[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
[H.A.S.C. No. 113-53]
INITIAL CONCLUSIONS FORMED
BY THE DEFENSE STRATEGIC CHOICES
AND MANAGEMENT REVIEW
__________
COMMITTEE ON ARMED SERVICES
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
AUGUST 1, 2013
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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COMMITTEE ON ARMED SERVICES
One Hundred Thirteenth Congress
HOWARD P. ``BUCK'' McKEON, California, Chairman
MAC THORNBERRY, Texas ADAM SMITH, Washington
WALTER B. JONES, North Carolina LORETTA SANCHEZ, California
J. RANDY FORBES, Virginia MIKE McINTYRE, North Carolina
JEFF MILLER, Florida ROBERT A. BRADY, Pennsylvania
JOE WILSON, South Carolina ROBERT E. ANDREWS, New Jersey
FRANK A. LoBIONDO, New Jersey SUSAN A. DAVIS, California
ROB BISHOP, Utah JAMES R. LANGEVIN, Rhode Island
MICHAEL R. 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 DAVID LOEBSACK, Iowa
K. MICHAEL CONAWAY, Texas NIKI TSONGAS, Massachusetts
DOUG LAMBORN, Colorado JOHN GARAMENDI, California
ROBERT J. WITTMAN, Virginia HENRY C. ``HANK'' JOHNSON, Jr.,
DUNCAN HUNTER, California Georgia
JOHN FLEMING, Louisiana COLLEEN W. HANABUSA, Hawaii
MIKE COFFMAN, Colorado JACKIE SPEIER, California
E. SCOTT RIGELL, Virginia RON BARBER, Arizona
CHRISTOPHER P. GIBSON, New York ANDRE CARSON, Indiana
VICKY HARTZLER, Missouri CAROL SHEA-PORTER, New Hampshire
JOSEPH J. HECK, Nevada DANIEL B. MAFFEI, New York
JON RUNYAN, New Jersey DEREK KILMER, Washington
AUSTIN SCOTT, Georgia JOAQUIN CASTRO, Texas
STEVEN M. PALAZZO, Mississippi TAMMY DUCKWORTH, Illinois
MARTHA ROBY, Alabama SCOTT H. PETERS, California
MO BROOKS, Alabama WILLIAM L. ENYART, Illinois
RICHARD B. NUGENT, Florida PETE P. GALLEGO, Texas
KRISTI L. NOEM, South Dakota MARC A. VEASEY, Texas
PAUL COOK, California
JIM BRIDENSTINE, Oklahoma
BRAD R. WENSTRUP, Ohio
JACKIE WALORSKI, Indiana
Robert L. Simmons II, Staff Director
Alex Gallo, Professional Staff Member
Mike Casey, Professional Staff Member
Aaron Falk, Clerk
C O N T E N T S
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CHRONOLOGICAL LIST OF HEARINGS
2013
Page
Hearing:
Thursday, August 1, 2013, Initial Conclusions Formed by the
Defense Strategic Choices and Management Review................ 1
Appendix:
Thursday, August 1, 2013......................................... 45
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THURSDAY, AUGUST 1, 2013
INITIAL CONCLUSIONS FORMED BY THE DEFENSE STRATEGIC CHOICES AND
MANAGEMENT REVIEW
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
Carter, Hon. Ashton B., Deputy Secretary of Defense.............. 4
Winnefeld, ADM James A. ``Sandy,'' Jr., USN, Vice Chairman, Joint
Chiefs of Staff, U.S. Department of Defense.................... 8
APPENDIX
Prepared Statements:
Carter, Hon. Ashton B., joint with ADM James A. ``Sandy''
Winnefeld, Jr.............................................. 51
McKeon, Hon. Howard P. ``Buck''.............................. 49
Smith, Hon. Adam............................................. 50
Documents Submitted for the Record:
Statement on Strategic Choices and Management Review by Hon.
Chuck Hagel, Secretary of Defense, dated July 31, 2013..... 95
Witness Responses to Questions Asked During the Hearing:
Mr. Franks................................................... 106
Ms. Hanabusa................................................. 105
Mr. McKeon................................................... 105
Mr. Nugent................................................... 106
Mr. Wilson................................................... 105
Questions Submitted by Members Post Hearing:
Mr. Castro................................................... 116
Mr. Langevin................................................. 110
Mr. Loebsack................................................. 113
Mr. Nugent................................................... 116
Mr. Shuster.................................................. 114
Mr. Wilson................................................... 109
INITIAL CONCLUSIONS FORMED BY THE DEFENSE STRATEGIC CHOICES AND
MANAGEMENT REVIEW
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House of Representatives,
Committee on Armed Services,
Washington, DC, Thursday, August 1, 2013.
The committee met, pursuant to call, at 10:07 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 committee meets
today to receive testimony on the Defense Department Strategic
Choices and Management Review.
This committee has frequently encouraged the Pentagon to
fully plan for sequestration and to make the consequences of
several rounds of budget cuts known. With that in mind, I
welcome this review and what it seeks to achieve.
I note that the President has directed the Department to
maintain his 2012 defense strategy even though his senior
commanders have testified that the strategy would have to be
revised in the face of additional budget cuts. Any further
consideration of strategy has been deferred to the Quadrennial
Defense Review, which will not report out until next February
at the earliest, which is actually after the next budget is
supposed to be presented.
In the meantime, the report makes clear that the Department
will proceed with changes in force structure, compensation, and
further efficiencies without a new strategy. The most
optimistic scenario has the President requiring DOD [Department
of Defense] to find another $150 billion on top of the $487
billion that has already been cut.
To make matters worse, even if all of the options in this
report were adopted, it would only address 10 percent of the
true budget shortfall in the next year or two. The math simply
does not add up.
This report also makes clear what I have been warning about
for over 2 years: Further cuts will cause catastrophic
readiness shortfalls. We will lose our workforce and ability to
recruit and retain the All-Volunteer Force, and our influence
around the world will continue to diminish.
There is agreement on both sides of the aisle and both
sides of the Potomac that these cuts embolden our enemies and
jeopardize U.S. national security. We often talk of risk, but I
hope that today we will have a frank discussion about how this
funding profile for defense limits the ability of this country
to protect our national
security interests, not simply that we are accepting more risk,
but what that means for the Nation and our men and women in
uniform.
I look forward to hearing the testimony, and I thank both
of our witnesses for being here today.
Mr. Smith.
[The prepared statement of Mr. McKeon can be found in the
Appendix on page 49.]
STATEMENT OF HON. ADAM SMITH, A REPRESENTATIVE FROM WASHINGTON,
RANKING MEMBER, COMMITTEE ON ARMED SERVICES
Mr. Smith. Thank you, Mr. Chairman. I appreciate this
hearing; as well, our witnesses being here.
This is an incredibly important topic, and, really, it all
comes down to sequestration.
The plan, the strategy that the President and the DOD laid
out a couple years ago based on the reductions in the budget
was challenging, to be sure, but manageable. And I think the
strategy matched the amount of money that was reasonably
available and also matched our national security challenges and
threats as best as they could.
Now we have sequestration coming down at us, and there is
really no, you know, end in sight to that. 2013 has been
difficult, 2014 is coming, and there are 8 years after that.
And the impact on our defense budget and the impact on what we
can do in terms of national security is deep and profound. It
has already had an impact on the readiness that is available
for this year, and then we are only, what, 3, 4 months into the
first year of sequestration. It is going to keep getting worse.
And I really hope our witnesses drive home that point
today, that if Congress does not act, if we don't do something
to shut off sequestration, we have a very bleak future in terms
of our national security.
And that is not to say that the defense budget can't take
cuts. It can. I think there are a lot of places where you could
find greater efficiencies. There are a lot of places where we
could reduce the budget responsibly and meet our national
security needs. But saying the defense budget can take cuts and
saying that it can take 10-percent, across-the-board cuts every
year for 10 straight years are two entirely different things.
And the impacts of those cuts are deep and devastating and
would fundamentally alter our commitments to the world and our
commitments to our own national security and would also have a
devastating impact on the industrial base. And by ``industrial
base,'' I mean jobs. I mean manufacturing jobs, good jobs that
really help our economy, protect our workforce. And while a lot
of that is defense-focused to begin with, we build skills and
expertise that then helps us in the commercial sector, as well.
We would lose that also. This is caused by sequestration.
Now, our budget deficit for 2013 and 2014, the projections
on that have come down significantly in recent months.
Personally, if I could do it, I would simply turn off
sequestration. It was done as a threat, and so we never really
wanted to implement it; we just figured it would be so bad, it
would force broader deficit reduction. Well, it didn't. So why
do we keep it on, when we see the impact that it is having on
our national security, our defense, and, by the way, on a whole
lot of other discretionary programs, as well?
But since there appears to be no appetite for simply, you
know, stepping back from the blind threat that we made a couple
years ago, it is incumbent upon Congress to come up with some
sort of plan to find savings and tax increases that can cover
the costs so that we don't have to do sequestration and further
devastate the discretionary portion of the budget, of which
defense is over half.
And, sadly, it seems like the appetite to do that is
lessening instead of growing around here. And I know people
say, well, you know, the sky didn't fall, the economy didn't
completely collapse when sequestration happened, but the final
point I will make is that sequestration is the classic, you
know, ``boiling the frog in the water.'' It is a slow process;
it doesn't happen overnight. But when you look at the outyears,
the charts as we go forward as these cuts get piled on top of
each other, you know, the impact is deep and profound.
And it is something that I would urge every member of this
body, not just of this committee, to really take seriously when
we look at how we deal with sequestration. Whatever the plan is
to come up with savings as an alternative, we have to put it on
the table. Because the impact of this is really, really going
to be deep in all of the ways that I have described and others
as well.
I can't say that I look forward to the testimony. I don't.
It is not going to be pleasant. But I hope everybody hears it
and it motivates people to act.
I yield back. Thank you.
[The prepared statement of Mr. Smith can be found in the
Appendix on page 50.]
The Chairman. Thank you.
Every member of this committee, I am sure, is very
frustrated. Our job is to look after the national defense of
the Nation. Both of you gentlemen, that is your job also. We
work in tandem. At times, we get frustrated because you come
from the Pentagon, we come from the Hill. And I know we will
have tough questions. I understand Mr. Smith's comment about he
doesn't look forward to the testimony, because it is tough and
we are going to have to some way get through it.
But I want to say at the outset, we are all on the same
team. We are all signed up to look after the defense of this
Nation. We just come from different parts of the city. And,
some way, we have to come together to get this problem
resolved.
Today was the first I learned that we--I guess we had been
so involved with the sequestration, I didn't notice the $150-
billion cut in the outyears that the President had already
included in his budget on top of the $487 billion and on top of
the $100 billion that Secretary Gates had had cut through
efficiencies and had said that most of it we would be able to
get back, and that turned out that we weren't able to.
So we are fortunate to have with us today Dr. Ashton
Carter, Deputy Secretary of Defense, and Admiral James
Winnefeld, the Vice Chairman of the Joint Chiefs of Staff.
Thank you, both of you, for being here.
And, Dr. Carter, the time is yours.
STATEMENT OF HON. ASHTON B. CARTER, DEPUTY SECRETARY OF DEFENSE
Secretary Carter. Great. Thank you, Mr. Chairman,
Congressman Smith, all the members of the committee. We do
appreciate the opportunity to be here with you to discuss the
results of the Strategic Choices and Management Review.
And to get to something the chairman just said, you know,
we are all Americans, and we very much appreciate the support
this committee gives to our people in uniform. It really comes
from the heart. It matters a lot to us. And we thank you for
taking the time, which you have to devote to so many topics, to
devote to us and our Department. So thank you.
And, also, before I get started with a brief recap of what
the SCMR [Strategic Choices and Management Review] was about,
if I could, I just want to emphasize something the chairman
said at the very beginning which is very important, which is
the need to act strategically in a time of budget transition.
We face two great transitions which are occurring
simultaneously. One, and the most important one, and I think
what the chairman's point was, is the strategic transition from
the first post-9/11 decade, where we have been so preoccupied,
of necessity, with the wars in Iraq and Afghanistan, to a new
era and to facing and dealing with the problems and
opportunities that are going to define this Nation's security
future.
That is a transition we have to make irrespective of
budget, but it happens to coincide with a very turbulent time
in terms of our budget and our ability to plan; hence, the
SCMR, Strategic Choices and Management Review. And it has two
parts to it, Mr. Chairman. It has the strategic part and it has
the management part, as you said.
Now, the management part is not strategic. That is about IT
[information technology] efficiencies, overhead reduction,
compensation reform. And none of that is strategic, but if we
don't address those issues, which we did in the SCMR, then we
would have to take all of any budget cuts out of investment,
modernization, and force structure, which we don't want to do.
So we wanted to look at both, and in the SCMR we did look at
both. I will make some brief remarks about both.
But to your point, Mr. Chairman, you are absolutely right.
And we did take a strategic look at those budget reductions,
but there is a very important finding, which was that, when you
took a strategic view and you tried to build your future
strategically, we were unable in that strategic approach to
fill the sequestration gap in the early years. I think that is
what you meant about the numbers don't add up. They don't add
up in the early years, because the things we have to do under
sequestration are not strategic; they are dumb. And so you
can't make it add up in the early years.
That is an important finding of the SCMR. I will say a
little bit more about that later, but I think that that is
exactly right.
And, of course, the SCMR is the preparation for the budget,
as you mentioned, fiscal year 2015. And we do need to make
these plans and these changes now and not wait for the
Quadrennial Defense Review, as you said, which will be a help
to us and which we do need to conduct, but it does come late in
the process, as you said.
Let me begin by saying, you know, we, of course, support
the enactment of the President's 2014 defense budget proposal
because it does support the goal of deficit reduction while
providing, as we will see and as the SCMR indicated, an
adequate level of resources to maintain a strong national
defense in a rapidly shifting and highly complex global
security environment.
But, since March 1st, sequestration has been the law of the
land. Secretary Panetta and I began warning about the negative
impacts of sequestration on the Defense Department almost 2
years ago. And, in fact, it was 1 year ago today that I
testified before this committee that sequestration would have
devastating effects on the Department, both because of the size
of the sequestration cuts and because of the mindless way that
the law requires them to be allocated. And, as predicted,
sequestration's impacts on the Department's operations have
been very unfortunate and far-reaching.
And in the absence of an overall longer-term budget
agreement between Congress and the President, we have concluded
that we must prepare and plan for the possibility that
sequestration-level budgetary cuts imposed by the Budget
Control Act will remain in effect, as Congressman Smith said,
for the years ahead and not just for this year.
And, accordingly, in March, Secretary Hagel asked me,
working with the Chairman of the Joint Chiefs of Staff, the
Vice Chairman of the Joint Chiefs of Staff, and all the
Department's civilian and military leadership, to conduct the
Strategic Choices and Management Review in order to prepare the
Department for a range of budget scenarios.
And, as its title suggests and as I mentioned, the SCMR had
two parts, one focused on strategic choices and one focused on
managerial ones, and a unified view was necessary.
The scenarios, budget scenarios, we considered in the SCMR
reflect today's budget debates. They range from the President's
fiscal year 2014 defense budget proposal, which included, as
the chairman has noted, an additional $150-billion reduction in
defense spending over fiscal years 2014 through 2023, most of
those cuts occurring later in that period, to the Budget
Control Act sequestration caps, which would cut $52 billion
from defense in fiscal year 2014 and then 50 again and 50 again
and 50 again and 50 again for 10 years.
The formal process of the Strategic Choices and Management
Review is now complete, and its findings are sobering. We hope
we will never have to make the most difficult choices that
would be required if the sequestration-level budgetary caps
persist. But the SCMR formulated and framed these kinds of
choices for us, and now we are at least prepared if confronted
with this scenario.
You can read the details about our findings in the written
testimony that the Vice Chairman and I submitted to this
committee, which I would request be entered into the record.
Let me just share with you the three key findings of the SCMR.
First, in all of the budget scenarios we considered,
savings from reducing DOD's overhead, administrative costs, and
operating expenses, which we refer to as ``efficiencies,'' as
well as serious reforms to compensation for civilian and
military employees, both are crucial.
Compensation alone makes up more than half of the defense
budget. If overhead and compensation continue to grow as the
overall budget shrinks, then all of the impact of the cuts will
fall on the other parts of the defense budget--on force
structure, on training for readiness, and on investment in new
technologies--resulting in reduced combat power and increased
national security risk.
These reforms are difficult and painful, but we have to do
them. And to do them, we need the partnership of Congress and
the lifting of many legislative restrictions under which we now
operate.
And we also found, however, that even the most aggressive
and ambitious packages of efficiencies and compensation reform
that we mapped out in the SCMR are not, by themselves, enough
to meet the budget reductions called for in any of the
scenarios we analyzed. The SCMR showed that cuts in combat
power, force structure, readiness, and investment will be
necessary in all three of the budget scenarios.
The second finding regards sequestration. The SCMR found
that over time a combination of carefully chosen efficiencies
and compensation reforms, combined with various carefully and
strategically chosen alternative approaches to cuts in force
structure, investment, and readiness, could achieve
sequestration-level cuts over time. But there is no
strategically and managerially sound approach to budget cuts
that can close the gap within the next few years.
I think that is your point, Mr. Chairman, about the numbers
not adding up.
We simply cannot downsize the force prudently in a few
years. Ten, yes; in a few, no. It takes time to downsize
forces, to cut employees, to close bases, to reap savings from
reforms. These strategic adjustments take time.
If sequestration-level cuts must be implemented in the
meantime, drastic measures that are not strategically or
managerially sound are the result. And you see this already in
fiscal year 2013, this year, where we had sequestration applied
immediately, resulting in such actions as readiness standdowns
and furloughs. Flexibility in time is essential.
And the third major finding of the SCMR concerns strategy.
The SCMR showed that the President's fiscal year 2014 budget
proposal allows the Department to still implement the main
tenets of the President's defense strategic guidance. Force
reductions in this scenario are necessary but, if accompanied
by efficiency and compensation reforms, can be made in a way
that incurs only minimal risk in our strategy, cutting parts of
the force that are in a sense excess to our strategic needs--in
particular, for example, reducing the size of our ground and
tactical air forces as we draw down from more than a decade of
stability operations in Iraq and Afghanistan.
