[Senate Hearing 108-759]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-759

 
    BUILDING AN AGILE INTELLIGENCE COMMUNITY TO FIGHT TERRORISM AND 
                            EMERGING THREATS

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 8, 2004

                               __________

      Printed for the use of the Committee on Governmental Affairs


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                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania          RICHARD J. DURBIN, Illinois
ROBERT F. BENNETT, Utah              THOMAS R. CARPER, Delaware
PETER G. FITZGERALD, Illinois        MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire        FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama           MARK PRYOR, Arkansas

           Michael D. Bopp, Staff Director and Chief Counsel
       Michael L. Stern, Deputy Staff Director for Investigations
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
                    Kevin J. Landy, Minority Counsel
                      Amy B. Newhouse, Chief Clerk




                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Collins..............................................     1
    Senator Lieberman............................................     3
    Senator Coleman..............................................    18
    Senator Lautenberg...........................................    20
    Senator Sununu...............................................    23
    Senator Durbin...............................................    25
    Senator Shelby...............................................    28
    Senator Pryor................................................    30
    Senator Specter..............................................    32
    Senator Levin................................................    34
    Senator Voinovich............................................    37
    Senator Dayton...............................................    39
    Senator Carper...............................................    41

                               WITNESSES
                      Wednesday, September 8, 2004

Hon. Robert S. Mueller, III, Director, Federal Bureau of 
  Investigation..................................................     5
Hon. John E. McLaughlin, Acting Director of Central Intelligence, 
  Central Intelligence Agency....................................    11

                     Alphabetical List of Witnesses

McLaughlin, Hon. John E.:
    Testimony....................................................    11
    Prepared statement...........................................    70
Mueller, Hon. Robert S., III:
    Testimony....................................................     5
    Prepared statement...........................................    57

                                APPENDIX

List of items CIA has not provided to Senator Levin requests 
  (SASC).........................................................    85
Post Hearing Questions for Director Mueller from: (Responses to 
  these questions were not received by press time.)
    Senator Levin................................................    86
    Senator Akaka................................................    87
Post Hearing Questions for Director McLaughlin from: (Responses 
  to these questions were not received by press time.)
    Senator Levin................................................    88
    Senator Akaka................................................    93


                     BUILDING AN AGILE INTELLIGENCE
                      COMMUNITY TO FIGHT TERRORISM
                          AND EMERGING THREATS

                              ----------                              


                      WEDNESDAY, SEPTEMBER 8, 2004

                                       U.S. Senate,
                         Committee on Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:39 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Susan M. 
Collins, Chairman of the Committee, presiding.
    Present: Senators Collins, Voinovich, Coleman, Specter, 
Bennett, Fitzgerald, Sununu, Shelby, Lieberman, Levin, Durbin, 
Carper, Dayton, Lautenberg and Pryor.

             OPENING STATEMENT OF CHAIRMAN COLLINS

    Chairman Collins. The Committee will come to order.
    Good morning. First let me apologize for the late start for 
our hearing. Senator Lieberman and I were among a group of the 
Members of the House and the Senate who met with the President, 
Vice President, and Dr. Rice to discuss intelligence reform 
this morning, and as our two witnesses know better than most, 
you do not tell the President, ``Gee, I have to go. I have 
another appointment.'' So Senator Lieberman is on his way back. 
He will be here very shortly to join us.
    Today the Committee on Governmental Affairs holds its sixth 
hearing on the recommendations of the 9/11 Commission regarding 
the restructuring of America's Intelligence Community. I thank 
my colleagues for their dedication to the vital mission 
assigned to our Committee, and I welcome our distinguished 
witnesses whose testimony will help to guide us.
    In just a few days we will pause to commemorate the third 
anniversary of a monstrous unprovoked act of war. September 11, 
2001 was a day of unimaginable cruelty and inspiring heroism. 
It is a date all Americans, indeed all civilized people, will 
remember for all time.
    For the purposes of this task before this Committee, 
however, it is what happened, or more precisely, what did not 
happen, 3 years ago today, that is instructive. In the 
chronology of events leading up to the terrorist attacks, 
September 8, 2001, 3 years ago to the day, was not a remarkable 
day. Rather, it was like far too many other days for far too 
many years, a day of missed opportunities.
    On the night of September 8 one of the hijackers, Ziad 
Jarrah, began driving from Baltimore to Newark. Along the way 
he was pulled over for speeding. The Maryland State trooper who 
made the stop had no way of knowing that Jarrah had been in 
violation of his visa for more than a year, a violation that 
should have rendered him inadmissible on each of his six 
reentries into the United States, a violation that should have 
brought an abrupt end to the flight training he received in 
Florida. Nor could that trooper have known that foreign 
governments had advised U.S. intelligence of Jarrah's suspected 
ties to terrorism, of his possible attendance at al Qaeda 
training camps in Afghanistan, and of the likelihood that he 
held two passports in order to disguise his travels. Without 
access to any of that information, the trooper had no reason to 
do anything but write him a ticket and send the motorist on his 
way. Three days later Ziad Jarrah took the controls of Flight 
93.
    Also on September 8, a memo received at FBI Headquarters 
outlined the concern of an agent in the Phoenix Field Office 
that Osama bin Laden had mounted a concerted effort to enroll 
al Qaeda recruits in American flight schools. The memo was not 
read that day, just as it had not been read since the agent 
sent it nearly 2 months earlier.
    On September 8, Zacarias Moussaoui was in his third week of 
detention on an immigration violation. His extremist beliefs, 
his strong ties to al Qaeda, and his interest in flight 
training were known to field agents in several components of 
the Intelligence Community. Despite the continued urging of 
those field agents, September 8 was just another day in which 
this information was not shared. No top intelligence officials 
were briefed and no action was taken. The 9/11 Commission 
observes that a maximum effort to investigate Moussaoui might 
have brought investigators to the core of the September 11 
plot.
    Also on September 8, the CIA had in its possession what the 
Commission describes as the final piece of the puzzle, 
information linking Khalid Sheik Mohammed to an alias that he 
used in planning acts of terrorism. Had this piece been 
connected to other pieces possessed by various intelligence 
agencies, a clear picture might have emerged of a top bin Laden 
lieutenant who had been recruiting operatives to travel to the 
United States to carry out acts of terrorism and who had 
definite links to Moussaoui.
    But September 8, 2001 was no different from the days 
before. The pieces remained unconnected. The puzzle remained 
unsolved.
    Much has changed since that time. There have been many 
improvements. We have created the Department of Homeland 
Security. The Joint Terrorism Task Force Program has been 
expanded. The Terrorist Threat Integration Center is up and 
running. The cooperation and coordination among our 
intelligence agencies have never been better and have been 
vastly increased. The two agencies represented here today, the 
FBI and the CIA, have been leaders in this effort.
    We have strengthened our defense against terrorism and we 
have gone on offense against the terrorists. But we have not 
yet transformed an Intelligence Community designed for the Cold 
War into one with the agility to respond to threats that range 
from nuclear missiles in North Korea to an al Qaeda operative 
on a highway in Maryland.
    An important step was taken less than 2 weeks ago when the 
President issued a series of Executive Orders to strengthen our 
Intelligence Community, but as the President noted at that 
time, these orders are not an alternative to congressional 
action. They are a starting point. We need to institutionalize 
through law many of the reforms that have been implemented by 
the leaders before us today. We must continue the dramatic 
progress that has been made since September 11. The 
intelligence structure we create must be designed for the 
demands of the 21st Century, for the current war against 
terrorism and for new challenges that we do not yet even 
envision.
    On September 8, 2001, America was a Nation asleep. Three 
days later we were jolted awake. Three years later, as we again 
prepare to reflect on the attacks on our country on that day, 
we must remain alert and committed to doing everything we can 
to provide a more secure future for our country.
    Senator Lieberman.

             OPENING STATEMENT OF SENATOR LIEBERMAN

    Senator Lieberman. Thanks very much, Madam Chairman, for 
that excellent statement, and for the leadership of this 
Committee that you have shown with such perseverance and 
steadfastness. I really feel as we convene this hearing, as the 
Congress reconvenes, that thanks to your leadership we have set 
a pace and also pursued a course of substantial inquiry that 
puts our Committee with this hearing and at least one, maybe 
two more that we will hold next week, in a position to meet, in 
fact, to beat the deadline that the Senate leadership has set 
for us, which is to mark up a bill and report it out to the 
Senate in response to the 9/11 Commission Report before October 
1. I cannot thank you enough for that, and I would also like to 
express my continuing pleasure in working with you on this 
critically important task.
    I extend a good morning to our witnesses, Director Mueller 
and Director McLaughlin. Thank you both for literally decades 
of public service, and for standing strong on this particularly 
critical post-September 11 era of American history in working 
so well together to improve our security. I look forward to 
your testimony this morning.
    I want to say, just looking back quickly over the several 
hearings that we have held since the 9/11 Commission Report, 
that my own initial positive reaction to the Commission's 
recommendation of a National Intelligence Director has in fact 
been strengthened by the testimony we have heard about the way 
the Intelligence Community's budget is developed, and 
particularly about the respective roles of the Department of 
Defense and the Director of Central Intelligence.
    It seems clear to me at least that this partnership has not 
been as equal as we would want it to be, nor has it really in 
fact mirrored what the law seems to ask of and give to the 
Director of Central Intelligence. That begins with the fact 
that though the law gives the DCI certain authority, 80 percent 
of the Intelligence Community's budget is under the Department 
of Defense. The DCI is then held responsible for any 
intelligence failures that occur, leading to a situation with 
accountability but a lack of authority. That never works. I 
think one of our main goals here should be to give authority 
where it belongs, to a strengthened DCI, which we now call the 
NID, the National Intelligence Director.
    We have also heard concerns expressed that creating a 
strong NID will make it more difficult for our war fighters in 
the field to receive the intelligence they depend on to 
prevail. But we have heard ample evidence that the NID will, 
indeed must, continue to make sure that the National Security 
Agency, the National Reconnaissance Office, the National 
Geospatial Agency, and all the other national assets serve the 
needs of the troops in the field, but to do so while also 
ensuring that the other critical national intelligence and 
security priorities we have are being met. That is the function 
of the new NID.
    Personally I conclude that the Director of Central 
Intelligence today lacks the budget and personnel authorities 
necessary to achieve the kind of unity of effort that we did 
not have prior to September 11, as the examples that Senator 
Collins has just given make amply clear. For example, while the 
present DCI has authority on paper to transfer personnel or 
funds between agencies, we have heard testimony that with so 
many qualifications and approvals necessary, that process can 
and usually does take as long as 5 months. That is no way to 
run a national intelligence operation in a time of war.
    I believe that our hearings have thus far also answered 
several critics of the Commission's recommendations who contend 
that the intelligence failures that did occur prior to 
September 11 were solely at or between the FBI and the CIA. As 
more than one witness has stated, when George Tenet, the 
Director of Central Intelligence declared war on al Qaeda, as 
far back as 1998, the heads of the other major intelligence 
organizations, including some of the national assets that the 
DCI does not have effective budget authority over, did not 
respond. I think the lack of real authority by the head of the 
Intelligence Community is clear and is a major problem that we 
must address.
    That was not the only example. We have heard other examples 
of times in the National Security Agency when there was a tug, 
justified understandable, between the Intelligence Community 
and DOD for National Security Agency assets, and because of the 
strength of DOD too often DOD wins those struggles, when in 
fact there are times that the DCI and the National Intelligence 
Community, in the national interest, serving the President, 
should win them. I think the balance we are talking about will 
change that.
    Madam Chairman, as you said and we are all aware, there 
have been some very important improvements and advances in 
cooperation among the different agencies, particularly the two 
represented before us today, the FBI and the CIA. I know that 
some have been led by that to argue that the Commission's 
recommendations are based solely on the pre-September 11 
situation, and do not take into account progress since then. 
Chairman Kean and Vice Chairman Hamilton have testified to us 
otherwise. The men and women who work in our Intelligence 
Community, in the CIA, in the FBI, and the many agencies that 
we have considered, are working to overcome the institutional 
barriers that have been revealed that made us vulnerable on 
September 11 and to keep the American people safe. But it is 
clear from the many hearings we have had in this Committee and 
other committees that we have made progress but we still have a 
long way to go, and the best way to get there is through the 
kind of statutory change that this Committee is in a position 
to recommend to the full Senate.
    I just add very briefly that Senator Collins and I, and 
Senator Levin and others, both parties in both houses, had the 
privilege of being at the White House today for a meeting with 
the President. I think the President made a very significant 
announcement, which is that the administration will support 
strong budgetary authority for the National Intelligence 
Director, certainly over what is called the National Foreign 
Intelligence Program, which constitutes well over half, in fact 
well beyond that, of the intelligence budget of our government. 
That is a very significant step, including an endorsement of 
the concept in the 9/11 Commission Report of the centers that 
are proposed to make sure all parts of our Intelligence 
Community are working together.
    This position taken by the President this morning gives me 
certainly high hopes that we will do what I know Chairman 
Collins and all of us want to do which is to adopt strong 
bipartisan reform and reorganization of our Intelligence 
Community, which builds on the strengths that we have now as 
represented by the two strong leaders who are before us, but 
improves to the point that history has shown us we must 
improve, and we can do so soon. I think we all know that in 
this case, I believe, the phrase ``proceed with caution'' could 
just as easily mean ``move slowly at your own peril,'' and I do 
not believe this Congress is going to allow that to happen.
    Thank you, Madam Chairman.
    Chairman Collins. Thank you, Senator Lieberman.
    I would now like to introduce our two distinguished 
witnesses. Each of them has devoted a considerable part of 
their lifetime's work to public service and we are very 
grateful for their service to our country.
    Robert Mueller became Director of the FBI on September 4, 
2001, just 1 week before the terrorist attacks. He immediately 
became responsible for spearheading what is perhaps the most 
extensive reorganization of the FBI since its inception in 
order to strengthen the Bureau's antiterrorism efforts.
    John McLaughlin became Acting Director of Central 
Intelligence on July 12 of this year. He had been Deputy 
Director of Central Intelligence since October 2000, but I 
would note that he is a long-time intelligence professional. I 
believe his career with the CIA actually started in the 1970's, 
if I remember correctly.
    I want to thank you both for sharing your experience and 
expertise and judgment with us today, and Director Mueller, we 
will start with you.

