INTERVIEW TRANSCRIPT

C-SPAN’S “NEWSMAKERS”

Guest: Secretary of Veterans Affairs, Jim Nicholson

Reporters: Patrick Yoest, Congressional Quarterly & Rick Maze, Army Times

Moderator: C-SPAN

TAPE DATE: Wednesday, July 25, 2007

AIR DATE/TIME: SUNDAY, July 29, 2007 at 10 a.m. and 6 p.m. ET

Please use with attribution to C-SPAN’s “Newsmakers”….*

* NOTE: C-SPAN should appear in all-caps because it is an acronym for Cable Satellite Public Affairs Network

Please contact Jennifer Moire in C-SPAN's Media Relations Department at

202-626-8797 or jmoire@c-span.org for questions

© NCSC

Copyrighted material: use with attribution only

PETER SLEN, HOST: This week, the President’s commission on care for wounded and returning soldiers issued their final report on how best to care for America’s veterans. The commission concluded that we don’t recommend merely patching the veterans healthcare system, as has been done in the past. Instead the experiences of these young men and women have highlighted the need for fundamental changes in care management, and the disability system.

Here to discuss the report and other issues is Veterans Affairs Secretary Jim Nicholson. Mr. Secretary, thank you for being on newsmakers.

JIM NICHOLSON, VETERANS AFFAIRS SECRETARY: It’s a pleasure.

SLEN: Here to question him, Patrick Yoest of the Congressional Quarterly, and Rick Maze of Army Times. Mr. Secretary, first question, do you agree with the commission’s conclusion that the veterans healthcare system is broken and needs fundamental change?

NICHOLSON: Well I don’t think that was their conclusion. In fact, the first thing Senator Dole said this morning, when he and Secretary Shalala were briefing the President, and Secretary Gates and I were there in the oval office, is that the care that’s being given is very good. The processes need work and so do some of the other parts of the system and about those, I agree. I think they have come up with a very good constructive report. They have been very diligent. They held a lot of meetings and hearings, visited a lot of our hospitals and DOD’s hospitals. They have a good understanding, I think, of the system. And their recommendations reflect that. I think they are good.

SLEN: But they talk about “no more patching,” “needs fundamental change.”

NICHOLSON: Well I think one of the things that they addressed that really needs change is this hand off, this transition from being an active duty service member to becoming a veteran. It’s very redundant and it’s also slow. And that basically was the problem at Walter Reed. It wasn’t healthcare per se. It was process. It was young service members in medical hold trying to decide what their disposition was going to be.

What they have come up with is a fundamental change to this system, saying that military decides whether one is fit to remain in the military, that’s their domain. If they are not fit to remain, they turn them over immediately to the VA and we conduct evaluation of what percentage of disability that they have and what their military medical retirement should be, and what other compensation and pension benefits that they may be entitled to. That seems to me, to be a very good division of labor, something long overdue and something, by the way, a commission that I chaired for the President at the cabinet level came up with as well.

SLEN: Patrick Yoest.

PATRICK YOEST: Secretary Nicholson, in the past you have indicated openness to changing the VA’s disability benefit system. And today the Dole-Shalala Commission suggested that the federal government completely restructure the disability of determination and compensation system of DOD and VA. Now what do you see as the future for the VA’s disability benefits system, which now currently has a backlog of over 400,000 claims?

NICHOLSON: Well I hope that there will be paradigm shift. I have wanted to conduct a pilot where we assume the validity of the service member’s claim, and then evaluate it and give them their benefits accordingly. And then, conduct audits later on if – we and also taking measures to see how the recovery might be.

What has happened is that so man people have gotten into the compensation queue, and not the health queue. And our real goal and our mandate is to make people well. And then those that we cannot make well or not make fully recover, we compensate for the difference, for the diminution as a result of their service to their country, a grateful country who wants to do that. That needs to be reversed. They recognized that and are recommending it.

YOEST: But that would put the VA in a position – the auditing system that you mentioned, that would put the VA in a position of possibly taking back benefits they had all ready given to veterans. Is that a position that you would want to put the VA in?

NICHOLSON: Well that’s a very good point you raise, because here to for that rarely ever happened. So everybody would have to understand the new system. If you want a benefit real quickly, without going through that labyrinth process that we now have to go through pursuant to both statutory law and case law, which is why it takes so long to get a claim finally adjudicated.

