, they move onto the next soft target. >> i want to keep this going. this is uncharted territory and i will caveat that the point that was made is we need a legal framework because in the absence of that, people are getting
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frustrated and it has a lot of consequences. >> bill, now we can all feel your pain. let's say we work in one of those scenes where your company -- you are a company and you think you have been attacked and you think the origin is chinese -- whether it is chinese government for chinese teenagers , chinese criminal group, whatever. i just installed the latest and greatest huawei servers in my system. i'm going to be asking the question, is the attack really from abroad? or perhaps unknown to huawei, was their backdoor built in and i sort of helped the thief come into my system? >> i've read the same data that you have about the increasing attacks on u.s. networks. 1 ofuawei has less than u.s. and market. those attacks are not taking place over our gear.
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for what it's worth. >> ok. good answer. right here. we have been hearing for a very long time now the danger of cyberattacks on national security and we've been talking about the corporate realm for the most part. where do you see this going? is this realistic? when will it happen? what can we do about it? >> ok, tom, you said academics don't or can the future, so look in the future. here isiggest problem espionage and especially commercial espionage, not sabotage and disrupting systems. the problem is commercial
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espionage. where is this going in the future? that is a very difficult question to answer. but let me go to to the snowdon revelation from moment because they fit in part of this picture. what we're seeing is to the great surprise of many observers, the u.s. government, the nsa are more capable intelligence news agencies -- they are able to intercept more and decide for more information the many people previously had assumed. i think one of the big questions for the future is, what do those revelations mean for american businesses from a what do they mean for intelligence agencies from a what do they mean for the balance between western intelligence agencies and children's agencies -- intelligence agencies in author terry and countries? i'm really concerned about what is going on in the moment.
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yes, some of the revelations have a positive effect because we have been having informed debates about what the nsa should be able and should not be able to do. right now what i'm saying is a shouting match between those i think -- that thinks known as a traitor and those who think snowdon is a hero. fact, we are not having a nuanced conversation in the middle about what is and what is not ok to do. they may provoke the audience by saying there's a moral case to madede, ethical case to be for an open democracy. after all, we are in a robust open democracy, which has to be reassessed after this affair because many people seem to think that is not the case. both inside the united states -- unitedre inside the states and outside. there's a case to be made that a powerful intelligence agency
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should be an healthy democracy. we don't want the most powerful intelligence agency not accountable, not controlled by the democratic process, to be sitting in an author terry and tarian country. >> i know i have a tendency to be less grounded, so i will be less ground up for a moment, but we are seeing as a result of -- werisis of confidence read in the media that brazil is looking to localize clouds and launch it stationary satellite to africa into europe and the indian government is contemplating the elimination of gmail and yahoo! mail accounts for government employees. germany is looking to localize lodging e-mail made in germany, which is safe from the nsa. fragmentationthis
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of the internet environment which is not good for anyone. in the short term, there will be business opportunities. but in -- >> the internet is bad conductivity and we are reacting by disconnecting. >> we are vulcanizing. that is not solving the problem. that is grading challenges to scale, to interoperability, creates a challenges to the free and open spread of information. we need to balance that an economic benefit associated with that with the need for real and pragmatic approaches to better securing networks. >> hill, this takes us to a question we have received by e- wonderfully, anonymous. not the group, but somebody who doesn't want attribution to the question. asked why e-mail, do you think there is a need for a cyber weapons convention much like the
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npt? who should govern it and is there even an interest? asked this question of someone in the u.s. government, they flee in the other direction. they are not at all interested ciber, but then again, for the first 15 years after the atomic on was developed, they were not interested in in pt for the atomic wrong, either. i know this is one of your favorite topics. tell us what works and the analogy and what doesn't. is it even possible to have a treaty with a weapon that is not simply in the hands of states, but in the hands of terminal organizations, terrorists, teenagers acting like terrorists, whatever? >> i will defer the end of this to chad, but what i said earlier was the way we need to approach this, the industry needs to do its bit, which means those of us