TESTIMONY OF HON. ROBERT S. MUELLER, III,\1\ DIRECTOR, FEDERAL 
                    BUREAU OF INVESTIGATION

    Mr. Mueller. Thank you and good morning, Madam Chairman, 
Senator Lieberman and other Members of the Committee.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Mueller appears in the Appendix 
on page 57.
---------------------------------------------------------------------------
    I appreciate the opportunity to be here today to provide 
the FBI's views on intelligence reform. I would like to start 
by expressing my gratitude for the efforts of so many inside 
and outside of government, and particularly the 9/11 Commission 
and this Committee, who have worked to ensure that our national 
intelligence capability is postured for success against the 
adversaries of the 21st Century, and the overarching objective 
must drive all efforts for reform.
    To understand our views on Intelligence Community reform it 
is perhaps important to first understand how we, in the FBI, 
believe intelligence should be managed and how it should be 
produced. We believe that the management of intelligence should 
be centralized, the management centralized, but that its 
production should be distributed. For the FBI that means that 
the Office of Intelligence provides guidance to ensure that we 
focus intelligence collection and production on intelligence 
priorities and on filling gaps between what we know and what we 
do not know. This centralized management overlays our 
headquarters divisions and our field offices, which themselves 
remain responsible for intelligence collection, operations, 
analysis and reporting. The result of this approach is that 
intelligence and operations are integrated, that the users of 
intelligence, not the producers, are the judges of the 
intelligence value. These principles have guided the 
development of our intelligence program at the FBI since 
September 11.
    The FBI's Office of Intelligence manages intelligence 
production based on requirements, apportions resources based on 
threats, and sets standards of intelligence cadre training, 
source development and validation and collection tasking. The 
actual production of intelligence occurs within our 56 field 
offices, 400 resident agencies, our four operational 
headquarters divisions and perhaps most importantly, by our 
800,000 partners in State, local and tribal law enforcement. 
The Office of Intelligence continually monitors performance 
through embedded intelligence elements in the field and in 
headquarters and adjusts tasking and resources based on 
nationally directed intelligence requirements. The authorities 
and responsibilities of our Office of Intelligence allow it to 
carry out two broad areas of responsibility: Management of the 
FBI Intelligence Community Component; and direction to it to 
ensure that its activities are in keeping with the priorities 
established by the President and the needs of the users of 
intelligence.
    Turning to the proposals for intelligence reform, there is 
widespread agreement now existing as to the necessity of 
creating a National Intelligence Director as the manager of 
intelligence production across the 15 Intelligence Community 
components. We also think that the National Intelligence 
Director should not be directly responsible for the conduct of 
operations. The role of the NID should instead be to ensure 
that appropriate activities and operations are conducted by the 
constituent elements of the Intelligence Community.
    Given the model above, we believe that the NID should have 
a mechanism by which the principals of the National Security 
Council and the Homeland Security Council, and the Directors of 
the CIA, the FBI, and other relevant departments and agencies, 
are charged with ensuring the responsiveness to the direction 
of the NID in managing implementation of that direction. These 
individuals represent in large measure the users of 
intelligence, and will bring to the National Intelligence 
Director the views of the users as they set priorities and 
evaluate Intelligence Community performance. In reality, the 
principals would delegate that responsibility to a subordinate, 
and in our case in the FBI it would be to Maureen Baginski, the 
Executive Assistant Director for Intelligence.
    Madam Chairman, the model I have outlined incorporates 
three core principles for intelligence reform that we think 
this Committee should consider as it seeks to enact 
legislation. These three principles are: First, providing 
analysts transparency into sourcing; second, understanding the 
value of operational chain of command; and third, protecting 
civil liberties.
    Turning to the first principle, we believe it is important 
that analysts be provided transparency into intelligence 
sources. Just as agents need to question the background, 
motivation and access of their sources, analysts must also 
examine the credibility of sources who provide intelligence 
information. FBI analysts do not blindly receive source 
information and then develop intelligence reports and threat 
assessments based on that information. Instead, our analysts 
have transparency to our sources, and the result is a high 
quality intelligence product.
    Historically, individual FBI agents would collect 
information, analyze that information in the context of their 
particular case, and then use that analysis to guide their 
investigation. But the FBI, as an institution, had not elevated 
that analytical process above the individual case or 
investigation to an overall effort to analyze intelligence and 
strategically direct intelligence collection against threats in 
all of our programs. Today we are doing so, and I believe are 
doing so successfully. Not only does the FBI remain among the 
best collectors of information in the world, we now have 
enhanced our capability to exploit that information for its 
intelligence value. Ensuring that our analysts, not just our 
agents, have access to information about our sources plays an 
important role in the development of thorough and reliable 
intelligence products.
    In the ongoing debate regarding intelligence reform, some 
have suggested that a new entity composed of analysts be 
created, as well as a separate entity for the intelligence 
collectors. We believe that creating such stovepipes would be a 
step backward in the progress we have made since September 11. 
Our success has been enhanced by co-locating our analysts with 
those who must act on the intelligence. The physical and 
logistical proximity of the analysts to the collectors results 
in increased transparency for the analysts, which in turn, in 
my mind, results in better analysis.
    The second core principle to consider in reforming the 
Intelligence Community is the value of the operational chain of 
command. The 9/11 Commission Report recommended the 
establishment of a National Counterterrorism Center as the 
logical next step to further enhance the cooperation between 
intelligence, national security and law enforcement agencies. 
That was first initiated by the Terrorist Threat Integration 
Center subsequent to its establishment in the wake of September 
11. As you know and have referred to, Madam Chairman, the 
President recently issued an Executive Order establishing the 
National Counterterrorism Center. Among the provisions of the 
Executive Order is the directive that the NCTC assign strategic 
operational responsibilities to lead agencies for 
counterterrorism activities that are consistent with the law. 
The Executive Order also explicitly states that: ``The Center 
shall not direct to execution of operations.'' This directive, 
which comports with the recommendation of the 9/11 Commission, 
recognizes the importance of leaving operational control in the 
hands of the agencies.
    At least one of the pending legislative proposals for 
intelligence reform would transfer the Counterterrorism and 
Counterintelligence Divisions out of the FBI and into a new 
entity. We believe that such a proposal fails to recognize that 
most of the FBI's investigative work is accomplished not at 
headquarters but by its 56 field offices and 400 satellite 
offices located throughout the country. An interdependent 
relationship exists between FBI headquarters divisions and our 
geographically field offices, both in terms of operational 
coordination of investigations and a routine exchange of 
personnel. This interdependent relationship and chain of 
command between field offices and headquarters divisions cannot 
be disrupted and still continue to be effective.
    The FBI's components, particularly the Counterterrorism and 
Counterintelligence Divisions are not distinct and severable 
entities. Rather, they are fluid combinations of a variety of 
personnel. They include long-term professional employees such 
as analysts, who have spent decades developing a subject area 
expertise, mid-career field agents serving 2- or 3-year tours 
of duty to expand or hone their counterterrorism or 
counterintelligence experience before returning to management 
positions in field offices, and senior FBI executives who have 
proven themselves in leadership roles in the field or in other 
headquarters components.
    If the operational divisions are removed from FBI 
Headquarters as some have proposed, a large portion of the 
FBI's counterterrorism and counterintelligence program will 
still effectively remain within the FBI in the form of the 
counterterrorism, counterintelligence squads, and task forces 
in field offices, as well as designated counterterrorism and 
counterintelligence agents in our various satellite offices. 
Separating our counterterrorism and counterintelligence leaders 
from the information collectors and investigators would result, 
in my mind, in less effective coordination and a less safe 
America.
    In addition, it is important to understand that the FBI's 
intelligence capabilities are enterprise-wide. Intelligence is 
integrated into all of the Bureau's investigations, not just 
counterterrorism and counterintelligence. Some of the reform 
proposals would carve out sectors of the FBI, but fail to take 
into account that our counterterrorism and counterintelligence 
efforts benefit enormously from the intelligence garnered 
through our criminal investigations, our cyber crime 
investigations, the work of the FBI laboratory and many of our 
other programs. Altering the operational chain of command for 
any FBI program would impair the integration of intelligence 
that is proven effective in our national security efforts since 
September 11.
    The third, and for us perhaps the most important core 
principle, is a need to protect civil liberties. As former DCI 
George Tenet stated in a hearing earlier this year, the way the 
CIA conducts operations overseas is very different than the way 
the FBI conducts operations at home. Concentrating domestic and 
international counterterrorism operations in one organization 
represents a serious risk to American civil liberties. It is 
difficult to expect an agent trained in conducting operations 
overseas to fully appreciate the necessary legal constraints 
placed on operations conducted within the United States when we 
are conducting operations that would and could and often does 
adversely affect the privacy rights of our citizens.
    Let me turn for a moment to the words of the 9/11 
Commission's Report, which stated, ``The FBI does need to be 
able to direct its thousands of agents and other employees to 
collect intelligence in America's cities and towns--
interviewing informants, conducting surveillance and searches, 
tracking individuals, working collaboratively with local 
authorities, and doing so with meticulous attention to detail 
and compliance with the law. The FBI's job in the streets of 
the United States would thus be a domestic equivalent, 
operating under the U.S. Constitution and quite different laws 
and rules, to the job of the CIA's operations officers 
abroad.''
    The legal limitation, the oversight mechanisms and self-
regulatory practices of the Bureau effectively ensure that our 
operations are carried out within the Constitution and 
statutory parameters. Indeed, a number of outside entities, 
including the Government Accounting Office and the Office of 
Inspector General, have looked at our operations since 
September 11 and found that we have conducted them with full 
regard to civil liberties. I might also add that just last 
month the President issued an Executive Order creating a board 
on safeguarding American civil liberties. That effort will be 
launched this month, and the FBI will be a participant in that 
board.
    Recognizing the significant progress the Bureau has made in 
the past 3 years, the 9/11 Commission recommended that the 
counterterrorism intelligence collection in the United States 
remain with the Bureau. We are pleased with the progress that 
we have made since September 11, and I have spent some time 
testifying on that in the past. Today I would like to spend 
just a moment in giving you a brief update on some of our most 
recent efforts. I will not cover all of those that are included 
in my statement, I will just touch on a few of them.
    We are moving within the Bureau to the creation of a FBI 
Directorate of Intelligence, a service within a service, as 
recommended by the Commission and recommended by some Members 
of Congress.
    We have established field intelligence groups in each FBI 
field office to integrate analysts, agents, linguists and 
surveillance personnel in the field to bring a dedicated team 
focus to intelligence operations.
    We have set unified standards, policies and training for 
intelligence analysts, and as part of a new recruiting program, 
veteran analysts are attending events at colleges and 
universities throughout the country, and we are offering hiring 
bonuses to analysts for the first time in FBI history.
    We are establishing an intelligence officer certification 
program for agents, analysts, surveillance specialists, and 
language analysts. Once established, intelligence officer 
certification will be a prerequisite for advancement, thus 
ensuring that all FBI senior managers will ultimately be fully 
trained and experienced intelligence officers.
    We are establishing a career path in which new special 
agents are initially assigned to a small office and exposed to 
a wide range of field experiences, and after approximately 3 
years agents will then be transferred to a large field office 
where they will specialize in one of four program areas: 
Intelligence, counterterrorism/counterintelligence, cyber, or 
criminal, and will receive advanced training tailored to their 
area of specialization. In our special agent hiring, we have 
changed the list of critical skills we are seeking in 
candidates to include intelligence experience and expertise, 
foreign languages, and technology.
    We have placed reports officers in our Joint Terrorism Task 
Forces to ensure that vital information is flowing to those who 
need it, and since September 11, where we had 34 Joint 
Terrorism Task Forces, we have now expanded that number to 100.
    We have issued the first ever FBI requirements and 
collection tasking documents to our field offices. These 
documents are fully aligned with the DCI's National 
Intelligence Priorities Framework, and we have published 
unclassified versions for our partners in State, local, and 
tribal law enforcement. This year we are on course to triple 
the volume of intelligence reporting that we disseminate to the 
Intelligence Community as well as to State, local, and tribal 
law enforcement.
    In conclusion, Madam Chairman, the FBI's combined mission 
as an intelligence, counterterrorism, and law enforcement 
agency gives us the singular ability to exploit the connections 
between terrorism and criminal activity. Now that the Patriot 
Act has removed the wall between intelligence and law 
enforcement investigations, the FBI has a unique capacity to 
handle both the criminal aspects and intelligence gathering 
opportunities presented by any terrorism case, giving us the 
full range of investigative tools. We are concerned that some 
pending proposals would erect new walls between our law 
enforcement and our intelligence missions. We also would hope 
that Congress would renew the Patriot Act because no matter how 
the organizational charts are drawn, we will continue to need 
these vital tools in both the law enforcement as well as the 
intelligence arena to prevent acts of terrorism against the 
American people.
    Over the past 3 years the Bureau has made great strides, 
yet I am the first to say there is a great deal of work that 
remains to be done. We have a plan in place to get to where we 
need to be, and we have the hard-working, dedicated men and 
women of the FBI to take us there.
    Madam Chairman, I thank you and the Members of the 
Committee for your support and your advice. I look forward to 
working with you to develop legislation to strengthen our 
intelligence apparatus and better ensure the protection of the 
American people. As always, I welcome any suggestions you have 
for improving our counterterrorism efforts in strengthening our 
national security.
    Thank you again for the opportunity to appear before you 
today, and I am certainly happy to answer any questions you 
might have.
    Chairman Collins. Thank you for your testimony. Director 
McLaughlin.