But if we were to do it quickly, and have it being subject to review later or subject to an audit, that’s a trade off that the veteran would have to be accepting, that this may not be permanent but it is quick. And I do have this condition now, be it maybe temporary and I’ll get compensated. But if I heal up and I recover which is, I think, their goal and our goal, then that compensation might not be appropriate.

YOEST: How would you propose that the VA simplify the system beyond this auditing system that you are talking about? Simplifying, for example, the scale of disabilities from zero person disability to 100 percent, how would you simplify that?

NICHOLSON: Well I think, a lot of ways. The manuals that are being used, some of them are 1945 and 1946 vintage. They don’t reflect current technology, current workplace conditions of people that have certain disabilities now, it can be very productive and make a living, have a much fuller life than they used to have because of the miracles of medicine, and prosthetics and technology. So that needs to be reflected also in the upgrading of these manuals which are there by law. So there’s a considerable amount of new law will be needed on this. And I will dare say, a new cultural frame of mind about this, because if this system is going to be materially expedited, there are, you know, changes that are going to have to occur in it. People are going to have to adapt to those.

SLEN: Rick Maze.

RICK MAZE, ARMY TIMES: Mr. Secretary, this isn’t the first time that people have tried to make a cultural change like you are talking about in the VA. It happened at the end of the Vietnam area. It happened, probably at the end of the Korean War. They’ve never quite been able to make it because it’s a huge bureaucracy. I mean you’ve been the head of the second largest agency in the federal government, and making a change is very difficult. Is the Walter Reed scandal and what it all meant enough of an emphasis, do you think, for this to be the kick that finally changes the system?

NICHOLSON: Well one hopes that. I am also encouraged by the fact that the VA has made a giant cultural change in that we have not everyone of our eight million enrolled veteran patients on an electronic medical record. And that caused the medical care givers, the doctors, nurses and technicians to have to change the way they did business, and they have done that. We have uniformly, universally put everyone of our patients on electronic medical record and they input that after every occasion that they have with that patient.

Additionally, we have just completed training all of our clinicians at the VA to a screen for post traumatic stress disorder and any forms of brain injury for any veteran from the current combat environment that presents himself. And that went pretty well, really.

So yes, I think that the VA – I can only speak for the VA, I can’t speak for the Department of Defense, but I think the VA can adapt to that. The veterans too, will have to adjust to some of these changes, if they are going to be accepted, number one, and work.

MAZE: But your own experience in trying to make a chance was not good when you dared to touch the third rail of PTSD claims, and you found out what happened when you even just talked about the possibility that somebody’s benefit might be reduced. And it caused a huge firestorm for you that you had to clarify what you were saying, that you weren’t actually trying to hurt anybody. And in the end, the review that you were talking about, really didn’t occurring in the fashion that you wanted. That’s why I raised the question about it’s a tough road that you are trying to follow here.

NICHOLSON: Well it is, and that’s a good question and a good point that you make. Again, on the post traumatic stress disorder, the PTSD it’s a mental condition. It’s one of the signature injuries of this war, the war on terror. But I think one needs to see it in some ways just like a physical wound, an open flesh wound. We don’t evaluate what the final compensation is going to be for a veteran until we know the degree of healing and ability that he is going to retain.

So we have learned, and we’re the best in the world, by the way, at treating PTSD and we have a PTSD capability in everyone of our 153 major medical centers. We have learned that people can recover from this, especially if we start treating them early enough.

So what we should be doing is evaluating them on a temporary basis and start compensating them. And if they are having problems, just come from the combat. And they are having, you know, normal reactions to very un – abnormal experience. Get them compensated and do that quickly. And then, see if we can get them into recovery, get them into treatment. So our goal is to make them healthy and have a full life again and the meaningfulness of work. And then, make a final adjudication on what their compensation ought to be for their service.

MAZE: Would you advocate even wider screening then, than just the people that are coming in, because you’re really only looking at a small amount of the veteran’s population, if you are only doing the ones that are coming in the door. There are – maybe 80 percent of combat veterans in will not be automatically screened.

NICHOLSON: About a third of the veterans that come back and come off active duty, which is how they become a veteran, about a third of them are coming in to see us for different reasons. We are screening everyone of those. I think it would be very good if we could screen all of it.

And we have, by the way, a very active outreach going on, unprecedented outreach in the post employment locations and trying to get these people, guardsman and reserve included to know what they are entitled to from the VA and then come in and let us see them. And we are there for that, and we – the Congress, and the President have been very generous in our support for our expansion of capabilities to see them, we’re ramped up for that.

