obviously for the israelis if they have the able to deliver a nuclear weapon with a missile. what are your opinions about that -- if you might be able to enlighten us a bit more. >> well, as i said, we have a number of concerns here that we worry about with regards to iran, and those are concerns that we share not just with the israelis but with the entire international community. as the president himself has stated, we will not tolerate an iran that develops a nuclear weapon. and yet they continue obviously to try to improve their nuclear enrichment capables. that's something that concerns us a great deal. they continue to threaten the possibility of closing the straits of hormuz, and have made very clear that's a red line for

us. that the strait is very important to free commerce and shipping and the shipping lanes, and would have a huge economic impact if that were to happen. that, too, is acceptable -- is not acceptable and tolerance, we talked about iran and the terrorism and the fact they seek to undermine legitimate governments around the world. that, too concerns us. we think that the approach of the international community to apply sanctions and apply diplomatic pressure is having an impact. it has isolated iran. it's made very clear to them that they have to change their behavior. and i think that we need to keep that pressure on. that's an important effort, i think the international community is unified in that effort, and i guess my hope would be that we could all stick

together in ensuring that we continue to isolate iran and make very clear to them that they should choose to join the international community, the rules and laws and regulations of the international community and become part of that family. if they choose otherwise, then that would have serious implications. >> concern is more than just about their nuclear capacity, although that is a very important part. but is -- are the actions they're taking beyond being pesky in terms of what they are intending to do? >> it's far beyond being pesky. it's deliberately supplying equipment and arms to others to engage in terrorist activity, and that, too, concerns us very much. >> thank you. thank you, mr. chairman. >> thank you senator nelson. we're going to take a

five-minute break. strictly enforced. [inaudible conversations] >> come back to order, and senator portman has yielded to senator graham, and then we'll put senator portman back in his order when he returns, senator graham. >> if we could earmark ohio, i want to let rob know. i appreciate this very much. i have to run. secretary pa net -- pena a do you think is a viable option for the united states to contain a nuclear-armed iran. >> yes indeed. >> the idea of containment. shouldn't we prevent them -- >> it's not just contain but doing everything we took prevent them from -- >> i guess my question more correctly asked is, should we --

if they gate nuclear weapon, do you think the idea of containment is a way to go? should we prevent them versus containing them? >> no. i think we have to prevent them. >> if they have a nuclear weapon, the damage is done other, nations follow suit, terrorist get the material. so, secretary of defense view is that the idea of containing a nuclear armed irans the way to go the idea is to prevent them to do it. hopefully through sanctions and diplomatic engagement. i hope we can. okay. china. general dempsey, there's a lot of media reports that the chinese routinely -- the people liberation army routinely engages in cyberattacks of our business and national security infrastructure. do you believe that is a reality of the 21st century? >> i believe someone in china is hacking into our systems and stealing technology and intellectual policy, which at

this time is a crime but i couldn't attribute it directly to the pla. >> let's say they were involved in hacking into the defense infrastructure infrastructure, would you consider that a hostile act by the chinese. >> i would consider it to be a crime. i think there are other measures that could be taken in cyber that would rise the level of a hostile act? what would that be. >> attack iing critical infrastructure. >> a hostile attack, allowing to us respond in okay. i'm having lunch with the vice president of china in about 20 minutes. what do you want me to tell him? >> happy valentine's day. >> all right. >> senator graham, made very clear the cyberespionage from china has to stop and its mighty serious stuff so you can pass along, if you would, that commend as well. >> would you consider at it

hostile act? >> i sure would. >> i sure would. >> so happen valentine's day. >> ought to be an interesting lunch. secretary panetta, 2014, the game plan is to transition to afghan security force control. they're in the lead. is that correct? >> that's correct. >> we'll have the training mission and providing intelligence gathering, providing capabilities. they're not capable of doing airlifts. >> that's correct. >> do you support the concept of a follow-on force past 2014 as part of a strategic partnership agreement that would have a military footprint, that would allow americans to remain in afghanistan at the afghan's request? is that in our national security interests? >> i believe as the president stated, we have to have an enduring presence in afghanistan.