But, in contrast, the BCA [Budget Control Act] budget, or
sequestration budget, if mandated over the full 10 years,
would, in addition to the drastic measures in the early years
just noted, force the Department to make such significant
changes to the force that we would have to change parts of the
Nation's defense strategy--changes that would mark a
significant departure from the missions our Nation has been
accustomed to being able to accomplish.
The SCMR examined two illustrative strategic options to
reach sequestration levels that bracket our choices in each
force element and various choices in between: one bracket that
seeks to preserve a modernized force by sacrificing capacity
and one that preserves a larger force at the expense of
modernization. Neither is compatible with the current strategy,
as defined in the President's defense strategic guidance. Under
sequestration, a large number of critical modernization
programs would be at risk, and we would see significant
reductions in force structure.
So, to reiterate, the SCMR did not make final choices among
these possibilities because we hope never to have to face them,
but it did map out various options to reach each budget
scenario. The SCMR produced options that would prepare the way
for these large cuts, but I have to emphasize that plans alone
cannot avoid serious damage to our military capabilities.
Tragically, this prospect of serious damage to national
security, detailed in the written testimony we have submitted,
is not the result of an economic emergency or a recession that
makes a sudden reduction in expenditures necessary. It is not
because defense cuts are a mathematical answer to the Nation's
overall fiscal challenge or because paths of revenue growth and
entitlement spending have been explored and exhausted. It is
not, surely, because the world has suddenly become more
peaceful. It is not due to a breakthrough in military
technology or a new strategic insight of some sort that makes
continued defense spending unnecessary. It is purely the
collateral damage of political gridlock.
And friends and potential enemies around the world are
watching our behavior. To be sure, America will remain the
world's strongest military power, but we are accepting
unnecessary risk.
Secretary Hagel and I also fully support the President's
overall budget plan in his fiscal year 2014 budgetary proposals
for other Federal agencies.
DOD depends on a strong education system to provide
qualified recruits for our All-Volunteer Force; an unrivaled
science and technology base and a strong manufacturing base to
maintain our decisive technological edge; infrastructure that
surrounds our bases and installations; and other agencies of
law enforcement, homeland security, intelligence, and diplomacy
to complement the military instrument of power; and, more
generally, on a strong economy to buttress our role in the
world.
We in the Department of Defense are prepared to make
difficult strategic and budgetary choices, but in order to
sustain our military's unrivaled strength, we need the cloud of
uncertainty dispelled and not just moved to the horizon.
Along with budget stability, we need time to make changes
strategically, and we need the support of Congress to make
budget cuts in a managerially sensible way. We need to return
to normal budgeting and a deal that the Congress can pass and
the President can sign. And then, together with Congress and
this committee in particular, we can continue the strategic
transition upon which we need to be embarked with certainty and
stability.
Thank you.
[The joint prepared statement of Secretary Carter and
Admiral Winnefeld can be found in the Appendix on page 51.]
The Chairman. Thank you.
Admiral.
STATEMENT OF ADM JAMES A. ``SANDY'' WINNEFELD, JR., USN, VICE
CHAIRMAN, JOINT CHIEFS OF STAFF, U.S. DEPARTMENT OF DEFENSE
Admiral Winnefeld. Chairman McKeon, Ranking Member Smith,
members of the committee, and I would allude to the chairman's
remark, I would say teammates in supporting our national
defense, good morning. And thank you for the opportunity to
appear today on this important topic.
I was confirmed for this position the same day that the
Budget Control Act was passed in 2011. I have had the
opportunity to participate in every effort since then within
DOD to cope with this unfortunate mechanism for reining in our
spending in support of the national security imperative of
deficit reduction. This includes the initial BCA cuts that
year, and it also includes the carnage of the fiscal year 2013
sequester in its timing, its magnitude, and its mechanism.
As we look toward an uncertain future, I helped Deputy
Secretary Carter lead the SCMR as we stared into the chasm of
what we call ``sequester forever.'' And so I would make the
following points this morning, many of which will underscore
what Deputy Secretary Carter said.
First, I want to assure you that the SCMR process was very
collaborative, with the Services and combatant commanders and
other DOD components participating at every stage. This was a
deep and painful internal look at every corner of our
institution. All the stakeholders were involved in the process,
and the process has made us better.
Second, the SCMR was not an academic exercise. We looked at
everything, and we did it from the viewpoint of balancing
strategic ends, ways, and means. As you may recall, the defense
strategic guidance published a year and a half ago was our
first bite at this apple, because all three elements of that
equation had changed. The potential for additional cuts now
further upsets that balance, and the SCMR offers us choices on
how to restore it.
When the means come down drastically, something else in the
equation has to give, or we will face a strategic say-do gap.
With reduced means, we will work as hard as we can on the ways
we use in order to preserve the ends we need to meet at
acceptable risk. But, in the end, we could face a serious
decline in our ability to protect this Nation and our allies.
Third, the most damaging element of this whole process, as
Deputy Secretary Carter has alluded, is the speed at which the
reductions hit us. They are sudden and deep rather than
backloaded and gradual.
For a variety of reasons--for example, how fast we can or
should get people out of the service, and the legislative
limits on the ways we can cut--at the BCA level of reductions,
they simply happen faster than we can digest them in a balanced
and sensible way. On that profile, all we will be able to do in
the early years is grab money wherever we can, mostly out of
the modernization and readiness accounts, which is particularly
disruptive to our ability to defend this Nation.
Fourth, again, as the Deputy said, we need the freedom to
find savings in our structural costs and our compensation
first, or the structure, modernization, and readiness of the
force that defends our Nation will have to be reduced even
more.
I can tell you Chairman Dempsey and I are very concerned
that most of that could come on the back of readiness. And,
indeed, no matter what happens with the fiscal year 2014
budget, we will begin next year trying to dig out of the
readiness hole that sequester created for us this year. Imagine
trying to be in a swimming race where you have lead weights on
your legs and starting that race when you are already out of
breath. That is the situation we will be facing in fiscal year
2014. And this is a real problem that is getting worse every
day, and we ignore it at our peril.
Fifth, I want to emphasize that this effort was about
teeing up choices. No decisions have been made, because they
cannot yet be made, because we don't know how much money we are
going to have, and we don't know when we are going to know how
much money we are going to have, and we don't know what the
rules are going to be when we find out. And so it is very hard
to produce a strategy when one leg of the ends, ways, and means
stool is so uncertain.
Moreover, I am concerned, and Chairman Dempsey shares my
concern, that as Members begin to understand what these cuts
mean in real terms, we will end up with legislation or
amendments that foreclose bit by bit the levers that we need to
shape this force strategically, and they will funnel us in to
principally taking the only thing that is left, and that is
readiness, which really has no constituency other than the
young soldier, sailor, airman, or marine putting his or her
life on the line for our Nation's security interests. And we
are already seeing this.
It will be truly shameful if we allow this force to travel
further down the path to becoming hollow than it already has
over the course of this year. I believe the members of this
committee can help fix this by reaching a compromise that
changes the magnitude, the profile, and the mechanism of these
cuts and avoids a destructive continuing resolution with the
sequester mechanism riding on top of it.
So, to the degree that we must cut, we ask you to support
expanded reprogramming flexibility so we can shape the force
strategically. Allow us to make needed but fair adjustments to
the way we compensate our people, and allow us to shed
unnecessary structure and infrastructure.
In short, we have enough uncertainties among the many
security risks facing this Nation today. We need your help in
removing the risk of the financial uncertainty that faces your
Department. It is the least we can do for the magnificent young
men and women who stand on the front lines for our Nation and
who, no matter what happens, will always strive, supported by
our fabulous DOD civilians, to remain the finest fighting force
in the world.
So I would like to thank you for your continued support of
those wonderful people, and we stand ready to support you with
whatever information you need to get this done.
I look forward to your questions, and thank you very much.
The Chairman. Thank you.
You know, I have been struck by the news reports that have
suggested that senior defense leadership saw this review as an
effort to, ``set clear strategic priorities to implement the
President's defense strategic guidance at a time of huge
financial challenges.''
Indeed, our briefings yesterday that some of us were able
to attend made it clear that the President directed the DOD to
retain the defense strategy and not to use the SCMR to
contemplate alternative frameworks.
Yet, last April, General Dempsey testified, ``We adjusted
our strategy after the lessons of 10 years of war and our
projection on what the Nation would need in 2020, and we mapped
the 2013 to 2017 budget to it, absorbing the $487 billion cut,
and that if we have to absorb more cuts, we have to go back to
the drawing board and adjust our strategy. What I am saying to
you today is that the strategy we would have to adjust to
would, in my view, not meet the needs of the Nation in 2020.''
This February, he went on to say, ``The question I would
ask this committee: What do you want your military to do? If
you want it to be doing what it is doing today, then we can't
give you another dollar.'' That said after the $487 billion in
cuts. Since then, we have had sequestration piled on top of
that, which is another $500 billion, after he said, we can't do
this strategy if we give you another dollar--$500 billion and
$150 billion. That is $650 billion on top of it.
Now, I know the President took the $500 billion out of his
budget, he put the $150 billion, but the $500 billion is law.
And until it is changed, we have to consider that that is the
law.
Admiral Winnefeld, do you agree with these statements of
General Dempsey?
Admiral Winnefeld. Chairman McKeon, what I do agree with is
that the President never directed us to not depart from the DSG
[Defense Strategic Guidance], as far as I can remember.
Basically, we used the defense strategic guidance as the
baseline, and it was something that we strove to protect as
best we could with potential budget cuts.
What we discovered as we went through this is the deeper
those budget cuts go, and particularly under the BCA cut
levels, the $52 billion forever, that it is going to be very
hard to execute that strategy. There are areas where it will
break. And I would say that we can't write a new strategy until
we know what the bottom line is going to be, what level of cut
we would have to take.
So we are sort of trapped in this strategic no man's land
of--we now understand, based on the SCMR, what choices we might
have to make, which would certainly inform a new strategy if we
had to write one. But we don't know which choices we are going
to have to make until we know what the level of funding is
going to be. So we are really sort of trapped there in that
regard.
And I would also add that, you know, this was a very deep
and painful process. In it, we really, really strived, as
Secretary Carter mentioned, to find more efficiencies. It is
just something we always try to do; it is where we want to turn
first. And when you can do that, and if you look at
compensation, those things don't really start to add up until
the outyears. And that is why you see a greater willingness to
maybe take some of that step but have it backloaded, because
that is where we can get it. We can't get that upfront.
The Chairman. You know, I guess we just look at this
strategy a little differently. We had a strategy that has been
good for this Nation since World War II, where we would be able
to fight two major conflicts at a time, a lesson that we
learned in World War II. And that strategy has stood us well up
until a little over a year ago, and we were forced to cut $487
billion out of defense. We cut almost a trillion dollars out of
our domestic spending, and half of that came out of defense,
even though defense only accounts for about 17, 18 percent of
the overall spending. Defense got the big hit. And as a result
of that, the strategy changed. And like I say, that was just a
little over a year ago.
I have always felt like what we would expect of our
military leaders is, you tell us the threats that we have, you
set a strategy to meet those threats and then how much it is
going to cost to do that, then we have to someway come up with
the money, instead of, this is how much money we have and then
how do we devise a strategy to fit the amount of money.
With further sizeable cuts, will a new defense strategy be
required because the President's 2012 defense strategy can no
longer be supported with acceptable risk? You know, in the
discussion yesterday, we didn't talk about any different risk
or how much more risk we are going to have to accept.
If not, will we see an updated chairman's risk assessment?
You know, the last QDR [Quadrennial Defense Review] really
didn't do an adequate job of really telling us what the risk
would be out 15, 20 years. I hope the one that we get next year
will do a better job of that.
If we are going to see--if we are going to keep the
President's current strategy and resource it less, because the
last one already described significant risk, where does that
leave us? How are we going to find out what additional risk we
are asked to assume if we follow through with all of these
cuts?
Admiral Winnefeld. So, a couple of things.
First of all, in the initial part of your question, I share
your frustration. We would like nothing more than to be able to
state the ends first and then naturally have the means appear.
But, in the real world, we really can't do that. It really is a
balance of ends, ways, and means. And we have to look at the
ways we have, we look at the ends we are trying to achieve in
the world, the means we have, and try to be as innovative as we
possibly can to try to achieve balance, achieve an equilibrium
among those things. We have to have our strategic work informed
by means.
Now, we would love, again, to do that, just set the ends
and give us the money, but that doesn't really work very well--
--
The Chairman. You know, Admiral, the real world can change
on a dime. When Pearl Harbor happened, I am sure everything
changed, and we changed our focus, and all of a sudden we found
whatever resources we needed to meet the threat, and everybody
bought in. The problem is now everybody isn't buying in with
everything we have got. But I understand what you are saying
about the real world.
Admiral Winnefeld. If I could, just very briefly on the
defense strategic guidance, the chairman, when we submitted
that this year, did hold out that if the financial situation
gets worse, we might have to provide an update. And we are
considering at this moment whether we are going to do that.
And we reframed the chairman's risk assessment this year.
Rather than being sort of a regional tour d'horizon, we tried
to frame it in what we call, you know, national security
interests or national defense priorities. And that is the
approach we would take if we were to provide an update, sort of
a midterm update.
Secretary Carter. Mr. Chairman----
The Chairman. You know, I really think that is needed,
because we try to go and explain this dilemma to the other
Members of Congress, who right now are sitting in other
committees, they are studying other issues, they are not
focused on this issue. And when we just say, we are really
cutting the military too much, they don't understand. But if we
were to say, a third of our air force is grounded, we could not
right now do another Desert Storm, we could not do--what are
the things we cannot do with the $487 billion cuts we already
have and if the sequestration continues? We need to be able to
tell the world.
I think the world is watching, but I am not sure all the
American people are, and I am not sure all the other Members of
Congress are. Because I don't think people are quite grasping
the real significance and the real importance of what these
cuts are doing, the devastation that they are causing to our
ability to defend our
Nation.
Secretary Carter. Mr. Chairman, if I can just add one thing
to what the Vice said and just reinforce, the President's
strategic guidance--in the testimony we submitted is the letter
that Secretary Hagel signed kicking the SCMR off, and the
phrase he used in there was that the President's strategic
guidance would be the ``point of departure.''
And so it was recognized from the beginning that if we get
big budget cuts relative to the strategy that we designed a
year and a half ago, there is an impact on strategy, there is
no question about it. I think that is what the Chairman was
saying to you previously, and that is what the Vice said, and
that is certainly true. I just want to be absolutely clear
about that.
Now, when you make those strategic choices, you can make
them in different directions. You pointed to the question of
capacity for simultaneous conflicts. That is an important
ingredient of strategy. There are others: nuclear deterrence,
counterterrorism, and so forth. But as the Vice said, as the
budget is disrupted and reduced, there are going to be things
we can't do any longer.
And we adumbrated that in the Strategic Choices and
Management Review. And we continue to work on how to adjust to
that circumstance. We know the world is watching. It is
embarrassing and unsafe to be in the situation we are in, which
is scrambling in this way.
The Chairman. Thank you.
Mr. Smith.
Mr. Smith. Thank you, Mr. Chairman.
Just an observation at the start of mine. I mean, it is a
matter of budget choices. I mean, if we want to say to the
Defense Department, you know, tell us what you need to do and
then we will get you the money, then we need to make choices in
other parts of the budget, both on revenue and on spending.
And then the choices we have made in the last decade, you
know, have been to, you know, dramatically cut taxes and
dramatically increase spending. You know, even on entitlements,
we passed a prescription drug benefit and we have cut taxes by
some $6 trillion, $7 trillion over the course of the last, you
know, 10 years. And here we are.
So if you take the isolated portion of the defense budget,
you can argue for more money for it, but if you really want to
argue for more money for it, then you have to argue for less
someplace else or, as I have advocated, for more revenue. And
that is what is really missing from the discussion, is that,
you know, sort of, grand-bargain approach to better align where
our spending is at.
And don't get me wrong. As I have said earlier, I certainly
think the defense budget--the chairman and I probably don't see
eye to eye on this--can take a portion of that. There could be
some cuts there and we could still meet our strategy.
The problem is, what the Budget Control Act did is it put
everything on the discretionary budget, you know, and it put
all of the cuts, you know, not just on defense but on
transportation, infrastructure, research. Some of my colleagues
on other committees have been getting, you know, similar
briefings to this about NIH [National Institutes of Health]
funding or about infrastructure funding that, trust me, are
just as devastating in terms of the priorities and in terms of
protecting our country.
So that brings me back to the original point, that if we
want to stop sequestration, we have to honestly address those
other issues.
Dr. Carter, I wanted you to elaborate a little bit on the
personnel side of it. Because that is the other problem, is
that Congress has restricted you; not just that we said 10
percent across the board, we then also restricted where you can
make those cuts in ways that make it even more difficult.
The committee is adamantly opposed to base closure, so you
have no flexibility where that is concerned. Personally, I
support base closure. I think if we are going to bring down the
size of the force, it is completely logical. We have refused to
do anything except the modest increase we did on TRICARE
[Department of Defense health care program], I think, a couple
years ago. And on the personnel side, you know, we continue to
exempt that.
Can you walk us through those numbers a little bit and how
being able to have some more flexibility in those and perhaps
other areas could help you?
Secretary Carter. I absolutely can.
Let's start with compensation. Compensation, both military
and civilian, makes up about half of our budget. Nobody, in my
judgment, none of our soldiers, sailors, airmen, marines, or
DOD personnel, is overpaid. We value these people. We want
them, and, particularly those who are fighting for us, we value
what they are doing.
But we cannot continue to have compensation grow in the way
it has over the last decade, or it won't be half of the budget,
it will be 55 percent, 60 percent, and so forth. So, at some
point, the rate of growth in pay needs to slow.
We have made, as you indicated, proposals that would do
that that we think both adequately honor our forces, are
effective in the labor market in keeping really good people
coming into our military--because that is what makes our
military great--and are fair. And we have not been able to make
those changes.
Likewise with health care. Health care in DOD, like health
care in the rest of the economy, is growing in such a way that,
once again, it will engulf the rest of the budget. We have made
some proposals that we thought were fair, reasonable, we
thought about them very hard, and were not able to get them
enacted.
