>> the report analyzes why that should be true, and also as you just did, the report talks about

the united states, russia and afghanistan and the in game and the distribution network and so forth. i think there are opportunities here, and the report says that i'm not sure as you go down through pakistan and india whether that's true. the report does recommend that russia take a more active role in trying to persuade pakistan to pursue more responsible policies. how much influence there is i think is a question. as i just said, the relationship between russia and india is primarily now and arms transfer relationship. very different from the old da days. but i think thinking of it as a strategic hold the way you just did, ambassador, is the way the

russians think of it. and some of their behavior we don't like very much. i think for good reason. but it is i think less incendiary than it was earlier, and i think there are opportunities now that didn't exist before. but let me make one point, which my colleagues made a different way. there are so many of you have been in senior policy positions that what i'm about to say will be no stop the presses. but we tend here to make decisions on individual issues in very narrow categories without thinking how they affect the broader relationship. so we have a view on human rights, which we, of course, as americans feel strongly about, and we are inclined to lecture

others on the basis of our view of that subject here but often do not think how it affects their behavior on other issues. and what the report tries to say, i don't think it uses the word but i think the concept is throughout come is unfashionable word, linkage. that is to say, with the russians and dimitri use a good example of the libyan u.n. security council resolution, just have to recognize that as we behave in one dimension of the relationship, it affects substantially the other dimensions of the relationship. i think we are always very good at doing that. dimitri called it the unintended consequences, but i would say the thoughtless consequences might be even more transient. so thinking about the relationship which is what the report tries to do and it's all

encompassing area, recognizing that the folks who run russia, homo sapiens as they are, do not have in their head 27 different categories. they have one head. they are influenced by our behavior, just as we are influenced by tears. and perhaps to return to jim's very good, a strategy for the next phase takes that into account, looks at these various prescriptive possibilities and says, which ones are most important to us, which ones overlap at least to some degree with perhaps russian national interest, and which ones should we be pursuing. i think we're running -- graham, and then i think we'll have one more over here and think we will wrap it up. >> ambassador question is extremely important and it seems to me i agree completely with what you said but i make to further propositions.

first, the report is quite strong on the proposition, which could be misinterpreted as said that democracy and human rights should not trump all other considerations in americans relations with russians. that's right. but an equally important proposition is that giving lectures to people about their human rights or democracy practices has never been, and demonstrated to be an effective measure of having any positive impact on that subject. so equally component is part of the report that tries to ask the question for promoting democracy in russia, for promoting rule of law in russia, what method would be likely to be affected and how affected is giving lectures or

hectoring, which we think not very. but we have some specific suggestions about what that might entail. in fact, part of the reason why i'm enthusiastic about the wto is it strengthens the forces for more rule of law, for more pluralization in this society, for more integration of russia into the system. the second footnote, again, except from what bob was saying, a number of ways in which american foreign policy is naïve or hard, a long list, this is under previous administrations and this administration, ones which both bob and i have served, one of the most common pieces of naïveté is given to us, or mentioned by brent scowcroft in dimitri's very good journal, national interest, an

article i always give to students it's called a modest proposal. but brent makes the point that quote, we should never take the stance that quote, virtue is its only board, closed quote. with dealing with serious issues. like nuclear non-proliferation. so the proposition that russia should do things because it's either virtuous, good, good for us, good for the international community, or lectures we've all given. >> okay, over here and i think -- sorry, here and then here. [inaudible] >> could you speak up a bit? >> as you know, as dimitri and jim are noting, it is coming to the conclusion in the coming days, we hope. there are still important

commercials out there. hopefully on the brink of a resolution. and so this report coming at this time and your support for russia's graduation and extension of normal relations with a strong commercial agreement that we hope will be achieved in the coming days is very important and we are very pleased, to have you bring this report forward because this is not going to be when we do want to see this come up on the hill, we do want to see this in the coming months, russia graduates. it's not going to be a strict commercial issue as many in the room though, it's going to be a discussion about the broader relationship and having balanced ideas on the floor and people discussing the critical issues that are important to u.s. interests and why it's important to u.s. interests, that u.s. business, commercial engagement in russia is very important seen russian move forward on this

trajectory, so thank you very much. >> thank you. and let us just say we are available to help in that regard, if and when it's appropriate, because we agree that when the debate ignites on the hill it'll be a broad debate about u.s.-russian relationship. the report has views which we are going to try to ventilate as broadly as we can. last question, comment over here. [inaudible] [inaudible] >> i have a very brief question. recently prime minister --

[inaudible] probably this will be something which he will be entering the presidency when he wins the elections. my question is, how do you see this kind of idea, let's say, in the connection of u.s. interests, whether you can image, this might be something in the interest or you think the interests of the u.s. and this idea of prime minister would be clashing because of certain reasons? >> well, i think he could probably answer that better than i but i think it even though it is substance is. they can either be positive or negative depending on whether

it's welcoming. so i don't think there's a prima fascia argument against it. i mean, after all how good europeans have been proud of integration since immediately after the second world war in principle oppose immigration further east? but it depends on what kind of integration is. if it's -- the report makes clear that for the states in the former soviet union that their sovereignty and independence decision needs to be protected. and that the united states should have a role in trying to do so. but then one has to see the evolution of russian policy. >> thank you all for coming. yeah, the report is outside. and again, i repeat on behalf of graham and dimitri, and all the members of the group, that

prepared the report, if you have comments please, you know where to find us. send your comments, questions, suggestions. and if you have ideas about how we can use the report and its substance for commendable objectives, let us know that, too. thank you very much for coming. and dimitri, thank you for hosting us all here today. [applause] [inaudible conversations] [inaudible conversations]

>> when i finally started summit will come every person i worked with i had a rejection letter from. which was kind of cool. you to a meeting, we love your stuff. i was like what about this? >> in his nonfiction, ben mezrich questions the motivations, ethics and rally of brilliant people. his account of mark zuckerberg integration of facebook was adapted for the screen as "the social network," bringing down the house followed a group of mit students who won millions in las vegas. his latest, on the moon. now it's your chance to ask the question. call, e-mail or tweed ben mezrich live on in depth sunday at noon eastern on booktv. >> recently the "des moines register" published a poll with republican presidential candidate jon huntsman garnering just 1% of those polled. herman cain was in the lead with 23% followed by mitt romney with

22. next, remarks from mr. huntsman at a town hall meeting saturday. this was oh so by the atkinson republican committee of new hampshire. it was the first campaign stop in his four-day trip in the state. this is about an hour spent how is everybody here? >> a good. >> good to see you. it's a pleasure. >> hello. >> thank you. pleasure to see you. >> thank you very much. my goodness. i didn't think it would be anybody here when i arrived. >> this is just the generator. the power has been out.

>> that's incredible. we got in tonight and i thought -- [inaudible] got early notice, for folks may be, a couple more. thank you. delighted to be with you. >> you're welcome. >> is this going to be like a roundtable? >> ensure. >> atkinson republican committee has, would like to introduce -- the second in a series. >> you're my favorite. >> some guy in the gray shirt back here. the atkinson committee -- i happened to report because of

his experience because he means what he says and says what he means. i think in new hampshire we make the decision. not the media. >> thank you very much. let me just start out by saying i feel that there are some changes here in new hampshire, because this is a process driven by the people. we've done probably 80 events around this state. were going to do a whole lot more. and the meetings are getting larger and larger, and when the weather allows people to turn out, and i feel a real connection with people in this state. i believe that they are ready for straight up, honest conversation about where we are and what needs to be done. i'm not going to bluster and bs

people. i'm not going to sign pledges. i'm just going to tell you what i think needs to be done to move this country forward. and i understand full well that i'm an underdog in this process, but i understand, too, that new hampshire sometimes embraces underdogs. and they run them through the system, and in some cases they change the political landscape for the entire country. so is this process important from a national political standpoint? absolutely it is because it is the window through which, not only people in new hampshire leading the people from throughout the country, get to meet the candidates, get to understand who they are, what is a stand for without a whole lot in the way of artificiality. it is candidate and the people. i think that's important. it's so unlike a lot of the other big states where it's driven by a whole lot of purchase media.

