[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

[H.A.S.C. No. 112-158]

DEPARTMENT OF DEFENSE PLANS FOR SEQUESTRATION: THE SEQUESTRATION
TRANSPARENCY ACT OF 2012 REPORT AND THE WAY FORWARD

__________

COMMITTEE ON ARMED SERVICES

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

__________

HEARING HELD

SEPTEMBER 20, 2012

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HOUSE COMMITTEE ON ARMED SERVICES
One Hundred Twelfth Congress

HOWARD P. ``BUCK'' McKEON, California, Chairman
ROSCOE G. BARTLETT, Maryland ADAM SMITH, Washington
MAC THORNBERRY, Texas SILVESTRE REYES, Texas
WALTER B. JONES, North Carolina LORETTA SANCHEZ, California
W. TODD AKIN, Missouri MIKE McINTYRE, North Carolina
J. RANDY FORBES, Virginia ROBERT A. BRADY, Pennsylvania
JEFF MILLER, Florida ROBERT ANDREWS, New Jersey
JOE WILSON, South Carolina SUSAN A. DAVIS, California
FRANK A. LoBIONDO, New Jersey JAMES R. LANGEVIN, Rhode Island
MICHAEL TURNER, Ohio RICK LARSEN, Washington
JOHN KLINE, Minnesota JIM COOPER, Tennessee
MIKE ROGERS, Alabama MADELEINE Z. BORDALLO, Guam
TRENT FRANKS, Arizona JOE COURTNEY, Connecticut
BILL SHUSTER, Pennsylvania DAVE LOEBSACK, Iowa
K. MICHAEL CONAWAY, Texas NIKI TSONGAS, Massachusetts
DOUG LAMBORN, Colorado CHELLIE PINGREE, Maine
ROB WITTMAN, Virginia LARRY KISSELL, North Carolina
DUNCAN HUNTER, California MARTIN HEINRICH, New Mexico
JOHN C. FLEMING, M.D., Louisiana BILL OWENS, New York
MIKE COFFMAN, Colorado JOHN R. GARAMENDI, California
TOM ROONEY, Florida MARK S. CRITZ, Pennsylvania
TODD RUSSELL PLATTS, Pennsylvania TIM RYAN, Ohio
SCOTT RIGELL, Virginia HANK JOHNSON, Georgia
CHRIS GIBSON, New York BETTY SUTTON, Ohio
VICKY HARTZLER, Missouri COLLEEN HANABUSA, Hawaii
JOE HECK, Nevada KATHLEEN C. HOCHUL, New York
BOBBY SCHILLING, Illinois JACKIE SPEIER, California
JON RUNYAN, New Jersey RON BARBER, Arizona
AUSTIN SCOTT, Georgia
TIM GRIFFIN, Arkansas
STEVEN PALAZZO, Mississippi
ALLEN B. WEST, Florida
MARTHA ROBY, Alabama
MO BROOKS, Alabama
TODD YOUNG, Indiana
Robert L. Simmons II, Staff Director
Jack Schuler, Professional Staff Member
William (Spencer) Johnson, Professional Staff Member
Lauren Hauhn, Research Assistant

C O N T E N T S

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CHRONOLOGICAL LIST OF HEARINGS
2012

Page

Hearing:

Thursday, September 20, 2012, Department of Defense Plans for
Sequestration: The Sequestration Transparency Act of 2012
Report and the Way Forward..................................... 1

Appendix:

Thursday, September 20, 2012..................................... 43
----------

THURSDAY, SEPTEMBER 20, 2012
DEPARTMENT OF DEFENSE PLANS FOR SEQUESTRATION: THE SEQUESTRATION
TRANSPARENCY ACT OF 2012 REPORT AND THE WAY FORWARD
STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

McKeon, Hon. Howard P. ``Buck,'' a Representative from
California, Chairman, Committee on Armed Services.............. 1
Smith, Hon. Adam, a Representative from Washington, Ranking
Member, Committee on Armed Services............................ 2

WITNESSES

Austin, GEN Lloyd J., III, USA, Vice Chief of Staff of the Army.. 6
Dunford, Gen Joseph F., USMC, Assistant Commandant of the Marine
Corps.......................................................... 9
Ferguson, ADM Mark, USN, Vice Chief of Naval Operations.......... 7
Hale, Hon. Robert F., Under Secretary of Defense (Comptroller)... 4
Spencer, Gen Larry O., USAF, Vice Chief of Staff of the Air Force 8

APPENDIX

Prepared Statements:

Hale, Hon. Robert F., joint with GEN Lloyd J. Austin III, ADM
Mark Ferguson, Gen Joseph F. Dunford, and Gen Larry O.
Spencer.................................................... 51
McKeon, Hon. Howard P. ``Buck''.............................. 47
Smith, Hon. Adam............................................. 49

Documents Submitted for the Record:

[There were no Documents submitted.]

Witness Responses to Questions Asked During the Hearing:

Mr. Bartlett................................................. 67
Mr. Brooks................................................... 67

Questions Submitted by Members Post Hearing:

Mr. Franks................................................... 71
Ms. Tsongas.................................................. 73
DEPARTMENT OF DEFENSE PLANS FOR SEQUESTRATION: THE SEQUESTRATION
TRANSPARENCY ACT OF 2012 REPORT AND THE WAY FORWARD

----------

House of Representatives,
Committee on Armed Services,
Washington, DC, Thursday, September 20, 2012.
The committee met, pursuant to call, at 10:02 a.m., in room
2118, Rayburn House Office Building, Hon. Howard P. ``Buck''
McKeon (chairman of the committee) presiding.

OPENING STATEMENT OF HON. HOWARD P. ``BUCK'' MCKEON, A
REPRESENTATIVE FROM CALIFORNIA, CHAIRMAN, COMMITTEE ON ARMED
SERVICES

The Chairman. The committee will come to order.
Good morning, ladies and gentlemen. The House Armed
Services Committee meets today to receive testimony on the
Department of Defense planning for sequestration, the
Sequestration Transparency Act of 2012 and the way forward.
Thank you all for being here.
This will be the last week the House is in session until
mid-November. Today's hearing will provide Members a final
opportunity before the lame-duck session to inform themselves
and their constituents about how sequestration will be
implemented and how those decisions will affect our men and
women in uniform and our national security.
We had hoped that the President would provide this
information in the report required by the Sequestration
Transparency Act. Unfortunately, he failed to comply with both
the letter and the spirit of the law. Not only was the report
late, but the report submitted to Congress merely paid lip
service to the dire national security implications of these
cuts after the President has had over a year to consider this
crisis.
Moreover, the White House has even gone so far as to
instruct the Department of Defense not to make preparations for
sequestration. Nevertheless, as previous testimony of this
committee has provided, many of our military leaders believe
initial preparation for sequestration must occur well in
advance of the January 2, 2013, implementation date.
For example, when the Secretary of the Army John McHugh was
asked this spring if plans for sequestration were underway, he
stated, ``We are not doing as yet any hard planning. That would
probably happen later this summer.'' Today, we are following up
with the Department to review and understand the mechanics of
sequestration, how would they implement it, and the timelines
necessary to develop a comprehensive and complete strategy if
sequestration were to occur.
This morning, we will hear firsthand from the Honorable
Robert F. Hale, Under Secretary of Defense, Comptroller of the
Department; General Lloyd J. Austin III, Vice Chief of Staff of
the Army; Admiral Mark Ferguson, Vice Chief of Naval
Operations; General Larry O. Spencer, Vice Chief of Staff of
the Air Force; and General Joseph F. Dunford, Assistant
Commandant of the Marine Corps.
Let me make one final observation and appeal to our
witnesses. As the recent violence throughout the Middle East
has reminded us, we are living in the most dynamic and complex
security environment in recent memory. The decisions we make
with regard to sequestration will have a tangible and lasting
effect on that global security environment.
Last month, in testimony before the committee, the White
House budget director stated, and I quote, ``The impact of
sequestration cannot be lessened with advance planning and
executive action.'' He misses the point. Planning can't resolve
sequestration, but the lack of planning and the failure to
exercise leadership now can make a dire situation worse.
Gentlemen, we understand that there are no easy choices
here, but now is not the time for ambiguity. In your testimony,
I urge each of you to be as clear with us as you possibly can
about what the road ahead portends for the implementation of
sequestration. This could well be the last opportunity for our
military to get these facts on the record before the deadline
for a legislative remedy has passed.
With that, I look forward to your testimony and again thank
you for your service and thank you for being here today.
Mr. Smith.
[The prepared statement of Mr. McKeon can be found in the
Appendix on page 47. ]

STATEMENT OF HON. ADAM SMITH, A REPRESENTATIVE FROM WASHINGTON,
RANKING MEMBER, COMMITTEE ON ARMED SERVICES

Mr. Smith. Thank you, Mr. Chairman. I appreciate that we
are having this hearing. I think sequestration is
unquestionably the most important issue facing our Government,
figuring out how to deal with it, and it is important that we
learn more about it.
And it is clear, and I believe the President, the Secretary
of Defense and numerous other executive branch officials have
made it clear that they see sequestration as having a
devastating impact on defense. That was the point, I believe,
of the OMB [Office of Management and Budget] director's
remarks--was ``Don't think that you can somehow, you know, make
this work in a way that is not going to have a huge negative
impact on our national security.''
That is the main point that has been made by countless
witnesses and folks in a very bipartisan way. I don't think
there is any disagreement whatsoever on that. Even if you think
that savings can be found in the defense budget, and I do, this
is not the way to do it. It is going to be a $57 billion cut at
the absolute last minute, in the middle of fiscal year 2013,
after all kinds of planning was done to try to set it up.
It is also, you know, across the board. Every program has
to be cut by the same amount, for the most part--so the very
limit in terms of any flexibility in terms of handling this. So
we have established beyond a shadow of a doubt that this is not
good policy and no one has claimed that it is.
As for the issue that somehow the Pentagon and the White
House has done nothing to plan for it, I don't think that is at
all accurate. We had Under Secretary Ashton Carter here about a
month ago. He went for about, I don't know, 5, 6 minutes
chapter and verse right down the line of the programs that were
going to be cut and how they were going to be cut.
The executive branch has said which programs, in their
interpretation of the law, will be exempt. Personnel programs
are going to be exempt. They have said specifically this is
going to be, and I may be off on the number here, a 9.6 percent
across-the-board programmatic cut in everything.
So I don't think it is accurate to say that we have not
been planning for it. We have been planning for it. There is a
limited amount that you can do. There is some ambiguity in the
law. We have heard a variety of different interpretations as to
how you can sort of work with that ambiguity in terms of what
programs count and what programs don't. The President has said
now here is what it is.
So we know what it is. The challenge is trying to stop it
from happening. And the only way to do that is to pass a
comprehensive plan to reduce the deficit. That is what the
Budget Control Act required--find savings so that we don't have
a deficit that is uncontrollable; that we get it under control.
The requirement is $1.2 trillion over 10 years.
There have been various plans out there to get us up as
high as $4 trillion over 10 years, and we simply have to choose
to do that. I have said it before. I will say it again. I think
revenue has to be part of that equation. If you are absolutely
committed to the need to provide for the national security of
this country; if you are deeply concerned, and I share the
chairman's views about the complexity of the threat environment
and our need to be prepared for it, then you ought to be
prepared to raise the revenue necessary to pay for that
national security that we want so badly.
Thus far, we have been unwilling to do that. That puts us
in the box that we are in. I think it will be interesting to
hear from all you gentlemen about, you know, how you are
working out the details of that, but I don't think it is the
huge mystery that some have portrayed it to be. We know how
much is going to be cut; roughly, we know what it is going to
be cut from; and a number of different studies both, you know,
in the Government and outside, have attempted to assess the
damage that will be caused by that. And there is a variety of
different opinions on that, but it is not something that has
gone unexamined, let us put it that way.
What I would like us to do is spend the time trying to make
sure that we stop this thing that just about everybody agrees
is bad policy from happening. And the way to do that is to be
realistic about our budget deficit. Stop pretending that we can
bang the table about how awful the deficit is and then shy away
from any of the steps necessary to cut spending or raise
revenue to deal with it. That is the fundamental denial that we
have to deal with to prevent this problem from becoming very,
very great come January.
So I look forward to the testimony from the witnesses and
trying to deal with this very, very difficult issue. I yield
back.
[The prepared statement of Mr. Smith can be found in the
Appendix on page 49.]
The Chairman. Thank you.
Mr. Secretary.

STATEMENT OF HON. ROBERT F. HALE, UNDER SECRETARY OF DEFENSE
(COMPTROLLER)

Secretary Hale. Thank you, Mr. Chairman, members of the
committee. Thanks for the opportunity to discuss the drastic
effects that sequestration would have on the Department of
Defense if it goes into effect, as well as the recently
released report required by the Sequestration Transparency Act.
I am joined today by the vice chiefs of staff of our armed
forces. We submitted a joint statement. I will summarize that
briefly and then the vice chiefs will present some oral
statements of their own.
As Secretary Panetta has repeatedly said, sequestration
would have devastating effects on the Department of Defense. A
few days ago in response to the requirements of the
Sequestration Transparency Act, the Office of Management and
Budget transmitted a report that spells out the dollar
consequences of sequester. Our testimony today provides you
some high level assessment of the impacts.
These consequences really can't be avoided or even
substantially mitigated by planning alone. The reason is
simple: Sequestration was designed by law to be inflexible. It
was never intended to be implemented. It was enacted as a prod,
as I think you all know, for both Houses of Congress to devise
a comprehensive plan to reduce the Federal deficit. And the
only way to avoid these bad consequences now is for Congress to
enact a balanced deficit reduction plan that the President can
sign and that halts sequestration.
If that action is not taken, we are faced with the dollar
consequences that the Sequestration Transparency Act, STA,
report spells out. Cut in the national defense function will
total $54.7 billion in discretionary and direct spending in
fiscal 2013 under the assumptions of that report. Of this
amount, $52.3 billion would come out of the DOD [Department of
Defense] budget.
Each of our nonexempt budget accounts will take a hit of
9.4 percent. The only major exempt accounts involve those that
fund military personnel. The President has exercised his
authority to exempt military personnel spending from
sequestration.
So what effects will these have on DOD? Let me give you
some examples.
Funding for our overseas contingency operations, our OCO,
or wartime budgets, will be subject to sequestration. We will
protect the wartime operating budgets to the extent that we
can. Support of our warfighters is our highest priority. But
that will mean greater cuts in the base budget portion,
especially of the operation and maintenance accounts, and
particularly in the Army and the Marine Corps, and that will
result in reductions in training. Reduced training would affect
our ability to respond to a new warfighting contingency should
one occur.
Sequestration would almost certainly force us to reduce
spending for civilian personnel in the Department, which would
lead to hiring freezes and probably unpaid furloughs. This
could leave us without enough personnel to fix our weapons,
including the ones that are damaged in war, to maintain a
strong program of contracting, and to sustain financial
management and audit efforts, as well as many other support
functions.
Sequestration would also have substantial effects on DOD
investment programs. While there would be no impact on prior
year funds already on contract--and I think that is an
important point, those aren't subject to sequestration--there
would nonetheless be substantial adverse effects. The 9.4
percent cut would affect each of the budget accounts that fund
procurement, fund research, development, technology and
evaluation, and military construction.
In most cases we would have to buy fewer weapons, which
would drive up unit costs. In the case of ships and others
where you can't reduce the number of weapons, sequester would
result in delays.
Sequestration would adversely affect our military retirees
and families. We would have to cut family housing maintenance.
We would have to cut base operating support. We try to protect
families wherever we can, but we would have to make some of
these cuts.
We wouldn't have enough funds. There would be cuts in the
Defense Health Program that would leave us without enough money
to pay TRICARE bills in the last month unless we could find a
way to offset that, and it will be difficult. We are going to
be faced with delaying payments to providers, which could
result in denials of service.
These are the consequences that would come to play in
fiscal year 2013. But the law that would go into effect on
January 2nd actually not only imposes sequestration in 2013, it
cuts the discretionary caps out through fiscal 2021. In the
longer term, the cuts would in fact double the reductions
already imposed by the Budget Control Act, forcing us to make
substantial reductions in military personnel and units.
Otherwise, if we don't do that, we would end up with more units
than we have funds to train and equip.
Over time, sequestration would lead to reduced forces,
fewer aircraft carriers, brigade combat teams and fighters. We
would have fewer options to respond quickly to emerging crises.
Inevitably, this will require changes to the national security
strategy that was put into effect last January and which we
think remains the right one for the times.
For all of these reasons we believe that a sequestration is
a very bad policy. We hope that Congress will pass a balanced
deficit reduction plan that the President can sign and that
halts sequestration.
Mr. Chairman, this concludes my opening statement, and
after the vices have completed theirs we would welcome your
questions.
[The joint prepared statement of Secretary Hale, General
Austin, Admiral Ferguson, General Dunford, and General Spencer
can be found in the Appendix on page 51.]
The Chairman. Thank you.
General.