we need to obviously discuss what those missions are. i think clearly ct operations, one of those missions, training and advising, is one of those nations, enablers providing enablers is one of the positions, and obviously providing air support is one as well. >> so you would agree with the concept that post 2014, if we had configuration of american forces with adequate air power to assist the afghan security forces, plus a special forces component, the taliban days are over in terms of military conquest. >> that taught -- ought to be the goal. >> and i think you could do this with 15 or 20,000 troops with several air bases spread throughout the country and a war weary republic. we have air bases everywhere. and if we leave afghanistan and the issue is in doubt about the future of the taliban, well regret it. if we leave afghanistan in a way that creates a certainty about the taliban's future, i think we

can hold our heads up high. do you think iran is watching what we're doing and afghanistan? >> i would think without question. >> okay. iraq. general dempsey. what is your biggest concern and your best hope about iraq? >> i'll start with the best hope and that is that they appear to be committed to resolving the contentious issues among them politically, not through violence, with the exception of a few of the violent extremist organizations which remain there. my biggest concern is that they will -- they could potentially come to a decision they no longer need our help. they might look elsewhere. that's why our office of security cooperation there remains very vital part of our strategy. >> do you see the security situation in iraq getting worse or better? >> i see it as being in a sort of form of stasis right now. it is what its for the

foreseeable future with of course the potential for -- based on political decisions they might make with increasing tension in the arab kurd region. >> when it comes to the military budget, don't see the department of defense as a job create are for america. that's one of the benefits but i don't think we should view the department of defense as a way to create jobs to deal with unemployment. we should have a defense capability. i feel it's appropriate to reduce defense spending and appropriate to consider another round of black. so just can't me in the process of having to make hard decisions, even in the defense area. when it comes come health care premiums, is it sustainable? is the mandatory spending part of the budget sustainable without reform? >> no. >> so the question for the country is, if i don't get

court-martials and get to be a retired colonel and receive my tri-care benefits when i'm 60, it's okay to ask a guy like me to pay more. they haven't been adjusted since then 1990s. is that correct. >> that's correct. >> and general demsey, you're willing to pay more? >> i am, sir. >> i guess the point is that we're so far in debt, no one group is off the table. and it's hard to ask those who have done the most to secure our freedom to give more. but i'm willing to do it. to the retired community. i'm willing to grandfather the current system but also willing to look outside the box because if we don't do something in terms terms of healthcare growth and entitlement retiree benefits you're going to compete the retired force with operational needs and that's not where we want to go. so thank you both. i don't know if 487 is thing renumber but i'll work with you to get a number that is robust, and one last question. do you see a scenario in the

next decade where 100,000 american troops could be involved over a sustained period of time, and if you do, how would reducing the army and the marines by 125,000 affect these operations? >> i don't know the answer to that, sir. i think we wouldn't want to shape a future where we completely ignored the possibility. the force we're building on the 1317 budget is capable, we assessed, of stability, long term stability for a prolonged conflict. the 150,000 come out of the guard and reserve. >> thank you, senator graham. you have my proxy at lunch, by the way. >> senator webb. >> thank you, mr. chairman. mr. secretary general. first, let me just say that

somebody who spent five years in the pentagon, one of them as a serving marine and the other as defense executive, i appreciate all the work that's gone into this presentation. we're going to have our disagreement but having set on the defense resources board for four. >> i know how much effort has gone into what you brought over here and there are already reports back in my office on the discussion to slash the army and the marine corps and i think for the record we ought to point out that what we're looking at here is historically consistent with the end point of these sustained ground operations if in fact -- if my numbers are correct, you go back to the pre9/11 military and look at 2017, which you're projecting in your testimony, secretary panetta, the army is going to be about 9,000 higher than it was pre9/11, the marine

corps is 19thousand higher than pre9/11. so i look forward to working with you on a lot of different issues and some which we may have disagreement bought i have great respect for all the energy that has gone into the preparation of this budget. i want to talk about basing in the pacific. the chairman levin mentioned this in his opening comments. we have spent a great deal of effort on this. i agree, general dempsey, with what you said. i don't see a pivot here. i think we have always needed to be there. i've been speaking for many years about the need for us to reconfigure our prepares in -- our presence in a way not that downsizes or confronts or attempts to contain china but just as a way to strengthen our alliances and presence out there. there's a strong strategic