MAZE: Mr. Secretary, most news accounts about your resignation have characterized the Bush administration as unable to anticipate the deluge of returning Iraq and Afghanistan veterans. In your two-and-a-half years at the VA, what do you see as your legacy?

NICHOLSON: Well I think there will be a lot of things. A major transformation of the information technology system at the VA is underway and that is huge. Thousands of people are being transferred into a separate career cone. Discipline is being imposed. Encryption is being imposed. No longer the use of one’s own laptop and thumb drives and hard drives, but the company’s equipment, so to speak, the VA’s equipment is all that’s authorized. And we are imposing this on the myriad of contractors and researchers that we have in the system. And that is going very well, and that’s extremely important as evidenced by the major data briefs that we had in May of 2006.

The VA is a huge purchaser of goods and services, about $10 billion a year which is bigger than the budgets of some cabinet departments. I am restructuring that whole system and seeking to get an assistant secretary who will be just for the purposes of acquisition and construction. That is currently being done by the person who is also the chief financial officer of this $90 billion enterprise. We’re splitting that off.

I have made considerable steps in the whole mental health offering of the VA, so that as we said here, we’re screening all of these current combatants that are coming back. We have trained all of our clinicians to do that. We have a budget now of over $3 billion for mental health. We’re creating a suicide hotline that will actually start on Monday of next week. We’re expanding the working hours of the medical centers, you know, people don’t get sick on our schedule, they get sick on their own schedule.

MAZE: If I could just follow up on the point that you made about IT, of course, last year there was an incident when a VA laptop was stolen that contained personal information on service members and veterans and millions of them.

A government accountability office report release yesterday said that despite congressional mandates to overhaul information technology at the VA, the VA has not yet established an ensured consistent implementation of effective controls for accountability of IT equipment inventory. And IT inventory responsibilities are not well defined. So the report released yesterdays was not a positive report in many respects on the VA’s attempts to reform its IT capabilities. What’s your response to that?

NICHOLSON: Well I don’t agree with your conclusion totally, although there’s validity in some of that. That’s talking about sort of the physical location, accountability and inventory of the IT equipment of the VA. And that too is being improved and worked on, but not yet perfected. And that was a snapshot that the GAO took from how that progress is going, saying there’s still work that needs to be done.

And the VA, you know, stretches from Maine to Manila and Guam in between and Virgin Islands. And it is a vast organization. We offer healthcare services at over 1200 points, all of these have equipment. They have had equipment for years. The inventory system has not been what it should have been. It’s being fixed, but it isn’t there yet.

MAZE: But it touches directly upon the issue of the stolen laptop last year, I mean keeping control of the inventory of the computer equipment that you have.

NICHOLSON: Well that is quite different. That employee willfully took that piece of equipment to his home. I mean you can liken that to classified documents that a lot of us are familiar with in the military that, you know, are locked in a safe at night. And you are depending on the dependability, the integrity and the judgment of the people, the clearances, not to put this in a briefcase and take them home, which is exactly what that guy did.

SLEN: Mr. Secretary, right after the security breech, the laptop security breech in May 2006, you came on CSPAN’s morning program the Washington Journal and said if any veterans have been injured by this please give me a call. How many veterans did you hear from? Or how many veterans were injured by the security breech?

NICHOLSON: Well I haven’t gotten any calls. And we think no veterans were injured because I like to say by the good law enforcement work, and the grace of God, we got it back. It was being fenced. And we posted that there was a reward for it, and some people cooperated with us, and we got it back. The FBI conducted extensive forensic investigation on it, and determined that it hadn’t been breached. Now that’s darn lucky, but that’s the case.

And – but nevertheless, we offered to have a service provided to any of the veterans that wanted it to monitor their credit for a year. And we have hired a service to monitor that database. And they have pretty sophisticated ways of doing this to see if there’s any inkling that it’s being breached and we haven’t yet detected it, and knock on wood, we won’t.

SLEN: Rick Maze, another topic.

MAZE: Yes, I think to follow up on your change to the claim system and what you think you can accomplish? Because one of the complaints from veterans these days is that the system has become more complicated than its every been. And that it’s more adversarial than it’s ever been.

And I know that a lot of the reader phone calls that I deal with are from people that are just fighting the system and tired. This week it’s been a widow from Florida. Her name is Amy Clark (ph) and her husband died in April with a PTSD claim still pending that she, frankly, can’t get an answer about and doesn’t know where to go. And the paperwork is lost, she doesn’t know where it is because a VSO was helping her. It’s like an extremely frustrating system for a poor widow out there who’s husband has died. And this is – he died while the claim is pending, which is like one of the worst case examples that you hear.