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that make the plumbing need to -- all of us need to be held to the same standard. that means we need to establish the standards best practices and disciplines that will then be certifiable -- all of us. service providers and data managers need to have their appropriate -- best disciplines and environment as well as more transparent legal and revelatory regimes. for concept of an npt ciber, that is in the third realm. that is were governments need to issues and those issues may be as simple as, i want crèche or markets if you don't crush my planes. i don't know what those issues are, but they need to do that in the context of allowing industry to move forward commercially and competitively and to continue to innovate. >> does goes back to chats's points on attribution. the reason in the nuclear well
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realm the treaty's work, when one of them got launched, there was this neat little big screen that was down in some mountain of colorado and you could see you had 30 minutes before you were annihilated. there is no such screen for cyber weapons, so you don't know whether or not an attack is coming, whether it is from a state, from an individual whether it is from your spouse. you don't know where it is coming from. tell me how you make this work. if remember matthew broderick in a great movie, it is this challenge which is the threat vector is fundamentally decentralized in dynamic. in this threat vector, by the way, 30 and it is maternity. if you have 30 minutes to
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respond, that is a long time. this is happening at the speed of light. thousands of attacks per second. what it means is that the old paradigm in the nuclear age of having essentially a command and north, structure out of where there are two people in the united states that have the launch codes, the president of the united states and the commander of norad, and they basically have authentication to launch in a very exercised method of responding, that hierarchy is antithetical to this threat. this threat is decentralized. we have apoint situation where thousands of attacks are happening per second , there is no way the president of the united states can sit there and say -- it would be like me coming up to them every five minutes going, mr. president, mr. president, mr. president, what you want me to do? we have got to look at this
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threat vector and realize the human talent is not dominated by the united states government as david rightly points out. the weapons are not dominated by any particular government. the command and control ability to actually attribute the response -- there's no nice little plume that comes up. tore is no clear ability have a decentralized dynamic response. government, of decentralized and dynamic are not the first two words. >> tom, when i read your book, the nuclear analogies here drive you up the wall. [laughter] exploits, attack code, whatever you want to call it, is not created equal. [indiscernible] there's only been one cyber could take searcy.
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breachesall computer for espionage purposes are just microphones or cameras that gather information for someone else. they're not having any effect on the targets medially. i think that is a very important qualification to make. stuxnet is not happening at the speed of light. the development started in 2005. it was out in the wild in the first versions in 2007, then steadily improved effort versions until 2010 when it was discovered in june. sophisticatedst attack we have ever seen. so we need to take some of the statements about everything happening at the speed of light just with a little bit of -- >> it took us a year and a half to figure out who did it and how. >> dr. rid made an important point. when i say thousands of attack at the speed of light, there's a
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spectrum of attack. the surgical strike by a state- sponsored actor is the penultimate into the gamut of the spectrum of sophistication. i agree with dr. rid, those types of circuits all dashed -- surgical strikes will happen less frequent. realm,mercial espionage that is the bulk of the attacks. in that realm, to go back your question about what we need to do. the governments of the world are notrently systemically dynamic and not decentralized, therefore, they are not the right answer to this question. the right answer to this problem is agreeing on what bill said earlier, but get standardized norms of behavior and then let's empower the private sector who has in fact decentralized dynamic tools to deal with this. it is much like analogy, you