dynamic in the region, and a political dynamic in japan. if we don't get it right soon. this has been going on for more than 15 years. we can't kick the can down the court and i'm not asking for your comment. this is more along the lines of getting your bank statement. there are couple things due to us, and they're very important in our consideration. one is the reporting requirement that is scheduled to come out of the independent study. it was mandated by the ndaa. there's a 90-day period for which the bill was signed, which i think was december 31st. for the study to come to the secretary of defense and then the secretary of defense would have up to 90 days, not necessarily mandated to report to us on this independent evaluation of the basing structure. it's going to happen at the same

time that there are environmental statements and other issues taking place on okinawa about the basing system and i want to see if we can move forward in a timely way to resolve this. the other one is the marine corps laydown. i've spoken with the assistant commandant about the numbers that they're using. i support this transitioning concept. i had many conversations with the marine corps and others about thisser early, but we do need to see it -- we need to see the laydown. it's part of the defense authorization bill. the question that i actually have in this short period of time relates to the evolving situation in syria. and, general, i would like to ask if you might characterize for us the lack of a better

term, the on the ground opposition that now exists to the syrian regime. what proportion of this is domestic, what proportion is foreign, what are your observations? >> my observations, senator, are that it is a much different situation than we collectively saw in libya, and i think that's an important point to make, because we don't have as clear an understanding of the nature of the opposition. we're working in the intelligence community to develop it. but as you know there's some significant differences, vis-a-vis syria. that's a chemical and biological warfare threat. a very significant air defense system, a credible military. we're watching the trend lines on their military to see if they're still under the control of the regime there's big

players and actors who have vested interests there, so this is one where we have to not only understand happening on the ground and look at the regional context. ... the syrian army which is generally speaking the centerpiece of the opposition is

for the most part domestic also we also know that other regional actors are providing support and that complicates the situation. >> so the reports over the weekend that al qaeda has been involved as a part of the opposition, the only confirmation? >> no confirmation. i saw the same report. >> have you discounted it? >> not at all. if you think about -- i know you have come about syria is an issue of sunni majority compelling against an oppressive shiite regime, and i mentioned this a moment ago all of the players in the region seems have a stake in this and so those who put it like to foment the standoff, and you know who they are are all waiting and in syria. it is the last remaining piece in the puzzle of what you and i

probably months ago would have described as the arab spring but this is an important moment in the region and all of the players are waging an. >> thank you. mr. sherman. >> senator portman. >> thank you mr. chairman and secretary and general dempsey thank you for being here this morning. i have told secretary panetta i was going back and forth between the committee and the budget committee, and it's interesting because i am seeing two different points of view and i commend both of you today and your comments about the need for us to deal with the unsustainable growth on the entitlement or mandatory side of the spending in response to your question from senator gramm is the mandatory for the system but you gave the simple answer colin no. i will tell you to be honest, having just engaged in the

budget committee of the president's budget that was submitted yesterday it not only adds another 11 or $12 trillion to our debt taking it up to over $25 trillion but it takes a pass on any tough decisions that have to be made on the biggest part of the budget and the fastest-growing part of the budget and that is the entitlement side to beat actually grows under the numbers from 64% of the total budget now this would be medicare, medicaid, social security on the debt to gross from 64% now to the largest part of the budget to 78% during the window of the president's budget, and get there is no mention of social security, no reforms, and on medicare, the only reform i can see on the beneficiary side happens after the next term of whoever is president and that is on a slight means testing changes, so my concern is what you have outlined today, and i quote you from your overview document where you said the growing national debt if not addressed will hurt our

credibility around the world and ultimately put the national security interest and you talked about that in the nomination hearing and i appreciate approach that you take and if we consider to be continued on the path we will all be your many more hearings like this one talking not about how to use the national security but instead talking about how the budgets have been crowded out by an unsustainable practices in the government and we cannot afford the force we need. with that if i can focus on two things in terms of the defense budget because there is room despite my concern about the bigger budget crowding out defense there is room within the defense to find savings and to erie is the one to touch on the personnel in the theory of procurement. on the personal side, i appreciate the fact that you both again have focused on compensation, health care

benefits, the retirement review, these are all tough issues and if we agree the men and women in uniform are the single greatest asset and need to be cautious on the personal side, and the other side we need to be sure we are not crowding out in the defense budget to ensure we have adequate resources in the maintenance, so i would ask you this. when you look at what you've proposed in essence you've taken out one issue to the commission on the retirement, again a very delicate issue, and you've got some suggestions on changing compensation in the military health system here although i would suggest more would have to be done to meet your own criteria that you fleet of and my question to you is there a more holistic approach and this does relate to retention, and obviously our ability to attract the great professional force that we have now?

