additional tax cut of on average $265,000 each in that $1 million-plus earner cohort. the blockade here that is preventing moving beyond the sequester is by republicans, particularly in the house, refusing to proceed in any reasonable way, and instead demanding these damaging radical cuts for the middle class. let's look a little bit behind the curtain of campaign rhetoric and examine the harm, the personal real-life, real-person harm that the ryan budget would inflict on millions of middle-class families and retirees. in what is one of the extraordinary examples of say one thing but do another rhetoric, mr. ryan in his recent

nomination acceptance speech said the greatest responsibility of of the strong to protect the weak. the test of a society is how it treats those who cannot take care of themselves. his budget does the opposite. it slashes taxes for the most well off while decimating the programs on which struggling families and retirees rely. don't take my word for t. following the house passage of this ryan budget, the conference of catholic bishops said -- and i quote -- "congress faces a difficult task to balance needs and resources and allocate burdens and sacrifices. just solutions, however, "the bishop said, "must require shared sacrifice by all,

eliminating -- and fairly addressing the budget programs. the house-passed budget resolution fails to meet these budget criteria." that's what the conference of catholic bishops said. i'll say it again, the house-passed budget resolution failed to meet these moral criteria. that's not me speaking. that is the conference of america's catholic bishops. so let's start our look behind the curtain, the curtain of the budget that fails this moral test but that governor romney said was marvelous, to use his word. let's start with the budget's tax theories. the ryan budget would lower the top tax rates for both corporations and the highest-earning individuals from 35% to 25%. according to the joint economic committee analysis, this would result in an average tax cut of

$285,000 for americans earning $1 million a year and more. at the same time middle-income taxpayers making between $50,000 and $100,000 would see their taxes go up -- go up -- by $1,300 because middle-class deductions are stripped away to pay for the high-end cuts. ryan would also shift at the corporate level to a so-called territorial tax system which would mean that companies that ship jobs and operations overseas would no longer have to pay any u.s. taxes on their overseas profits. democrats have tried repeat lid to offer -- tried repeatedly to offer tax incentives to companies that bring jobs home to the united states, and nobody in this body has worked harder

on bringing jobs home to the united states than the presiding officer, the senator from ohio, senator brown. well, the ryan plan would do exactly the opposite. it would tell big corporations that if they move their business operations overseas, they'll never pay taxes on those again. the ryan plan is really a jobs bill for china, for india, for korea. not for america. it's an offshoring rewards act. in addition to those upside down tax changes that harm the middle class and raise their taxes to cut taxes for the highest earners in this country, in addition to its inducements to offshore more jobs instead of bringing them home, the ryan budget would slash $2.9 trillion from our health care programs beginning for workers who retire in 2023, mr. ryan would convert medicare to a voucher system,

which according to the nonpartisan congressional budget office would ultimately add an estimated $6,000 in annual out-of-pocket costs that our retirees, our seniors, would have to fork over. it's hard to imagine how future seniors living on a fixed social security income will be able to maintain health care coverage with these substantial increases and out-of-pocket costs that mr. ryan's budget envisions. if the republicans are saying that they won't make the deal that spares us the sequester unless that deal puts an end to medicare as we know it, holding medicare hostage, well it then takes some brass, to use president clinton's phrase, to say that we are for the sequester. the ryan budget doesn't stop there. it would repeal the affordable care act and take away access to

affordable health insurance for millions of americans of all ages. and of course repealing the affordable care act hits seniors again by reopening that dreaded medicare prescription drug doughnut hole that we worked so hard to close, and that is closed over time in the affordable care act. in 2011 alone, the affordable care act helped nearly 15,000 people in my home state of rhode island save an average of $554 by beginning to close the doughnut hole. millions of dollars out of the pockets of rhode island seniors. that made a big difference for people like olive who wrote to me from woonsocket. her husband fell into the doughnut hole last july. olive and her husband received a discount on prescription drugs.

they saved $2,404. if the ryan bill passed they would be stuck, $2,400 out of the hands of olive and her husband and into the hands of the drug companies. gee, who would be for that around here? in fact, under the ryan budget, the average senior would be stuck with $4,200 in additional out-of-pocket prescription costs, a huge transfer of wealth for america's seniors to the big drug companies. repealing the affordable care act wouldn't just harm seniors. it would also mean insurance plans would no longer have to cover young adults up to age 26 on their parents' plan. this moves over three million young americans just getting out of college, still looking for that first job that has health insurance coverage back on to the rolls of the uninsured. the radical ryan budget would also hurt young people by slashing pell grants, making college less affordable. students and graduates are already struggling to pay a

record $1 trillion that americans now owe in outstanding student loans, and the ryan plan would force students to take on even greater debt burdens. on top of these specific cuts, the ryan budget takes an additional $1 trillion in unspecified discretionary spending cuts. domestic discretionary funding is the money that's used to keep the government operating each year. f.b.i. agents investigating case -gs, border patrol eights working our -- border patrol agents working our borders, employees mailing out social security checks and many other important programs and functions. it's already at its lowest level since a shared g.d.p. since the 1950's. it's hard to imagine any other federal investment not being jeopardized by such draconian cuts. and that is why president

reagan -- president reagan's former economic advisor said about this ryan budget plan, "the ryan plan is a monstrosity." the reagan economic advisor. ronald reagan's economic advisor said "the ryan plan is a monstrosity. the rich would receive huge tax cuts while the social safety net would be shredded to pay for them. it is less of a wish list than a fairy tale, you utterly disconnd from the real world, backed up by make-believe numbers and unreasonable assumptions." if that's what ronald reagan's economic advisor thought about it, think what regular people might think about it. ryan's plan isn't even an act of courage. it's just pandering to the tea party. but that is what is being held hostage on this sequester. mr. president, i hope when the election season is over, no matter who wins, that

republicans will work with us without insisting on a monstrosity, without insisting on the end of medicare, on a balanced and reasonable plan to reduce the deficit. with a record national debt, now is no time for more tax giveaways to billionaires as mr. ryan proposes, but rather it is a time to ensure that america where everyone gets a fair shot, everyone pitches in their fair share and we go forward as a country together as we always

>> the secretary of defense was just with defense minister i think yesterday. they are working their way through this thing. we've been forthright with them

in morocco. we have given them a copy of the action investigation. we've actually sat with him and he briefed them, took their assessment team down with our training squadrons are, put them in the simulator and we showed them the mishap from flying in a similar and then put them in an airplane and actually was flying them around an airplane. they have everything. u.s. air force has come forward and they've done exactly the same thing. japanese government has the facts of the two mishaps. both mishaps were pilot error. it's tragedy. in our case we lost two crew chiefs in the back. so that i don't want to ever downplay that. that's serious. but both accidents were not caused by mechanical failures. your point about when people -- it's always dot dot dot and then they start rehashing press written by somebody really

almost 10, 11 years ago. the facts are this. the airplane itself is absolutely probably competing to be the safest airplane in the first 100,000 hours of flight. you build an airplane, you feel that come to take a look at how it performs in the first 100,000 hours. that airplane is tied for first place across all the airplanes we have ever built, all the ones we are flying right now and all the ones we're flying overseas and all aircraft carriers. it's tied with the cv 22, interestingly enough, the air force, and h. 60 helicopter. those are the three safest airplanes in the first 100,000 hours of flight. it's a great tragedy we have the mishap in morocco. i can't pull that back, but we went for years without having a mishap. the airplane has been program. the airplane has been restructured but it's on its 15th combat deployment.

when you go in afghanistan, and you fly, and i do all the time, you get older, everyone wants to fly around in that. everybody does. there's a reason for that. so i'm very optimistic. am optimistic that are two nations will be able to work their way through this it's the best, i wrote a piece and, to the government of japan and i said i'm a pilot, a senior pilot and i'm an active duty military today. i just don't see age 36 run okinawa a few hours ago. i know it well. i'm equally as mindful of my responsibilities for safe operations of that airplane for the people of okinawa. the citizens of that great nation as i am mindful of my own

marines that will be flying them and family members in the pics i take that very precisely. it's a heck the capability, and i think it's in the best interest of the alliance to have that together. >> time for a few more questions. the gentleman in the second row. give him a microphone, please. >> thank you. i'm president of the as russia business council but i'm actually here because i'm a father of the marine. and i want to ask you, sir, about -- >> he is deployed right now. >> he is deployed. he called me today. said he couldn't say what he was. he wasn't even sure which ocean it was ass. >> i'll tell you off-line. >> thank you. i wonder if you would address the questions familiar to morale. coming off a very long engagement in afghanistan. we're going into a downsizing,

the sequester must weigh on people's minds. you've been dealing with some of the more thorny social issues have come up the last few years with "don't ask, don't tell," with women going into combat infantry, training and so forth. can you talk a little bit about what sort of reaction you were saying coming from the rank-and-file, and how you're dealing with? >> before i pitch in, what's your son say? what's his sense? >> my son says when a marine stops complaining, there's something wrong. [laughter] >> there's a lot of truth to that. >> i think, my sense is that his morale is pretty high. he is deployed in afghanistan and came back and seems to be coping well with it. i mean, it's a tribute to the poor that it instills a certain degree am a high degree and

people learn how to compensate for these fluctuations. but one can't help but pick up a little bit of concern about where things are going, and cutting scores and bonus, reenlistment bonus and things like that. >> thank you for that, and thank you for loaning me your son. i mean that sincerely. the interesting thing right now, when i say this commute going to say well, he's a service chiefs we have to say this. this. actually i am a service chief and i don't have to say this but it would save anyway. more outright now is probably never been higher than, or probably morale has never been higher than this right now. marines feel good about what you're doing. and how do i know that? first of all, i talk to them. and you might think that they would withhold themselves when i walk up to them but they actually are pretty forthright. you can measure kind of the

mental health, the happiness of the you know, or the service, by how things are with me enlistments, how things are with young men and women standing at the door trying to get in. when a young man or woman finishes the first four years, they have an opportunity or a decision, do i sign up for another four-year contract and stay on, or do i get out and i go to work or go to my family business or go to school, whatever it is on going to do. reenlistments right now our higher than they've ever been. in fact, we are challenge in the marine corps because we are drawing down to the 182 i talked about in my comments. which means the competition to stay in is very, very teen. so we have a higher numbered of

young men and women who want to stay by a factor probably three or four than we have space for. so reenlistments are high. if you want to become, for instance, an officer in the marine corps today, and i know this because i track it. in fact, i was just working it this weekend. and i would've never made. carl smith probably neither one of us would have made it. but here's the average sat score for a college graduate applying for the marine corps. sat score is 1250, 3.22 gpa. no felonies. i mean none of that kind of stuff. no nasty tattoos that are visible, which is difficult in today's society. and you are heavily involved in sports and heavily involved in extracurricular activity. so 3.2 to gpa -- i sat score of