In the SCMR, we identified--I am looking at the numbers
here--over the 10-year period, $63 billion over that period in
additional efficiencies that we think we can get and $97
billion in compensation changes that we would recommend. So
that is 160 out of the 500; that is about a third of the cuts
we are required to take,
out of more than half of our budget, so it is still not cutting
in
proportion.
But we need support for these things. You mentioned BRAC
[Base Realignment and Closure]. That is another popularity
winner. But I can't tell you anything else but that we need to
do that. Otherwise, we will be all ``tail'' and no ``tooth'' to
our military.
So these aren't strategic questions, as I said at the
beginning; these are managerial questions. But they have
strategic consequences, because we will end up with these bills
overwhelming investment and everything else. So we really do
appeal for understanding and support here.
We intend, as part of the fiscal year 2015 budget, as we
did in 2014, as we did in 2013, and back when I was with
Secretary Gates in 2010 and 2011, then also, appealing to be
able to make these changes.
Mr. Smith. Well, you are kind of----
Secretary Carter. That is the smart and sensible way to
take a bite out of budget cuts if we do face them.
Mr. Smith. Yeah, you are kind of trapped in the middle
here, in that, you know, collectively, Congress is doing
nothing about sequestration, but, individually, we all want to
imagine that it is not going to happen, so that we look at, you
know, cuts that impact our districts or impact programs that
are important to us, and we fight them just like it was 8 years
ago, you know, when we had a big defense budget.
And it is like Congress has kind of got to choose. I mean,
if we don't like sequestration, if we want to, you know,
preserve these bases and preserve all these other things, then
we had better stop sequestration. But as long as it continues
to roll on, we are way behind the curve on adjusting to the new
reality and giving you the flexibility that you need if, in
fact, sequestration is the way of the world.
And, as I said, I would turn it off tomorrow, but we don't
have the votes for that. So if it is what it is, we have to
start legislating within that reality.
Thank you. Appreciate the testimony.
I yield back.
The Chairman. Thank you.
Mr. Thornberry.
Mr. Thornberry. Thank you, Mr. Chairman.
Dr. Carter, just to be a little more specific on what you
and Mr. Smith were talking about, I am looking at a chart that
shows fiscal year 2014 in particular. And it shows the specific
recommendations that you all have made on pay and health care
and retaining aircraft and ships, and it ends up being about $5
billion worth of difference in fiscal year 2014. But that
leaves about $47 billion worth of difference that it doesn't
touch.
And so, to me, I take your point. It is a little bit like
my constituents who argue, I know how to balance the budget,
just cut foreign aid.
Well, there are proposals you all have made. We have not
agreed with them all, absolutely. But, at the same time, the
huge portion that shows on this chart is not touched at all by
the recommendations you all make for 2014.
I understand, a lot of this is in the outyears and the
savings grow, is part of the answer. But looking at what is
right in front of us, under sequestration, there is $47 billion
that you all don't have a plan for, right?
Secretary Carter. Well, we don't have a strategically and
managerially sound way to make those cuts. That was the point I
made at the beginning. That whole orange pie has to be filled
in with things that you and I would never sit in a room and
think about doing as sensible things.
The little red wedge, yes, is the beginnings of some of the
efficiencies that we were just discussing with Ranking Member
Smith.
What you see there in orange--it is ironic, because orange
is the color we have used in our own review for dumb gaps--that
is a gap that can't be made up in a strategically and
managerially sensible way.
That is what we have been doing this year. That is why you
see furloughs. Would you furlough somebody if you thought about
it in advance and could take time? Would you stand down
readiness so that you didn't have units flying, you didn't have
ships sailing? We wouldn't do any of that stuff----
Mr. Thornberry. Yeah.
Secretary Carter [continuing]. If we had our----
Mr. Thornberry. The only point I would emphasize is, I
think it is important that we all work to put this in context.
And so, for the Administration to continue to emphasize the
request it makes that we may disagree with, I think it is a
fair point to make it, but put it in context, that it doesn't
deal with the overwhelming majority of the problem that we have
in front of us.
Similarly, base closing, it costs money for 2014. It would
make that problem worse. And, certainly, given the recent track
history of 2005 base closing, it would make it much worse. It
is going to take 15 years before you ever break even, et
cetera, et cetera.
Let me just move to Admiral Winnefeld, because I want to
ask one other question.
I understand that the combatant commanders have been
instructed to update their operational plans 18 months ahead of
schedule. And we probably can't talk about this in great detail
here, but I would like to know why.
And it looks to me like we are again getting the cart
before the horse, because that basically is the strategy. The
demand signal on the people and the stuff that we need to carry
out operations in certain theaters, you are telling them ahead
of time to go ahead and update that now before any of the rest
of this is settled.
Admiral Winnefeld. There are a lot of really good reasons,
Congressman, for taking a look at our OPLANs [Operation Plan].
We don't do it often enough to start with. We don't want to
fight the last war. We are always accused of fighting the last
war; I don't want to do that.
There are a lot of things that can change that will
influence how you fight. One is evolutions in the threat. And
almost every threat we face in our major planning scenarios--
and you can imagine what they are in the Western Pacific and in
Iran and that sort of thing--those threats are changing
rapidly. So we need to account for that.
Our own technology is changing. Those plans, in many cases,
are written based on old technology that we have. Congress has
given us the funds in the last few years for new technology. We
need to update those plans. The world is changing very quickly.
And I would also say that if we can find a better, more
innovative way to execute those plans, that will take some of
the pressure off of the uncertainty in the financial world that
we are feeling right now. But that is not the only purpose for
asking them to take a look at their plans. In fact----
Mr. Thornberry. My time is running out. So it is changes in
the world, or is budget included in the reason that they are
asking for doing it 18 months ahead?
Admiral Winnefeld. It is everything, Congressman.
Mr. Thornberry. Including budget.
Admiral Winnefeld. Ends, ways, and means, including budget.
But mostly the fact that our technology has changed, the threat
trajectory has changed, the world has changed, and I don't want
to fight the last war.
The Chairman. Thank you.
Ms. Davis.
Mrs. Davis. Thank you, Mr. Chairman.
Thank you, both of you, for being here.
I really appreciate the comments that my colleague just
made, but the reality is that, even though the Congress can't
maybe change all of that and close the gap, there are things
that we can do. And so I think that we need to look at that
within the context, as well. Because some of those changes,
with thoughtful discussion, might lead to some differences that
might be helpful to you. And I hope that we can do that.
I also wanted to ask about if these furloughs continue. If
we don't solve the problem of sequestration, will you be forced
to continue to furlough civilian employees?
Secretary Carter. First, with respect to furloughs for this
year, that is, fiscal year 2013----
Mrs. Davis. So I am looking at, yeah----
Secretary Carter. I understand.
Mrs. Davis [continuing]. For fiscal year 2014.
Secretary Carter. As I understood, you had a question both
about 2013, the continuation, and whether we need to do it in
2014.
With respect to 2013, we hope that we will be able to
adjust the furlough level. We have set it at 11 days. Furloughs
are under way. In most organizations, they are going at about 1
day a week. That means 1 day, a payday, per week lost for an
individual and their family. This is not a joke. It is very
serious and no way to treat people. And, therefore, we are
looking in every way, as we reach the end of the fiscal year,
can we find money somewhere?
I will give you some examples. Some of our war costs
associated with Afghanistan--it is a war, so you don't know
exactly how much you are going to spend. If, by the end of the
fiscal year, we have money left over, so to speak, we want to
be able to see that in advance and apply that to furloughs.
Mrs. Davis. Uh-huh.
Secretary Carter. Fuel prices are a little different,
changing in our favor.
So we are looking around as part of our general effort to
manage under sequestration in the smartest way possible, given
that it is a dumb thing. And if----
Mrs. Davis. What about freezes on civilians?
Secretary Carter. If we do find funds between now and the
end of the year, we have two priorities. One is to restore
maintenance, and the other is to relax furloughs. So that is
what we are doing.
In 2014, if we have sequestration in 2014, and I think the
Secretary has indicated this, it goes beyond sequestration to
the possibility of RIFs [Reduction in Force]. It goes to the
possibility of involuntary separations of service members.
Because it just gets worse and worse and worse over time.
Obviously, we hate to do that kind of thing, but that is the
kind of thing that becomes necessary if sequestration
continues.
Mrs. Davis. While it is difficult to, I think, see the
impacts as yet--and I think you mentioned this earlier--what do
we know about those impacts, though, in terms of, you know,
have you established some metrics? What do we know about
retention, recruitment? What do we know about performance,
productivity? What do we know about these that might be helpful
to us and instructive?
Secretary Carter. Well, we know quite a bit, and we are
trying to use the experience of operating under sequestration
in 2013 to do better if we have to in 2014, even though the
problem gets worse.
But I will just give you a few examples of how it is
different. Let's take an investment program, an acquisition
program. You know, you all, very rightly, and I, especially
when I was Under Secretary for Acquisition, Technology, and
Logistics, get so frustrated with poorly performing programs,
weapons programs. Well, sequester makes well-performing
programs into poorly performing programs. It drives up unit
costs, it causes schedule delay, all the things we hate,
because it is a poor use of taxpayers' money.
I have already said the impact on people. On readiness--and
Admiral Winnefeld can chime in on this if he wishes, but our
readiness problem will get even worse in 2014 because we have
deferred some expenses into 2014 in the hopes that we wouldn't
face sequestration.
So we have looked at this very carefully. We are as
prepared as it is possible to be for sequestration in 2014. How
we are doing it is outlined in a very long letter that
Secretary Hagel sent to Senators Levin and Inhofe 2 weeks ago,
and I commend that to your attention. It is attached to Admiral
Winnefeld's and my testimony. And it gives our plan for fiscal
year 2014.
But, you know, again, being prepared and having a plan
doesn't mean it is not really unconscionable.
Mrs. Davis. Uh-huh.
Admiral Winnefeld. And just very briefly, you asked about
the effect on retention and recruiting. Retention and
recruiting are a very complex animal that depend on a lot of
factors--the economy out in the rest of the country and so on.
But I know that the Chairman and I are both fond of saying that
today's readiness crisis is tomorrow's retention crisis. These
folks want to be in, and they will not stay if they are not
training.
Mrs. Davis. Thank you.
The Chairman. The gentlelady's time has expired.
Mr. Jones.
Mr. Jones. Mr. Chairman, thank you very much.
And, you know, I sit here and listen to you very carefully.
Yesterday, we had John Sopko, the Inspector General for
Afghanistan Reconstruction, in a hearing in the Oversight
Committee. You know, it is almost like we have two different
worlds up here. We have the Washington world, and then we have
the world of 49, 50 States out here.
Down in Jacksonville this past week, the Jacksonville
paper, ``Furloughs to Impact Mental Health Treatment,''
``Marines React to Mental Health Furloughs.'' I don't have time
to read some of the comments to you. I would like to.
You know and you have been talking about the problem. And
the chairman made the comment, and he is right, that when we go
to the floor and we talk about all the problems that will hit
the military and the defenses of our Nation, a lot of Members
don't believe it. Well, they can't believe it, because we keep
sending money to Afghanistan, billions of dollars. In the two
wars of Iraq and Afghanistan, we spent over $1.7 trillion, and
we cannot even adequately take care of the wounded coming back
home. Here I gave the example of the mental-health cuts down at
Camp Lejeune.
I think that this Administration and the Congress needs to
face the facts. The facts are, when you have to borrow money as
a government to pay your bills, then you need to reconsider how
much of the world do you want to build empires in. And I do not
understand why the President feels the obligation, or the State
Department, to have a bilateral strategic agreement with
Afghanistan. Karzai is going to leave one day; the Taliban will
take over Afghanistan. He will be smiling from his castle
somewhere that Uncle Sam and the poor taxpayers built for him.
Dr. Carter, I know you don't make policy, I understand, as
far as foreign policy. But we need the leadership in this
country, both in Congress and outside of Congress, to start
speaking clearly and honestly to the American people. And the
situation is that if we are going to rebuild our military--
which right now we can't do because we don't have the money; we
are in sequestration--somewhere along the way, policymakers
have got to start speaking out, that we have to change our
strategy.
And that is what I hope that Secretary Hagel is doing. I
have great respect for him. I think he is a man of integrity.
He is a man that I have the greatest respect for. And maybe
that is what we are headed to.
We have to get smarter with our policies. Because we are
going to be in sequestration a little bit longer, maybe a year
or 2, and you are going to continue to have to take these cuts,
furloughs. The chairman and ranking member are going to have to
hold these hearings. But we are not going to move forward. We
are just going to have these discussions and stay in the same
status quo that we are in today.
So I hope--and I am going to stop, I want to listen to you
and the Admiral--but I hope at some point in time somebody will
start saying, listen, America, you no longer can police the
world, nor should you police the world. Help us rebuild America
first and rebuild the military. And that is where we are.
Do you have any comments?
Secretary Carter. Thank you. Just two things to note.
One is that, whatever any of the Members think of
Afghanistan and the campaign in Afghanistan and the rationale
for it and the success of it and so forth, one thing is for
sure, which is of great importance to the Department, as you
note, which is that we are winding down our involvement in the
war in Afghanistan. And people are still debating how fast and
how much and so forth, but no question about it.
And that has some real consequences for us. And it gets
back to the very first thing I talked about here, which is: We
are and must be, as a department, embarked on a major
transition from the era we are coming out of, anchored in Iraq
and Afghanistan and the first post-9/11 counterterrorism focus,
to what we are going to do in the future and what we can do in
the future given our level of resources.
That is more important than anything about the budget, to
make that strategic transition. And, in that regard, I very
much identify with what you were saying.
Mr. Jones. Thank you.
The Chairman. The gentleman's time has expired.
Ms. Bordallo.
Ms. Bordallo. Thank you, Mr. Chairman. And thank you for
holding this hearing.
And thank you, Dr. Carter and Admiral, for your honest and
forthright testimony today.
I continue to find it deeply concerning that Congress has
placed the Department of Defense in the position you are in
today, to make these tough, tough choices. And I fully support
having a robust military to defend our Nation and our
interests, but we in Congress must do our part to ensure you
have the resources to meet current and emerging challenges.
I support ending sequestration immediately and in its
entirety. Finding a comprehensive solution to sequestration
will allow DOD to properly plan and prepare for potential
conflicts of the future.
And that is the bottom line here. We are not allowing the
world's greatest fighting force to effectively and efficiently
maintain pace. And it is a message that will see some action in
the near future. And we in Congress are the problem.
Dr. Carter, I would like to know if you can discuss the
SCMR results with respect to the rebalance to the Asia-Pacific
region. I met earlier this week with the Senior Vice Minister
of Defense for Japan, and I understand that you met him as
well. While we had a good discussion on the Marines'
realignment from Okinawa to Guam, I know we both had concerns
about the timing of these moves.
So can you elaborate on the impact of the Guam realignment
and if you foresee any changes from the previous testimony
provided by yourself and others on the commitment to the
Pacific region? And how does the results of the SCMR exercise
impact the realignment, if at all?
Secretary Carter. Thank you. And thank you for meeting with
Minister Eto during his visit here.
The rebalance to the Asia-Pacific theater is a central
tenet of our strategy. I think it is so obviously a part of the
world that will be central to America's future that we will
always have that high on our priority list. And it remains high
on our priority list, and we are doing everything we can under
sequestration and in all of these budget scenarios to protect
investments in the rebalance in the Asia-Pacific.
Now, at the extreme ends, where you get sequestration for a
decade, we are not going to be able to do everything that we
have planned to do in the Asia-Pacific. We are just not going
to be able to do it. But it will still be a priority, and we
will still be able to do much of it.
And it is important that people in the region, both our
friends and potential opponents, understand that we have the
capacity and will to do that.
And there are two reasons for that. One is that we are now
able to shift a lot of the weight that we have had in Iraq and
Afghanistan to the Asia-Pacific theater. Some of that equipment
and those people are showing up already. And, second, in our
budget, whatever our budget level is, and as we went through
these various scenarios, we attached priority to the things
that are most relevant to keeping the peace in the Asia-Pacific
theater.
We have done that for 60 years. It had been good for
everybody, including us. If they think about it, it is good for
China, it is good for India. It is the environment in which
Japan, South Korea, Southeast Asia, all these economies have
arisen. There is no NATO [North Atlantic Treaty Organization]
over there. There is no law of nature that says that there is
going to be peace in the Asia-Pacific. It is the pivotal role
of the American military power which has done that for 60
years. We need to keep doing that and do as much of it as we
can in any budget scenario.
Ms. Bordallo. Well, thank you. Thank you very much, Mr.
Secretary.
And I have another quick question. I believe the long-range
strike capability is of critical importance, not only in the
Pacific region but for any future conflict we may be involved
in. As a co-chair of the House Long-Range Strike Caucus, I am
interested to know how the Air Force next-gen bomber is
addressed in the SCMR.
Maybe Admiral?
Admiral Winnefeld. The Long-Range Strike Bomber is a very
important program for us for a number of reasons. Principally,
the two of: It is a vital leg of our strategic deterrent, of
the triad; and, second, it is a very important element of
potential future warfighting concepts that we would need from a
standoff capability and also a penetrating capability. So we
are certainly committed to that program.
As far as I can tell--and I would have to defer to the
Under Secretary of Defense for Acquisition, Technology, and
Logistics, but I pay very close attention to this program--it
is currently on track.
Now, as far as the SCMR goes, you know, the deeper you go,
the tougher some of this gets. And at the BCA levels, you know,
it could impact that program in terms of timing or what have
you. And it also would depend a little bit on whether you
emphasized capacity or capability, in terms of how many you
might buy or whether you would do the program.
But, at the moment, we remain committed to that.
Ms. Bordallo. Thank you, Admiral. My time is up. But thank
you very much.
I yield back.
The Chairman. Thank you.
Mr. Forbes.
Mr. Forbes. Thank you, Mr. Chairman.
And, Mr. Secretary, Admiral, thank you so much for your
testimony today on the dire consequences of these cuts.
You know, hindsight is always 20/20. And I would hope that,
had the President had the benefit of your testimony, he would
not have began the massive defense cuts that he started when he
first came into office over 4 years ago. And make no mistake
about it: The President began these massive defense cuts.
