You know, china has demonstrated some advanced capabilities on cyber. They havent conducted anything that might resemble warfare, per se, but they have stolen military secrets from the United States. That starts to see an area thats moving closer to offense than mere security and espionage. Russia has devil straighted a real cyber offense capability if you look at the war in georgia. There was a demonstrated capability to go on that kind of offense. And another looking to do a good job of that, if they want to is israel. If you look at the joint effort of the United States and israel to create the stuxnet worm that went after the Iranian Nuclear capabilities thats another major area. There might be some terrorist organizations interested in developing that. But those are the big players on the international scenes, the nation states to have any kind of real severe ability to conduct attacks. The nsa with north korea a lot of countries would probably have that capability. Its easier to attack the private sector than it is to attack the u. S. Government. What are the current rules of engagement . And are there any . And does the United States follow them and do other countries have rules of engagement . So, if there are any rules the United States adheres to it is hard to discern them. You know, some of the delving into the Class Society sector so it can be difficult for anyone to us is out what they might be. But when i talk to people what they tell me is that there arent any obvious rules. It is a very, very turkey area. It is something that the Defense Department has been working toward developing for a long time. And theres a Cyber Command that, you know is under the Defense Department and you know, joint effort with the National Security and there were recent calls in congress after the attack on sony to develop a formal policy on cyber offense. To develop more formal capabilities. But it is a very murky area. Where does all that stand . What does Congress Want to do, and what is the administration doing . Is the United States prepared for Cyber Attacks . So you know the even though there is this newer home for something to happen on normal cyber offense rules its really still even in the developmental stage. I started writing about cybersecurity back in 09ish, and a couple years later, you know i started asking about the offense side and people were saying gork were still trying to figure it out. Thats still where we are is trying to figure it out. And you know there was a limited bit of language in a fiscal 2012 defense operation, though basically saying we give your blessings to conduct cyber offense but in a very kind of vague way not in a specific way. As far as the United States overall ability to defend itself. Its, you know, its more advanced than most nations. Its nor advanced than probably any nation were talking about the government. Its still relatively easy by the nature of cyber attack to conduct an attack. Even on the u. S. Government. We were leaking secrets to china on accident for a very long time because because our defenses were not very good. Were probably still leaking some of those secrets and certainly the private sector is very vulnerable, as well. If the u. S. Were to, or have engaged in offense when it comes to Cyber Attacks, what agency would be doing that . So it would almost certainly be the Defense Department. Some combination of the u. S. Cyber command, and National Security agency would be leading that kind of effort. Its possible that there might be other agencies involved. But those would be the main ones to look at. The washington is reporting this morning, still starks, that theres going to be a new agency to sniff out threats in cyberspace. Sony picture hacks spurs the u. S. To set up rapid source on intelligence of intelligence on these attacks. This is going to be this is going to be made this announcement is going to be made later today by the administration and this will be an executive order put out by the president. What do you know about this new agency. What sort of role would it play . It looks as though it will be Something Like a National Counterterrorism center. That is a separate Agency Within the Intelligence Community that collects all the threat data and puts it in one place. Sounds like a very similar idea to that. It is the kind of thing that you know back when the nctc was starting to be formed, people ask why cant another agency do this, why cant the cia do this, why cant any other why cant the office of director of National Intelligence do this before the actual formalization of that office be informed . I think youll probably hear some similar questions. Why do we need a separate agency to do this when we have the department of Homeland Security which is supposedly the civilian. We have the National Security agency. Why cant one of those agencies just handle it . It sounds as though the Obama Administration thinks that a separate effort is needed similar to the nctc. And so back to this topic of going on the offense and asking our viewers whether or not they think we should be engaging in offense when it comes to Cyber Attacks, going to turn to our viewers here in just a minute and have them respond to this and get their take on it. What is what is happening next on this front . I mean is congress is there legislation percolating, is the Administration Planning something . Whos going to make the next move . So that will be an