  TESTIMONY OF HON. JOHN E McLAUGHLIN,\1\ ACTING DIRECTOR OF 
       CENTRAL INTELLIGENCE, CENTRAL INTELLIGENCE AGENCY

    Mr. McLaughlin. Madam Chairman, Senator Lieberman, Members 
of the Committee, thanks for the opportunity to be here today 
and to talk to you about all of these matters and to answer 
your questions. It is very important to us, and I appreciate 
that opportunity.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. McLaughlin appears in the 
Appendix on page 70.
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    As you consider reorganization proposals by the President, 
the Kean Commission and the Congress, I would like to take a 
few minutes to talk about the capabilities of the Intelligence 
Community as it is today, not as it was in 2001. And I do this 
not to suggest that there is no further need for change, but to 
emphasize that the foundation you have to build on is stronger 
than many people realize as they look at the Intelligence 
Community today.
    That said, we can still do better, and I am going to close 
with some suggestions on how that can be accomplished.
    Three years of war have profoundly affected the 
Intelligence Community. Since September 11, our capacity and 
effectiveness have grown as our resources have increased and as 
we have addressed issues highlighted by our internal reviews, 
by the Commission, and by others. We have adjusted to new 
challenges, we have built on successes, and we have learned 
from errors. This has been the most dramatic period of change 
for intelligence in my memory, and you alluded to some of the 
changes, Madam Chairman. Some further examples:
    Our priorities, the Nation's, and the Intelligence 
Community's, have changed dramatically since September 11. As 
you said, Madam Chairman, we are on the offensive worldwide 
against terrorists, and many of the most dangerous are captured 
or dead.
    Our practices have changed. Intelligence, law enforcement 
and military officers serve together and share information in 
real time on the front lines in the war on terrorism at home 
and abroad. Here in Washington, I chair an operational meeting 
every day with Intelligence Community representatives, military 
and law enforcement elements there. At that meeting we review 
and act on information that arrives in real time. We follow up 
earlier streams of reporting. We ensure that someone has the 
responsibility to follow up and get the job done, and we have 
gotten important results.
    Our worldwide coalition had changed. It is broader, deeper 
and more committed. Where terrorists found sanctuary before, 
they now find our allies working against them, and we are 
seeing the results around the world.
    Our laws have changed. Director Mueller referred to the 
Patriot Act. It has given us weapons in the war that we did not 
have before. It has given us access, critical access, that we 
did not have before in the foreign Intelligence Community.
    Our institutions have changed. The Terrorist Threat 
Integration Center enables us to fuse intelligence collected 
abroad with law enforcement information collected here at home. 
Twenty-six different data networks now flow there, and they are 
shared there by officers from the widest array of foreign and 
domestic agencies ever assembled in one place. People who think 
we cannot break down the so-called stovepipes ought to visit 
TTIC, and I know a number of you have.
    Now, here are a few real-world effects for those changes:
    Many of al Qaeda's pre-September 11 leadership are dead or 
detained. In almost every case, the take down was a result of 
aggressive clandestine human and technical operations involving 
effective cooperation among various intelligence disciplines 
and with law enforcement.
    It was imaginative operations and analysis, CIA officers 
working with the U.S. military, that helped drive armed forces 
operations and ousted the Taliban from power in Afghanistan, 
destroying the al Qaeda sanctuary in the process.
    CIA, FBI, and Treasury officers, working together as 
partners at home and abroad, are starving al Qaeda of its 
financial lifeblood.
    CIA worked with the FBI as it took down extremists in 
Lackawanna, Columbus, and New York City.
    One area of crucial change for the Intelligence Community 
is its dramatically increased support to the war fighter, 
especially in Afghanistan and Iraq, where the terrorist 
challenge remains substantial. I believe such support can and 
will be preserved in any option that we consider. Everyone in 
the Intelligence Community understands that NSA and NGA in 
particular, both integral parts of the National Intelligence 
Community, have a vital role to play in supporting combat, as 
does the CIA, and that role would have to be preserved 
regardless of who they report to or how this community is 
ultimately structured.
    In short, the situation has changed pretty dramatically 
since September 11, where the 9/11 Commission left off. Two 
things however are still true: Al Qaeda and other terrorists 
remain very dangerous; and there is still room for improvement 
in the Intelligence Community. But the caricature that many 
seek to perpetuate of a community that does not share 
information or work together, a community of turf-conscious 
people competing for influence, that frankly, is not the 
community that I see and lead today.
    Looking ahead now, it is important to note that the threat 
from terrorist organizations is not stagnant. These 
organizations learn and adapt. It is not enough for us to keep 
up. We must anticipate and stay ahead. As we seek to build on 
the improvements we have made in recent years, we should keep 
in mind a few of what I would call first principles, just as 
Director Mueller referred to a few core principles.
    First, speed and agility are the keys to winning in the war 
on terrorism, and profoundly important to the Nation's other 
intelligence challenges. Speed and agility are not promoted by 
complicated wiring diagrams, more levels of bureaucracy, dual-
hatting, or uncertainty about who is in charge, but speed and 
agility are promoted by having the right tools to do the job, 
such as the essential tools provided by the USA Patriot Act.
    Second, form should follow function. The functions 
intelligence must perform today are dramatically different than 
during the Cold War. Back then we focused heavily on large 
strategic forces and where countries stood in the bipolar 
competition of that day. Contrary to what is often said, we 
long ago moved on to the new challenges of today, locating 
people, tracking shipments of dangerous materials, and 
understanding politics down to the tribal level in a world 
where the only constant is change.
    Third, most important to knowing how and what to change is 
a consensus on what we actually want from our intelligence 
agencies, along with constancy in resources and moral support 
for them through good times and bad.
    Fourth, some competition is good. Because intelligence 
reporting can often be interpreted in many different ways, we 
want all interpretations on the table and an Intelligence 
Community that facilitates rigorous debate.
    Fifth, our foreign partnerships are absolutely critical and 
serve as a force multiplier in the global war on terror. 
Changes in our structure must ensure that there is no harm done 
in how we build, manage, and strengthen these invaluable 
relationships.
    As you know, on August 27, the President signed four 
Executive Orders and two Presidential Directives intended to 
address several recommendations of the 9/11 Commission. The 
President's actions strengthens the foundation upon which you 
can build. In those Executive Orders there are some significant 
changes.
    First, the DCI will have access to all relevant 
intelligence relating to transnational terrorism and weapons of 
mass destruction, including information from the FBI and the 
Department of Homeland Security.
    Second, the President made clear that the DCI must be able 
to determine--and that is the key word in that Executive Order, 
determine--the annual and consolidated national foreign 
intelligence program budget, with the advice of heads of 
departments or agencies that have an organization within the 
Intelligence Community. This clarifies significantly the DCI's 
authority over the national foreign intelligence program.
    Third, in establishing the National Counterterrorism 
Center, the President underscored the government's commitment 
to create a central and shared knowledge bank on known and 
suspected terrorists. For the first time, strategic planning 
for counterterrorism activities, integrating all elements of 
national power and integrated all-source analysis will occur in 
one place, overseen and orchestrated by a director reporting to 
the DCI, and should you create a National Intelligence 
Director, ultimately to that person.
    Regarding the leadership of the Intelligence Community, I 
have argued and continue to believe that a significantly 
empowered DCI could fulfill the spirit of the 9/11 Commission 
recommendations. Nonetheless, now that the President has 
committed to create a National Intelligence Director, my sole 
interest is ensuring that this person, this individual can 
succeed, and I think this will require new authorities and 
structures. Ideally, a single person responsible for all 
national intelligence activities should, for example:
    Maintain independence and objectivity as the President's 
principal intelligence advisor; have full authority to 
determine, reprogram and execute all funding for the core 
national intelligence agencies, principally, CIA, NSA, NGA and 
NRO; have clear authority to provide strategic direction to 
these agencies and drive their collection and analytic 
priorities; have the authorities necessary to reorient 
intelligence capabilities to meet emerging threats and 
priorities; have direct access to substantive experts to help 
fulfill his or her responsibilities as the Nation's principal 
intelligence officer; have the authority to bridge any 
remaining divides between foreign and domestic intelligence 
activities in the area of policy and particularly information 
technology; have the authority to determine education and 
professional development standards and personnel management 
policies and incentives; and finally, to ensure the continued 
synergy that results from the close interaction of operators 
and analysts at a number of places now in our Intelligence 
Community.
    All of this, of course, would involve major changes for our 
intelligence system. It would require additional legislative 
changes such as a separate appropriation for the national 
foreign intelligence program, and some organizational 
realignment that you are considering. Given the heavy reliance 
on intelligence by the Defense Department, I believe it would 
be important to codify the National Intelligence Director's 
responsibility for meeting military intelligence requirements. 
At the same time, these national intelligence agencies must 
support the missions of all the other foreign and domestic 
organizations, such as the State Department, the FBI, Treasury, 
and Homeland Security. All of them have vital roles to play in 
protecting our people here at home. I believe though that a 
fully empowered National Intelligence Director would be able to 
strike this important balance.
    Let me close by saying that no matter how successfully we 
anticipate future challenges, we will not foresee them all. So 
we will need the ability to adapt our organizations to change 
easily and quickly. We will need flexibility in shifting 
resources, people, and money, to respond to shifting 
priorities. The new Executive Orders and Directives are a 
significant and important step in the right direction, but 
cannot effect all of the changes necessary to adapt our 
Intelligence Community to the challenges of the 21st Century.
    Thank you, Madam Chairman, and I am prepared to take your 
questions.
    Chairman Collins. Thank you.
    I would tell my colleagues that I hope to do two rounds of 
questioning today, so if everyone could adhere to the 6 minutes 
in the first round, we will do a second round.
    Director Mueller, I very much appreciate your listing as a 
core principle of the FBI for intelligence reform the need to 
protect civil liberties. Oftentimes in the debate on the 
reforms I think that issue, which is so critical, has been 
slighted, and I appreciate your listing it front and center as 
one of your most important principles. Some, such as former CIA 
Director Bob Gates, have expressed concerns that the 
establishment of a National Intelligence Director and a 
National Counterterrorism Center, with authorities that would 
bridge the foreign and domestic divide, would erode the 
separation between domestic law enforcement and foreign 
espionage. As we know, when the CIA was first created back in 
1947, President Truman, among others, took great pains to make 
sure that the lines were clearly drawn.
    Do you have any suggestions for safeguards that this 
Committee could incorporate into our legislation to ensure that 
the protection of our safety in the war against terrorism does 
not result in an erosion of civil liberties?
    Mr. Mueller. I think, as the drafters go about looking at 
the language, that the drafter should be very careful to 
distinguish between strategic planning and specific tasking. In 
other words, I believe that a National Intelligence Director, 
or under the National Intelligence Director, the head of the 
National Counterterrorism Center, should play a role in 
coordination of our efforts across the agency lines, whether it 
be the FBI, the CIA, or the Department of Homeland Security, 
coordination, planning, establishing collection requirements, 
but how you go about responding to that dictate should be the 
responsibility of the individual agencies.
    If you are clear in drafting the language, then it is clear 
that the FBI, reporting through the Attorney General, collects 
the intelligence according to the guidelines established by the 
Attorney General and according to the statutes that guide our 
collection of intelligence, and you maintain that division.
    One of the things I believe in is the importance of 
continuously attempting to integrate the analytical side of it 
as opposed to the collection side, but also when you have 
something I will call a transnational intelligence 
investigation, where you have information or intelligence 
gathered overseas about a threat in the United States, and we 
have to investigate some persons in the United States, and the 
CIA has to investigate persons outside the United States, there 
has to be an exchange of information, there has to be a 
coordination of those investigations. But how those 
investigations are carried out should be left to the discretion 
of either the Director of Central Intelligence or the Director 
of the FBI.
    Chairman Collins. Thank you. We look forwarding to working 
closely with you on that very important issue.
    Director McLaughlin, in your testimony you alerted us to 
concerns about parts of the Commission's plan about which you 
have reservations. You talked about dual-hatting, for example, 
and I agree with you that that raises uncertainty in the chain 
of command. You say, and you have said this time and again, 
that speed and agility are the keys to winning the war on 
terrorism. What authorities do you think that the National 
Intelligence Director should have in order to improve the speed 
and agility of the Intelligence Community? I know you would 
prefer to have more authority vested in the DCI, but since we 
are headed towards a NID, how can we achieve your goal of 
improving the speed and agility of the Intelligence Community?
    Mr. McLaughlin. I think a National Intelligence Director 
would need the authority to move money and people quickly. We 
have talked in other committees, and I have spoken with you 
personally about some of the hurdles you go through as you try 
and do those things today. So those are the principal things.
    In today's world, unlike the world of the Cold War, issues 
come and go with blinding speed, and sometimes your chance to 
exploit the opportunity to attack that issue, to pool resources 
on it, to get your best heads together, both collectors and 
analysts and operators is quite fleeting, and so a National 
Intelligence Director needs to be able to say to his or her 
operating agencies, ``I need five from you and five from you 
and five from you, and I need them in 2 or 3 days, and they 
need to be up and running in this room with these computers and 
these systems, with these databases flowing to them in order to 
move with maximum agility and speed.'' Those are the kind of 
things you need.
    Chairman Collins. Thank you. Your example that you have 
previously given to me in a private meeting of it taking 5 
months for you to reprogram money, I think lends credence to 
what you are saying, and we want to make sure that there is 
sufficient authority for the new NID, so that he or she can be 
truly effective.
    Senator Lieberman.
    Senator Lieberman. Thank you, Madam Chairman. Thanks again, 
gentlemen.
    One of the more interesting and in some ways important 
recommendations of the 9/11 Commission that has not received a 
lot of public discussion but is something that this Committee 
will have to reach a judgment on is their recommendation ``to 
combat the secrecy and complexity we have described, the 
overall amounts of money being appropriated for national 
intelligence and to its component agencies should no longer be 
kept secret. Congress should pass a separate appropriations act 
for intelligence, defending the broad allocation of how these 
tens of billions of dollars have been assigned among the 
varieties of intelligence work.''
    So I take it to be their recommendation based on, in part, 
what they describe as our failure, Congress' failure, to 
exercise appropriate oversight of intelligence. I would bet, 
though I certainly have not done a survey, that the great 
majority of Members of Congress, in both Houses, could not tell 
you what the bottom-line spending today on intelligence is, let 
alone what appropriations are going to individual agencies. And 
it is hard to do real oversight or talk about budgets and 
accountability and authority if you do not have those baseline 
numbers.
    Now, let me say a final word there. I think the Commission 
argues that change will allow Congress and the American people 
to make judgments on if we are giving too much to one agency 
and not enough to another. Perhaps it will help inform this 
question that has gone on about whether we have spent too much 
on technological assets, SIGINT, and not enough on human 
intelligence. But it will also allow another kind of 
comparison, which is to compare what we are spending on 
intelligence with what we are spending on health care or 
agriculture or environmental protection, that kind of balance.
    So I think as a general principle, it is a very interesting 
and important idea to consider. Obviously, none of us want to 
do that in a way that will compromise our national security, 
and just before I invite your response, the Commission deals 
with this concern about American enemies learning about our 
intelligence capabilities by tracking top-line appropriations 
figures. But they say, they answer, that the top-line figure by 
itself provides little insight into U.S. intelligence sources 
and methods. In fact, the government already readily provides 
copious information about spending on its military forces, 
including military intelligence. The Intelligence Community 
should not be subject to that much disclosure. But when even 
aggregate categorical numbers remain hidden, it is hard to 
judge priorities and foster accountability.
    So, Director McLaughlin, and then Director Mueller, I would 
welcome your counsel to us on this important question.
    Mr. McLaughlin. Well, this is a difficult question and I 
think there are very divided views on this. I will give you my 
personal view. I think we do not keep secrets well enough as a 
government, so I start with that proposition given that we are 
up against an enemy that keeps secrets very well and 
compartments those secrets down to a handful of people in a 
remote area somewhere in a cave.
    That said, I come out a little differently on this 
question. If there is a separate appropriation for the foreign 
intelligence program, the national foreign intelligence 
program, as distinct from the current arrangement where that 
appropriation is buried in the larger Defense Department bill, 
I think it would make some sense to declassify the overall 
number for the foreign intelligence program. I would not go so 
far as to declassify the numbers for the individual agencies. I 
think that gives too much opportunity for adversaries to 
understand how we are moving our money from year to year, from 
technical programs to human source collection and to other 
objectives.
    But establishing an overall number and acknowledging it 
publicly for the national foreign intelligence program does a 
couple of things. I think first it reinforces responsibility 
and accountability on those receiving the money because you can 
see whether it is going up or down and so forth. It also does 
the same thing for Congress because it is then apparent whether 
Congress--I have a phrase in my testimony that talks about 
constancy of resources. One of our problems over the years is 
that resources have gone up and down. We have lived on 
supplementals. Programs that require year-to-year constancy 
have not had that. And so I think this would be one way to 
maybe address some of those issues, and I do not think that 
declassifying the top line would be a major security threat. My 
personal view.
    Senator Lieberman. I appreciate that answer.
    Director Mueller, I invite your response, and I suppose 
specifically on the matter, if I get it correctly, the 
counterintelligence budget of the FBI is part of the national 
foreign intelligence program budget. Certainly I would hope 
that it would be part of what is given now to overall authority 
to the new NID. Would you have concerns specifically if that 
number became public?
    Mr. Mueller. Let me see if I can address the two issues.
    Senator Lieberman. Please.
    Mr. Mueller. One is I think you raise a consolidation of a 
budget that is understandable to persons--in other words, one 
budget. I myself find the Federal budgeting practice an arcane 
science. I do not purport to have grasped it.
    Senator Lieberman. It may be one intentionally so.
    Mr. Mueller. But putting in one place all elements of the 
Federal intelligence budget makes some sense to me, whether it 
be in having the NID as that person who is responsible for that 
and then having a committee in Congress that is fully--has 
transparency into that makes a great deal of sense.
    In terms of the portions which you then publicize, I think 
it depends on what you ultimately end up with, and having a 
bottom-line figure is a lot different than having certain 
categories I think everybody in this room would agree should 
not be made public.
    Senator Lieberman. How would you feel about the 
Intelligence Directorate that you are forming now having its 
bottom line made public?
    Mr. Mueller. I would have problems in having that budget 
publicized. It would immediately be perused by our enemies, 
whether it be terrorists or other countries in terms of how 
many agents we have in our counterintelligence program, where 
they might be, what their support is. I would have real 
problems on that. I do not think we should be giving out that 
kind of information to our enemies. They will sit there. They 
peruse the budget figures. They can discern from the budget 
figures what the implications are, and I think that is 
something we have to be very concerned about.
    Senator Lieberman. Thank you both. Thanks, Madam Chairman.
    Chairman Collins. Thank you. Senator Coleman.

              OPENING STATEMENT OF SENATOR COLEMAN

    Senator Coleman. Thank you, Madam Chair.
    First, gentlemen, thank you for your service. It is greatly 
appreciated. I would like to explore, if I can briefly, the 
relationship between the changes at the top--we are talking 
about major changes here at the national level, but the 
interrelationship with those at the local level, because those 
are the guys that are going to be making the stops. Madam 
Chairman, in her opening statement, talked about an 
opportunity, a local stop being made for a speeding violation, 
and had there been the right connection, something might have 
happened.
    Can we talk a little bit about that, about what is 
happening down at the local level? For instance, Minneapolis 
and St. Paul both have, as I understand it, local ordinances 
that prohibit, tell their local law enforcement not to ask 
about immigration status. Can you talk to me a little bit about 
the impact of specifically that kind of ordinance, what impact 
it would have, and any other things like that that are out 
there that would hinder our ability at the local level to 
interact with the things that are going on in our national 
counterterrorism effort? Director Mueller.
    Mr. Mueller. Well, there may be local ordinances out there 
in various cities indicating that you cannot on a stop ask 
about immigration status. Nonetheless, we have made substantial 
strides since September 11 in putting in our databases and in 
NCIC information on those who have outlasted their visas, those 
who are in dereliction of their responsibilities with the 
Immigration Service so that there now is a mechanism that a 
person who is out of status and deemed to have been out of 
status will be picked up, and that status of the person will 
become known to the officer.
    So while, yes, in those cities where there are such 
ordinances it can hamper the ability of State and local law 
enforcement to identify those who come from outside this 
country and are illegally inside this country, we have other 
mechanisms in place to identify those persons once they have 
been deemed illegally here.
    We have made since September 11, I think, substantial 
strides in working with State and local law enforcement to 
gather intelligence such as this. We have one consolidated 
watchlist. It is in NCIC. Contributors are the State 
Department, Customs, and the CIA. If it is international 
terrorism, it goes through TTIC for placing on the watchlist. 
If it is domestic terrorism, it goes there also. And, 
consequently, if there is a name on that consolidated watchlist 
which is in NCIC and a person stops somebody there throughout 
the United States, there now is the ability to understand and 
recognize that that person's name is on that watchlist for some 
purpose.
    The Joint Terrorism Task Forces now, going from 34 to 100, 
give us an intersection with State and local law enforcement 
that we did not have before. And while there may still be gaps, 
as you have pointed out, in our ability to gather information 
in certain communities, we have made substantial strides in 
eliminating many of the other gaps that were there prior to 
September 11.
    Senator Coleman. Director McLaughlin, I am not sure whether 
you want to get into this, but I do know that the CIA before 
was out of the domestic, and now you are there. Is there 
anything from your vantage point that you see that would hinder 
your ability to effectively interact with folks at the local 
level?
    Mr. McLaughlin. Not really. The way it works now is that 
when something happens at a local level that has a foreign 
intelligence dimension, it migrates to us either through our 
interaction with the FBI or through TTIC. Of course, if it is a 
purely domestic issue, we do not get involved, nor should we.
    Senator Coleman. Madam Chairman, are we going to have a 
second round?
    Chairman Collins. Yes, we are.
    Senator Coleman. Let me ask you then, Director Mueller, one 
other question on this round. In your testimony, you raised a 
concern that as we make these structural changes that we don't 
ignore the relationship between the basic FBI functions--
laboratory, cyber crime, and our counterterrorism efforts--can 
you give me a little bit of sense, a little more detail of 
where you see potential problems in restructuring as to how 
they may negatively impact those relationships?
    Mr. Mueller. If you identify that portion of the FBI that 
is counterterrorism or counterintelligence and you try to pull 
that out, what I think one misses is that--and your main focus 
is terrorism. Let's just take terrorism for an example. You 
take out the Counterterrorism Division. Terrorists now 
increasingly have to rely on criminal organizations to travel 
from country to country for false identification, for 
smuggling, being smuggled in or through a country. They have to 
rely on other criminal organizations for money laundering. We 
have had a number of cases where Hezbollah in the United 
States, for instance, has utilized cigarette smuggling to 
generate revenues to support Hezbollah.
    And so if you try to compartment terrorism and pull it out, 
what you are missing is that terrorists are criminals. And, 
increasingly, with the pressure that has been brought overseas 
by the great work that the CIA has done, the military has done, 
we have done overseas and here, when the pressure is put on, 
they lose their facilitators, they have to go to others. And it 
is often our investigation of criminal enterprises that leads 
us to the terrorists, and I think that will increasingly do so.
    And if you seek to split that out, I think you are doing a 
disservice to the effort on the war on terrorism.
    Senator Coleman. And I would suspect then that the 
importance of the Patriot Act comes into play which gives you 
many of the same tools that you use for standard crime now to 
use in the war on terrorism?
    Mr. Mueller. Well, the Patriot Act breaks down the wall 
that inhibited our sharing of information from those criminal 
cases to the intelligence side and the information from the 
intelligence side to assist in our criminal cases. And in the 
past, we were inhibited, we were limited. We had one arm tied 
behind our back in terms of that sharing of intelligence and 
criminal information. And the Patriot Act has broken down that 
wall and gives us the ability to take the information from our 
criminal cases, bring it over to the intelligence side. And 
likewise, if we have on the intelligence side information as to 
statutes that have been broken, illegal activity on the 
intelligence side, we then can use it to wrap up somebody in 
this United States who has broken the laws.
    Senator Coleman. Thank you. Thank you, Madam Chairman.
    Chairman Collins. Senator Lautenberg.