1250, just to make the cut. and then you sit around and start talking about okay then, i mean, i've looked at a record this weekend that had an sat score of 1550. i didn't even know it went that high. that's twice as high as carl smith and mind. so now if you said i want to be a young enlisted marine, i don't want to go through that sat and college and stuff, eight months. you sign up today, if you walk, go to the recruiter downtown washington, d.c. and you sign up, assuming you are morally, physically and everything else qualified, then you're looking to sit in will recall -- because we don't have room for you. it will be eight months before we can ship, the san diego. that's an indication that young

men and women want to commend. our officer retention is probably higher today than i can ever remember. it's in the '90s. i'm talking captives but and you might think captain's don't like that stuff. actually they want to stay. it's in the 90 percentile. i'll tell you what i worry about. so that's all good. and by the way, just like your brothers in the army, we've been in some pretty tough times. this is not been -- i've lost 1123 marines now, killed in action since we crossed the border in march 2003. almost 14,000 wounded so it's not been without cost. but marines know that when they sign up. and we tell them that is going to be hard. we say we're going to deploy you around the world and we've been

living up to the promise. i'm not trying to be corny. we do and they like that. i think that's why the marines -- were concerned about now is that as we come down out of, 2014 where we have withdrawn the bulk of our forces out of afghanistan, so kind of major combat kind of operations have ceased so to speak and we don't know what the rest of the world -- were will do to us but i'm going to have to make sure that my young men and women see job satisfaction, are motivated, to go to places like the pacific, to go train with other nations, to go on board ships. and i'm going to have to work my way through that. that's a concern of mine. because i've been a marine, the bulk of my time, the warriors.

you trained come to deploy, you would hear comedy with her and we all work, all of us work hard to keep our morale up. so that is probably my greatest concern. probably not so much as the morale has grown but i think it is really good, as i look in the future, i'm concerned, how am i going to keep that up. kids right now, and i see kids with great love and affection, in our young men and women, they step forward and they're willing to sacrifice. don't worry about whatever generation we're talking about. they are selfless. they are courageous, and they are willing to step forward and give of themselves. and they're doing it by the thousands. i'm just worried as we can come out of that i'm going to have to promise, that's what australia is actually a pretty good theater. so i know, i mean, that's our

field answer, and that's true. >> general, stan taylor. talking about the v-22 its had its first deployment in iraq and afghanistan. and i'm wondering how you see that aircrafts wrote evolving, and maturing perhaps, as you send it over to the asia-pacific region. >> i think it's got a great combat record by the way and it's been shot up coming in and out of the zones. it's almost 15th deployment. it's on, goodness, 13th or so combat deployment, so it's been shot up going in and out of zones and it's done just fine. you know, as you think asia-pacific, so we know it works well in combat but what about in the humanitarian assistance and disaster relief?

let me give you some figures that i think will catch your attention. in the asia-pacific area, every single year over 70,000 people are killed by a natural disaster. tsunami, earthquakes, cyclones. i just talked to my commander on okinawa on sunday. he had the latest typhoon go through, the one that gone through was like two weeks before that. these are super typhoons. these are what we would call kind of category five kind of things. all that, when i landed in manila they had just had a typhoon that had sat over the philippines for almost two weeks. where landed in manila five weeks ago, whatever it was, the skies had just cleared and we landed. half of manila was under water. hundreds and hundreds of people had lost their homes and --

thousands have lost their homes and many have died. had an earthquake on the other side of the philippines, 6.4 as i recall a few weeks ago. the asia-pacific area is prone to natural disasters of almost epic proportions. so how does the v-22 fit there? i can fly from okinawa to philippines, nonstop, and be down there, provide relief. if i have to go down with my 44 year-old helicopters it takes me nine hours because i've got to find little islands that i can stop and refuel in all the way down. then when they get there i have probably got a combat ready, about 110 miles which things i can fly out to someplace, loiter for about 20 minutes and come back. the v-22 you don't have to do that. it literally, all the advertisements were using 2001 and 2002 to come to promote the

airplane, flights to and have times as fast, carries three times as much in ghostlike through four times, actually that's the truth. when you start thinking the pacific, large, massive areas of water and huge amounts of potential goodness for our nation, that the airplane can help our allies, i think it's got a key role in the pacific. i think should our two nations work through this, and i'm optimistic that they will, that we'll have an opportunity very quickly to show that. >> i think we're out of time. thank you so much for the enormous depth and breadth of your discussion here from the asia-pacific through europe and the middle east and from the strategic to the tactical and certainly your important thought on taking care of our veterans

and our active personnel. thank you so much for coming here. [applause] >> the house ethics committee holds a public hearing on ethics charges against california representative maxine waters. the charges allege that her grandson who serves as a chief of staff pressured the treasury department to give a bail out to minority owned bank where waters husband held stock in served on the board. we will have that live at 9:15 a.m. eastern on c-span2. >> the defense department does not have a detailed plan if the automatics cuts under sequestration take back. according to the defense department's chief financial officers robert hill. he testified to the house armed services committee with representatives from each of the four military branches. this is about two hours.

>> the committee will come to order. good morning ladies and gentlemen. the house armed service committee meets today to receive testimony on the department of defense planning for sequestration. the sequestration transparency act of 2012 and the way forward. thank you all for being here. >> this will be the last week the house is in session until mid-november. today's hearing will provide members a final opportunity before the lame duck session to inform themselves and their constituents about how sequestration will be implemented and how those decisions will affect our men and women in uniform and our national security. we had hoped that the president would provide this information in the report required by the sequestration transparency act. unfortunately, he failed to comply with both the letter and the spirit of the law. not only was the report late, but the report submitted to

congress merely paid lip service to the dire national security implications of these cuts, after the president has had over a year to consider this crisis. moreover, the white house has even gone so far as to instruct the department of defense not to make preparations for sequestration. nevertheless, as previous testimony to this committee has provided, many of our military leaders believe initial preparation for sequestration must occur well in advance of the january 2, 2013 implementation date. for example, when the secretary of the army, john mchugh, was asked this spring if plans for sequestration were underway, he stated we are not doing as yet any hard planning. that would probably happen later this summer. today we are following up with the department to review and understand the mechanics of sequestration, how would they implement it, and the timelines necessary to develop a comprehensive and concrete

strategy if sequestration were to occur. this morning we will hear firsthand from the honorable robert f. hale, undersecretary of defense, comptroller; general lloyd j. austin iii, vice chief of staff of the army; admiral mark ferguson, vice chief of naval operations; general larry o. spencer, vice chief of staff of the air force; and general joseph f. dunford, assistant commandant of the marine corps. let me make one final observation and appeal to our witnesses. as the recent violence throughout the middle east has reminded us, we are living in the most dynamic and complex security environment in recent memory. the decisions we make with regard to sequestration will have a tangible and lasting effect on that global security environment. last month, in testimony before the committee, the white house

budget director stated, the impact of sequestration cannot be lessened with advance planning and executive action. he misses the point. planning can't resolve sequestration. but the lack of planning and the failure to exercise leadership now can make a dire situation worse. gentlemen, we understand that there are no easy choices here, but now is not the time for ambiguity. in your testimony, i urge each of you to be as clear with us as you possibly can about what the road ahead portends for the implementation of sequestration. this could well be the last opportunity for our military to get these facts on the record before the deadline for a legislative remedy has passed. with that i look forward to your testimony, and again, thank you for your service and thank you for being here today. mr. smith. >> thank you, mr. chairman.

i appreciate that we're having this thing. i think sequestration is unquestionably the most important issue facing our government can figure out how to deal with it and it's important we learn more about it. and it's clear and i believe the president and secretary of defense and numerous other executive branch officials have made it clear that they see sequestration as having a devastating impact on defense. that was the point i believe of the omb director's remarks was don't think you can somehow make this work in a way that is not going have a huge negative impact on her national security. that's the main point that is been made by countless witnesses and folks in a very bipartisan way. i don't think there's any discredit whatsoever on the. even if you think that savings can be found in the defense budget, and i do, this is not the way to do. it's going to be a $57 billion cut at the absolute last minute. the middle of fiscal year 15 after all consequence was done to try to set it up.

