[Congressional Record Volume 144, Number 99 (Wednesday, July 22, 1998)]
[Extensions of Remarks]
[Pages E1381-E1383]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      ADDRESSING THE Y2K CHALLENGE

                                 ______
                                 

                            HON. JERRY LEWIS

                             of california

                    in the house of representatives

                        Wednesday, July 22, 1998

  Mr. LEWIS of California. Mr. Speaker, by now we are well aware of the 
Y2K problem that poses a threat to virtually every aspect of our daily 
existence. My good friend and colleague, Mr. Horn, has done an 
outstanding job of raising awareness within Congress and every federal 
agency on the need to address this complex challenge. Indeed, every 
American is potentially affected by the Y2K problem and educating the 
public is critical to avoiding major disruptions in our daily lives.
  Raising awareness is the key to proposing solutions. To that end, I 
would like to share with you and submit for the record a very fine 
article that recently appeared in the Seattle Post-Intelligencer. The 
piece, ``Crash 2000,'' was written by Bruce Chapman, president of the 
Seattle-based Discovery Institute. The Discovery Institute has recently 
launched a two-year project on the many diverse public-policy issues 
connected with Y2K.
  The Discovery Institute will host a conference on Y2K and related 
public policy concerns in Washington, DC on September 24. This 
conference will focus upon specific issues that need to be considered 
by Congress, the Executive Branch and other levels of government to 
minimize the effects of the Y2K transition. Well-known technology 
author George Gilder will moderate the day-long session which will also 
feature Congressman Horn and some of the best and brightest minds on 
the Y2K issue.

          [From the Seattle Post-Intelligencer, June 14, 1998]

                            Focus Crash 2000


      Life with computers at risk should Y2K disease prove deadly

                           (By Bruce Chapman)

       From airport traffic control to tax refunds, from ``just-
     in-time'' package deliveries to time-sensitive hospital 
     equipment; from fire and police services to defense commands, 
     products and activities we take for granted could slow or 
     stop.
       That's the Year 2000 problem scenario, a disquieting 
     possibility that is nagging increasing numbers of public and 
     private leaders.
       In a year and a half, as the new millennium opens, the 
     lives of everyone not residing in some Stone Age redoubt will 
     be affected to an unknown extent by a bizarre glitch in many 
     of the world's computers and software products. Even the 
     minimum likely outcome is worrisome.
       Take the disruptions of last year's United Parcel Service 
     strike, when hundreds of businesses failed, combine them with 
     the recent service stoppage on 40 million pagers when the 
     Galaxy 4 satellite broke down, and replicate such effects in 
     other sectors of the U.S. economy and around the world--
     simultaneously.
       Other outcomes could be worse. Nobody knows how bad it 
     could be. They do know that ``it'' will happen on Jan. 1, 
     2000. A program to stimulate greater public awareness, 
     understanding and action is needed. Yet a communications gap 
     between the culture of the technology industry and that of 
     the political world is slowing the response to the 2000 
     problem, or ``Y2K,'' as it is coming to be known.
       The individualistic people in the technology industry do 
     not naturally make connections between their world and the 
     realm of everyday public life. They tend to fear the 
     government when they do not scorn it. People in the public 
     sector often have difficulty comprehending the economic and 
     social impacts of technology. To them, tech is just another 
     industry to be taxed, regulated and litigated. But at the 
     start of the new century, a programming foible of years gone 
     by--compounded by repetition--threatens to make obvious the 
     big, unavoidable connections between technology and public 
     policy.
       The problem arose from widespread use of a coding technique 
     to save digital space in computers--shortening the 
     designation of years by eliminating the number denoting the 
     century. The date ``1998'' is merely rendered ``98'', for 
     example. Even if some people thought of the troubles that 
     might occur when the year 2000 rolled around, in the fast-
     changing world of high technology, systems were not expected 
     to last long enough to matter.
       The unanticipated result as the year 1999 changes into 2000 
     is that many computers will read ``00'' to mean ``1900.'' 
     They will have no way to control the resulting calculations 
     appropriately. Whole systems, including personal computers 
     and mainframes, and software products of various kinds, could 
     malfunction, spit out errors erratically, or simply crash. 
     With them would crash the billions of orders and transactions 
     and industrial processes upon which our lives have come to 
     depend.
       At potential risk are: critical infrastructure (water, 
     power, telecommunications, transportation); government 
     services at all levels; banking and finance, here and 
     overseas. The very uncertainty about the prospects for these 
     functions could trigger an anticipatory economic contraction 
     well before 2000.
       Huge private and public repair efforts already are under 
     way. Some national banks' Y2K bills are running up to $600 
     million. A Securities and Exchange Commission study released 
     last week estimated that the top Fortune 250 corporations 
     alone expect to spend some $37 billion on the problem.
       Many companies' systems are fixed already. But that won't 
     necessarily protect them from failures experienced by their 
     suppliers, or their customers. Nor will it protect