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don't rely on the federal government there are posses -- you have a local police force, in my pd here in new york, you don't always need a big government solution, a local solution, frankly, in this case, going back to the bank analogy, having a private guard who actually is there to respond to your individual company needs. as long as they meet certification, the government doesn't have to solve all of our problems. we can in fact do it ourselves. only at the high end spectrum, with dr. rid mentioned, the whole dress high and does just ultra high-end sophisticated attack will stop you heard general alexander confess, got in trouble later, we don't even have our act together. just now announcing it will have 13 offensive strike teams, but they won't be ready until 2015. if the calvary is not coming,
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we're all on her own, and we have got to have a global consensus of how we're are going have norms of behavior and then empower local police or cyber police forces just to handle this. >> chad makes a good point. offensiver organizing subroutines and calling them stuxnet anddy did the olympic games. they may not have been organized as a team, but they had to operate someplace. ?he question in the back >> hello. we've seen recently how vulnerable the world financial system is too erratic and chaotic behavior. just how affordable are those trading systems? you mentioned the speed of light. most of our financial system now is being run by computer programs. just how much chaos could be
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caused? we have seen how much chaos can be cost by a malfunctioning system. could this be deliberate as well as butterfly wing and chaos theory? >> the question here is, we have seen markets that know how to implode on themselves without any outside help -- [laughter] shut downnasdaq without any outside help. so supposing someone came along helped -- came along and actually helped raises a question. tom, i think it raises another question for you, which is, most of us could not have imagined a world that was his economically and are dependent -- interdependent. if you take out his market systems, you cannot only take out one society, you can take out a whole bunch all at one time. ourselvesdid that with lehman brothers and bear stearns five years ago. tell us what the vulnerability
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is if someone was trying to do a deliver only. >> no doubt there is significant for durability. we have seen a few instances in the past couple of months. the steering electronic army hacked twitter account of the associated press and sent out a result, --and as a >> the tweet said the president had been assassinated or shot at or something. >> something like that. >> people can make a lot of money in a few minutes in this town. >> that's right. irrelevanting it was , but it bounced back very quickly. then there was the technical incident which was also an interesting situation where a lot of people got a lot of nervous phone calls and washington, d.c., i hear. it wasn't an attack. just a quick point, what does that mean? past coupleover the
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of years, we have seen an interesting pattern. we're getting used to some cyber attacks. where not really that nervous the website being down for a few hours. you read the "washington journal" instead. >> i have an exception to that. you ask bank of america and wells fargo, they are worried. it costs them millions of dollars a minute when websites are down. with all due respect to dr. rid, we have seen the shift from theft to destruction. when you look at the attacks that are going on against wells fargo, bank of america, citibank, these are not attacks to steal money or intellectual property, these are direct attacks specifically for the purpose the gentleman said in the back, which is to shake the confidence of our system. if you think about on any given day, it every bank is bankrupt. if all of us go to the bank tomorrow and take out our money, no bank can withstand that.
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it is a great question. politics by is another means. it is an act of war. >> another question out here. if not, we will go to one that is coming here. another anonymous. we don't know whether this is the same anonymous or a different anonymous. [laughter] a question for mr. plummer. is the only problem here your company has a chinese name? cisco has been known to help , the build its firewall great wall. have you thought about changing your name to something non- chinese? would it make the slightest bit of difference? >> to the first part of the question, i think the balance of the challenge that we have faced is because we have a heritage in china. sometimesning to me
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that is a to someone $35 billion company my trusted and proven globally, and of the $35 billion, one third of all the inputs into huawei dear comes from american suppliers. that is like $7 billion for the procurement last year. it is stunning to me that people cannot grasp that. so, yes, great deal of it is just a fundamental misunderstanding of what it means to be an international company with the chinese heritage. as for changing the name -- >> is a chinese heritage or chinese heritage if you read the senate report and so forth, it has links to the chinese military because of where the founders of the company and so forth -- >> hogwash. it was not the senate, he was the house intelligence committee. i thought that might come up.