it's also across the border every program had to be cut by the same amount for the most part. so the very limit in terms of any flexibility into handling this. so we have established beyond a shadow of a doubt that this is not good policy and no one has claimed that it is. as for the issue that somehow the pentagon and the white house has got nothing to plan for it, i don't think that's at all accurate. we had undersecretary ash carter hear about a month ago. he went for about, i've, six minutes chapter and verse right down the line of the programs that were going to be cut and how they're going to be cut. the executive branch has said which programs in their interpretation of the law will be exempt, personal, programs will be exempt. they has to specifically this is going to be, i may be off, 9.6% across the board programmatic cut in everything. so i don't think it's accurate to say we have not been planning for it. there's a limited amount you can do. there is some ambiguity in the

law. we've heard a variety of different interpretations as to how you can work without ambiguity in terms of what programs count, what programs do. the president said now here's what it is. so we know what it is. the challenge is trying to stop it from happening. the only way to do that is to pass a comprehensive plan to reduce the deficit. that is what the budget control act required, find saving so that we don't have a deficit that is uncontrollable, but we did it under control. the requirement is $1.2 trillion every 10 years. there's been various plans to get us as high up to $4 trillion every 10 years and we simply have to choose to do that. i think raven has been a part of that equation. if you are committed to the need to provide for the national security of this country, if you're deeply concerned, and i share the chairman's views about the complexity of the threat

environment an after need to be prepared for it, then you to be prepared to raise the revenue necessary to pay for that national security that we want so badly. thus far we've been unwilling to do that. that puts us in the box we are in. i think it will be interesting to hear from all of you gentlemen about how you're working out the details of that but i don't think it's a huge mystery that some have traded to be. we know how much is going to be cut. roughly we know what it is going to be cut from and a number of different studies both in the government and outside of attempted to assess the damage that will because divided. is a variety of different opinions on that but it's not something that has gone unexamined. let's put it that way. what i would like us to give spend time trying to make sure that we stop this thing that just about everybody agrees is bad policy from happening, and the way to do that is to be realistic about our budget deficit and stop pretending we can bang the table about how awful the deficit is and then shy away from any steps necessary to cut spending or raise revenue to deal with it. that's the fundamental denial we

have to deal with if we're going to prevent this problem from becoming very, very great, january. i look forward to the testimony from witnesses and trying to do with his bravery difficult issue. i yield back. >> thank you. mr. secretary? >> thank you, mr. chairman, members of the committee, thanks for the opportunity to discuss the drastic effects that sequestration would have on the department of defense if it goes into effect as well as the recently released report required by the sequestration transparency act. i'm joined today by the vice chiefs of staff. we submitted a joint statement. i will summarize that briefly and then the vice chiefs will present some oral statements of their own. as secretary been a has repeatedly said, sequestration would have devastating effects on the department of defense. a few days ago in response to the requirements of the sequestration transparency act the office of management and budget transmit a book that spells out the dog consequences of sequestered to our testimony

today provides you some high level assessment of the impacts. these consequences really can be avoided. the reason is simple to sequestration was designed by law to be inflexible. it was never intended to be implemented. it was an act as a prod for both houses of congress to provide a comprehensive plan to reduce the federal deficit. the only way to avoid these bad consequences now is for congress to enact a balance budget deficit plan that the president can sign and that will hold sequestration. if action is not taken we're faced with the dollars consequences that the sequestration transparency act report spells out. cuts and the national defense option will total $54.7 billion in fiscal '13. of this amount $52.3 billion would come out of the dod budget. each of our nonexempt budget accounts will hit 9.4 precipitate the only major

exempt account and all those on military personal. the president has exercised his authority to exempt military personnel spending from sequestration. so what effects will these cuts have on dod? let me keep you some examples. funding for our overseas contingency operations will be subject to sequestration. we will protect the wartime operating budgets to the extent that we can. they support -- the support of our warfighter is our highest priority but that will mean greater cuts in the base budget portions especially of the operation and maintenance accounts, particularly the army and the marine corps. and that will result in reductions in training. reduced training would affect our ability to respond to a new war fighting continued seek should one occur. sequestration will almost certainly forces to reduce spending for selling personnel which alito hiring freezes and probably an paid furloughs but this could leave us without enough personnel to fix our

weapons including the ones that are damaged in war. to maintain a strong program of contracting and sustained financial management, as was many other support functions. sequestration but also a have substantial effects on dod investment programs. while there will be no impact on prior-year funds already on contract, and i think that's an important point, they are not subject to sequestration, there would nonetheless be substantial adverse effects. 9.4% cut would affect each of the budget accounts, funds procurement, research development and military construction. in most cases would have to buy fewer weapons which would drive up unit costs. in the case of ships and others where you can't reduce the number of weapons, so question would result in delays to sequestration would adversely affect our military retirees and families. we would have to cut family housing maintenance. we would have to cut base operation support. we try to protect families wherever we can't but we have to make some of these cuts.

we would have enough funds. it would be cuts in health programs. if we can find a way to offset the, it will be difficult. these are the consequences that would come to play in fiscal 2013. but the law that would go into effect on january 2 actually, not only impose a sequestration in 2013, it cuts discretionary caps out through fiscal 21. and the longer-term the cuts would affect double the reductions already opposed by the budget control act. otherwise we don't do that. would end up with more units than we have funds to train and equip. overtime sequestration would lead to reduced forces, fewer aircraft carriers, combat teams and fighters. we would have fewer options to respond quickly to emerging crises. inevitably, this will require

changes to the national security strategy that was put into effect last january in which we think remains the right one for the times. for all of these reasons we believe a sequestration is a very bad policy. we hope the congress will pass a balanced budget deficit plan that the president can sign and that holds sequestration. this concludes my opening statement. >> thank you, general. spent good morning, i first want to thank you for the steadfast and strong support that you've shown to our men and women and their families. i can appreciate this opportunity to appear before you today on their behalf to discuss a potentially impacts of sequestration on your united states army. i look forward to answering your questions after my colleagues have concluded their opening comments. as we are all well aware, these are challenging times for our nation and for our military.

tough choices must be made and the army says ready to do its part. indeed, we are already operating under the budget control act which will cut defense spending by about $490 billion over 10 years. however, sequestration would mean another $550 billion cut. what's more, sequestration represents a rigid solution that would apply these cuts in arbitrary fashion nearly across the board. as such these cuts will adversely affect just about every aspect of our army. and of particular concern cuts will apply to more funding or oka, which supports training and forces deployed to afghanistan. we will do everything we can to assure that our deployed and next to deployed soldiers have everything that they need to be successful. we will also do although we can to maintain support for our soldier and family programs. making these adjustments work or

even deeper cuts to be made within our other accounts. these for the reductions will adversely affect our readiness and specifically our ability to respond to contingencies. such mechanical cuts will significantly increase risk in what is the most complex and involve global operating ever and thus potentially requiring us to we look our national military strategy. and so ideally congress and the administration will work together to hold sequestration as soon as possible. if not, and a sequestration goes into effect, we must be afforded the necessary flexibility to adjust resources in order to avoid wasteful penalties and inefficiencies and to focus properly on our highest priority. indeed, we must continue to work together to ensure that are battle tested army remains our nation's force a decisive action ready today and prepared for

tomorrow. mr. chairman, and ranking them by smith, members of the committee, i thank you again for your continued support and demonstrate commitment to the outstanding men and women of the united states army and their families, and i look forward to answering your questions. >> thank you, general. admiral. >> chairman mckeon, ranking member smith and distinguished members of the committee, good morning. it is an honor to represent the men and women of the navy and to discuss the sequestration with you today. based on our preliminary review, sequestration will reduce funding for the navy in fiscal year 2013 by nearly $12 billion. should sequestration poker, it would force the navy to make difficult choices in the second half of the fiscal year across three broad categories. fleet operations and maintenance, procurement and force structure. making the impact of

sequestration will be to our operations and maintenance accounts with reduction of over $4 billion. this account ones are fleet operations, maintenance, spare parts, civilian personnel and training and to reckless of course lead readiness. these reductions will translate to reduced flying hours for our crew, fewer underway days and training for our ships and submarines and less maintenance for the fleet. this will impact our industrial base and the expected service life of our platforms. we will prioritize expenditures to ensure that our forward deployed forces continue to be properly manned, trained and equipped. as a result, nondeployed forces will see a disproportionate share of reductions under sequestration. we will make every effort to preserve the quality of life and family support programs for our personnel. however, we may be forced to make selective reductions in support services and

infrastructure sustained. these reductions will have cumulative effects to our readiness in fiscal year 2014 and beyond. sequestration will also reduce the fiscal year 2013 shipbuilding and aircraft procurement accounts by over $4 billion. it will require adjustments to major acquisition and modernization programs and will reduce funding for research laboratories and technology development centers. at this point it's difficult to assess the impact on any individual program or family and programs since each contract contains unique and complex provisions, dates and pricing. also a change in one program may have cascading effects on investments in other interrelated programs in the future. we will carefully examine each of our programs to understand the full impact. in some cases our assessment will be we are unable to execute procurement action. and others will face delivery delays and higher unit costs as we negotiate reductions in scope

and quantity. while we will work to sustain our shipbuilding and procurement programs in prescriptive and mechanical nature of sequestration, affords limited flexibility to mitigate the impact of these budget reductions. our fiscal year 2013 budget submission already reflects difficult choices to meet the budget control act. our request balances our investment in infrastructure, future capability operations, maintenance and training to sustain a ready force. the potential reduction of budget control act be on those reflected in our fiscal year '13 budget submission will translate over time to a smaller force with less prevalent, longer response times and reduced ability to provide surge forces in support of our major operation plans and other needs. under these reductions, we will be unable to execute the requirements of the current defense strategy. mr. chairman, last month i visited central command region. i had the opportunity to visit