>> we thought about bundling these issues together into as you described a holistic look at compensation, health care and retirement, and the chiefs and dhaka were of the opinion that we wanted to address the issue that we saw before us that we knew had to be changed, and that was to compensation and health care, but take the time to study the impact of retirement change because one of the things we are concerned about is although it is counter intuitive, you know that about 75% of the force retires or not retires that separates the for the retirement, but 100% of the force when asked even at the five year mark of the career people say to you don't screw around with my retirement or a man of siggerud even though they know the chances of them actually retiring is only about 30%. so there's a psychological factor with retirement benefits that we don't fully understand

yet. we want to take some time to understand what the impact of the retirement reform would be on both recruitment and retention, if that's why we all felt, the chiefs and i felt we should separate these. >> secretary panetta, any thoughts on this given your background on the budget issues? >> i think it's important, as you know as a former director as i was, that we have to approach this budget based on the fact that there is no ground here. you've got to get everything and you've got to question everything. and we approached it on that basis. we talked about allowances, we talked about pay, pay raises, we talked about all the health care areas to be looked at a number of those areas. but just we felt we've got. we've got to take a step to make sure that compensation is part

of the answer to what we have to achieve year in savings, and for that reason we selected the area that we looked at. i think it's important that all of this has to relate to the soldier the uniform by or woman who's there on the battlefield, how do we make sure the we provide the benefits that are necessary to attract the very best, and frankly, we have the very best operating on behalf of the united states today. how do we do that, how do we maintain that benefit based it's important that the same time understand that we've got to control costs and out years and that was the della katella matteo with the cui approached it in the way that there's more that can be done properly. >> well i know that members of the committee know this but

maybe for some watching, this is an increasing part of your budget just as it is for the federal budget as i mentioned if you look at your percentage of spending on the tricare for your overall budget. so one member of the committee to speak for a lot of other colleagues not just the one i heard speak earlier we look forward to working with you on that to be sick support it. i know my time is up but just again to focus on competition that for us may be to spend a little more up front to make sure we have a competitive process to save so much overtime and maybe follow-up the question in writing in that regard. thank you mr. chairman and gentlemen. >> senator mccaskill? >> thank you mr. chairman and to the service to the country. as some of you know, i've spent a lot of time working on contract issues as a member of this committee and other committees, and i don't need to tell you what a huge piece of your budget contract and represents. the project on government oversight released a report last

year that is the first in-depth analysis that has been done an ally of the cost of the personal services contracts as compared to the cost of a federal employee. the study showed that we are paying contractors 1.83 times more than the government pays federal employees, and that is including taking into account the benefits package that goes along with the cost of the personal cost of hiring the for allin -- the federal employees. we need to talk about freezing the employees' salaries but there's been very little difficult work of trying to roll down the cost of the contracts. secretary leon panetta with the reductions of personnel contained in the budget, what are you doing to ensure that

reducing what's happened over the years is why we tried to hold the line of the federal employees contract and has just ballooned and you are by far number one in that. number two, it is the part of homeland security. so, i would like to address that if you could. senator, you provided a tremendous leadership on this issue, and it is a great concern to me personally because it has -- it is an area that has expanded dramatically in almost everywhere i go in my new capacity to the and i see the contract employees providing a lot of services. some of them i think are very important and they perform a very important role. some of them whether or not we could perform the same rule and be able to do it in a smaller price. we did look at this area as part of our efficiency approach to

try to see if we could gain some savings and i would like to ask our country were to speak to that. >> briefly i think you know, senator mccaskill, we have a initiative a couple of years ago in source jobs where it was cost-effective. we are still looking at where it is cost-effective. i think with the budget cutbacks and we are looking at what the right mix is probably both contractors and civil servants are going to come down over the next few years in the budget. we have to find the right mix and i do not believe we have an easy formula but we are looking in that context which is the right one what is the most cost-effective way to get the work done. >> we will have a hearing on this on the contract in oversight and what i will be looking forward to seeing is what kind of strict analysis is the department of defense in breezing to get a handle on the contract employees.