a lot of the artificiality of politics. so i think it is tailor-made for where we are, and i like the feel here, you know, we're creeping up in the polls and i think that's good. i sat down with senator lamar alexander a few nights ago, who competed in 1996 and was about 3% of the state, the december before the new hampshire primary. and he said just be yourself. just get out with people. they will hear you and they will make a decision based upon what is it you have to say, but don't pay any attention to the numbers. i get that part. everything has to be driven by polls and numbers these days. that's part of the drama of politics. but in the in people actually wait in and have something to say about that. so listen, let me just cut to the chase we and then we will hear from all of you, what ever you would like to say. i guess it's fair to say that

i'm not trying to represent the 99%, and the 1%. i think it's time to we pull everybody together in this country. it saddens to me -- it sad thing we're so divided in this nation. i think it's un-american for the most optimistic blue sky problem-solving to be divided as we are. it's just not natural. and i said what is driving this divide? i have to tell you i think driving this divide is -- welcome -- is the high level of joblessness in this country. when we are 14 or 15 million of our fellow citizens who are without work, and millions more beyond them were part of the official tally who were so disputed they had just given up trying. we are left with a country full of moms and dads and families that have been shipwrecked by this economy. i said we can do better than that. and i think we also tend to

underplay the impact of joblessness has on neighborhoods and communities and towns and states. i think it's very real. so when you have a conversation with somebody like the sheriff of hillsborough county and he says by deputies are now delivering foreclosure notices to the middle class, so-called, and all the indicators are upside down in terms of the challenges. a lot of it is driven by joblessness. so i say let's get smart, let's get real about what needs to be done in this country and begin pulling people together. i think the first steps need to consist of putting for strong economic programs that speak to revitalizing this economy, getting us back on our feet again. i've been a governor, twice elected. we had a great economy. we were a major job creator. not that government creates jobs but you've got to be very sensitive to that environment that you create. it's either competitive or it isn't.

so we put forward an economic program. i think we have copies out here you can all take with you. "the wall street journal" has come out and endorsed it as the best of the bunch. our tax reform proposal which was going for a clean sweep of the loopholes in the deductions, lowering the rate, broadening the base in simplifying the individual side that leaves us with three rates. on the corporate side i say we need to end corporate welfare. we need to phase out subsidies. we just can't afford them anymore. beyond that i think it will do a whole lot in terms of cleaning up capital of the undo influence lobbyists have. there's nothing to lobby for entrance of corporate loopholes, breaks and welfare. what's there to do? i say it would also take an important step in cleaning up capitol hill. so that's our tax program. it's real, it's doable, it looks

at the existing code. it sweeps a clean and it would lead this country with a level playing field for businesses, small and medium. and it would be a major contribution for competitiveness now that we're second decade into to 21st century. we have to look at tax reform since 1986. and it's high time we do so. regulatory reform is needed. energy independence is needed. they are all perfectly doable but as president i want to have a very specific and simple focus on about three things. those three things must have some sort of connection with the overall competitiveness in this country. if they do not make a contribution and firing are engines of growth and expand our economic base and creating jobs, it's a waste of time as far as i'm concerned. what i want to put forward first day i'm president will be exactly that, which will fire are engines of growth. tax reform, regulatory measures and energy independence from all three of which i think are

critically needed at this point in our nation's history. beyond economics, i want a foreign policy that is appropriate for where we are. second decade into the 21st century. we still have a bit of the opening from the cold war, the old world circuit 1946. and i said, you know, 50,000 troops in germany, the russians are not coming anymore, folks. we have been 10 years with the war on terror. we've given it all. some families have paid an enormous sacrifice, and to them we offer a salute and a deep sense of gratitude and thanks. but i say we don't need to be nationbuilding in afghanistan with 1000 troops were we have a nation to build at home. when the country is weak and when our core is deteriorating, economically speaking, we are of no value to the rest of the world. we don't project those values of

goodness, democracy, liberty, human rights and open markets. we do when we are strong, we don't when we are weak. we have to focus first and foremost on strengthen our court. i want a foreign policy that is focused fully on two things. i think they are the most salient aspects of our nation's interest as we proceed into the 21st century. one is a foreign policy driven by economics. when are we going to get with the program about a foreign policy driven by free trade, driven by investment, driven by international economic alliances that playwright back to strengthen alcor and creating jobs. other countries do it. it used to break my heart sitting in beijing, the second largest embassy in the world and you watch 100,000 troops in afghanistan. we secure the land owned of the chinese go in and take the mining concession. there something wrong with this picture. we've got to lead with economics. number two, we have to recognize that as far as the eye can see

into the 21st century we have an asymmetric threat called terrorists. whether it is in waziristan, whether it is in philippines, we've got the subsidiaries of terror that will have to deal with. we need to make sure that we have a national security footprint and the defense department that is appropriately focus on the real threat out there. it is an asymmetric threat we are facing. that means more and way of tactical intelligence gathering, more in a way of special forces capabilities and more in the way of training with those who share the same interest with the united states so that we can do it together. chances are you'll have israel who will stand up and say economics, counterterror, we get that. we can move forward with you as a friend and ally. chances ar are you will have pee like india who will stand up and they would say economics, counterterrorism, we can relate to that as well.

we will have an opportunity to kind of look at the map and say we need to remind the world what it means to be friend and ally of the united states. it might be a new moment in our nation's history. given the salience of economics and counterterrorism, shore up some new friendships and shore up new alliances as well. so in conclusion let me just say that we have a unique moment in history, i do believe, to rebuild our manufacturing muscle in this country. when i talk about tax reform and regulatory reform, what is that focused on? why are we thinking about doing that? addressing joblessness is important that idd also at this moment in history we have an opportunity to rebuild our manufacturing muscle. so when i was born in 1960, 25% of our gdp came from manufacturing. today it is a paltry 9%. you can survive. service industries are great and we are the best in the world in

certain industries but we need to manufacture. we need to fill those holiday out carcasses in places like birmingham new hampshire which have since been made a raft of activity in productivity with energy and vitality again. that's totally doable. in part it's doable because all the early assumptions about china stealing our thunder on the manufacturing side and winning from it -- that's a change. china as opposed putting a 10% growth rates for 30 years running will not be looking at four, five, 6% economic growth rates which entire unemployment, higher unemployment in china means greater than political uncertainty and on stability. if we are smart we will say okay, and what do we need to do to become that? it's the underlying structural problem when you do progress.

it isn't a little stimulus here, and you know, another quantitative easing, those are all temporary fixes. we need long-term fixes. we can do it, and we can't at this point in our nation's history begin rebuilding our manufacturing muscle. it is totally doable. we need leadership. we need a plan and we need to get real about our relative competitive environment and begin addressing some of those needs. so i look to the united states as i get 10,000 miles away. i have looked overseas four times. i have been an ambassador for my country three times, and i say you look from 10,000 miles away and this country has everything going for it. everything a nation would ever want to succeed. we don't recognize that sometimes. all you can see our of people who are in a deep funk right now, which is so unnatural and so un-american for the most optimistic problem-solving blue

sky people the world has ever known. that's where we are in we need to get out of the hole and we need to get out of it fast. what is it would we've got going for as? stability. how great is it to have stability? we have rule of all. we have the longest surviving constitution this world has ever known. we have private property rights. where the greatest universities and colleges anywhere in the world. some underfunded to be sure that people still flock here from every corner of the world to attend a. where the most innovative, creative, entrepreneurial class of people on earth. we have a pretty brave and courageous armed forces, too. we have everything we need to succeed. we have leadership. we don't have a plan. we don't have a president that is when to step out from behind the teleprompter and say folks, get on the bus, we are moving out and we're not looking back. yes, mistakes have been made. we are not going to go back and

review that. it is a waste of time. we need to look forward. our people need to look to the future and get real about what this country needs. it's completely doable. so we are bring a background to the table. literally and figuratively that i think is what this nation needs right now. i am honored and delighted to be able to do it and will put that assumption to the test right here in new hampshire first and foremost because this is where people tune in. this is where a message can be heard and this is where the early evaluation is done. so thank you all for taking the time to be here on a snowy right where i didn't think anybody would show up. [laughter] year among the most interested. it proves a point about, i have repeated over and over again. so thank you very, very much, and we will just do it over for any comments or questions that you have come and go go from there.