interesting question. There has been at times a little bit of tension between the administration wanting to do this on its own without any kind of congressional interference. And the Congress Wanting to get involved and writing the rules but also not wanting to get overly prescriptive. I think with the north korea, sony attack, there was theres increasing interest in actually congress doing something. You know, you saw the chairman of the house Homeland Security committee, Michael Mccaul last month say we need to develop rules on this. We need to strengthen our capabilities to do this. 44 i have not seen any formal written legislation yet. That doesnt mean that we wont see it especially from someone like chairman mccall, perhaps, or perhaps in the Defense Authorization bill this year or perhaps in intelligence authorization bill depending on who works to get involved from what end of things. I wouldnt be surprised to see Something Like that this year. At the same time i also wouldnt be surprised to see some pushback from the administration saying, let us figure this out. Weve been working on this for awhile. Were still trying to develop the rules on our end, give us a little space. Okay. All right. Tim starks, thank you for your time. No, thank you. A reminder well hear more about cybersecurity at 12 45 this afternoon live on cspan2 at the Wilson Center with lisa monaco, the white house Homeland Security, and counterterrorism adviser. Were here with the Senate FinanceCommittee Hearing this morning on the u. S. Tax code. Members will hear from former senators bob packwood, the oregon republic, and the democrat from new jersey bill bradley. Both former members of the committee and both were part of the 1986 tax bill under president reagan. Our live coverage under way here. Were waiting for senator hatch, who is the chairman. He opened the senate this morning. The senate started its session today, no firm legislative schedule has been announced yet but senators have been giving speeches about the Homeland Security bill and those provisions in it that would block the president S Immigration action. Live coverage of the senate over on cspan2. The house begins its legislative day today at noon. Theyll take up several bills. Includes one that provides 18 billion for nasa programs to replace the space shuttles with new launch systems to reach the International Space station by 2017. And also mars, for human exploration. Another bill calls for airports to have response plans for security threats. Tomorrow the house expected to take up the keystone xl pipeline and live house coverage always over on cspan. We see a couple of senators. A couple of them there in the room. This should be getting under way shortly. And here were here with the Senate Finance kitty. You can see the chairman, senator orrin hatch of utah. Hes the gentleman in the gray suit walking back to the center of the dais there. Were waiting yet it looks like for former senator bill bradley, the new jersey democrat. You did see a moment ago senator hatch talking with former senator bob packwood. Both senator former senator bradley and senator packwood will be witnesses today. Theyll be talking about some of that 1986 tax deal under president reagan. They were both members of the committee and they were part of that tax package. We do have live coverage and were under way as soon as this hearing gets gaveled in. Hearing will come to order. Todays hearing is about the need for tax reform and what lessons we can learn from the Tax Reform Act of 1986. The last successful overhaul of the United States tax code. We have before us today two former senators who were key to that effort. I dont know why they call you former senators. I think youre always going to be senators to me. I look forward to hearing their thoughts and advice, and i think we all do, during todays hearing. Before we engage meaningfully in tax reform we need a clear vision of what we want success to look like. A vision is not a specific system of rates, of deductions or credits. Instead a vision is how we want to change the opportunities for American Families and the rewards that americans receive from their labor. Entrepreneurship, and investment. A successfully reformed tax system will help make america the best place in the world to work, conduct business, invest, and prosper. A successfully reformed tax system will be one that provides economic growth, and is simple and fair. This, more than anything else, should be our vision for tax reform. The landmark Tax Reform Act of 1986 was developed by thenchairman bob packwood through a careful and methodical partisan bipartisan process that relied heavily on member input. Senator bradley was a key part of that process. I dont want to leave out congressman rostenkowski and a whole rash of others in the white house at that time. But these two are the two great leaders in the senate at that time. Over the last few weeks weve begun a similar process that we hope will yield a similar result. Tax reform legislation that both parties can support. The 1986 act signed in law by president reagan reformed a costly and complicated tax system into a simpler one, with lower tax rates for american households and businesses, affording them greater personal prosperity. Over time our tax system has once again become costly, complex, its impeding growth standing in the way of shared prosperity and placing American Workers and businesses at a