it surprised me when i got here that not only do we not know how many contractors there were in their back, we didn't know how many contractors there were in the government buildings within 5 miles of where we are sitting right now. and that is a huge problem that the contractors just became task orders as opposed to kind of keeping a handle on how this monster dhaka out of hand. we also are going to have legislation coming from the wartime contract in commission that finished its work. i will look forward to the direct input from you about the legislation that we will be hopefully filing this week and we will be working with this committee to get the provisions included in the defense. as i look at afghanistan, 16 billion gdp, 2 billion of that is not from us. that is a huge impact on that country, and as some of you are

aware i've also been looking at the way the funds have been used in terms of infrastructure and help for the first time in the budget there was an infrastructure fund and embedded in the budget coming from the military to do the things that traditionally the state have always done. that is larger, it is like steroids essentially is with the infrastructure was. and i'm going to quote what the counter insurgency advisory and assistance team which provided a report directly by general allan found that it wasn't achieving the counter insurgency goals and i'm going to quote this report. current incentives promote the spending funds without sufficient accountability. there is no system for determining what projects are likely to let fans. no apparent desire to object if we evaluate whether the objectives were achieved. commanders of the areas and is of the spectrum are judged by the amount of the funds

submitted complicated or spent over actual measures of the effectiveness to this situation is not only wasteful but it allows for corruption, insurgent resource capture and the legitimization of the afghan state. we retain primary responsibility for the project success or failure will the host government and population are spectators. i know that serve has been something that is held near and dear and now the afghanistan reconstruction fund is an outgrowth of that because we've gotten beyond the window for months to the large highway construction projects without the kind of rigorous analysis in terms of its sustainability. as we drove off a cliff and afghanistan in terms of what we are giving the country's gdp aren't we creating a scenario that a lot of this money is going to go into the category that it went into iraq and that is a lot of wasted taxpayers' dollars on the afghanistan infrastructure?

>> senator, the actual use of the fund on a share the concern that you have indicated, and as we do drawdown and turn over the race will devotees to the afghans, one of the issues we have to think long erhard about is the sustainability of these efforts. dysphoric sample and afghan forces that takes over and provides the principal security for the country what is the level that we need? is it sustainable? can this country provide the support system that has to? what kind of economic base will the country have for the future? and the issues that you have raised all relate to that question what are we looking at in terms of the future of the country, and can it sustain itself? that's going to be something we have to get a lot of

consideration to not only the united states, but obviously all with our allies have to take a hard look at what we try to do to assist in this country in the future if we are going to be successful. speed i will add, senator, the way that we -- personally i hope we don't drop off a cliff. one of the things we've been discussing is the blight slope. it's our funding wide scope if we drop off a cliff it will have the result he predicted. that is the reason i would suggest we can't fall off the cliff in afghanistan. we have to transition this responsibly. as for whether the have the capacity to deal with all of this of this in several countries around the world to include iraq most recently and that is the most difficult part of these missions is building the capacity, the capability and in the capacity.

it's really institution building. it's pretty easy to be builder infantry but elegance and to partner with them and the institution that sits above it all has to be developed and i would suggest that we have made some pretty significant progress in that regard since about 08 by share your concerns. i'm not sure that i share the understanding of the study cited because the pentagon when it was done and who did it and where they did it could have a very different outcome of the places we are you some information on that going forward >> ai certainly -- i have to tell you i think some of the stuff we built in afghanistan we can go ahead and build the stuff. we can hire the people to build it. our know-how can provide the leadership to build it, but i

don't -- the degette and wishful thinking will catch up in afghanistan that sitting there as an expensive extra power generator because they can't even use it and was hundreds of millions of dollars of american tax payer money. we just can't afford to do that. i have an amendment to move this money that the united states for infrastructure, and i think it's important that we do that because of the need of this country, and the real problem do end up in the bad guys' hands and we know that there have been too many instances that we have found. i appreciate that and the more information you can give me about what kind of record you are bringing to the sustainability because i can find that and i have looked for it. thank you, mr. chairman pete