STATEMENT OF GEN LLOYD J. AUSTIN III, USA, VICE CHIEF OF STAFF
OF THE ARMY

General Austin. Good morning, Chairman McKeon, Ranking
Member Smith, the distinguished members of the committee. I
first want to thank you for the steadfast and strong support
that you have shown to our men and women and their families.
And I appreciate this opportunity to appear before you today on
their behalf to discuss the potential impacts of sequestration
on your United States Army.
I look forward to answering your questions after my
colleagues have concluded their opening comments.
As we are all well aware, these are challenging times for
our Nation and for our military. Tough choices must be made,
and the Army stands ready to do its part. Indeed, we are
already operating under the Budget Control Act, which will cut
defense spending by about $490 billion over 10 years.
However, sequestration would mean another $550 billion cut.
What is more, sequestration represents a rigid solution that
would apply these cuts in an indiscriminate and arbitrary
fashion nearly across the board. And as such, these cuts will
adversely affect just about every aspect of our Army.
And of particular concern, cuts will apply to war funding,
or OCO, which supports training and forces deployed to
Afghanistan.
We will do everything we can to ensure that our deployed
and next-to-deploy soldiers have everything that they need to
be successful.
We will also do all that we can to maintain support for our
soldier and family programs. However, making these necessary
adjustments will require even deeper cuts to be made within our
other accounts, and these further reductions will adversely
affect our readiness, and specifically our ability to respond
to contingencies.
Such mechanical cuts will significantly increase risk in
what is a most complex and volatile global operating
environment, thus potentially requiring us to relook our
national military strategy.
And so, ideally, Congress and the Administration will work
together to halt sequestration as soon as possible. If not, and
if sequestration goes into effect, we must be afforded the
necessary flexibility to adjust resources in order to avoid
wasteful penalties and inefficiencies and to focus
appropriately on our highest priorities.
Indeed, we must continue to work together to ensure that
our battle-tested Army remains our Nation's force of decisive
actions, ready today and prepared for tomorrow.
Mr. Chairman, Ranking Member Smith, members of the
committee, I thank you again for your continued support and
demonstrated commitment to the outstanding men and women of the
United States Army and their families, and I look forward to
answering your questions.
[The joint prepared statement of General Austin, Secretary
Hale, Admiral Ferguson, General Dunford, and General Spencer
can be found in the Appendix on page 51.]
The Chairman. Thank you, General.
Admiral.

STATEMENT OF ADM MARK FERGUSON, USN, VICE CHIEF OF NAVAL
OPERATIONS

Admiral Ferguson. Chairman McKeon, Ranking Member Smith and
distinguished members of the committee, good morning. It is an
honor to represent the men and women of the Navy and discuss
sequestration with you today.
Based on our preliminary review, sequestration will reduce
funding for the Navy in fiscal year 2013 by nearly $12 billion.
Should sequestration occur, it would force the Navy to make
difficult choices in the second half of the fiscal year across
three broad categories: fleet operations and maintenance;
procurement; and force structure.
The immediate impact of sequestration will be to our
operations and maintenance account, with a reduction of over $4
billion. This account funds our fleet operations; maintenance;
spare parts; civilian personnel and training; and directly
supports fleet readiness.
These reductions will translate to reduced flying hours for
our air crews, fewer underway days, and training for our ships
and submarines, and less maintenance for the fleet.
This will impact our industrial base and the expected
service life of our platform.
We will prioritize expenditures to ensure that our forward-
deployed forces continue to be properly manned, trained and
equipped. As a result, non-deployed forces will see a
disproportionate share of reductions under sequestration.
We will make every effort to preserve quality-of-life and
family support programs for our personnel. However, we may be
forced to make selective reductions in base support services
and infrastructure sustainment.
These reductions will have cumulative effects to our
readiness in fiscal year 2014 and beyond.
Sequestration will also reduce the fiscal year 2013
shipbuilding and aircraft procurement accounts by over $4
billion. It will require adjustments to major acquisition and
modernization programs and will reduce funding for research
laboratories and technology development centers.
At this point it is difficult to assess the impact on any
individual program or family of programs since each contract
contains unique and complex provisions, dates and pricing.
Also, a change in one program may have cascading effects on
investments and other interrelated programs in the future.
We will carefully examine each of our programs to
understand the full impact. In some cases, our assessment will
be we are unable to execute a procurement action. In others, we
will face delivery delays and higher unit costs as we negotiate
reductions in scope and quantity.
While we will work to sustain our shipbuilding and
procurement programs, the prescriptive and mechanical nature of
sequestration affords limited flexibility to mitigate the
impact of these budget reductions.
Our fiscal year 2013 budget submission already reflects
difficult choices beneath the Budget Control Act. Our request
balances our investments in infrastructure, future capability,
operations, maintenance and training to sustain a ready force.
The potential reductions to the Budget Control Act beyond
those reflected in our fiscal year 2013 budget submission will
translate over time to a smaller force, with less presence,
longer response times, and reduced ability to provide surge
forces in support of our major operational plans and other
emergent needs.
Under these reductions we will be unable to execute the
requirements of the current defense strategy.
Mr. Chairman, last month I visited Central Command region.
I had the opportunity to visit both of our aircraft carriers,
Enterprise and Eisenhower, our minesweeper force, our patrol
craft and other ships in the region. I talked to over 10,000 of
our forward-deployed sailors.
At every forum, sailors from the most junior to our
operational commanders expressed concern regarding what
sequestration will mean to our Navy and their service. The
uncertainty of our fiscal future is increasingly on the minds
of our force.
Mr. Chairman, Ranking Member Smith and distinguished
members of the committee, we appreciate the continued support
of Congress and this committee for the men and women of our
Navy serving around the globe. On behalf of them and their
families I appreciate the opportunity to discuss this important
issue and look forward to your questions.
Thank you.
[The joint prepared statement of Admiral Ferguson,
Secretary Hale, General Austin, General Dunford, and General
Spencer can be found in the Appendix on page 51.]
The Chairman. Thank you, Admiral.
General.

STATEMENT OF GEN LARRY O. SPENCER, USAF, VICE CHIEF OF STAFF OF
THE AIR FORCE

General Spencer. Chairman McKeon, Ranking Member Smith and
distinguished members of the committee, good morning and thank
you for the opportunity to share the Air Force's perspective on
sequestration.
As we built our fiscal year 2013 President's budget
submission, we carefully balanced risk across all mission areas
while protecting readiness and essential future investments and
proposed the minimum force structure required to support the
defense strategic guidance within the resource provided by the
Budget Control Act. It was difficult, but doable.
Further reductions through sequestration would affect this
balance and our ability to execute the strategic guidance as
currently defined.
More than two decades of sustained combat operations and
routine missions at home and around the world have stressed our
force, decreased our readiness and limited our ability to
replace our old aircraft and invest in advanced capabilities.
Further reductions in readiness, such as in training
programs and maintenance, would not only affect our ability to
fulfill current wartime deployments, operational requirements
and defense of the homeland, but it would also significantly
impact our ability to prepare for future operations.
The same is true for investments in modernization.
Sequestration would also drive us to reevaluate and in some
cases curtail our contracts. This could drive unit cost
increases and inefficiencies. We don't know to what extent
because we have not yet had those discussions with industry
partners. However, these factors would impact the future of
vital aerospace technology, one of our key competitive
advantages.
Mr. Chairman, and committee members, our Nation is
fortunate to have world-class people who work hard to produce
world-class air power every day.
Sequestration will leave the Air Force with people who are
not adequately trained, who lack the equipment they need and
who must make do with weapons systems that are not fully
equipped, representing a hollow force unable to support the
current defense strategic guidance.
The United States Air Force and our sister services
comprise the premier fighting force on the planet. And our Air
Force leadership team is fully committed to ensuring we do our
part to remain the world's greatest air and space force for the
future.
Thank you, Mr. Chairman. I look forward to your questions.
[The joint prepared statement of General Spencer, Secretary
Hale, General Austin, Admiral Ferguson, and General Dunford can
be found in the Appendix on page 51.]
The Chairman. Thank you, General.
General.