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i thought about bringing a stack about this tall of 20 page reports that rebut pretty much every little bit of information that was misrepresented in that report, but i didn't want us to be distracted. i will have business cards for anyone interested. is, this is the asia society. that is why we're here right now. part of what we're here to do is increase understanding across various different cultures. there is just a fundamental misunderstanding of what it means to be a multinational with a heritage in china. >> let me ask you the reverse question. ibm,novo bought the old was there any similar concern in china that you are aware of that they were buying into systems to which u.s. had a backdoor? i don't really -- i can't speak for what -- i think the concerns were more on this side of the equation going through
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the process, but you also have to keep in mind the terminal, whether it is a pc or tablet or phone or what have you, has not attracted the same attention as the access network. >> if you think about the name toyota, my grandmother lived through world war ii and refused to buy japanese cars. i imagine some of your parents may have felt the same way. today, i think we view toyota as a trusted brand. in fact, there multiple plants across the united states and are a part of our -- one of our closest allies is japan. but what is fascinating about that analogy is when i was in the cia, we did have to look at forcing japanese to comply with domestic rules and other things -- we even rented a toyota, broke it down, got a lawyer to prove this. we broke down the whole car, checked every part, reasonable
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did and gave it back so we didn't have to buy it. toyota began to get into compliance and played by the global rules and now they are trusted partner with us. >> can you tell me with the cia was doing to the federal trade commission? >> we had economic research in the cia. very sophisticated. >> you would know to see the cia parking lot. [laughter] >> very good. right back here. consultancy specializing in u.s. chinese negotiations. i would like to talk about the ip, that side of cyber crime. i recently saw a case where chinese entity sort of accessed american technology. i think it was amsc, american superconductor.
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the american company got no satisfaction in the chinese court system. the chinese company subsequently tried to export that same technology back to the united states where they did run into legal trouble. i think it was the fbi is bringing suit. it is a multimillion dollar lawsuit against the chinese side. does that offer any source of optimism, a glimmer of hope, there may be a market or a legal way of addressing cyber espionage? >> who wants to take that? >> the case is new, the special in the larger picture because it involves an austrian subsidiary , inmerican semiconductor which an austrian employee, and the good old-fashioned way am a to deliver information software
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to the chinese company. it is not a case of commercial espionage only done through the internet. there's a very important human element, which explains why custom much visibility as well, because of that law. >> are you talking about american superconductor? >> that is a different case. it involves the development of wind turbine technology. i think the fundamental point of your question is a good one and goes to what he'll said earlier. if we can work together to raise global norms and legal standards, the chinese have any cool vested interest in making sure ultimately because they're going to innovate and have intellectual property it is to be protected and enforced, that type of regime is critical. there are groups like harvard and wharton and others that are working hard to help promote the appreciation within the chinese leadership of how critical this
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type of legal norm is. >> i think it is key when a company like huawei becomes a global leader, becomes one of the world's largest intellectual property rights holders. to drive a broader and more global respect for and the protection of intellectual property rights. twoe are down to our last minutes. while the asia society does not endorse cyber warfare, they told me that if i run over the time period, there wiping all my hard drives and my iphone clean before i leave the stage. so we are going to end with a question from austria who asks , do all theer accommodations are, isn't the use of cyber warfare just like using special operations? isn't it just a tool of the trade?
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them expand on the question. 1950swas a time in the when dwight eisenhower publicly said nuclear weapons were just another bullet in our arsenal. time we decided -- even he decided quietly, if you read the articles out now, it really was just a tool of the trade. because it was so uncontrollable, we would not use it routinely. what happens when we asked that and question about cyber all of your is dr. ridley doubt in the beginning for us, espionage, attacks on infrastructure, and the political tools? can you imagine a situation where we all agree to take cyber out of the arsenal? i am just a business.
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[laughter] we are engaged in commerce. i think this is better for the -- >> you're caught in the crossfire. quick set is a fair point. we are business unfairly caught in the crossfire. i'll let the academic and former government person answer. bill, you're up. >> can we imagine someone not using it to liberally although they have it? ken creeley, let's consider the syrian strike scenario. would syria [indiscernible] >> the israelis did on their way into redecorate the syrian reactor. >> that is a different situation. them you take another example. outgoing secretary of defense
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made suggestion just before he left the pentagon to introduce a medal for cyber operators as well as drone operators. usually controversial. there is an outcry among veterans because they said, give us a break. people who are just playing with a joystick or tracking code should get a medal in the hierarchy [indiscernible] chuck hagel pulled it because he is a veteran himself. the point here is, talking about we have to respect people who are experienced. >> chad, you get the last word. it has to be a brief one. not think much like we have unilaterally disarmed nuclear o where we began, stuxnet will mark a milestone in the entry into the cyber age.