both of our aircraft carriers, enterprise and eisenhower. our minesweeper force, our patrol craft and other ships in the region, i talked to over 10,000 of our forward deployed sailors. at every forum, sailors from the most junior to our operational commanders expressed concern regarding what sequestration will mean to our navy and their service. the uncertainty of our fiscal future is increasingly on the minds of our force. mr. chairman, ranking member smith and distinguished them of the committee, we appreciate the continued support of the congress and this committee for the men and women of our navy surfing around the globe. on behalf of them and their families i appreciate the opportunity to discuss this important issue, and look forward to your questions. thank you. >> thank you, admiral. general. >> chairman mckeon, ranking member smith and distinguished them as of the committee, good morning. and thankfully opportunity to share the air force perspective on sequestration. as we build our president

budgets mission we carefully balanced risk while protecting readiness and essential future investments and proposed a minimum requirement to support the guidance within the resource provided by the budget control act. it was difficult but doable. further reductions through sequestration would affected his balance at our ability to execute the strategic guidance as currently defined. more than two decades of sustained combat operations and routine missions at home and around the world have stressed our force, limited our ability to replace our old aircraft and invest in advanced capabilities. further reduction in readiness such as training programs and maintenance would not only affect our ability to fill current deployment, operation requirements in defense of the homeland but it will also significantly impact our ability to prepare for future operations. the same is true for investments

and modernization. sequestration would also drive us to reevaluate and in some cases curtail our contracts. this could drive unit cost increases and inefficiencies. we don't know to what extent because we have not yet have those discussions with industry partners. however, these sectors would impact the future of vital aerospace technology, one of our key competitive advantages. mr. chairman, and committee members, our nation is fortunate to have world-class people who who work hard to produce world-class air power every day. representing a hollow force unable to support the current defense strategic guidance, united states air force and our sister services comprise premier fighting force on the planet. and our air force leadership team is fully committed to ensuring we do our part to remain the world's greatest air and space force for the future.

and you mr. chairman. i look forward to your questio questions. >> thanks. >> thank you for the opportunity to appear before you today. thanks for your efforts to highlight the impact of sequestration an attempt to halt its implementation. much has been said about how sequestration will affect both the budget and the strategy. for the marine corps we would express similar challenges. we would suffer a significant degradation in readiness, we be unable to properly support our military strategy. we would incur costs and schedule delays across our investment account and will be unable to properly maintain our infrastructure. we maintain readiness by bouncing the allocation resources across our pillars of readiness to remain ready we have to retain high quality people. we've got to maintain the capabilities and capacities necessary to support the strategy. we have to sustain high levels of readiness for both those units that are forward deployed and those at home station. we have to probably maintain our

infrastructure and we have to build to modernize in a way that allows us trimming relevant for future security challenges. if the inflexible guts associate with sequester are implemented because of the nature and relative size of our budget we will not be able to maintain balance across those pillars. we will not be able to do what you expect your force and readiness to do. in fy '13 would begin to set the conditions for a humble marine corps. i am prepared to provide more detail for the budget and strategy during your questions. but i share the perspective previously authored by the secretary of defense, the comment and and other leaders. sequestration will have a chaotic effect on the force during a time of extraordinary challenges to our nation. before i close i would like to share under the concern that i have about sequestration. in the last 10 years our marines, soldiers, sailors and airmen have asked all we've asked them to do. the flexibility of our force was seen again last week when marines responded in our to

reinforce embassies in the middle east in north africa. that type of response has occurred so often over the last several years we might take it for granted. the majority of our young men and women in uniform like those in an anodized terrorism support teams, those were in afghanistan, are too busy doing their jobs right now to worry about the exact details about how we develop an pass budgets. they care about and are affected by what we did in washington but they actually don't think about much about us on a daily basis. nor should they have to. frankly, given all they do for us, they have a right to expect that whatever is we're supposed to be doing to properly support them that we are actually doing it. our ability to provide a young men and women with the wherewithal to accomplish their assigned task is the very foundation of the very trust and confidence they have been us. that trust and confidence is the foundation of the spirit and metal and combat effectiveness. one in my greatest concerns about sequestration in all the associate second and third order

effects is that we will lose the trust and confidence of the all-volunteer force we worked so hard to build. my point is that this is not just about quantifiable impacts on budget and strategy as significant as they may be. equally at risk of intangible qualities that make our military the very best in the world. should we lose the trust and confidence in a force by fitting to properly support them, it will take a very long time to earn it back. that fact needs to be a key part of the debate as we move forward. thank you again for the opportunity to be here this morning. i look forward to your questions. >> thank you, general. thanks to each of you for your testimonies. you know, we all, i'm sure everyone in this room understands, the nation is in a serious situation. we have a debt now of $16 trillion. and growing by leaps and bounds. in the last election there was, i'm sure people campaigning on

the idea that we need to get our spending in line with our revenues. we have to get our deficit in order, and everything needs to be on the table. military leaders have stepped up and they're all patriotic and said we understand this and we want to do our part. for deficit reduction act was passed, and that was set up and a couple of different tranches of cats. the first cut was almost a trillion dollars. half of it, almost half a trillion dollars, coming out of defense. when defense actually accounts for 17% of our budget, 50% of the savings were taken out of defense. i would contend that that is probably not fair, and i think it puts our defense in jeopardy. however, military leaders stepped up and said we can do that. we had to change our strategy,

the strategy we've had since world war ii, but over months, over a years time really, our leaders managed to work that out in the budget that starts october 1. the strategy was changed. we agreed we're not going to be able to do all the missions we have done in the past. we can't answer every phone call but yeah, we are there, we will be there. but they did that without complaint. the second part of the deficit reduction said that will have a supercommittee that will look at other ways to find savings in mandatory spending side. if we took all discretionary spending out, a laminated defense, eliminate homeland security, eliminate transportation, eliminate education, all federal spending,

that we get a chance to vote on every year we were still be running a deficit this point of a half trillion dollars a year. defenses not the problem. -- defense is not the problem. the supercommittee was not able to carry out their mandate. we all understand that. we understand the political pressures, but the fact was it didn't happen, and so sequestration that was supposed to be so terrible they could never be actually put into place is getting closer. we are now one month -- for three months away from full implementation. i contend that we are already in sequestration. the jobs already been lost. the decisions are already being made to slow things down or cut things off, and people are losing their jobs. there are two impacts. one is a big cut on our defense which puts our security at risk. the second side is the impact on

our economy. as the ceo said, if this thing goes there, that we will go right back into another recession starting next january. so this is very, very serious. the sequestration, the way it is outlined if you should take full effect in january is another five, 600 billion out of defense, and it is without any thought or any planning, just you go down every line item and cat without any kind of planning. a couple of you mentioned training. when i applied for this job for the steering committee, i said as i see this job, the most, the requirement is to make sure that our men and women in uniform, when we send them into battle,

they have all of the training, the leadership, the tools, everything they need to carry out their missions and return him safely. this cuts into that. it means will not be able to do it. the ports and the chance that i've been visiting recently, a lot of emphasis is on ied training. that's the biggest problem that we're dealing with in afghanistan. severe injuries and deaths, most of them are coming from ieds. a lot of training of all of these bases was being put into that effort. when you say that we will be cutting back on training, that can cost the lives. and that jimmy is over the top. we've gone way too far. -- pat toomey is over the top. the budget year for next year. we have passed a continuing resolution that causes all kinds

of problems for the defense department and other agencies of the government for the first six months of next year. and then sequestration kicks in january 2. the c.r. keeps government open for six months. as far as i'm concerned, the defense department shuts down january 2, because the sequestration will hit on top of that. as i've looked at how we have to cut every line item, evenly by 9.6% was it, mr. secretary? >> 9.4. >> 9.4. if oprah was also included, which is, that includes ammunition for troops in afghanistan, correct? >> yes. is that a line item? >> how is that handled?

>> the ammunition accounts would be a procurement and if we end up cutting procurement at the line item, it could be. i would need to look back and see exactly where ammunition is funded in the local budget. so nothing has more priority over anything else. >> none of us would agree with that. i mean, that means cutting the lawn out of for my would have the same priority as troops. >> we will have some opportuni opportunity, budget separately for oca and the base budget and you approved each budget. when we actually began exiting, the budgets merged so there's one operation of maintenance, both oca and base spending in the. we would have some authority to move money within that account. and we would use it to try to protect the wartime operating

budgets. i don't want to make that sound easy because what that means is we would have to make is partially large cuts in the bayside, and that will have some of the affects on readiness and training that are such concern to us. so we would have some ability and we would move to use it to protect the actual wartime operating budgets. >> i have more questions if we have time, but again, i appreciate your service and all you're doing to protect us from threats abroad. mr. smith. >> thank you, mr. chairman. i don't actually have questions. a quick comment. first of all i agree with the chairman again on the impact of this. clearly it limits flexibility. i think all of you gentlemen have explained you're trying to do it in a commonsense away as you can. within the limitation of the budget control act, but those

are severely the notation. the main, i have is how anyone could list your comco and our for vice chiefs and some of conclude that the pentagon isn't planning for this. it is utterly beyond. clearly you're planning for it. clearly you're considering a programmatic basis. it's a very, very thorny problem to deal with. so i appreciate your efforts on that. from my part will continue to work your to try to make sure that you don't have to do what you are planning now to do. so we appreciate your efforts and i yield back. >> thank you. mr. bartlett? >> thank you very much. i would like to emphasize what actions it and can put our discussion in context. about every six or seven hours there's another billion dollars increase in our deficit. that drives our debt up more than $1 trillion a year.