STATEMENT OF GEN JOSEPH F. DUNFORD, USMC, ASSISTANT COMMANDANT
OF THE MARINE CORPS

General Dunford. Chairman McKeon, Ranking Member Smith,
members of the committee, thank you for the opportunity to
appear before you today. And thanks for your efforts to
highlight the impact of sequestration in attempt to halt its
implementation.
Much has been said about how sequestration would affect
both the budget and the strategy. For the Marine Corps, we
would experience similar challenges to the other services.
We would suffer a significant degradation in readiness. We
would be unable to properly support our military strategy. We
would incur costs and scheduled delays across our investment
account and would be unable to properly maintain our
infrastructure.
We maintain readiness by balancing the allocation of
resources across our pillars of readiness. To remain ready we
have to recruit and retain high quality people. We have got to
maintain the capabilities and capacities necessary to support
the strategy.
We have got to sustain high levels of unit readiness for
both those units that are forward deployed and those at home
station. We have got to properly maintain our infrastructure.
And we have to be able to modernize in a way that allows us
to remain relevant in the context of future security
challenges.
If the inflexible cuts associated with sequester are
implemented, because of the nature and the relative size of our
budget we will not be able to maintain balance across those
pillars. We will not be able to do what you expect your force
in readiness to do.
In fact, in fiscal year 2013 we will begin to set the
conditions for a hollow Marine Corps.
I am prepared to provide more detail on the implications
for the budget and strategy during your questions. But I share
the perspective previously offered by the Secretary of Defense,
the Commandant and other senior leaders.
Sequestration will have a chaotic effect on the force
during a time of extraordinary challenges to our Nation.
But before I close, I would like to share another concern
that I have about sequestration. For the last 10 years our
Marines, soldiers, sailors and airmen have done all we have
asked them to do.
The competence, responsiveness and flexibility of our force
was seen again last week when Marines responded in hours to
reinforce embassies in the Middle East and North Africa. That
type of response has occurred so often over the last several
years we might take it for granted.
The majority of our young men and women in uniform, like
those in the Fleet Antiterrorism Support Teams that deployed
last week, or those that are in Afghanistan, are too busy doing
their jobs right now to worry about the exact details about how
we develop and pass budgets.
They care about and they are affected by what we do in
Washington, but they actually don't think about much about us
on a daily basis, nor should they have to.
Frankly, given all they do for us, they have a right to
expect that whatever it is we are supposed to be doing to
properly support them, that we are actually doing it.
Our ability to provide our young men and women with the
wherewithal to accomplish their assigned tasks is the very
foundation of the special trust and confidence that they have
in us. And that trust and confidence is the foundation of their
spirit, their mettle and their combat effectiveness.
One of my greatest concerns about sequestration and all the
associated second and third order effects is that we will lose
the trust and confidence of the All-Volunteer Force that we
have worked so hard to build.
My point is that this is not just about quantifiable
impacts on budget and strategy as significant as they may be.
Equally at risk are the intangible qualities that make our
military the very best in the world. Should we lose the trust
and confidence of the force by failing to properly support
them, it will take a very long time to earn it back. That fact
needs to be a key part of the debate as we move forward.
Thank you again for the opportunity to be here this
morning. I look forward to your questions.
[The joint prepared statement of General Dunford, Secretary
Hale, General Austin, Admiral Ferguson, and General Spencer can
be found in the Appendix on page 51.]
The Chairman. Thank you, General.
Thanks to each of you for your testimonies.
I am sure everyone in this room understands the Nation is
in a serious situation. We have a debt now of $16 trillion and
growing by leaps and bounds.
In the last election there was, I am sure, people
campaigning on the idea that we need to get our spending in
line with our revenues. We have to get our deficit in order and
everything needs to be on the table.
Military leaders have stepped up, and they are all
patriotic, and said we understand this and we want to do our
part.
The Deficit Reduction Act was passed and that was set up in
a couple of different tranches of cuts. The first cut was
almost a trillion dollars, half of it, almost a half a trillion
dollars, coming out of defense.
When defense actually accounts for 17 percent of our
budget, 50 percent of the savings were taken out of defense. I
would contend that that is probably not fair. And I think it
puts our defense in jeopardy.
However, military leaders stepped up and said we can do
that. We had to change our strategy, strategy that we have had
since World War II, but over a month's--over a year's time,
really, our leaders managed to work that out in the budget that
starts October 1st.
The strategy was changed. We agreed we are not going to be
able to do all the missions that we have done in the past. We
can't answer every phone call that, yeah, we are there. We will
be there.
But they did that without complaint.
The second part of the deficit reduction said that we would
have a super committee that will look at other ways to find
savings in the mandatory spending side.
If we took all discretionary spending out, eliminated
defense, eliminate homeland security, eliminate transportation
and infrastructure, eliminated education, all Federal spending
that we get a chance to vote on every year, we would still be
running a deficit at this point of a half trillion dollars a
year.
Defense is not the problem. We need to address the
mandatory spending side. The super committee was not able to
carry out their mandate. We all understand that. We understand
the political pressures.
But the fact was it didn't happen. And so sequestration
that was supposed to be so terrible it could never be actually
put into place is getting closer. We are now 3 months away from
full implementation.
I contend that we are already in sequestration. The jobs
are already being lost. The decisions are already being made to
slow things down or cut things off and people are losing their
jobs.
There are two impacts. One is a big cut on our defense,
which puts our security at risk. The second side is the impact
on our economy. And the CBO [Congressional Budget Office] said
that if this thing goes through that we will go right back into
another recession, starting next January.
So this is very, very serious. But the sequestration, the
way it is outlined, if it should take effect, full effect in
January, is another $500 billion, $600 billion out of defense
and it is without any thought or any planning, just you go down
every line item and cut without any kind of planning.
A couple of you mentioned training. When I applied for this
job to our steering committee, I said, ``As I see this job, the
requirement is to make sure that our men and women in uniform,
when we send them into battle, they have all of the training,
the leadership, the tools, everything they need to carry out
their missions and return home safely.''
This cuts into that. It means we will not be able to do it.
The ports and the camps that I have been visiting recently,
a lot of emphasis is on IED [improvised explosive device]
training. That is the biggest problem that we are dealing with
in Afghanistan--severe injuries and deaths, most of them are
coming from IEDs.
A lot of training at all of these bases was being put into
that effort. When you say that we will be cutting back on
training, that can cost lives and that to me is over the top.
We have gone way too far.
The budget year for next year starts October 1st. We have
already passed now a continuing resolution [CR] that causes all
kinds of problems for the Defense Department and other agencies
of the Government for the first 6 months of next year. And then
sequestration kicks in January 2nd.
The CR keeps Government open for 6 months. As far as I am
concerned, the Defense Department shuts down January 2nd
because sequestration will hit on top of that. As I have looked
at how we have to cut every line item evenly by 9.6 percent--
was it, Mr. Secretary?
Secretary Hale. By 9.4 percent.
The Chairman. By 9.4 percent. If OCO is also included,
which it is, that includes ammunition for our troops in
Afghanistan. Correct?
Secretary Hale. Yes.
The Chairman. Is that a line item? How is that handled?
Secretary Hale. The ammunition accounts would be in
procurement and if we end up cutting procurement at the line
item level, yes it would be a line item or could be. I would
need to look back and see exactly where ammunition is funding
in the OCO budget.
The Chairman. So nothing has more priority over anything
else? None of us would agree with that. I mean, that means
cutting the lawn out at Fort Myer would have the same----
Secretary Hale. Right.
The Chairman [continuing]. Priority as troops have in
Afghanistan.
Secretary Hale. We will have some opportunity. We budget
separately for OCO and the base budget, and you approve each
budget. When we actually begin executing, the budgets merge.
So there is one operation and maintenance Army account for
actives that has both OCO and base spending in there. We would
have some authority to move money within that account and we
would use it to try to protect the wartime operating budgets.
But I don't want to make that sound easy, because what that
means is we would have to make disproportionately large cuts on
the base side, and that will have some of the effects on
readiness and training that are of such concern to us.
So we would have some ability and we would move to use it
to protect the actual wartime operating budgets.
The Chairman. I have more questions than we have time, but
I, again, appreciate your service and all that you are doing to
protect us from threats abroad.
Mr. Smith.
Mr. Smith. Thank you, Mr. Chairman.
I don't actually have questions--a quick comment.
First of all, I agree with the chairman, again, on the
impact of this. Clearly, it limits flexibility. I think all of
you gentlemen have explained that you are trying to, you know,
do it in as commonsense a way as you can within the limitations
of the Budget Control Act, but those are fairly severe
limitations.
The main comment I have is how anyone could listen to our
comptroller and our four vice chiefs and conclude that somehow
the Pentagon isn't planning for this is just utterly beyond me.
Clearly, you are planning for it. Clearly, you are considering
on a programmatic basis issues that are a very, very thorny
problem to deal with.
So, you know, I appreciate your efforts on that. You know,
for my part, we will continue to work here to try to make sure
that you don't have to do what you are planning now to do. So,
we appreciate your efforts and I yield back.
The Chairman. Thank you.
Mr. Bartlett.
Mr. Bartlett. Thank you very much.
I would like to reemphasize what our chairman said and kind
of put our discussion in context. About every 6 or 7 hours,
there is another billion dollar increase in our deficit. That
drives our debt up more than a thousand billion dollars a year,
more than $1 trillion a year, our debt increases.
As the chairman said, if we were to zero out everything
that we vote on here--if we had no NIH [National Institutes of
Health], we had no military, we had no homeland security, no
Department of Transportation--it is all gone; no Department of
Education. If we zeroed all of that out, we would still have a
deficit.
We borrow about $0.42 out of every $1 we spend. So clearly
the sequester does not solve our deficit-debt problem.
If the sequester occurs, defense will be cut something a
bit more than $50 billion this next year. Defense is a bit less
than one-fifth of our spending. So if you are going to cut
defense and the other discretionary programs, let us be fair
and cut across the board all of the programs.
That would mean about $250 billion that we would cut from
our spending next year. That would include Medicare, Medicaid,
Social Security--across the board, discretionary and
nondiscretionary programs.
These cuts by most people are considered draconian and
impossible, so let us put that in context. This $250 billion
cut would represent less than a fourth of our deficit next
year; closer to a fifth of our deficit next year. If you can't
cut a fifth of our deficit, how will you ever get there?
If this sequester occurs, this would represent--and this
was the drawdown from these wars--after wars, we always have
drawdowns--it would represent about half the percent drawdown
that we had after the Cold War and after Vietnam. Now, we ended
up with hollow militaries then. We simply don't want to do that
again. But it kind of puts this cut in perspective.
As the chairman indicated, if the sequester is implemented
as written, it would be totally devastating. I know there are
some argument as to what precisely the wording of the sequester
law means, but if you had to renegotiate more than 2,500
contracts, prime contracts, and many thousands of subcontracts
and reduce them by 9.6 percent, we would grind to a halt very
quickly. Obviously, you can't do that.
Mr. Secretary, if Congress continues to be irresponsible
and we do not address this problem, are you prepared to
recommend to us an implementation procedure for the
sequestration that would cause the least harm to the military?
Secretary Hale. Yes. We will be prepared to implement this
in the best way that we can. You know, I am reminded of that
analogy----
Mr. Bartlett. Sir, excuse me. That was not my question. I
know you have a little wiggle room with this, but not a whole
lot, sir. Are you prepared to recommend to us a change in the
law that we can then vote on so that this can be implemented at
much higher levels, rather than at the specific levels that the
sequester indicates?
Secretary Hale. I mean we would have to look at that, Mr.
Chairman, or Mr. Bartlett. You know, in the abstract, I don't
know what that law would be. We need to avoid this thing, not
try to make it better. I would like to offer you an analogy. If
you are driving into a brick wall at 60 miles an hour, let us
find a way to avoid the wall, not figure out a way to pick up
the pieces after we hit it.
I believe that is true. We need to halt this thing, rather
than try to make it better because we are not going to be able
to make it fundamentally better.
Mr. Bartlett. My question anticipated that, sir. I said if
Congress is going to continue to be irresponsible, then the
Administration can be responsible and recommend to us an
implementation procedure which is going to cause the least harm
to the military.
Are you prepared to do that?
Secretary Hale. Yes. Within the law, we will prepare to do
that. Whether we are going to recommend another law, I think I
need to think about and I will, and I will be glad to respond
to that for the record; but within the law, we will recommend
the best plan that we can if we have to, but it won't help that
much.
[The information referred to can be found in the Appendix
on page 67.]
Mr. Bartlett. Thank you, Mr. Chairman.
The Chairman. Thank you.
Mr. Reyes.
Mr. Reyes. Thank you, Mr. Chairman.
Gentlemen, thank you for being here.
You know, that old cliche of the devil being in the
details? We don't like the details that we are hearing, even
though it was us. And I couldn't agree more with my
subcommittee chair, Chairman Roscoe, that it is our fault. It
is Congress' fault for putting you in this position.
It is a lot like somebody holding a gun to your head,
wanting to take your possessions. You don't have enough
possessions, so we are saying, ``Well, give us a plan on how
you are going to get possessions so you can give them to me.''
It is ludicrous.
Every time that we come up with how we are going to deal
with sequestration, I can't help but tell my colleagues in
Congress to look in the mirror. We did this. We passed that
idiotic law that now have put you in a situation where we now
want you to solve the dilemma that we didn't have the courage
not to do.
So, I don't have any questions, Mr. Chairman. I just think
that we have, as a Congress, have to accept the responsibility.
We have to find a way to solve it. And we shouldn't be asking
the generals that are here and the secretary that have been so
gracious and patient with us all these months, to give us a
solution. It is up to us. It is up to us.
And I say that even though I didn't vote for this idiotic,
stupid law, I accept responsibility as part of Congress, and I
think it is up to us to find the solution. However we do that,
we better do it fast.
Thank you, Mr. Chairman, and I yield back.
The Chairman. Thank you.
Mr. Wilson.
Mr. Wilson. Thank you very much, Mr. Chairman.
And thank for being here today.
Two days ago, I had the privilege of being with
Congresswoman Vicky Hartzler at the University of Central
Missouri. And while I was there, we were hosted by the
university and the issue was sequestration. We have persons all
over our country--Whiteman Air Force Base, Fort Leonard Wood--
that I had the opportunity to visit. The American people are
very concerned.
And I want to thank you for your service, but also we
really are counting on you to make sure that, again, the
American people understand what is going on.
I am particularly concerned, General Dunford. I have the
privilege of representing Parris Island, Marine Corps Air
Station, Beaufort Naval Hospital. My late brother-in-law was a
Marine who received the Navy Cross at Okinawa.
So I grew up with a great appreciation for the Marine
Corps. And it is my understanding that the personnel costs of
the Marine Corps are significantly higher than the other
services. Approximately 58 percent of the budget is spent on
personnel. Is that correct?
And then additionally, I am very grateful that indeed the
personnel accounts are exempt, but what does that do in regard
to force level, in regard to readiness, research, procurement,
training? Secretary Panetta has indicated this could lead to a
hollow force. And how will the Marine Corps address the issues
before us?
General Dunford. Congressman, first, you are correct.
Fifty-eight percent of our total obligated authority goes
toward personnel. Our cost per Marine is not higher, but the
proportion that we spend in our budget on personnel is higher.
As a result of personnel being exempt in 2013, what I
alluded to in my opening remarks is that we would then have to
find a preponderance of funds out of operation and maintenance,
infrastructure and our modernization accounts. So we will
continue to do things like run Parris Island. We will
absolutely continue to support those Marines and sailors that
are in harm's way in Afghanistan. We will support those that
are forward deployed.
But where we will see the biggest impact from a training
perspective and where those resources will come from are those
units that are at-home stationed. And I think you know that
right now two-thirds of our units that are at-home stationed
are already in a degraded state of readiness. They are in a C3,
C4 status already.
And these cuts will further exacerbate deficiencies in home
station readiness.
We will also be unable to support the strategy. One of the
things that we are beginning to do now and had intended to do
in fiscal year 2013 is reconstitute our 3rd Marine
Expeditionary Force, which is the core of our contribution to
the U.S. Pacific Command and the resources that are necessary
to support that are unlikely to be available.
And then what we will see across the board in our
modernization accounts are delays and so forth that will cause
us to delay programs and in some cases do more with less.
Mr. Wilson. And, of course, I want to point out the
challenges you have: facing an asymmetric enemy not in uniform;
illegal enemy combatants; persons who truly are bloodthirsty
and act with no regard to the civilian population.
And, thank you for the success and the hard work that has
occurred. General Spencer, it has been reported that the U.S.
Air Force might have to cancel its contract with Boeing to buy
refueling tankers, the KC-46, as a result of sequestration. The
Air Force would then have to negotiate a new contract possibly
for fewer KC-46. How many fewer KC-46s would the Air Force buy?
What sort of per unit cost increase will this cause?
General Spencer. Well, Congressman, I would say upfront
that we wouldn't at this point plan to cancel the contract.
And, depending on the cuts--and I think the chairman mentioned
earlier, if sequestration is triggered, the first thing we
would do is look at those accounts or those areas that we would
want to try to protect, and OCO, or overseas contingency
operations, would be one of those.
So, once you do that, then that drives more of a cut into
the other accounts. And so assuming we would protect wartime
operations, that would drive higher than a 9.4 percent cut into
our other accounts, like our procurement accounts.
So what we would have to do--we have not had specific
conversations with the contractor for the KC-46. But depending
on the amount of the cut, the issue would be, we would have
to--because we have a firm fixed-price contract--we would have
to open up that contract.
And so, we would have to then talk to the contractor about
revising our payment schedule. And, I would guess the
contractor would then talk to us about, ``Okay, well, we can't
give you as many airplanes on the schedule that you asked
for,'' or, ``We may have to stretch out the airplanes,'' or,
``By the way, we may have to charge you more because now the
contract's back open.''
So, clearly, as we go down--I think, as Mr. Bartlett
mentioned, as we go down the thousands of contracts and
thousands of lines, that is the type of process that we have to
go through with every contract.
Mr. Wilson. And I am concerned about the cost, and thank
you for addressing that.
I yield.
The Chairman. Thank you.
Mr. Andrews.
Mr. Andrews. Thank you, Mr. Chairman.
I would like to thank the witnesses.
I commend the chairman for his persistent and continued
interest in focusing on the severity of this issue, which he
has done throughout the year.
I, frankly, wish that the same degree of interest was being
demonstrated on the House floor this week. The House is leaving
town tomorrow until after the election. There will be an
adjournment resolution at some point today or tomorrow. I am
going to vote no, because I think for us to walk away from our
responsibilities--we have heard about this morning--without
making some effort to pass some legislation both Houses and the
President could sign is not very responsible.
And, I think it is an interesting contradiction that this
hearing has set forth chapter and verse about the urgency of
this problem and the response of the institution is to leave
town for 6 weeks.
Now, having said that, let us talk about the importance of
some of the decisions we may have to make. And I want to
preface this by saying, I fully embrace the principle that
anyone who served this country is deserving of high-quality
health care for the rest of their life. I fully embrace the
principle that you shouldn't ever change the rules in the
middle of the game for someone who is retired or who is near
retirement. I don't think you do that to people.
However, Secretary Rehnquist, Secretary Gates and now
Secretary Panetta have come here and laid out for us year after
year chapter and verse the hard reality that retiree health
care costs are eating up a larger and larger share of the
defense budget. We all pretend that is not true, because
raising the issue is a political landmine.
But I think if we are serious about not having the
sequester but equally serious about balancing the budget, one
of the things that we have to talk about is whether it is