            OPENING STATEMENT OF SENATOR LAUTENBERG

    Senator Lautenberg. Thank you, Madam Chairman, and I 
commend you for your excellent opening statement and 
clarification of the mission. And the thing that concerns me is 
that we tip our hat to a lot of the ideas. The question is: How 
long might it take to implement the changes as they are 
described? You have merged these various departments, and I say 
to each one of you, be proud of what your departments have 
done. There is no shame, because second-guessing is the easiest 
game to play, and when we talk about our offense against 
terrorists worldwide, I would ask you: Has the population of 
terrorists grown in your estimation?
    Mr. McLaughlin. I have to give you one of those 
intelligence answers that starts with, ``It depends.'' In other 
words, if you look at a discrete population of the terrorist 
movement, the original leaders of the September 11 era, al 
Qaeda, you have heard the figure often mentioned that three-
quarters of those people, the original chart that we had, are 
either dead or in captivity.
    If you go beyond that, we have had significant success, I 
believe in wrapping up al Qaeda leaders. In Pakistan alone, 
working with the Pakistanis since September 11, somewhere 
between 500 and 600 important al Qaeda figures have been taken 
out of business.
    That said, there is a worldwide movement here that draws 
support and draws inspiration from the example and the ideology 
that bin Laden has propagated. And I think it is really 
impossible to measure whether that is growing or shrinking. But 
I would say it is still substantial and certainly growing in 
some parts of the world. So that as we are in this tactical 
phase of terrorism, we are quite aware that we are taking down 
terrorist networks, but that new ones are popping up in their 
place.
    Senator Lautenberg. So have the gains been sufficient to 
give us any comfort level? When I look at the people----
    Mr. McLaughlin. That is the important question.
    Senator Lautenberg [continuing]. Who we identify as the 
principals, the bin Ladens, Zarqawi--when I was in Iraq, 
Senator Levin and I were there on the same trip, and we saw a 
screen identifying the parking place of Zarqawi's car and so 
forth. And the statement was made to us that they were not 
minutes but very close to a significant capture. Well, he is 
still on the loose, and----
    Mr. McLaughlin. Well, the successes that we talk about have 
had important consequences, and to answer your question 
directly, yes, they have made a difference in our degree of 
safety. If you look at someone like Khalid Sheikh Mohammed, the 
architect of September 11, when he was captured and detained, 
he was in the middle of at least two other major plots that 
would have had an impact on the United States. So that was 
interrupted, and we continue to follow ancillary aspects of 
those plots.
    And that is true for just about every terrorist that we 
would talk about. If you look at the capture of Eisa al-Hindi 
in the U.K., who was the individual responsible for many of the 
casing reports that focused on structures in the United States, 
by having him in detention, whatever he was doing, which 
certainly was potentially injurious to people in the United 
States or the U.K., is now interrupted.
    So it makes us safer, but to quote what everyone says, 
appropriately these days, we are still not safe. But we are 
safer.
    Senator Lautenberg. We are safer than we were before. I 
think there is a question that arises, and that is, it looks 
like the zeal of those who hate us continues to attract people 
to their mission. It is very tough, and we have a huge job. And 
when I see what you require by way of skilled personnel, Mr. 
Mueller, in language and so forth and the period of time, 3 
years to train people to be good analysts, if I read it 
correctly, and I look at the mission--and not that I do not 
want to do it. I want to do it. I want us to be totally safe, 
even though right now we are beginning to look more like a 
fortress. But the fact is that we have to respond to the 
threats against us.
    I would ask a question here to see if either one of you or 
each of you has given thought to whether or not the person who 
fills the NID job ought to have a specific term for duty. I 
looked at the Federal Reserve, and I see that there is one 
person in command sort of that the branches report in. They 
have a lot of authority. And I have long been a believer that 
the further away we get from the political structure, the 
better off we are in our functioning. It more approximates a 
business environment which is something that we would like to 
see happen. I would like to see it happen, for instance, with 
the FAA long-term projects. This one is a very long-term 
project. As much as we rush to get the job done, the fact is 
that the implementation in its full sense is a long way away.
    What do you think about having a specific term of duty for 
someone who has that responsibility?
    Mr. McLaughlin. Well, Director Mueller and I are different 
on that score. The Director of Central Intelligence does not 
have a fixed term. The Director of FBI does. So we may have 
different perspectives.
    I think there are pros and cons to it. The pros of having a 
fixed term for a National Intelligence Director would be that 
it would be yet another way to do something that I included 
among my various principles here, which is to ensure the 
objectivity and non-political character of whoever holds that 
office, particularly if you could do it in a way, for example--
I haven't reviewed for a while how the Chairman of the Joint 
Chiefs is chosen, but his term is, I think, 2 years renewable 
in a way that staggers it so that it overlaps with Presidential 
terms. So there would be advantages to that.
    Now, there are some disadvantages to it, I think, in that I 
have never been a believer that the President should not be 
able to choose whoever he or she wants for a job like that 
because a certain amount of trust is required, and trust even, 
and maybe especially, when the National Intelligence Director 
is bringing bad news, when the National Intelligence Director 
has to walk in and say, ``Mr. President, I have got to tell you 
something you are not going to want to hear, but you need to 
hear it.''
    In those circumstances, one can argue that intimacy with 
the President and trust, personal trust, could be an important 
advantage. It could work a lot of different ways. But I think 
there are pros and cons to this.
    Senator Lautenberg. Mr. Mueller.
    Mr. Mueller. As one who has a 10-year term, I actually 
think that the arguments for a 10-year term for the Director of 
the FBI are somewhat different than the arguments for a 10-year 
term of the National Intelligence Director. One of the 
principal duties of the National Intelligence Director is to be 
the adviser to the President on intelligence matters. And we 
tend to focus, I think, in looking at this legislation, and 
perhaps rightfully so, because it comes out of the 9/11 
Commission Report, on counterterrorism. The National 
Intelligence Director and the CIA do a lot more than focus on 
counterterrorism. There is a view, a world view shaped that 
dictates the foreign policy of the United States to a certain 
extent, to the extent that one looks at the intelligence. And I 
guess I think the President should have the confidence in the 
person who holds that view of principal adviser for 
intelligence, not just counterterrorism, not just WMD, that are 
important, but way beyond that.
    I do think the Bureau is somewhat different in the sense 
that certainly we should play the role of objective, 
independent investigators of allegations. And for the Director 
of the FBI, I think that is tremendously important that that 
independence and that objectivity in conducting investigations 
of allegations that can reach throughout the government should 
not in any way be impinged by what may happen in a particular 
election.
    So I think there is a distinction to be drawn between the 
role of the National Intelligence Director and the Director of 
the FBI.
    Senator Lautenberg. Thank you each for your clarifications.
    Chairman Collins. Senator Sununu.

              OPENING STATEMENT OF SENATOR SUNUNU

    Senator Sununu. Thank you, Madam Chairman.
    Just to pick up on that last point, this is not a question. 
This is an editorial comment, I suppose. But it is my 
understanding that the statute isn't really a 10-year term at 
all. It is a 10-year maximum. And the reason we have that is 
because no one wanted J. Edgar Hoover or that kind of power to 
be assumed by a future FBI Director. I think you are doing just 
fine at the moment, and I am not saying that we want to cut 
short your tenure. But as the statute reads, it is a 10-year 
maximum, not a 10-year term.
    Mr. Mueller. I know that well. [Laughter.]
    Senator Sununu. The points you made, however, I think are 
very valid.
    I want to ask you both about programming counterterrorism 
operations. In your testimony, Director Mueller, you said that 
the NID should not be directly responsible for the conduct of 
operations and that his or her role should be to ensure that 
appropriate activities and operations are conducted by the 
various elements of the Intelligence Community. And you also 
used the phrase, ``the NID should have a mechanism by which the 
principals are charged with assuring responsiveness to the 
direction of the NID in managing implementation.'' In some of 
the other material we have, I think a distinction was made 
between conducting operations and assigning operational 
responsibilities that the NID or those at the Counterterrorism 
Center would have responsibility--sorry, the NID would have 
responsibility for assigning operational responsibilities but 
not actually conducting operations at the tactical and 
strategic level.
    I just want each of you to comment and clarify on these 
different roles and responsibilities, one for conducting the 
operations, maybe making tactical choices, but the other role 
of the NID for maybe initiating, maybe assigning and helping to 
coordinate operations on behalf of the broader national 
Intelligence Community.
    Mr. Mueller. Let me use as an example something like the 
two conventions that we just had, the Democratic National and 
Republican National Convention. One was worried about threats 
against them. It would seem to me that the NID, as the homeland 
security in the intelligence realm, would pull together the 
elements of the Intelligence Community and say, OK, here we 
have this particular convention that is going to take place. 
What is the FBI doing to gather intelligence? And we would go 
in and have a discussion about what we have done to gather 
intelligence in terms of what may happen, international threats 
from the CIA, domestic treats to the United States, and if 
there are any gaps in that.
    Then I would think the NID would have the responsibility of 
doing the requirements, saying, OK, FBI, here is something that 
has come in from the CIA, you go out and determine the validity 
of this information that came from the CIA. But how we did it, 
whether we used FISA, whether we used surveillance in this 
particular case, would be left up to us.
    Now, we would have to go back--there should be transparency 
in what we are doing, and we could always be second-guessed and 
suggestions made about how to do it differently. But ultimately 
how we do it, what authorities we use, what personnel we use, I 
think ought to be within this chain of command. And by this 
chain of command, I mean that we have a responsibility, me 
being the Director of the FBI, to the National Intelligence 
Director to provide the information the National Intelligence 
Director needs, and if there are gaps there, to utilize our 
organization to go out and fill those gaps.
    Mr. McLaughlin. This is a tricky question, and it is one on 
which people have trouble communicating with each other, I 
believe, because, talk about different cultures in the U.S. 
Government, the word ``planning'' means something very 
different to different organizations. At the Pentagon it 
typically means a very elaborate, end-to-end process with an 
envisioned result that is in a way foreordained or must be 
foreordained. In the intelligence business, it might mean 
planning, a quick meeting in my office to check the essentials 
of a problem, out to the field, try something, get back to me, 
see how it goes, and it is a more iterative process. So first 
the term ``planning'' means different things to different 
people. So how do you get around that?
    I agree very much with what Bob Mueller said. The way I 
would see this working in a National Counterterrorism Center is 
that it would be a kind of clearinghouse for what needs to be 
done, and then the doing would be passed to those who must do 
it.
    I will give you an example, a different one than Bob gave 
you, partly hypothetical and partly real. Let's assume that we 
detect through intelligence methods plans by people in two 
countries in the Persian Gulf to attack oil facilities there, 
both to harm that local government and to injure the U.S. 
economy--a real-world example. Let's assume that we also 
discover connections between one of those individuals and 
someone in the United States. This happens all the time.
    At that point, the job of whoever has that information in 
front of him or her is to say, this is how I think it would 
work. CIA, what are you doing to wrap those guys up? FBI, what 
are you doing to take that information about the U.S. 
connection and run it down here in the United States? I won't 
tell you how to do it, but it needs to be done, and you know 
how to do it, and we are going to talk about it again tomorrow.
    That is kind of how I would see it working. And at the end 
of the day, this is all about--I think if there was a single 
thing that we would hold above all else in the counterterrorism 
arena and on this particular question, it is what I would call 
the fusion of data. We must have people who have all of the 
data in front of them so that those connections can be made, 
and someone who is looking at all of that data, as people in 
the TTIC now do, are the ones who are--as we are at our daily 
meeting at CIA where we have many of these people represented, 
are the ones who can say there is a pattern here, someone needs 
to act on this part, this part, and this part.
    I hope that answers your question, but that is how I think 
about it.
    Senator Sununu. That does. If I can ask one final brief 
question about the point that you just made about having the 
information in front of you. In his testimony, Director Mueller 
noted that there is a proposal out there that creates a new 
entity that is composed of analysts and a separate entity for 
the intelligence collectors. In the Director's words, ``We 
believe that creating such stovepipes would be a step backward 
in the progress we have made since September 11.''
    Do you agree with that view of a proposal that creates a 
collection-only entity or an analyst-only entity?
    Mr. McLaughlin. I am not sure what specific example Bob is 
referring to, but I firmly believe that there is merit in 
fusing analysis and operators and collectors. And I am not 
speaking about a hypothetical there. I am speaking about what 
we have achieved in our Counterterrorism Center, where if you 
were to walk through the department that deals with al Qaeda, 
you would see something that, if you went back 10 years, would 
have been seen as somewhat revolutionary. Go to this desk and 
there is an operator sitting there, meaning a field operative, 
someone who is maybe just back from overseas and has extensive 
experience recruiting agents, running operations.
    In the next cubicle, you will find an analyst, someone who 
has spent most of their time here at headquarters, some time 
overseas but mostly here, delving deeply into problems and 
seeing patterns that may not be apparent to someone who has 
been moving around the world with other priorities and so 
forth, a checkerboard of people like that. And I think one of 
our strengths that we have achieved is the fact that an analyst 
can now walk in to an operations officer and say, I have an 
idea, I see a pattern here that you ought to follow up on. Or 
an operations officer can go to an analyst and say, I am 
getting these reports from three different sources; I need some 
context to understand this. And that person comes back the next 
day and says, well, I have dug into this, here is the context, 
here is how it all fits together.
    Senator Sununu. Thank you.
    Chairman Collins. Senator Durbin.

              OPENING STATEMENT OF SENATOR DURBIN

    Senator Durbin. Thank you, Madam Chairman, and thank you 
both for being here today.
    Director Mueller, I am glad that early in your statement 
you made reference to the civil liberties issues, and I think 
history teaches us that in times of great fear and national 
security, freedom is the first casualty. We look back on many 
things that we did where we overreacted as a government, 
sometimes with shame.
    I would like to speak to specifically the President's 
Executive Order, which you referred to in your remarks. This 
order, which came down just a few days ago, established, 
pursuant, I suppose, to the suggestion of the 9/11 Commission, 
a board to review whether or not our government has gone too 
far, whether or not we have invaded the civil liberties of 
individuals unnecessarily. That is a good thing to have such a 
board.
    But then you look at the Executive Order. Who will stand in 
judgment of the Department of Justice and whether they have 
gone too far in invading the civil liberties of Americans? 
According to the President's Executive Order, it will be the 
Deputy Attorney General of the Department of Justice, the Vice 
Chair being the Department of Homeland Security Under 
Secretary, and all the members of the board being political 
appointees of the Bush Administration.
    It strikes me as this board is like saying to a baseball 
player at bat, you can call your own balls and strikes.
    Doesn't it strike you--I hope it does--that we would want 
to have some group overseeing the activities of this government 
that is somewhat removed from the political realm, from 
political appointment, from the actual management of the agency 
which they are supposed to be reviewing?
    Mr. Mueller. I can see the point that you are making, 
Senator. I do think there is a value to having a board whose 
responsibility is to focus on the privacy issues of that which 
we are contemplating. One could discuss who should serve on 
that particular board, but I think it is important to establish 
such a board with that mandate.
    In terms of oversight, I do think--and it has been my brief 
experience up here for the last couple of years--that oversight 
from Congress into the activities of that board, into the 
activities and what we are undertaking, whether it be through 
the Intelligence Committee, the Judiciary Committee, or this 
Committee, is not--it does not pull its punches. And so I do 
believe that there is merit in having this board or such a 
board, and I do believe that there is oversight of our efforts, 
whether it be through the Intelligence Committee, the Judiciary 
Committee for the FBI, or this Committee, in terms of 
addressing terrorism and whether we are going too far or not.
    Senator Durbin. I serve on both of those committees, 
Intelligence and Judiciary, and you give them too much credit. 
We are not really as good as we should be. The 9/11 Commission 
makes that obvious, too. We have got to set out not just to 
reform the Executive Branch, we need to reform Congress when it 
comes to the oversight of the activities involved in fighting 
terrorism. And if the last refuge for protecting the civil 
liberties of Americans is vested in the members of the Senate 
Judiciary and Intelligence Committees, I can tell you we need 
help. We need more troops. We need more people involved if that 
is what we are to do.
    I will not dwell on it. When I spoke to Governor Kean 
yesterday about this very same composition of this Executive 
Order, he said that it was their intention to get a more 
disinterested perspective--I think those were his exact words--
of the members. I will not dwell on it, but I think that the 
Executive Order does not serve that purpose.
    Director McLaughlin, we have talked a lot about the wiring 
diagrams and the budget authority. Let me go to two specific 
areas I would like to ask you about. You have undoubtedly read 
the Senate Intelligence Committee Report on the use of 
intelligence leading up to the invasion of Iraq, the 
preparation and analysis of intelligence, and the fact that we 
failed in so many ways to assess the real threat in Iraq. The 
NIE was prepared in a hasty fashion, 3 weeks when it ordinarily 
takes 6 months. We were not clearly well versed in what we were 
going to find in Iraq. Witness the fact we are still looking 
for weapons of mass destruction. We mistakenly--some mistakenly 
led others to believe the al Qaeda connection was there. The 9/
11 Commission makes it clear it was not.
    Most of this was generated through intelligence gathering. 
We have talked a lot about new structures, new wiring diagrams, 
new boxes on the chart. Specifically I would like to ask you 
two things.
    Looking back now, do you think that any of the 
recommendations we are making in terms of this new structure 
really would have a quantitative and qualitative impact on the 
mistakes that were made leading to Iraq? And, second, one of 
the provisions that was raised by the 9/11 Commission I would 
like to just visit for a brief moment, and that is the whole 
question of the Abu Ghraib prison situation, which, of course, 
is a great embarrassment to the United States.
    Can you tell me whether the CIA played any role in the 
Iraqi prison techniques, the interrogation techniques, the 
stress and duress techniques? Did the White House or any other 
agency authorize the CIA the use of aggressive interrogation 
techniques? These are questions which have not been answered to 
date, and I would like to give you a chance, if you would, 
responding to this 9/11 Commission Report aspect, to comment.
    Mr. McLaughlin. Senator Durbin, on your question about Iraq 
and the intelligence before the war and whether the changes we 
are considering would have affected that, my honest opinion 
here is that the changes we are considering now would have a 
more immediate impact and are more directly related to 
counterterrorism than to the kinds of issues that emerged in 
our work on Iraq and the subsequent examination of it. Because 
I think principally the effect of these changes that we are 
considering now would be to increase the sharing and fusion of 
information and the rapidity with which a National Intelligence 
Director could realign resources on a problem. I do not think 
that was involved in some of the difficulties that we had in 
the Iraq case. I think there were other issues that we have 
moved to deal with since then that would not necessarily be 
affected directly by these changes.
    Senator Durbin. I will not dwell on it. My time is up
    Mr. McLaughlin. You understand what I am saying. I just 
think it applies more to counterterrorism to where I think it 
is more direct.
    Senator Durbin. Forgive me. Weren't we told by the 
administration that the invasion of Iraq was counterterrorism?
    Mr. McLaughlin. No, I am thinking of al Qaeda.
    Senator Durbin. Weren't we told there was a linkage between 
Saddam Hussein and al Qaeda?
    Mr. McLaughlin. Yes, but the 9/11 Commission was very clear 
in saying that the Intelligence Community understood that 
correctly and got it right.
    Senator Durbin. Well, the point I am getting to--well, I do 
not want to dwell on it----
    Mr. McLaughlin. Well, that is my point.
    Senator Durbin. My time is running out, and I do want to 
ask you to respond to the second question about the CIA's role 
in the interrogation techniques at Abu Ghraib and whether or 
not there was any authorization by the CIA or White House or 
other agency, to your knowledge, for these types of aggressive 
interrogation techniques.
    Mr. McLaughlin. We have under way an Inspector General 
report of interrogation techniques in Iraq. I have to be 
careful how I speak about this because that investigation is 
not complete. But to this point, there is nothing that would 
indicate CIA involvement in those techniques, and particularly 
no involvement in the kinds of things that were portrayed in 
those photographs.
    There are one or two cases involving particularly the death 
of one individual who was transported where that individual was 
for some period of time in CIA care, and that is being looked 
into by the Inspector General. But that investigation is not 
finished yet.
    Senator Durbin. And the White House involvement, was there 
any White House involvement or any other agency in the 
establishment of these interrogation techniques at Abu Ghraib?
    Mr. McLaughlin. Not that I am aware of, no.
    Senator Durbin. Thank you very much. Thank you, Madam 
Chairman.
    Chairman Collins. Senator Shelby.

