[Senate Hearing 109-1019]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 109-1019
 
  THE COST OF CRIME: UNDERSTANDING THE FINANCIAL AND HUMAN IMPACT OF 
                           CRIMINAL ACTIVITY

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

                                HEARING

                               before the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 19, 2006

                               __________

                          Serial No. J-109-110

                               __________

         Printed for the use of the Committee on the Judiciary



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                       COMMITTEE ON THE JUDICIARY

                 ARLEN SPECTER, Pennsylvania, Chairman
ORRIN G. HATCH, Utah                 PATRICK J. LEAHY, Vermont
CHARLES E. GRASSLEY, Iowa            EDWARD M. KENNEDY, Massachusetts
JON KYL, Arizona                     JOSEPH R. BIDEN, Jr., Delaware
MIKE DeWINE, Ohio                    HERB KOHL, Wisconsin
JEFF SESSIONS, Alabama               DIANNE FEINSTEIN, California
LINDSEY O. GRAHAM, South Carolina    RUSSELL D. FEINGOLD, Wisconsin
JOHN CORNYN, Texas                   CHARLES E. SCHUMER, New York
SAM BROWNBACK, Kansas                RICHARD J. DURBIN, Illinois
TOM COBURN, Oklahoma
           Michael O'Neill, Chief Counsel and Staff Director
      Bruce A. Cohen, Democratic Chief Counsel and Staff Director


                            C O N T E N T S

                              ----------                              

                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Sessions, Hon. Jeff, a U.S. Senator from the State of Alabama....     2
Specter, Hon. Arlen, a U.S. Senator from the State of 
  Pennsylvania...................................................     1

                               WITNESSES

Lappin, Harley G., Director, Federal Bureau of Prisons, 
  Washington, D.C................................................     3
Leary, Mary Lou, Executive Director, National Center for Victims 
  of Crime, Washington, D.C......................................     8
Ludwig, Jens, Professor, Georgetown Public Policy Institute, 
  Georgetown University, Washington, D.C.........................     7
Sedgwick, Jeffrey, Director, Bureau of Justice Statistics, 
  Washington, D.C................................................     4

                         QUESTIONS AND ANSWERS

Responses of Harley Lappin to questions submitted by Senator 
  Kennedy........................................................    19
Responses of Jens Ludwig to questions submitted by Senator 
  Kennedy........................................................    26
Responses of Jeffrey Sedgwick to questions submitted by Senator 
  Kennedy........................................................    29

                       SUBMISSIONS FOR THE RECORD

Dorgan, Hon. Byron, a U.S. Senator from the State of North 
  Dakota, statement..............................................    33
Lappin, Harley G., Director, Federal Bureau of Prisons, 
  Washington, D.C., statement....................................    36
Leary, Mary Lou, Executive Director, National Center for Victims 
  of Crime, Washington, D.C., statement..........................    58
Ludwig, Jens, Professor, Georgetown Public Policy Institute, 
  Georgetown University, Washington, D.C., statement.............    64
Sedgwick, Jeffrey, Director, Bureau of Justice Statistics, 
  Washington, D.C., statement....................................    71


  THE COST OF CRIME: UNDERSTANDING THE FINANCIAL AND HUMAN IMPACT OF 
                           CRIMINAL ACTIVITY

                              ----------                              


                      TUESDAY, SEPTEMBER 19, 2006

                                       U.S. Senate,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:33 a.m., in 
room SD-226, Dirksen Senate Office Building, Hon. Arlen 
Specter, Chairman of the Committee, presiding.
    Present: Senators Specter and Sessions.

 OPENING STATEMENT OF HON. ARLEN SPECTER, A U.S. SENATOR FROM 
                   THE STATE OF PENNSYLVANIA

    Chairman Specter. Good morning, ladies and gentlemen. The 
Judiciary Committee will now proceed with our hearing on the 
cost of crime. This has been a subject of keen interest to me 
since my days as District Attorney of Philadelphia. My 
experience there suggested to me that the criminal problems in 
America could be dealt with by taking two positions: One on 
career criminals to have life sentences, to separate them from 
society on a permanent basis. Career criminals commit about 70 
percent of our violent crimes. And, second, to provide for 
realistic rehabilitation for first offenders, second offenders, 
and especially juveniles, because they would return to society, 
and that we would be well advised to have realistic 
rehabilitation, notwithstanding the very extensive cost, from a 
point of view of protecting society from recidivists and from 
the dual point of view of giving individuals an opportunity to 
beat the drug habit, beat the alcohol habit, have literacy 
training, have job training to re-enter society.
    Toward that end, I introduced legislation shortly after I 
was elected in 1980. My views on career criminals were accepted 
by the Congress and signed by the President on the armed career 
criminal bill in 1984--robbery, burglary, rape, major offenses, 
amended in 1986 to include drug sales. It had been 
characterized by Attorney General Barr as one of the most 
effective weapons in the arsenal of the prosecutor for law 
enforcement.
    In 1985, I introduced the National Violent Crime Program 
Authorization Act, where I was seeking to reduce violent crime 
with realistic rehabilitation. At that time I estimated the 
cost of violent crime at $100 billion and up to $500 billion of 
pain and suffering was included.
    When I chaired the District of Columbia Appropriations 
Subcommittee, I structured a program which cost some $22 
million for literacy training and job training in the D.C. 
prisons. And the OMB Director, David Stockman, made a 
recommendation to President Reagan that he veto the bill. 
Pretty unusual to have a document appropriations bill vetoed, 
and it was, in fact, not vetoed. For many reasons, that program 
did not succeed and was later abandoned because of cost.
    We are now considering, among other legislative 
initiatives, the so-called Second Chance Act, which is designed 
to give recidivists a second chance--or violators a second 
chance to try to avoid their becoming recidivists. 
Interestingly, the Washington Post--interestingly, the--it 
would not have been so interesting if the Washington Post had 
commented. It was the Wall Street Journal that said people are 
finally interested in rehabilitation because it will save 
money. And saving money has more tangible benefits and seems to 
attract more supporters than other reasons to rehabilitate and 
avoid recidivism.
    So that is a brief statement of a lot of years of focus on 
this issue, and it is nice to be Chairman of this Committee to 
put it on the agenda. And it is nice to have an experienced 
Federal prosecutor, Senator Sessions, who knows these issues 
and is very much on top of them, so I now yield to my 
distinguished colleague from Alabama.