spent my question is what are some of the biggest mistakes barack obama has made? what would you do differently? >> well, i would have to say in simple terms there's been no leadership. and i think the point has been made for every american to see you can run on a mantra, called hope. you can get elected. but that doesn't guarantee when it nation does when you can we get that as well. we haven't had leadership. i also believe that from a policymaking standpoint the most fundamental error occurred in the first two years when the focus was not on economics, not on figure out how to fire the engines of growth, expand the nation's economy and give confidence to our investor class and our creative class. so what's happened? what do you have to show for it?

you have obamacare which do the opposite. he took the out of the marketplace and refuse their in a high degree of uncertainty. and so people are not hiring today. they are not investing today because they can't see around the been. they don't know what the future holds. capital is a coward. they will flee from wherever it proceeds to be risk in the marketplace and will find a safe haven at some point. if we're not that safe haven someone else will be. switzerland or singapore or ireland or someone else. right now we are not a safe haven. we have got to return to becoming a safe haven. i don't want to simplify too much but i would have to say that the opportunity economic side, then the door closes after two years and it doesn't matter whether you go to ohio or illinois or california to make an economic speech. everybody is today because there's not much you can do after two years. as governor their certain cycles of power. ugandan opening and it's about two years on and people want to assess and analyze what you have done. the door is closed.

people are now tuned into 2012 to see what lies around the been and what the future holds. thank you. >> i warn you, i have had your experience. i have lived outside the country for years, and my concern is i worked as commercial fishing for three years. and also was -- [inaudible] my friends that are very high in government make the point to me constantly, the united states has gone down a path where we treat ourselves like crap, and enemies alike we worship them. how can you change that? i mean, you were an ambassador. i worked in the embassy. and really, when a president changed, within three weeks the atmosphere of the embassy changes. i believe, i'm also a business

man. [inaudible] but how are we going to fix that? my friend wanted to come visit me here in the united states, and they can't get visa. yet they are one of our best allies in the world right now. but they can go to mexico on vacation and i can go visit to the border in texas and visit. so it's when it's telling people outside the united states. they can't understand why our dollar is in stronger because everything you said, we have all kinds of natural resources. we have all this work ethic. why do we tolerate it? how can you change that? >> don't get me started on the visa policy. that's a subsection of our over

all relations with the rest of the world that needs to be addressed, otherwise we'll lose a lot of people who are still hanging on as friends. because they can't access the country anymore. but let me say we are kind of 10 years after the war on terror started, and let's face it. iraq and afghanistan have so shifted alliances, friendships around the world, that we have an opportunity here, i do believe, because i think we're at a new moment. 10 year mark, you know, we are drawing down in afghanistan, at least we need to come it will happen eventually. iraq will see a different dynamic. and i think we have an opening where this country can say based upon our most important and salient realities, interest, economics and counterterrorism, let's take a look at the map and see who is with us and who wants to proceed with the shared interests in mind. and some of them are going to be our traditional allies, and some

are going to be new. but to have a president who has at least been some time abroad, who knows i think what used to be a friend and ally of the next is, what that assumes in terms of military to military, security cooperation, diplomatic cooperation, economic relationships as well. i would like to take a look at the map and say based on those two compelling realities, as we now look to the next 20 years, who is with us and who do we want, who do we want to strengthen ties with and who in the international community who we want to develop new things with. and a son that i think we have a new opening to reshape our international affairs. but it's going to take a president who actually gets that part, who can define with clarity what are compelling international interest are going to be, and in which countries around the world are likely to

share those and then we can begin building bridges with. i do believe that we're entering a period in terms of foreign policy right now. it's a little bit post war on terror. we are going to have to remain vigilant as far as the eye can see into the 21st century with respect to this asymmetric counter terror threat that we face. but 100,000 boots on the ground, no. looking at iran longer-term is perhaps the most transcendent foreign policy in the decade. absolutely. more in the way of the shifting focus on the asia-pacific region because that will be three quarters of our nation's trade in the coming 20-50 years. also where the emergent military threats happened to be. so when i say 50,000 troops in germany, you know, let's start coming. let's focus on the realities.

we can get it done but i think because, because of the fatigue, internationally of the last 10 years, these are tough years. i think the world is waiting for a new opening, a new outreach by the united states that is the son getting our economy's back their feet, stabilizing ourselves, and continuing in a new kind of focused way our whole effort on counterterrorism. when we went bowling, by the way? >> 1991-1994. very exciting period to be there. but i was unofficially their in 1989 to 1991. >> well, i made a visit there in 1989, there at the embassy. i think it was fall.

>> as you know, the ones who took power, not a freely elected parliament at that point. [inaudible] >> we will share notes on that later. thank you very much. >> we have a considerable number of students in japan and korea in okinawa. do you see a need -- [inaudible] i was just wondering, you mentioned bringing the troops home from germany, and wondering what you see in terms of the military role? >> in afghanistan because most is nation building an essay we are not gaining anything by nation-building. here's what we've done successfully in afghanistan. we need to recognize this and move forward. we had free elections in 2004. we routed out the taliban.

we dismantled al qaeda. we have killed osama bin laden. and i say we do need a presence that speaks to intelligence gathering, special forces response is when we find the folks who are preparing to do us harm. and some ongoing training responsibility with the afghan national army. that's not 100,000. that's well south of there. so then you say that kind of presence will need probably -- because of the ongoing counterterrorist or. it will be less land-based with the boots on the ground and more i think of rapidly deployable force based on reliable intelligence and the ability to get at the enemy any more surgical like fashion. in the asia-pacific region because of the rise of military powers there and the need to keep the sea lanes open for trade and commerce, that's good for our economy.

that's good for job creation in this country. the seventh fleet and specifically, they've always played a critical role in keeping the sea lanes open in eddie basden vital to our nations economy. that must continue. when you look at the major economies and major military powers on the rise. japan frankly will have to be looked at in terms of issues like the marine base in okinawa. why? because it's now become a local political issue to the point where those running for mayor of the local towns in okinawa are running against a 10,000 marines who are garrisoned their because of the encroachment issues in the city. and when that becomes a political issue, you say we got out to address their kind of a long-term downward that our overall relationship with japan starting in okinawa and working outward. so are the opportunities in guam

to expand? absolutely. are the opportunities in place like philippines where we were booted out and they took a vote to the senate in 88 or 89? would have a very large presence there and we regret that decision ever since. to have new openings in places like south east asia, indonesia? maybe even vietnam. i mean, how surreal would it be, we are have the uss jon mccain, u.s. navy destroyer. the vietnamese are very, very concerned about the issues in the south china sea, and they are very real. whenever you have disputed land at the core of a foreign policy issue, they get hot. so we need to stay vigilant in that part of the world. so it's about, i think showing up to relationship in the asia-pacific region all the way around to india what we need to be doing more.