[[Page E1382]]

     them if their computers interact with systems that are not 
     fixed. Analyst Mark R. Anderson, who spots technology trends 
     from his highly wired aerie in the San Juan Islands, sees 
     ``networks'' as ``the greatest Y2K problem. If my computers 
     are fixed, and yours are not, I'm not sure I want to be 
     linked to yours that (Dec. 31, 1999) midnight.''
       To put the matter in personal terms: Your bank assures you 
     that it is entirely and certifiably compliant. But if that 
     bank starts getting bogus data from malfunctioning computers 
     at other banks--say, from overseas--or finds that it cannot 
     get information at all from federal financial institutions, 
     its own systems could be compromised.
       Edward Yardeni, economist with Deutsche Morgan Grenfell in 
     New York, citing the tardiness of private and public entities 
     in confronting the Y2K problem, estimates the chance of a 
     major recession as 60 percent. ``The likely recession could 
     be at least as bad as the one during 1973-74, which was 
     caused mostly by a disruption in the supply of oil. 
     Information, stored and manipulated by computers, is as vital 
     as oil for running modern economies.''
       A Federal Reserve study a few months ago estimated a repair 
     cost to private business in the United States of about $50 
     billion and to the economy of only a fractional percent of 
     growth, but those estimates already are probably out of date. 
     A private study by Y2K specialists at the Gartner Group in 
     Palo Alto, Calif., sees a $115 billion dollar domestic tab 
     and a $600 billion cost worldwide.
       It is instructive that the head of one vitally affected 
     federal agency, the IRS, does not even dispute the extent of 
     potential danger. Commissioner Charles Rossotti told a 
     Congressional committee this spring, if repairs cannot be 
     made in time (and IRS is far behind, ``There could be 90 
     million taxpayers who won't get their refunds, and 95 percent 
     of the revenue stream of the U.S. could be jeopardized.''
       ``Could be.'' Nobody knows for sure. A lot can happen in a 
     year and a half.
       ``It's still unclear how much pain there will be,'' says 
     Microsoft's Bill Gates.
       One reason for uncertainty is that many information systems 
     are not, as it were, technologically transparent. 
     Instructions may be embedded in locations where one does not 
     expect them. Old systems may have idiosyncratic, even 
     whimsical, programs written by someone long gone and in an 
     obsolete program language.
       The rickety IRS system, for example, dates from the 1960s. 
     Given the workload in bringing critical systems to a point of 
     Y2K compliance, Gates is among those who propose that ``From 
     today forward, `triage' is the order of the day.'' In the 
     battlefield, a surgeon applying the triage policy divides 
     casualties by categories of those who are in good enough 
     shape to ignore, those past saving and those who can be saved 
     with prompt action. Triage for information services means 
     deciding which systems are of relatively low priority and can 
     be repaired later, those that are past saving and must be 
     replaced or abandoned, and those needing immediate fixes.
       That Gates has anything at all to say in Y2K these days is 
     commendable. Many businessmen are afraid to mention the 
     subject. Business Insurance, a trade journal, reports that 
     ``Security is tight for many corporate conversion projects 
     because of the concern that their stock prices might fall 
     when the word got out about how much it will cost to bring 
     their systems into compliance.'' Even the Securities and 
     Exchange Commission is having a hard time getting information 
     from companies, according to testimony before a Senate 
     hearing last week. But before long, as public awareness 
     grows, enterprises that cannot boast of major efforts to 
     become Y2K compliant could become the ones risking stock 
     owner displeasure. Nothing hurts a stock price like a 
     breakdown in basic corporate functions.
       Business leaders also are being warned by their lawyers to 
     keep quiet because of the threat of lawsuits. The Journal of 
     the American Bar Association estimates that there will be a 
     trillion dollars worth of claims as a result of Y2K. Trial 
     lawyers already are holding conferences to examine 
     opportunities for suits against tech companies and others if 
     their systems fail. But again, with time it may become clear 
     that those companies will fare best that are most active in 
     preventing Y2K trouble and trying to help others--including 
     the public.
       Actually, the government itself may have contributed to 
     today's punitive legal atmosphere by its aggressive actions 
     on other matters, from monopoly suits against Microsoft and 
     Intel, to efforts to stop telecommunications and cable 
     mergers. The federal government, by keeping such a low 
     profile on Y2K for so long, also has slowed public education 
     on the overall Y2K threat. The government did know about it. 
     Almost two years ago, after receiving a special report from 
     the Congressional Research Service, Sen. Patrick Moynihan, D-
     N.Y., sent an urgent letter to President Clinton, alerting 
     him to the Year 2000 problem, and warning that it ``could 
     have extreme negative economic consequences during your 
     second term.'' He later publicly termed Y2K a potential 
     ``national emergency.''
       Yet it was only four months ago that the White House 