Is the system you are talking about going to change that? Is it going to simplify the system? Is it going to make it a one place to call so people can find out where their claim is at?

NICHOLSON: Yes, eventually it will because that system also needs a healthy infusion of technology. I mean that’s really how we fixed VA medicine. That’s one of the ingredients to fixing the VA claims issues. It is a cumbersome system. You know we have a fiduciary obligation to the taxpayers, and we have a lot of laws and regulations and cases, court cases that tell us what we have to do.

But I will say that it also is a benevolent system. I mean the overriding policy in the system is to grant, if you can, and deny only if you must. And 89 percent of the people who submit a claim get a compensation from the VA. And I would also that in the number of claims now pending, at any given time given, you know, we had 24 million veterans there is a queue, there’s always going to be a queue. The important metric is how long it takes us to get to a decision. But over half of those claimants are people who are all ready being compensated by the VA, I think it’s 54 percent all ready being compensated. They want their compensation to be increased and that’s their right to claim that or to make an appeal of what they are given.

Also, it’s probably worth adding that the compensation when it begins is paid back retroactively to the date that the claim is filed. So those somewhat mitigate. But I will tell you that this system currently taking about 177 days. It’s down considerably from what it was just a few years ago, that was 220 days, and we got it down to 177.

I want to get it down further, because it irritates people, and it shouldn’t. And we want to do quicker but at the same time, critics need to rationally appraise what we’re dealing with. Not only is there a greatly increased volume of individual veterans coming in, but they now come in with many more, what we call issues, that is they don’t come in just to talk about their arthritic knee. They come in having a rotator problem in their shoulder, and a problem in the feet, hearing, sight and such that there are about 10 of these issues per veteran. Now that’s kind of hard to discuss in quick terminology. But each one of those requires a clinical evaluation and that number has gone up sharply.

YOEST: I wanted to ask, you mentioned a lot of different challenges that are not yet resolved at the VA. You mentioned a lot of different challenges that are not yet resolved at the VA. You mentioned the disability claims backlog 177 days, mental health challenges with PTSD, traumatic brain injury the IT structure at the VA. Why did you decide to leave the VA at such a crucial moment, and do you have any reservations about that?

NICHOLSON: Well first of all, I would also say about those challenges that they are opportunities. And I have been very engaged in working on those, and we’ve made considerable progress on those things that give me a great deal of satisfaction about the improvement that we have made.

I thought about – when I was coming back from Rome, and the President asked me to take this job, I found out you don’t say no in the oval office, and it’s been a tremendous honor and privilege for me to have this job, and to be able to serve veterans the way that we do and I’ve been able to in this job.

At the two year point, I thought about submitting my resignation, but at that time, we had some really flashpoint thing happening, I can’t even remember what it was, but it wasn’t a good time for me to say I was leaving. So at this two-and-a-half year point after considerable thought, it wasn’t an easy decision, but, you know, I’m going to be 70 here, this February fourth, and I’m basically a business man. I’ve been out of that for 10-and-a-half years, and I really want to get back into it while I’m still relatively young enough to do that.

YOEST: Your deputy Gordon Mansfield has been suggested as a successor to you. Have you suggested any possible successors to the White House at this point?

NICHOLSON: Well I have had discussions with the White House personnel office about Gordon Mansfield who is a very fine mine, a very fine public servant. He won the distinguished service cross in Vietnam. He has been a great deputy to me, loyal and valuable. And so he certainly, I think, should be seriously considered but that’s a decision that the President is going to make, not me.

SLEN: Mr. Secretary, is there any chance that you will change your mind and run for senate in Colorado?

NICHOLSON: No. I don’t have any plans to do that. I have had a lot of people talk to me about that. I several months ago looked at that carefully, discussed it with my family and decided not to do that.

SLEN: Is there anything that would bring you into the race? Are you completely ruling out?

NICHOLSON: Yes. I don’t have any plans to run for office.

SLEN: Rick Maze, final question.

MAZE: Yes I want to ask you about when people were calling for your resignation, several times, in fact. It seemed to be sometimes a really big chorus. And some of them were calling you basically veteran hater. And at it was at that point that people reminded them, that you, yourself are an honorable veteran. You are a decorated Vietnam combat veteran and that seemed to quiet them down a little bit. I am wondering, personally, how did you feel when you were taking that attack?