how you secure the streets of malacca and the indian ocean, those are all going to be very, very important as china's navy becomes more bluewater focus and are able to penetrate beyond the first island chain which has been the primary sphere of influence. so let's just face reality. from an economic standpoint, from a military standpoint, the asia-pacific region is pretty important. >> i have a question. on your website, one thing she wanted it is repeal obamacare. and i wonder how realistic that really is now that 26-year-olds are staying on the parents insurance, mammograms are free. and i wonder how realistic it really is to get current

correctional tasha congressional appeal to repeal obamacare at the cost of reelection to some of the people currently in office. how willing will they be to do that? >> i'm not in -- you say want to appeal, what you want to do? i can't stand it when politicians that want to repeal this. what does that mean? what i going to do? i think we would be better served by calling in the other 50 governors of the country. if we were able to repeal obama to which i think we need to do, and if the senate reconstitutes up with more republicans i think you have the opportunity. in large part driven by the reality you have a trillion dollars in cost over the next 10 years, you have at least one person said is an unconstitutional mandate. you have an unfunded mandates in states on the medicaid side that are likely unsustainable over time. may be most harmful of all you have is great helibond called uncertainty that is introduced

in the market place which allows small businesses is thing i don't think i'm going to invest or higher. >> it's our biggest expense other than payroll is our health care for our employees. and i'm getting ready to renew, and it's scary when you see the trend of the upward premiums. and last year we had to pass on a big increase to our employees as well as a huge deductible, just to keep that affordable. and this year i in getting exactly the same way we have this huge deductible and it's going up again. we can only absorb so much of the costs. and, unfortunately, we have to pass it on to the employees. and it pains me to do it, but there's nothing more we can do. and then unfortunately that makes it less affordable and you

have less participation, less participation makes the premium even higher. so it's just a cycle. >> how bad is a defined contribution plan as opposed to benefit plan? i think that's where the future is. affordable insurance policy. that's one of the biggest problems of all but we don't have enough affordable insurance policies and that creates the problem to begin with. [inaudible] >> but what is driving costs? if it is a double digit cost increasing terms of medical inflation which it is and has been, what are the drivers? is a fee for service, hospitals? is it litigation? is that the fda at trials which are time consuming are very expensive for pharmaceuticals? there's a lot of cost drivers out there but we've to recognize, first of all, it's terribly complicated this whole

health care thing. $3 trillion in size. that's the size of the gdp of france. that's our health care sector. and any expert will tell you that have about $3 trillion is superfluous, needless spending. so we're blowing through the money that is nonsense. and it really does come down to how do you get more transparency into the system to the patients so they know what their needs are, they know what procedures cost, they can pick and choose those which they really need based upon their having to cover them. it's going to be more reliant on truly affordable insurance policy. will have to rely more on things like harmonized medical records with the doctor can pull up a medical record as opposed to guessing what is right for you. pulling up your medical records that shows what's been the best treatment for you and the prescriptions that will be best overtime as opposed to just randomly giving the stuff, which just drives up costs.

i think you have to be a person responsibly side as well, which is to say 75% of health care spending is for disease. diabetes, you have cancer, you have cardiovascular, you have obesity. that's 75% of the health care spending right there. i hear today that despite all what individuals can do, particularly if you match them with insurance policies that are affordable and may incentivize that kind of wellness, there's a whole lot more we can do. but i have to tell you, the insurance sector is still trapped. you can buy policies across state borders. if there was an affordable policy, like in utah, you can't access one here, which would be great if you get access to affordable policies in other parts of the country, if you were to tasha imagine what that would do in terms of the rising cost in the right direction. >> why? >> regulation. after the president says the 50

governors, this is large, obligated but it's very important for people we get it done. we did although the in our state, other states have done things that i think have advanced the ball a bit. they've all learned something different from the. let's take the next two to three years as a country. i don't care if you're republican and democrat, we are all invested in finding the right fixed on health care. let's go back and see what we've learned and where we are. then was the rightful role of washington is. and i would say instead of $1 trillion, one size fits all package that you drop on the country in cost and uncertainty let's say let's start with the insurance sector. let's try to drop the barrier so people can access affordable policies. that would be huge deal if we could do that. if you just harmonized medical records across the board based on, the system everything else, that would take a lot out. simple steps would help as well. but those kind of things at all, out of turning to the governors,

they are the incubators of democracy, let's go at it. let's see what you learned. we can't rush it because the last thing you can do is something this big and potentially devastating for me consequent is to rush something people don't understand. that's what happened. [inaudible] and so, the folks who should be standing behind obamacare and defending it are not there. they're kind of running for governor. i don't think anyone kind of understood what this would mean in terms of the real world. so here we are. you can only think about for so long and say what do we do? we have to move forward at a country at some point is that finger-pointing. let's move forward and find some solution. i think that's what ago, ultimately. >> i absolutely agree with you. we are more divided and more angry in the last three years

than in the last four years. my question to you, you mentioned about subsidy. i was hoping you'd branch into that. we get so much in subsidies and grants, companies, auto copies, pharmaceutical companies. you might get a new product out of it but we still pay top dollar for the products. so, if we give money to these companies, oil companies, pharmaceutical companies, how would you control, we give you all this money and still charge top dollar, -- [inaudible] get the money back out of interest rate, or you've got to put some kind of cap on that product. comment on that. >> well, i don't have the arithmetic would work on that one, but i think what you are saying is right, and that is, and i believe that the best

course for our economic future on corporate subsidies is to face them out quickly. why? well, we can't afford this as a country anymore. first and foremost and second of all i think they have huge distorting effects within the market place. the whole subsidy for ethanol and corn. what does it do on a per capita basis? you know the math on a per gallon basis of ethanol. but what it does in terms of the distorted affect downstream, feed for cattle, are commodities shipped overseas for basic foodstuffs, people pay more, when it shouldn't be that way. so i believe we can take steps in the guard. it's going to be awful tough. the last i looked, i'm still trying to get the number for subsidies, but i added up about $90 billion in this country has in subsidies in one form or

another in the agricultural sector, probably 15-$20 billion alone that go to prop up prices. and so how do we begin to make progress, for example, on global free trade? if we want to begin to take steps in the opening marketplaces and exporting more. exports brings jobs to this country. we prop up the accepted. friends drops of the accepted. the rice farmers in japan prop up the ag sector. they're all trying to show the united states to show leadership and i believe 25% of the world economy, 25% of the world's gdp that we probably would see some gains longer-term by taking some of the subsidies, moving out. i think it would be, it would be, it would be steps towards greater market reform in other developed countries in the world you're not going to do as long as we're there. i hate is it all comes down to the united states but we are the

world leader. you are still world leader and we still provide the rhythm for the global economy in this country but i believe the time is come for us to say no more subsidies. i know that's painful and i know you can find, everybody benefits to some degree but it's artificial. spent a few companies are working on a product, they will keep going. you'll find the money on their own. they got the money on their own. somebody will give them a loan. why are we paying twice? we're getting all this, giving pfizer all this money and paying so much for health care, paying $3000. [inaudible] >> i mean, for example, get real

about the big picture on subsidies. i also think we have a banking system that is too big to fail. and so what are we doing? you take a look at this topic six banks in the country that have reserves, or assets that are equal to 65, 66% of our nation's gdp, 9.3, $9.4 trillion. they are propped up. they have an implied guarantee by the taxpayers. so if they fail because they're too big to fail, and everybody goes south if they went south, they will get a bailout. and i say capitalism without failure is in capitalism. and if you're propping up banks were there too big to fail, there is something fundamentally wrong with that notion. that's not fair for the taxpayers. i'm not sure that goldman sachs from $200 billion in assets in 1998, you know, to 2008 when the storm hit, being valued at

1.1 trillion, numbers have gone up but what has it done for the american people? are we better off because of it or are we assuming more risk? in other words, what is the risk reward scenario? i say we are a lot of risk by applied subsidy potentially a banks that are too big to fail. so when you start having this discussion i think you have to remember that it plays out in ways we might not imagine, all the way through the banking system. if we're going to fix this economy and get back on her feet, take some of the underlying structural issues like taxes and regulation, health care. you have to take a look at the banking sector as well. you leave it unattended, utah the prospects of bank failures downstream and massive bailouts because if they were to go down, that would take way too many people that nobody wants to see them fail. institutions have to be able to fail based on free market economics.