The second thing I would hope is the President, listening
to your testimony and in hindsight, would not have suggested
sequestration. And make no mistake about it: It was the White
House's suggestion we do sequestration, which, Mr. Secretary,
you said was a dumb idea. Many of us told them it was a dumb
idea then.
I would hope in hindsight, too, the President, hearing your
testimony, would come back and not have signed that into law,
which, make no mistake about it, the President signed it into
law.
But what concerns me most is not what the President has
already done but the fact that we hear over and over it is
Congress' problem, but the President has come out even recently
and said, unless he gets all the increases in spending, all the
increases in taxes he wants across Government, that he will not
support any effort Congress makes to fix this for national
defense, no matter how reasonable and no matter how sensible.
So I hope that behind the scenes there will be some folks
in the Pentagon who are trying to be reasonable voices to
suggest to the President that that course of action is wrong
and perhaps even dead-wrong.
And, Admiral, you mentioned in answering the chairman's
question that budget impacts strategy. Is that a fair
statement?
Admiral Winnefeld. I think any experienced strategist would
say that it is a balancing of ends, ways, and means.
Mr. Forbes. So would it be fair to say, if you have a
smaller budget, your strategy is going to change, than if you
have a larger budget?
Admiral Winnefeld. You either change the ends of the
strategy or you accept more risk in executing it. I would say
that every strategy has a band of risk in it. You would like to
be in the low-risk band of any strategy. But as the resources
drift away, you start getting into a higher and higher risk
area of that strategy. And, at some point, you are going to
have to change your strategy.
Mr. Forbes. The reason I say that is because, for the last
4 years, this committee, the chairman, many of us have been
saying that the budget was really having an impact on the
strategy and driving the strategy, but, over and over again, we
were hearing people from the Pentagon coming over and dipping
their hands in some sort of mythical bowl and saying, no, no,
no, this strategy is driving our budget, and the budget is not
driving the strategy. So I believe, very clearly, many of these
cuts have driven our strategy and will drive us to a dangerous
strategy.
But let me come back to that hindsight being 20/20. If I
look back over the last 2, 3 decades, one of the things that I
can see is that there were some game-changing technologies that
took place, some of them--stealth technology, unmanned systems,
precision-guided munitions.
I am going to ask you to, kind of, look out to 2040 and
take a look back. What do you think some of our game-changing
technologies would be that maybe we need to fence off and make
sure we are protecting?
And one of those, specifically, talk about the Navy's
UCLASS [Unmanned Carrier Launched Airborne Surveillance and
Strike] system. Do you see this as a game-changing technology
that will define the future of the carrier air wing?
Admiral Winnefeld. First of all, I would say there are a
number of technologies out there that we have to pay attention
to, and it is why both Under Secretary Carter and I have worked
hard to do the best we can to protect our ``seed corn,'' which
is our R&D [research and development] budget, you know, science
and technology. You can't protect all of it, but it is terribly
important that we continue this work. Any company would tell
you that in a downturn they have to continue their research and
development so they can come out at the other end with a
product that works. And that is the same thing for us.
There are a number of these things. One would be cyber,
making sure that we are continuing to advance on that front
technically, as well as training and infrastructure. There
are----
Mr. Forbes. Admiral, I have 60 seconds.
Admiral Winnefeld. Okay.
Mr. Forbes. Can you tell me about UCLASS?
Admiral Winnefeld. The UCLASS, I have been personally
driving the requirement on that because I believe in the
program.
In terms of whether it is a game-changer that totally
transforms warfare, I wouldn't go so far as to say that, but it
is a very important element of what we would put on the flight
deck of an aircraft carrier in the future. It has a lot of
potential capability for us that we would want to employ in a
more dangerous world.
Mr. Forbes. Mr. Chairman, thank you, and I yield back.
The Chairman. Thank you very much.
Mr. Loebsack.
Mr. Loebsack. Thank you, Mr. Chair and Ranking Member.
I want to thank both of you for your service, of course,
and for being here today. This is a critical hearing, I think,
to understanding the long-term impacts that allowing
sequestration to continue would have on our men and women in
uniform, on our readiness, and, indeed, on our national
security. So, again, thank you for being here.
I do believe, as I think everyone on this committee does,
and I believe very strongly that we have to replace
sequestration. And I think the hearing today outlines the long-
term consequences of sequestration and the, I guess, height of
irresponsibility that really would be the case if we were to
allow sequestration to go on.
But I have two particular issues I want to address today
with you.
First, Secretary Carter, can you outline the impact the
scenarios explored in the strategy would have on the health of
the industrial base? And here we are talking about the organic
industrial base--arsenals, ammunition plants, depots,
shipyards, et cetera.
And, in particular, what would be the impact on the
workforce within the industrial base, including the civilian
workforce? And we have already talked furloughs a little bit,
but specifically our ability to surge capacity when needed to
respond to a national security contingency?
Secretary Carter. Absolutely. It is a very important
matter. There will be an impact on the industrial base, organic
and the rest of our industrial base. I worry about it a great
deal as Deputy Secretary. I worried about it a lot more when I
was Under Secretary of Defense for Acquisition, Technology, and
Logistics.
We, just to take people, employ, as I am sure you know,
about 800,000 civilian employees at the Department of Defense.
A lot of people in Washington think they are people who get up
in the house next-door and drive to a building that has a four-
letter name on it and sit at desks. Not true. Our civilians,
for the most part, don't live anywhere near Washington, as you
know. And they fix things. They fix vehicles, they fix
airplanes, and so forth.
And, as I said earlier, furloughing them is no way to treat
people. The only reason that it was safe from a mission point
of view to furlough depot workers was that we couldn't afford
to do the work, so we didn't have work for them to do--also a
consequence of sequester.
Going forward, we are looking at the backlog at each of our
depots. As you well know, I am sure, we manage that backlog to
create, as best we can, an even workflow. There is no question
about it that if our budget is cut, we are not going to be able
to do as much maintenance as we had planned. And those
installations will be affected, like everything else is
affected. We will try to manage that in the most intelligent
and humane way we possibly can, but it is a consequence of
lower budgets.
Mr. Loebsack. It is the human effect that we talk about.
With respect to the furloughs, it is the human effect, when it
comes to reduced workload and all the rest, but also it is also
a national security issue. If we are not keeping the arsenals,
for example, warm and we have a contingency, it is going to
take much longer to get those folks back online and make sure
that those products are available, those things are available
for our troops in the event of another conflict.
Secretary Carter. It is true. Anywhere I see in the
industrial base what I will call irreversible change--that is,
something that we are ramping down that we couldn't re-create--
I get worried about that. Because things, once you bring them
down, once you eliminate a skill set, it is very hard to bring
that back.
Mr. Loebsack. That is right.
Secretary Carter. And so it gets back to what Admiral
Winnefeld was saying about protecting our future. One of the
things we try to do is to make sure that we don't make
irreversible changes, wherever that is possible for budgetary
reasons, so that we don't destroy something that would be very
time-consuming and expensive to re-create.
Mr. Loebsack. And, Admiral, I think I will take your answer
for the next question for the record, if we could. We will
submit that question to you.
But it has to do, of course, with going into more detail in
terms of implementation of end-strength reductions as reviewed
in the strategy and, in particular, looking at total force and
the balance between Active Duty and Reserve Components. I am
almost out of time, so I will submit that to you. And if you
could get back to us in writing, I would appreciate that very
much.
All right, thank you.
Thank you, Mr. Chair.
The Chairman. Thank you.
Mr. Wilson.
Mr. Wilson. Thank you, Mr. Chairman.
And thank you both for being here today.
I share the concern of Congressman Forbes, and I appreciate
that you are raising the issue of sequestration. I am very
grateful that, with the leadership of Chairman Buck McKeon, the
House voted twice last year to address this issue. We, in our
most recent budget, voted to address the issue.
This has a catastrophic effect. When we hear the word
``furlough,'' the American people need to know what that means.
It is a 20-percent pay cut. We all know, in running our homes,
that we have planned mortgage payments, car payments, tuition,
and utility costs. And so ``furlough'' sounds too nice. Twenty-
percent pay cut.
This needs to be addressed. And I sincerely hope--I have
always been concerned that it was, indeed, Secretary Panetta
who said, this will hollow out the military. So I am very
concerned, and I hope every effort will be made to address
this. Also, reprogramming and to be ever-vigilant in regard to
our readiness.
But having that in mind, this committee has supported the
statutory 1.8-percent pay increase. The President had
recommended 1 percent. By September the 1st, there is the
potential of the Secretary making a recommendation to the
President to reduce the pay increase to 1 percent. What will be
the recommendation by the Secretary?
And I am also concerned that there was a statement that pay
increases have been, ``40 percent above inflation since 2001.''
Where did that figure come from, and how was it calculated?
Secretary Carter. Thank you.
Let me start with the furlough question. I, too, hope that
we are able to change that. You are right, ``furlough'' is too
nice a word. I have talked to too many of our folks who are
missing a fifth of their pay in the last quarter of the year.
That is what it amounts to, and that is a real impact on people
and their families. And it is no way, as I said earlier, no way
to treat people who are serving their country, too, even though
they are civilians.
And, by the way, I will just mention that more than half of
our civilian workforce are veterans on top of that. So they are
doing it because they love the work, because they love the
country, and they like to be part of defense. It is no way to
treat them.
And thank you and everybody on this committee for
supporting reprogramming. That is essential for us to try to
adjust to this abrupt circumstance.
With respect to military pay and the rest of compensation,
you are right, we asked for a slower rate of increase in
military pay, and Congress did not--Congress denied that. That
is an example of what I said earlier about we need help if we
are going to do this.
And we will be making proposals in fiscal year 2015. We
haven't fully formulated them. In fact, we have asked the Joint
Chiefs of Staff, in particular, and the senior enlisted leaders
of the Department to help us make that decision and make a
recommendation to the President. But we will be making a
recommendation in that area.
The 40-percent number, I am not sure I am familiar with it,
but I think the number that might be the one you are thinking
of is the increase, total increase, in real military pay over
the period of the last decade. That----
Mr. Wilson. If you could get----
Secretary Carter. I can certainly get back to you.
Mr. Wilson [continuing]. Some documentation, I would
appreciate it.
Secretary Carter. You bet.
[The information referred to can be found in the Appendix
on page 105.]
Mr. Wilson. And then do you anticipate--again, we are here,
it is August. Will we be--when will we learn about the
President's decision relative to the pay increase?
Secretary Carter. With respect to the fiscal year 2015 and
beyond?
Mr. Wilson. Yes.
Secretary Carter. That will be when he submits his budget,
which will be in February.
Mr. Wilson. But, yet, this year, there could be a
determination of 1.8 to 1 percent. And so what do you
anticipate for our service members this month?
Admiral Winnefeld. If I can weigh in, the President's
budget as submitted for the fiscal year 2014 was at 1.0
percent. So that is where the position stands. I know that in
various committee action and the like that that has not been
approved; it has been taken at 1.8. So I think there will be a
conferencing at some point where that would be determined.
I would just say that you would think the Joint Chiefs
would be the last group that would want to slow the rate of
compensation, but we have taken a very, very hard and close
look at this, and we are going to have to slow the rate of
increase. It is not decreasing anybody's pay; it is slowing the
rate of increase.
But we are going to just run out of money to provide the
tools that these troopers need to do their job.
Mr. Wilson. Okay.
Admiral Winnefeld. The most important thing for them, the
most important compensation for them is to come home alive. The
best way to bring them home alive is to get them the stuff they
need.
Mr. Wilson. Well, thank you both. But I truly am concerned
that we need to show how much we appreciate the young people
making a difference for our country.
Thank you.
The Chairman. Thank you.
Ms. Hanabusa.
Ms. Hanabusa. Thank you, Mr. Chair.
Secretary Carter, the Secretary of Defense made a public
statement yesterday, and I just want to have your confirmation.
He said that the $487 billion reduction over the next decade is
to satisfy the initial caps of the BCA. And I have been always
asking, what is the 487? So it is to satisfy the caps that are
contained in the BCA; is that correct?
Secretary Carter. Correct.
Ms. Hanabusa. So what we are now talking about, since we
know that that is taken care of, is the impact of
sequestration.
One of the things that you stated, both of you stated in
the SCMR is that it is not intended to define the exact
compensation of, basically, the future forces or what we are
going to do. It is sort of, I think you used the word, a
``decision space'' faced by the Department, and it is going to
guide you. One of the areas that it is also going to guide is
in the QDR. And that, of course, is what many of us are looking
at to see what the view is into the future.
Now, how does the QDR and what you intend to do with the--
as you state in the SCMR, because the QDR, of course, comes
from the Department originally--how is that going to interface
with that which we have done in terms of the NDAA [National
Defense Authorization Act]?
For example, we have said no BRAC, and one of the proposals
is a potential BRAC. We have said no civilian furloughs,
assuming that goes through, and one of the things that is very
obvious from all of this is that we may be faced with that.
So can you tell me how we are going to play and what we do
with the NDAA into not only how you view the SCMR working
forward but also the QDR?
Secretary Carter. Absolutely. The same people who did the
SCMR, the senior leadership of the Department, will do the QDR,
so it will be informed by the SCMR. And, of course, we are
required by law to do a Quadrennial Defense Review. A lot of
the work for that is, in a sense, already done. And the QDR, on
its schedule, comes late. We will probably be pretty close to
finalizing the next budget by that time.
With respect to pieces of legislation contained in the
NDAA, obviously we will abide by the law. Where we think that
change is required, we will ask for it. And when we do, we will
try to give you the whole picture.
Because I think this was mentioned by Ranking Member Smith
earlier; when people look at individual pieces of the budget,
of course you don't want to cut any of these things. There are
real people involved. They are doing real work. They wouldn't
be here in the first place if they were doing something that
was not essential. So it is really hard. But you can't--we
can't, at least, look at things that way. We have to look at
the whole picture. And so we may indeed come back to you and
say, when we have looked at the whole picture, we need to take
this step.
I think BRAC is an example of that. We need to do that. We
need to do it even more when our budget is being reduced more,
because the excess overhead is even more excess in that
circumstance. So we need that authority. Otherwise, we are
going to end up taking only ``tooth'' and not ``tail.''
Ms. Hanabusa. I understand that, but, of course, you will
also face from us, on this side, the fact that the BRACs don't
pencil out for maybe 16 years down the road, and the joint
basing hasn't exactly worked the way it has.
But, in addition to that, on page 13 of your testimony,
both of you say, ``To meet these severe caps in the long term,
the SCMR examined two illustrative strategic options.'' One is
basically to seek to preserve a modernized force by sacrificing
capacity, and one to preserve the larger force capacity at the
expense of modernization programs.
So it seems like with both--these are the two options you
have come down with, but both have an upside and a downside.
Are we reading this correctly?
Secretary Carter. Exactly, yes.
Ms. Hanabusa. And the last one, I am running out of time,
but I will submit it and ask you to respond for the record.
On the follow page, you talk about reducing end strength.
And it is severe for Army, from 490,000 to between 380,000 and
450,000; and Marine Corps, from 182,000 to between 150,000 and
175,000.
So you seem to be focusing on those two Services; is that
correct?
Secretary Carter. No, that is not correct.
Ms. Hanabusa. Okay, so could you respond to me in writing?
I am out of time.
Secretary Carter. Absolutely. Similar changes in every
force element were considered----
[The information referred to can be found in the Appendix
on page 105.]
Ms. Hanabusa. Thank you.
Secretary Carter [continuing]. Not just the Army and the
Marine Corps.
Ms. Hanabusa. Thank you.
Thank you, Mr. Chair. I yield back.
Mr. Wittman. [Presiding.] Thank you, Ms. Hanabusa.
Dr. Carter, Admiral Winnefeld, thank you so much for
joining us. We appreciate all that you do.
I wanted to talk a little bit about the figures that you
bring up, especially for 2014. I think we have a slide to put
up here that puts it in perspective about what we are talking
about.
If you look at the slide here, you see that the actions
required by Congress to make reductions of about $5 billion get
us down to $47 billion in 2014. You spoke of about an
additional $12 billion in the SCMR recommendations that get us
down to about $35 billion. That is still a long way short in
2014 to the full $52 billion in reductions.
Can you tell me how we would get to make up the remaining
portion of that balance? I understand that the step in that
first year is the most precipitous one. Can you tell me how we
would get to $52 billion? And would that affect readiness, and,
specifically, which readiness accounts it would affect?
Secretary Carter. Absolutely, I can. And it will affect
readiness.
What you have to do in these early years under
sequestration is go where money can be had quickly. And there
are some places where money can't be had quickly--for example,
military compensation. Even if you wanted to cut that, you
can't do that quickly. If you wanted to reduce the size of the
force quickly, you don't save money, because even if you
involuntarily separate a service member, there is a process for
doing that under the law, and you end up paying as much as they
are leaving to them as you would if they had stayed. So you
don't save money that way.
So how can you save money? You save money by curbing
readiness, because you can do it quickly. So you will see
readiness changes, more severe than in 2013. And I am going to
ask Admiral Winnefeld in a minute to detail some of that. You
will see us taking money out of investment programs, which
means we won't be issuing contracts that we had planned to
issue to people who are building things for us, people who are
accomplishing services for us. You will see bases that aren't
maintained the way that they should be and are planned to be.
All of that stuff, which is not good government, is not good
management, you just have to go where the money is.
And some of this is detailed in our written statement and,
in particular, in the letter that we wrote to Senators Levin
and Inhofe, which is kind of a very--I think it is eight or
nine single-spaced pages of what we have to do in fiscal year
2014.
Admiral Winnefeld. So there are three areas that, the
Deputy Secretary said, you have to grab the cash wherever you
can. And we can't, as he said, easily get people out of the
Services, so if you want to take it out of the personnel
accounts, the only other things you can do--and this is what
the Services will have to do under those numbers. They will
stop bringing people into the military. They will stop their
promotions. And they will stop moving them on PCS [Permanent
Change of Station] moves.
So that is one slice of this thing. And you can imagine
that bump going through the snake over 20 years of a year when
you just don't take anybody in. It is very, very harmful to the
force.
Mr. Wittman. Right.
Admiral Winnefeld. Another one is the modernization
programs. You can grab cash there. But, as the Deputy Secretary
mentioned earlier, that starts to break programs. We find unit
costs of JSFs [Joint Strike Fighter] going up. We find, you
know, things like Nunn-McCurdy violations when that occurs.