possible to have a fair and equitable system of having more
contributions from retirees into the military health care
system.
I want to reiterate: I am not for that for present retirees
or people near retirement. I don't think that is fair.
I want to ask you this question: If we came up with a
system that was equitable, that phased in such contributions
over time so that youngest had the longest to plan for it and
it was fair in the sense that those at the top of the pay grade
had a relatively greater contribution than those at the bottom,
do any of you gentlemen think that such a change would retard
or impair your recruitment or retention of people in the armed
services of our country?
General Austin. We would have to see the actual details of
the proposal, but certainly I think any change is going to
create some concern. But having said that, you know, I think if
it is, as you have described, fair and equitable, I think that
there are a sizable amount of folks that would view it
positively.
Mr. Andrews. I am painfully aware that there will be
disagreement over definitions of fairness and equity, but I
appreciate that.
Admiral, what do you think?
Admiral Ferguson. Congressman, I think we have the gold
standard of health care in our country for our people, and they
richly deserve it, as do our retirees and our dependents.
I think we would have to examine very carefully the details
of the proposal in order to give you a better assessment of
that point.
Mr. Andrews. Yes, sir.
Admiral Ferguson [continuing]. We have to preserve it, in
my view, on a fiscally sustainable basis into the future to
ensure----
Mr. Andrews. I agree with that. I don't want to make a
promise that we can't keep 20 years from now.
Admiral Ferguson. Exactly.
Mr. Andrews. Yes, sir.
General Spencer. Congressman, I agree with my colleagues.
One of the things that is interesting about retirement, as
an example, is you would think that folks newly coming into the
military wouldn't be worried or thinking about retirement, but
they do, as I think we all found out as we went around and
talked to people the last time it came up.
Mr. Andrews. Yes.
General Spencer. My daughter is married to a soldier in
Fort Hood in Texas. And when it came up before, she called me
and asked me, ``Are they going to take my retirement away?''
So I think, as my colleagues have mentioned, we would have
to see the details of it, but certainly there is some potential
there.
Mr. Andrews. I appreciate that.
Yes, sir, General.
General Dunford. Congressman, I think it is important that
we remember the end state of compensation, which is to recruit
and retain a high quality force, and you alluded to that.
Mr. Andrews. Right.
General Dunford. You know, I think it would be very
dangerous for us to isolate any aspect of compensation without
a comprehensive review of compensation writ large. And I think
that really is what the Secretary and the chiefs concluded last
year and have come over and recommended, is that we not isolate
any aspect of compensation, that we not focus singularly on
health care; that we take the opportunity to look at
compensation in a holistic way by an independent panel to
provide choices then that senior leadership could look at in
order to deal with the very real problem that you outlined----
Mr. Andrews. I thank each of you gentlemen. And I see my
time has expired.
I just want to say that I have been encouraged by the
dialogue in this committee which has been sober, serious, and
factual, I think, all year.
I am equally discouraged by what we don't hear on the
floor, that this is the kind of question we are going to have
to come to grips with if we are going to cancel out the
sequester and reduce the national debt.
Thank you, Mr. Chairman.
The Chairman. Appreciate the gentleman bringing that point
forward.
And in our authorization bill that this committee passed
and the floor passed and the House and the President signed
last year did increase the co-pay on our retirees. It was about
$5 a month for a single person; about $10 for a----
Mr. Andrews. I heard about it. I remember.
The Chairman. And that was first time in many, many years
that that had been addressed. And we also face the issue in
this year's bill. That hasn't become law yet because, again, we
are waiting for the other body to act----
Mr. Andrews. As I said, this is the kind of sober
deliberation that will help fix this problem, as opposed to
sequester, which is across the board.
The Chairman. Thank you.
Mr. Scott.
Mr. Scott. Thank you, Mr. Chairman.
And gentlemen, thank you for being here and thank you for
your service to the country.
General Austin, I know you are from Thomasville. That is
part of my district--and happy to have you in the district. Any
time you are down there, let me know.
And General Spencer, Robins Air Force Base is the largest
industrial complex in Georgia, the largest employer in my
district.
So I have opposed sequestration from the start. I
understand that we have to have some reductions in total
spending, and certainly I think that you gentlemen are better
equipped to provide for where those cuts should come than
Members of Congress and certainly the way sequestration would
implement those cuts and tie your hands. I think it is probably
the least efficient thing we could have done.
The world is a more dangerous place today, is one of my
other concerns with sequestration. We have seen this with the
embassy attacks and other places.
And General, I know that some Marines have been denied
access to even get in to provide additional protection for our
embassies in some parts of the world. I think that is something
we have got to review, as well.
But I want to go, if I could, to Secretary Hale and to your
comments. You said that you would consider whether or not
Congress should pass another law before you made that
recommendation. And your written statement says, ``very much
hope that Congress will pass a deficit reduction plan that the
President can sign and avoids sequestration.''
Just set the record straight here--this Congress, the House
of Representatives in this Congress, has passed five different
measures to avoid sequestration, and the President and the
Senate, neither one of them have shown leadership in giving us
any indication of what they will sign. All they say is they
won't sign what we have passed.
It is time for the United States Senate to pass a piece of
legislation that deals with sequestration, and quite honestly
it is time for the President to show leadership on this issue
as well.
And I guess, Mr. Hale, can you tell us what the President's
proposal is that he would actually sign, going back to your
written testimony?
Secretary Hale. Well, Mr. Scott, the Administration has
made two proposals, one last October to the Joint Select
Committee on deficit reduction and then one in the President's
budget. I think that he would sign either of those.
Mr. Scott. Mr. Hale, can I remind----
Secretary Hale. Both of them----
Mr. Scott [continuing]. Can I remind you that the President
didn't get a single vote from a Democrat or a Republican on his
budget? That is how fiscally out of balance his proposal was.
He didn't get a vote in the Senate, a single vote in the Senate
on his budget.
I apologize for interrupting, but is it realistic for the
President to hold to a plan that of 535 potential votes did not
get a single vote from a Member of either party, and he wants
to hold to that plan? Is that leadership?
Secretary Hale. The Administration also said in the
Sequestration Transparency Act that they would work with
Congress to find a way to solve sequestration.
Mr. Scott. Well, that is just words----
Secretary Hale. So I have to take them at their word that--
--
Mr. Scott. Well, Mr. Hale, with all due respect, that is
just words. This Congress has passed five--the House, I should
say, I apologize, let us not confuse the do-nothing Senate with
the House--we have passed five measures to avert the potential
devastation of sequestration on national security. What is the
President's plan other than a budget that got zero of a
potential 535 votes?
Secretary Hale. Mr. Scott, I am the Comptroller of the
Department of Defense. I know what he has proposed----
Mr. Smith. Will the gentleman yield? I am sorry. You have
asked the question of these people and I am happy to answer it.
Mr. Scott. Sure.
Mr. Smith. I mean the White House has made two proposals
that Congress rejected. The House has made five proposals that
the Senate doesn't accept.
Mr. Scott. Mr. Smith, did you vote for the President's
budget?
Mr. Smith. So I fail to see how you are in a better
position on that.
Mr. Scott. Did you vote the President's----
Mr. Smith. We have all kinds of proposals that the other
side doesn't agree to----
Mr. Scott. Did you vote for the President's budget? You did
not vote for the President's budget.
Mr. Smith. The President's budget was not presented on the
House floor.
Mr. Scott. So you rejected the President's plan as well as
I did.
Mr. Smith. The President's budget was not presented on the
House floor. You put something up that was not the President's
budget and you have spent all the time since then claiming that
it was. That, too, is not helpful.
Mr. Scott. That is simply not true, Mr. Smith, with all due
respect. I mean, the President got zero votes out of 535
potential on his budget. It is time for him to lead, follow, or
get the hell out of the way of this country.
Thank you, Mr. Chairman, and I----
The Chairman. Thank you.
Mr. Courtney.
Mr. Courtney. Thank you, Mr. Chairman. And, again, thank
you for the series of hearings, starting with the industrial
workforce and leading up to today's hearing this morning, for
focusing on this, and, again, following on the transparency
report, which was just released, which, by the way, also set
out the impact in terms of non-defense areas of the Government
that would be devastated by sequestration.
I mean, all the way from food supply, because of the cuts
in terms of food inspection that would paralyze the delivery
and production of food in this country; the impact in terms of
health care services with the across-the-board Medicare cuts;
K-12 Title 1 that would be devastated.
You know, again, the whole purpose of this was to be
indiscriminate, to be unacceptable. And you have to look no
further than the granddaddy of sequestration, who was Senator
Phil Gramm, who constructed the original sequestration
mechanism back in 1985. He testified after the Budget Control
Act was passed and his language was it was never the objective
of Gramm-Rudman to trigger sequestration; the objective of
Gramm-Rudman was to have the threat of sequestration force
compromise and action.
And what we just heard, you know, shows that we have still
got a gap in terms of the two sides. But in the past our
predecessors, starting in 1985 through 1992, kind of, you know,
grinded away in terms of getting proposals, which were very
hard for both sides to get to, but nonetheless did what was
right for the country.
And, you know, General Dunford, your description of, you
know, the folks that serve under you, who responded to the call
a few weeks ago and did their job, and how they, frankly, are
counting on us to do our job, you know, to me was probably the
most powerful statement this morning in terms of, you know,
what the real issue is here, about whether or not the people of
this country have any confidence in this institution to do its
job.
And I would just say, you know, I don't have a question, I
just--you know, the decision on Friday by the leadership of the
House to basically cancel all the session days that were
scheduled in October, to basically leave town for 7 weeks, you
know, that does not comply with the spirit of Senator Gramm's
description of what sequestration is supposed to be about. It
is not about an end, it is about a process, and it is about
people doing their job.
And, you know, I personally believe that there still is a
center in this place that is ready to roll up its sleeves and
find a path between the two sides which we just heard a moment
ago. And, again, the example of the Marines who are deployed,
or whether it is sailors who are, you know, all across the
globe, or whether it is the amazing work that the Army is
doing.
And, again, I visited with you in Iraq, General Austin,
and, you know, commend you again for your amazing service in
the Air Force, which are patrolling the skies.
By the way, the Coast Guard would also get hit by
sequestration, the folks in New London at the academy. I was
talking about sequestration with them a short time ago. They
are impacted, too. You know, we know now, I mean, what is the
consequences. It is completely unacceptable for our country
both in terms of domestic and nondomestic sectors. And what we
have got to do is do our job.
And I just hope, frankly, that the motion to adjourn is
going to fail and that people are going to roll up their
sleeves and get it done.
By the way, there has been some positive signals from the
Senate in terms of some negotiations. Senator Lindsey Graham
this morning talked about a mini-Simpson-Bowles to try and sort
of get some savings and avoid the January 2nd timeline.
I commend him. I mean, you know, that is somebody who is
rising to his constitutional duty to try and start finding a
middle ground and avoid what is looming on January 2nd. And
hopefully the spirit of Senator Graham's comments this morning
is going to be heard in this Chamber and that we are going to
maybe at least during the recess have some people talking about
ways to stop this sequestration from going into effect.
And with that, I yield back, Mr. Chairman.
The Chairman. Thank you.
Just a reminder that the House has passed a bill that cuts
mandatory spending. It was hard, a lot of tough votes, but we
did pass it. It pays for the first year of sequestration, not
just defense, but all of the sequestration, pays for the first
year, which would move the discussion back onto a less
politically volatile timing that we could be discussing it.
The Constitution lays out how we function, and it says one
body will pass legislation, the other passes legislation, a
conference is called, and you work out your differences.
I understand the Senate doesn't like our bill, but they
have not passed a bill that would take us to conference where
we can really discuss those differences. Rather, they can sit
and say, ``We don't like what was done.''
So I guess then what their interpretation of the
Constitution is, they can say that, then we have to pass
something and ask them, ``Is this okay, Mr. Senator?'' If that
isn't done, then I guess we pass another bill and ask them,
``Is that okay?''
But the way I read the Constitution is it says, until they
put up the votes and actually pass something, we can't move
forward. And that is the big bottleneck that we have facing us
right now.
Our bill was based on cutting spending. If they want to
pass a bill that is totally based on new revenue, then we come
together and try to work out our differences. But they would
have a lot more credibility if they did something, if they
passed a bill that we could go to conference on and actually
work on. The only reason the Senate is still in town is because
one Senator is holding them up and they can't get the votes yet
to pass the CR. And eventually the time will run out and they
will leave town also.
Mr. Smith. Mr. Chairman----
The Chairman. I yield.
Mr. Smith. I actually agree on the last point, the CR. But
the helpful place that we need to get here is the problem in
the Senate is, while, as you see, one person can hold the whole
thing up, we don't have that rule in the House. We have a much
more efficient and effective way of moving things forward. So
the problem in the Senate is it takes 60 votes to do anything.
So before they can pass a bill they need bipartisan agreement.
So all I would say, in a note of what I hope is, you know,
trying to bring us back together here, is, you know, who passed
what, where? The bottom line is right now Republicans and
Democrats have not agreed on what needs to be done. And until
we do, it is not going to get done. It is not like one side is
doing it and the other side is not.
It is the nature of the way the Senate is set up that they
have to get bipartisan agreement before they can pass anything.
In some instances they have to get unanimous agreement before
they can do anything. It is the nature of their rules, not that
one side is showing leadership and the other isn't. We both
need to come up with a plan that is bipartisan. We need to get
working on it.
The Chairman. Actually, the bill that we passed, we passed
under reconciliation. So they only need 50 votes in the Senate
to pass this bill. And until they do something, we will not be
able to solve this problem.
Mr. West.
Mr. West. Thank you, Mr. Chairman, and Ranking Member also,
and thanks to the panel for being here.
And, General Austin, I want to thank you for being a role
model for me as a young paratrooper, and it is a pleasure to
see you.
My question for General Austin and General Dunford--when
you look at my friends and a lot of e-mails they send me, five,
six, seven tours of duty into the combat zone--the second,
third order effects that has on the family, my big concern
right now with the sequestration is what are we going to look
at as far as the personnel strength, because there is going to
be a reduction on personnel strengths for our Army and for our
Marine Corps, our ground forces?
So with that being said, when we are looking at
implementing these personnel reductions that is going to be
part of this overall sequestration for the Army and Marine
Corps?
General Austin. Thank you, sir. And, again, thanks for your
service and thanks for your support.
We are reminded that as we have this conversation, as some
have pointed out, that there are 61,000 or so soldiers deployed
to Afghanistan in support of that effort and they are doing a
magnificent job.
As we have discussed earlier, personnel under the plan, if
this plan does go into effect--and we hope that it doesn't. We
hope that Congress will work with the Administration to make
that not happen, that is the best case, best course of action--
but if it does, then the personnel accounts are protected in
fiscal year 2013--or exempted.
So we would be looking at shaping a force further in the
out-years. And as what you have heard our chief say earlier is
that this would probably drive our end strength down by 80,000
to 100,000 over time. So that is our back-of-the-envelope
assessment at this point.
General Dunford. Congressman, as I think you know, we are
in the process of drawing the Marine Corps down from a high of
202,000 in the active component to 182,000. And we have got a
plan to do that between now and fiscal year 2016, a very
deliberate plan that keeps faith with people.
Manpower is exempt this year. The thing that we realize is
that if sequestration takes effect, manpower is exempt in
fiscal year 2013. What I alluded to earlier is that it would be
impossible for us to balance those pillars of readiness and
maintain 182,000 past fiscal year 2013.
So what the Commandant has really said was once we find out
what our topline is, inside of that topline we will build the
very best Marine Corps that we can build in a balanced way, so
that we don't have more force structure than we have the
ability to train, properly equip, and to take care of the
families, as you alluded to.
What I would tell you is though that at 182,000, we are
exactly at the line of our ability to respond to a single major
contingency operation. So as we look forward, if we have
significant reductions below 182,000, that will cause our force
structure to be below the level of a single major contingency
operation.
Mr. West. Next question is, you know--you gentlemen taught
me a great thing about anytime you prepare a military
operation, you look at the most dangerous course of action; so
with this being the most dangerous course of action, where do
you all see the two preeminent places where you are going to
have to accept risk if this continues to go forward, especially
when we look at the volatility of the world today?
General Austin. Well, sir, what we would do is continue to
support those soldiers that are deploying to Afghanistan, and
the next-to-deploy soldiers. We would make sure that they are
adequately resourced to get the job done. That remains our top
priority.
In addition to that, we would also make sure that we
support those programs that are enabling and supporting our
soldiers and families so that we don't break the faith that we
have established with our soldiers and families.
You know, the fact of the matter is that we have fought
with an All-Volunteer Force for over a decade. And as I have
said before in other places, that if you had asked me 15 years
ago if we could do that with an All-Volunteer Force, I would
say absolutely not; that is probably not possible.
But we have done it. We have done it because we have taken
good care of our soldiers and families. And so we would want to
keep those programs in place. So where we think we would begin
to see eroding capability would be in those forces that are at
home training and preparing to deploy for contingencies. We
think that, you know, as you make decisions to transfer
resources to cover other shortages, that eventually that it
will erode your readiness to respond to contingencies.
So, we want to maintain the faith that we have established
with our soldiers, and we also want to be able to respond to
contingencies in addition to supporting the fight in
Afghanistan.
General Dunford. Congressman West, similar to the Army, our
priority regardless will remain supporting those Marines and
sailors that are forward deployed. We will continue to do that.
You asked for the two main areas that we would take risk, I
don't see any way that we could maintain a proper modernization
profile where we could continue to move forward, and we would
not be able to sustain our investment in infrastructure as
well.
And to put that last point in some perspective, we fund to
a low C-2 level in our infrastructure. If sequestration were to
take place, we would see almost an immediate drop into C-3 and
below with our infrastructure.
Again, to maintain current operations at the level that we
need to maintain them, as well as to try to maintain as many of
those family programs that we need to keep faith with our
Marines--but modernization, infrastructure would certainly
suffer and they would suffer in a way that would be very, very
difficult to recover in the years ahead, and frankly be very
inefficient as we did that.
The Chairman. Thank you.
Mrs. Davis.
Mrs. Davis. Thank you, Mr. Chairman.
Thank you all for your leadership and for joining us today.
At the beginning of your statement, Secretary Hale, you
emphasized, I believe, that we need a balanced budget deficit
reduction plan. Is there anything in this discussion that we
have had today that would suggest that perhaps it doesn't need
to be balanced or that there is something about that in terms
of all the areas that we are looking at, not just defense, that
is not part of that discussion?
Secretary Hale. The Administration favors a balanced
program of deficit reduction. I realize there are differences
of opinion, but that would suggest both cuts in spending and
some increases in revenues. That has to be worked out between
the two Houses of Congress and the Administration, but I
believe that they continue to favor that.
Mrs. Davis. Do any of you feel that that doesn't
necessarily reflect your services?
Secretary Hale. I am going to intervene and ask that our
military leaders not be asked to comment on that particular
issue, if that is acceptable to you, Mrs. Davis.
Mrs. Davis. All right.
Secretary Hale. And that you stick with me on that one.
Mrs. Davis. Okay. I will stick with you, sir. Thank you.
I wanted to go to the issue that you really have discussed
in terms of high priorities--obviously, the warfighter. But
when we think of the personnel accounts, sometimes I think it
is difficult for people to recognize the impact of these
personnel accounts on readiness--childcare centers as an
example.
If they were to be drastically reduced, would that have an
effect on readiness? Is that an area that perhaps needs to be