STATEMENT OF HON. JEFF SESSIONS, A U.S. SENATOR FROM THE STATE 
                           OF ALABAMA

    Senator Sessions. Mr. Chairman, thank you for having this 
hearing. I think it is very important. Our witnesses have some 
very interesting testimony, I believe, and I look forward to 
hearing that.
    The dream and hope and belief that we could find a cure for 
recidivism is still worth great intensive effort and 
consideration. But history tells us it is not so easy. I 
believe it was Norm Carson who used to head the prison system, 
and he said there is nobody, there is no area of the Government 
in which more people do not think--more people think they know 
the answer and how to fix it than in prisons. You know, 
everybody says if you just do this, the prisoners will be 
straight. But it has proven to be a grim thing, really, and so 
I will not say any more. I look forward to hearing from the 
panel.
    Chairman Specter. Well, thank you very much, Senator 
Sessions.
    With Senator Sessions' comments about the prisons, so-
called correctional facilities, I made it a point when I was 
D.A. of Philadelphia to visit all of Pennsylvania's 
correctional facilities. I saw a lot of familiar faces there, 
people that my office had convicted and sent to jail. And it is 
a long neglected subject.
    Well, I want to turn now to our distinguished panel. We 
begin with Mr. Harley Lappin, Director of the Federal Bureau of 
Prisons, an expert in corrections, two decades in prison 
management prior to being appointed to his current position; 
recipient of the Attorney General's Award for Excellence in 
Management; bachelor's degree from Indiana University, and a 
master's degree in criminal justice and corrections 
administration from Kent State University.
    Thank you for joining us, Mr. Lappin, and we look forward 
to your testimony.

  STATEMENT OF HARLEY G. LAPPIN, DIRECTOR, FEDERAL BUREAU OF 
                   PRISONS, WASHINGTON, D.C.

    Mr. Lappin. Chairman Specter, Senator Sessions, it is a 
pleasure to be here and have the opportunity to appear before 
you today to discuss a variety of issues regarding the cost of 
crime as it pertains to the Bureau of Prisons.
    The Federal prison system today encompasses 113 
institutions with approximately 192,000 inmates and a staff of 
35,000. When I began my career 21 years ago, we had about 45 
institutions and just over 32,000 inmates. At the time, when 
Norm Carlson was the Director, as you mentioned, this was after 
many, many years of a pretty stable population up until that 
point. Beginning in the early 1980s and continuing to the 
present, the Federal Government has played a much more 
substantial role in the criminal justice system. And with 
increases in Federal sentences and law enforcement efforts, the 
increase in the Federal inmate population has been staggering.
    Our increasing costs are being driven primarily by the 
increasing number of inmates and the substantial amount of time 
these individuals will be incarcerated. The Federal inmate 
population increased by over 10,000 inmates per year between 
1997 and 2001 and has been increasing by over 7,000 inmates per 
year since then. We project the population to increase to over 
220,000 inmates in the Federal prison system by 2011. The 
current average sentence length for inmates in our custody is 
about 9.6 years.
    We realize that considerable taxpayer resources are devoted 
to funding our agency, and we make every effort to use those 
resources wisely. All of our operations, activities, and 
initiatives are driven by our mission: protecting public safety 
through the secure and safe confinement of inmates, as well as 
returning productive and crime-free ex-offenders to their 
communities.
    We have undertaken a number of specific cost containment 
initiatives over the past few years. Like many other Federal 
agencies, we are under fiscal constraints and have been making 
adjustments to our operations to allow us to continue to 
operate safe and secure prisons at substantially reduced costs. 
We undertook these initiatives to be able to continue to expand 
capacity. We will continue to build and manage new Federal 
prisons at the medium- and high-security level, where we are 
experiencing the greatest level of crowding and where we expect 
the greatest number of new admissions. And we will contract 
with the private sector for the confinement of criminal aliens 
in low-security facilities.
    While we have 35 institutions that are more than 50 years 
old, the majority are relatively new. However, even these 
facilities have been taxed as a result of crowding, which has 
increased from 26 percent above capacity in 1996 to 36 percent 
above capacity today.
    To counter the deleterious effects of crowding, we have 
improved the architectural design of our newer facilities, 
taken advantage of new and improved technologies and security 
measures, and enhanced population management and inmate 
supervision strategies. Through research we conducted over 
several years and encompassing many institutions, we have 
determined that there is a direct relationship between crowding 
and violence in our institutions. It is imperative that we get 
resources to increase bed space capacity and staffing in order 
to reduce crowding to a more manageable level.
    Full staffing of all institution positions is very 
important for our agency. All of our employees in our 
institutions are law enforcement officers, and we operate under 
a ``correctional worker first'' philosophy. Both custody and 
non-custody staff are responsible for inmate supervision and 
institution security. This allows us to maintain a substantial 
number of staff who provide inmate programs, giving offenders 
the opportunity to gain the skills they need for successful re-
entry into society.
    Virtually all Federal inmates will be released back into 
our communities at some point in time. The vast majority of our 
inmate programs and services are geared toward helping inmates 
prepare for their eventual release. We provide many self-
improvement programs, including work in prison industries and 
other institution jobs, vocational training, education, 
substance abuse treatment, and other programs that impart 
essential life skills.
    Federal Prison Industries serves as a prime example of a 
cost-savings program. Inmates who participate in the Federal 
Industries Prison program are 24 percent less likely to 
recidivate, thereby reducing costs to society, notably the cost 
to the criminal justice system for rearrest, prosecution, and 
incarceration, as well as the cost of victimization. They are 
also more likely to maintain employment after release as a 
result of FPI training. Without a program like FPI, our prisons 
would be more costly to operate. Due to some recent changes in 
law and policy, however, we see somewhat of a decline in the 
opportunity for inmates to participate in this type of program.
    Chairman Specter, Senator Sessions, this concludes my 
opening statement. I would be more than happy to answer 
questions that you have an interest in during this Committee 
hearing.
    Thank you.
    [The prepared statement of Mr. Lappin appears as a 
submission for the record.]
    Chairman Specter. Well, thank you, Director Lappin. Thank 
you for adhering to our time limits, and thank you for your 
more comprehensive written testimony, all of which will be 
included in the record, as will all the prepared statements.
    We now turn to Dr. Jeffrey Sedgwick, Director of the Bureau 
of Justice Statistics; had been Deputy Director in the Reagan 
administration; has a bachelor's degree from Kenyon, a Ph.D. 
from the University of Virginia; had been on the faculty of the 
University of Massachusetts, Political Science Department, 
where he is currently on leave.
    Thank you for being with us today, Dr. Sedgwick, and the 
floor is yours.