And then, finally, the most important thing to us, of
course, is readiness. And readiness is the elephant in the
room. If you have an F-15 [Eagle fighter jet] squadron in your
district, a lot of people don't care if it is flying or not,
they just want it to be there. And that is why they call it a
hollow force. It looks good on the outside, an F-15 is sitting
on the ramp, but they are not flying.
Mr. Wittman. Right.
Admiral Winnefeld. And so we will definitely see that very
harmful effect next year if we have to meet those numbers.
Mr. Wittman. Gotcha.
Let me ask this. When you talk about those effects on
readiness, can you qualify for us what that means as far as the
risk this Nation assumes, both currently and then potentially
if we face another conflict or another instance where we have
to deploy somewhere around the world?
Admiral Winnefeld. I have a very good classified slide that
demonstrates that. I have shown it to Chairman McKeon. I would
be happy to show it to any Member.
But it outlines basically the supply side. It shows you how
many forces you have and the readiness state of those forces.
And on the right side, it shows the demand side. And that
demand side, it is what we are actually using day-to-day
today--forward presence, you know, what we are doing in the
Arabian Gulf and Korea, that sort of thing. And then it shows
what the demand signal could be for various contingencies. And
it is not a pretty story, but I can't go into it in an
unclassified environment.
Mr. Wittman. Can you just give us a very brief, one-
sentence assessment about what that increased risk means to the
men and women that serve this Nation and put themselves in
harm's way?
Admiral Winnefeld. Well, one thing it means is that if you
did have to do a contingency and you ended up deploying forces
that are not ready, you know, that is something we don't like
to do. One of, we believe, the most important ways to not break
faith with our people is to make sure that when we send them
into harm's way that they are fully ready to fight.
Mr. Wittman. Gotcha.
Admiral Winnefeld. And we would not want to be in a
position where we had to violate that.
Mr. Wittman. And if perchance they were not ready to fight,
does that mean more men and women die on the battlefield?
Admiral Winnefeld. Either that or we don't go into the
contingency.
Mr. Wittman. Gotcha. Very good.
Thank you, gentlemen. We appreciate it.
Mr. Barber.
Mr. Barber. Thank you, Mr. Chairman.
In regard to your last question and the response, I just
took a meeting a few minutes ago with the upcoming commander of
the 12th Air Force at Davis-Monthan Air Force Base. And he was
talking about having to stand down pilot training for 3 months.
And I asked him what the ratio of standing down to lack of
readiness looked like. He said it is at least two to one. You
know, 3 months down, you got to have 6 months to get back up to
speed. So we are already doing irreparable harm, I believe, to
our readiness by having to take these actions.
I want to talk about something a little bit different in
regard to how sequestration is affecting our current and future
force. I think Chairman McKeon stated it quite well when he
said that, within this committee, there is an acute awareness
of what this is doing to us, but with our colleagues who are
also facing their challenges in other committees, not so much;
in fact, in many cases, not at all. And across the country, the
American people really don't get this yet. But our regional
commanders know, as do our local commanders. And they cite all
the time the adverse consequences that sequestration is having
on morale and is having an effect, morale effect, also on
military spouses and families.
You know, I grew up in an Air Force family. We never saw
anything like this, indiscriminate cuts that just absolutely
make no sense. And so I have no personal experience with it.
But over the last several weeks and months, I have met with a
lot of families and military men and women at Fort Huachuca in
Arizona, at Davis-Monthan at the 162nd Air National Guard. And
almost to a person, they reflect that morale is really
declining. And then I talk to businesses in those communities,
and they are affected, obviously, by the lower buying power.
People don't want to buy things when there is uncertainty.
So I just want to ask this question, Mr. Secretary. Given
the
current fiscal constraints and the negative impact that
sequestration is having on morale of both service members and
their families, how will the military--and I think we also know
that our service members are often some our best assets when it
comes to
recruitment.
How is the Department ensuring that recruitment to meet our
future needs is being sustained in a time like this? I mean,
surely, it has to have had an effect or an anticipated effect.
Secretary Carter. Well, we are monitoring that very
carefully. We count on having the best people of any military
in the world. And since it is an All-Volunteer Force, we have
to look at the labor markets and see, are we going to be able
to recruit and retain the kind of people we need?
We are doing okay so far. I think the morale change might
have an effect on us, and we are watching that. So, also, does
the overall economic situation, the labor markets in general.
And so, also, as far as retention is concerned, is the
quality of service life. If you joined because you want to be
tip-top in your military profession and you are not allowed to
train this year, you are just allowed to sit around, because we
don't have the money to let you train, that is very dispiriting
for people, and that is the kind of thing that will make them
leave. So I am very concerned about that.
This is something that is so concerning to us that we watch
it very closely. It is very concerning to me. But I want to ask
Admiral Winnefeld if he has anything to add to that, because
this is something that really cuts to the heart for us.
Admiral Winnefeld. Sir, I think you are asking a very good
question, because, as the Deputy says, at the moment, perhaps
because of the job market, what have you, we are doing okay in
recruiting and retentionwise.
But it is a complex animal, and there is no question in our
mind that, as the readiness of the force declines, that these
people aren't going to be doing what they came in to do, and
they are going to be less inclined to stay. Some of them will
stay anyway, but there will be less inclination to stick
around.
And the real morale piece--I wouldn't say the morale of the
force is terrible right now. Our young men and women are doing
great. But this has introduced a level of uncertainty in their
lives as to whether they are going to have a future.
And sometimes I will talk to audiences, and I look at them
and I will say, look to your left and look to your right. If we
can't agree that we can absorb a slower rate of increase of
compensation, then one of you guys is going to be gone in a
couple years, assuming we are allowed to do that. So there is
some uncertainty out there in their lives.
Mr. Barber. Well, let me just comment, in my remaining
time, in regard to my earlier conversation with the General. He
has told me that re-upping is also becoming a problem. Men and
women who are trained to fly potentially an F-22 [Raptor
fighter jet] are saying they don't want to continue. That is a
tremendous impact, negative impact, on our future readiness.
And I appreciate all you are doing to try to make us manage
this through. I hope Congress will come to its senses and find
a better way. Thank you.
Thank you, Mr. Chairman. I yield back.
The Chairman. [Presiding.] Thank you.
Mr. Scott.
Mr. Scott. Thank you, Mr. Chairman.
Admiral, thank you for your service. Most of my questions
will be for Dr. Carter, simply because of the two bases that I
represent, but I certainly appreciate your service.
And, Dr. Carter, I represent Robins Air Force Base, and I
also represent Moody Air Force Base in Valdosta. And,
obviously, the furloughs are of great concern to us. And I
appreciate your comments in that--I believe I have your quote
right--that you wouldn't furlough anybody if you had your
choice and that you are hoping to adjust from 11 days down.
Secretary Carter. Correct.
Mr. Scott. And I hope that we will know soon what that is.
Because I will tell you, a 20-percent pay cut for the men and
women that are out there working to make sure that our
warfighters have the equipment that they need when they go into
battle is doing a lot of damage to the morale and, quite
honestly, I think, is extremely inefficient.
And I want to ask you a couple of questions about the
organic depots, if I could, and the impact of the furloughs and
the efficiencies and the competitiveness of our depots as we go
forward and we start to compete for new business as that
backlog is
created.
Furloughs were mandated across the board. I didn't support
the sequester, didn't support the furloughs. I offered
alternatives that had flexibility in it, as you suggested.
There is no business case analysis that suggests that the
furloughs help in any way, shape, or form long-term. But they
are creating inefficiencies and they are creating deferred
maintenance, and that makes our depots less efficient and
increases the cost per unit.
And my question is, what adjustments will be made to
compensate for things that are being done because of
Washington, not because of the men and women at the depot, as
we go forward to compete for that business, to try to get it
into the organic depots?
Secretary Carter. Your analysis is absolutely right, both
as regards the effect on the efficiency of those installations
and, most importantly, as regards the people.
And in this, as in everything else that we have had to do
in fiscal year 2013, it has effects. Even if sequestration goes
away, we are going to be living with the residue of what
happened in fiscal year 2013 for a while, in readiness, in
depots, in all kind of ways.
For the depots, as we go into 2014, we are looking at the
backlog at each of the depots and trying to manage that to a
reasonable level. If the backlog falls too low, then if there
is a further budget reduction, it risks layoffs, which we don't
want. So we want the workload to be managed above a level where
it risks that. On the other hand, we don't want it too high
either. So, at each of those, the relevant service is trying to
manage the backlog in a smart way in view of what is happening
in sequestration.
We will have to see what happens in 2014 and manage the
workload accordingly. We won't be able to afford to do all of
the maintenance that we had planned to do before the Budget
Control Act, no question about it. And that will have a long-
term effect on each of our facilities, as it has on all of the
extramural maintenance companies also.
Mr. Scott. But just to recap, you do agree that the
furloughs that are occurring at the depots are creating
artificial inefficiencies, that when we go to compete for the
business in the future, we simply want to make sure that that
playing field is leveled so that we are judged based on our
capacity without the damaging things that Washington has done.
Secretary Carter. I understand exactly what you are saying,
yes.
Mr. Scott. One last question I have with regard to the
furloughs and maintenance. Has there been consideration into
more joint depot work, where Air Force depots would be able to
compete for Navy business, for example?
Secretary Carter. Yes, there is. And that is an important
source of efficiency. There has been some opposition to that,
but it is more efficient.
Let's take helicopter engines. A lot of helicopter-type
model series are multiservice; different Services maintain
those helicopters. Why not have one place where a certain model
of helicopter is maintained?
We are looking at that. That is a move we should make and I
hope we get the flexibility to make.
Mr. Scott. One final question real quick, just as to the
choices. One concern that I hear from some of our people with
regard to readiness is that the choices--I mean, we are going
to continue to fly the Thunderbirds, it appears. And just from
the standpoint of putting that as a priority above combat
readiness, could you speak to that very quickly?
I know I am out of time, Mr. Chairman.
Secretary Carter. Yes. And let me ask Admiral Winnefeld to
speak to that also.
The particular matter of the Thunderbirds flying is they
are not flying in order to make shows. They are flying in order
to keep the proficiency of those pilots, who are also pilots
who are part of forces that would participate in operations
plans if there was a crisis around the world. So it is
incidental that they are members of the Thunderbirds.
Sandy, do you want to say any more about that?
Admiral Winnefeld. Just very briefly, because I know the
chairman wants to get moving.
They are flying at a low, very low, restorable proficiency
that, if we are able to get money next year, would cause their
on-ramp to actual readiness to be more shallow. And as the
Deputy points out correctly, they are deployable as a
warfighting contribution if they need to be.
Mr. Scott. Thank you, sir. Thank you for your service.
The Chairman. Thank you.
Ms. Duckworth.
Ms. Duckworth. Thank you, Mr. Chairman.
Mr. Secretary, it is good to have you here.
And, certainly, we have the power to end sequestration. We
should end it. That would take away a lot of the problems that
we are facing right now, although it does not solve a lot of
the long-term problems.
I want to go back to the discussion on the reductions to
end strength and specifically with the Reserve forces, both the
Reserves and the National Guard. Could you address where this
is going to go underneath some of the proposals that you have
in terms of end strength for the National Guard, the
proficiency, the training?
You know, I don't want that hollow force. I don't have any
bases in my district, but I certainly want the National Guard
to not just be sitting there with pretty aircraft on the tarmac
and nobody proficient to fly them.
So could you speak a little bit to maintenance of the
operational force and the Guard?
Secretary Carter. I will. And then, again, I will ask
Admiral Winnefeld if he wants to add to it.
I mean, first of all, the whole Reserve Component, Guard
and Reserves, have made an enormous contribution over the last
10 years. They have been necessary because of the length of the
Iraq war and the Afghanistan war. So we have had to call upon
them, and they have answered the call.
But the Reserve Component, like all the rest of everything
we do in defense, is going to have to accept some of the
reductions. And I think what is important is that each and
every Guard or Reserve unit have a mission that is clear to
them and clearly needed either by us or for the Guard for
defense support to civil authorities, in particular the States,
in an emergency.
And, in that connection, we are beginning just this year--
in fact, I have a meeting on it this afternoon--to have a way
of defining the requirements for the Guard, defense support to
civil authorities. We have never done that in 250 years of
having a National Guard, defined requirements for what they
need to do for the States, the way we have requirements defined
for the Pacific Command, the Northern Command, the Central
Command, and so forth. We are just beginning that now. That
will give a lot more clarity to the future need for and size of
and composition of our Guard and Reserve force.
We took a first look at that in the SCMR. I would say it
was a good, solid look, but we are trying to refine that
through the process I just described.
And let me ask Admiral Winnefeld if he wants to add
anything about the Reserve Component.
Admiral Winnefeld. I would simply reiterate what the Deputy
Secretary said about the value of the Guard and Reserve. They
have been tremendously important as a component of the entire
DOD and we very much value them.
As the sequester cuts occur, depending upon the depth, if
it is the full sequester, what have you, the entire business is
going to have to come down, to include the Guard and Reserve
along with the Active.
I don't want to speak for the service chiefs, but I know
that General Welsh and General Odierno are very concerned about
this. They are paying very close attention to it. Having spoken
to General Odierno--and I don't want to put words in his
mouth--I know he would likely--and probably Secretary McHugh, I
think, is along with him, but I haven't spoken to him--bring
the Active Component down at a larger rate than the Guard. But
that remains to be seen, depending on what the Services come in
with their budget submissions.
But make no mistake that we value the contributions of the
Guard and Reserve.
Ms. Duckworth. Mr. Secretary, so in your meeting later
today talking about what the requirements are for defense
support of civil authorities, are the Governors going to have
any say in this meeting?
Secretary Carter. That is what is really novel about this
process. For the first time, we will have the TAGs [The
Adjutants General] representing the Governors. And I will then
meet with the Governors, as I have done now several times over
the last few years on this very subject, because I know it is a
difficult thing. This is an area where we, at the Federal
level, provide and pay for something that the Governors then
use. That has an issue of federalism in it, and we need to
resolve it in a thoughtful way.
And having seen the chaos of 2 years ago when we began
making budget changes in the Air National Guard, I think we
need to do better than that. We need to have a clear sense of
what the Governors need and what the role of the Guard is in
that capacity. And then the Guard and Reserve also play a role,
if mobilized, in foreign conflict, as well. And we need to
define all that.
Ms. Duckworth. Thank you. I am out of time.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Mr. Franks.
Mr. Franks. Well, thank you, Mr. Chairman.
And thank both of you for being here. There is certainly a
great deal of respect on this side of the room for both of you.
And, Admiral Winnefeld, if it is all right, I will start
with you, sir. You know, in the debate in this House, sometimes
there are things that are--the function of the debate is a
political one-upmanship, and then sometimes there is really the
sincere commitment to try to do the right thing, and sometimes
there is an amalgamation of both. And so I am going to ask you
a question that has a political dimension to it, and I don't
ask to you address that at all. Just an honest, professional
military point of view, even though the question will become
obvious.
In your best professional military judgment, would there be
greater risk to this country's ability to meet our current
national security commitments under sequestration or under the
funding approved by the House in its budget deliberations,
which would restore the $52 billion cut in national defense in
fiscal year 2014?
Admiral Winnefeld. Well, sir, if you are asking me whether
I think we would be able to meet our commitments under a $52-
billion cut or no $52-billion cut, I would have to answer that
we would be a lot more likely to meet them under the ``no $52
billion cut.'' So I would----
Mr. Franks. I hated to put you through that exercise, but I
appreciate you answering honestly. And that is--I am not
shocked at it, but oftentimes--I know sometimes civilian
command structure makes it difficult to do that. So I
appreciate that, Admiral, and appreciate your commitment to the
cause of defending this country.
Dr. Carter, I have had the privilege of spending the last
11 years in Congress on the Strategic Forces Subcommittee,
focusing on our strategic nuclear deterrence and our homeland
missile defense apparatus. And you may recall saying in a
recent speech at the Aspen Security Forum--I will just quote
it. It says, ``You may all be surprised to know that nuclear
weapons don't actually cost that much. Our annual spending for
nuclear delivery systems is about $12 billion per year. This is
out of around $525 billion, and so it is not a big swinger of
the budget. You don't save a lot of money by having arms
control and so forth.''
And just for the record, I couldn't possibly agree with you
more. But tell me, if you would, your conclusions related to
the SCMR, what conclusions it came to in regard to our nuclear
deterrence as well as our missile defense capabilities.
Secretary Carter. Absolutely. And for the record, I want to
associate myself with the Vice Chairman. I will take the $52
billion, too.
Mr. Franks. You think the $52 billion would help.
Secretary Carter. Yes.
Mr. Franks. Okay, we have established that. Yes, sir.
Secretary Carter. With respect to the cost of nuclear
forces, what I said in Aspen was that we, this year, protected
the operations of the nuclear forces under sequester. We did
not want to not send nuclear submarines to sea, not have our
missiles on alert. We didn't want to do that, so we protected
that. Obviously, that pushed sequester off onto other accounts.
But it, like the war in Afghanistan and a few other things, we
protected because it is so important to our security.
The point about cost is this: The SCMR looked at nuclear
forces, but the point I was making was and the way I said it in
Aspen was nuclear weapons deserve our deepest respect and
constant attention because of the awesome, destructive power
that they have. However, they are not a big swinger in our
budget. That is just a fact.
Mr. Franks. Yep.
Secretary Carter. And so, as we go forward, we will make
decisions about nuclear forces on the basis of a lot of
factors, but budget will not seriously drive the composition of
the nuclear forces. They are just not a huge part of the
budget.
Many of you, of course, understand that, but many people
don't realize. They think that they are a large part of our
budget. In fact, they are not. But they are, obviously, very
important.
Mr. Franks. Yeah. Well, and I appreciate you making that
clear, because, as you know, as you say, most folks, it is just
one of those things that we don't have in the forefront of our
consciousness, that while they represent the pivot of most of
our capability in the foundational sense, they are not the cost
factor that some think they are.
So let me try to get one last question in. In the overall
conclusions of the SCMR, let me ask you if you can articulate--
and I will ask both of you, because my time is just about gone
here--what are the things that you think are most significant
that we can't do under the conclusions that you have come to,
those things that you think that are most important that we
can't do that we should be able to do and we should focus on as
a committee and a country?