     appointed John Koskinen, a former Deputy Director of the 
     Office of Management and Budget, to head a new President's 
     Council on Year 2000 Conversion. Koskinen is an experienced 
     crisis manager, but his job is still less that of a policy 
     ``czar'' than that of a facilitator. He has a small office 
     and three employees.
       Of course, by now few large corporations need education 
     from the federal government on the serious of Y2K. But the 
     same cannot be said of small businesses. Surveys show that 
     many of these remain blissfully indifferent. The National 
     Federation of Independent Business and Wells Fargo Bank have 
     discovered that only one in six small businesses has even 
     looked into the subject. Richard Bergeon, president of 
     Systemic Solutions, Inc., in Seattle and co-author (with 
     Toronto consultant Peter deJager) of ``Managing 00: Surviving 
     the Year 2000 Computing Crisis,'' predicts that, given 
     present trends, ``as many as 50 percent of small businesses 
     may fail.''
       Meanwhile, White House special adviser Koskinen has tried 
     to lower expectations of what his office can do to help the 
     economy as a whole. ``We have to figure out how we can help 
     people organize themselves. There's no way for me or the 
     federal government to manage this problem.'' Regarding the 
     government's own functions Koskinen has promised a full 
     report on preparations by early 1999.
       But Congress is not about to wait that long. After holding 
     several discouraging hearings this winter and spring, Rep. 
     Steven Horn, R-Calif., a former university president who 
     heads the House Government Reform and Oversight subcommittee 
     on technology, last week graded the federal efforts an ``F.'' 
     He demanded that ``The president and his administration must 
     set priorities if the conversion is to be successful . . . 
     Now is the time for the president to designate the Year 2000 
     problem as a national priority.''
       It seems likely that pressure will continue to grow on the 
     president, and on Vice President Al Gore, a technology 
     enthusiast, to expand federal readiness efforts. Publisher 
     and possible Republican presidential contender Steve Forbes 
     has been particularly outspoken, terming the situation a 
     ``leadership crisis, rather than a technology crisis.''
       Horn and Forbes have gained credibility from reports 
     issuing lately from the government's independent General 
     Accounting Office and the inspectors general in various 
     departments. The reports cite deficiencies in most 
     departments, indicating that at the present rate of change, a 
     number of major federal functions are unlikely to be Y2K 
     compliant on time.
       For example:
       Some failures of mission-critical defense systems are 
     ``almost certain,'' reported the GAO, unless the pace of 
     fixes is greatly increased. The Department of Defense has 
     spent $2.9 billion, but lacks key management and oversight 
     controls, the GAO says. If the Defense Message System fails, 
     ``it would be difficult to monitor enemy operations or to 
     conduct military engagements . . . Aircraft and other 
     military equipment would be grounded.''
       The Labor Department already has spent $160 million of the 
     $200 million allocated to it to help states convert computers 
     that handle unemployment insurance. Labor's inspector general 
     told a congressional committee he fears for the department's 
     ``benefit payment systems for job corps students and injured 
     coal miners, longshore and harbor workers and federal 
     employees and their families.'' Only 13 of 61 systems in the 
     Labor Department have been identified as Y2K compliant.
       The Education Department is so tardy that it still has no 
     comprehensive Year 2000 plan.
       Despite recent improvements, it is uncertain that the 
     Department of Health and Human Services will be able to 
     process some $200 million in Medicare payments or the $170 
     billion awarded annually in research grants for cancer and 
     other diseases. The problems of HHS, like the IRS, are 
     compounded by computer problems beyond the Y2K threat.
       Experts told the Horn Committee that the Federal Aviation 
     Administration is so far behind in Y2K readiness that it may 
     have to ground planes in 2000. However, White House adviser 
     Koskinen is more optimistic, believing that the FAA will have 
     completed its repairs by the end of the year and will have 
     another year for testing.
       The Social Security Administration, with 92 percent of its 
     project completed, is in better shape than any other federal 
     agency. The Horn Committee graded it an A+. But, as Internet 
     columnist Victor Porlier notes, the agency has been working 
     on the problem for seven years, yet even it is not finished. 
     What does that say about the prospects of agencies that have 
     barely begun?
       Also, how will a fully functional agency such as Social 
     Security persevere in sending out checks and meeting its own 
     payroll in 2000 if a dysfunctional IRS and Treasury 
     Department cannot collect and distribute federal money?
       Finally, says Porlier, Social Security's experience, 
     wherein systems had to be tested early and repeatedly, 
     underscores the importance of adequate time for testing and 
     debugging before systems can be certified as truly 2000 
     compliant.
       That time is fast disappearing.


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