  STATEMENT OF JEFFREY SEDGWICK, DIRECTOR, BUREAU OF JUSTICE 
                  STATISTICS, WASHINGTON, D.C.

    Mr. Sedgwick. Thank you, Mr. Chairman, Senator Sessions. As 
you know, I currently serve as Director of the Bureau of 
Justice Statistics, and BJS is the official statistical agency 
of the United States Department of Justice and a component of 
the Office of Justice Programs. Our primary mission is to 
collect, analyze, publish, and disseminate information on 
crime, criminal offenders, victims of crime, and the operation 
of justice systems at all levels of Government. I am pleased to 
be here this morning to discuss the financial impact of crime 
on victims and the criminal justice system.
    I would like to divide my comments into three parts: first, 
an overview of the National Crime Victimization Survey--one of 
the Nation's two leading measures of crime; second, the costs 
of crime to victims estimated by this source; and, finally, the 
cost of crime in terms of the level of justice system 
expenditures.
    What we know of the financial impact of crime on victims is 
largely based on the NCVS that was initiated in 1972 as the 
National Crime Survey. Its purposes were to measure the ``dark 
figure of unreported crime,'' obtain information on 
characteristics of crime victims and crime events, and provide 
estimates of year-to-year change. The NCVS Sample is a 
nationally representative, stratified, multistage sample drawn 
from the Decennial Census. It is a household- or address-based 
survey and one of the largest ongoing Government surveys. The 
sample is interviewed every 6 months and contains 76,050 people 
and 42,000 households.
    The NCVS measures crimes both reported and not reported to 
police. It is considered an omnibus crime survey that measures 
crimes of violence and theft for household members age 12 and 
older, provides national estimates with each household 
interviewed seven times at 6-month intervals over a period of 3 
years. The survey has a 92-percent response rate measured by 
households. The crimes measured by NCVS include rape, sexual 
assault, robbery, aggravated assault, simple assault, pocket 
picking or purse snatching, burglary, motor vehicle theft, and 
theft. The NCVS does not measure homicide.
    In estimating the financial cost of crime to victims, the 
NCVS largely relies on four measures:
    In terms of injury, we ask the question: What was the total 
amount of your medical expenses resulting from this incident, 
including anything paid by insurance?
    For theft, we ask the question: What was the value of the 
property that was taken?
    For damage, we ask the question: How much would it cost to 
repair or replace the damaged items?
    And for lost work, we ask the question: About how much pay 
did you or other family members lose as a result of your 
victimization?
    Using these categories, we can derive estimates of the 
financial cost of crime to victims over time by looking at NCVS 
data from the past decade.
    If we look at that data, for example, in 1994, we find that 
there were 10.86 million violent crimes in the United States 
that resulted in a gross loss to victims of $2.26 billion and 
31.01 million property crimes that resulted in a gross loss to 
victims of $22.59 billion, or a combined total of $24.85 
billion measured in constant 2004 dollars.
    By 2000, the number of violent crimes had fallen to 6.32 
million with a resulting gross loss of $1.67 billion while the 
number of property crimes had fallen to 19.3 million, resulting 
in a gross loss of $12.96 billion, or a combined total of 
$14.63 billion measured in 2004 constant dollars.
    In 2004, the number of violent crimes was 5.18 million with 
a resulting gross loss of $1.14 billion, while property crimes 
totaled 18.65 million with a resulting gross loss of $14.71 
billion, or a combined total of $15.85 billion.
    Now, it is important to remember that these NCVS data 
accurately track trends but yield significant underestimates of 
the costs of crime. For example, intangible, or non-monetary, 
costs include fear, pain, suffering, and lost quality of life. 
These are currently not estimated by the NCVS.
    Even on tangible costs that involve monetary payments, such 
as medical costs, stolen or damaged property, wage losses, et 
cetera, NCVS cost estimates are limited. Costs unreported by 
victims are assumed to equal zero. Medical costs are limited to 
short-term costs. And other costs not measured in the NCVS 
include mental health care costs and the costs of economic or 
white-collar crimes.
    On this latter issue, in the second half of 2004, the NCVS 
included a special supplement designed to estimate the 
incidence and prevalence of identity theft, a form of 
victimization not routinely estimated in the NCVS. Findings 
from that supplement indicated the estimated loss as a result 
of identity theft in the 6 months from July to December 2004 
was about $3.2 billion.
    Equally important are the tangible and intangible costs of 
crime to non-victims including the costs of security devices or 
services for the home, fear, behavior changes to avoid 
anticipated victimization, and so on. None of these costs are 
currently estimated by the NCVS.
    In addition to the costs of crime to victims, there is the 
expenditure of the criminal justice system, including policing, 
prosecution and adjudication, and correction. Based on the most 
recent figures from 2003, the United States spent an estimated 
$185 billion. Expenditures for operating the Nation's criminal 
justice system increased from almost $69 billion (in 2003 
dollars) in 1982 to $185.5 billion in 2003. Of this amount, 
local governments funded nearly half, with State governments 
funding another third.
    Chairman Specter. Dr. Sedgwick, how much more time will you 
require?
    Mr. Sedgwick. About 10 seconds.
    Chairman Specter. OK.
    Mr. Sedgwick. Thank you, sir.
    One way to put these figures in context is to consider the 
per capita expenditure on administration of justice. That 
figure for 2003 was $638 for every person in the United States 
population. This $638 purchased police protection, prosecution 
and adjudication of criminal offenders, and incarceration of 
all those found guilty.
    I can stop there.
    [The prepared statement of Mr. Sedgwick appears as a 
submission for the record.]
    Chairman Specter. Thank you very much, Dr. Sedgwick. We 
will come back on the Q&A for amplification.
    We now turn to Dr. Jens Ludwig, Associate Professor of 
Public Policy at Georgetown University, faculty research fellow 
of the National Bureau of Economic Research, and a member of 
the Steering Committee of the National Consortium on Violence 
Research at Carnegie Mellon; B.A. from Rutgers and a Ph.D. in 
economics from Duke.
    Thank you for being with us today, Professor Ludwig, and we 
turn the floor over to you.