NICHOLSON: Well I was really taken back the first time I ever appeared before the House Veterans Affairs Committee, Congressman Filner called for my resignation. I had never met him before, and I think he said that I didn’t have enough passion and didn’t care about veterans. And I would enjoy playing back for you a voicemail that I just got from Congressman Filner here a few days ago expressing his sorrow and regret that I was retiring and wishing that I wouldn't.

And, you know, it’s a matter of people not acting irrationally or politically but getting to know one another. Not only am I a veteran, by father was a veteran. My son is a veteran. My brother is a veteran. I have four nephews that are on active duty all colonels. In fact, one of them is a full colonel, he’s just been put on the list for promotion to Brigadier General and I am very proud of him. But we’re a family of veterans and people who serve in the military.

So, you know, in this town, some of these things just happen, but at first I was really taken aback by all of that, I have to stay.

SLEN: Mr. Secretary, the Veterans Affairs budget has increased by about 77 percent during President Bush’s term. With the war in Iraq, the war in Afghanistan, PTSD and brain disorders becoming, as you called them, the signature injuries, are we going to continue to see large increases in the VA budget?

NICHOLSON: I think we are, at least in the near term because people that we put on the compensation roles, this is non discretionary funding, as opposed to discretionary, that will go on indefinitely and some of these are very young people. And so that will increase. The VA is a huge organization with a vast array of facilities, and the average age of the hospitals is 57 years old. And those hospitals – that contrast, by the way, with the average age of a hospital in the civilian sector being about 14 years old.

So there’s a lot of expense that’s going to be needed in the future to upgrade or replace hospitals, to build new hospitals, to accommodate the population shifts. I have all ready begun that. We are going to build a new hospital in Las Vegas, Orlando, Florida, in Denver, a new hospital is planned, and Louisville, Kentucky. Others will be needed, Salisbury, North Carolina needs a new hospital. I have commenced some of that but that will always be a need when you have physical stock of this age. Most of it was built after World War II, right after World War II.

SLEN: Veterans Affairs Secretary Jim Nicholson has been our guest this week on newsmakers. Thank you, sir. We’ll be right back with our reporters.

(break)

We’re back with our reporters, Rick Maze, Patrick Yoest. Has Jim Nicholson been an effective Veterans Affairs Secretary, Rick Maze?

MAZE: You know, I think he is. I think that he faced a lot of trouble when he came into office. He followed a very popular previous secretary Tony Principi, who was well loved in the veterans community, was plugged in Washington, was known to be mostly bipartisan, and so that was a tough thing to follow, in the first place, when the took office.

And secondly, he has been secretary during an unpopular war and at a time when the White House has shown great resistance to increasing to considering veteran spending as a war cost because they don’t want to increase domestic spending. So he faced a difficult time. And I think he probably deserves more credit than what he will end up getting.

For me the test of his being secretary isn’t just the negative criticism, there’s one event that I like to think of about how good his leadership was, and that’s Hurricane Katrina, where the VA really didn’t get a lot of attention.

But out of every federal agency that responded and had to do something during Hurricane Katrina, the VA is the one that is widely praised for how it acted, its doctors, its nurses, its hospital staff, and volunteers got every patient out of the hospital in New Orleans. They found a place for every one of them.

Not a single patient died as a result of that massive movement. They got the medical records with them so that everybody was taken care of. And afterwards, they were quick on the scene to have clinics set up and they are still using temporary clinics today. To me, that’s a sign of this is not a dysfunctional agency, it’s an agency in time of war and political circumstances that are difficult for it, that are just trying to do as well as they can.

SLEN: Patrick Yoest, we talked a little bit about the budget for the VA. Do you see any bite back from Congress? Or has Congress been willing all along to fund what is necessary?

YOEST: That’s an interesting question. Secretary Nicholson took a lot of flack in 1995 and 1996 because of – I’m sorry – 2005 and 2006, because of budget shortfalls at the VA. The federal government had under estimated the needs that they would have for returning veterans and other VA needs. And even at this point, Congress is consistently providing more than the administration’s requested for veterans, particularly on veterans healthcare.

So on one hand you can’t criticize Secretary Nicholson for problems with budgetary projections that were problems before he came into office. On the other hand, the VA is still consistently asking for less money than a lot of folks in Congress think they need. So in answer to your question, Congress certainly is delivering on veterans funding to the tune of a lot of more than the administration would want in some cases, several billion dollars.

SLEN: Patrick Yoest is with Congressional Quarterly. Rick Maze is with the Army Times. Gentlemen, thank you for participating in newsmakers.

YOEST: Thank you.

END