              OPENING STATEMENT OF SENATOR SHELBY

    Senator Shelby. Thank you, Madam Chairman.
    I first want to thank you, Madam Chairman, for your 
leadership, and also Senator Lieberman's. I want to associate 
myself with some of the remarks you made earlier, Senator 
Lieberman. I think we have a great opportunity here 
legislatively to do something that probably should have been 
done 50 years ago, but we did not have that opportunity, and 
that is to bring real structural reform to the Intelligence 
Community. I trust, Madam Chairman, we will not miss that 
opportunity under your leadership and Senator Lieberman's.
    I want to focus just for a minute, Director McLaughlin, on 
the National Counterterrorism Center that we keep talking 
about. My experience over the years with the Intelligence 
Community causes me at times to question whether such 
entrenched intelligence bureaucracies will allow the NCTC to 
live up to its potential. And while the NCTC will be new in a 
sense, the analysts, a lot of them, will be the same--maybe not 
totally the same--doing the same job in a sense that they have 
always done.
    What will change? In other words, what will change and will 
it be for the better? Will it make us safer?
    Mr. McLaughlin. I think the answers to those questions, 
Senator, are yes and yes, and I would use the experience we 
have had so far in the Terrorist Threat Integration Center to 
illustrate the point. The Terrorist Threat Integration Center, 
TTIC, would be the foundation on which the National 
Counterterrorism Center would be built. And what is new and 
different there is that one of my terrorism analysts, or one of 
Bob's, who heretofore had been looking, in my case, almost 
exclusively at foreign terrorist data, or domestic in the case 
of the FBI, when they go into that National Counterterrorism 
Center, as they have into TTIC, they will now be exposed not 
just to that data but to data from 26 different networks that 
are flowing into that center.
    So that one of the ways I have spoken to my analysts--I 
sent close to 90 analysts there. One of the things I have said 
to them is as a career, think about this as a great opportunity 
because you are going to be exposed to people from the FBI, the 
Coast Guard, Homeland Security, and to their perspective that 
you will never get sitting in our building; and when you come 
back, you will bring that back into our arena as you focus on 
foreign terrorism. That changes.
    Senator Shelby. OK. But you are talking about creating 
basically a super-analyst center, in a sense, in 
counterterrorism, aren't you?
    Mr. McLaughlin. Well, creating analysts with a broader 
perspective.
    Senator Shelby. A broader perspective. Now, how many 
analyst centers do we have in the Intelligence Community? I 
know the Bureau, Director Mueller, you have one. You are 
central to the whole deal. The State Department has one. We 
created or tried to create one at Homeland Security. I know I 
worked with Senator Lieberman on that. How many others do we 
have, analyst centers?
    Mr. McLaughlin. Several. We have the Counterterrorism 
Center, the Counterintelligence Center, the Counternarcotics 
Center. I think we will move before long to a 
Counterproliferation Center.
    Senator Shelby. But other than the FBI, what other agencies 
in the Intelligence Community have an analysis center?
    Mr. McLaughlin. Well, the centers by definition draw on all 
of these agencies, so that in the ones I have mentioned we have 
representatives from, in the case of the Counterterrorism 
Center, upwards of a dozen agencies.
    Senator Shelby. You are talking about people working at the 
Counterterrorism Center from all of these other agencies.
    Mr. McLaughlin. About a dozen.
    Senator Shelby. But these other agencies will continue to 
have, I assume, their own analysis center; is that right, 
Director Mueller?
    Mr. Mueller. Correct, yes.
    Senator Shelby. OK.
    Mr. McLaughlin. That is the balance we have to strike.
    Senator Shelby. So what you are really talking about--and 
you alluded to it--is expanding the Terrorism Threat 
Integration Center that we created, TTIC.
    Mr. McLaughlin. Building on that.
    Senator Shelby. Building on that. To a great extent?
    Mr. McLaughlin. Well, I would say to the extent that it 
will now--this all has to be determined in practice, but to the 
extent that it will now have a strategic planning function that 
is not resident in the Terrorist Threat Integration Center.
    Senator Shelby. Director McLaughlin, in your prepared 
remarks that you shared with us earlier, you said, and I will 
just quote your remarks here: ``Ideally, a single person 
responsible for all national intelligence activities should: 
Maintain independence and objectivity as the President's 
principal intelligence advisor; have full authority to 
determine, reprogram, and execute all funding for the core 
national intelligence agencies--CIA, NSA, NGA, and NRO; have 
clear authority to provide strategic direction to these 
agencies and drive their collection and analytic priorities; 
have the authorities necessary''--in other words, power--``to 
reorient intelligence capabilities to meet emerging threats and 
priorities; have direct access to substantive experts to help 
fulfill his/her responsibilities as the Nation's principal 
intelligence officer; have the authority to bridge any 
remaining divides between foreign and domestic intelligence 
activities in the areas of policy and information technology; 
have the authority to determine education and professional 
development standards and personnel management policies and 
incentives; and ensure the continued synergy''--which is very 
important--``that results from the close interaction of 
operators and analysts.''
    But, ideally--you left out the FBI as far as controlling 
any of their budget. Is that correct?
    Mr. McLaughlin. Well, I think----
    Senator Shelby. In your remarks.
    Mr. McLaughlin. Yes, the way I see it is that the National 
Intelligence Director ought to have--I believe there is a 
portion of the FBI's budget that would be included in the 
national foreign intelligence program budget, just a very small 
portion, but certainly not the entire FBI's budget. And 
Director Mueller, I am sure, has an opinion.
    Mr. Mueller. I would say that our intelligence budget, 
expanding, I would hope, intelligence budget, not just as small 
as referred to by my colleague over here----
    Senator Shelby. Well, to do your job, you are going to have 
to expand it.
    Mr. Mueller. We are, yes. But that should be controlled by 
the NID, and I would go to appropriations as opposed to 
execution. In other words, I think there ought to be one 
appropriation. There ought to be one intelligence budget under 
the auspices of the NID who could look at what the requirements 
are, who has the personnel and the capability of meeting those 
requirements, and then adjusting the budget appropriately, 
including that portion of the FBI that addresses intelligence.
    Senator Shelby. I know my time is up, but one last 
statement, I guess. Isn't it true that the President of the 
United States has and has always had the authority to disclose, 
if he thought it was important to do so, the numbers on the 
intelligence appropriations? In other words, the President has 
that authority if he wanted to do that.
    Mr. Mueller. I assume so.
    Senator Shelby. And if he thought it was in the best 
interest of the country.
    Mr. McLaughlin. Yes.
    Mr. Mueller. The answer is yes.
    Senator Shelby. So we do not need statutory authority for 
the President to do that.
    Mr. McLaughlin. No, sir.
    Senator Shelby. He has it. Thank you. Thank you, Madam 
Chairman.
    Chairman Collins. Senator Pryor.

               OPENING STATEMENT OF SENATOR PRYOR

    Senator Pryor. Madam Chairman, thank you for your 
leadership on this. And I want to thank you for your public 
service. I appreciate the witnesses coming here today and 
talking about these very important issues. I want to just focus 
here for a minute, if I can, on your plans, both of you, your 
plans to recruit, hire, and retain the right kind of people for 
your agencies.
    Now, I know that, as I understand it, both agencies have 
done some fairly innovative and aggressive marketing and made 
some pretty serious efforts to try to get the right people and 
keep the right people in place. Could you all tell the 
Committee a little bit about that?
    Mr. Mueller. Sure. After September 11, we made the 
determination that we needed to broaden the types of candidates 
that we were attracting to the FBI. We have historically looked 
to lawyers, accountants, former law enforcement, military--all 
good. We have taken the position, rightfully so, I think, that 
we look for maturity in judgment in the persons we bring on as 
special agents because we give them tremendous power when you 
give them the capability of operating as an FBI special agent. 
So we have looked for maturity in judgment.
    In the wake of September 11, we understood that we needed 
skills that perhaps we had not addressed in the past in the 
Bureau, so we have opened it up and looked at intelligence 
officers, computer scientists, scientists to address something 
like anthrax, language specialists, and regional experts. And 
we have focused on bringing into the Bureau not only the 
persons who show the judgment and maturity but also have these 
additional skills. And we have continued to try to do that for 
our agents.
    This fiscal year we have almost 40,000 applicants for the 
special agent position. I will tell you for our analyst 
position, we had almost--well, on the agents, one other fact 
that I think is important is that of those--it was actually 
38,000 applicants we have had in this fiscal year. Almost 
17,000 of them demonstrated one of those skills, special 
skills, that we are now looking for. We have had 57,000 
applications for intelligence analyst positions this year. And 
so I think there are a number of factors that have gone into 
that.
    First, we have been out indicating we want a wide variety 
of skills in the FBI. Second, persons have responded in the 
wake of September 11 to the desire for public service. And we 
have been fortunate to get those persons applying that will 
bring to the Bureau skills that will be necessary in addressing 
the threats of the future.
    Senator Pryor. Have you been happy so far with what you 
have been able to accomplish?
    Mr. Mueller. Yes. I keep saying I am happy with where we 
are, but we have got a ways to go.
    Senator Pryor. Right.
    Mr. Mueller. And we have made strides, and one of the 
concerns I had is that if we had focused on some of these 
specialties, we would lose the maturity of the judgment that is 
so important. And I am quite confident that the quality of 
applicants that we are getting is such that we can have the 
maturity of judgment that we want for a special agent, but also 
have the benefit of some of these additional specialized 
skills.
    Mr. McLaughlin. When I am asked what we really need these 
days, I frequently say more experienced people. The 
Intelligence Community, of course, started from a low point in 
1995, 1996, 1997, in that time frame. We bottomed out after 
about a 23-percent reduction in the wake of the dissolution of 
the Soviet Union and the end of the Cold War. And so that 
particularly in the period since then, we have been building up 
again, thanks to resource increases by the Congress and the 
administration. So more experienced people is sort of our 
bottom line.
    I am very pleased with the people we are getting. There 
seems to be great enthusiasm for public service at this moment. 
Typically in a week, we get somewhere between 3,000 and 6,000 
resumes seeking employment with the Central Intelligence 
Agency, many more applicants than we can hire.
    When we look at our recent classes, which are now at record 
levels compared to the dozen or so people that we were training 
in the clandestine service in 1996, we are having an average 
age of about 28, 29, so we are getting people with significant 
prior experience before they come to the agency or to the 
Intelligence Community. This is fairly typical across the 
agencies.
    I am most familiar with CIA's data. If we look at the GPAs, 
we are up in the range of 3.2 to 3.7, typically. If we look at 
languages, the one I am most concerned about is Arabic. We have 
a sizable number of Arabic speakers. I will not use the 
absolute number here, but in the last year, from 2003 to--
within the last 12 months, it has increased by 36 percent in 
terms of people who test at the Level 3 level. We make a 
distinction between those who claim proficiency and those who 
test out.
    So those are the areas where we have the greatest need and 
shortage, and I would emphasize Bob's point that we are looking 
for people with maturity in skills because, particularly in 
this era of increasing demands, frequently your first tour as 
an officer overseas will be in some remote and dangerous place. 
And for our analysts, talking about them, too, increasingly 
they operate overseas, and we are looking for similar 
backgrounds there, and we are getting them.
    Senator Pryor. Is the pool large enough for you or are you 
competing against yourselves to try to get these qualified 
people in?
    Mr. McLaughlin. I think within the foreign Intelligence 
Community, most of the agencies that you would talk to would 
give you comparable statistics. The pool seems to be large 
enough. There seems to be very high interest in public service 
at this moment, and we are grateful for that.
    Mr. Mueller. I would say that to a certain extent we are 
competing for analysts with particular skills, and one of the 
things that we are looking forward to is, in building up our 
intelligence cadre, to put it on an equal footing with the 
Intelligence Community and the Department of Defense and the 
CIA with the appropriate SES positions, with the career 
advancement, with remuneration that is the equal of the 
analytical cadre at other agencies. We haven't always had that, 
and that is one of the areas in which we are focusing.
    Senator Pryor. Thank you.
    Chairman Collins. Thank you. Senator Specter.

              OPENING STATEMENT OF SENATOR SPECTER

    Senator Specter. Thank you, Madam Chairman. In the few 
moments that I have, I would like to go to what I consider the 
core reason for having a National Director, and that is the 
sharing of information.
    I chaired the Intelligence Committee in the 104th Congress 
and saw what so many have characterized as a culture of 
concealment, and with oversight for the Judiciary Subcommittee 
back in the year 2000, we found memoranda from the Director of 
the FBI which should have been disclosed to the Judiciary 
Committee, and there, again, a very heavy overlay of what has 
been characterized as a culture of concealment.
    I have circulated a draft bill which would take the 
Counterintelligence Unit out of the FBI and put it under a 
Director, leave the entire CIA under a National Director, leave 
tactical intelligence with the Department of Defense, but the 
rest of it move under a National Director. And dealing with 
your two agencies, Director Mueller, you make a decision on 
what you are going to share with the CIA, and, Director 
McLaughlin, you make a decision on what you are going to share 
with the FBI. What I think is a preferable course is that there 
be a National Director on top who knows all of what the 
Director of FBI knows and knows all of what the Director of the 
CIA knows so that there does not have to be a reliance that the 
FBI has shared all the information with the CIA and the CIA has 
shared all the information with the FBI, and it goes for the 
other of the 15 intelligence agencies or counterintelligence 
agencies, that to the extent you can have a person on top--and 
we have to rely upon someone to be in charge--that I have been 
persuaded up to this point--and I am still prepared to listen. 
I am concerned about some civil liberties issues, which I 
discussed with Director Mueller yesterday. But what is wrong 
with that postulation as the best idea to have somebody who 
knows all of what you two men know and all of what the key men 
in all of the intelligence agencies know? Director Mueller.
    Mr. Mueller. Senator, I think you can accomplish that 
without pulling out the divisions of the FBI. If you are 
looking at an area on, for instance, counterterrorism, the NID 
should have access to all of the FBI information relating to 
counterterrorism. The way that person would at this juncture 
would be through the National Counterterrorism Center, the all-
source information analytical center, that would report to the 
NID.
    I do think there are, as I indicated in my remarks, some 
substantial downsides in pulling out the Counterterrorism or 
Counterintelligence Division where you are pulling it away from 
its roots and the sources of the information where you can give 
that NID the information through the National Counterterrorism 
Center and through the all-sources Counterterrorism Center, not 
just the FBI information but the CIA information as well.
    You allude to the presumption of non-disclosure that there 
has been throughout the Bureau in the past, and I would say to 
a certain extent the CIA. In part, that has been attributable 
to the wall that was broken down by the Patriot Act; in part, 
that is attributable to the fact that we focus on cases and do 
not want the facts of cases getting into the press or going to 
somebody else. But when it comes to terrorism and other areas 
such as that, there has to be a presumption of disclosure.
    Now, one of the things we have done to instill that in our 
management is we have had all of our special agents in charge, 
all of our assistant special agents in charge go through a 1-
week course at the Kellogg School of Management in Chicago. The 
focus of that 1-week course for all of our 250 top management 
was to take an institution such as ours through a period of 
transformation. It is the same school that gives similar 
courses to IBM or GE, the corporate structure around the 
country.
    We had a 1-week course for each of our top management 
focused on intelligence information and how we treat it, how we 
disclose it, as well as information technology, with the 
expectation that those who have gone through that school 
understand that we are an organization going through 
transformation, and these are some of the obstacles that other 
organizations have gone through, and this is what we need to do 
as an organization to overcome those obstacles.
    So I think we as an institution are changing in terms of 
our understanding, our embracing of the necessity to 
disseminate and to share information in ways that we perhaps 
had not been in the past.
    Mr. McLaughlin. I would not add much to that.
    Senator Specter. Mr. McLaughlin, I have 17 seconds left, 
but you do not have any limitation.
    Mr. McLaughlin. I would just not add much to what Director 
Mueller said, except to say that our officers are now present 
in the FBI, his officers are present in the CIA. On a major 
terrorist case--I can think of two or three in the last month--
Bob and I are on the phone to each other continuously comparing 
notes about everything from the case itself to our contacts 
with foreign intelligence services.
    We have in TTIC today for the first time a senior official 
and a body of analysts who work with that person, the Director 
of TTIC, who has the kind of visibility that you have just 
discussed. And I see the benefits of that.
    So, essentially, let me just stop there and say that the 
concept you have laid out, Senator, of a person who has this 
visibility across this whole arena, domestic and foreign, is a 
good one, I believe. I would endorse it.
    Senator Specter. Thank you.
    Chairman Collins. Senator Levin.