 STATEMENT OF JENS LUDWIG, PROFESSOR, GEORGETOWN PUBLIC POLICY 
       INSTITUTE, GEORGETOWN UNIVERSITY, WASHINGTON, D.C.

    Mr. Ludwig. Chairman Specter, Senator Sessions, thank you 
very much for inviting me to testify this morning. It is an 
honor to appear before this Committee to discuss what is known 
about the cost of crime to American society.
    I believe the costs of crime to America are plausibly on 
the order of $2 trillion per year. That is trillion with a T. 
Around two-thirds of these costs are due to what are common 
called ``street crimes,'' while the remaining one-third is due 
to white-collar or economic crimes. There are, unavoidably, 
some uncertainties associated with generating an estimate of 
this sort. The costs of crime in the United States could be 
somewhat higher or somewhat lower than my figure suggests, but 
I believe the $2 trillion is a defensible best estimate for 
what the costs of crime to American society might be each year.
    My calculations suggest that the cost of crime are enormous 
by any standard. By way of comparison, total gross domestic 
product in the United States in 2004 was equal to $11.7 
trillion. Put differently, the reduction in the quality of life 
that Americans experienced due to crime, what one might call a 
``crime tax,'' is the equivalent of around 17 percent of U.S. 
GDP.
    While gun violence accounts for just a small share of the 
total number of crimes that occur that in the United States 
each year, these are disproportionately costly crimes to 
society that together account for at least $100 billion of 
costs.
    Street crime in the United States, particularly violent 
crimes, are disproportionately concentrated among our Nation's 
poorest residents, yet the costs of crime are much more evenly 
distributed across society than these victimization statistics 
would suggest.
    Given the enormous toll that crime imposes on American 
society, even costly new initiatives to reduce crime can 
generate benefits to American taxpayers and citizens that 
justify the increased Government expenditures. For example, one 
of the most famous early childhood model programs in the United 
States for poor 3- and 4-year-old children is called Perry 
Preschool, which was implemented in Ypsilanti, Michigan, in the 
1960s. Perry participants have now been followed up to their 
40th birthdays, and the program is estimated to generate around 
$6 in benefits to society for each $1 spent on the program. The 
costs of reduced crime alone account for more than half of the 
benefits from the Perry Preschool program, which implies that 
the value of crime reduction alone from this targeted preschool 
intervention exceeds the overall costs of the entire program.
    More generally, the cost-effectiveness of anti-crime 
policies and programs can often be enhanced by targeting 
resources at the highest-risk people, such as ex-offenders, 
career criminals or gang members, or at particularly costly 
aspects of the crime problem, such as crimes that involve guns.
    Finally, if crime really is a $2 trillion per year problem 
in the United States, then in my view we would benefit by 
spending much more than we currently do on research and 
development efforts to identify new and more effective ways to 
prevent crime. It is my understanding that the National 
Institute of Justice's current research budget annually is 
substantially smaller than that of the National Institutes of 
Health. I believe there would be great social returns to 
increased R&D spending for NIJ and other activities of this 
sort.
    This concludes my opening statement. I would be pleased to 
answer any questions that you might have.
    [The prepared statement of Mr. Ludwig appears as a 
submission for the record.]
    Chairman Specter. Thank you very much, Professor Ludwig.
    Our final witness is Ms. Mary Lou Leary, Executive Director 
of the National Center for Victims of Crime. She served as 
Deputy Associate Attorney General and Chief of Staff for the 
Office of Associate Attorney General, an Assistant U.S. 
Attorney, and Acting Director of the Office of Community 
Planning in the Department of Justice. She has a bachelor's 
degree from Syracuse, a master's degree from Ohio State, and a 
law degree from Northeastern.
    Thank you very much for being with us, Ms. Leary, and we 
look forward to your testimony.

   STATEMENT OF MARY LOU LEARY, EXECUTIVE DIRECTOR, NATIONAL 
         CENTER FOR VICTIMS OF CRIME, WASHINGTON, D.C.