more than a trillion dollars a year our debt increases. as the chairman said if we were to zero out everything that we vote on here, we had no in ih, no military, no homeland to get him now department of transportation and it's all gone, no department of education, we zero all of that out, we would still have a deficit. we borrow about 42 cents out of every dollar we spend. so clearly the sequestered does not solve our deficit, the debt problem. if the sequester a cursor defense will be cut something a bit more than $50 billion this next year. defense is a bit less than one-fifth of our spending. so if you're going to cut defense and the other discretion programs, let's be fair and cut across the board all of the programs. that would mean about

$250 billion that we would cut from our spending next year. that would include medicare, medicaid, social security, across the board discretionary and nondiscretionary programs. these cuts by most people are considered draconian and impossible. so let's put that in context. this $250 billion cut would represent less than one-fourth of our deficit next year, closer to one-fifth of our deficit next year. if you can't cut one-fifth of our deficit, how will you ever get there? if this request would occur it would represent, and this is the drawdown, after wars would always have drawdown, it would represent about half a% backed drawdown we had after the cold

war and after vietnam. now, we ended up with hobbled military then come with serving don't want to do that again. but i've got to put this in perspective. as the chairman indicated, if the sequestered is implemented as written it would be totally devastating. i know there's some argument as to what precisely the wording of the sequestered law means, but if you had to renegotiate more than 2500 contracts, prime contracts, and many thousands of subcontracts, reduce them by 9.6%, we would grind to a halt very quickly. obviously, you can't do that. mr. secretary, if the congress continues to be a responsible, and we do not address this problem, are you prepared to recommend to us and implementation procedure for the sequestration that would cause

the least harm to the military? >> yes, we will be prepared to implement this, in the best weekend. and i am reminded speed is excuse me. that was not my question. there's a little wiggle room in this but not a whole lot, sir. are you prepared to recommend to us a change in the law that we can then vote on so that this can be implementing at much higher levels rather than the specific levels the sequestered indicates? >> i mean, we would have to look at that, mr. chairman, or mr. bartlett. unicom in the abstract i don't know what that law would be. we need to avoid this thing, not try to make a better. i'd like to offer you an analogy. if you drive into a brick wall at 60 miles an hour, let's find a way to avoid the wall, not a way to pick up the pieces. i believe that's true. we need to hold this thing rather than try to make it better. we're not going to be able to make it fundamentally better.

>> i said if the country is going to continue to be a responsible, then the administration could be responsible and recommend to us and implementation procedure which will cause the least harm to the military. are you prepared to do that? >> yes. within the lot we were prepared to do that to whether we recommend another law i think i need to speak about, and i will, and we have a response for the record. but we will recommend the best plan that we can if we have to, but it won't help that much. >> thank you, mr. chairman. >> thank you. mr. reagan's. >> thank you, mr. chairman. gentlemen, thank you for being here. the old cliché of the devil being in the details, we don't like the details that we are hearing. even though it was us, and i couldn't agree more with my subcommittee chair, chairman roscoe, but it's our fault that it is congresses fault for putting you in this position. it's a lot like somebody holding

a gun to your head wanting to take your possessions. you don't have enough possessions so saying, give us a plan on how you're going to get possessions so you can give them to me. it's ludicrous. every time that we come up with how are we going to deal with the sequestration, i can't help but tell my colleagues in congress to look in the mirror. we did this. we passed that idiotic law that now have put you in a situation where we now want you to solve the dilemma that we didn't have the courage not to do. so i don't have any questions, mr. chairman, i just think that we have come as a kind, have to accept the responsibility. we have to find a way to solve it. and we shouldn't be asking the generals that are here, and the secretary, that have been so gracious and patient with us, all these months, to give us a

solution. it's up to us. it's up to us. and i say that, even though i didn't vote for this idiotic, stupid law, i accept responsibility as part of the congress. and i think it's up to us to find a solution. however, we do that, we better do it fast. thank you, mr. chairman. i yield back. >> thank you. mr. wilson. >> thank you very much, mr. chairman, and thank you for being here today. two days ago i had the privilege of being with congresswoman at the university of central missouri. and while i was there we were hosted by the university, and the issue with sequestration. we have persons all of our country, air force base, fort leonard wood that had the opportunity to visit, the american people are free concerned, and i want to thank you for your service but also we really are counting on you to

make sure that again, the american people understand what's going on. i'm particularly concern, general dunford, i have te privilege of representing paris island. my late father-in-law was a marine who received the navy cross at okinawa so i grew up with a great appreciation of marine corps. and it's my understand that the personal cost of the marine corps are significantly higher than the other services, possibly 58% of the budget is spent on personnel. ..

>> first, you're correct, 58% of our total obligations authority goes towards personnel. our cost perma lean is -- per marine is not higher, but the proportion we spend on personnel is higher. what i alluded to in the my opening remarks is that we would then have to find a preponderance of funds out of operational maintenance, infrastructure and our modernization accounts. so we'll continue to do things like run paris island, we'll absolutely continue to support those marines and sailors in harm's way in afghanistan, we'll sport those that are -- support those that are forward deployed, but where those resources will come from are those units that are at-home stationed. and i think you know right now two-thirds of our units are already in a degraded state of readiness. they're in a c3-c4 status already, and these cuts will further exacerbate deficiencies

in home station readiness. we'll also be unable to support the strategy. one of the things we had intended to do in fy-13 is reconstitute our third marine expeditionary force which is the core of our contribution to the u.s. pacific command and the resources that are excess to support that -- necessary to support that are unlikely to be available. and then what we'll see across the board are delays and so forth that will cause us to delay programs and in some cases do more with less. >> and, of course, i want to point out the challenges you have facing an asymmetric enemy not in uniform, illegal enemy combatants, persons who truly are blood thirsty and act, um, with no regard to the civilian population, and thank you for the success and the hard work that has occurred. incident spencer, it's been

reported -- general spencer, it's been reported that the u.s. air force might have to cancel its contract with boeing as a result of sequestration. the air force would then have to negotiate a new contract, possibly for fewer kc46. how many fewer would they buy, what sort of cost increase will this cost? >> well, congressman, i'd say up front that we wouldn't at this point plan to cancel the contract. and depending on the cuts, and i think the chairman mentioned it earlier, if sequestration is triggered, the first thing we would do is look at those accounts or those areas that we would want to try to protect, or overseas contingency operations would be one of those. once you do that, that drives more of a cut into the other accounts. so assuming we would protect wartime operations that would drive here or than the 9.4%

account. we have not had specific conversations with the contractor for the kc46, but depending on the amount of the cut, the issue would be we would have to -- because we have a firm, fixed-price contract, we would have to open up that contract. so we would then have to talk to the contractor about revising our payment schedule. and i would guess the contractor would talk to us about, ok we can't give you as many airplanes on the schedule that you asked for, or we might have to stretch out the airplanes, or we might have to charge you more because now the contract's back over. as we go down the thousands of contracts and lines, that's the type of process we have to go through with every contract. >> and i am concerned about the cost, and thank you for addressing that. i yield. >> thank you. mr. andrews. >> thank you, mr. chairman. i'd like to thank the witnesses. i commend the chairman for his persistent and continued interest in focusing on this

severity of this issue which he's done throughout the year. i frankly wish that the same degree of interest was being demonstrated on the house floor this week. the house is leaving town tomorrow until after the election. there will be an adjournment resolution at some point today or tomorrow. i'm going to vote no, because i think for us to walk away from our responsibilities we've heard about this morning without making some effort to pass some legislation both houses and the president could sign is not very responsible. and i think it's an interesting contradiction that this hearing has set forth chapter and verse about the urgency of this mr. problem, and the response of the institution is to leave town for six weeks. having said that, let's talk about the importance of some of decisions we may have to make, and i want to preface this by saying i fully embrace the principle that anyone who served this country is deserving of

high-quality health care for the rest of their life. i fully embrace the principle that you shouldn't ever change the rules in the middle of the game for someone who's retired or who's near retirement. i don't think you do that to people. however, secretary rehnquist, secretary game. s and now secretary panetta have come here and laid out for us chapter and verse the hard reality that retiree health care costs are eating up a larger and larger share of the defense budget. we all pretend that's not true because raising the issue is a political land mine. but i think if we're serious about not having the sequester but equally serious about balancing the budget, one of the things we have to talk about is whether it's possible to have a fair and equitable system of having more contributions from retirees into the military health care system. i want to reiterate, i'm not for that for present retirees or

people near retirement. i don't think that's fair. but i think -- i want to ask you this question. if we came up with a system that was equitable, that phased in such contributions over time so that the youngest had the longest to plan for it, and it was fair in the sense that those at the top of the pay grade had a relatively greater contribution than those at the bottom, do any of you gentlemen think such a change would retard your recruitment or retention of people in the armed services of our country? >> sir, we'd have to see the actual details of the proposal, but certainly i think any change is going to create some concern. but having said that, you know, i think if it's as you've described, fair and equitable, i think that there is a sizable,

there are a sizable amount of folks that would view it positively. >> i'm painfully aware there will be disagreement over the definition of fairness and equity, but i appreciate that. admiral, what do you think? >> congressman, i think we have the gold standard of health care in the country for our people, and they richly deserve it, as do our retirees and our dependents. i think we'd have to examine very carefully the details of the proposal in order to give you a better assessment at that point. >> yes, sir. >> but we have to preserve it, in my view, on a fiscally-sustainable in the basis in the future -- >> i agree with that. i don't want to make a promise we can't keep 20 years from now. >> exactly. >> yes, sir. >> congressman, i agree with my colleagues. one of the things that's interesting about retirement as an example is you would think that folks newly coming into the military wouldn't be worried or thinking about retirement, but they do, as i think we all found out as we went around ask talked to people. >> yep.