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at the end of the day, in a same way that we came very close to a nuclear holocaust in 1963 in the cuban missile crisis, it is even more so the case that cyber has the potential to have missteps precisely because it is so decentralized and the after mission problem is so severe. so the risks are great, the challenges can be overcome, but it underscores we will never get rid -- the genie is out of the bottle. we will not get rid of cyber, but we desperately need in the same way we have a doctrine for nuclear deterrence, we desperately need the same in the world of cyber. >> well, aren't you all glad we solve those issues? thank you for joining us. i want to thank those who joined us online and sent in their questions. those who join us online and did not sin in their questions, and all of you, for being such a
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good audience. in thek will be for sale back of the asia store and they will be signing those books as well. thank you all for coming. [applause] >> thanksgiving, the producer president traditionally orrdoned a turkey two. that will happen at 1:20 eastern life here on c-span. later today, more from our q&a series. tobytoby crawls grow -- cosgrove. here's a preview. >> what do you think? >> i think what we have to understand is what is going on in health care across the country. we have gotten ourselves in the situation where we knew we had
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to change health care. health care has become so expensive in the united states. it is now consuming 18% of the gdp. it is starting to eat into things like education and other social programs that we want to have and need to have. and we are more expensive than any other country in the world. harness thato inflation rate. we have to control it and bring the cost down so that we can remain competitive. we have been at this a long time. beginning to drive this is a process that started several years ago. and how we begin to try to make our health care delivery more efficient. for example, we have consolidated services and hospitals. we have closed one hospital that a 2000-bedes from hospital. frankly, we consolidated
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services. we consolidated services for obstetrics, for rehabilitation, for cardiac surgery, for , and for trauma. for example in trauma, when we consolidated the services from 5 trauma centers to three, we saw in mortalitynt rates. this has been a long process that we are trying to reform this. what is going on right now is a lot of the things are coming to a head. that we have concentrated on taking out cost over the last couple of beers. for example, things like purchasing. in the last two years, we took out $180 million in purchasing. put blocks and so you can't order redundant lab tests. >> that is a portion of q&a with
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dr. toby cosgrove from the cleveland clinic. watch that interview at 7:00 p.m. eastern. looking at some of the primetime programming tonight, c-span 2, discussion on the use of genetics and forensics and the criminal justice system. on c-span 3, the clinton administration intelligence and policymaking during the 1992- 1990 five bosnian war. watch the starting at 8:00 eastern on c-span 3. 1960s were different. [laughter] there were a lot of things happening involving race, the breakdowns to structure and society. i was suddenly out of the noinary and there were rules. things were falling apart.