looked at as even a higher priority when we are talking about
these issues?
Admiral Ferguson. Well, Congresswoman, you know, we have
made it a priority within the service because many of those are
funded by the operations and maintenance account, that we would
have some flexibility to make movements within that account to
sustain our family support programs, our people programs. We
think they are the cornerstone of readiness for both families
and our service members.
But that does cause reductions in other programs within the
account in facility infrastructure, sustainment, modernization,
some base support operations. But I think that we feel very
strongly due to the deployed nature of our forces that we would
have to make an effort to sustain those.
General Austin. I would echo what Admiral Ferguson just
said. It is absolutely imperative that we continue to take care
of our soldiers and families. And it does have an impact over
time on the ability of the family to be resilient. And that is
a thing that we are very, very focused on.
General Spencer. Congresswoman, I also agree with my
colleagues that we would try our best to protect family
programs, health care, that sort of thing. But I will add
though, as Admiral Ferguson mentioned, as we look at what we
want to protect, that is going to squeeze out other accounts.
And they are all in that sort of organizational and
maintenance account, the O&M [operation and maintenance]
readiness account which, you know, has things for the Air Force
like flying hours to train our combat crews, weapons systems
sustainment to maintain our aircraft, to have aircraft
available for our depots.
We have got our civilian pay--180 civilians or so in the
Air Force in that account; training; ranges; spare parts. You
can go down the list--engine overhaul.
So as we look at--obviously, we would want to protect
programs like that, but then that would just squeeze out other
readiness issues as well and make the problem even more
difficult.
General Dunford. Congresswoman, what I think you are really
highlighting is the need for all of us to take a comprehensive
look at readiness. And as I alluded to in my opening remarks,
you know, we have got pillars of readiness. And one of those
pillars is the need to recruit and retain a high-quality force.
And those programs that you spoke to are inextricably
linked to our ability to recruit and retain a high-quality
force, so they are inextricably linked to readiness as well.
And as General Spencer and the other members of the panel
have outlined, once you assume risk in one area, you are going
to accept risk in another area. This is about balance. And the
difficulty with sequestration is it actually makes it difficult
to balance across those pillars of readiness.
So you are going to do things that are inherently things
you wouldn't do if you had the ability to do this logically and
manage risk. And that is the difficulty, I think, for all of us
is that the way the cuts are being applied will not put us in a
position to manage risk.
Mrs. Davis. And when we look at--you mentioned health care,
of course, and that is a great concern, particularly if our
TRICARE physicians choose not to accept military personnel. Is
there something you wanted to just mention about that, in terms
of awareness of what we should be thinking about in that area?
Secretary Hale. Let me take a shot at that and see if I can
be helpful. The Defense Health Program is a budgetary account.
Under the sequester rules, it would receive the same percentage
reduction as all the other accounts; in the case of the STA
report, 9.4 percent.
The only thing we could do would be to try, if that
actually came to pass, would be to try to move money into that
account. It will be very difficult, frankly. We could only do
it through reprogramming and you have got to find something to
cut. And as I have learned painfully over the last 4 years,
that is very hard to do.
So I think we would be faced to some extent with not being
able to pay all of our TRICARE bills probably right at the end
of fiscal year 2013. We would try to avoid it, but I think it
would happen. I am not quite sure what our providers would do
in that case. We would be just late, and then we would try to
fix it in 2014, but it is not a good situation and not one that
I think any of us--I certainly don't want to go through.
The Chairman. Thank you.
Mr. Brooks.
Mr. Brooks. Thank you, Mr. Chairman.
I would like to first thank our men in uniform for your
service. It is quite impressive to see three four-stars and an
admiral here and the dedication that those emblems represent on
behalf of our country, and also, Mr. Hale, your presence here.
And I have heard a good bit about why we are here today.
And I wanted to add my thoughts to it, and people can digest
them for what they are worth. But we are here today because we
have had a United States Government that for years now has been
reckless with the American treasury.
We have had three consecutive trillion-dollar deficits. We
are now in our fourth year of a trillion-dollar deficit. Our
country has never seen this kind of financial irresponsibility
in its history prior to the last 4 years.
And it has reached the point where, in the very chairs
where you all sit, both in 2010 and in 2011, the Chairman of
the Joint Chiefs of Staff has appeared before the House Armed
Services Committee and testified that this accumulated debt is
the greatest threat to America's national security. He did not
name Al Qaeda. He did not name North Korea. He did not name
Iran. He did not name anybody else. He said number one threat
is our debt.
Now, if you look at the numbers, the debt has one trigger
point primarily--a lot of factors, but one trigger point.
Spending has gone up over 40 percent in the last 6 years.
It doesn't take much of a mathematician to figure out what
the cause of the problem is when spending has gone rampant. And
it has gone rampant in large part because the entitlement
programs, that some of my colleagues have pointed out.
And in that vein I want to emphasize one point. We are in
this process of sequestration not only because of this history
of deficits that have accumulated to $16 trillion in debt that
have put us in a very hazardous position financially, where we
are risking insolvency and bankruptcy as a country, which in
turn if that happens could destroy our national defense
capabilities, far worse destruction than sequestration would
ever do.
We all know how bad sequestration is. But then we get to
the solution aspect of it and in August of last year an
agreement is reached.
But let us be very, very clear about this point. The
agreement that was reached with respect to sequestration was
because that is what the White House demanded.
First, they wanted tax increases on top of tax increases we
already have in play. I have a list of 12 pages of tax
increases that are going to hit American families this year,
next year and the year after that and maybe the year after that
too--12 pages.
But that is not enough. They want even more. And so the
House of Representatives said we are going to protect family
incomes. And so the President came up with this sequestration
idea that attacks and puts at risk our national defense
capabilities.
And so I am very much in accord with Mr. Scott's comments
earlier that I believe that if the President is sincere in his
desire to avoid these national defense cuts, then he should
also be sincere in proposing a specific plan that is in
writing, in the form of a bill that can be introduced into the
United States Congress by at least one person who agrees with
him.
And to date I have not seen that plan introduced in the
House of Representatives where at least one Member of the
United States House of Representatives has seen fit to agree
with its terms and conditions.
And if the President is going to continue to be the
Commander in Chief and if he is going to continue to rightfully
complain through his Secretary of Defense about the adverse
effect of sequestration on our national defense capabilities,
and I believe those concerns are legitimate, then I pray that
Barack Obama, as Commander in Chief, will propose a specific
bill that is introduced in the House of Representatives with
some semblance of support, if not bipartisan, at least by
Democrats, that details what his plan is so that the American
people can see it and they can digest it and decide where they
want to go with it.
Now, Mr. Hale, if you are familiar with a specific bill
that the President has proposed that has been introduced in the
House of Representatives that is confined to this issue, and I
am not talking about a smorgasbord where it has got a thousand
different points, one point happens to touch on sequestration.
I am talking about a sequestration-fix bill, one bill that
has been introduced in the House that has the support of
Members. Please share it with me.
The Chairman. The gentleman's time has expired.
If you could, please answer that for the record, Mr.
Secretary.
Secretary Hale. I will do that.
[The information referred to can be found in the Appendix
on page 67.]
The Chairman. Mr. Critz.
Mr. Critz. Thank you, Mr. Chairman.
Secretary Hale, in your written testimony you are worried
about a different type of problem. You mention it in your next
steps and it is the effects of if we don't have sequestration
but that the process starts.
And you talk about you don't want to alarm employees. You
don't want to hold back on obligation of funds for weapons
projects or operating programs.
And a statement at the end of this one paragraph says we
will continue normal operations unless sequestration is
actually triggered. So does that mean that although it is in
the back of everyone's minds, the Department of Defense is
marching forward as if sequestration is not going to happen?
Secretary Hale. Well, I wouldn't put it that way. We don't
want to sequester ourselves.
And so, yes, consistent with OMB's guidance and our own
guidance, we are not going to start cutting back right now in
anticipation of sequestration. But we know it is there. It is
more than in the back of our minds.
And we have begun steps to look at impact assessment. We
have worked closely with OMB to understand how the law would
work. And as we get closer to this event, we will have to move
toward specific planning to do it.
But we don't want, as I said, to sequester ourselves----
Mr. Critz. Right.
Secretary Hale [continuing]. And start in advance to say,
``Well, let us cut back this weapons system because maybe we
will have to do it.''
Mr. Critz. Right. Right.
Secretary Hale. We are still hopeful that we won't go
through this.
Mr. Critz. And there is a series of information here that
says that, you know, and obviously we have already received,
this committee, testimony that indicates that there is actually
an observable slowdown and reduction in contracts and orders.
So there are things happening. And in your testimony, and
we have heard it too, it from the private sector, everybody is
doing this sort of scenario.
And the one thing that I would ask you, and I don't know if
you can quantify it or not or if the service chiefs, vice
chiefs can quantify it, is how much effort is being put into
starting to put the pieces of the puzzle together, looking at
what if sequestration happens.
Is there a concerted effort within the Secretary of Defense
or within the services that there are people assigned now to
start looking because there is a point, and I am trying to
think, where you mention, ``We are working with OMB to
understand this complex legislation and are assessing the
impacts.''
So although you are not sequestering, you are in process of
addressing this. And I mean to my point every day that we kick
the can down the road, you are expending funds for something
that may not happen.
Secretary Hale. I think that is right. And it will pick up
in its pace. We largely do now understand the laws, even if we
don't like them.
And we have done high-level impact assessment. You have
seen that in our testimony today.
Mr. Critz. Right.
Secretary Hale. And we will have to pick up the pace,
working with the services and the defense agencies in terms of
guidance on how we will implement this, hoping at every point
that we can stop.
But if it does not get halted, we will eventually have to
do detailed budget planning. And that will be enormously costly
in terms of time within the Administration.
Let me just go back to one of your other points. In the
aggregate, we don't see a slowdown in obligation rates, at
least through the data we have, which is about a month lag.
I am not saying there is not some program out there that is
doing it.
Mr. Critz. Right.
Secretary Hale. And there may be industries that are making
advance preparations. But we do not see for the Department as a
whole a slowdown in obligation rates through maybe a month ago.
Mr. Critz. Okay.
Now, are you making any assumptions as you plan for fiscal
year 2014 with regards to sequestration?
Secretary Hale. No. The fiscal guidance that we have from
the Administration is the same as last year, last year's plan
for fiscal 2014, and does not take into account sequestration.
Again, we are not going to do this to ourselves. We are
still hopeful that Congress and the Administration will find a
way to avoid it.
Mr. Critz. Okay.
And if any of the chiefs want to address if there is
particular folks who have been assigned to getting prepared for
possible sequestration, please chime in.
With that, I----
Secretary Hale. We have a team set up that is working on
and looking at impacts and will move toward guidance for
planning. So they are all represented in various forms.
Mr. Critz. Okay.
Admiral Ferguson. Yes. Congressman, I would characterize
the effort--is that our normal staff function is that
individuals are assessing the impacts. Now that we have the
Transparency Act report, we understand what the budget amounts
are.
The planning involves understanding what your top-line is
ultimately and the assumptions and the planning factors you use
to shape the future fiscal target shapes the decisions in 2013.
So that type of planning is not going on.
Mr. Critz. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Mr. Young.
Mr. Young. Thank you, Mr. Chairman, Ranking Member.
I would thank all of you for being here today. I know these
are unique challenges that we are all confronting and trying to
find our way through, so appreciate your service.
The first issue I would like to touch on. You know, my
district is in south central southern Indiana. And we have a
number of assets that support the missions of DOD in
particular, from NSWC [Naval Surface Warfare Center] Crane to
Camp Atterbury to the Muscatatuck Urban Training Center. Even
Indiana University has an important role in defending our
Nation and supporting our military.
One of the questions I have pertains to the actual cost of
the sequester. This committee has received testimony from a
number of industry experts including a former deputy director
of OMB, who has testified to the fact that the actual budget
impact of sequestration is going to go far beyond what is in
the Budget Control Act, $55 billion in fiscal year 2013 top-
line reduction.
Instead, informally the committee has heard estimates of
$70 billion for equitable adjustments to contracts or by my
calculation what is 50 cents on the dollar. Ashton Carter has
also referenced the so-called hidden tax.
I would ask Mr. Hale, if you could answer, do you agree or
disagree with this observation and why? And if you could give
us an estimate of how much in additional cuts could be required
as a result of contract cancellations, claims, personnel
severances and other things. Please let us know.
Secretary Hale. Well, let me start by trying to clarify a
bit how sequestration would work.
If we have already signed the contract and obligated the
funds, especially with prior year money, that contract is not
going to be affected; obligated balances, prior year obligated
balances are not affected by sequestration.
So I would not anticipate that contracts signed before
January 2nd are going to be significantly affected. They won't
be canceled and so we won't encounter fees in that regard. We
would be forced not to pick up options.
We would be forced to change contracts that were planned to
be signed after January 2nd. We would be forced into some
personnel actions in the civilian area that--we will avoid
rifts because frankly that would cost us money in that year.
So I think the bottom line is we are going to, both because
of the law and the way we would implement it, I don't see those
sorts of large cancellation fees. There could be some but I
don't see them occurring.
And I think that we will just have to find ways to avoid
the severance cost because we won't be able to afford them.
Mr. Young. Well, thank you for that response.
I will pivot a bit and talk strategy here for a second
because you, Mr. Hale, have indicated that, by your estimates
and presumably of others, I think some of the service attendees
here have indicated that some adjustments will need to be made,
should sequestration go into effect, to the national security
strategy and to the missions we are asking our military to
perform on our behalf.
What I have been struck by, though, is multiple indications
from different individuals on our panel, all of whom I have
great respect for, that there is seemingly little to no
contingency planning going on. We don't know which strategy
changes will be required, and presumably you are the strategic
thinkers of our military. To me, that seems most irresponsible
for this freshman Member and former captain in the Marine
Corps.
I think it would be revealing if we could get more
information on this team that was referenced who is in the
early stages of, quote--``looking at the impacts of
sequestration on our strategy.'' That would be revealing, I
think, because it would tell us what risks are in fact regarded
as greater and lesser risks to our Nation; what missions we are
going to ask our military to perform in the future. And we
could infer from the changes to our strategy what missions are
of higher and lower priority.
And finally, we could determine which spending is more
important or less important, is exactly the sort of analysis we
don't receive on this committee. And therefore, we are asked to
make superficial spending decisions based on parochial
interests and the limited information we receive from the
Administration.
So if we could get any information, I would most appreciate
it.
Thank you, gentlemen, again for your service.
The Chairman. Thank you.
Ms. Hanabusa.
Ms. Hanabusa. Thank you, Mr. Chair.
Secretary Hale, you know, I have sat through so many of
these meetings regarding the effects of sequestration, whether
it is in this full committee or it is in the Readiness
Subcommittee. I even sat in on Seapower, which I am not a
member of, because I represent Hawaii and you can imagine how
important these issues are to us.
Today's hearing was called ``Department of Defense Plans
for Sequestration, the Sequestration Transparency Act of 2012
Report, and the Way Forward.'' That is the title.
And the one thing I have got to say is that in all the
prior hearings and testimony that we have had, including Chief
of Naval Operations Admiral Greenert, as well as Army Secretary
John McHugh, that the theme seems to be the same. It is whether
someone above them has said not to really plan for
sequestration, or the Office of Management and Budget has said
just plan your budget for the upcoming year without any
consideration of sequestration.
Would that be a correct statement as to how the Defense
Department has been proceeding on this specific issue?
Secretary Hale. Well, we are certainly planning our fiscal
2014 budget without regard to sequestration, and that is
consistent with fiscal guidance from the Office of Management
and Budget.
We made a decision not to plan in detail for sequestration,
again in the continued hopes that there will be an agreement
between the Administration and Congress to halt it. I think as
we get closer to this event, we will have to move towards
guidance to the service and specific planning. And if it does
go into effect, I can assure you we will be ready to implement
it and we will move toward the planning that is required to do
that.
Ms. Hanabusa. Can you tell me how long you think it is
going to take to get to that point? Because some of these
testimonies we got from February of this year--the chairman has
always expressed his great concern about sequestration, which
all of us share. So I am just curious. I mean, you knew that
sequestration was going to be an across-the-board cut, so the
report that was done by OMB is a 9.4 percent literally across-
the-board cut.
So how long will it take you to then drill down from all
these different program IDs which have the 9.4 percent across-
the-board cut? How long will it take you? I just kind of want
to know when the chairman is going to call us back in and we
are going to hear the actual plans.
Secretary Hale. Well, the first thing we will have to do is
come up with guidance, as we would do in a regular budget to
the services. That probably will take place over the next month
or so. I would say 6 weeks or so after that guidance has gone
to come up with detailed plans.
Ms. Hanabusa. So probably a 2-month period, and then we
will be able to know how each one of these different programs--
--
Secretary Hale. We will wait as long as we can to begin
this process. You know, I feel like I spend most of my time
these days planning for things I fervently hope don't happen.
And I think we will wait as long as we can to begin this
process, again in hopes that it is halted, but we won't wait so
long that we won't have this Department ready if in fact it
goes into effect on January 2nd.
Ms. Hanabusa. Now, one of the statements made by OMB in
their report is this. It says with the single exception of
military personnel accounts, the Administration cannot choose
which programs to exempt or what percentage cuts to apply.
These matters are dictated by a detailed statutory scheme.
Just so anyone listening in on us, when you say you are
going to start to study how the cuts are going to take place,
you are talking about the 9.4 percent within each program ID.
Is that correct?
Secretary Hale. That is correct.
Ms. Hanabusa. So would you say as frustrating as it may be
for us to try and figure out what is going to happen, so when
we get home and people ask us how it is going to be cut, from
your vantage point, it is really up to Congress and the
President to make everything right.
Secretary Hale. Well, we are depending on Congress and the
President and the Administration to halt this. We certainly
hope that is true. But as I said before, if it happens on
January 2nd, we will take the steps that are needed to make
this Department ready, and OMB has said they will do that
across the Federal Government.
Ms. Hanabusa. And Mr. Hale, many of the testimonies that we
have had all say that Defense Department has taken its share of
cuts already in the first part of the Budget Control Act. And I
believe that Secretary Panetta said that if we have got to take
an additional series of cuts, throw everything out the window.
Would you agree with that?
Secretary Hale. Well, I don't know if he said it quite that
way, but if we take substantial additional cuts, whether it is
sequestration or in some other way, we will have to reconsider
the security strategy that is put in place. And I know I can
speak for Secretary Panetta in saying he believes that strategy
is the right one for current times.
Ms. Hanabusa. When you say ``the strategy,'' you are
talking about the 2014 budget that----
Secretary Hale. The strategy that was put in place last
January and is the basis for the fiscal 2013 budget he believes
is the right strategy and he would like to continue it. But if
there are significant additional budget cuts, we will have to
revisit that strategy.
Ms. Hanabusa. Thank you.
Thank you, Mr. Chair. I yield back.
The Chairman. Thank you.
Mr. Schilling.
Mr. Schilling. Thank you, Chairman.
And it is great to be amongst you fellows. We really do
appreciate what you do for our country.
Just a couple of things to Mr. Hale--a couple of questions.