[inaudible] spent i lived in england for 17 years. >> what you have to say about -- >> they have three weeks and i have dollar limits. we continue to see the big unions and the big corporations giving humongous sums of money for something that seemingly never ends. and recent court decisions at the supreme court level have result in more money coming in. i wonder if there's any way to limit the season or the amount, or are we just whistling in the wind? >> there may be some hope. let me just mention a couple of things. when i ran for governor iran on these things, too. they want to be but i still feel strongly about them. one is term limits. some people don't like the idea that somebody would advocate for term, just let the political marketplace takeover.

and i think there's this thing called income us in this country that becomes so overwhelmingly powerful and allows people to become so entrenched that is long-term harmful to the system. [inaudible] >> or whatever. you need turnover. unique freshening up. you need to infuse new thinking and energy in the system occasionally. i think that would do it. also, when i ran for governor in 2004 i was for term limits, trying to get it through the legislature and was shot down. even to limit the governor which they were not willing to do. and campaign finance reform. i think we need it. a lot of people might disagree with that as well, and i'm not sure it's going to happen during my lifetime to i would like to see because i think we have a serious problem about how we go financing campaigns. and how do you bring it so it is closer to the people on the

finance side? how do you bring it closer to the grassroots level as opposed to a few people hadn't get involved in the highest levels of financing campaigns? that's kind of where we are today. it's wide open. you can say that transparency is enough. i say transparency is very, very good. we need more transparency, but at some point we need to take a good look at campaign finance reform. it's been tried in the past and i don't meet to review the history with you, but we need to stick with it to some extent. shortening the season? why don't we just go to the networks and say, just give people time, not the silly debates but give a candidate a chance to sit on the stage for an hour with a panel of journalists, and just drill down. just get to the heart and soul of the candidate, what they believe on the issues of the day as opposed to these rehearsed line to get in debate which is a waste of everybody's time. [inaudible] >> there you go.

something like that that would be meaningful. maybe we'll get to that point. what were you doing in the u.k.? >> oh, i worked for the defense department as a schoolteacher, and then later -- [inaudible] >> i go to a community college here las. ..

i think it is a manifestation of our democracy. i might not -- a don't agree with a lot of what they say but it is part of the system. it is a legitimate part of the system. do i agree on trillion of dollars we have blown through that everybody is upset about with nothing to show for it? nothing on the balance sheet of debt and no improvement in joblessness or in terms of economic well-being? do i agree on the idea that we won't a lot thanks ever again? yes. do i agree with as a mentioned a minute ago banks there too big to fail? agree with that too.

to be sure every generation has compelling issues that bring people out. remember when i was much younger the anti-war demonstrations. in the white house it was completely encircled. so was the defense department so concerned at the pentagon that they had 50 caliber machine guns on the front steps so the description went at the time, fearful of where it might go and i have seen similar protests, anti globalization rallies when iowa's trade ambassador. every generation will have their issues that bring people of. i would rather have that than the opposite. >> we will take one more because i want to get everyone home tonight. >> it is fairly well known -- most people are speak with,

lobbyists in congress, they have a tremendous impact on the administration, many people have told me -- there is a subset of people below the radar screen. the first indication of that was -- [inaudible] -- all he was doing on behalf of this country for the general public and policymakers and interest for the highest level of people. how do you see and it in congress? and at one time legislation to limit access and involve elected officials? what is your stand on that? >> i think they will have considerable influence in the system. maybe inordinately so. they have a legitimate right to

lobby and i don't begrudge them that. again it gets back to is raising money for you, how much are they raising and what interests do they represent? i am not sure what can be done other than what i've put forward on the tax reform side which is to say clean house on corporate welfare, clean house on subsidies. realistically if you talk about measures that one might take but this realistically would go farther than anything else. if you don't have corporate welfare and loopholes and deductions i would have none of the remaining. what are you going to lobby for? what will you spend your time doing on capitol? you can complain the system is unfair and there is inordinate amount of power and influence by lobbyists. that step alone would go a long way. but also in letting you know to

my successor as governor of utah, gary herbert is not governor and basically i said a few people have lobbyists on capitol hill in the state. you are the lobbyists for everybody else. handle that wisely. and i guess i would take that philosophy with me. lot of people who don't have lobbyists can't afford them. the executive branch -- or the u.s. government. that means you have to have a leader who can embody and encapsulate the aspirations of all people. that is what i would bring. [inaudible]

>> either deliberately or through -- [inaudible] -- one of the biggest mandates is -- [inaudible] >> created taxes and created jobs and china to have you speak more on these other areas and what you have seen and how it impacts when we as a nation will go, extremely important when people don't understand the scope or the depth of what you bring to the office. very critical that people in this room get that message out. >> thank you very much. let me end on this. we had to ask ourselves the question is what we are doing --

does it add to our creed life, liberty and the pursuit of happiness, is it making as a free society? you can't have pursuit of happiness without a job. stop and think about that. if what we are trying to do in government, adding to that motto life, liberty or taking away? that is constantly what we need to be asking ourselves as we move forward because we are unique in the world in terms of being a nation founded on that premise of life, liberty and the pursuit of happiness. we have to be vigilant in maintaining that. thank you very much for being here tonight. i am honored that even in this nor'easter with the uncertainty of even getting home tonight that you came out to shake my hand. thank you very much.

[applause] >> pleasure to meet you. >> a real honor. thank you. that was the job. thank you. honored to have you. it was an honor to have you here. thanks for giving me a little bit of your time. nice to see you. thank you for your time. have a pleasant evening. i appreciate that. showing his hand a little bit. good luck. thanks. [inaudible conversations] >> yes indeed. a pleasure to see you again. that is terrific. >> about the repatriation of all the american children. >> that is part of our tax plan. you get $1.2 trillion to

$1.5 trillion. >> that a lot of money. >> andy pettitte that? bought incentivizing. we did it once in 2004. and 2006. where the tax rate was taken down considerably and hundreds of billions of dollars came home and it is time to do it again. [inaudible conversations] >> thanks again. appreciate it. [inaudible conversations] [inaudible conversations]

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[inaudible conversations] [inaudible conversations] [inaudible conversations] >> watch more video of the candidates. see what political reporters are saying and track the latest campaign contributions with c-span's website for campaign 2012. easy-to-use and to navigate the political landscape with twitter feet and facebook a big liberal candidate bios and the latest polling data and links to c-span media partners in the area primary at

c-span.org/campaign2012. >> officers from the air force, army, navy and marine corps testified at a house subcommittee hearing focusing on military readiness and budget cuts. this is an hour and 45 minutes. . >> i want to welcome our distinguished experts focusing on how we maintain readiness in the age of austerity and more particularly what is the risk the national defense of our country if we continue making the cuts to defense that we hear being discussed in washington. i want to thank our witnesses for being with us and i know several of you had to cancel longstanding personal commitments to be with us this morning. appreciate your willingness to testify before this subcommittee

on this most important topic. in the interest of time because we know we could have votes coming anytime and we may have to recess and come back because this is important and we want to get this on the record i will dispense with any normal opening remarks. since this bordallo is not here we will dispense with a remark that have them put in the record. i would like to look at a procedural matter that we use in this committee and that is we discuss prior to the hearing that we would like to dispense with the five minute rule and depart from regular order some members may ask questions during the course of the discussion. i think this will provide a round table forum and enhance the dialogue of these important issues. we but like to proceed with standard order for members to address the witnesses but if anyone has a question pertinent to the matter being discussed at a time seek acknowledgment and wait to be recognized. we plan to keep questioning to five minutes but i don't want to

curtail productive dialogue. i ask unanimous consent to dispense with the five minute rule and proceed as described. without objection it is so ordered. we are delighted to have you here with us today. we have the honor of having general chiarelli, vice chief of the united states army since august 4th, 2008. he has commanded at every level from platoon to core, commanded the united states european command, director of operations readiness and mobilization at headquarters. we also have admiral ferguson. we're delighted to have you with us. he is the vice chief of naval operations, navy personnel command and chief of legislative affairs and chief of naval personnel. also general joseph dunford, assistant commandant of the marine corps. general dunford has gone to the