The Chairman. The gentleman's time has expired. Can you
please take those responses for the record?
Secretary Carter. Absolutely.
[The information referred to can be found in the Appendix
on page 106.]
The Chairman. Thank you.
Mr. Cooper.
Mr. Cooper. Thank you, Mr. Chairman. I had almost given up
hope here.
I appreciate the witnesses.
I just wanted to make an announcement that, in an effort to
be constructive, Congressman Paul Ryan and I have introduced
today a bill that would give the Pentagon complete flexibility
in making spending decisions. Now, we would not reduce the
extreme diet that you are on. And I personally would like to,
you know,
eliminate sequestration entirely. But at least we want to give
you
flexibility.
Now, this has been an unduly controversial issue on the
committee, as the chairman knows. I introduced such an
amendment during the markup. It passed by a voice vote. But
then when a recorded vote was called, people put on their team
jerseys again, and it turned out that both parties were against
flexibility.
So I don't know how far this bill will go, but I hope that
more Members of Congress and even more members of this
committee--because this has not been the best attended of our
hearings--will pay attention to the extraordinary upheaval that
is going on in the Department of Defense right now as a result
of our own actions. This is not a foreign threat; this is a
self-inflicted wound. And Congress needs to behave much, much
better when it comes to funding our military priorities.
So I am not asking our witnesses to comment and get in
trouble, because you are always reluctant to bite the hand that
feeds you. Now you are even reluctant to bite the hand that is
not feeding you. It is a crazy situation that you have been put
in. But we on this side need to be doing a much better job.
So I thank the chairman. Yield back the balance of my time.
The Chairman. Thank you.
Mr. Nugent.
Mr. Nugent. Thank you, Mr. Chairman.
And I certainly do appreciate your service, both of you, to
this country.
And I guess one of the--and this is not directed to you,
just a comment. As our Commander in Chief, you would think, as
we move forward, particularly when we talk about at least
turning off the sequester as it relates to our Department of
Defense--which, without it, we have no freedom or security.
And so, you know, as we move forward, you heard it already,
about the $52 billion, the President has come out and, you
know, issued a veto threat in regards to that, which is
unfortunate because that takes away the dialogue that you could
have in regards to the rest of sequestration and what it is
doing to the country but, more importantly, what it is doing to
our national security.
You know, having three sons that currently serve, I hear
firsthand the effects of sequestration in regards to training
and readiness, but they are good troopers. You know, they stand
ready to serve. They stand ready to protect this country. But
it is disheartening, as a dad, to hear them because their mom
and I worry. When we have had them deployed to Afghanistan and
Iraq, we knew that they were the best-trained, best-equipped
force and they had a good opportunity to come home. By the
grace of God, they did. But now I am worried about the effects
of sequestration and a Commander in Chief that says the right
things but doesn't
necessarily do the right things, particularly as it relates to
our
military.
You have talked about retention. I think that should be a
huge issue for you in the armed services. Because we have one
of the best-trained groups right now. They have experience in
combat, which is not something you can teach.
How do you see a way forward to retain those that have
served their country? I mean, how do we do that in
sequestration without just, you know, RIF'ing just rafts of
folks?
Secretary Carter. Well, I think one of the tragedies of
sequestration is that there will be people who, if
sequestration continues, who joined to serve, who have served
honorably, and whom we won't be able to afford to retain. That
is a reality and a tragedy.
And to get back to something that----
Mr. Nugent. But, I mean, did we not learn from the Vietnam
era, when we went through the same issues of RIF'ing people,
that it is so difficult to train that? I mean, it is almost
impossible to train that experience.
And are there other areas that we could look to instead of
always looking at personnel? And I know it is a huge part. I
ran an agency. It is the largest, typically, the largest part
of your budget. But, you know, you talk about modernization and
making--it is either modernization or a larger force. Is there
an in-between that we can reach if we can't get the President
to work with us on sequestration as it relates to the military
in particular?
Secretary Carter. Well, we are going to try to make the
most balanced approach we can to those cuts if we have
sequestration in fiscal year 2014.
But the reality is--and this gets back to what Congressman
Cooper was saying about flexibility. Flexibility doesn't help
us that much, because we have to go where we can go and get
money in the near term. And there is much of the defense budget
that we cannot access in the near term. That is why we end up
doing ruinous things to readiness, for example, because those
are accounts we can get our hands on. So flexibility in that
sense doesn't help us much.
The kind of flexibility we need is the kind, as we
indicated earlier and the SCMR shows, we need flexibility in
time and we need the----
Mr. Nugent. Not----
Secretary Carter [continuing]. Latitude to do things like
BRAC----
Mr. Nugent. Not to cut you off, but I have----
Secretary Carter [continuing]. And so forth that----
Mr. Nugent [continuing]. 19 seconds.
One last question. When we are talking about CENTCOM
[Central Command] and SOCOM [Special Operations Command], the
Secretary talked about reductions in force there. CENTCOM
already had talked about reducing that force by 1,500 in 2014.
The additional reductions that the Secretary talks about, is
that on top of that number?
The Chairman. The gentleman's time has expired. Can you
please take that one for the record?
[The information referred to can be found in the Appendix
on page 106.]
Mr. Nugent. Thank you. I appreciate it.
The Chairman. Thank you.
Mr. Cook.
Mr. Cook. Thank you, Mr. Chair.
I know some of this has been addressed, but I quickly want
to go over this again. And this is about readiness and training
and everything like that.
And it seems as though we dance around this over and over
again, but the--and correct me if I am wrong in the way I am
getting this, but the bottom line is that, basically, what we
are ending up with is all the units are C-4, not combat-ready,
not deployable.
And it is like, I don't know, maybe it is just my
impression that we are almost afraid to come out and say that.
And, yes, it is because of the sequester and other things, but
the bottom line is, you know, somebody who has been an
infantryman and everything--and that is, like, the worst thing
that can happen to a unit, is to be a C-4 or not combat-ready.
And that is what we are. And you have just added to that
argument by talking--and it is not your fault; it is our fault.
Because of the depots, about all the gear we still have in
Afghanistan that we still have to get back, that they are going
to probably have to drag it out of there; it is not going to be
running. And yet we are supposed to meet all these
contingencies.
And if you can comment on that. If you already have, I ask
for your patience in addressing this. Thank you.
Admiral Winnefeld. No, it is a very, very important and
good question.
One of the frustrations we have in articulating this
precisely is that, if you articulate it precisely, it is
classified. So you would be telling an adversary, you know,
where you are. So we have been speaking out, though. We have
been saying, hey, we are getting hollow, we are losing
readiness, we have grounded nine fighter squadrons.
Fortunately, thanks to the reprogramming action by Congress,
they are back flying at a very low level again. But, you know,
if we get into specifics, we are telling the bad guys where we
are.
So I share your frustration. And believe me, that is part
of the contribution to hollowness, is not being able to talk
about it precisely in public.
Mr. Cook. No, I agree with you. But, yet, you know,
everybody who watches this hearing here has got to hear the
same things that everyone, when we hear these doom and gloom
reports. And, of course, the old unit rep FORSTAT [Force Status
and Identity Report] reports, some of them were classified,
some of them weren't.
But in terms of all the contingencies, you know, all the op
plans and everything else, it is like, God, you got to just
wrap them up and put them--because we can't basically carry out
any of them. And I don't know whether I am speaking in a
classified mode or not, but I think it is something that
everybody in the world knows right now, and it is sending a bad
signal.
You talked about, yeah, maybe we got the nukes, but in
terms of conventional warfare right now, God, if the Members of
the Congress and the public don't get it, this is the most
serious threat that I think we face.
But I have one more question before we run out of time, and
this is about one of the comments made about the Secretary has
asked Secretary Carter to identify an individual from outside
the Department who is deeply knowledgeable about the defense
enterprise and eminently qualified to direct implementation of
the OSD [Office of the Secretary of Defense] reductions and
report directly to the Deputy Secretary.
This kind of scares me, about this person who, he or she,
right after they solve world peace, they are going to solve
this mess and be the guru on how we are going to--so can you
comment on where we are going to find this messiah that is
going to straighten us out?
Thank you.
Secretary Carter. I don't think it will be a messiah, but
we do need to reduce the size of the Office of the Secretary of
Defense. The Secretary feels strongly about that; I feel
strongly about that. We can't ask people all over the country
and our military people and civilian employees all over the
world to make sacrifices if we are not willing to make
sacrifices ourselves. So what this is about is showing the way.
And Sandy has a great expression that he always tells me,
which is, ``the pig won't slaughter itself.'' And applied to
OSD, not that they are bad people or anything, but I can't
staff out the reduction of that organization. And so I am going
to have someone to come in to advise me and the Secretary--we
will make the final decisions--on how we can streamline the
Office of the Secretary of
Defense.
It is just a reasonable thing that I can't go to my staff,
which is the Office of the Secretary of Defense, and say, how
would you streamline the Office of the Secretary of Defense? I
won't get a good answer. I will put them in a bad position. So
I am going
to get somebody who knows enough about the Department and
management----
Mr. Cook. Yeah----
Secretary Carter [continuing]. To advise us, and that is
how we will make those decisions.
Mr. Cook. Yeah, I am running out of time. I just want to
thank you very much for--it has been a long day. And I wasn't
trying to put you on the spot about whether it is classified.
But we do dance around that, and I think everybody knows the
answer already.
Thank you.
The Chairman. Thank you.
Mr. Smith.
Mr. Smith. I just have a couple of comments based on some
of the questions that transpired.
I mean, first of all, on the flexibility point, if
sequestration happens, I really want to underscore what Dr.
Carter said, flexibility has very, very limited benefit. And I
worry a little bit that this has sort of taken on a life of its
own, as if this would be a solution to the problem. And I
really thank you for pointing out the limitations on what you
can cut where.
If you have to take these $52-billion cuts every year going
outward, no flexibility in the world is really going to
fundamen-
tally change the dire scenarios that you laid out. We need to
end sequestration.
Secretary Carter. Right.
Mr. Smith. The second thing I would like to point out,
regrettably, Admiral Winnefeld, you don't have the $52 billion
that Representative Franks made you think you had, because the
defense appropriations bill that was passed does have $52
billion more in it than sequestration would allow, but it does
not change sequestration law.
So, yes, if we can imagine a world where this appropriation
bill exists independent of sequestration, then it is all good.
We passed our DOD authorization bill based on that same
premise.
The trouble is, as you have heard today and as you have
witnessed, nothing is on the table to stop sequestration. So
you pass this lovely appropriations bill, and then you come in,
you cut $52 billion out of it. It doesn't really change the
equation much.
And, lastly--and this is the most political point I will
make, so I apologize a little bit in advance. But it is really
just in response to Mr. Forbes' comment that somehow
sequestration was all the President's idea and why on earth did
he have such a dumb idea and why has he put us in this place.
It is an interesting selective amnesia. But the reason for
sequestration was because of the House Republicans' refusal to
raise the debt ceiling.
So, basically, if the President had vetoed that bill--and I
voted against it, but I have enormous sympathy for the people
who voted for it--if the President had vetoed that bill, we
would have breached the debt ceiling and been unable to pay a
good many of our bills and probably collapsed our economy.
Sequestration was only forced upon us because of the refusal to
raise the debt ceiling.
And this is not just sort of a historical point, as we
drift toward another option of raising the debt ceiling. I hope
people will remember that outcome as we get close to the debt-
ceiling issue and simply raise it. Once we have incurred the
debt, once we have passed the spending bills, once we have
passed the tax cuts, to then come along and say, oh, gosh,
really, we don't want to pay those bills, is just wrong.
If you want to do something about the debt, you know,
increase taxes, cut spending, put something on the table. But
don't once again take our country to the brink of not raising
the debt ceiling so that we can pay our bills.
What we see before us, what we have heard for the last 2-
plus hours is directly as a result of the brinksmanship over
the debt ceiling that happened in the summer of 2011. And I
just don't want people to forget that as we go into another
series of budget fights.
I thank the chairman for his indulgence. I yield back.
The Chairman. I will expound a little bit upon what the
ranking member just said.
I think many times when we go out and respond to our
constituents, we can talk about a vote, and they don't always
understand that a vote may be containing several different
items. It is not one item and a ``yes'' or ``no'' vote.
That particular vote on the Budget Control Act, the very
first thing it did was raise the debt-ceiling limit. Then it
also cut about a trillion dollars, half of which came out of
defense and half came out of other domestic spending.
Then it set up a ``super committee'' [Joint Select
Committee on Deficit Reduction] that was supposed to find an
additional trillion dollars in savings out of mandatory
programs. We all know now the history of that. They were unable
to do that, so sequestration did kick in. And that trillion
dollars, instead of being taken out of mandatory programs,
which are the real driver in all of this--because if we
eliminated all domestic spending, we would still be running a
deficit of over a half-trillion dollars. And that comes out of
the mandatory side that we have no vote on and really needs to
be addressed.
So the sequestration kicked in, and that took another half-
trillion dollars, $500 billion, out of defense on top of the
$487 billion and the part of the $100 billion that was done
earlier under Secretary Gates that came out of defense also. So
it has been a culminating effect.
And the gentleman is absolutely correct; we will face on
September 30th a very important decision about moving forward.
Probably half of the Congress now does not know what regular
order is like. They have never had it.
You have never had in your--like you said, you were sworn
in on the day we voted for that fateful bill. So none of the
members of the Joint Chiefs have ever served under a regular
budget.
I don't think the Senate has passed an appropriation bill
since 2009. They did pass a budget this year, although it is so
far different from the House budget that there is no way to
reconcile the numbers. And we have become pretty dysfunctional
as a Congress. It is unfortunate, but some way, at some point,
we need to get our act together and get something done.
I do have one final question. Title 10 of U.S. Code
codifies the permanent requirement for an independent panel to
review the QDR process--and we have talked earlier about the
QDR--and also provide alternative assessments. The law provides
that the panel may request whatever information they require
from the Department, DOD, to conduct their work.
Given that last year's QDR is expected to be heavily
informed by the SCMR, to what extent do you intend to make
available to the NDP [National Defense Plan] the proceedings or
conclusions of the SCMR? You will give them the same support
that you give to the QDR?
Secretary Carter. Yes, absolutely. We were very pleased and
fortunate that former Secretary Perry and General John Abizaid
have agreed to chair that panel. They will get all the
information they want for their deliberations, including the
SCMR.
The Chairman. Great. They did an outstanding job last time.
The members of the NDP were required by law to be appointed
by February 1st. We have appointed ours. The remaining members
have been appointed. The Secretary has yet to appoint his co-
chairs. Do you know the reason for that delay?
Secretary Carter. I will get back to you on that.
[The information referred to can be found in the Appendix
on page 105.]
The Chairman. Okay.
And now that the SCMR is over--and maybe that was taking
the time--I would like to ask that the Secretary comply with
the law and get the NDP operational as soon as possible. So if
you could carry that message back.
Secretary Carter. Will do.
The Chairman. Thank you very much.
Anything else?
Mr. Smith. No.
The Chairman. No further questions.
Thank you very much for your time, your patience, and your
willingness to answer our questions.
This hearing is adjourned.
[Whereupon, at 12:25 p.m., the committee was adjourned.]
=======================================================================
A P P E N D I X
August 1, 2013
=======================================================================
PREPARED STATEMENTS SUBMITTED FOR THE RECORD
August 1, 2013
=======================================================================
Statement of Hon. Howard P. ``Buck'' McKeon
Chairman, House Committee on Armed Services
Hearing on
Initial Conclusions Formed by the Defense Strategic Choices and
Management Review
August 1, 2013
This committee has frequently encouraged the Pentagon to
fully plan for sequestration, and to make the consequences of
several rounds of budget cuts known. With that in mind, I
welcome this review and what it seeks to achieve.
I note that the President has directed the Department to
maintain his 2012 defense strategy, even though his senior
commanders have testified that the strategy would have to be
revised in the face of additional budget cuts. Any further
consideration of strategy has been deferred to the Quadrennial
Defense Review, which will not report out until next February
at the earliest. In the meantime, the review makes clear that
the Department will proceed with changes in force structure,
compensation, and further efficiencies without a new strategy.
The most optimistic scenario has the President requiring DOD to
find another $150 billion on top of the $487 billion that has
already been cut. To make matters worse, even if all of the
options in this report were adopted, it would only address 10%
of the true budget shortfall in the next year or two. The math
simply does not add up.
This review also makes clear what I have been warning about
for over 2 years. Further cuts will cause catastrophic
readiness shortfalls, we will lose our workforce and ability to
recruit and retain the All-Volunteer Force, and our influence
around the world will continue to diminish.
There is agreement on both sides of the aisle and both
sides of the Potomac that these cuts embolden our enemies and
jeopardize U.S. national security. We often talk of risk, but I
hope that today we will have a frank discussion about how this
funding profile for defense limits the ability of this country
to protect our national security interests--not simply that we
are accepting more risk, but what that means for the Nation and
our men and women in uniform. I look forward to hearing the
testimony and thank both of our witnesses for being here.
Statement of Hon. Adam Smith
Ranking Member, House Committee on Armed Services
Hearing on
Initial Conclusions Formed by the Defense Strategic Choices and
Management Review
August 1, 2013
I would like to thank our witnesses for appearing before us
today. You have extremely hard jobs, and I am afraid that we in
Congress have not made them any easier by allowing
sequestration to take effect.
The single biggest takeaway from Strategic Choices
Management Review is that Congress, by allowing sequestration
to continue, is abdicating its constitutional responsibility to
responsibly fund the military and to provide for the common
defense. Through sequestration, Congress is forcing the
Department of Defense to make some extremely difficult
decisions that will undermine military readiness and put more
unneeded stress on our troops, civilian employees, and military
retirees.
I hope our witnesses today can help us understand the pain
that sequestration will cause next year and into the future. I
would ask them to walk us through those choices that will have
to be made and those risks that will be imposed. And we should
be clear--when we talk about risk in the context of the
Department of Defense, we mean that military conflicts will go
on longer or our response will be slower and smaller and those
translate to greater loss of life.