One of the things that I am concerned about--we have the Rock
Island Arsenal in our district. Dave Loebsack from Iowa and I
share that. And, you know, I truly believe that sequestration
is here, it is now and it is happening.
Just this morning, I got a message--``Good morning,
Congressman Schilling. We just were told that if we don't get
another $45 million worth of work by October the 1st, we won't
be able to maintain current workforce. Our contracting people
are on it, but apparently significant job loss is a
possibility. I am thinking we are in a bad way, brother; any
news on your end?''
You know, so one of the things that I think, you know,
coming from a small business perspective, is that you are
constantly planning. And, you know, when we talk about the
Senate, their inability to pass the 30-some jobs bills and so
on and so forth.
But the one thing that I think is critical as a country,
that both sides of the aisle need to do, and also on the Senate
side, is there is a word called ``compromise'' and coming
together and try to find that common ground. And what I have
seen--this is my very first time ever holding a public office.
I got to the point to where I just could not take it anymore
and decided to run for Congress, and hence the reason why I am
here.
But what I have found is with this Senate is the fact that
every time there is something that they don't like, they pick
up their toys and they leave the toy box and they go home, just
like what they did with the payroll tax back in the holiday
that they had back in December.
But I guess there are a couple of things. I mean, we
definitely need to sit down and address this, but what I would
like to do is, if you could, sir, when we talk about--one of my
concerns is contracts that are written prior to sequestration
taking hold, is what do we do--I mean, we have a lot of cost
overruns that are out there. I guess, how do we put an exact
value on these to be able to say that these things are good?
I mean, we see constantly the cost overruns are there, but
that is what we are trying to--I would like to have clarified
is how do we project? I mean, if you have got a couple million
or billion-dollar cost overruns, how are we going to deal with
that?
Secretary Hale. You are not talking about sequestration.
You are talking about cost overruns that would occur in a
regular budget, if I understand you correctly?
Mr. Schilling. Well, primarily when sequestration hits, and
you are saying we are going to guarantee the contracts that are
already in effect prior to sequestration hitting, how are we
going to deal with the overruns that are going to be there? I
mean, we have no way to calculate those out.
Secretary Hale. Well, what I said is under the law, if we
have already obligated the funds, especially prior-year funds,
they would not be affected by sequestration. So the contract,
if already signed, would go forward with the amount of money we
had obligated.
Now, if that contract needs more funds and has to be
modified, it would be subject--any additional funds would be
subject to sequestration. And I think we would have to judge
whether or not the added funds were sufficiently important in a
period of budgetary stringency, and that kind of decision would
be made by our program managers with guidance from senior
leaders.
I don't know if that is helpful, but I think that is the
process that we would go through.
Mr. Schilling. Right. Another thing that I, you know, we,
constantly look at, when I talk to people out in the district,
most Americans are willing to pay more in taxes. Some here call
it revenues. I call it what it is. It is an increase in taxes
on the hard-working American folks out there.
And most folks that I talk to tell me, ``You know what? We
are willing to pay a little bit more under one condition--stop
wasting our money.'' No more tunnels for turtles. No more swamp
mice in California, and so on and so forth.
But until then, to raise taxes so that this Government can
continue to waste our hard-earned tax dollars, I think it is
pretty difficult in this House to get that through, and we
can't get that guarantee. So I just wanted to have my two cents
in there.
I really appreciate you all's service to the Nation, and
keep doing what you are doing. I yield back.
The Chairman. Thank you.
Mr. Barber.
Mr. Barber. Thank you, Mr. Chairman.
First of all, I apologize for being late. Just got through
with a hearing on ``Fast and Furious,'' which is, of course,
very important in my district since that was where Border
Patrol Agent Terry was killed.
I appreciate the opportunity to ask some questions--first
question for Secretary Hale.
At the last committee meeting when we discussed
sequestration, I said at that time that the lack of action on
this important issue is really a failure on both our part and
others to getting our fiscal house in order.
And we will be voting on adjournment tomorrow. I will vote
against it. I think we should stay here and not go home. We
shouldn't be so much worried about our own contracts and with
our constituents and saving our jobs if we can't save the jobs
of our community and our constituents from this threat.
Secretary Hale, as we see this looming threat just over the
horizon, can you say how it is affecting the morale of our
service members, how this uncertainty is affecting both them
and their families?
Secretary Hale. Well, let me take a shot at that. And I
would certainly invite the vices who are probably better able.
I am particularly worried about our civilian members. For
fiscal year 2013 we will exempt military personnel, so it won't
have a direct effect on the number of military personnel,
though it may have effect on their confidence, generally.
I am particularly worried about our civilians. They will be
directly affected. We would probably have to have a hiring
freeze and I suspect we would have to consider unpaid
furloughs.
And I think there is starting to be increasing unease in
our workforce about how this is going to affect individuals,
and I don't blame them. I am very worried for them. But I would
invite my colleagues here to comment if they would like.
General Austin. Thank you, sir.
From an Army perspective, you know, as I go around to
different installations and talk to soldiers and families, we
are beginning to hear more and more of them ask the question
of, ``What does this really mean for us in terms of support for
family programs or what does it mean in terms of end strength?
Will my soldier be caused to leave prematurely?'' Those types
of things.
And so the issue is that they are beginning to focus on it
more so than we would like to see them worry about it.
And, again, our concern is that we don't want to break the
faith with the soldiers and families that we have established
over the years. I think that is one of the things that has
enabled us to do what we have done and support two fights for
over a decade.
Let me commend our families for what they have done to
date. And with your support we have been able to take good care
of them.
So they will continue to be with us, but, again, they are
focusing on it a bit more than we would like to see.
Admiral Ferguson. Congressman, as I mentioned in my
opening, I just returned from a tour to Central Command to
Middle East, and spoke to about 10,000 sailors on our aircraft
carriers, mine force, patrol craft. At every forum, from the
most senior commanders to the most junior sailor, they ask
about sequestration and what it means to them, their families.
And I sensed a growing anxiety over the uncertainty of our
fiscal future and what it means to them and their service to
the Nation.
And I would just offer that they are looking very strongly
to us to solve this and to give them certainty so they can plan
their lives and their aspirations and their future. And I think
we owe them that great debt as we go forward.
General Spencer. Congressman, I have a similar experience.
There is, I think, some growing anxiety, particularly with our
civilians in depots, and that, you know, overall our aircraft
engine repair, et cetera, because of the uncertainty. They
don't know what is going to happen.
And as I have gone out and talked to military folks--I
mean, it is pretty heartwarming, I guess, to hear--all they
want is parts and to get airplanes off the ground and get
satellites launched. They just want to get the mission done,
and as Admiral Ferguson said, they are looking to us to get
this thing behind us so we can move forward.
General Dunford. Congressman, I would just reemphasize a
point I made in my opening statement, and that is our folks
over the past 10 years have done what they have done because of
the trust and confidence they have in us. They trust that they
will have the wherewithal to accomplish the mission when they
go in harm's way. They trust that we will take care of their
families when they are deployed.
And I honestly believe they still trust that that will be
the case. They still trust us to resolve this issue and make
sure that they have the proper resources.
But my point would be, our inability to resolve this, our
inability to assure them that they will have the wherewithal
when they go in harm's way the next time to have what they need
to accomplish the mission I think is a significant risk. And
the point I would make about civilians is, there is significant
angst in the civilian community--civilian Marines, as we call
them--about their future. And that concerns us a great deal.
Because just like Marines, our success with civilian Marines--
and what they do is important. They participate in our
training. They fix our equipment. They take care of our
families.
And our ability to recruit and retain high-quality
civilians is equally important. And I think the way we treat
them and the ability that we have to provide them with some
predictability in their future is also important.
So those are some of the concerns I have.
Mr. Barber. Thank you, Mr. Chairman.
Mr. Thornberry [presiding]. Thank you, Mr. Barber.
Mr. Coffman.
Mr. Coffman. Thank you, Mr. Chairman.
And I first want to say that I believe that the Congress of
the United States should stay in session until we resolve this
problem of sequestration, as well as some of the other issues
facing this country, such as bumping up against another debt
limit and the fiscal cliff that we face. And so I will be
voting against adjournment tomorrow.
Let me just say, first, I differ with a lot of my
colleagues. I think that we are capable of more cuts in the
Department of Defense. I just disagree in the manner that they
are going to be done through sequester; that is it is going to
fall disproportionately on weapons and equipment that are so
vital to our fighting forces.
But let me just say first, I think that prospectively, I
would like to see cuts. I think that the Department of Defense
is far too top heavy--more admirals than ships in the United
States Navy. And it is that top heavy across the board in the
other services, as well.
I think we ought to look at some of the permanent overseas
military bases that we have: 79,000 troops still in Europe. Our
NATO [North Atlantic Treaty Organization] allies, most of them
are spending less than 2 percent of their economy on defense.
We are at 4.7 percent.
South Korea--28,000 troops. We are at, again, at 4.7
percent of defense spending as a share of the economy. They are
at 2.7 percent. It seems like we care more about defending
South Korea than the South Koreans.
This whole notion of nation building, which has been so
incredibly costly--that we could invade, pacify and administer
whole countries based on the premise that at the end of the day
they really just want to be like us, if only given the
opportunity they will be like us.
You know, I volunteered to go to Iraq with the United
States Marine Corps out of retirement--not because I believed
in the war; because I believed once we were in it we had to
finish it. But how costly that was not just in terms of lives,
but in terms of tax dollars spent.
And as long as I am on this committee, if I can do one
thing, it would be making sure that this country never goes
down the road of nation building again. And I am glad to see
that we are phasing out of Afghanistan.
On the issue of Libya today, I mean, it is stunning the
lack of coordination between the intelligence community and the
State Department. And now that we are being reactive when we
could have easily been proactive, didn't even have a Marine
Corps security detachment on the ground in Tripoli in the
embassy. Pretended as if it was a permissive environment, which
was stunning to me, and it cost the lives of a U.S. ambassador
and two of his co-workers.
With that said, let me put one question out to the United
States Marine Corps. And with our ability to respond in that
region right now with FAST [Fleet Antiterrorism Security Team]
teams and NEO [Non-combatant Evacuation Operation] ops, how
does sequester impact that capability?
General Dunford. Congressman, when we look at sequester,
what we will make every effort to do is make sure that our
current operations don't suffer. So the expectation would be
that the Marines that are in Afghanistan, our fleet anti-
terrorism support teams, and the forces necessary to do the
kinds of things you alluded to a minute ago would be resourced.
Where you would see the price being paid is units at home
station, again already in a degraded state of readiness. This
would further exacerbate that home station readiness. But it
would not degrade the readiness of those forces that are
forward deployed. We would make every effort to make sure that
wasn't the case.
Mr. Coffman. Let me just say I would never support a cut
that compromised the national security or the capability of
this country to defend itself. And I think, fundamentally,
sequester and the manner that these cuts are going to be done
will in fact compromise national security, will in fact
compromise the capability of this country to defend itself.
You know, I guess another question for the Marine Corps--if
sequester would occur, what would be the permanent damage to
the United States Marine Corps in terms of its ability to
respond to incidents across the board?
General Dunford. Congressman, the permanent damage would be
hard to explain at this point. What we would experience, as I
mentioned to Congressman West, is we would pay for current
operations.
Our modernization account, our infrastructure would suffer,
and then those units that are home stationed would suffer. But
the immediate impact would be--that is the bench that you
expect the Marine Corps, as the Nation's crisis response force,
to be ready when the Nation is least ready in the unexpected
crises and contingencies that are supported by those forces
that are at home stationed.
And so the degraded readiness that we would see in those
forces at home station would impact our immediate crisis and
contingency response capability.
Mr. Coffman. Thank you, Mr. Chairman. I yield back.
Mr. Thornberry. Thank you, Mr. Coffman.
Gentlemen, thank you again for joining us today. We
appreciate your service to our Nation.
And I wanted to make a little statement before we got into
my line of questioning, and that is, there is an issue out
there that I think hasn't gotten as much attention as I think
it needs to. We all talk about sequester, but we haven't talked
a lot about Afghanistan and recent events in Afghanistan, with
the attack there at Camp Bastion and the Taliban's efforts
there. I think that is something that we all ought to be
looking at.
I see we had two brave Marines there defending that
airfield perished. We see six of our AV-8B Marine Corps harrier
jets being destroyed, a number of other ones damaged. We see
that type of brazen attack there in Afghanistan.
And while at the same time we are here talking about
sequestration, talking about cuts to the overseas contingency
operation funds while at the time that we are under, I think,
some pretty challenging times here in Afghanistan, I think it
is unconscionable that this body is preparing to go home while
we look at these challenges.
That is just not right. This body can do better than that.
It must do better than that. It must stay in town. Make sure
this sequester gets set aside.
As the debate took place earlier--I know folks were talking
about, ``How do we make reductions to the budget?'' Nobody had
any intention of ever getting to this point of making these
types of cuts across the board to our national defense. It is
not where this Nation needs to be.
We need to stay in town and get this done. And I, like
other Members here, have stated I will be voting against this
body going home. We have to get this job done for our men and
women that serve this Nation.
With that being said, Admiral Ferguson, I wanted to point
to you and ask your estimate about what will happen in one area
of the Navy, specifically aircraft carriers.
We know the U.S. law says you have to maintain 11 carriers.
We know that about seven or eight are at sea at any one time,
based on maintenance schedules, based on time sailors have to
be resting a little bit or retraining, whatever the case may
be, making sure that the refueling is taking place.
That being said, we know that those challenges are there.
And we know that if you look at sequestration and look at what
challenges that is going to place on carrier OPSTEMPO
[operations tempo], on maintenance schedules, on refueling
schedules, I want to get your estimate on how you believe
sequestration will affect that.
Also manning, how a 9.4 percent reduction in your budget is
going to affect maintenance schedules and manning schedules.
Also, are we looking at 9-plus-month deployment schedules and
shorter dwell times, shorter times for our men and women who
serve in this Nation's Navy to be at home? Is that going to
change?
And thirdly, with the new Asia-Pacific strategy, with that
shift in strategy, will sequestration allow the Navy to attain
the goals set forth in that strategy so, Admiral?
Admiral Ferguson. Well, thank you for the question,
Congressman.
Let me speak about the carrier force and then I will go
into the broader strategic questions that you have posed.
Firstly, we have an issue right now, and I will digress a
second, in the continuing resolution is that we need authority
to complete the refueling overhaul in the Theodore Roosevelt
and we need additional congressional authority to begin Abraham
Lincoln, which is prepared to start after the first of the
year.
And that we are working with Congress through reprogramming
action to achieve that and so I would ask support of that
initiative because not having those carriers complete their
availabilities or start their refueling will greatly impact
future availability of aircraft carriers.
We have a single refueling yard located in Virginia. And
that single facility has to process the carriers and they are
stacked up to come through.
On the broader question of sequestration, what the impact
will be is that we will have to defer maintenance and we are
presently supplying two aircraft carriers in the Middle East,
Enterprise and Eisenhower, now.
And we are accelerating the preparations and training of
additional aircraft carriers to replace them as well as sustain
an aircraft carrier in the Western Pacific.
Under sequestration we will divert as many resources as
possible to prepare those air wings, the escort ships and the
carriers to meet the schedule. But we will be creating a
deficit in the forces beyond the next group to deploy where we
will have insufficient funds to offer them sufficient training,
flying hours and maintenance.
And over time under sequestration you will see the Navy get
smaller. We have testified previously to a force of around 230
to 235 ships in the future if this is sustained for 10 years.
And you will see less presence forward. You will see an
inability to complete maintenance periods in a timely fashion
to meet the requirements of the combatant commanders.
And it will result in a smaller force that is less
available to respond to crises and to deploy.
For those existing forces we are seeing already, because of
the heavy demand for the Navy, both in the Middle East and in
the Pacific, longer deployments. Our carriers are operating at
about 8 months or so.
Our ballistic missile defense ships are operating at 9
months, with very rapid turnarounds to go back. And those
portions of the force in most demand are operating at a very
high tempo.
We would not be able to sustain that going forward, under
sequestration.
Mr. Thornberry. How about the new Asia-Pacific strategy?
How do you see this affecting that in the long term? Would we
be able to maintain meeting the goals of that strategy?
Admiral Ferguson. Yes. As part of the broader security
strategy of the Department of Defense, we would be unable to
sustain that because we would be a smaller force and with less
presence and less ability to surge.
And that puts that at risk as we go forward in the future.
Mr. Thornberry. Very good. Thank you, Admiral.
General Dunford--wanted to ask you a question and kind of
put things in perspective. The Marine Corps has been
extraordinarily busy in recent years.
As you know, last year a Marine Corps MEU [Marine
Expeditionary Unit] during a single deployment was able to take
up a variety of different operations: humanitarian aid in
Pakistan, combat operations in Afghanistan, anti-piracy efforts
there in the Horn of Africa, and then being a significant part
of Operation Odyssey Dawn there in Libya.
Very, very busy times--your forces being stretched; we all
know where the Navy is right now as far as the number of
amphibious ships and being able to really meet the requirement
that is there and questioning where that goes in the future
with being able to build additional amphibious ships.
You lay on top of that the new Asia-Pacific strategy that
looks at dealing with issues there in that particular region,
many of which are a need for Marine Corps capability that goes
with that.
I wanted to get your perspective, based on this current
scenario, how do you see your current posture in relation to
potential sequestration and then laying on top of that the new
Asia-Pacific strategy, if you can give me your perspective on
what that means for the Marine Corps?
General Dunford. Congressman, with regard to the crisis
response, you know, you alluded to the things that we have done
over the past 2 years.
And we would expect we would continue to do those things,
even under sequestration.
In other words, there is not a call that we have missed
yet. And there is no expectation that we will miss a call in
the future.
The impact, though, will be on that crisis contingency
response depth at home that I have talked about. In other
words, our forward-deployed, forward-engaged forces, we are
committed to make sure that they go out the door as ready as
possible.
But the bench back at home is going to get thinner and
thinner over time. We have a readiness challenge today. It will
be exacerbated.
The critical piece about the Pacific is that we are in the
process of reconstituting our unit deployment program in the
Pacific. That really is the core of our contribution to the
United States Pacific Command and that is the force that would
execute the combatant commander's theater campaign plan.
As a result of sequestration, in our initial impact
assessment we would not have the resources available in order
to continue to resource the unit deployment program in 2013 and
beyond.
And that will, again, preclude us from meeting the goals
that have been assigned to us in the theater campaign plan by
the U.S. Pacific Command.
So it absolutely will have a strategic consequence.
Mr. Thornberry. Very good. Well, thank you, General
Dunford.
Gentlemen, Secretary Hale, General Austin, Admiral
Ferguson, General Spencer, General Dunford, I want to thank you
all again for your service to our Nation, for your leadership,
for your direction during what is a very challenging time both
for us abroad and here at home.
And I thank you again.
And with that, if there are no other questions or business
to come before the House Armed Services Committee, the hearing
is now adjourned.
[Whereupon, at 12:05 p.m., the committee was adjourned.]
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WITNESS RESPONSES TO QUESTIONS ASKED DURING