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without structure, it is very, very difficult to navigate. i was extremely fortunate to be at holy cross. i was extremely fortunate to still have had a residual him of the way i was raised in the structure the nuns had given me, the structure the seminary had given me. i was also extremely fortunate because i had already been in predominantly white schools. i was the only black in my high school in savanna. the transition to a school with very few blacks in a very difficult set of circumstances -- academically and otherwise -- i had sort of a jumpstart. i was ahead of the game. i had something. it allowed me to continue to do well, even though it was very, very difficult. >> thanksgiving on c-span. hear from two supreme court justices, clarence thomas at 9:00 p.m. followed by elena kagan at 9:40 five eastern. also this holiday weekend, four
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days of book tv on c-span 2 including the life and art of norman walk well. 3, the 150th anniversary of the gettysburg address. commemorating the incidents as president lincoln spoke to the dedication of soldiers, national cemetery at gettysburg. ahead of thanksgiving, the associate press reports about 200 flights have been canceled so far, but the wintry mix that is moved into the eastern states isn't causing the widespread gridlock. up, discussion on issues facing air travelers over the holiday weekend. it is from today's "washington journal." welcome bart jansen. let's begin with this merger between american airlines and us airways. it means we will go from 10 major carriers are the last
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decade to four. >> there been a bunch of consolidation. northwest then united and continental joined and then southwest bought airtran and so now we're waiting oft for the final approval the american and us airways merger to go ahead. they been hoping to finish in the december, but a court has question whether that might push into the new year. host: let me share this editorial calling this merger unwise saying -- is that the case? guest: that is the concern that prices will go up, you'll have fewer choices, the loss of the
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justice department filed worried not just about the erect flights that might be reduced, but also -- direct flights that might be reduced, but also about 1000 city pairs that can be affected. connecting flights. those sorts of flights could all be subjected to less competition, higher prices. i was absolutely the concern. the remedy now is the airlines will be giving up slots, permission to fly at some of the key airports around the country. just as things even though it doesn't deal with perhaps the thousand city pairings that spur competition at the major hubs, it is a good compromise as these copies prepared to merge. host: let's talk about reagan national. it is a major hub for us airways and now they have this merged airline under this agreement, it means what for southwest or
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jetblue or other low-cost carriers? guest: the agreement with justice said they will give up basically 52 round-trip flights out of reagan every day, the combined company, because they were going to control almost 70% of the gates at reagan and so it will be giving up a share of them. they say something like 15% overall. will 52 round-trip flights go to another carrier. justice has said it must go to a low-cost carrier such as southwest or jetblue. the idea is those carriers tend to draw down prices in the cities where they operate, the prices are cheaper in boston because of jetblue, that sort of thing. the d,stion though is among others, would like to get a chance of the slots and it is an open question whether other airlines will be allowed to bid. host: this is a related story you wrote. if you're traveling in and out
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of small or midsized cities for such as rochester, new york, or dane, ohio, or urethra, pennsylvania, or other smaller communities, what impact will this have on the small cities? guest: the direct impact is the concern that flights could be canceled, that airlines will no longer serve smaller communities. during congressional hearings as the merger was being considered, us airways chief warned lawmakers that service to wisconsin, other states, from national, could be reduced if those are the flights they might give up if they have to give up these slots at national. then the question is, ok, if a southwest or jetblue were to stop and stop serving the airport, with acer wisconsin or would they go to some of the more popular cities they are ready serve? would jetblue continue flying up and down the east coast of florida, say?
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is is a question for the smaller committed is, whether they will lose service jimmy's past mergers, a couple of cities that have suffered -- service, in the past mergers, couple of cities that have suffered, they moved hubs out of those airports, now among the more expensive places to fly in the country. host: let's use usair is an example. it began in the northeast as mohawk and allegheny airlines that emerged with piedmont and became us airways. and then moved its base from pittsburgh or one of its paces in pittsburgh to arizona and now this merger with american airlines. what does that tell you about the state of the airline industry over the last 50 years? big change, the since 1978 has been under deregulation. the government no longer said, airlines, you ought to fly between these different cities, we need to serve this greater variety of places. since deregulation over the past two decades, service has moved
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more to hubs and spokes. if you're not fun between major cities, you tend to have to connect your major cities. that is that smaller committed service --less communities with less service as there's been greater consolidation. what the airlines say is they're moving people efficiently. maybe you have to make a connection, but there are many choices and because of the way the hubs work, perhaps you have choices you did not have before. host: we're talking with bart jansen, discussing the state of airline industry. our phone lines are open. join in on the conversation. live scenes at reagan national airport, one of the busier airports -- is it the busiest travel day of the year or is that cliché? >> is a bit of a cliché.