    Ms. Leary. Thank you, sir. Good morning, Chairman Specter 
and Senator Sessions. I want to thank the Committee for holding 
this hearing to examine the costs of crime. Through our 
testimony about the costs of crime, we hope to help you look 
beyond the dollars that are associated with medical costs, 
funeral costs, lost wages, and the like to see the intangible 
but lasting impact on individual victims of crime and 
communities.
    On an individual level, victims and those who serve them 
can tell you more about the true cost of crime, and it goes far 
beyond dollars. At the National Center, we hear stories every 
day from victims who call our National Crime Victim Helpline. 
We see how victimization leads to increased substance abuse, 
higher rates of depression and posttraumatic stress disorder, 
increased risk of suicide, homelessness, higher rates of 
unemployment and underemployment, and negative long-term 
consequences. The impact can be physical, emotional, financial, 
and social, and it reaches way beyond the individual victim to 
encompass friends, family, communities, coworkers, and 
schoolmates.
    Victims of violent crime are at particularly high risk. 
Almost 50 percent of rape victims, 37 percent of stalking 
victims, and 32 percent of physical assault victims will 
develop PTSD, posttraumatic stress disorder. PTSD has a 
profound effect on a victim's quality of life and just the 
ability to function from day to day. People with PTSD often 
suffer from very disturbing flashbacks. They can be jumpy, 
irritable, very easily startled, constantly on guard. And they 
may have difficulty concentrating or sleeping. If they do not 
get treatment, many PTSD sufferers will suffer this way for 10 
years or more after the event.
    Moreover, we are just beginning to understand the cost of 
crime to our Nation's youth. Victimization at this crucial 
point in human development has far-reaching impact. Teenage 
victims report more truancy, negative contact with teachers, 
hostile conflict with other students. This disrupts their 
academic performance and really impedes their ability to get a 
career later on. The link between teen victimization and 
substance abuse, teen pregnancy, and eating disorders is also 
well established.
    But one of the most alarming impacts of teen victimization 
is the relationship between that victimization and their 
becoming a perpetrator. Being a victim of crime has been 
identified by researchers as the single most significant factor 
that contributes to teens later becoming perpetrators of crime.
    What about the impact of homicide? Nobody can really fully 
understand what a homicide survivor goes through. Everybody in 
this room can certainly understand a family's shock and grief 
upon learning of a loved one's death by violent ways. But there 
are other dramatic impacts that we have not even considered.
    Time and time again, we hear about entire families who are 
devastated when they lose a family member to homicide. 
Marriages break up. Families no longer celebrate holidays 
because they think it is just not right to do that after one of 
the members has been the victim of murder. Survivors of 
homicide struggle with maintaining careers. Many of them cannot 
return to work on time to save their job. And in communities 
where there has been a homicide, oftentimes the family members 
and the rest of that community, if it is a homicide committed 
on the street, have to walk by those blood-stained sidewalks 
every single day, and oftentimes for years to come.
    The impact of other violent crime is also far-reaching. We 
know about the immediate aftermath when you have 
hospitalization and treatment of an assault victim or battered 
spouse. But after discharge, what about the scars, those 
invisible scars, or even the visible ones for victims who are 
unable to afford reconstructive surgeries so they can go out in 
public or get a job?
    People call our helpline every single day and tell us that 
they are traumatized, unable to leave home; their marriages 
have broken up; they have gained 100 pounds; they are terrified 
to sleep in the room where they were attacked. We hear about 
these intangible costs day in and day out, and not enough is 
being done to address those intangible costs.
    Finally, we know that the impact of identify theft goes way 
beyond just dollars. People can spend the rest of their lives 
after that kind of victimization trying basically just to 
restore their own identity and financial solid footing, or the 
elderly who are stripped of their life savings and suddenly 
face their old age living in poverty, and oftentimes betrayed 
by their very caregivers. The emotional impact of that betrayal 
is devastating in and of itself.
    Even minor crimes can have a far-reaching impact. Victims 
whose car is stolen, how then are they to get their kids to 
daycare or to school? How are they to get to work to support 
their families? Even these minor crimes can destroy a family's 
life.
    So it is very important when we talk about the cost of 
crime to use dollar figures just as a starting point. The real 
cost of crime includes the costs of the quality of an 
individual life and of society's life at large, from substance 
abuse, depression, PTSD, homelessness, loss of employment, 
school dropouts, and other consequences to our social system at 
large.
    Chairman Specter. Ms. Leary, how much more time do you 
require?
    Ms. Leary. I am done. I thank you for this opportunity. The 
National Center looks forward to working with this Committee to 
address the costs of crime.
    [The prepared statement of Ms. Leary appears as a 
submission for the record.]
    Chairman Specter. Well, thank you very much, Ms. Leary, and 
thank you all. The testimony and the prepared statements are 
very profound. I am just sorry there are not more people here 
to listen to them. The press table has all empty chairs, and 
the television is internal only.
    It is true that our colleagues have a great many matters, 
especially in the last 2 weeks of a session before we adjourn 
at the end of next week. But when you talk about 
rehabilitation, you do not strike a very sexy note, 
regrettably. And the testimony that is being given here today 
is really very significant.
    Professor Ludwig, how come you have such a low figure for 
the cost of crime at $2 billion? Where did you get that figure?
    Mr. Ludwig. The figure is $2 trillion per year.
    Chairman Specter. I cannot hear you. Speak up.
    Mr. Ludwig. The figure is $2 trillion per year.
    Chairman Specter. I meant trillion. We get mixed up on 
zeros around here.
    [Laughter.]
    Mr. Ludwig. It is easy to do, Senator.
    Chairman Specter. Where did you get the figure? Come on.
    Mr. Ludwig. The figure is so large because it is intended 
to try and put a dollar value, as difficult as that might be, 
on the profound intangible costs that Ms. Leary was describing 
to the victims of crime.
    Chairman Specter. Profound intangible costs.
    Mr. Ludwig. Profound intangible costs.
    Chairman Specter. OK. Now, where did you get the figure?
    Mr. Ludwig. Sir, the figures come from--basically the 
figures come from trying to find out how members of the public 
are willing to pay to reduce the risk of crime victimization to 
themselves and their loved ones.
    Chairman Specter. How much the members of the public are 
willing to pay to reduce--
    Mr. Ludwig. Are willing to pay out of their own pocket in 
order to reduce the costs of crime, the risks of crime.
    Chairman Specter. How much are they willing to pay?
    Mr. Ludwig. Well, I estimate that those costs alone account 