u.s. army ranger school, marine care amphibious warfare school and u.s. army college and a distinguished career and we appreciate the expertise he brings to this panel. last but certainly not least is general breedlove. we appreciate you being with us. general breedlove is vice chief of staff of the u.s. air force at georgia tech graduate and we enjoyed the graduate university of virginia playing you the other week. it may be the one bright spot we will have this year but thanks for your help and cooperation in that. he is also a graduate of arizona state university where he had his masters of saw science degree at national war college and without further ado we want to get to your opening statements. we are pleased to have the ranking members join us and we also have with us feet chairman of the full committee. we talked about before you got

here dispensing with opening statements and putting them in the record because they will call votes at 10:15. >> i would like to welcome our witnesses and place my statement. >> we appreciate your service to this committee. madeleine and on worked as close partners and have a special relationship and i appreciate her help with this committee and the great work that she does. with that we are going to do something a little bit different. we are going to put your statements in the record as they have already been made in the record and as i told you before we want you to tell us the importance of what we have. i want you to expound on it with your testimony anything you want to say. we will start with general chiarelli. as you know we have heard -- we already had $465 billion of cuts in national defense taking place in the country. some talk about an additional $600 billion coming. there are discussions that that

will significantly reduce the force that we have in the united states army. you have been serving for a long time. you served in almost every capacity in the army. when we talk about risk and the risk these cuts could have some time we talk in terms of institutions but it comes down to men. you have seen historically what these kind of cuts have done to the risk to your men that will serve under you. please address that question and any other comments for your opening statement. we turn it over to you. >> ranking member bordallo and distinguished members, thank you for allowing me to be here today. these are challenging times. you heard me say that before. we are past decade of war with an all volunteer force. we always had volunteers in our force but it is important to note we have never done this before. we never fought ten years.

we never fought an entirely volunteer force. that force is amazingly resilient but at the same time it is strained. soldiers are strained. families are strained. but they have been absolutely amazing over these ten years of war. i would like to leave you with three points in my opening statement. first is if we recognize budget cuts and corresponding reductions the structure will be made. however we must make a responsive so that we do not end up with a hollowed out force and i can expand on that later on or an unbalanced force. our nation is in the midst of a fiscal crisis and we recognize we must all do our part. we are continuing to identify efficiencies and work very hard on our capability portfolio review process and many of those deficiencies and we will book many more. we appeared before the committee in july looking at cuts in the

vicinity of $450 billion over ten years. the army's portion of that cut the legal and historical percentage at 26%. secretary of the army and chief of staff said that it will be doable. i am getting paid to worry about things. i worry are cut may be higher than that and that causes me -- above and beyond that, directly and deeply impact every part of our army and our ability to meet our national security objectives and effectively protect our country against all friends. whatever threats are made carry risks. so many of the 31 before me have sat at a similar time in our history and had to make the same arguments and answer the same questions. i am sure that was true in the debate after the war.

always in indianapolis and fought a war memorial to the war. of course it was world war i. we cut our army to 300,000 only to grow it to 8.5 million to fight that four year war. at an end week our army again down to 530,000 soldiers. the number sounds familiar of hope and we ended up with the korean war and in the korean war the first battle of that war was the army veritas -- famous task force. equipped force that had infantry battalions that were missing and the results were predictable. it is interesting to note general bradley in what we were talking about after world war ii supported them he went on to say the strength of the military depended on the economy and we must not destroy that economy

but in his autobiography after the korean war bradley wrote my support of this decision, my belief in higher defense spending would wreck the economy was a mistake. perhaps the greatest mistake i made in my post war years in washington. i lived through an army that came out of vietnam and did the same things. ten to 12 years we had to rebuild that army. these questions, these decisions have been made before and there's a tendency to believe the end of war we will never need ground forces again. i tell you we never got that right. we have always required -- don't have the imagination to predict exactly when that will be. my final point is whatever decisions are made, whenever cuts and reductions are

directed, we must ensure we do not lose the trust of soldiers, brave men and women who fought the last ten years and their families. mr. chairman, a thank you and look forward to your questions. >> we hope to get into that in a little more depth as this hearing goes on and what compensation cuts could mean to your force. thank you for that. admiral ferguson, you are facing a tough time as we tee up your opening remarks. you are looking at nav as we understand the fact that we can argue about numbers but china today has more ships in their navies and we have in our navy and we can pick or choose some of them not through any fault of yours but $3 and cents we sent to you. we have $367 million shortfall in your maintenance budget because of dollars we haven't given to you. we recognize on surface-to-surface missiles we

have a distinct challenge between chinese missiles and our missiles because we need technology. in addition to that, we see the projection for our subs that can put us in the next ten years where china would have 78 subs to roughly 32 for arms. we can argue around the edges of those but what do these cuts mean to you? four sixty-five billion we have done for your men and women in the united states navy and what would it mean if we put additional cuts out? anything you want to put in your opening remarks we want to hear from. >> thank you, chairman forms and chairman mckeon, ranking member bordallo and distinguished members of the subcommittee. my first opportunity to testify before the committee and my honor to represent men and women of the navy, active reserve and civilian who do stand watch around the globe to date. my appreciation for

congressional support of them and their families. in an era of declining budgets we are mindful of the lessons of the past. we assess force readiness. taken in some or in part low personal quality, aging equipment, degradation in material readiness and reduce training will inevitably lead to declining readiness of force. we remain committed to maintaining our navy as the world's preeminent maritime force. to do so we must sustain a proper balance among the elements of current readiness and to the long term--those long-term threats to our national security. those elements may be simply stated. sustain the force structure that possesses required capability to face the threat, man that force with high-quality personnel with requisite experience, support with adequate inventories of spare parts and weapons, sustain industrial base that sustain the

force and exercise operationally proficient and relevant. our objective and challenge in this period of austerity will be to keep funding for current future readiness in balance and holding an acceptable level of risk and capacity of those forces to meet the requirements of the combat commanders. how we shake ourselves in this environment must be driven by strategy. we feel that is extraordinarily important. the cuts that are contained, that discussed, chairman forbes, we will accept as part of that reduction in capacity. it will affect certain areas of presence we have a round world. response times. decisions will be tough but executeable. looking at the strategy review going on in the department, we can meet those challenges and we will meet those challenges contained in the end. we intend to take a measured approach and we will look at efficiency in our overhead,

infrastructure and personnel costs be personal force structure and modernization. absent support of the congress you alluded to the impact of sequestration. that impact on our industrial base and our navy will be immediate, severe and long-lasting and fundamentally change the navy that we have today. mr. chairman, members of the committee, appreciate it opportunity to testify and look forward to answering questions. >> thank you. general dunford, you have also served your entire career with men and women under you in the marines and one of these things people believe is once we get out of iraq and afghanistan you will have all the resources you need to do everything you need to do around world. if you look at the cuts that have already been made and we look at these potential cuts from sequestration the projections are your forces could go as low as 150,000 men

and women. if that were to occur, what would the impact be on you and even if we were out of iraq and afghanistan would you be able to conduct a single contingency around world? if you went to that question and any opening remarks the floor is yours. >> members of the committee, thanks for the opportunity to appear before you to talk about the readiness of a marine corps and have the opportunity to thank you for the support of your marines. as we meet this morning almost 30,000 around the world doing what must be done, 20,000 in afghanistan, those marines are the number one priority and with your support they are well trained and ready to do the mission. a recognize that the nation faces an uncertain security environment and difficult fiscal challenges. no doubt we have tough decisions to make. to support the difficult

decisions we have to make we recently have gone through a force structure review effort and the results of that with the committee in the past and offer that framework will allow us to provide recommendations to the secretary of defense to frame the issues similar to the ones the chairman framed in his opening question. we recognize the need to be good stewards of resources and we are working hard to account for every dollar and looking to make sure every dollars well spent. in the end we know we have to make cuts. as we provide our input we need to address three critical considerations. strategy, balance and keeping faith. with regard to strategy we need to know what the nation requires and what the resource available will build the most capable force to do it. as we refine that strategy to use what we learned in the review effort to make recommendations with regard to balance we want to make cuts in a manner that create a hollow force. we have seen that in the past