Without a doubt, the Department of Defense must become more
efficient, and Congress will have to help them do that. But
sequestration will continue to force the Department to make
unacceptable cuts to force structure, modernization, and
benefits for our military personnel and retirees, creating
significant readiness shortfalls. The SCMR drives home the
point that continued budget policies of fiscal austerity and
intentionally starving the Federal Government of revenue put
our national security at risk.
We are already on a path to significant deficit reductions.
I am in favor of simply lifting sequestration and ceasing to
impose these dramatic costs on our military. Those who refuse
to end sequestration have the responsibility of proposing a
balanced package of revenue increases and spending cuts that do
not harm our national security. Those who refuse are allowing
sequestration, and the significant harm it causes, to persist.
In particular, those who continue to insist on tax cuts above
all else have a responsibility to answer the question: How much
military risk are you willing to take to preserve your tax cut?
Thank you Mr. Chairman, and again, I very much appreciate
the witnesses appearing here today.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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DOCUMENTS SUBMITTED FOR THE RECORD
August 1, 2013
=======================================================================
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
=======================================================================
WITNESS RESPONSES TO QUESTIONS ASKED DURING
THE HEARING
August 1, 2013
=======================================================================
RESPONSE TO QUESTION SUBMITTED BY MR. MCKEON
Secretary Carter. There were extraordinary circumstances this year
that delayed the appointment of the National Defense Panel (NDP) co-
chairs. First, Secretary Hagel did not take office until February 27,
2013. In addition, the Department was facing significant budget cuts
whose long-term impact urgently needed to be understood. Secretary
Hagel therefore directed the Strategic Choices and Management Review
(SCMR) to develop potential options for managing these cuts. The
defense strategy must be appropriately informed by the resources
available to implement it; thus, Quadrennial Defense Review (QDR)-
related work, including NDP appointments, was deferred until the SCMR
was complete.
Upon completing the SCMR, Secretary Hagel appointed former
Secretary of Defense William Perry and retired General John Abizaid as
the co-chairs of the NDP. Congressional staff was informed of these
appointments on June 27th and 28th. The Department also hosted the
NDP's inaugural, day-long meeting at the Pentagon on August 20th.
The QDR will review the Department's strategic priorities and
define its missions, capabilities, and programs over the long term,
taking into account the future security environment and priority
missions for which U.S. forces must prepare. The work undertaken for
the SCMR will facilitate and inform the QDR. [See page 43.]
______
RESPONSE TO QUESTION SUBMITTED BY MR. WILSON
Secretary Carter. When Secretary Hagel said, ``[o]verall, personnel
costs have risen dramatically, some 40 percent above inflation since
2001,'' he was referring to the increase in Military Personnel funding
from 2001 to 2013. In 2001, the Department spent $112B (in FY14$) from
the Military Personnel account, while in 2013, DOD spent $156B (in
FY14$) from that account. This is an increase of 40% above inflation.
Not all of this increase is due to pay increases. There are more active
duty personnel and more activated reserves serving today than there
were in 2001, increasing the cost to the Department. There are also
other items in the account beyond pay for current military personnel,
such as retired military pay accrual and Medicare-eligible Health Care
accrual, which experienced cost growth. Additionally, there was growth
in the costs of some of the benefits provided to Service members (e.g.,
housing) that also contributed to the increased costs in the Military
Personnel account beyond inflation. [See page 26.]
______
RESPONSE TO QUESTION SUBMITTED BY MS. HANABUSA
Secretary Carter. The Strategic Choices and Management Review
(SCMR) looked at the entire Department, and all of the Services are
facing end-strength cuts as well as severe reductions in funding as a
result of sequester-level cuts. We typically talk about capacity cuts
for the Army and Marine Corps in end-strength terms, and cuts in Navy
and Air Force in terms of numbers of ships and aircraft squadrons.
The Services are now in the midst of determining exactly what a
smaller military would look like and what it would be capable of doing.
I hope the results of the SCMR indicate why we need the cloud of
budgetary uncertainty and turbulence to be dispelled so that we can
continue the strategic transition upon which we have embarked with
certainty and stability.
The Department strongly supports the President's Budget Submission
for Fiscal Year 2014 and the long-term budget plan for the entire
Federal Government that makes critical investments to strengthen the
middle class, create jobs, and grow the economy while continuing to cut
the deficit in a smart and balanced way. I urge Congress to develop a
comprehensive and balanced deficit reduction package that the House and
Senate can pass, and that the President can sign. [See page 28.]
______
RESPONSE TO QUESTION SUBMITTED BY MR. FRANKS
Secretary Carter. The Strategic Choices and Management Review
(SCMR) was never intended to be definitive in describing the future
force under various budget scenarios. Rather, it was intended to inform
the decision space senior leadership faced, and, in turn, guide the
Services and Defense Agencies in developing their budgets. They are now
in the midst of determining exactly what a smaller military would look
like and what it would be capable of doing. This work will dovetail
with the Quadrennial Defense Review (QDR), which will look at the
options for adjusting the current strategy and the implications of that
assessment.
That said, the SCMR showed in the starkest terms that
sequestration-level budget constraints are incompatible with sustaining
the current defense strategy. Sequester is irrational, mindless, and
damaging. The $37 billion in FY13 sequestration cuts are having a
damaging impact on readiness, which limits the United States' military
options when responding to crises. The Services are planning now for
how they would implement their plans if sequester remains in FY14, and
the result could be a compounding of this year's damage. The Department
will still have an obligation to defend the country and maintain global
responsibilities. Accordingly, DOD will preserve the best possible
force to do so in the long term, but sequestration-level caps will
limit what is possible--now and in the future. The budgets that the
Services are developing, combined with the results of the QDR, will
position the Department to say with more clarity which missions it will
no longer be able to
afford. [See page 37.]
______
RESPONSE TO QUESTION SUBMITTED BY MR. NUGENT
Secretary Carter. Much of the growth seen in Central Command
(CENTCOM) was due to a temporary increase in manpower associated with
the war effort. Most of the reductions for CENTCOM in 2014 are tied to
the winding down of the war effort.
The reduction Secretary Hagel is implementing at all major
headquarters, based on the results of the Strategic Choices and
Management Review, is a 20% reduction in the 2013 baseline. This is in
addition to previously planned reductions, such as the plans to reduce
CENTCOM in 2014. [See page 39.]
?
=======================================================================
QUESTIONS SUBMITTED BY MEMBERS POST HEARING
August 1, 2013
=======================================================================
QUESTIONS SUBMITTED BY MR. WILSON
Mr. Wilson. 1) The Strategic Choices and Management Review
determined that the Army could be reduced from the plan of 490,000 to
somewhere between 420,000 and 450,000 for the Active Component and from
555,000 to between 490,000 and 530,000 for the Reserve Component.
a. In what timeframe would these reductions take place?
b. How much risk does the Army incur with respect to strategic
capacity in case the United States is drawn in to a more traditional
war mission instead of a protracted counterinsurgency operation?
c. How does this impact the Army's ability to pivot a focus to the
Pacific and maintain a presence in Europe, Africa, and the Middle East?
d. With this large of a reduction can we assume that it would
require an additional BRAC since it would leave the Army with too much
infrastructure for the force size?
Secretary Carter. a. SCMR assumed that the Active Army would be
reduced from 490,000 to 420,000 by FY19 and the Reserve would be
reduced from 555,000 to 490,000 by FY23.
b. SCMR determined that, at end-strength of 420,000 to 450,000
Active Duty and 490,000 to 530,000 Reserves, the Army has the capacity
to execute overlapping traditional wars and defend the homeland, with
acceptable risk. At these end-strength levels, the Army would be more
strained to support a large, protracted counterinsurgency operation.
c. The reduction in Army end-strength provides sufficient forces to
prioritize DOD focus in the Pacific, while also maintaining some
presence in Europe, Africa, and the Middle East.
d. The Secretary stated that the Department would benefit from an
additional Base Realignment and Closure (BRAC) round to align
decreasing manpower with infrastructure; accordingly, the Department
requested a BRAC in the President's Budget Submissions for FY13 and
FY14.
Mr. Wilson. 2) The plan for reform of the Administration of the
Military Health System includes a proposed increase in the personnel in
the Office of the Assistant Secretary of Defense for Health Affairs
from the current level of 45 to 121 to include retaining the four
Deputy Assistant Secretaries. The plan calls for this plus-up by
October 1, 2013. How does this personnel increase meet the requirement
to reduce headquarters by 20 percent? Despite the continuing assertion
by DOD officials that health care costs are negatively affecting the
overall DOD budget, the cost growth of the Defense Health Program from
FY 13 to FY 14 is $300 million, an increase of just under 1 percent.
The cost of care in the Military Treatment facilities rose by $175
million, less than 1 per cent. The cost of Private Sector Care
decreased by $650 million. Over the last 3 years DOD has requested
authority to reprogram in excess of $1.2 billion from the DHP to non-
health-care-related activities. What do you anticipate will be
unexpended in the DHP for this fiscal year?
Secretary Carter. The plan to reduce management headquarters by 20%
will be executed against an accurate baseline of headquarters personnel
accounting, regardless of potential realignments among headquarters
elements. It is important to note that the referenced proposed increase
of personnel in the Office of the Assistant Secretary of Defense for
Health Affairs (HA), from the current level of 45 to 121, is actually a
realignment from the current TRICARE Management Activity (TMA)
personnel who support headquarters functions as part of the current
dual-hatting organizational structure between HA and TMA. There is no
net increase in personnel in the Military Health System headquarters
elements as a part of this realignment.
Given the size of the Defense Health Program's appropriation and
the variability inherent in the beneficiary population's demand for
health care, it is impossible to predict with great accuracy, as of
this writing, what the Department's final financial position will be,
to include unobligated/unexpended funds. Fiscal Year 2013 was
further complicated by a Continuing Resolution as well as a reduction
due to
sequestration.
Mr. Wilson. 3) Secretary Hagel recently visited a commissary at
Naval Air Station Jacksonville and, as I understand, he is the first
Secretary of Defense to visit a commissary and I thank him for taking
the time to personally view this important benefit and meet the
families it supports. According to a recent Resource Management
Directive, the Defense Commissary Agency has been told to study the
feasibility of focusing its operations mostly or entirely overseas and
cut its budget by 33%. The study was due to the Secretary of Defense by
1 July. Is it truly the intent of the Department to eliminate CONUS
commissaries and deprive military families on CONUS bases of this very
important non-pay compensation benefit? If so, has the Department
determined how much it would have to spend on maintaining overseas
commissaries due to the loss of nearly 70% of surcharge funds generated
by CONUS commissaries that currently support those overseas? Has the
Department calculated potential impacts on readiness and retention if
the cuts and closures are implemented? Finally, what is the net effect
monetarily of implementing the RMD after adding other costs that are
offset by the commissaries, such as maintenance of overseas
commissaries, COLAs, unemployment compensation, adverse impacts to
readiness and retention, etc.?
Secretary Carter. At the outset, let me assure you that the
Department continues to explore the future of military commissaries. In
addition, the Resource Management Directive (RMD) report has not been
delivered to the Secretary or me, so I am unable to comment about its
contents at this time.
______
QUESTIONS SUBMITTED BY MR. LANGEVIN
Mr. Langevin. 4) I understand that much of what you have to say
today is very broadly couched and that many difficult decisions remain
to be made as you choose from, as the Secretary said, a menu of options
to deal with the mindless cuts that sequestration imposes. I applaud
the Department's willingness to seriously examine reducing DOD's
overhead and administrative costs, and share the view that this is an
important route to cost savings, despite the backloading of the
savings. But as the Department continues to dive into the very stark
options that you have laid out and make some budgetary choices, I would
simply emphasize the importance of having discussions with Congress
sooner rather than later. I would also emphasize that I am very
concerned over any degradation in our cutting-edge capabilities and our
investments in the fundamentals of a strong national defense, such as
STEM and R&D. Our vulnerabilities, and the interest of our adversaries,
in these leading-edge capabilities would make any reduction penny-wise
but pound-foolish. I am particularly concerned given that cuts in R&D
show immediate budget effects but their more pernicious effects take
years to set in, whereas personnel and other savings are much more
backloaded. To that end, how did the Department look at second- and
third-order effects of reductions--the effects on future workforce,
other agencies, and other such groups outside the DOD?
Secretary Carter. During the Strategic Choices and Management
Review (SCMR) the Department worked to consider the impacts to the
future workforce and others outside of DOD. For example, the Department
leveraged previous studies on recruitment and retention to evaluate
impacts to pay and compensation. However, the timeline that SCMR was
working under did not permit a detailed quantitative assessment of the
second- and third-order effects resulting from sequester-level cuts.
That said, sequester-level cuts would harm missions across Government
that support a vibrant economy and a strong national defense. The
Department depends on a world-class education system to maintain a pool
of qualified recruits, as well as on a domestic infrastructure that
surrounds our bases and installations. DOD also counts on scientific
breakthroughs funded by R&D grants joined with a strong manufacturing
base to maintain our decisive technological edge. All of these
aforementioned areas are threatened by sequestration. The Department
must work with other impacted agencies to make the case for ending
sequestration and assessing the second- and third-order effects that
have yet to materialize. If the sequester
remains the law of the land, I agree that the potential repercussions
are very
concerning.
Mr. Langevin. 5) During the out-brief of the CSBA ``strategic
choices exercise,'' all four teams generally characterized the current
budgetary constraints due to sequestration as unsustainable for
securing U.S. interests and fulfilling our international obligations.
Do you agree with that assessment?
Secretary Carter. The Department agrees with this assessment. The
abrupt, deep cuts caused by the Budget Control Act of 2011 (BCA) caps
force DOD to continue to make the sort of nonstrategic choices made
this year. The Services are currently planning for how they would
implement their plans if sequester remains in fiscal year 2014, and the
result could be a compounding of the current damage. If the cuts
continue, the Department will have to make sharp cuts with far-reaching
consequences, including limiting combat power, reducing readiness, and
undermining the national security interest of the United States.
Sequestration-level caps will limit what DOD can do--both now and in
the future.
Mr. Langevin. 6) Dr. Auslin from the American Enterprise Institute
mentioned at a recent hearing that the ``U.S. should find it worrisome
that every nation in the Asia-Pacific that can afford more weapons is
buying more weapons.'' Additionally, ADM Roughead stated at the same
hearing that the real power of Asia is the ``economy'' and that we need
to maintain stability within the region so no ``one'' nation is
dominant. Under the scenarios in the SCMR, are we able to conduct the
pivot to the Asia-Pacific region? If so, what costs and risks may be
incurred elsewhere in the world if we do?
Secretary Carter. No matter the fiscal scenario, the Department
remains committed to executing the rebalance to the Asia-Pacific.
Indeed, the Secretary made his second trip to the Asia-Pacific this
month. What the SCMR did reveal was that, at sequestration-level caps,
the Department is unable to completely implement the planned rebalance.
DOD will have to make adjustments. The Quadrennial Defense Review will
take a closer look at the options for adjusting the current strategy
and the implications on the Department's global activities.
Mr. Langevin. 7) One of the assumptions made during SCMR was
changes in the law that would grant the DOD flexibility in implementing
the reductions. What happens if you don't get this flexibility?
Secretary Carter. The SCMR did not assume that Congress grants the
Department flexibility in meeting sequester-level budget caps. DOD
fully recognized the challenges in gaining approval to implement
statutory changes, which is why some proposals were characterized as
more risky. That said, the Department must cut more deeply into its
force structure without this flexibility.
DOD needs Congress to be a full partner. Specifically, it needs
Congress' help on:
Remove restrictions that limit DOD's ability to manage
efficiently. For example:
The rate at which the Department can draw down ground
forces is capped by law. At sequestration levels, DOD may want
to come down faster, to gain savings earlier and shift
resources back into readiness and modernization as quickly as
possible.
The law presently restricts the Department's ability to
rebalance the military/civilian mix in the medical field, which
precludes DOD from lowering costs without impacting the ability
to perform its mission.
The Department still does not have authority to conduct
another Base Realignment and Closure round. DOD knows it has
excess installations today, and sequester will only add to that
excess.
Compensation Reform. The Department must slow growth in
military pay raises in manner that still supports the All-Volunteer
Force. DOD must also be able to raise fees for health care programs for
retirees while still maintaining the generous benefits they deserve.
The force is healthy and recruiting and retention numbers are
excellent--we can make some adjustments here. These proposals were made
in the President's fiscal year 2014 budget submission.
Still, although flexibility would of course help, it is not a
panacea. Flexibility alone would not permit the Department to
accommodate these very large and abrupt reductions without causing
serious harm to DOD's mission. Even with flexibility, readiness would
at best remain at current degraded levels and many investment programs
would be seriously disrupted.
Mr. Langevin. 8) If the Budget Control Act's sequester-level caps
remain in Fiscal Year 2014 then what impacts will this have on DOD's
modernization portfolio? What major defense acquisition programs will
be curtailed or even terminated to achieve this cap level?
Secretary Carter. This decision holds enormous complexity, and
there is no simple answer. If current sequester level caps remain in
place, the ability to modernize Department of Defense portfolios will
decrease significantly. As budget levels are established, requirements
will be prioritized for execution in the Planning, Programming,
Budgeting, and Execution cycle. Until exact budget levels are known, it
will be nearly impossible to forecast which programs in the
Department's modernization portfolio will remain unchanged, will
experience reduced funding and/or schedule delays, or will be cut
outright.
The Department's Senior Acquisition Executives reinforced this in
recent testimony to the Subcommittee on Tactical Air and Land Forces,
United States House of Representatives. Fiscal Year 14 funding level
will impact all Air Force investment programs. Program disruptions will
cost more taxpayer dollars to rectify contract breaches, raise unit
costs, and delay delivery of critical equipment. Sequestration will
potentially impact every Navy program and system, forcing reductions in
procurement quantities, delays in schedules (delivery and initial
operational capability), deferral of costs to future years, and
unnecessary cost growth. The budget pressures will create significant
risk to Army aviation modernization efforts. Multiyear contract
efficiencies are jeopardized as quantities of UH-60 and CH-47
helicopters may be reduced across the Department. Planned upgrades and
modernization of combat vehicles would also be affected if
sequestration occurs in FY14, potentially resulting in delays to
scheduled upgrades to the Abrams tank and Bradley Infantry Fighting
Vehicle. Over time, we will assume significant risk in planned
modernization of combat vehicles, to include the Army's next-generation
infantry fighting vehicle.