for about $700 billion of my $2 trillion figure.
    Chairman Specter. $700 billion they are prepared to pay?
    Mr. Ludwig. $700 billion for the elimination--the figures 
that we have imply that all together the public--
    Chairman Specter. Where do you get that figure when cities 
are not putting up any more money for their police forces? They 
are looking for the Federal Government and the States to solve 
their local crime problems. They are not taxing to put more 
police on the street.
    Mr. Ludwig. Well, I think that the evidence that we have 
suggests that the value to citizens from increased spending on 
things like additional law enforcement efforts would, in fact, 
generate value to society that exceeds the costs.
    Chairman Specter. Let me interrupt you. You are up to $700 
billion. Now, you have got $1.3 trillion to account for on your 
way to $2 trillion. Proceed.
    Mr. Ludwig. Sir, we have got $700 billion in costs to 
victims. We have $700 billion from white-collar economic 
crimes. So I am up to one-point--
    Chairman Specter. Where do you get that figure?
    Mr. Ludwig. Sir, that comes from a variety of surveys of 
small and large businesses across different industries in the 
United States.
    Chairman Specter. Who made the surveys?
    Mr. Ludwig. There are a variety of different surveys of 
firms in the insurance industry, one of the national--
    Chairman Specter. Are those in your prepared text?
    Mr. Ludwig. They are in my prepared text, Senator, yes, 
sir. So that brings it up to $1.4 trillion, and then the 
residual that gets us up to $2 trillion comes from things like 
explicit Government expenditures, as Dr. Sedgwick was 
mentioning, as well as costly private measures that individuals 
and businesses undertake to protect themselves against the risk 
of crime.
    Chairman Specter. I am pressing you on the details because 
if we can prove a $2 trillion figure, you would attract a lot 
of attention.
    Mr. Ludwig. My written testimony, Mr. Chairman, includes a 
technical appendix that tries to spell out the methodology in 
perhaps painfully gruesome detail.
    Chairman Specter. I am not neglecting the other three 
witnesses. I plan to come back for a second round here.
    Director Lappin, you say that educational programs have a 
benefit of nearly $6 for every $1 spent. How much does your 
Bureau, the Federal Bureau of Prisons, spend on education?
    Mr. Lappin. Well, let me just say for the record that the 
numbers you are referencing are actually out of a piece of 
research from the Washington State Institute of Public Policy 
in 2001, where they compared the investment of dollars spent in 
education and vocational training and their supposed impact on 
reducing crime, that is, reducing prosecutions, incarcerations, 
and so on. And as you indicate, a benefit of education is for 
every dollar invested, about a $6 savings.
    Chairman Specter. Well, how do they come to that 
conclusion, if you know?
    Mr. Lappin. I think through--again, I am not an expert 
specifically on how this research was done. Your staff, in 
fact, asked for that research earlier today, and we have 
provided a copy of that to them. Annually, we invest about--
just a moment and I will give you the exact number.
    We spent about $102 million providing education, which 
includes GED, English as a second language, parenting, and 
other associated classes, as well as vocational training, to 
the 192,000 inmates in this past year in the Bureau of Prisons, 
so about $102.9 million a year goes toward education and 
vocational training, about $53 million toward drug treatment, 
and about $33 million or so toward religious programs. So that 
is kind of an example of the investment we make in programs to 
hopefully increase or enhance the skills of inmates.
    And let me just say in general, we are thrilled, to be 
honest with you--by ``we,'' I mean me as the Director of the 
Bureau of Prisons and other directors of corrections around the 
country--thrilled that the President, the Senators, 
Congressmen, and State and local Congressional staff are 
talking about re-entry and the impact of these programs on 
inmates, because, one, we want to invest that money wisely, and 
we want to make sure that that money we invest is being--the 
impact is reducing recidivism, because at the end of the day, 
that is what it is all about, is returning to the community 
offenders who are more likely to be successful, less likely to 
reoffend, less likely to victimize.
    Chairman Specter. The red light went on in the middle of 
your answer, and I am going to come back to you, Director 
Lappin, to ask you in the next round how effective your 
correctional programs are. You comment about people--you are 
delighted to hear people talking about it. I do not hear nearly 
enough talk. In fact, I do not hear much talk at all. But I am 
glad to yield to Senator Sessions because he will talk about 
it.
    Senator Sessions. I have been observing this crime 
situation for quite a number of years, from the time I was--in 
the mid-1970s, I was a young prosecutor, and I tried to think 
about it and ask myself what is happening.
    Mr. Sedgwick, our murder rate today, the rate of murder, as 
I recall, compared to the murder rate in the late 1970s or 
early 1980s is about half of what it was.
    Mr. Sedgwick. Substantially lower, that is correct.
    Senator Sessions. I want to hear that. The murder rate in 
America is one-half of what it was 25 years ago. When Ronald 
Reagan got elected, a lot of people think he got elected to 
fight the cold war. He really got elected because people were 
shocked by the doubling of the crime rate in the mere 10 years, 
surging 12-, 15-percent rate increases of crime, and there was 
an article that came out--I do not know if you remember it, 
Professor Ludwig or Dr. Sedgwick, by a study that rebutted and 
debunked the idea that was afoot at the time that prisons are 
of no value, that social programs and education would end 
crime, and that this was the mantra of the 1980s--the 1970s. 
And it said basically, after great intensive survey and study, 
that these programs had little, if any, impact on crime, on 
recidivism in prisons.
    In fact, I would note, Mr. Lappin--and I am just looking at 
your numbers here. Your drug treatment program--and you have 
some good drug treatment program. We spend a lot of money on 
that. You said that the recidivism rate was--16 percent less 
likely to recidivate and 15 percent less likely to relapse in 
drug use within just 3 years, in a 3-year period. So I am not 
saying that is insignificant. And the numbers we are dealing 
with, 15 percent is significant. But anybody that has this idea 
that we can just have a drug treatment program in prisons and 
they are all going to go out and not use drugs again are living 
in a dream world. We have been trying this for 30 years.
    You also suggest that those who participate in educational 
or vocational training, in your numbers, Mr. Lappin, are 33 
percent less likely to recidivate. But wouldn't you admit that 
people who are sort of self-select--there are several prisoners 
in a prison. Those who tend to take advantage of the education 
programs already--and this is what the study that I referred to 
in the late 1980s said. It was a moral, personal, intellectual 
decision by a person who is incarcerated whether or not they 
are going to continue a life of crime. They have to decide: Do 
I want to be in and out of jail the rest of my life? Or do I 
want to make something of my life? And how that occurs to them 
comes from various different ways.
    But, at any rate, wouldn't you admit that that is not to 