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even during this holiday season, it is not the biggest day. the airlines estimate something like 2.4 million people will be getting on planes today. it is a very busy day. but on sunday, they're going to million projected. even on this holiday weekend, it is not quite the biggest. couple of bigger weekends. they tend to be in july when everybody is out of school. it is among the biggest days of the year. host: the wall street journal reporting because of the weather here in the east and because deicing is a big factor and often delays planes, usair and jetblue sank to its passengers, if you change your flight, you can do so and be charged a penalty. believe all of the major airlines are saying they will waive the change fees during the storm that is predominately now along the east coast. because of the concerns with at least rain delays and perhaps
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snow delays in western pennsylvania, western new york state, up in the new england -- so if people have problems with their flights this weekend, they ought to be a little east change .hem without fees the concern is the planes are flying very full notice. something like 80 seven percent full. so seven out of eight seats are full. if a flight is canceled, you need to seven-day more flights if every seat is full if every traveler still wants to fly, seven-day more flights just to move the people that already got canceled. it is a difficult situation. so far it has been prominently delays. atlanta had like one out of three flights delayed yesterday. the question is whether there will be cancellations today. about these to ask fees. for example, if you're about to board a plane and there is a flight that leaves an hour
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earlier and it is opened, there are extra seats, airlines are 150l charging you $100 or dollars to change, even though your already at the airport. why is that? guest: they like predict ability. that is why they charge lower fees -- the lower fares typically if you buy your ticket at least three weeks in advance. they want to know ahead of time how many people will fly. would cities their flying to so they can arrange the planes and the crew to be the cities where they need to be to give everybody moving. host: but all of these fees. if you change or fight in advance or change it at the airport, they charge a fee. you also have the baggage fee, which is $25 off and for the first bag and sometimes $35 for the second back, and they charge you for drinks on board the plane except for soda. guest: yes. generally, what they're trying to do is, as they compete over bundling,is called un
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for making all a cart the prices for all of the other service they offer. they think perhaps that is a more fair way to charge travelers because if you're someone who always goes with the carry-on cai go ahead, charge the people who have to bring checked luggage the $25 or $50 a bag, that way people who use the they would like to. you can paid upgrade your seat. you can pay for more legroom now. you can pay for food. bundling.ave been un the fees totaled billions of dollars here. they're becoming more all a card rather than one fare that will cover everything. host: is it a good or bad idea? guest: many consumers are upset about it because the fees aren't always the easiest thing to figure out. people don't like getting surprised at the airport when they find out they might have to pay extra for the bags.
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if your family a for going a vacation coming up to pay an extra $100 at the gate, that is frustrating some folks. but there are moves both in the department of transportation and among the airlines to make the fees more obvious. it is a big tussle now in the department of transportation about whether to order the airlines to at least make the fees for baggage, for seat assignment for basically part of the initial fair use the that is advertised upfront. their rule is still being developed. it is not been completed yet. it is not clear whether they will force that am a but the airline say they don't you to be forced. the competition will force them to either disclose the fees as readily as you like or, for some people, it is difficult to sort out what they have to pay. host: we're talking with bart jansen, graduate of the university of iowa, earned his
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masters from columbia university, has worked in a number of state capitals including annapolis, maryland, also cover the state legislature in idaho and portland, maine and is written for congressional courtly, newspapers, and the last two years, covering aviation issues for "usa today." jerry is joining us from new york. caller: good morning. comments. quick i work for the airline. southwest -- we call them low-cost carriers, but in today's day and age, if you really do a comparison online, the cost of flying this airlines are not that less than traveling on the legacy airline. two, i think airfares relatively cheap. if you try to book your ticket tomorrow -- look at today for flying tomorrow, it is relatively expensive. but if you book way in advance, it is relatively inexpensive to
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me and a pretty good deal. host: jerry, thank you for the call. guest: the airlines would love to have you know the cost of an airline ticket has dropped over the last decade compared to inflation, but the fares, measured directly, do not count the extra fees, and i am not familiar with anyone totaling the fares plus the fees and how they stack up. the airlines contend they provide an affordable service, especially when you think that one-third of their cost is fuel and fuel prices have risen dramatically over the last few years. as to low-cost carriers -- you are right. some folks say southwest is now the biggest domestic airline, flying more flights will -- than anyone else in the united states. should they be considered the upstart or the low-cost carrier?