>> thank you. >> thank you mr. chairman, psychiatry deinze, mr. hill, thank you for your leadership during a very challenging time in the department of defense. i appreciate very much we need to find savings in defense in a way that doesn't undermine our national security. no question. but please count me out when it comes to brac and here's why. i want to echo the concerns that secretary panetta himself having gone through the process released before the house committee in october where secretary, you said i went through and i know that all but dollars people looked for, you know, a huge savings, yet they didn't take into consideration the cleanup committee didn't take into consideration the work that had to be done. they didn't take into consideration the needs that had to be addressed and in many cases it round up costing more. the reason the gao report found that it cost us for the 2005 background, 67% more than we

estimated and in that we will not see any savings from the 2005 drug until 2018, 13 or 14 years of life as a way of serious questions whether we would save any money from the process, and particularly at a time we are still making decisions about the global posture and strength of the forces i don't think is the right time for the process where we may not save a dollar and frankly. that is what concerns me at the end of the day. i want to ask about our engagement rate at guantanamo. director clapper testified i believe it was last year in the spring that our real engagement rate of those that have been released from guantanamo bay was 27 per cent. do you know what the number is now and has that percentage of 27% getting back up this fight gone up?

>> i think 27% was over the long period stretching back into the last administration were the individuals were transferred. i believe under the ones that have been transferred under this administration that it's less. i can't remember the exact percentage. >> what ever administration released it, director clapper said the overall the engagement. >> that's true, and i think that number is correct and i will give back to you one of the specifics -- i want to go to the engagement rate increase at all and the reason i asked is in the follow-up to senator mccain's question earlier about what we have heard could be the administration's potential release of gitmo prisoners in

exchange to the taliban. i just wanted to raise concerns on a couple of friends. number one, as i see it of course in "the wall street journal" and "the washington post" of these five people let's be clear if these reports are accurate we are talking about individuals who the senior most television commander in northern afghanistan, someone who is an alleged war criminal, two of them are potentially involved in killing of a cia operative, an american cia operative. the remaining small will is alleged to have helped smuggle weapons to attack the u.s. troops loyal to the haqqani network. another is vertically associated with osama bin laden and mullah omar and then the following me belong to al qaeda, and his release has been called highly

problematic. all five of these individuals were characterized by the administration in 2010 if these reports are accurate about who these individuals or all five of them were deemed by this administration in 2010 to back the interest transfer but not feasible for the prosecution. i guess my question -- i know you have to certify, psychiatry, two years later is their something changed about these individuals that we are not aware of? and, my follow-up would be as light understand the administration's plan, this is an exchange for good will from the television. if we are going to release -- if these reports are the case, the public reports with who these individuals are dangerous individuals who could get back and we engage with our troops who are not just soldiers the appear to be leaders among the taliban and the networks that if we are to release them in

exchange for the measure of good will, it seems to me why aren't we getting the cease-fire if we are going to put of people that were so dangerous? so to questions. has something changed from 2010 of the assessment of these five individuals? in terms of being too dangerous to release? and second, do you think this is a good deal if we are only going to get a goodwill gesture from the taliban? >> let me reemphasize that, absolutely no decisions have been made with regards to the reconciliation. there are some discussions, but the conditions for the reconciliation have been made very clear that the taliban has to lead down their arms. they have to renounce al qaeda, they have to read it please the constitution in afghanistan. as far as i know, none of those conditions have been met at this point, and obviously would be part of the discussions.

as to whether or not as part of the for these discussions involved that there were a transfer that's part of that, under my obligations as the secretary i have to certify that these individuals will not return to the battlefield and i've got to be convinced that steps are taken to ensure that does not happen, and until i am assured that that is the case i am not going to certify. >> i appreciate that mr. secretary, and i would hope -- these are very dangerous individuals if they are as the been reported in the washington journal, and in particular, to transfer them to the so-called good will gesture, i appreciate your list of conditions of the cease-fire laying down of arms, and i obviously am concerned to transfer these individuals that all given how the interest they have been in the past. and frankly we haven't always been right about this as you know. 27% wrong with what ever administration we are in.