say that if every prisoner in American Federal prisons 
undertook an education program that all would reduce recidivism 
by 33 percent?
    Mr. Lappin. You are correct in that when you look at the 
inmates in our custody, we have willing participants and we 
have unwilling participants. I am confident to say that the 
majority, 60 to 70 percent, of the inmates at least in our 
custody are typically willing participants, and willing to get 
involved in these programs.
    But you are right, even for those willing participants, 
only a portion of them are successful in the end. You are 
absolutely correct in that just because you happen to 
participate in a vocational training or an education program 
you are going to be cured. We are certainly not seeing that. We 
certainly see enhanced chances of success.
    Senator Sessions. Yes, even at the margin, 10 percent, 15 
percent.
    Mr. Lappin. That is right.
    Senator Sessions. That is worth considering.
    Mr. Lappin. That is correct.
    Senator Sessions. And it ought to be a factor in our 
processes. I noticed that you said that--I noticed also that 
the crime rate was up a little bit this past year, which was 2 
percent. Is that what it was overall or something? That is not 
a good--we have been having some good numbers.
    But let me just say one more thing. You had a 10-percent 
decline in the recidivism rate over 1983 to 1994, but it was 
really from 44 percent to 40 percent.
    All I would say, first of all, one of the most important 
things for us to understand about crime, there is not a magic 
bullet. There is not one program that--we have tried every kind 
of program in prison, and we have invested all kinds of 
experimental programs, and the numbers are not where we would 
like them to be.
    I would contend that there still remains in this country a 
limited number of people who will rob, rape, shoot, and kill 
you. There are not that many. And if you identify those and 
they serve longer periods of time, you will have a reduction in 
crime in America. And that is what happened. The Federal 
Government adopted a tough mandatory sentencing policy, without 
parole. States have followed with repeat offender laws, and we 
have surged the number of people in prison, and we have had a 
significant drop in the crime rate when the American people in 
the 1980s would not have thought it was possible that we were 
going to be reducing by half the murder rate in America.
    My time is up, and maybe we will get into some of these 
solutions as we go forward, but I think we should not 
underestimate the fact that if you look up a group of violent 
criminals, 100,000 of them, and keep them in jail, that 100,000 
will not commit violent crimes. And if they are released, you 
are going to have a high recidivist rate among a lot of those, 
and if we are smarter about who we release, smarter about who 
stays in jail, we can reduce the pressure on our prisons 
without increasing the threat to the public. And I do not know 
how to do that.
    Thank you, Mr. Chairman.
    Chairman Specter. Thank you, Senator Sessions.
    Director Lappin, do you track the people you release to see 
the percentage of recidivism?
    Mr. Lappin. Yes, we do. We do research to assess our 
programs, and in doing so we do tracking of offenders.
    Chairman Specter. Do you track them all?
    Mr. Lappin. We do a sampling. We do a representative sample 
of those who are released. We do not track all of them. We 
release about 41,000 offenders a year back into this country, 
and about 20,000 get released to other countries.
    Chairman Specter. Would you provide in writing for the 
Committee how many you track and what your findings are by way 
of recidivism?
    Mr. Lappin. Yes. We actually have--
    Chairman Specter. And would you give me your best estimate 
as to how many of these 192,000 inmates you have you think are 
susceptible to rehabilitation? And would you give us the 
figures as to what it would cost on education, literacy 
training, detoxification, job training, and re-entry so that we 
can make quantification as to what appropriations we would have 
to deal with those issues?
    Dr. Sedgwick, does your role in crime statistics give you 
insights into the list of questions I just posed to Director 
Lappin?
    Mr. Lappin. We have a very strong interest in recidivism 
and re-entry studies. We find them enormously difficult to 
conduct. They are very expensive.
    Chairman Specter. We do not have a whole lot of time, and 
we are going to have just a second round. Would you respond to 
the same question as to what it would cost to trace them? You 
find out from Director Lappin how many he traces and find out 
what it would cost to trace them.
    Mr. Sedgwick. Sure.
    Chairman Specter. And what statistical program you would 
recommend to make a determination as to how many recidivists 
there are and see if you can shed some light on what should be 
done to avoid recidivism.
    Mr. Sedgwick. Right.
    Chairman Specter. You are sitting on a gigantic statistical 
cumulation of information.
    Mr. Sedgwick. Yes, we are.
    Chairman Specter. When you have the techniques and 
procedures to response to those questions, we would like to 
know that.
    Mr. Sedgwick. OK.
    Chairman Specter. Ms. Leary, your statement is really 
fascinating when you talk about the impact on the victims, and 
particularly at risk of developing post stress disorder, 
symptoms up to 10 years, a negative impact on truancy for those 
12 to 19, your conclusion that the victims of crime are likely 
to commit further criminal offenses, marriages broken up in the 
aftermath of homicide involving the loss of a child.
    I would be interested, the Committee would be interested in 
how you might list all of these factors and how you would go 
about quantifying the cost. That is a pretty hard thing to do, 
but jurors are asked to do that all the time on pain and 
suffering. That is the category.
    How would you approach that, Ms. Leary?
    Ms. Leary. Well, it is a really difficult research 
question, and, you know, one of the problems that we have in 
really quantifying these things is that there is not enough 
research being done on the intangible costs of crime.
    Chairman Specter. Would you give us your ideas as to how 
the research ought to be conducted? Take your statement to the 
next steps so we can try to quantify it.
    Professor Ludwig, we are going to be contacting you for 
more specification on the $2 trillion.
    Mr. Ludwig. Certainly. That would be terrific.
    Chairman Specter. OK. My light is on.
    Ms. Leary. Yes, I am not a researcher, but I could say that 
one idea that comes to mind is an addendum to the National 
Crime Victimization Survey that BJS does, which is a pretty 
good tool for finding out about crime that actually doesn't 
even get reported to the FBI. Because, you know, when the FBI 
says rape is down this year and, you know, where there are only 
so many reported rapes during 2005 or 2006, people assume, Oh, 
gee, that is terrific, there are not as many rapes as there 
used to be.
    Well, all that means is not as many rapes were reported, 
but it does not mean that not as many rapes are actually being 
committed.
    So I would say that probably a survey that goes to that 
crime which is not reported necessarily to authorities would be 
the way to start, and I can talk with Mr. Sedgwick about that. 
I would be happy to do that and to respond to this Committee.
    Chairman Specter. Well, that is--my red light went on, and 
if you would also deal with the question about unreported crime 