drawdowns. i have seen that in the 1970s as a young lieutenant. we don't want to see an imbalance between training and equipment and modernization efforts. regardless of the size of a marine corps at the end of the day every unit in the united states marine corps will be ready to respond to today's crisis today. finally we have to keep faith with our people and do that because it is the right thing to do and it is necessary for us to maintain a high quality all volunteer force. we need to send a loud and unmistakable message that the contributions our men and women have made over the past we can use were recognized and appreciated. there are many different definitions of keeping faith and something attributed to george washington gives us a good baseline for discussion this morning. washington said the willingness of future generations to serve will be proportional to how they perceive veterans of earlier wars were treated and

appreciated by our nation. those words seem as relevant today as they were 200 years ago. to get back to your specific question, what would happen if the marine corps is 150,000, when we went through the first structure review effort we came up with a side of the marine corps of 186,800. that is a single major contingency operation force that can respond to only one major contingency. 150,000 would put us below the level necessary to support single contingency. the other thing i would think about is what amphibious forces have done the past year. humanitarian assistance in pakistan supporting operations in afghanistan with fixed wing aviation responding to the crisis with pirate on the magellan star and operations in libya and our friends in the philippines and japan and 150,000 marines we have to make some decisions. we won't be able to do those things on a day-to-day basis or

make the combatant requirements before engaging forces. we will not be there for potential adversaries or jewish or potential france or allies and we won't be able to contain small crises before they become major conflagrations. at 150,000 marines there would be some significant risk institutionally in the marine corps because we will be spending faster and causing our marines to do more with less but as importantly or more importantly responsiveness we will have to combat commanders continues and crisis response will be degraded significantly. >> thank you. general breedlove, thank you for being here. people talk about leaving iraq and afghanistan but we know when the air force, when everyone else my come home the air force often does not come home. they still have to stay and do operations. i would like to have any comments you have about what

these cuts have made to the air force already and what future cuts could do. the floor is yours. >> thank you, chairman for. chairman mckeon, thanks for the opportunity to talk to you about 690,000 proud mn -- air men. this is a challenging time and the air force has been at war for two decades. we have fought alongside our joint team in afghanistan since 9/11 and we went to the gulf in the beginning of the 90s and didn't come cote your point. the nation comes back from a war we leave significant assets overwatch. remaining forces to provides support to those who would remain behind in the regions and that was witnessed as you know in northern fly watch and

southern watch. therefore state and kept high tempo. the cuts we see in front, my remarks we will talk about a minute. they are challenging times and the tempo is exacerbated by the fact that our armed forces since the opening of the gulf war has 34% fewer aircraft and we started that war with and 26% fewer people. so the tempo that we face which we don't see a change in in the future puts a big stress on the force. that has led to a slow but steady decline in our unit readiness as we discussed with this committee before. we have tried to reset in the middle of that and pick up new missions. the air force's mission inside as we have been asked to support this joint team in intelligence surveillance and reconnaissance. we also have been asked to build increased capacity in special operations and we will continue to meet those requirements and

answer the call in the future. all the while the strain put on our force and the need to recapitalize our aging fighter, tanker and bomber fleet. we are finding the oldest fleet air force has ever flown and we desperately need to get to recapitalization during this age of fiscal austerity. the department of defense will have to be part of this recovery and the air force will play its part in that recovery. our goal is to do two things and you heard several of my predecessor's remarks on them. first of all maintain a credible military force. we expect it will be smaller and quick frankly much smaller in some areas. we need to remain credible and capable force as we get smaller. second to avoid becoming a hollow force. like joe and pete mentioned i was in the air force in the 70s and i saw what a hollow air force look like. flight line with their planes that couldn't fly and buildings

with many people with no training or ability to accomplish a mission if the airplane said fun. we don't want to go there again. we will get smaller to remain capable with the forces that are left behind. many of the challenges will come on our people and the backs of our people. as we get smaller and as we expect to asking does not done -- we stayed behind when there's a peace dividend. the temple on their air men will increase and the tempo on our proud reserve component which you know as an interval part of our air force will have to increase because they will become ever more important in a diminishing force. finally sequester cuts envisioned in the budget control act are allowed to take place, we have to go beyond getting to our capacity. we believe we will begin to look at the capabilities that we have

to shed and no longer offered to the joint team. reduction in size would reduce the number of bases we could support, number of air men we could keep on the air force, the impact of the size of our industrial base will be important as it is to the navy and much as joe has mentioned as we downsize the first missions we have to shed is the engagement we see around the world where we preclude further conflict or build allies that will help us will not be able to make those contributions. i look forward to your questions. >> thank you. as each of you know this is the most bipartisan committee in congress. we work together very well and it is a privilege to have all of our members here. we are honored today to have the chairman of the full committee and part of that region we serve in such a bipartisan means because of his leadership. he graciously said he would like

our members to ask questions. i don't think he is asking question but not like to defer to him any comments he might want to make. >> thank you for being here and for your comments. i think that the cuts that you are all working hard to put into place, imac with admiral mullen of month and a half ago and he assigned $465 billion in cuts. that came from the president's speech of cutting $400 billion and the $78 billion they found and the $100 billion you have gone through in efficiencies and what we did -- it is accumulateable and is hard to get the exact number. when the secretary came up or couple weeks ago using 50 plus or 489. some where between 450, and five hundred billion you are dealing

with. we will start hearing the details in january. many in congress and most in the country do not understand and focused on the supercommittee and a $6 billion we will be hit with if they are not able to do their work. if they don't realize the extent of the cuts you have been working on for period of time that will be hitting us next year, we are talking -- we had five hearings at the full committee level not counting all of the committee meetings, subcommittee levels to try to get a handle on this and try to educate the rest of the congress and the rest of the populace of the country as to what really is going to happen to our military. the first five hearings were the impact on the actual military,

the men and women you served with. those that are laying their lives on the line right now as we talk. i have seen in my lifetime lot of drawdowns. i have never seen us do it when we are fighting a war. i think it is incumbent upon us to get the word out, the message to see if this is really what people expect. when i go home and talk to people and tell them what happened they say that isn't what we wanted. we want to get the troops out of germany or cut the waste or get the troops home from korea or somewhere. they do not realize the extent of what has been done, level of and what will happen with the supercommittee and yesterday we had another hearing where we had three economists and they talked about some financial impact to our economic economy. we're in a fragile economy with 9% unemployment rate. they are talking about job

losses of 1.5 million which would increase the unemployment rate up over 10%. what the members start looking at their districts and their homes and lost jobs, the combination of all of this i am hoping will make a stick another breath and say wait a minute. is this really what we went to do? this economic problem we are in right now that we have been building over decades cannot be solved in one budget cycle. i think we have to have some real understanding of what we are doing. is it really what we want to do given the risks facing us around world? with that i thank you for being here and looks like we are going to be having votes right away which is unfortunate but i am

hopeful we will return after the votes. thank you. >> we will hold questions to the end to get to as many members as we can. i would like to recognize the gentlelady from guam for any questions she may have. >> i hope everyone bears with me. i have a very bad cold. i have a couple questions. understand we're coming back for a second round. my first question as i played out my opening statement, further efficiencies and budget cuts would be determined through a comprehensive strategic review. so i am asking to what extent are each of the services involved in developing this review? what are the key tenets of this review? without a strategic plan what are we proceeding with arbitrary cuts? why not wait until such a plan is developed? i ask this because i do not understand the rationale for the

reduction at naval facilities command pacific or the deactivation -- we will start with the admiral first. >> if you will yield for a second. logistically to our members they called a vote that aren't members need to go to. we will come back afterwards for anyone who can come. ms. bordallo's question will be the last we take before we recess to go to the vote. with that, please answer. >> miss bordallo, while the services that are participating at the service chief levelland vice chief level and forms and the ongoing strategy review, the joint staff, in those discussions that are ongoing presently looking into budget submission that the services have done and they were given a fiscal targets as you alluded to for us to reach and now they are