>> my daughter's married to a soldier in fort hood, texas, and she called me and asked me, are they going to take my retirement away? so i think as my colleagues have mentioned, we'd have to see the details of it, but certainly there's some potential there. >> i appreciate that. yes, sir, general? >> congressman, i think it's important that we remember the end state of compensation which is to recruit and retain a high quality force, and you aliewld today that. >> with right. >> and i think it'd be very dangerous for us to isolate any aspect of compensation without a comprehensive review writ large, and i think that really is what secretary and the chiefs concluded last year and have recommended, is that we not isolate any aspect of compensation, we take the opportunity to look at it in a holistic way to provide choices that senior leadership could look at in order to deal with the very real problem that you outlined -- >> i thank each of you gentlemen. i see my time's expired. i just want to say i've been

encouraged by the dialogue within this committee which has been sober and factual all year. i'm equally discouraged about what we don't hear on the floor. this is the kind of question we're going to have to come to grips with if we're going to reduce the national debt thank k you, mr. chairman. >> appreciate the gentleman bringing that forward, and in this authorization bill that the committee and the floor passed and the house and the president signed last year did increase the copay on our retirees. it was about $5 a month for a single person, about $10 for a -- >> i heard about it. i remember. >> and that was, that was first time in many, many years that that had been addressed, and we also face the issue in this year's bill that hasn't become law yet because, again, we're waiting for the other body to act. >> as i say, thises the kind of sober deliberation that will help fix this problem as opposed to sequester which is across the board.

>> thank you. mr. scott. >> thank you, mr. chairman. gentlemen, thank you for being here and thank you for your service to the country. general austin, i know you're from thomasville, that's part of my district, and happy to have you in the district anytime you're down there. let me know. general spebser, robbins air force base is the largest industrial complex in georgia, the largest employer in my district, so i've opposed sequestration from the start. i understand we have to have some reductions in total spending, and certainly i think you gentlemen are better equipped to provide for where those cuts should come than members of congress and certainly the way sequestration would implement those cuts and tying your hands. i think it's probably the least efficient thing we could have done. but the world's a more dangerous place today is one of my other concerns with sequestration. we've seen this with the embassy attacks, and, general, i know that some ma reeks -- can

marines have been denied access to provide protection for embassies in some parts of the world. i think that's something we've got to review as well. but i want to go, if i could, to secretary hale, and to your comments you said that, um, you would consider whether or not congress should pass another law before you made that recommendation, and in your statement you testified, your written statement says very much hope congress will pass a deficit reduction plan that the president can sign and avoid sequestration. just set the record straight here. this congress, the house of representatives in this congress, has passed five different measures to avoid sequestration. and the president and the senate, neither one of them have shown any leadership and given us any indication of what they will sign. all they say is they won't sign what we've passed. it's time for the united states senate to pass a piece of

legislation that deals with sequestration, and quite honestly, it's time for the president to show some leadership on this issue as well, and i guess, mr. hale, can you tell us what the president's proposal is that he would actually sign going back to your written testimony? >> well, mr. scott, he -- the administration has made two proposals, one last october to the joint select committee on deficit reduction and then in the president's budget. i think that he would sign either of those, both -- >> mr. hale, can i remind you that the president didn't get a single vote from a democrat or republican on his budget? that's how fiscally out of balance his proposal was. he didn't get a vote in the senate, a single vote in the senate on his budget, so i don't -- i apologize for interrupting, but is it realistic for the president to hold to a plan that a 535 potential votes did not get a single vote from a member of other either party, and he

wallets to hold to that plan -- he wants to hold to that plan? >> the administration said they would work with the congress that they would find a way to -- >> mr. hale, that's just words. this congress has passed five -- the house, i should say, i apologize. let's not confuse the do-nothing senate with the house. we have passed five measures to avert the potential devastation of sequestration on national security. what is the president's plan other than a budget that got zero of potentially 535 votes? >> mr. scott, i'm the comptroller of the department of defense. i know what he's proposed -- >> will the gentleman yield? i'm sorry, you've asked a question, i'm happy to answer it. the house has made two proposals that the white house rejected, the house has made five proposals that the senate rejected. we have all kinds of proposals that the other side --

>> did you vote for the president's budget? >> i did not vote for the -- >> so you rejected the president's budget. it was not presented on the house floor. you put something up that was not the president's budget, and you've spent all the time since then claiming that it was. that, too, is not helpful. >> that's simply not true. mr. smith. it, with all due respect. i mean, the president got zero votes out of 535 potentials on his budget. it's time for him to lead, follow or get the hell out of the way of this country. thank you, mr. chairman. >> thank you. mr. courtney. >> thank you, mr. chairman. and, again, thank you for the series of hearings starting with the industrial work force which, and leading up to today's hearing this morning for focusing on this, and, again, following on the transparency report which was just released which, by the way, also set out the impact this terms of nondefense areas of the

government that would be devastated by sequestration, i mean, all the way from food supply because of the cuts in terms of food inspection that would paralyze the delivery and production of food in this country, the impact in terms of health care services with the across-the-board medicare cuts, k-12, title i that would be delaware stated -- devastated. the whole purpose of this was to be indiscriminate, to be acceptable, and you have to look no further than the granddaddy of sequestration, senator phil graham, who constructed the original mechanism back in 1985. he testified after the budget control act was passed, and he his was the objective of gramm-grudman was -- what we just heard shows we've got a gap in terms of the two sides. but in the past our predecessors, started in 1985

through 1992 kind of, you know, grinded away in terms of getting proposals which were very hard for both sides to get to, but nonetheless, did what was right for the country. and, general dunford, your description of, you know, the folks that serve under you who responded to the call a few weeks ago and did their job and how they, frankly, are counting on us to do our job, you know, to me was probably the most powerful statement this morning in terms of, you know, what the real issue is here about whether or not, um, the people of this country have any confidence in this institution to do its job. and i would just say, you know, i don't have a question, i just, you know, the decision on friday by the leadership of the house to basically cancel all the session days that were scheduled in october to basically leave town for seven weeks, um, you know, that does not comply with the spirit of senator graham's description of what sequestration is supposed to be about. it's not about an end, it's

about a process, and it's about people doing their job. and, you know, i personally believe that there still is a center in this place that is ready to roll up its sleeves and find a path between the two sides which we just heard a moment ago. and, again, the example of the marines who are deployed or whether it's sailors who are, you know, all across the globe or whether it's the amazing work that the army is doing and, again, i visited with you in iraq, general austin, and commend you, you know, again for your amazing service in the air force which are patrolling the skies. by the way, the coast guard would also get hit by sequestration. the folks in new london at the academy, i was talking about sequestration with them a short time ago. they're impacted too. you know, we know now, i mean, what's the consequences. it's completely unacceptable for our country both in terms of domestic and nondomestic sectors. and what we've got to do is do our job. and i just hope, frankly, that

the motion to adjourn is going to fail and that people are going to roll up their sleeves and get it done. by the way, there has been some positive signals from the senate in terms of some negotiations. senator lindsey graham this morning talked about a mini simpson-bowles to try to get some savings and avoid the january 2nd timeline. i commend him. i mean, you know, that's somebody who's rising to his constitutional duty to try and start finding a middle ground and avoid what's looming on january 2nd. and hopefully, the spirit of senator graham's comments this morning is going to be heard in this chamber and that we're going to maybe at least during the recess have some people talking about ways to stop this sequestration from going into effect. and with that, i yield back, mr. chairman. >> thank you. just a reminder that the house has passed a bill that cuts mandatory spending. it was hard, a lot of tough votes, but we did pass it.

it pays for the first year of sequestration. not just defense, but all of the sequestration. pays for the first year which would move the discussion back to a less politically-volatile timing that we could be discussing it. the constitution lays out how we function, and it says one body will pass legislation, the other body passes legislation, a conference is called, and you work out your differences. now, i understand the senate doesn't like our bill, but they have not passed a bill that would take us to conference where we can really discuss those differences. rather, they can sit and say we don't like what was done, so i guess then what their interpretation of the constitution is, they can say that, then we have to pass something and ask them, is this okay, mr. senator? if that isn't done, then i guess

we pass any bill and ask them, is that okay? the way i read the constitution is it says until they put up the votes and actually pass something, we can't move forward. and that's the big bottleneck that we have facing us right now. our bill was based on cutting spending. if they want to pass a bill that is totally based on new revenue, then we come together and try to work out our differences. but they would have a lot more credibility if they did something, be they passed a bill -- if they passed a bill that we could go to conference on and actually work on. the only reason the senate is still in town is because one senator is holding them up, and they can't get the votes yet to pass the cr, and eventually the time will run out, and they will leave town also. >> mr. chairman, maybe if i could -- >> i yield. >> i actually agree on the last point, the cr. but the helpful place we need to get here is, the problem in the senate, well, as you see, one person can hold the whole thing

up. we have a much more efficient and effective way of moving things forward. the problem in the senate is it takes 60 votes to do anything. so before they can pass a bill, they need bipartisan agreement. so all i would say is in the note of what i hope is trying to bring us back together here is, you know, who passed what what where? right now republicans and democrats have not agreed on what needs to be done, and until we do, it's not going to get done. it's not like one side's doing and the other side's not, it's the nature of the way the senate is set up that they have to get bipartisan agreement before they can pass anything. in some instances they have to get unanimous agreement before they can do anything. it's the nature of their rules, not that one side's showing leadership and the other isn't. we both need to come up with a plan that's bipartisan. we need to get working on it. >> actually, the bill that we passed we passed under reconciliation, so they only need 50 votes in the senate to pass this bill. and until they do something, we will not be able to solve this

problem. mr. west. >> thank you, mr. chairman and ranking member, also, and thanks for the panel for being here. and, general austin, i want to thank you for being a role model for me as a young paratrooper, and it's a pleasure to see you. my question for general austin and general dunford, when you look at my friends, a lot of e-mails they send me, five, six, seven tours of duty into the combat zone. the second, third order effects that has on the family. my big concern right now with the sequestration is what we goo look at as far as the personnel strength? there's going to be a reduction on personnel strength for our ground forces. so with that being said, when are we looking at implementing these personnel reductions that's going to be part of this overall sequestration for the army and marine corps? >> well, thank you, sir. and, again, thanks for your service, and thanks for your support.