and try to quantify the costs of unreported crime, that is 
pretty tricky.
    We have a vote coming up at noon that we have to get ready 
for, so we are not able to go into as much detail as we would 
like to at the hearing. But the issues which I have posed will 
be very helpful as a followup.
    Senator Sessions?
    Senator Sessions. Thank you.
    Ms. Leary, it is good to see you again, and thank you for 
your leadership and service in the Department of Justice. I 
have a staff person that still--just now, after, I think, 5 
years getting through, you know, an identity theft problem. I 
know a young lady that was assaulted, knocked down, her 
backpack stolen, had to have knee surgery because she was 
twisted so badly when she was knocked down by a criminal. So 
you are right that things are significant.
    Mr. Sedgwick, you remember the Rand Study on California 
prisons that showed quite number of prisoners committed 
hundreds of crimes, and, in fact, a certain percentage, a 
significant percentage, said they committed as many as 200-plus 
crimes a year.
    Mr. Sedgwick. Right. I remember that study very well.
    Senator Sessions. They would knock in your car window and 
do two or three a night, break in your house, break in your 
business, and those kinds of things, and leave a trail of 
debris and broken people who had to put in burglar alarms, and 
all of these things that occur. It is a big deal.
    Let me ask you, Mr. Lappin, I understand we have a 
substantial number, maybe 27 percent of our Federal prison 
system involved non-citizens.
    Mr. Lappin. That is correct. About 26, 27 percent are non-
U.S. citizens. That is about 48,000 inmates in our custody are 
non-U.S. citizens.
    Senator Sessions. Now, does that include the people that 
are detained at the border until they are released through ICE 
agents?
    Mr. Lappin. It does not. That is--
    Senator Sessions. It does not include the people that they 
are detaining for release and deportation?
    Mr. Lappin. That is a portion of those who are detained at 
the border. Those who are convicted and sentenced to Federal 
prison. So there is another group who are in detention status, 
either pending return or pending trial, that is typically the 
responsibility of ICE, Bureau of Immigration and Customs 
Enforcement, or the Marshals or some other temporary holding 
group until a decision is made about their return or--
    Senator Sessions. Let me say, I think overwhelmingly people 
who come to our country are not criminals, even if they come 
illegally to work here, but I do believe there is a trend out 
there that I sense that people who are in trouble in their own 
countries for criminal activities might find that the best 
thing to do is skip town and come into the United States, 
because everybody knows them back in their home country. So I 
think we need to do a better job of managing that, and that 
would have a substantial effect.
    Mr. Sedgwick, your Crime Victimization Study is designed to 
go beyond police reports.
    Mr. Sedgwick. Correct.
    Senator Sessions. They do have some potentials for 
manipulation. If a police chief wants to say he is making 
progress in fighting crime, he will report that crime rates are 
down. If the police department got cut in its budget for 2 or 3 
years, he will report that police crime is up.
    Now, that is the cynical view, but police do have some 
ability to make the numbers up here higher by reporting more 
arrests or lower if they choose.
    Mr. Sedgwick. Correct, and that is--
    Senator Sessions. The Crime Victimization Study, briefly, 
some believe it is more accurate than the police reports.
    Mr. Sedgwick. Certainly, it is better measure of the 
victim's experience with crime. Ultimately, the UCR numbers are 
a good measure of a police department's experience with crime.
    Senator Sessions. Right.
    Mr. Sedgwick. But if you want to get beyond that and say 
what is an American citizen's experience with crime and 
victimization, the NCVS is a better measure of that. It was 
designed to do that and complement--
    Senator Sessions. Because that surveys people to see if 
they have been affected by crime.
    Mr. Sedgwick. Correct.
    Senator Sessions. Mr. Lappin, 9 years you say is the 
average sentence served in the Federal prison?
    Mr. Lappin. 9.6 years.
    Senator Sessions. And that is without parole.
    Mr. Lappin. That is correct.
    Senator Sessions. It used to be in the old days you would 
get 15 years, you would probably serve about 3. Now in the 
Federal system, you get 15 years, you probably serve 13 of 
those.
    Mr. Lappin. Pretty close.
    Senator Sessions. Something like that. In your view--and I 
will ask each of you this briefly, because my time is up--could 
we reach a higher level of sophistication in identifying those 
who deserve the longer periods of time and those who we could 
take a chance on to allow shorter periods of sentencing? Mr. 
Lappin?
    Mr. Lappin. I believe we could. In fact, there are some 
systems in place today that identify some individuals who we 
think are going to be more successful in the community and as a 
result can have some time off of their sentence. These are 
typically nonviolent offenders, and I will use the drug 
legislation that was passed a few years ago as an example.
    Senator Sessions. The crack dealer who has got 9 years or 
15 years, you are not going to be able to let him out in 7 if 
you think there is going to be a good chance--
    Mr. Lappin. Not if they have violence in their background. 
Again, this is primarily for nonviolent offenders. This is the 
only program that we have that really gives the inmate an 
opportunity to serve less time given their performance in 
prison and their background.
    Senator Sessions. All right.
    Mr. Lappin. So I think we could do a better job of that.
    Senator Sessions. And at the front end and at the back end.
    Mr. Lappin. Yes, we could.
    Senator Sessions. Mr. Sedgwick?
    Mr. Sedgwick. I think the Bureau of Justice Statistics can 
improve on our ability to provide benchmarks on re-entry 
success and recidivism avoidance.
    Senator Sessions. And I would agree. I believe it was Ms. 
Leary that said--or somebody. Research is important. We need 
the best information we can get. Mr. Ludwig, briefly? My time 
is over.
    Mr. Ludwig. I agree with my fellow panelists.
    Senator Sessions. Thank you.
    Ms. Leary?
    Ms. Leary. I do as well, and when I was at OJP, I saw the 
benefit of the research and the studies that were done. And if 
we want to base what we do on what we know, we have to fund 
research and development.
    Senator Sessions. Thank you, Mr. Chairman. Thank you for 
having this hearing. I think it is very valuable.
    Chairman Specter. Thank you, Senator Sessions and thank you 
all. The topic is an extraordinarily complex one, and we have 
started the process of trying to analyze how to cope with it. 
And if we had some handle as to the specifics on recidivism to 
measure what education, job training, and literacy training, et 
cetera, would prevent recidivism, we would be able to move 
ahead. And we ought to see if we cannot get a handle on the 
unreported crimes, which is hard. We ought to try to get a 
handle on the intangible costs. And if you can document your $2 
trillion figure, Professor Ludwig, we might have a lot of 
support from casualty insurance companies and businesses which 
lose hard dollars.
    Thank you all, and that concludes our hearing.
    [Whereupon, at 11:31 a.m., the Committee was adjourned.]
    [Questions and answers and submissions for the record 
follow.]

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