it was a medium risk. these guys were all high risk. medium risk and he was released and he is now leading the taliban forces citing the u.s. marines and the helmand province. so we do our best in these situations, but as a prior prosecutor, the best predictor of future behavior is prior year p.a.. these guys are not good. i appreciate you looking at the certification very carefully, and thank you all for being here today. >> thank you, senator. senator udall. >> thank you mr. chairman and gentlemen, i'm sure you can imagine you would rather spend valentine's day with any groups other than the armed services committee, so thanks for being here. it's apparent that the fiscal challenges the dod faces are those that we face across the federal budget. we have had a respite given the

end of the war in iraq but unfortunately more broadly, and i'm not speaking to you but more broadly we've mismanaged our finances across the board and we've put ourselves in a pretty tough on would say even on the tough financial position. if you look at our history, we have leverage our economic and military strength to accomplish our goals, and we cannot project our power abroad if we are weak at home and then we have also undercut our domestic and strategic goals by managing our finances so poorly. you both know we have to carefully sturgell the balance between the fiscal irresponsibility, strategic capability. we cannot haul out the force. we have to get this right. i think we have a lot of history to guide us and we have to make sure that we incorporate the lessons learned from our success in both our failure as a non-clearer i always learn more when i was on the mound in the didn't climb as the ones i was

successfully something. but in general, in that spirit i wanted to turn to the summary that i heard that the commitment to the research and development programs and the continued development of the alternative energy technologies. dod has always been an innovator in the research as created a number of products we now consider essentials to the everyday civilian life. at the same time they are concerns that they are operational needs that need to be addressed now can you discuss the thinking behind the focus on the future and how that decision affects the operations and those that might be just over the horizon? >> on the issue of energy, on a can can petraeus began a broadly to the medical advances and i know you have a long list. >> we do, sir. in terms of looking at the joint

force 20 slash 20 is why we want to protect ourselves out and then look back and find our way forward and this budget is the first step in it that. i will use the operation energy as an example. we lose soldiers, marines, notably airmen on the roads of afghanistan going from 5-5 and the supply missions and so forth. to the extent that we can create autonomous or semi thomas in terms of energy consumption power and energy or the organizations, you know, net is zero in terms of the consumption of power and energy we will actually save lives and become a lot more agile because we won't be as tight to some kind of traditional linear line of communications. so we are all in and as you know, the army has the five installations where one of them is in colorado by the way where we are trying to receive a net zero energy situation but that this kind of the garrison environment, operational the we

are trying to do the same thing with the tactical units. every service frankly is working on this iraq diligently and this reflects that. estimates the compelling stories of the marines are doing in theater a at the front lines and as your predecessor put it saving energy saves lives and so i commend you for what you're doing and i look for to working with you in this area as we move forward. >> mr. secretary, if i could turn to you, as i think you are aware the congress what the department to establish the responsive space office within the air force to rapidly filled the small responsive satellites are tactical in nature and tasked by the combat commanders in the field. that's in comparison to the large national systems that take six to eight years of literally billions of dollars to field. the house understand in the fiscal year 2013, the department is proposing to abolish the operational base the zero budget

from the $111 million last year in and integrate whenever capability is left in the space the of the system center. can you explain the department's thinking when the satellite the launch was judged by centcom to be successful or started sending images back to them in the fall of 2011 almost three years to the day after the program? and one additional question is there a possibility of the decision to put the cart before the horse? i assume the alleged was probably put together before centcom started using the system. can you explain the reasoning here? >> center, but we have bald hill talk to that yet estimate center, what we have done as uses terminate the program office but not the commitment for the operational response initiatives. it will be put into the space command where it can be looked at in the broad context and we think it is the right decision as those focusing on the one particular approach, but to look

more broadly at this initiative a lot of ways to do need to find a cost-effective way so that is our approach to the estimate i look forward to working with you to make sure we continue to get this right. we talk about small round golf courses on this front line and this is the way of doing that, but in space. let me turn to iraq and afghanistan. we ended our mission abroad and we are drawing down the forces in afghanistan, we proposed reducing the and strength in the service branches and a substantial number of aircraft ships and hermene brigade combat teams. after all that and more when adjusted for inflation that the budget for the 2017 will still be at almost exactly the same level as it was in 1986 that's the height of the ronald reagan area build up against the soviets can you talk about the major reasons why we are spending the same amount of money for the smaller force?