um, we are reminded that as we have this conversation as some have pointed out that there are 61,000 or so soldiers deployed to afghanistan in support of that effort, and they're doing a magnificent job. as we've discussed earlier, personnel under this plan if this plan does go into effect, and we hope that it doesn't, we hope that congress will work with the administration to make that not happen, that is the best case, best course of action. but if it does, then the personnel accounts are protected in fy-13, or exempted. so we would be looking at shaping a force further in the outyears. and as what you've heard our chief say earlier is this would probably drive our end strength down by 80-100,000 over time.

so that's our back of the envelope assessment at this point. >> okay. >> congressman, as i think you know, we're in the process of drawing the marine corps down from a high of 202,000 and the active component to 182,000, and we've got a plan to do that between now and fy-16, very deliberate plan that keeps faith with people. manpower is exempt this year. the thing we realize is that if sequestration takes effect, what i alluded to earlier is it would be impossible for us to balance those pillars of readiness and maintain 182,000 past fy-13. so what the commandant has really said is once we find out what our top line is, inside that top line we'll build the very best marine corps we can build in a balances way so that we don't have more force structure than we have the ability to train and to take care of the familiesings as you alluded to. what i would tell you is at 182,000, we are exactly at the

line of our ability to respond to a single major contingency operation. so as we look forward, if we have significant reductions below 182,000, that will cause our force structure to be below the level of a single major contingency operation. >> next question is, you know, you gentlemen taught me a great thing about anytime you prepare a military operation, you look at the most dangerous course of action. so with this being the most dangerous course of action, where do you all see the two preeminent places where you're going to have to accept risk if this continues to go forward, especially when we look at the volatility of the world today? >> well, sir, what we would do is continue to support those soldiers that are deploying to afghanistan, and the next to deploy soldiers, we'd make sure that they are adequately resourced to get the job done. that remains our top priority. in addition to that, we would also make sure that we support

those programs that are enabling and supporting soldiers and families so that we don't break the faith that we've established with our soldiers and families. you know, the fact of the matter is that we've fought with an all-volunteer force for over a decade, and as i've said before in other places that if you'd asked me 15 years ago if we could do that, with an all-volunteer force, i would say absolutely not. that's probably not, not possible. but we've done it, and we've done it because we've taken good care of our soldiers and families, and so we'd want to keep those programs in place. so where we think we would begin to see roding capability -- eroding capability would be in that those forces that are at home training and preparing to deploy for contingencies. we think that, you know, as you make decisions to transfer resources to cover other

shortages, that eventually that it will erode your readiness to respond to contingencies. so we want to maintain the faith that we've established with our soldiers, and we also want b to be -- want to be able to respond to contingencies in addition to supporting the fight in afghanistan. >> congressman west, similar to the army our priority regardless will remain supporting those marines and sailors that are forward deployed. we'll continue to do that. you asked for the two main areas that we would take risk, i don't see any way that we could maintain a proper modernization profile. we're going to continue to move forward, and we would not be able to sustain our investment in many infrastructure as well. and to put that last point in some perspective, we fund to a low c2 level in our infrastructure. if sequestration were to take place, we'd see almost an immediate drop into c3 and below with our infrastructure. again, to maintain current operations at the level we need to maintain them as well as to maintain as many of those family

programs we need to to keep faith with our marines. but modernization infrastructure would suffer in a way that would be very difficult to recover in the years ahead and, frankly, be very inefficient as we did that. >> thank you. ms. davis. >> thank you, mr. chairman. thank you all for your leadership and for joining us today. at the beginning of your statement, secretary hale, you emphasized, i believe, that we need a balanced budget deficit reduction plan. is there anything in this discussion that we've had today that would suggest that perhaps it doesn't need to be balanced or that there is, um, is something about that in terms of all the budgets, you know, all the areas that we're looking at, yacht just yes dense -- not just defense that's not part of that discussion? >> the administration favors a balanced program of deficit reduction. i realize there are differences

of opinion, but that would suggest both cuts in spending and some increases in revenues. that has to be worked out between the two houses of congress and the administration, but i believe they continue to favor that. >> any of you feel that that doesn't necessarily reflect your services? >> i'm going to intervene and ask -- >> okay. >> -- our military leaders not be asked to comment on that particular issue if that is acceptable to you. >> all right. >> ms. dais, and you stick with me on that one. >> okay. i will stick with you, sir. thank you. i wanted to go to the issue you really have discussed in terms of high priorities, obviously, the war fighter, but when we think of the personnel accounts, sometimes i think it's difficult for people to recognize the impact of these personal accounts on readiness. childcare centers as an example. if they were to be drastically reduced, would that have an effect on readiness? is that an area that, perhaps,

needs to be looked at as even a higher priority when we're talking about these issues? >> well, congresswoman, you know, we've made it a priority within the service because many of those are funded by the operations and maintenance account that we would have some flexibility to make movements within that account to sustain our family support programs, our people programs. we think they're the cornerstone of readiness for both families and our service members. but that does cause reductions in other programs within the account, in facility infrastructure, sustainment, modernization, some base support operations. but i think we feel very strongly due to the deployed nature of our forces that we would have to make an effort to sustain those. >> uh-huh. >> i would echo what admiral ferguson just said. it is absolutely imperative that we continue to take care of our soldiers and families, and it does have an impact over time on

the ability of the family to be resilient, and that's, that's a thing that we're very, very focused on. >> congresswoman, i also agree with my colleagues that we would try our best to protect the family programs, health care, that sort of thing. but i'll add though, as admiral ferguson mentioned, as we look at what we want to protect, that's going to squeeze out other accounts. and they're all in that sort of organizational and maintenance account, the o&m readiness account which has things for the air force like flying hours to train our combat crews, weapon systems sustainment, to maintain our aircraft, to have our aircraft available for our depos, we've got 180 civilians or so in the air force in many that account, training, rangers, spare parts, you can go down the list, engine overhaul. as we look at, obviously, we would want to protect programs like that, but that would just squeeze out other readiness issues as well and make the problem even more difficult.

>> uh-huh. >> congressman, what i think you're really highlighting is the need for all of us to take a comprehensive look at readiness, and as i alluded to in my opening remarks, we've got pillars, and one of those pillars is the need to recruit. those programs are inextricably linked to our ability to recruit and retain a high quality force. as general spencer and the other members of the panel have outlined, once you assume risk in one area, you're going to accept risk in another area. this is about balance, and the difficulty with sequestration is it actually makes it difficult to balance across those pillars of readiness. so you going to do things that are inherently things you wouldn't do if you had the ability to do this logically and in managed risk. and that's the difficulty, i think, for all of us is the way the cuts are being applied will not put us in a position to manage risk. >> and when we look at -- you mentioned health care, of course, and that's a great concern, particularly if our tricare physicians choose not to

accept, um, military personnel. is there something you wanted to just mention about that in terms of awareness of what we should, um, be thinking about in that area? >> let me take a shot at that and see if i can be helpful. the defense health program is a budget tear account. under the she sequester rules, it would seem the same reduction, 9.4%. the only thing we could do would be to try if that came to pass, try to move money into that account, and it'll be very difficult, frankly. we can only do it think braming, and you've got -- programming, and you've got to find something to cut. as i've learned painfully over the last four years, that's very hard to do. so i think we would be faced, to some extent, with not being able to pay all our tricare bills at the end of fiscal '13. we'd try to avoid it, but i think it would happen. i'm not quite sure what our

providers would do in that case. it'd be just late, and then we'd try to fix it in '14. but it's not a good situation, and not one that i don't think any of us, i certainly don't want to go through. >> thank you. mr. brooks. >> thank you, mr. chairman. um, i'd like to, first, thank our men in uniform for your service. it's quite impressive to see three four-stars and an admiral here and the dedication that those emblems represent on behalf of our country. and also, mr. hale, your presence here. and i've heard a good bit about why we are here, why we are today, and i wanted to add my thoughts to it, and people can digest them for what they are worth. but we are here today because we have had a united states government that for years now has been reckless with the american treasury. we have had three consecutive trillion dollar deficits, we're now in our fourth year of a

trillion dollar deficit. our country has never seen this kind of financial irresponsibility in its history prior to the last four years. it has reached the point where in the very chairs that y'all sit in 2010 and in 2011, the chairman of the joint chiefs of staff as appeared before the house armed services committee and testified that this accumulated debt is the greatest threat to america's national security. he did not name al-qaeda, he did not name north korea, he did not name iran, he did not name anybody else. he said number one threat is our debt. now, if you look at the numbers, the debt has one trigger point primarily, a lot of factors but one trigger point, spending has gone up over 0% in the last -- 40% in the last six years. it doesn't take much of a

mathematician to figure out the cause of the problem when spending has gone rampant. and it's gone rampant in large part because of the into entitlt programs that some of my colleagues have pointed out. and in that vein i want to etch size one -- emphasize one point. we are in this process not only because of history of deficit that have put us in a hazardous position financially where we risk insolvency and bankruptcy as a country which in alternative if that happens, could destroy our national defense capabilities, far worse destruction than sequestration would ever do, and we all know how bad sequestration is. but then we get to the solution aspect of it, and in august of last year an agreement is reached. but let's be very, very clear about this point. the agreement that was reached with respect to sequestration was because that is what the white house demanded. first, they wanted tax increases on top of tax increases we already have in play.