THE HEARING

September 20, 2012

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RESPONSE TO QUESTION SUBMITTED BY MR. BARTLETT

Secretary Hale. Our assessment phase has not been completed and as
such, our planning phase has not commenced.
The Department remains hopeful that Congress will halt
sequestration through legislation. If it does not, we will be ready to
implement sequestration. [See page 14.]
______

RESPONSE TO QUESTION SUBMITTED BY MR. BROOKS
Secretary Hale. The President put forward comprehensive deficit
reduction packages with sufficient deficit reduction to avoid the
sequester on two occasions.
First, he submitted a package of proposals in the President's Plan
for Economic Growth and Deficit Reduction for consideration by the
Joint Committee that included over $4 trillion in deficit reduction and
short term measures for job creation. This package was not required and
the Administration took the nearly unprecedented step of drafting
legislative language to assist the Joint Committee and expedite
consideration of the plan.
Second, in light of the Joint Committee's failure in November of
last year, the President used the FY 2013 Budget to again propose a
comprehensive deficit reduction agreed to in the BCA. When combined
with legislation signed into law last year, the President's Budget
proposed over $4 trillion in balanced deficit reduction. In total, it
includes $2.50 in spending cuts for every $1 dollar of additional
revenue. And the budget was clear in its intent to avoid the sequester.
Now it is Congress's responsibility to enact balanced deficit
reduction that the President can sign and avoid the devastating, across
the board cuts that would occur under the sequester. [See page 28.]
?