               OPENING STATEMENT OF SENATOR LEVIN

    Senator Levin. Let me first thank you and Senator Lieberman 
for your stalwart, determined, bipartisan leadership here to 
produce a product that we can rally around and which will make 
the necessary reforms. You are both really doing great work, 
and we all appreciate it.
    I think from your description, both of you, of what 
operations you would allow a new National Intelligence Director 
to direct, neither of you believe that that Director should 
have the power to task operations. Is that correct?
    Mr. Mueller. Yes.
    Mr. McLaughlin. I think there is a fine line here.
    Senator Levin. OK. If you cannot answer it quickly, that is 
OK. Just say you cannot answer it quickly, and I will go on to 
the next question.
    Mr. McLaughlin. I think he should be able to task.
    Senator Levin. Operations.
    Mr. McLaughlin. In one area.
    Senator Levin. OK. Could you give us that one area?
    Mr. McLaughlin. Well, this is how I think about it. I think 
someone has to report to that National Intelligence Director; 
for example, if the CIA reported to that National Intelligence 
Director directly, and the CIA Director worked for that 
National Intelligence Director, while the CIA Director would be 
in charge of operations overseas, by virtue of reporting to the 
National Intelligence Director, that person would certainly 
have something to say about operations.
    Senator Levin. Something to say. As the 9/11 Commission 
recommends, should that NID be able to assign operational 
responsibilities to an agency?
    Mr. McLaughlin. Not directly.
    Senator Levin. Thank you.
    Now, we have heard a lot about the declaration of war 
against al Qaeda in 1998 by the CIA Director. Did the budgets 
that were submitted by the CIA subsequent to that declaration 
of war reflect what the Director believed should be done to 
carry out that war? Did your budget request inside the 
Executive Branch, first of all, implement that declaration of 
war?
    Mr. McLaughlin. I don't recall the specific numbers. I know 
we asked for more money for counterterrorism, but I don't 
recall----
    Senator Levin. You asked for more than you got?
    Mr. McLaughlin. I just don't recall the data.
    Senator Levin. Could you get that to this Committee?
    Mr. McLaughlin. I will.
    Senator Levin. OK. Do you know whether or not when the CIA 
Director came to Congress with the administration's budget the 
CIA Director indicated that that is what he supported in terms 
of the needs of the CIA?
    Mr. McLaughlin. I am sure that he brought forward a budget 
that he supported.
    Senator Levin. And was there ever a case where he said to 
us, hey, the CIA has declared war, we do not have enough money 
in this budget request to carry out that war? Was there ever an 
instance that you know of where that happened?
    Mr. McLaughlin. I would have to go back and review the 
record on that.
    Senator Levin. Offhand, do you know of any instance where 
that happened?
    Mr. McLaughlin. I know that we needed more and wanted more 
and asked for more, but I cannot take it to the precision you 
are asking.
    Senator Levin. All right. So that there were times when you 
came to us, to the Congress, and said we are at war but this 
budget request does not allow us to carry out that war?
    Mr. McLaughlin. I would have to review the record to make 
sure I have that correct.
    Senator Levin. All right. Now, on the tug of war that has 
been referred to between the Department of Defense and the 
Intelligence Community over national assets of the NSA, I think 
we ought to analyze any such tugs of war that exist and that 
have occurred over the years. About how many times would you 
say that occurred?
    Mr. McLaughlin. In fact, in practice that does not occur 
very often.
    Senator Levin. All right. If there are any examples of 
that, would you submit those for the record?
    Mr. McLaughlin. Yes.
    Senator Levin. Now, the budget currently that is submitted 
to the OMB is developed by the DCI by law. Is that correct?
    Mr. McLaughlin. That is correct.
    Senator Levin. Is that a hollow authority? We have heard 
that all you folks do is you staple together the request of 15 
agencies, that you do not shape or influence that.
    Mr. McLaughlin. No, it is more complicated than that. The 
Director issues guidance to each of the agencies based on the 
national intelligence priorities that are worked out with the 
National Security Council. The agencies then formulate a budget 
based on that guidance. The Director then looks at the budget 
to see if it is in line with the guidance he or she issued. 
That is then approved and goes to OMB and also to the 
Department of Defense where there is a consultation at both of 
those arenas.
    Senator Levin. So that the guidance is issued currently 
under law by the CIA Director?
    Mr. McLaughlin. That is how it works in practice.
    Senator Levin. And is that a hollow authority?
    Mr. McLaughlin. I wouldn't say so.
    Senator Levin. Because one of the things we have to decide 
to do is how do we shift budget authority. I think the real 
issue, at least as I read the current law, as I read the 
current Executive Order, is whether or not the law means what 
it says.
    Mr. McLaughlin. No, the Director's authority at the 
initiation, the formulation of the budget is substantial. His 
authority declines as the budget is executed.
    Senator Levin. And that is where, it seems to me, the key 
issue is, and that is determined currently by Executive Order, 
is it not?
    Mr. McLaughlin. No. That is not, I don't think, determined 
by Executive Order.
    Senator Levin. Who determines, for instance, that it is the 
DOD agencies that have that authority, that budget execution 
authority, to the extent that it exists in the Executive 
Branch? And I hope we all remember that when it comes to 
reprogramming, Congress has got a key role. But, nonetheless, 
to the extent it exists in the Executive Branch, who currently 
has that authority? Is that authority which is given to the DOD 
now given to them by Executive Order or by law?
    Mr. McLaughlin. The authority to?
    Senator Levin. To be the reprogramming engine?
    Mr. McLaughlin. No. It is a result of the fact that the 
budget resides in the DOD and is literally in their 
comptroller's office and their computer system.
    Senator Levin. By appropriation?
    Mr. McLaughlin. I believe.
    Senator Levin. So that it is an appropriation decision 
which puts that implementation authority into the hands now of 
the DOD?
    Mr. McLaughlin. I think that is correct.
    Senator Levin. Which means we can change that by simply 
changing how that is appropriated, if we want to do that.
    Mr. McLaughlin. Yes, that is correct.
    Senator Levin. OK. My time is up. I just wonder if there is 
still a plan for a second round.
    Chairman Collins. There is, of 5 minutes each.
    Senator Voinovich.

             OPENING STATEMENT OF SENATOR VOINOVICH

    Senator Voinovich. I would like to thank you, Madam 
Chairman, and Senator Lieberman for your leadership. I think 
there is a question about whether or not we are going to spend 
enough time to do this thing right, and from my observation, I 
think the time has been put in by all of us, and particularly 
you, that will put us in a position where we can move forward 
responsibly with legislation.
    I would like to thank you, Mr. Mueller and Mr. McLaughlin, 
for your service. I was comforted by your testimony in terms of 
the progress that we have made since September 11. You might be 
interested to know that I have met with the Joint Task Force 
people in Cleveland, Columbus, and Cincinnati, and the Homeland 
Security officials, and they say that there has been a sea 
change in terms of the exchange of information among law 
enforcement agencies and also the folks that are charged with 
homeland security. So this is getting down to the local level 
where I think it really makes a difference.
    Director Mueller, in addition to fighting terrorists, the 
FBI is responsible for combating other serious threats to the 
United States, such as organized crime and corruption abroad, a 
subject on which I held a hearing in the Foreign Relations 
Committee last year. At that hearing we heard testimony on the 
pervasive influence of the Russian Mafia in the United States 
of America. Grant Ashley, Assistant Director of the Criminal 
Investigative Division of the FBI, testified before the 
Committee, and I asked him if the FBI had enough resources to 
fight organized crime as we devote more and more resources to 
fight against terrorism. He indicated that some of the 
resources once dedicated to the fight against transnational 
criminals are being diverted for the fight against terrorism 
while noting that the problem of transnational crime continues 
to grow. I am very concerned about crime and corruption 
overseas, and that is what the hearing was on, and then we had 
all this information about the Russian Mafia here in the United 
States.
    Yesterday in Cleveland, I met with the FBI special agent in 
charge, Gerald Mack. He feels that the Joint Terrorism Task 
Forces are working well. That is one of the things I mentioned. 
I asked him if he had enough agents assigned to 
counterterrorism, and he said he did but that he was taking 
agents away from their normal assignments to meet 
counterterrorism requirements. You have got a big job. In 
addition to terrorism, we all know the FBI has responsibilities 
for areas such as public corruption, non-violent white-collar 
financial crimes, and civil rights. I have three questions for 
you.
    First, should the FBI continue to be responsible for all 
these areas, or should the FBI shed some of its missions which 
could perhaps be given to other Federal agencies or State law 
enforcement agencies so that it can focus on its highest 
priorities, such as terrorism and organized crime?
    Second, do you have the workforce and the resources to do 
all of these missions?
    And third, does the FBI need additional personnel 
flexibilities to accomplish its expanded counterterrorism 
mission?
    Those are three long questions, but the fact of the matter 
is you are charged with many responsibilities. The question is: 
Do you have the resources to get them done, or should we give 
some consideration to shifting some of these responsibilities 
you have to some other agencies?
    Mr. Mueller. Well, going to the first question on the 
shifting of the responsibilities, we have shifted 
responsibilities. We have looked at what areas of 
responsibility we have in the wake of September 11, for 
instance, and looked at those areas in which we, in my mind, 
provide something unique to law enforcement. I moved almost 500 
agents from the drug program to counterterrorism in the wake of 
September 11. I also have moved agents from some of our work in 
things like bank robberies, smaller white-collar criminal 
cases, in the belief that DEA and the other agencies that can 
pick up those areas where we don't have necessarily any special 
expertise. I think particularly in the drug area, we have 
developed substantial cases over the years. We have a huge 
degree of expertise. But it seems to me that DEA can beef up 
that capability, and they are doing so.
    So we have already taken and looked strategically at what 
we are doing, where we can best put in our personnel. One of 
the things that we need to be as a workforce, and that is 
flexible. We will find that there will be a case that arises in 
a place like Lackawanna, New York, and we have to be able to 
push resources there, but not leave them there. Too often in 
the Bureau we have taken resources, put them in a particular 
place to address an immediate threat, the savings and loan 
crisis being one of them. And those resources are still there 
20 years later, when we need the resources elsewhere in the 
country.
    So we have to be much more flexible, and it may mean in a 
particular division at a particular point in time, we have to 
take people----
    Senator Voinovich. Have you done this in conjunction with 
the DEA and other agencies?
    Mr. Mueller. Yes.
    Senator Voinovich. Everybody has signed off on it?
    Mr. Mueller. Yes, through the Department of Justice.
    Second, in terms of our workforce, there are areas where we 
are building up our intelligence capability where we are 
looking at augmentations to our workforce in terms of how we 
better provide adequate salaries to our analysts, how we 
develop a career path for our analysts that has not been there 
in the past. That equates, as I said before, to the career path 
in the CIA or DIA or NSA or these other areas. And we are going 
to Congress with a request to give us the flexibility to 
develop those career paths.
    Last, in terms of do we have enough money to do all that is 
on our plate, we have had to prioritize, as every Federal 
agency does. We put our requests for financing in the critical 
areas where we need to defend the security of the United 
States, the requests in counterterrorism, counterintelligence, 
cyber, white-collar crime because of the large white-collar 
crime cases we are addressing now. And we have through the 
administration and through Congress received substantial 
augmentation of monies over the years. And we continue to go 
back in the 2004 budget and the 2005 budget to request that 
which we need to address the current priorities, but also other 
priorities that we see on the horizon, and we will continue to 
do so.
    Senator Voinovich. And you think that the National 
Intelligence Director having the full view of what is there 
will be beneficial in terms of your operation, in terms of your 
resources?
    Mr. Mueller. I believe so. I think the National 
Intelligence Director would look at us as one of the components 
and an essential component in terms of intelligence within the 
United States and would look favorably on a request to augment 
the monies that are spent on our intelligence program to 
provide the types of intelligence that both I want, the NID 
would want, and the President would want as to future threats 
against the United States, not just in counterterrorism but in 
counterintelligence, those who wish to steal our secrets, as 
well as cyber, preventing cyber attacks and identifying those 
overseas who would launch cyber attacks against our 
infrastructure, against our Defense Department.
    I would look to that National Intelligence Director to look 
at us and the Defense Department and the CIA and be fair in 
terms of what we need to do the job as an intelligence agency 
in ways that we have not been looked upon the past.
    Senator Voinovich. Thank you.
    Chairman Collins. Thank you. Senator Dayton.