distinct disadvantage. Put simply, it is past time for congress to stand up once again to fix our broken tax system. If youve been around washington over the last few years, chances are youve already heard me talk about tax reform. Ive been making the case for tax reform on the senate floor, here in the finance committee and public appearances and written materials and in private conversations. In december the republican staff of this committee produced a comprehensive report outlining the need for tax reform and providing some direction to our overall efforts. Im sure everyone here has read that report cover to cover. Ive already publicly laid out seven principles that i believe should guide our tax Reform Efforts. I will not go in to much detail on each principle today, instead ill just talk about them briefly. First principle is economic growth. Tax reform if its done correctly should promote growth and significantly reduce economic distortions that are present under the current income tax system. The second principle is fairness. The Income Tax Base which has become riddled with exclusions, exemptions deductions, and credits, should be as broad as possible. Tax reform should broaden the tax base by eliminating or reducing a number of tax expenditures along with lowering tax rates and removing distortion. The third principle is simplicity. The taxpayers and businesses spend over 6 billion hours a year complying with tax filing requirements, with annual Compliance Costs in excess of 171 billion. Which is more than the Gross Domestic Product of new zealand, for instance. Simplifying the tax code will result in greater clarity and compliance, and will free up resources for families job creation, and other productive uses. The fourth principle is revenue neutrality. Tax reform should be revenue neutral and not an occasion to raise taxes on american households or businesses. General revenues already exceed their historic average as a share of our economy and greater revenue should not be an objective of reform. The fifth principle is performance. The joint committee on taxation lists almost 100 provisions of the tax code that will expire over the next decade. This is unacceptable. Families and businesses should be able to plan for the future without wondering if the tax code is going to change from year to year. The sixth principal is competitiveness. The combination of a high Corporate Tax rate worldwide taxation and the temporary nature of some tax incentives makes American Companies less competitive when compared to their foreign counterparts. Tax reform should reduce burdens on businesses, large and small to allow them to more effective compete on the world stage. The seventh principle is the promotion of savings and investment. Many aspects of our current tax system discourage savings and investment, thereby hindering longterm growth. Savings and investment help build the Capital Stock providing fuel for economic growth, and it generates prosperity for American Workers and businesses. These seven principles are the guideposts that we use when looking at tax reform proposals. I think were going to have an interesting hearing today. We have two really great former leaders, chairman packwood and senator bradley, to see what advice they can give us if we undertake our tax Reform Efforts in this congress. I did read showdown in guchi gulf and some indication of how difficult this was. If anything it may be even more difficult today, because of the mess that has occurred since none of which you deserve to be blamed for. Senator widen . Thank you very much chairman hatch. As chairman hatch noted, the finance committee is joined this morning by two legislators who are at the heart of the last Major Overhaul of the u. S. Tax code in 1986. Chairman packwood spent more time than anyone figuring out how to make the numbers in tax reform work. That is the tough work of legislating. Senator bill bradley was the intellectual godfather of the reform plan that broadened the base closed loopholes and kept progressivity in the code. Senator bradley lit the fire that got the Reagan Administration invested in reform. And i dont think anyone would question my judgment that senator bradley had by a wide margin the best jump shot in the senate tall guy caucus. Now if theres one obvious similarity between 1986 and today its that people are quick to say that tax reform is absolutely impossible. Americans say congress cant organize a twocar parade. Theres no way they could come to the on Major Economic legislation. So what happened three decades ago needs to happen again. Turning the impossible into the possible. The congress and president reagan came to the to pass the 1986 Tax Reform Act based on what i call principled bipartisanship. One side wanted to flatten the tax code. The other side wanted to close loopholes and guarantee that the tax code treated everyone fairly. Both sides said were going to set aside the partisan attack. Look for Common Ground, and each side came away with the feeling that it had upheld its principles. When president reagan signed the bill into law, he called it an historic overhaul of our tax code, and a sweeping victory for fairness. He continued, and i quote here, its also the best antipoverty program, the best profamily measure, and the best Job Creation Program ever to come out of the congress of the United States. Those same objectives guide the finance committee in the congress that