>> senator, what we have here is the $487 billion was in the plan dod budget over the next ten years and that included obviously a lot of what we have been we had to reduce in the budget looking forward. so overall, make no mistake about it. even though the defense budget shows a slight increaseed in the budget plus the amount would be involved in terms of the war cost we are going to be going down dramatically by about 20% which is comparable to what we have seen in the past drawdowns. and so, this budget by its but

at the same time by virtue of what we've done we have made it much tighter. obviously, we have had to take on the force structure, we've had to make cuts in the ships and planes and other areas of space as you said, but the bottom line is we think we have a sustainable budget that will take us to the kind of force we are going to need to meet the threats out there in the world. >> thank you for your service. >> thank you senator udall. >> thank you mr. sherman. i am sure at this point to end the hearing secretary panetta that you are contemplating what daniel akaka said to you and are wondering about your career choice, but we do appreciate your service and the service of all of you. general dempsey, i want to bring up with you in the issue that really troubles me.

since may of 2007, afghan security forces have killed 70 americans and allied troops and wounded many more come over 100 more. in 45 separate attacks and one of those killed was the unnamed soldier private first class buddy mclean. i am so disturbed by the frequency of these attacks it raises questions about our the bidding process, it raises concerns among our troops when here they are risking their lives to train and assist these afghan troops to only have some of them turn on them and kill them. it's my understanding that the central command report concluded that there was the crisis of

distrust that permeated both the national afghan security troops that we are trading, and our own troops as well so here they are being sent out on the joint missions trading side by side, but they don't trust each other unless the steps are taken to stop these attacks on our troops by the off can security personnel that level of trust that is so necessary for the successful strategy is going to be extraordinarily difficult to achieve. after all, these are the very security forces that we are depending on to take over from us so that we can come back home. so i would ask you what is being done to address this very serious and destructive problem?

>> thanks, senator. i'm well aware of this issue. i recently briefed the president on who shares your concern to the sec is actually 47 instances. about 11 of them were related to infiltration yourself radicalization. the remainder were issues of personal. its stress, it's trouble, it's not related to the taliban influence or ideological issues. that is an important point. does it make it any better, but it makes it more understandable. the other thing i want to mention is it's not just what we call -- it isn't just than attacking us, they are attacking each other and probably at a rate of three times, so we are interested in this and have an eight step vetting process that includes -- i don't have the entire thing ever laced but it includes things like letters from the tribal elders, training, indoctrination, and

then the counter intelligence agents, u.s. and coalition and also afghans themselves. recently because of the recent issue with the french you may recall, president karzai and the ministry of interior agreed to invest some counter intelligence throughout the afghan national army to try to get after this. so we are seized with it. it is tragic, and we are taking steps to improve its. we are not going to get it to zero is the nature of this kind of conflict. estimate you know, it's one thing to tell a family that has lost a loved one that they did so in support of the afghan people to help them have a secure country and to make our national security better, but it's so different to try to

console a family that has lost a son or daughter as a result of the afghan security force members telling them. and i just think it is a terrible problem and the seeming frequency is really disturbing. i realize we are never going to get to zero, but there are too many incidents. >> if i could, i share your concern deeply and i just returned from the nato ministerial we're obviously the french were very concerned have lost some of their troops in the situation. what we did at the nato ministerial was to task general allan to report back on the steps that are being taken. before this he had actually taken some of the steps that general dempsey recommended, and they are moving aggressively to try to do a better review of those that are going into the afghan army, better checks and

background checks in order to ensure that these incidents are cut back. even know killings this we are in any way justifiable, that is still remains something that is endemic. it is sporadic but nevertheless we have to address it and make sure it doesn't happen. >> thank you. i would ask that you keep me informed as you do try to improve the process. secretary panetta escher's a lot of the concerns that my colleagues have expressed about some of the cuts in the budget, particularly those that have shipbuilding in the size of the fleet. seems inconsistent to say that we are going to focus on the asia pacific area, and yet not seek to get to for what years

has been the absolute minimum goal of 313 ships. i am pleased however the the budget request indicates that the department intends to seek a multi-year procurement plan for the 51 destroyers between now and 2017. first of all, do you support that plan, and do you see that as helping to produce the kind of efficiencies that will lead to a lower cost per unit? >> absolutely. i think it's extremely important. two things are important. we want to maintain -- we've to enter 85 ships now. we want to be yet to under 85 ships in 2017 and the next five years our hope is to gradually move up to 300 by the end of 2020. so we are clearly intent on having the vv that is fully capable to project