looking at those fiscal submissions and the overall strategy as we go forward and take action as we make those decisions through the fall prior to the budget submission about balancing between those portfolios in terms of capabilities and capacity and does it meet the strategy we see going forward? >> the reviews are not completely finished. is that correct? >> that is correct. from our perspective the decisions regarding the final form of the budget submission are not completed yet and those discussions are ongoing. active participation by service chiefs. >> anyone who wants to we will come back to additional questions you have. we will be here. anyone else like to respond? >> thank you. admiral ferguson got it right. we are participants in the

process to do the comprehensive strategic review led by secretary panetta and an opportunity to provide input in the comprehensive strategic review and we are confident that the results of the strategic review will be the framework where specific cuts are made. as admiral fergus and alluded to we had the initial going to take a look at the same proportional cuts across the board as we went through the drill of $450 billion but at the end of the day as we get for december the strategic review will be complete. at that point we will talk about specific decisions the secretary will make but our understanding is he is not making final decisions about specific cuts that would be made to achieve the initial goal. >> the other witnesses have the same answer? >> i would argue from the army standpoint we are participating in the internal debate in the building but like when i get up in the morning and see the futures, how they are doing in the stock market and look around town and read what the think

tanks are saying they seemed to be discounting the requirement for ground forces which is a natural tendency after what we have been for the last ten years but every other time we have done that in our history as i indicated before, we have done so on the backs of service men and women, soldiers on the ground and let's be honest, it has cost us live. it cost of lives at taskforce smith in korea. it cost us lives every single time. >> we haven't done this when a war is going on as the chairman mentioned. what is the time line for the review of completion? >> let's hold that until we get back. we just have a few minutes to get up for votes. we will recess until after the votes. anyone who can come back then will be there.

[inaudible conversations] [inaudible conversations] >> we apologize to you for the inconvenience of us having to do this vote but that is what we are here for. thank you for your patience. we were continuing with miss bordallo. >> thank you. we will begin with general breedlove. what is the timeline for the review completion? >> as we were walking out we looked at each other and came to the same conclusion.

we expect the review will wrap up in december and as we are working on the budget issues between now and then as we understand facets of the review that apply to our budget process we do that. and i would echo my three compatriots that we are to this point, we have been formulating that strategy. >> thank you very much. that is the end of december. >> that is our collective wisdom. we have a same date in mind. >> admiral ferguson, you didn't answer fully to questions asked about the review process. i said i did not understand the rationale for the reductions in force at the naval facilities command pacificorp the deactivation of the two c battalions. can you answer that? >> as we look at force structure

of the construction battalions around the globe the initial budget submissions we prepared had a reduction in order to meet command of the combat commanders and as we size our forces those forces are on call to serve what we see as future demand. as i alluded to in the opening statement we had to take reductions from certain elements of capacity across the force in order to meet the budget targets we have and we looked at that area as a potential reduction. as we go forward in this review process that is part of the effort we're looking at as to what the final force structure of the construction battalions will be. >> thank you. i have one other question. why would congress consider any potential changes to recruiting and potential incentives such as military retirement and health care or reductions to essential

training when the military department can't identify cost of when they pay for contract and services? the army fulfilled the requirements of fiscal year 2008, national defense authorization act that requires contracts or requires an inventory for services but for half a decade while this nation has been at work the air force and the navy and the defense agencies have failed to implement this law which would help us control the skyrocketing costs and expenditures on contract and services. what do each of your military departments do to decrease contract services and work with farmers instead of just reducing dollars? if you are only reducing dollars you are likely setting up conditions to default contractors in light of the current civilian hiring freezes. i guess air force will answer that first. >> thank you for the

opportunity. we are as our other services looking at everything we do contractually especially as we learn the lesson of the wars we have been in the past ten years, what is inherently governmental and what we should be retained as a blue suit requirement versus those things we contract for. most specifically in combat zones and every facet of what we do has been reviewed to see if this is something we want to eliminate or we need to repurchase and bring back into our service those things in a military way? this isn't a time when we expect our air force will get smaller rather than larger. there is a lot of pressure on that process. how does that relate to jobs that typically civilians also do? civilians who are part of the air force? we are in an ongoing review.

we are focusing most specifically on thing that in combat zones and whether they should be a blue suit job or contract job and we are putting fiscal pressure on what we spend on contracts to help incentivize that approach. >> anyone else care to answer? >> in the navy the office of the secretary is leading an effort across all budget submitted offices to look at service contract in particular and other contract we have a long same lines as other services to see what is governmental land where we pay excessive overhead in charges. >> are you all in agreement? >> we are doing the same thing. i believe it is a deputy secretary to handle contracts and service contracts. going through a complete review of them to understand where there is redundancy or places

where we can't cut and certain areas that may fall into the purview of being able to use soldiers to help in these areas. >> we are part of the same process at pearl ferguson described. >> what is the time line for this review? >> our process -- are do not know what the time line is for the review. my assumption is in conjunction with the budget in december. we will have initial assessment of contract in at that time and time will get back to you if it will extend past december. >> thank you, gentlemen. i yield back. >> the gentlelady from guam has yielded back. she has additional questions the has deferred until the end so our members can get their questions in. we have the gentleman from

georgia, mr scott for five minutes. >> one of the things i hope you will continue to do is inform the committee of things in the code sections we can take out better increasing cost of operations, things we would like to pretend we can afford but we can't like energy mandates and other things running up the cost of operations. general breedlove, i represent roberts air force base and would love to invite you to the air logistics center if you will come in and the season i will make it worthwhile venture. i will even get you to a georgia tech game though i might wear a different hat at the game that you will but it will be a great opportunity for you to come as well. the men and women in our area are very grateful for the commitment of the three depot's strategy and i ask the question to make sure it is a commitment

from the airports to maintain the three depots. >> thank you for that. i hope as we go through these cuts -- let me say this. as a member of congress i know that you know more are running your agencies and different departments than i do and i hope you will be very forthcoming with us about what we can do to help you in doing that. i want to be an ally for you. i am sorry we are going through this. i am quite honestly embarrassed that we have more discussions in this congress about cuts to the military that we do about cuts to social programs. that is carrying america down a very dangerous path. i know america is tired of the

wars in afghanistan and our men and women that have been over there will continue to go but i know they are ready for more time with their families but i'm not so sure the world won't be a more dangerous place than it is today. i thank you for everything you have done. thank you for your support and if i can ever help you feel free to call on our office. >> thank you. we have a commitment to the three depots. we think that is the minimum and thank you for your support. as all of us look at what we can do to address the tale of our forces that will continue to be important as we go forward. the depots bring capability to all of our services that is unmatched a round world to make sure our services, air force and the airplanes they head are ready to do the mission and our

commitment is strong. >> the other aspect is those cuts, we need to rebuild a lot of the machines we have used. every dollar we take out of the rebuilding of those machines is a dollar that comes out of a man or woman's pocket working on the assembly line. if you want to create jobs are will respectfully submit this is the place where you do it. the country, every citizen gets a direct benefit from a strong military and every dollar we spend in rebuilding our equipment in the dollar that goes back in to and american working man or will print -- working woman's pocket to take care of their family. thank you for what you have done for our country and we will stand ready to help you. i yield back. >> the chairman yields back. gentleman from connecticut, mr. courtney recognized for five

minute. >> thank you for holding this hearing and to the witnesses for spending time with us today. i want to ask a question about a specific issue which is the c 27 cargo aircraft. the plan has been put on hold or partially delayed. obviously for the army that is a big issue in terms of having that lift capacity because it is pretty old and i wonder if someone can give an update in terms of where the decision stands. weather is related to four sixty billion north there are other issues at work and are don't know if either general wants to comment. >> i will be first to comment. i can not speak specifically to

what you mentioned on a full scale production. we will take that for the record and get back to you. as far as the c 27 and mission of supporting the army and what will probably be called the last portion of the delivery of goods the air force has a full commitment to that mission. we will not back off of the requirement for the air force to meet that mission. if that mission is to be done with c 27s or c 130s it is the decision still pending and is part of the ongoing budget review but it will be worked out in the next few months. >> if you want to comment? >> the army is committed to the c 27. it fills a gap. my rotary wing aviators --.