              OPENING STATEMENT OF SENATOR DAYTON

    Senator Dayton. Thank you, Madam Chairman.
    Director Mueller, at a hearing a couple weeks ago, I asked 
the Secretary of Defense about the chain of command on 
September 11, 2001. The 9/11 Commission Report concluded that 
there was not that morning a proper chain of command 
established between the President of the United States, the 
Secretary of Defense, and then on to the combatant commanders; 
and that as a result, the Vice President issued the President's 
instruction to authorize NORAD fighters to shoot down hijacked 
enemy planes within U.S. airspace about 2 hours after the first 
hijacking, and an hour and a half after the first World Trade 
Tower was struck, the NORAD mission director decided not to 
pass that instruction on to the pilots who were airborne at the 
time.
    The Secretary of Defense replied that on September 11, 
2001, the defense of this country from an enemy attack from 
within our borders was not the responsibility of the U.S. 
military or of NORAD but of the FBI. And I would like to know--
two questions. One is: Was that your understanding of your 
responsibility on that day? And, second, who has that 
responsibility today if, God forbid, there should be a repeat 
of a September 11 type of attack?
    Mr. Mueller. We certainly have responsibility for 
developing intelligence about threats within our borders, 
threats that may come from outside our borders but are to take 
place within our borders. We have responsibility for developing 
intelligence to identify those threats, and we also have 
responsibility to address those threats with investigations 
and, by addressing it, taking the investigations to prosecutors 
and either taking those persons off the street by prosecution, 
expulsion from the country, or monitoring them. I think we have 
that responsibility.
    I would say it is a shared responsibility. I think Homeland 
Security has a substantial role to play in protecting the 
borders, for instance; Customs, the ICE. And so while I think 
we have a substantial responsibility to prevent another attack 
within the United States from either international terrorists, 
domestic terrorists, there are others that play a piece in 
that.
    Senator Dayton. What was your understanding, sir, on 
September 11, 2001, given the----
    Mr. Mueller. I think we had a role. Absolutely, I think we 
had a responsibility to protect the United States. I think we 
understood that responsibility, and as we do today.
    Senator Dayton. Was that an operational responsibility on 
that day once those planes were hijacked to take action to 
defend the country?
    Mr. Mueller. Yes.
    Senator Dayton. And if so, what would that action--what 
could that action have been given your assets?
    Mr. Mueller. Well, immediately upon the incidents 
happening, we had a responsibility to determine who was 
responsible, whether there were any others out there who would 
utilize similar methods to hijack planes. We had to do it in 
coordination with others, whether the FAA or, to a certain 
extent, the military. But we absolutely had a responsibility 
once those terrorist attacks had occurred to identify who was 
responsible, make certain there were no others out there.
    Senator Dayton. But that occurred at the time of the 
attacks--and I guess I am even more interested in if, as I 
said, God forbid, that kind of attack should develop again, I 
would like to know who is responsible operationally, who has 
the authority and the assets to direct whatever must be 
directed to marshal an active defense of the United States from 
an enemy attack if it repeats itself from within the borders.
    Mr. Mueller. Well, we had a responsibility then to prevent 
attacks. We understood that before. And we have a 
responsibility now to prevent attacks.
    Senator Dayton. Prevent. But what happens if one, as I 
said, should commence along the lines of September 11? Do you 
have resources available to marshal an act of defense at that 
point in time? If so, what are they? Do you need such 
resources?
    Mr. Mueller. We had on September 11 approximately 11,000 
agents. On September 12th, we had 6,000 of those agents 
addressing it.
    Senator Dayton. With all due respect, Director, you are not 
answering my question.
    Mr. Mueller. We do have resources to address the--once an 
incident happens----
    Senator Dayton. Is happening.
    Mr. Mueller. Is happening, yes. If there is an ongoing 
hostage taking, for instance, that is our responsibility. We 
would have our Hostage Rescue Team there working with State and 
locals to resolve that issue. If there was another incident 
such as what happened on September 11 in which planes slam into 
buildings, then we would have a responsibility to investigate. 
We also have a responsibility to prevent that happening if we 
had intelligence. It was our responsibility to pull all the 
intelligence together along with that which the CIA has and 
disrupt, prevent that attack.
    Senator Dayton. I guess I was astonished by the Secretary 
of Defense's response, and I guess I am trying to, again, 
understand because it would seem that the air defense 
capabilities of this country reside with either NORAD, which is 
a North American shared command, or with our own military 
command directly. And I did not know the FBI had or even shared 
that, again, immediate, at-the-time responsibility or had the 
capabilities to take action. So I am trying to understand who 
has that today and what is the understanding of who has that 
responsibility today.
    Mr. Mueller. I see. I didn't fully understand, I guess. No, 
we do not have responsibility for the issuing of orders to 
NORAD to defend against that type of attack. I mean, our 
responsibility would be to coordinate with other agencies to 
make certain that the chain of command through whether it be 
the Department of Defense, Homeland Security, National Security 
Council, to the President has all the information we have 
available to us to make that decision. But we do not have the 
capability or authority, for instance, to launch jets to 
prevent an incident such as what happened on September 11.
    Senator Dayton. Thank you.
    Thank you, Madam Chairman. My time has expired. Thank you.
    Chairman Collins. Thank you. Senator Carper.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. Thanks, Madam Chairman.
    Director Mueller, I think earlier in response to Governor 
Voinovich's questions about the work that you have done sort of 
restructuring and refocusing the FBI's attention on 
counterterrorism, you went through a litany of a number of the 
steps you have taken, and I think they are certainly 
commendable. Some critics of the FBI are concerned that when 
you leave--and none of us are in these jobs forever--but when 
you leave, a successor or a series of successors will undo the 
good work that you have done on this score. And with that in 
mind, those concerns in mind, what advice would you have for 
us, steps that we might take legislatively to ensure that does 
not happen, or at least to reduce the possibility that it would 
happen?
    Mr. Mueller. I do think that the establishment of a NID 
goes some ways to assuring that because then you will have 
oversight of the Intelligence Community in that office within 
the administration.
    Second, the establishment of an intelligence directorate, 
the funding, the staffing, the development of career paths, the 
development of the cadre of people will certainly outlive my 
tenure. That will be tremendously important. Adequately funding 
and assuring the staffing will be important to enhance our 
capabilities there. And there also is the Department of Justice 
through whom we report, assuring that we are doing the job and 
satisfying the mission that has been set out for us.
    And last, there is Congress, also looking at what we have 
done, what we have accomplished in various areas, not only in 
the oversight committees but also in the appropriations process 
that will be monitoring whether or not we are reaching the 
goals that we have set for ourselves.
    Senator Carper. Good. Thanks.
    Director McLaughlin, if I could ask you a question or two, 
please. You actually raised an interesting question in some of 
your previous testimony. I believe it was before the Armed 
Services Committee. Here is what you asked: ``Who will you hold 
responsible not just when things are going well but when 
something goes wrong with intelligence?'' You went on to say, 
``Today it is the Director of Central Intelligence, even though 
his authority over the rest of the community outside CIA''--
``his authorities are limited.''
    ``If in the future there will be a National Intelligence 
Director, what authorities would be commensurate with that kind 
of responsibility?'' That was the question you asked. A good 
question, I thought.
    Having posed that question, I want to just sort of turn the 
tables on you a little bit this morning and ask you, if you 
were put on the hook for what goes right or what goes wrong 
with intelligence, what authorities would you want or need?
    Mr. McLaughlin. Well, thanks for asking. I posed the 
question because I wanted to force people to think about that 
issue, because it is pretty clear today who you hold 
responsible. And I think the answer to the question implies 
certain things about resources and authorities. If you choose 
to say that the National Intelligence Director is the Nation's 
principal intelligence officer and that is the person to whom 
you will look in good times and bad, then I think that person 
does require substantial authorities and something else that I 
will talk about.
    Now, I have mentioned before what I think the authorities 
need to be. They need to be greater than the DCI's, which are 
substantial, but they need to be extending to the budget. They 
need to be extending to the ability to influence substantially, 
perhaps hire and fire the leaders of major agencies, so that it 
is clear that this person really is in charge.
    I think the other thing I wanted to mention, though, is 
that if you truly are being held responsible, you need access 
to troops; that is to say--I mean, there are two conceptions of 
how this could work. It could be just--not ``just.'' It could 
be a person whose principal duties are to handle the 
programmatics of the community--budget, training, security 
policies, information technology and so forth. One model.
    Another model is someone who does that and also represents 
the community's view substantively--testifies before the 
Congress, the annual worldwide threat testimony; briefs the 
President; renders a judgment for you on behalf of this entire 
Intelligence Community on whether North Korea has nuclear 
weapons or not.
    Someone who has those responsibilities and you hold 
responsible and accountable for those kinds of questions will 
need to be able to reach without any impediments into a body of 
experts, analysts, and operators, just as the DCI can, to gain 
that knowledge, gain the expertise, gain the analysis, 
understand the differences, understand the gaps, and bring them 
forward.
    So that is how I think about it, and if this is the person 
you want to hold responsible, then it cascades through a series 
of other decisions to be made, I believe, about how the person 
is staffed, who reports to the person, and so forth. I can sort 
of describe how it works now, but that is how I see it.
    Senator Carper. One last quick question, if I could, and 
just a brief answer, too, if you will, from both of you. We 
have talked a lot and heard from a lot of witnesses in 
excellent testimony about some of the things that we ought to 
do. And, occasionally, I will ask the witnesses, What should we 
absolutely not do? And if you would just give me an example or 
two of something we absolutely ought not to do as we 
restructure our Intelligence Community, what might be an 
example or two that you would share with us?
    Mr. McLaughlin. Don't create a National Intelligence 
Director with no real authority because you will have the worst 
of all worlds then. You will have diminished the authority of 
the Director of Central Intelligence in the process and created 
another competitor for authority but without clear authority.
    Senator Carper. Director Mueller.
    Mr. Mueller. As I understand the difference in collections, 
capabilities, authorities between that which is collected 
overseas and that which is collected within the United States 
and keeping that in mind when drafting legislation for the NID 
to assure that the National Intelligence Director has the 
capability for strategic tasking, but leaves the collection of 
that information within the authorities of the various 
different intelligence agencies.
    Senator Carper. Thanks to both of you.
    Chairman Collins. Thank you.
    We are going to have a brief second round of questions, but 
I am going to take a 5-minute break. I am going to resume the 
hearing in 5 minutes. Thank you.
    Senator Lieberman. We will have a seventh-inning stretch.
    Chairman Collins. Right.
    [Recess.]
    Chairman Collins. The Committee will come back to order. We 
will now have a final round of questions limited to 5 minutes 
each.
    Director McLaughlin, as you could tell from the questions 
you have had from us at this hearing and at previous hearings, 
there is a great deal of interest in learning exactly how the 
budget process works now and how we can reform it and 
institutionalize it in the legislation that we are drafting.
    In consulting with my colleagues, I think it would be very 
helpful to enhancing our understanding if you were to provide 
to the Committee a copy of the budget guidance that the DCI 
sends out to the 15 intelligence agencies.\1\ So I would ask 
that you provide that for the record.
---------------------------------------------------------------------------
    \1\ The list of items CIA has not provided to Senator Levin 
requests (SASC) has not been provided by press time.
---------------------------------------------------------------------------
    Mr. McLaughlin. I will.
    Chairman Collins. Thank you. The other issue on which there 
continues to be great debate, debate driven in part by the fact 
that different agencies define planning differently, as you 
have pointed out, has to do with the role of operational 
planning and how we should draw those lines. In your testimony 
you referred to an operational meeting that you chair every 
day, ``with Intelligence Community, military and law 
enforcement elements represented.'' I am told that these 
meetings often focus on counterterrorism issues.
    You also noted in your testimony that, ``at that meeting we 
review and act on that day's intelligence.'' I am trying to get 
more of a feel for what that means. Does that include 
discussing operations to be carried out by the agencies 
represented at that operational meeting?
    Mr. McLaughlin. It is mainly focused on operations to be 
carried out by CIA, but we have in that meeting, as part of the 
personnel from our Counterterrorism Center, representatives 
from other agencies. There is an FBI officer who is there, 
stationed in the Counterterrorism Center, so that there is 
transparency with the FBI. So it is mainly on CIA operations. 
That said, it is frequently the case that in the course of our 
operations we uncover a link to the homeland, and that is 
passed on the spot to the people from the Bureau, and migrates 
back to the FBI.
    It is also the case that there may be a military dimension, 
and so I have in that meeting the Associate DCI for Military 
Support, a 3-star Navy Seal, who if we require military 
involvement in a counterterrorism operation, he is there to 
organize that. So this is a very tactical meeting we have and 
decisions----
    Chairman Collins. Are you tasking though?
    Mr. McLaughlin. Yes. We are not tasking the agencies, but 
it is in fact analogous to what I think might happen in a 
larger setting in a National Counterterrorism Center. I do not 
task the FBI and I certainly do not task the U.S. military, but 
these issues arise, and I will say to my officers, ``Be in 
touch with the FBI to make sure that they are aware of what we 
have just heard and are acting on it. Be in touch with the 
Pentagon to make sure they have forces deployed along Border X 
in the event we drive a terrorist over it. Be in touch with the 
National Security Agency to make sure they have these phone 
numbers that we have uncovered in some document collection that 
we have encountered.''
    So this is a very tactical, hands-on type of operation 
every day.
    Chairman Collins. It is information sharing, it sounds like 
as well. Is this what you would envision the National 
Counterterrorism Center doing in order to free up the NID to 
focus on managing the Intelligence Community?
    Mr. McLaughlin. I see it as a variation of that. I think 
somewhat less tactical, more strategic, and less directive, 
because I do direct CIA officers and stations to perform 
certain duties. I would see the NCTC as being more of a 
clearinghouse for data and the development of a checklist of 
things that must be done, things that must be plugged together, 
things that must be integrated, and then directing--directing 
is probably the wrong word--asking people to focus on that and 
get back to you. This will have to be determined in practice, 
but that is my understanding of how this would work.
    Chairman Collins. Director Mueller.
    Mr. Mueller. I also have a meeting twice a day, 7:15 in the 
morning and then 5 o'clock in the evening with 
Counterterrorism, and sitting at the table are representatives 
of Department of Homeland Security, the CIA, but it is an 
effort for me to understand what we are doing in our 
organization and give direction to make certain that we are 
doing what is necessary to meet the counterterrorism mission.
    But apart from what I do and what John does, there also is 
twice a day, a CIVITS, it is called. It is a videoconference 
chaired by Homeland Security adviser Fran Townsend or somebody 
under her, with each of the component agencies on that 
videoconference, looking to determine whether everything has 
been done to meet a particular counterterrorism threat, and 
that is the opportunity, and my understanding is it does take 
place once a day and once on Saturdays, and it seems to me that 
it is that planning, that bringing together of the agencies 
that the National Counterterrorism Center will do that is now 
being done out of the Homeland Security adviser's office. And 
it is that type of daily interaction of the agencies that 
assures that we are agile, that we are responding to the 
immediate threats that there is coordination.
    So I see the National Counterterrorism Center as having the 
analytical capability, but also that coordinating function that 
is now being coordinated out of the Homeland Security adviser's 
office.
    Chairman Collins. Thank you. Senator Lieberman.
    Senator Lieberman. Thanks, Madam Chairman. I thought that 
was a very good question and very helpful answers because there 
has been some debate about whether the National 
Counterterrorism Center should have an operational planning 
role, and the fear expressed on the extreme is that somehow the 
Director of the center or the NID would interfere with the 
chain of command between the war fighters, the Secretary of 
Defense, the President, or the FBI, yourself, and the Attorney 
General. But there has to be a way to make this work without 
doing that, and it sounds like you are doing it every day 
anyway. In the Counterterrorism Center everybody is going to be 
around the table analyzing what has been collected. There is a 
natural way, of course, in which you are all going to say, 
well, what are we going to do about it? And then you are going 
to agree who should have what role. I want to go to another 
question, but I thought your answers were very helpful.
    I am going to assume for the moment that we are heading 
toward creating a National Intelligence Director and that we 
are going to avoid the pitfall that you, Director McLaughlin, 
quite accurately state is probably the most dangerous thing we 
can do here which is create a NID with no real authority. I 
think today the meeting at the White House was a turning point 
because the President did explicitly support a strong National 
Intelligence Director with full authority not just to form but 
to receive the appropriations for the full national foreign 
intelligence program, which as you know better than I, is well 
over half of what we spend on intelligence.
    Now I want to ask the question about how we make the NID 
effective, and that is, what is the bureaucracy under there? I 
ask you both as individuals who have directed large 
organizations, but also because your organizations will be now 
in part or in whole under the NID. We have a few models. We 
have the Commission model, the three deputies: Foreign, 
domestic, and military. We have the Roberts model: Ccollection 
analysis, science, and technology. Some have suggested we 
should just give the Director the opportunity to create a 
couple of deputies and let them decide what they want to do. 
Others have said maybe the centers are so important, have one 
deputy for the centers and then one deputy for what your 
community management team does now, all the budget matters.
    What counsel would you give us? This is a slate that is not 
quite blank, but that we have to fill in fairly soon and we 
want to do it most effectively, about how to organize under the 
NID to make this work, assuming he has budget authority.
    Mr. McLaughlin. It is always dangerous to design a line and 
block chart sitting here at the table, but I will give you some 
thoughts on it.
    Senator Lieberman. And I will accept them as first thoughts 
and I would welcome them.
    Mr. McLaughlin. I think the first thing that a National 
Intelligence Director has to ask him or herself is, ``How do I 
get my job done?'' That may be the first, even before that, 
``What is my job? If I am the Nation's principal intelligence 
officer, what is my range of duties?'' Let us assume that they 
are a mixture of substance and management.
    You have to have troops and you have to have someone to 
integrate all of these things for you because you are looking 
at a very diverse community. One way to think about this would 
be to have the CIA Director and the CIA report directly to the 
National Intelligence Director. I do not think we have sorted 
out who reports to whom in any conclusive way in any of the 
legislation or the bills yet. It is not clear to me anyway.
    Senator Lieberman. In one way the Commission decided this 
or recommended, because as you remember, the CIA Director was 
one of the deputies, double-hatted.
    Mr. McLaughlin. Yes. I would do it a little differently. I 
would have the National Intelligence Director regard the CIA as 
the institution that can integrate things for him or her in the 
sense that among the CIA's distinguishing characteristics is 
its non-departmental nature. It is not attached to any 
department that makes or implements policy, and therefore, it 
is an institution that the National Intelligence Director could 
turn to for the purpose of integrating both collection and 
analysis. You have in the CIA a body of all source intelligence 
analysts who are multidisciplinary, global in focus, and not 
attached to any policy department. And the CIA Director could 
make those assets available to the National Intelligence 
Director.
    In the overseas part of the CIA you have not just HUMINT 
collection, but under the DCI's current practice, the Chief of 
Station in various spots around the world is also an 
integrator. The Chief of Station is the chief intelligence 
officer for the United States in that country, and therefore, 
coordinates the activities in that country of other 
institutions that are stationed there from the Intelligence 
Community. So the CIA could perform that integration function 
for the National Intelligence Director.
    I raise that because I do not know what the NGA, NSA, and 
NRO would be in the reporting chain here, but they are 
essentially collection agencies and agencies that devise 
technology, and someone needs to integrate that as the CIA 
currently does for the DCI.
    So if you accepted that, then the next thing to figure out 
would be what are the division of responsibilities between the 
National Intelligence Director and the Director of the CIA? I 
will stop there, but there are ways to think about that.
    Senator Lieberman. I appreciate that answer and invite you 
to think about it and give us any counsel you would pretty 
soon.
    Director Mueller, do you have a response?
    Mr. Mueller. Yes.
    Senator Lieberman. The Commission recommended the Executive 
Assistant Director for Intelligence of the FBI might well be 
double-hatted as the Deputy NID for Domestic Intelligence. I 
assume that--because I have talked to you about it--you think 
that is a bad idea.
    Mr. Mueller. I do not agree with double-hatting. Again, 
going back to chain of command and responsibilities, my 
responsibility to assure that the dictates, directives of the 
National Intelligence Director are carried out now, I would 
delegate that to Maureen Baginski who would be a principal 
relator to the National Intelligence Director, but I do not 
believe in double hatting.
    Senator Lieberman. If you were the NID what is the 
structure you would want underneath you to make it work?
    Mr. Mueller. I would have a deputy, and then I would have 
as a council of the principal players in the National 
Intelligence Community that would play a role as the users in 
directing down through their organization the priorities, the 
requirements that I as the National Intelligence Director with 
the input of that counsel believe are appropriate and hold the 
person on that council responsible for the execution of our 
plan. I would have one deputy. In other words, when I am not 
there, I would want one deputy who is responsible as opposed to 
three vying with each other or four vying with each other for 
prominence across the board.
    There is one other point I would make, and that is I do 
believe the National Intelligence Director should have some 
independence from any of the underlying agencies. We are 
incorporating for the first time really in the Intelligence 