Ultimately, if needed, termination or curtailment of major defense
acquisition programs will be a result of careful consideration of
Warfighter requirements balanced with fiscal constraints. The current
fiscal environment may result in a potential decrease of up to 20
percent in both investment and research and development accounts. As
demonstrated, this will have momentous near- and far-term implications.
Mr. Langevin. 9) I understand that much of what you have to say
today is very broadly couched and that many difficult decisions remain
to be made as you choose from, as the Secretary said, a menu of options
to deal with the mindless cuts that sequestration imposes. I applaud
the Department's willingness to seriously examine reducing DOD's
overhead and administrative costs, and share the view that this is an
important route to cost savings, despite the backloading of the
savings. But as the Department continues to dive into the very stark
options that you have laid out and make some budgetary choices, I would
simply emphasize the importance of having discussions with Congress
sooner rather than later. I would also emphasize that I am very
concerned over any degradation in our cutting-edge capabilities and our
investments in the fundamentals of a strong national defense, such as
STEM and R&D. Our vulnerabilities, and the interest of our adversaries,
in these leading-edge capabilities would make any reduction penny-wise
but pound-foolish. I am particularly concerned given that cuts in R&D
show immediate budget effects but their more pernicious effects take
years to set in, whereas personnel and other savings are much more
backloaded. To that end, how did the Department look at second- and
third-order effects of reductions--the effects on future workforce,
other agencies, and other such groups outside the DOD?
Admiral Winnefeld. The SCMR did its best to consider impacts to the
future work force and others outside the Department. For example, it
leveraged previous studies on recruitment and retention to evaluate
impacts to pay and compensation. Although we discussed the potential
impacts of reduced funding on collaborative efforts that DOD has with
other agencies, such as Department of State and Department of Homeland
Security, the SCMR timelines didn't permit a detailed quantitative
assessment.
Mr. Langevin. 10) During the out-brief of the CSBA ``strategic
choices exercise,'' all four teams generally characterized the current
budgetary constraints due to sequestration as unsustainable for
securing U.S. interests and fulfilling our international obligations.
Do you agree with that assessment?
Admiral Winnefeld. I agree with the assessments that the current
constraints with regard to the manner in which sequestration must be
executed, are unsustainable for securing U.S. interests and fulfilling
our international obligations. The most damaging element of the whole
process is the speed at which the reductions hit us. They are sudden
and deep, rather than gradual and backloaded. For a variety of reasons,
for example, how fast we can or should get people out of the service,
and the legislative limits on the ways we can cut, at the BCA level of
reductions, they simply happen faster than we can digest them in a
balanced and sensible way. With these constraints, all we will be able
to do in the early years is grab money wherever we can, mostly out of
the modernization and readiness accounts, which is particularly
disruptive to our ability to defend this Nation.
Mr. Langevin. 11) Dr. Auslin from the American Enterprise Institute
mentioned at a recent hearing that the ``U.S. should find it worrisome
that every nation in the Asia-Pacific that can afford more weapons is
buying more weapons.'' Additionally, ADM Roughead stated at the same
hearing that the real power of Asia is the ``economy'' and that we need
to maintain stability within the region so no ``one'' nation is
dominant. Under the scenarios in the SCMR, are we able to conduct the
pivot to the Asia-Pacific region? If so, what costs and risks may be
incurred elsewhere in the world if we do?
Admiral Winnefeld. SCMR, used the January 2012 Defense Strategic
Guidance (DSG) to guide our analysis. As you are aware, the DSG guides
our rebalance to the Asia-Pacific. All of the SCMR ``scenarios'' used
during the strategic choices review maintain our Asia-Pacific rebalance
while accounting for fiscal realities going forward.
As Secretary Hagel said in his Shangri-La speech, ``it would be
unwise and short-sighted . . . to conclude that our commitment to the
rebalance cannot be sustained . . . like the employment of all
resources, it is always a matter of the wise, judicious, and strategic
use of those resources that matters the most and has the most lasting
impact.''
While sustainable over the long term, the rebalance may take longer
to fully execute due to budgetary constraints caused by sequestration.
Time and fiscal realities afford us an opportunity to ensure we are
putting the right resources in the right places. We will continue our
steady, thoughtful, and measured rebalance to the region--although some
new and key relationships will take longer to develop and deepen
because of sequestration (de-scoped exercises because of reducing
steaming and flying hours).
We will strive to ensure risk incurred in other areas of the world,
as a result of sequestration and the rebalance, will remain at
acceptable levels. We will continue to monitor the risk throughout the
rebalance and keep you apprised through the Chairman's Risk Assessment,
which we submit to Congress every spring.
Mr. Langevin. 12) One of the assumptions made during SCMR was
changes in the law that would grant the DOD flexibility in implementing
the reductions. What happens if you don't get this flexibility?
Admiral Winnefeld. If we don't get flexibility, our choices will be
greatly limited. We must have flexibility to appropriately reshape the
Department if we will absorb another nearly half-trillon dollars in
budget reductions. Flexibility is required in three main areas. The
first area includes elimination of restrictions on reducing or
adjusting force structure. Cuts at the sequestration level require us
to reduce personnel and equipment. Limiting reductions in these areas
will cause disproportionate cuts to readiness and modernization--it is
zero-sum. Second, we need to work with Congress on establishing
flexibility in our pay, compensation, and medical accounts. Without
this flexibility, we will lock one area of our budget, in this case
personnel costs, while forcing disproportionate cuts to procurement,
readiness, R&D, and operations. Finally, we need your support for
reducing excess infrastructure through BRAC in 2015. The previous five
rounds of BRAC eliminated excess infrastructure and save $12B per year
that is invested in our joint force.
Mr. Langevin. 13) If the Budget Control Act's sequester-level caps
remain in Fiscal Year 2014 then what impacts will this have on DOD's
modernization portfolio? What major defense acquisition programs will
be curtailed or even terminated to achieve this cap level?
Admiral Winnefeld. Abrupt, deep cuts caused by the BCA caps in FY
2014 will force the Department to make nonstrategic changes that impact
the Department's modernization portfolio. The Department remains firmly
committed to enactment of the President's defense budget for FY 2014
because it provides the right level of resources to maintain a strong
national defense.
Still, I recognize that a contingency plan must be developed in the
event that the sequester-level budgetary caps currently imposed by the
BCA remain in effect year over year. Although the specifics are still
in development, DOD would be forced to make disproportionate reductions
in procurement, research and development, and military construction.
The Department will seek to protect most or all funding for a few
programs that are most critical to our military strategy; however,
funding for hundreds of program line items, large and small, will have
to be cut significantly. This translates to buying fewer ships, planes,
ground vehicles, satellites, and other weapons, and sharps cuts to
modification programs and research funding.
______
QUESTION SUBMITTED BY MR. LOEBSACK
Mr. Loebsack. 14) Admiral Winnefeld, please provide additional
detail regarding the implementation of end-strength reductions as
reviewed in the strategy. Did the strategy look at the total force and
the balance between the Active Duty and Reserve Components? What
conclusions, if any, did the review come to regarding the balance
between the two components?
Admiral Winnefeld. The strategy encompasses the total force. The
Services use an established, comprehensive, and transparent process to
determine the optimal number and mix of Active and Reserve Component
forces balanced with the National Military Strategy. As we work through
the process of sequestration-level force structure reductions, we have
put everything on the table, but at this time, we do not have
conclusions on the mix of Active and Reserve forces.
______
QUESTIONS SUBMITTED BY MR. SHUSTER
Mr. Shuster. 15) What steps are being taking to ensure that future
budget constraints are not mitigated through the use of future
furloughs that impact readiness, morale, and financial security of the
civilian workforce?
Secretary Carter. As the Department contends with FY 2013 funding
reductions and the prospect of continued sequester-level Budget Control
Act (BCA) caps resulting in a cut of $52 billion in funding in FY 2014,
Operations and Maintenance (O&M) funds cannot be protected. Cuts in O&M
funding would also affect DOD's civilian workforce because many
civilians are paid with O&M dollars. To minimize adversity to our
valued civilian workforce, the Department will continue current hiring
freezes (as appropriate), minimize the use of temporary and term
employees, and encourage the liberal use of Voluntary Separation
Incentive Pay (VSIP) and Voluntary Early Retirement Authority (VERA),
both of which are valuable in reducing involuntary separations and
associated costs.
I am hopeful that Congress will pass a deficit reduction package
that the President can sign and detrigger sequestration. A
comprehensive solution of this nature would do much to support the
mission of the DOD and prevent the need for sharp reductions in the
funding supporting the civilian workforce.
Mr. Shuster. 16) If sequestration remains, as a result of the
President's failure to work with the legislative branch, what are the
DOD plans to ensure that the organic industrial base will survive
budget cuts to support the future needs of the warfighter?
Secretary Carter. The Department recognizes that maintaining an
organic industrial base provides readily available base and surge
capabilities that enable DOD forces to respond to mobilization,
national defense contingency situations, and other emergency
requirements. Supporting an organic industrial base, as well as a
commercial industrial base, will be a very difficult challenge in the
face of severely restricted budgets. Industrial activities are
competing with operational components for scarce resources.
The Department is taking proactive steps to mitigate these
challenges. Existing authorities, such as public-private partnerships
under 10 U.S.C. 2474, will be leveraged to the maximum extent possible.
However, without authorization for a new round of Base Realignment and
Closure, the Department may not efficiently align the military's
infrastructure with the needs of its evolving force structure, which is
critical to ensure limited resources are available to support the
highest priorities of the warfighter and national security.
Mr. Shuster. 17) How is utilizing a BRAC round as a near-term
solution for current budget shortfalls justified when previous rounds
have proven more costly upfront and the potential savings are not
realized beyond a 10-year window? What changes does the DOD plan to
make to ensure a BRAC round would be beneficial? Are base closures and
realignments overseas being looked at prior to domestic sites?
Secretary Carter. While there are upfront costs for BRAC, in the
long term there are significant savings. The previous five BRAC rounds
('88, '91, '93, '95, '05) closed 121 major bases and resulted in
hundreds of other realignments and minor closures, saving a total of
$12 billion annually.
I agree the Department of Defense cannot afford another $35 billion
BRAC round similar to 2005. However, the key factor that drove the cost
of the last BRAC round was the willingness to accept recommendations
that were not designed to save money. Nearly half of the
recommendations from the last round were focused on taking advantage of
opportunities only available under a BRAC process to move forces and
functions to where they made sense, even if doing so would not save
much money. They were pursued because the realignment itself was
important, not the savings. This ``Transformation BRAC'' cost just over
$29 billion and resulted in a small proportion of the savings from the
last round. Even so, it allowed the Department to improve the
distribution of forces within its infrastructure in ways that are
difficult to achieve outside of a BRAC round, while also recapitalizing
aging infrastructure. This was an opportunity that the Department could
afford when budgets were higher and the Department was experiencing
growth.
The remaining recommendations made under BRAC 2005 paid back in
less than 7 years, despite experiencing cost growth. In contrast to the
``Transformation BRAC,'' these ``Efficiency BRAC'' recommendations only
cost an estimated $6 billion, with an annual payback of approximately
$3 billion. This part of BRAC 2005 paid for itself speedily and will
produce savings for the Department in perpetuity. If the Department
receives authority to conduct another BRAC round, it anticipates
undertaking a similar ``Efficiency BRAC'' (lower costs and savings with
quicker payback and a focus on efficiency). A BRAC round that is
focused on efficiency recommendations can succeed and makes eminent
sense in today's fiscal climate.
The Department has initiated a comprehensive infrastructure
analysis to identify potential opportunities for consolidation in
Europe. The process will ultimately result in a validation of DOD's
enduring European infrastructure requirements, providing an analytical
basis to support sustainment funding and future recapitalization. By
the end of this calendar year, we plan to have a Department-vetted list
of European infrastructure options from which the DOD leadership can
make strategic investment decisions. But given the size of the budget
cuts, it is unrealistic to expect that DOD can make all reductions via
overseas bases and installations alone.
Mr. Shuster. 18) Missile Defense remains a significant priority.
When will the Service Branches bring members of the HASC into the
planning phase of future funding plans to ensure that cuts aren't
arbitrarily made in programs considered priority of the HASC?
Secretary Carter. The Prioritized Capabilities List guides program
priorities and the development of the missile defense budgets. The
Department of Defense will continue to work with Congress through the
annual authorization and appropriations processes to ensure adequate
funding for defense programs are submitted as part of the President's
Budget submission and also to ensure congressional priorities are
included.
Mr. Shuster. 19) How is utilizing a BRAC round as a near-term
solution for current budget shortfalls justified when previous rounds
have proven more costly upfront and the potential savings are not
realized beyond a 10-year window? What changes does the DOD plan to
make to ensure a BRAC round would be beneficial? Are base closures and
realignments overseas being looked at prior to domestic sites?
Admiral Winnefeld. DOD cannot afford to keep excess infrastructure
in an era of budget and security uncertainty. The tax on our
warfighters is unacceptable as each dollar spent on excess
infrastructure cannot be spent on maintaining our superb joint force.
Absent BRAC, the Department will continue to support unnecessary
infrastructure, so BRAC must be an essential part of any overall DOD
reshaping strategy.
Given the force structure reductions on the horizon and the budget
constraints we face, we have every expectation that a future round will
be far more similar to the first four BRAC rounds than the most recent
round in 2005 in terms of costs and savings. The first four rounds of
BRAC (1988, 1991, 1993, and 1995) are producing a total of
approximately $8 billion in annual recurring savings with an average
payback of less than 7 years, and BRAC 2005 is producing an additional
$4 billion in annual recurring savings.
It's important to note that the 2005 BRAC round was very different
than the first four rounds. BRAC 2005 had two components with the major
component focused on ``transformation.'' The other component,
``closure,'' was more traditionally aligned with previous BRAC rounds
which eliminated excess infrastructure. The major, or
``transformation,'' component of BRAC 2005 cost about $29 billion with
military construction accounting for over $11 billion of this cost. In
addition, the transformation component of BRAC 2005 included
recommendations that had no savings or produced limited savings to
include infrastructure consolidation. The more traditional or
``closure'' component of BRAC 2005 cost about $6 billion to implement,
paid for itself in less than 7 years, and is now generating $3 billion
in annual savings. The next BRAC round would be squarely focused on
closure and eliminating excess
capacity.
A 2004 survey found that the Department had 24% aggregate excess
capacity, while BRAC 2005 only reduced capacity by 3.4%. Thus, the
Department believes we have about 20% excess capacity at the aggregate
level today. With today's force structure declining relative to 2005
levels, our excess capacity will continue to grow. No successful
business would carry the amount of excess infrastructure that DOD
currently is forced to maintain.
While we clearly have excess capacity, many have asserted that we
should look first at our overseas infrastructure for reductions. We
have been reducing our overseas infrastructure for years. Since 2003,
the Department returned more than 100 sites in Europe to their
respective host nations, and we reduced our overseas personnel strength
by one-third. The remaining overseas force structure provides enormous
dividends to this country in terms of presence and responsiveness.
Ongoing force structure changes should produce additional opportunities
for reducing infrastructure both at home and abroad while preserving
the best joint force that is ready and postured for full-spectrum
operations.
Mr. Shuster. 20) Missile Defense remains a significant priority.
When will the Service Branches bring members of the HASC into the
planning phase of future funding plans to ensure that cuts aren't
arbitrarily made in programs considered priority of the HASC?
Admiral Winnefeld. The restructuring of DOD under the Strategic
Choices and Management Review, and the subsequent decisions from the
QDR, will be a comprehensive process that will only succeed with mutual
coordination and cooperation between DOD and Congress. In accordance
with standard budgeting procedures, the explanations for all
adjustments in key defense programs will be outlined in the budget
justifications and associated briefings the DOD will present to
Congress with the FY 2015 budget and associated FYDP.
______
QUESTIONS SUBMITTED BY MR. CASTRO
Mr. Castro. 21) and 22) During the hearing you discussed that
another round of sequestration cuts could result in potentially not
taking in new recruits into the Services. Can you describe the kinds of
impacts that would have on our short-term/long-term recruitment and
retention in an All-Volunteer Force and how that impacts national
security?
Secretary Carter and Admiral Winnefeld. Another round of
sequestration cuts could impact force structure and drive a reduction
in the number of military personnel. Services will consider the best
way to lower overall personnel numbers with the least impact on
readiness, while attempting to maintain a positive tone. Although we
have force management tools that allow us to reduce personnel strength
on the current force, we also may reduce accession numbers to maintain
balance in the overall force.
Additionally, the negative impact of another sequestration on
operations and training will discourage the best and brightest from
joining the military and discourage retention of our most talented
Service men and women. Any impacts to recruitment and retention will
impact the ability of our Service members to execute our national
security strategy which is hinged upon being the most technologically
advanced, best equipped, and most highly trained force in the world.
In addition to the impact on operations and training, the
uncertainty surrounding sequestration cuts has a corresponding
intangible impact on the morale of our Service members. In our All-
Volunteer Force we rely on retaining the highest quality force. With
further cuts and an improving economy retaining quality will become
more difficult as our Service members look outside the military for
opportunities to work or serve.
______
QUESTION SUBMITTED BY MR. NUGENT
Mr. Nugent. 23) Secretary Hagel described the Strategic Choices and
Management Review as ``a menu of options.'' With the drawdown of forces
planned at the conclusion of our second war in the Central Command Area
of Responsibility, CENTCOM has already announced plans to reduce their
headquarters personnel at MacDill by 1,500 by the end of 2014. Just to
clarify, when you consider a 20% reduction in major headquarters, is
that measured in dollars or manpower? Does the menu of options
presented in this review account for the reductions that are already
planned? In other words, when the option of reducing headquarters by
20% is considered, does that mean another reduction for CENTCOM below
the 1,500 personnel already planned?
Secretary Carter. Much of the CENTCOM growth was due to a temporary
increase in manpower associated with the war effort. Most of the
reductions for CENTCOM in 2014 are tied to the winding down of the war
effort.
The reduction Secretary Hagel is implementing at all major
headquarters, based on the results of the Strategic Choices and
Management Review, is a 20% reduction in the 2013 baseline. This is in
addition to previously planned reductions, such as the plans to reduce
CENTCOM in 2014.