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QUESTIONS SUBMITTED BY MEMBERS POST HEARING

September 20, 2012

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QUESTIONS SUBMITTED BY MR. FRANKS

Mr. Franks. What are the top three risks to national security that
you believe will become even greater liabilities if sequestration is
not avoided; in what way will they become greater liabilities?
General Austin. In accordance with guidance from the Office of the
Secretary of Defense (OSD), the Army is not planning for sequestration.
The Office of Management and Budget and OSD continue to assess the
impact of the sequestration process on all of the Department of Defense
should this event occur.
Our areas of greatest concern are the ability to conduct operations
and win decisively; our ability to preserve, protect, and maintain the
All Volunteer Force; and a potential hollowing out of the force.
Reduction of significant resources will increase the risks of a
mismatch between strategy and resources.
First, the Army will seek to minimize the effects of sequestration
on training and readiness. However, we would not be able to avoid some
cuts in funding for readiness, which would result in immediate
reductions in training. Furthermore, the complex operational
environment demands that we continue to empower Soldiers and small
units with significant investments in technologies and equipment. While
the Army has maintained investments in modernization, sequestration
cuts would add considerable risks to the execution of many of our
programs. These impacts will increase risk to our depth and ability to
cover the full range of missions contained in our defense strategy.
Second, sequestration could also impact our ability to preserve,
protect, and maintain the all-volunteer force. The Army must sustain
the bonds of trust with Soldiers and their Families. The men and women
of our Army and their Families need to know with certainty that we will
meet our commitments to them. It is important to note that the health
of the force and sustaining an all-volunteer Army also depend not just
on personnel compensation and benefits, but also on leader and Soldier
development programs and a high state of readiness.
Finally, sequestration could put us on a path toward a hollow
force. If sequestration occurs, it is imperative that the Army is
afforded the necessary flexibility to adjust resources and conduct
comprehensive strategic analysis, so we can execute our highest
priority missions. We must ensure that we preclude hollowing the Army
by maintaining balance in force structure, readiness, modernization
efforts, and commitments to the all-volunteer force.
Mr. Franks. What are the top three risks to national security that
you believe will become even greater liabilities if sequestration is
not avoided; in what way will they become greater liabilities?
Admiral Ferguson. The Department has not begun planning for
Sequestration; however, the prescriptive and mechanical nature of
sequestration affords limited flexibility to mitigate the impact of
these budget reductions. A detailed review directed by OMB would be
required to determine the specific impacts to national security from
sequestration.
Based on our preliminary review, sequestration will reduce funding
for the Navy in FY13 by nearly $12B dollars. Depending on available
transfer authority to consolidate these cuts, sequestration would
severely limit the ability to preserve major acquisition or readiness
programs. It will also affect our industrial base and the expected
service life of our platforms.
The potential reductions will translate over time to a smaller
force with less presence, longer response times, and reduced ability to
provide surge forces in support of our major operational plans and
other emergent needs. Under these reductions, we will be unable to
execute the requirements of the current defense strategy.
Mr. Franks. What are the top three risks to national security that
you believe will become even greater liabilities if sequestration is
not avoided; in what way will they become greater liabilities?
General Spencer. To meet the objectives set forth in the January
2012 Defense Strategic Guidance (DSG), the Air Force must maintain the
highest degree of capability and capacity. Imposition of the funding
cuts in sequestration will result in long-term sacrifice of our ability
to maintain the capability and capacity that is required to meet the
challenges inherent in the future security environment. In the event
that sequestration is triggered, the following three risks threaten the
Air Force's ability to provide compelling air, space, and cyber
capabilities: 1) a decreased ability to maintain readiness and
proficiency; 2) increased cost to continue sustaining weapon systems
while newer, more capable systems are delayed due to program
restructures; and 3) increased cost of next-generation systems
procurement due to the renegotiation of cancelled contracts and loss of
economies of scale. Without the ability to mitigate some or all of
these risks, they will challenge the Air Force's ability to meet our
Nation's defense priorities.
Air Force operations and maintenance and investment accounts are
stretched to meet current readiness and modernization requirements.
Sequestration effects would require the Air Force to cut operational
flying hours and an already strained weapon system sustainment program;
curtail training; reduce civilian hiring, as well as implement
potential furloughs and reductions in forces; reduce daily operations
to emphasize mission critical operations; and defer/stop infrastructure
investments. It will also negatively impact the Air Force's ability to
recapitalize aging weapon systems, requiring the Air Force to continue
to sustain legacy weapon systems until newer, more capable systems can
be procured.
DSG directs the Air Force stay focused on strategic priorities.
Sequestration will have a clear and immediate adverse impact on our
ability to maintain force readiness and provide capabilities to the
combatant commanders (CCDR). To perform full spectrum operations while
avoiding the creation of a ``hollow force,'' readiness must remain a
top priority while recapitalizing an aging, smaller force structure. It
is imperative that priority modernization programs receive full
funding: the F-35 Joint Strike Fighter, the KC-46A Refueling Tanker,
and the Long-Range Strike Bomber. Aside from military personnel costs,
which have been exempted, sequestration calls for indiscriminate across
the board cuts. Without the ability to manage cuts and prioritize among
modernization and other programs, sequestration will result in
increased costs due to contract termination fees and weapons system
per-unit cost increases due to contract re-negotiation.
In summary, the Air Force identifies sequestration's three
significant risks to national security as: decreased readiness for the
next major contingency; a reduced capability due to the increased costs
to maintain legacy systems due to delays in modernization programs that
have to be restructured; and reduced funding flexibility for new, non-
conventional technology due to increased cost of renegotiated
procurement programs. In addition to significantly increasing the Air
Force's operational risk, the cuts to procurement programs will
prohibitively limit the Air Force's ability to invest in new systems,
degrading our ability to regenerate capabilities that might be needed
to meet future, unforeseen demands.
Mr. Franks. What are the top three risks to national security that
you believe will become even greater liabilities if sequestration is
not avoided; in what way will they become greater liabilities?
General Dunford. The Marine Corps will always seek to optimize the
nation's investment in our capabilities, regardless of funding levels.
Even under sequestration, the Marine Corps will continue to strive to
field the most effective force the nation can afford. The top three
risks to the Marine Corps are decreased readiness in the Nation's ready
force, a disproportionate impact on modernization funding, and an
inability to maintain progress towards a rebalance to the Pacific.
Risk 1. Decreased Readiness in the Nation's Ready Force.
The Marine Corps carries the mandate from the 82d Congress to be
''the most ready when our Nation is the least ready.'' As the Nation's
forward engagement and crisis response force, the Marine Corps supports
a globally responsive rotational presence in the Pacific Ocean, Indian
Ocean, and a transitory presence in the Mediterranean Sea. This forward
presence buys time and decision space for national leaders. The Marine
Corps is also forward deployed to influence foundational strategic
activities and for strategic deterrence. The expeditionary nature of
the Marine Corps makes it a good friend to allies and partners and a
lethal combined-arms force in the event of an unforeseen crisis.
The foundation of this role is the Marine Corps' five readiness
pillars: high-quality people, unit readiness, infrastructure,
modernization, and capability and capacity to meet Combatant
Commanders' demands. If sequestration were to occur, the Marine Corps
risks severe weakening of these pillars to include decreased personnel
readiness because of insufficient manning and training resources;
significant shortfalls in required modernization and infrastructure
investments; and decreased unit readiness due to inadequate resources
for training and maintenance. All of these factors will contribute to a
steady decline in both capability and capacity to meet combatant
commanders' foundational forward presence requirements.
Sequestration could also quickly become a national liability by
forcing political leaders to make a difficult choice between rapid
maritime capacity (which also contributes to global foundational
activities) or reducing capacity in the Asia-Pacific region, an
enduring strategic priority. While it is important to prioritize
particular global regions, history suggests that the United States must
remain globally responsive, anticipating the destabilizing and
disruptive security environment throughout the world. The United States
requires a Marine Corps that is a ready crisis-response force prepared
to respond to the most-likely security challenges--this readiness and
responsiveness will be severely impacted by sequestration.
Risk 2. Disproportionate Impact on Modernization Funding.
The decision to exempt military personnel from the FY 2013
sequester would produce a disproportionate impact on the remaining non-
exempt funding in the Marine Corps' operations, training, maintenance,
and weapons modernization accounts. The Marine Corps is a manpower-
intensive force; the majority of its budget is dedicated to military
personnel and it has the smallest equipment investment budget of all
the Services. As such, exempting manpower from sequestration would have
a severe impact on the Marine Corps and would be particularly
devastating to non-manpower accounts, especially to modernization and
equipment reset efforts. Even though sequestration would be
proportionately applied to the Marine Corps, the net effects on the
Marine Corps' portfolio of smaller investment programs would have a
disproportionate impact on these programs and the Service's overall
readiness.
Sequestration would cut the defense budget an additional $55
billion per year from the levels established by the Budget Control Act.
This yields an additional $492 billion in cuts over the next nine years
on top of the $487 billion reduction already being implemented by DOD.
The decision to exempt military personnel would impose dramatic and
disproportionate cuts across all other appropriations--procurement,
research and development, military construction, and operations and
maintenance would each be cut by approximately 9.4 percent.
Marine Corps programs, by nature, are streamlined to achieve
maximum effect for the taxpayer, and have little margin for large
swings in funding levels. Thus, sequestration would cause the Marine
Corps to cancel or delay many small modernization programs which are
critical in ensuring our ability to equip our individual Marines for
their warfare specialties. A secondary impact would be a delay in
resetting equipment after a decade of combat, forcing Marines to train
with obsolete or degraded equipment, in smaller quantities, for an
extended period. The impact of sequestration to operations and
maintenance funding would be a reduction in Marine Corps forward
presence and training activities. Reset efforts would be slowed,
resulting in war-weary equipment not getting the maintenance required
to continue the mission. Units training at home station would have
reduced training ammunition, fewer vehicle hours, degraded aviation
support and decreased communications support.
As military personnel are exempted from the cuts, the impacts to
the other pillars of readiness would be dramatic and unquestionably
lead to a hollowing of the force. The Marine Corps would be required to
dedicate a significant portion of the budget to paying for manpower,
yet would lack sufficient funding to properly train and equip this
force. In short, this would result in a high degree of risk and a
``hollow force.''
Risk 3. Inability to Maintain Progress Toward a Rebalance to the
Pacific.
The Marine Corps is in the process of rebalancing to the Pacific
after ten years of warfare in Iraq and Afghanistan; this effort seeks
to strategically balance capabilities in Hawaii, Guam, Japan and
Australia so that Marines can train, exercise and operate with allies
and partners and simultaneously have the ability to respond to crises
across the Pacific region. Sequestration will exacerbate delays in Guam
construction, which in turn will increase the time required to reduce
the Marine Corps' presence on Okinawa and slow the rebalancing effort.
Forward presence builds trust that cannot be surged when conflict
looms. With each delay in the Marine Corps' rebalance to the Pacific
region, allies and potential partners must make strategic choices
regarding their relationships with potential competitors in their home
region. Opportunities for collective partnerships are stressed and
relatively fleeting in these conditions. Reduced forward presence
signals a reduced U.S. commitment to security partners in the Pacific,
with a potentially detrimental effect to America's strategic global
interests.
______

QUESTIONS SUBMITTED BY MS. TSONGAS
Ms. Tsongas. Some have proposed a 3-month delay of the automatic
cuts to defense spending. If the sequester eventually does take effect,
but not until April 2, how would the DOD absorb a potential 10 percent
reduction with only 6 months left in the fiscal year?
Secretary Hale. By law, it would have to be absorbed within any
unobligated balances from prior years and FY 2012 funds. This would
pose some problems for the Department of Defense.
Ms. Tsongas. Although under sequestration each program is intended
to be cut by the same percentage, some programs could be disrupted more
than others, depending on size and maturity. Can each of you comment on
the potential scale of Nunn-McCurdy breaches which programs being
developed by each of your services could be facing were sequestration
to go forward?
General Austin. Since we are not sure how much flexibility we will
have to blunt the negative consequences of sequestration through
reprogramming or other actions, at this time it is impossible to
predict with any specificity the number, if any, of Nunn-McCurdy
breaches that may occur.
Ms. Tsongas. Although under sequestration each program is intended
to be cut by the same percentage, some programs could be disrupted more
than others, depending on size and maturity. Can each of you comment on
the potential scale of Nunn-McCurdy breaches which programs being
developed by each of your services could be facing were sequestration
to go forward?
Admiral Ferguson. If sequestration is triggered, automatic
percentage cuts will be applied without regard to strategy, importance,
or priorities, resulting in adverse impact to operations and many
contracts within the Department. This could result in a Nunn-McCurdy
breach if an acquisition program's funding execution is limited to the
extent that production level becomes cost prohibitive and/or
significantly delayed. However, a detailed review of each program, or
family of programs, would be required to determine the specific impact
since each contract contains unique and complex provisions, dates, and
pricing. We have not completed that review. At this point, the
Department has not begun planning for sequestration and any planning
effort will be government-wide as guided by the Office of Management
and Budget.
Ms. Tsongas. Although under sequestration each program is intended
to be cut by the same percentage, some programs could be disrupted more
than others, depending on size and maturity. Can each of you comment on
the potential scale of Nunn-McCurdy breaches which programs being
developed by each of your services could be facing were sequestration
to go forward?
General Spencer. With regard to modernization impacts,
sequestration would drive an additional reduction above the first phase
of the Budget Control Act reductions to the Air Force Fiscal Year 2013
budget request. The proposed budget is a balanced and complete package
with no margin of error. Programs would need to be restructured,
reduced, and/or terminated. All investment accounts would be impacted,
including our high-priority Acquisition Category I modernization
programs such as MQ-9, Joint Strike Fighter, and KC-46A. The Air Force
has not conducted an assessment on how a 9.4 percent cut will affect
each Air Force acquisition program, therefore, we do not know which
programs would face Nunn-McCurdy breaches.
Ms. Tsongas. Although under sequestration each program is intended
to be cut by the same percentage, some programs could be disrupted more
than others, depending on size and maturity. Can each of you comment on
the potential scale of Nunn-McCurdy breaches which programs being
developed by each of your services could be facing were sequestration
to go forward?
General Dunford. Sequestration will impact all of our investment
programs through increased unit costs, schedule delays, and slowing of
necessary research and development. If sequestration occurs, the
Ground/Air Task Order Radar (G/ATOR) program will likely trigger a
Nunn-McCurdy breach. The potential scale of such a breach includes a
cost growth of up to 20% of the Program Acquisition Unit Cost and a
delay into Low Rate Initial Production from FY13 to FY14. The G/ATOR's
production transition, including timely semiconductor technology
insertion, will also be significantly impacted leading to lost cost
savings and misalignment of funding associated with a shift in
schedule.