Community some aspect of domestic intelligence, and to have 
some supervisory advisory role there apart from the Attorney 
General, in my mind, requires an understanding of how we gather 
intelligence, under what authorities, what use we can make of 
it within the domestic United States, which is a different 
background perhaps, a different area of expertise than one 
would have in the development of intelligence within the United 
States. And there has to be, in my mind, that independence at 
the NID that is somewhat different than having the NID an 
extension of the CIA.
    Senator Lieberman. Very helpful. Thank you both.
    Chairman Collins. Senator Dayton.
    Senator Dayton. Thank you, Madam Chairman.
    Director McLaughlin, there is a book out now, ``Imperial 
Hubris'' written by Anonymous, so I believe it is not anyone 
very anonymous.
    And, Madam Chairman, I wish that we could devote a hearing 
to this and get other views on this, because I think this is 
the crux of the dilemma that we are facing in this country in 
terms of our policy.
    He writes, ``As I complete this book, U.S., British and 
other coalition forces are trying to govern apparently 
ungovernable post-war states in Afghanistan and Iraq while 
simultaneously fighting growing Islamist insurgencies in each, 
a state of affairs our leaders call victory. In conducting 
these activities and the conventional military campaigns 
preceding them, U.S. forces and policies are completing the 
radicalization of the Islamic world, something Osama bin Laden 
has been trying to do with substantial but incomplete success 
since the early 1990s. As a result I think it is fair to 
conclude that the United States of America remains bin Laden's 
only indispensable ally. As usual, U.S. leaders are oblivious 
to this fact and to the dire threat America faces from bin 
Laden and have followed policies that are making the United 
States incrementally less secure.''
    Moving on, ``U.S. leaders act as naive and arrogant 
cheerleaders for the universal applicability of western values 
and feckless overseas military operations, omnipotently 
entitled''--various names here. ``U.S. leaders boast of being 
able to create democracy anywhere they choose, ignoring 
history.''
    I wonder if you would care to comment on that, and 
particularly whether we are weakening or strengthening our 
national security as a result of what we have done to date in 
Iraq and our continuing operations there?
    Mr. McLaughlin. Of course, the author's opinions are his 
own and----
    Senator Dayton. Absolutely. I am asking you for your 
professional response as Director of the CIA.
    Mr. McLaughlin. I will give you my personal opinion then.
    Senator Dayton. Fine.
    Mr. McLaughlin. It is instructive to me that bin Laden 
carried out these attacks on the United States long before 
there was any thought of going into Iraq, and carried them out 
at a time when there was arguably progress in the Arab-Israeli 
situation. So I do not see these as significant motivators for 
the al Qaeda movement. They are things that they fall back on 
as excuses, but in the case of Iraq, I think Iraq is a cause 
for extremists but it is not the cause of extremism.
    Senator Dayton. As I understand what he is saying here, I 
guess the crux of my question would be, we are in Iraq, we have 
done what we have done, but is our continuing presence there, 
active military involvement there--we have heard now from one 
of our colleagues, very well regarded, that we could be there 
another 10 to 20 years. I think the point he is making is that 
these actions on our part are weakening our national security 
by continuing to increase the radical--his term is the 
radicalization of the radical Arab world, which I do not think 
is justified in its stance toward the United States, but he is 
saying here we are unwittingly contributing to that 
radicalization and to the increased number of those who would 
take these kind of disastrous actions against us.
    Mr. McLaughlin. A lot of things in intelligence fall under 
the category of discoverable, other things knowable, and other 
things unknowable. I think the question you have posed, I am 
not trying to dodge it, but ultimately it is unknowable. In one 
sense you could say that Iraq can become a cause for extremists 
even though it is not the cause of extremism, and in the short 
term you could see it as generating some of the problems that 
the author talks about.
    If you take a longer-term perspective and you imagine the 
achievement of what the United States is seeking to achieve in 
Iraq over a period of time, it would have the reverse effect I 
believe. So I think this is a very fluid and dynamic thing, and 
to kind of freeze frame it the way the author does, and to talk 
about it in absolute terms I think is misleading.
    Senator Dayton. Again, I would agree. As Yogi Berra says, 
it is always hard to make predictions, especially about the 
future. He does quote Ayman al Zawahri in late 2003. That would 
be well after we are into the Iraqi operation. Quote: ``We 
thank God for appeasing us with the dilemma in Iraq after 
Afghanistan. The Americans are facing a delicate situation in 
both countries. If they withdraw they will lose everything, and 
if they stay they will continue to bleed to death.''
    Would you concur that we are bleeding to death if we 
continue to persist in Iraq for this period of 4 years, 10 
years, or 20 years?
    Mr. McLaughlin. Once again, I think it is just impossible 
to say. This is a very tactical day-to-day situation, and it 
is, of all the situations in the world, the closest that I can 
see to what I would call a multi-dimensional chessboard. In 
other words, if there is success on the political arena, 
success on the economic arena, the security problem will 
diminish. If there is not, the security problem will continue 
to grow. And as we look at the political situation now, it is a 
mixed picture. The recent convocation of a conference is a good 
sign, selection of 100 people of varying background.
    The next question will be, can they achieve their goal of 
having an election for a constituent assembly in January? If 
they do, that will be another milestone. If they do not, that 
will be a bad thing. I think you just cannot talk about it in 
absolutes. It is very fluid and it is very dependent on all of 
these variables. I think it is one of those situations where 
only time will tell.
    Senator Dayton. Thank you for your response. Thank you, 
Madam Chairman.
    Chairman Collins. Thank you, Senator Dayton. Senator Levin.
    Senator Levin. Thank you, Madam Chairman.
    The two big reports that we have been looking at recently, 
one is the 9/11 Commission Report, and the other one is the 
report of the Senate Intelligence Committee. One has to do with 
the intelligence failures before September 11 to a significant 
extent. The other one is the intelligence failures prior to 
Iraq. In none of the 500 pages of each report that I can find 
is there any relationship drawn between any lack of power over 
budget or personnel on the part of the CIA and those failures. 
I will make that as a statement because it seems to me, unless 
you know there is something in this report that I have not 
seen, that is just a statement of fact. There is no connection 
between what we are looking at, which is greater budget and 
personnel power for a new intelligence director and the 
problems to be corrected which were identified in those 
reports. That does not mean we should not give greater power, 
by the way, because I think there are some things we can do 
more efficiently and effectively, so I am not opposed to giving 
greater power. I think we ought to realize, however, this is 
not the--this does not address the issues which were raised.
    The issue raised in the 9/11 Commission Report essentially 
was the lack of coordination, and the lack of sharing of 
information, which TTIC has now done a lot to address, and 
other efforts, including the Executive Order recently signed by 
the President also addresses.
    The issue though, which needs to be focused on heavily is 
the question of the objectivity and the independence of the 
intelligence which is received both by the Executive Branch and 
by the Legislative Branch, because I think you both pointed 
out, we are a consumer of those assessments. It is not just 
that you folks, you particularly, Mr. McLaughlin, brief the 
President. We rely on this before we vote on authorizations for 
use of force and for other purposes, for budgeting purposes. We 
have got to be able to rely on those assessments, and frankly, 
we cannot. If anyone wants to know why we cannot rely on it, 
read 500 pages of the Senate Intelligence Committee report as 
to how far off assessment after assessment after assessment 
were.
    The part that I would like you to address though, Mr. 
McLaughlin, is this. There were many occasions where the 
underlying intelligence was different from the public 
statements of the administration. One was presented to you. 
That issue was raised with you by Senator Durbin earlier today, 
and that had to do with the relationship between al Qaeda and 
Saddam Hussein and Iraq. I want to just give two examples of 
this. Your underlying assessment relative to this famous report 
of a meeting in Prague, your classified assessment was that 
there were great doubts that meeting took place. The 9/11 
Commission found that there is no evidence that meeting took 
place. You had an unsubstantiated report which you had doubts 
about in the CIA in your classified document, and yet the 
administration was repeatedly referring to that report of a 
meeting as being strong possible evidence of a link between al 
Qaeda and Saddam Hussein, constantly. As a matter of fact, in 
one of the statements of the administration, it was stated to 
be that it is likely that meeting occurred, at the same time 
your underlying intelligence was saying you had real doubts 
about it.
    Why is it that the CIA then in its public statements 
relative to that meeting did not reflect what your underlying 
intelligence said, which is that you had doubts about that 
meeting? What you said publicly was that, we cannot prove that 
the meeting took place. That is what you said publicly. But 
what you did not add was something which is critically 
important, which is that you had doubts about the meeting, that 
it ever took place, and as a matter of fact, you have concluded 
there is no credible evidence that the meeting took place. Why 
that public difference between what your underlying 
intelligence said and between what you were saying publicly 
about that meeting?
    And then there is one other issue I would like to get to, 
which relates to the same point.
    Mr. McLaughlin. I know this is a serious concern of yours, 
Senator, you have raised it a number of times. I will try and 
address it. First, our understanding of that meeting evolved 
over time, as most intelligence does. The skepticism came in as 
we continued to look at it and develop intelligence on it. I 
cannot give you a timeline as to when that skepticism became 
more pronounced, but it did.
    Senator Levin. Could you do that for the record?
    Mr. McLaughlin. Sure.
    Senator Levin. Thank you.
    Mr. McLaughlin. Also I do not have in mind precisely what 
we were saying about it publicly, but I know that we were not 
at any point publicly endorsing the idea that that meeting was 
somehow conclusive.
    So what we have done is be very forthright, and I would say 
very objective in what we have said in our intelligence 
reporting about that meeting to you and to the President. The 
9/11 Commission had access to that and rendered a judgment 
about the accuracy of our work.
    I think what you are raising is a difficult issue because 
it implies that every time a public figure of some importance 
makes a statement that is at variance with our intelligence, I 
ought to stand up and say ``foul.''
    Senator Levin. You do not have to say ``foul.'' You can say 
it accurately when you speak publicly.
    Mr. McLaughlin. That would be a very difficult job for us 
because it happens in every arena. I heard Members of Congress 
on television this weekend say things that I thought were 
highly inaccurate about our work and about the conclusions of 
our work.
    Senator Levin. I am only asking you to state things 
accurately when you speak, that you give us the full picture 
when you speak.
    Mr. McLaughlin. If every time I heard a public official say 
something that I disagreed with based on my knowledge of 
classified information, if I stood up and said, ``Excuse me, I 
would like to correct the record,'' I would be doing that quite 
a bit.
    Senator Levin. You missed my point, but I will try it 
again. My point is that when you do speak publicly that you 
give an accurate reflection of the underlying intelligence. We 
have to rely on that. The public relies on that. And when you 
leave out----
    Mr. McLaughlin. I agree with that.
    Senator Levin. OK. But you left it out on that key meeting 
relative to Prague, which was used over and over again by the 
administration as being a principal source of their conclusion 
about whatever links exist between al Qaeda. But let me go on 
to the next one.
    Mr. McLaughlin. I would have to go back and parse the words 
on what we said publicly, but I would just assure you there is 
no intention on our part to speak inaccurately in public about 
our intelligence.
    Senator Levin. Or to leave out critical----
    Mr. McLaughlin. Or to leave out critical parts.
    Senator Levin. Now on the other one, if I may. This has to 
do with your judgment that there was, as to the relationship 
between al Qaeda and Saddam Hussein, you reached a conclusion, 
``you'' being the CIA, that as a matter of fact it was highly 
unlikely that Saddam Hussein would share a weapon of mass 
destruction with a terrorist group such as al Qaeda. That was 
your conclusion, that only if attacked, only in retribution, 
would that action possibly take place. That was your 
conclusion, that it would be, in your words, classified words 
at the time, an extreme step for Saddam Hussein to share a 
weapon of mass destruction with al Qaeda, at the same time the 
administration was saying that he was very prone any day, any 
moment to give a weapon of mass destruction to al Qaeda.
    So you had a significant difference between your conclusion 
and the conclusion and the statements which were made by the 
administration. Did you not have some obligation, at least when 
speaking publicly about the difference between the 
administration's statements and your underlying statements, 
your classified statements, did you not have an obligation when 
speaking publicly to accurately reflect that difference?
    Mr. McLaughlin. Well, we do not often speak publicly about 
classified information, so automatically there is a limitation 
on what we are going to end up saying publicly. But I do recall 
an exchange that you and I had in the Senate Intelligence 
Committee in which you asked me similar questions, and I 
answered them quite clearly in a classified setting, and you 
requested that I declassify those answers, and I did, and they 
were answers that generally were along the lines of what we 
have just discussed in terms of the propensity of Saddam 
Hussein to use weapons, and that was unclassified after I 
agreed to your request.
    Senator Levin. And you said then, when you responded to the 
request from the Intelligence Committee, on the eve of a vote 
on the authorization amendment, Mr. McLaughlin, you then gave 
us the declassified answer, that it would be an extreme step 
for him to hand one a weapon of mass destruction; is that 
correct?
    Mr. McLaughlin. I do not recall.
    Senator Levin. Assume for the moment, that is what you said 
publicly. But then what the Director said was exactly what you 
say you do not do. He characterized the intelligence. He spoke 
up and said: There is no difference. There is no inconsistency 
between the CIA views that you had just declassified and those 
of the administration. He did exactly what you say you do not 
do, which is to speak publicly about comments of public 
officials relative to this kind of information, Director Tenet, 
and this was front page critical news. This goes to the 
question of whether or not Saddam Hussein attacked us on 
September 11, because if he did, everybody wanted to go after 
him. And so what the CIA Director did after you, at our 
request, declassified that critical statement that only if 
attacked would he share a weapon of mass destruction with al 
Qaeda, it would be an extreme step for him to do so, then the 
Director initiated a call to the media, saying that there is no 
inconsistency between those two views, those of the CIA which 
you just declassified, and those of the administration which 
were consistently that he is just prone to hand a weapon of 
mass destruction to al Qaeda.
    My question to you is--and it is something which should I 
hope trouble you, I hope trouble someone there, because we have 
got to rely on objective independent assessments. And before we 
hand more power to a Director to do that, we, it seems to me, 
are duty bound to be comfortable that we are going to be 
getting straightforward, unvarnished, independent, objective 
statements when statements are made publicly.
    Can you explain that statement that there was no 
inconsistency in your views which were so different from the 
administration?
    Mr. McLaughlin. I would have to go back and revisit that 
whole incident. What I would tell you to frame it though is 
that there is no revealed wisdom on questions like that. People 
have different views. I stated a view.
    Senator Levin. CIA had a view, Mr. McLaughlin. Your view 
was it would be an extreme step for him to hand a weapon of 
mass destruction to al Qaeda unless he was attacked. That was 
the view of the CIA.
    Mr. McLaughlin. That was my personal assessment based on 
your question to me, and----
    Senator Levin. That was not the CIA view?
    Mr. McLaughlin. I did not take a poll. I gave you my 
personal view, and I guess what I am saying is I would have to 
go back and revisit the particulars of the incident, but I 
think it is a question on which reasonable minds can differ.
    Senator Levin. That was in the NIE. It was not a personal 
assessment. You declassified the NIE on that issue for us, and 
then the Director undermined it by saying there was not 
inconsistency, and that is where the lack of trust comes in. So 
it was in the NIE. It was not your personal assessment.
    Mr. McLaughlin. I was reflecting what was in the NIE. That 
is for sure, but I was responding to you in a very, as I 
recall, a very tight exchange in which you were asking me very 
particular questions, and I gave you my view of what the 
intelligence had to say.
    Senator Levin. The Chairman has been very generous. Thank 
you.
    Chairman Collins. I want to promise our witnesses that this 
hearing truly is almost over. Before I adjourn it, I want to 
clean up one issue about budget authority over which I think 
some confusion has been created. I see that Larry Kindsvater is 
sitting right behind the Director, and at the risk of putting 
him on the spot, I would like to ask him to come forward and 
answer this question very briefly.
    Just to be clear, if Congress wants to appropriate funds 
directly to the National Intelligence Director, would we have 
to change the law?
    Mr. Kindsvater. As most things regarding appropriations 
law, I probably should talk to my attorney first, but my 
understanding is if you want to specifically appropriate 
funding to the NID, yes, you have to change the law. But again, 
I think before we go too far on that, we ought to contact our 
appropriation lawyers and make sure that is perfectly correct.
    Chairman Collins. OK.
    Mr. Kindsvater. I believe it is.
    Chairman Collins. There has been some confusion on that 
point, whether an Executive Order can do it, or whether there 
should be a law changed.
    Mr. Kindsvater. The only thing I could add is we would have 
to go back and check if there is a law today that requires that 
appropriations for NSA, for example, go to a defense-wide 
appropriation account. Again, I need to contact one of my 
attorneys to review the law to find out if that is correct or 
not.
    Chairman Collins. OK. Thank you.
    Senator Levin. Two requests of the Chairman, if I may?
    Chairman Collins. Yes.
    Senator Levin. One is that we have heard a lot about a 
Scowcroft Report recommending some reforms----
    Chairman Collins. We have requested it.
    Senator Levin. Thank you. I apologize. I interrupted you.
    Chairman Collins. No, go ahead.
    Senator Levin. And the other issue has to do with--this 
goes to the oversight issue. A lot of emphasis has been made 
about the importance of congressional oversight as a way of 
assuring that there be objective and independent intelligence. 
I want to just be blunt. I talked to Stan about this earlier, 
and I talked to Mr. McLaughlin about it as well. There is a lot 
of material which is owed to the Armed Services Committee by 
the CIA, a lot of questions which have been asked which have 
not been answered. And it is like pulling teeth, and we have to 
change that. If we are going to rely on oversight, we have to 
get a much more responsive Intelligence Community. I have a 
list which I will give to Mr. McLaughlin of the items which 
have not been provided despite longstanding--this is months--
requests for information.
    I only bother this Committee with this issue because of the 
importance of oversight and the need that Congress has, 
particularly when these are Committee requests. This was not an 
individual Senator's request. These were Committee requests. So 
I would just like to make that point part of the record. I will 
make this list of items be part of the record. We got a few 
more answers today, but frankly, they dribble in, and we have 
got to have a much greater responsiveness. Mr. McLaughlin, you 
and I have talked about that issue as well, and we will provide 
the list to Stan.\1\
---------------------------------------------------------------------------
    \1\ The list of items CIA has not provided to Senator Levin 
requests (SASC) appears in the Appendix on page 85.
---------------------------------------------------------------------------
    Chairman Collins. We will include that in the record.
    Since many of the requests really have been done through 
the Armed Services Committee, I would encourage you to bring it 
up to Senator Warner. Senator Lieberman.
    Senator Lieberman. Thanks, Madam Chairman. I cannot resist, 
and I will do this briefly.
    I have followed this last dialogue between Senator Levin 
and Director McLaughlin, and perhaps I will begin it by making 
this larger point to put an exclamation point after something 
you said. We are focused on intelligence and organizing our 
intelligence well. We are focused on the best collection we 
can, and then the best analysis and breaking down the 
stovepipe, sharing, centralizing authority and accountability. 
But in the end a lot of this is not mathematics of two plus two 
equals four. It is looking at data and reaching conclusions to 
the best of our ability, and different people can reach 
different conclusions. And perhaps I will enter this 
specifically by saying with respect that I disagree with the 
conclusion, based on my own analysis--and I have spent a lot of 
time at this--of the intelligence, that Saddam Hussein was not 
likely to share weapons of mass destruction with terrorist 
groups. I disagree with the conclusion that he did not have an 
ongoing relationship with al Qaeda. The stuff that I have read 
and seen says to me that it went on from the early 1990's, and 
in fact after we defeated him in the Gulf War, he convened a 
series of conferences in Baghdad of Islamist terrorists. And 
the dialogue went on.
    The 9/11 Commission Report, though makes it clear that 
there is not sufficient evidence to find any involvement by 
Saddam Hussein in supporting the attacks against us of 
September 11. That is the failure to have evidence to reach a 
conclusion. They document quite a series of connections between 
the Iraqi Government under Saddam and al Qaeda, including for 
the first time I saw it, what they say was an invitation, an 
offer of asylum by Iraq to Osama bin Laden, which I believe was 
in 1998 or 1999. So I am happy to disagree with your 
conclusion.
    But to make that larger point, and just to say one last 
word, it gets at something. Senator Levin is quite 
appropriately and justifiably focused on seeing whether we can 
create a system that not only coordinates intelligence and 
makes it effective to the decisionmakers, both Executive Branch 
and Legislative, but that depoliticizes it, and that is a goal 
I share. But in trying to achieve that goal I think we all have 
to understand that if you reached a conclusion or the CIA did, 
different from me, or let us say the same as whoever happened 
to be President, maybe that did not happen because your arm was 
twisted for political reasons, maybe it did. But there is at 
least the same chance that it did not, that maybe that was your 
best conclusion based on what you saw.
    Mr. McLaughlin. I assume the exclamation point you are 
trying to place, Senator Lieberman, is after my statement that 
there is no revealed wisdom on these issues.
    Senator Lieberman. That is the exclamation point, 
absolutely right. Final word is thank you to both of you. You 
are really extraordinary public servants, and whether one 
disagrees or agrees with whatever conclusion you reach on a 
given occasion, I think just listening to you during this 
hearing, you give me, and I hope insofar as others in the 
country have watched, just a lot of confidence about who is in 
charge at this point, and bottom line, I am glad you are on our 
side.
    Mr. Mueller. Thank you.
    Mr. McLaughlin. Thank you, sir.
    Chairman Collins. I want to echo those thanks, and we very 
much appreciate your testimony. We look forward to working very 
closely with both of you as we draft the reform legislation. 
Thank you for your testimony. The hearing record will remain 
open for 5 days.
    This hearing is now adjourned.
    [Whereupon, at 1:55 p.m., the Committee was adjourned.]



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