i have a list of 12 pages of tax increases that are going to hit american families this year, next year ask the year after that and maybe the year after that too. twelve pages. but that's not enough. they want even more. and so the house of representatives said we're going to protect family incomes, and so the president came up with this sequestration idea that attacks and can puts at risk our national defense capabilities. and so i am very much in accord with mr. scott's comments earlier that i believe that if the president is sincere in his desire to avoid these national defense cuts, then he should also be sincere in proposing a specific plan that is in writing in the form of a bill that can be introduced into the united states congress by at least one person who agrees with him. and to date, i have not seen that plan introduced in the house of representatives where at least one member of the

united states house of representatives has seen fit to agree with its terms and conditions. and if the president is going to continue to be the commander in chief, and if he's going to continue to rightfully complain through his secretary of defense about the adverse effect of sequestration on our national defense capabilities -- and i believe those concerns are legitimate -- then i pray that barack obama as commander in chief will propose a specific bill that is introduced in the house of representatives with some semblance of support if not bipartisan, at least by democrats that details what his plan is so that the american people can see it, and they can digest it and decide where they want to go with it. now, mr. hale, if you are familiar with a specific bill that the president has proposed that has been introduced in the house of representatives that is confined to this issue -- i'm not talking about a spore gas board where it's not a thousand

different points, one point happens to touch on sequestration, i'm talking about a sequestration-fixed bill, one bill that's been introduced in the house that has the support of members, please, share it with me. >> gentleman's time has expired. if you could, please, answer that for the record, mr. secretary. >> i will do that. >> mr. kritz. >> thank you, mr. chairman. secretary hale, in your written testimony you are worried about a different type of problem. you mention it in your next steps. and it's the effects of if we don't have sequestration but that we all start, the process starts. and you talk about you don't want to alarm employees, you don't want to hold back on obligation of funds for weapons projects or operating programs. and a statement at the end of this one paragraph says you -- we will continue normal operations unless sequestration is actually triggered.

so does that mean that although it's in the back of everyone's minds, the department of defense is marching forward as if sequestration is not going to happen? >> well, i wouldn't put it that way. we don't want to sequester ourselves, so, yes, consistent with omb's guidance and our own guidance, we're not going to start cutting back right now in anticipation of sequestration. but we know it's there. it's more than in the back of our minds, and we have begun steps to look at impact assessment, we have worked closely with omb to understand how the law would work, and as we get closer to this event, we will have to move toward specific planning to do it. so, but what with we don't want is, as i said, sequester ourselves and start in advance to say, well, let's cut back this weapons system because maybe we'll have to do it. >> right, right. >> i'm still hopeful we won't go through this. >> well, and there's a series of information here that says, you know, and obviously we've already received, this

committee, testimony that indicates there's actually an observable slowdown in reduction in contracts and orders. so there are things happening. and in your testimony, and we've heard it too from the private sector, everybody's doing this sort of scenario. and the one thing that i would, um, ask you, and i don't know if you can quantify it or not or if the vice chiefs can quantify it, is how much effort is being put into starting to put the pieces of the puzzle together looking at what if sequestration happens. is there a concerted effort within the secretary of defense or within the services that there are people assigned now to start looking at -- because there's a point, i'm trying to think, where you mentioned we are working with omb to understand this complex legislation and are assessing the impacts. so although you're not

sequestering, you are in process of addressing this. and, i mean, to my point, every day that we kick the can down the road, you're expending funds for something that may not happen. >> i think that's right. and it will pick up in its pace. we largely do now understand the laws, even though we don't like them, and we have done high-level impact assessment. you've seen that in our testimony today. and we will have to pick up the pace working with the services and the defense agencies in terms of guidance on how we'll implement this, hoping at every point that we can stop. but if it does not get halted, we will eventually have to do detailed budget planning, and that will be enormously costly in terms of time within the administration. let me just go back to one of your other points n. the aggregate, we don't see a slowdown in obligation rates, at least through the data we have which is about a month lag. i'm not saying there's not some program out there that's doing it.

>> right. >> there may be industries that are making advanced preparations. but we do not see for the department as a whole a slowdown in obligation rates through maybe a month ago. >> okay. now, are you, um, making any assumptions as you plan for fy-14 with regards to sequestration? >> no. we are, the fiscal guidance that we have from the administration is the same as last year. last year's plan for fiscal '14 does not take into account sequestration. again, we're not going to do this to ourselves. we are still hopeful that congress and the administration will find a way to avoid it. >> okay. and if in by of the chiefs want -- if any of the chiefs want to address if there's particular folks who have been assigned to getting prepared for possible sequestration, please, chime in. with that -- [laughter] >> we have a team set up that is

working on and looking at impacts, and we'll move toward guidance for planning. so they are all represented in the various forms. >> congressman, i would characterize the effort is that our normal staff function is that individuals are assessing the impacts now that we have the transparency act report, we understand what the budget amounts are. but planning involves understanding what your top line is, ultimately, and the assumptions and the planning factors you use to shape the future fiscal target shapes the decisions in the '13. so that type of planning is not going on. >> thank you. thank you, mr. chairman. .. finish

>> this committee received testimony from a number of members and from omb that testified that the actual impact goes beyond the budget control act, $55 million in fy13 top line reduction, instead, informally, the committee heard estimates of $70 billion for adjustments to contracts or, by my calculation, what is 50 cents on the dollar. ash carter also referenced the

so-called hidden tax. i'd ask mr. hill if he could answer. do you agree or disagree with this observation and why? if you could give us an estimate of how much an additional cut would be required as far as cuts, claims, and other references, let me know. >> i'll clarify how sequester sequesteration would work. the contract would not be affected, and a contract signed for january 2 would not be significantly affected. we won't encounter fees in that regard. now, we would be forced not to pick up options. we would be forced not to change contracts that were plan to be signedded after january 2nd.

we would be forced into some personnel actions in the civilian area that, i mean, we would have to -- we will avoid risk because they would cost us money in that year. i think the bottom line is we're going to, both because of the law and the way we'd implement it, i don't see large cancellation fees. there could be some, but i don't see them occurring. we'll have to find ways to avoid the sef advance cost -- severance cost because we won't be able to afford them. >> thank you. you, mr. hill, -- mr. hale, indicated some adjustments need to be made should sequesteration go in effect for the national security strategy and the missions we ask our military to perform on our

behalf. what i've been struck by, though, is multiple indications from different individuals on our panel, all of whom i have great respect for that there's seemingly little to no contingency planning going on. we don't know what strategy changes are required, and you're the strategic thinkers of our military. to me, that seems most irresponsible for this freshmen member and former captain in the marine corp.. i think it would be revealing if we could get more information on this team that was referenced who is in the early stages of, quote "looking at the impacts of sequesteration on our strategy." that would be revealing, i think, because it tells us what risks are regarded as greater and lesser risks to the nation, what missions we'll ask the military to perform in the future, and we can infer from the changes from our strategy, what missions are of higher and lower priority, and timely,

determine which spending is more important or less important is the sort of analysis we do not receive on this committee, and therefore, we are asked to make superficial spending decisions based on parochial interests and limited information received from the administration. if we could get information, i'd most appreciate it. thank you, gentlemen, again for your service. >> thank you. >> thank you, mr. chairman. secretary hale, you know, i sat through so many of these hearings regarding the effects of sequesteration whether it's in the full committee or readiness committee or cpar which i'm not a member of, but you imagine how important these issues are to us. it was called department of defense plans for sequesteration. it's the 2012 act and the way

forward. that's the title. the one thing i have to say in all the prior hearings and testimonies that we've had including chief of naval officers as well as john mccue, the nemo seems to be the same. it's whether someone above them said not to really plan for sequesteration or the office of management budget said just plan the budget for the upcoming year without consideration of sequesteration. would that be a correct statement as to how you -- how the defense department has been proceeding on this specific issue? >> well, we are certainly planning the physical 2014 # budget without regard to sequesteration, consistent with the guidance we got from the office of management of budget. we made a decision not to plan in detail for sequesteration, again, in the continued hopes that there will be an agreement

between the add -- administration and congress to halt it. i think as we get closer to the event, we'll have to move towards guidance and planning, and if it goes in effect, we'll be ready to implement it and move towards the planning required to do that. >> can you tell me how long you think it will take to get to that point? some of the testimonies from february of this year, the chairman expressed great concern about sequesteration, which all of us share. i'm curious. you knew that sequesteration would be an across the board cut so the report that was done by omb is a 9.4 literally across the board cut. how long will it take you to drill down all the program ids with the 9.4 across the board cut? how long does it take you? i want to know when chairman calls us back in and we hear the actual plans.

>> well, the first thing we've to do is come up with guidance as we do in a regular budget. to the sieveses, that takes place over the next month or so, six weeks after the guidance is done, to come up with detailed plans. >> a two month period, and then we'll know -- >> we'll wait as long as we can to begin the process. i spend most time planning for things i hope don't happen. we'll wait as long as we can in hopes it's halted, but we won't wait so long that we won't if the department ready if it goes in effect on january 2nd. >> one of the statements made by omb in that report is this -- is says "with the sing the exception of military personnel accounts, the administration can want choose which programs to exempt or what cuts to apply. the matters are dictated by a

detailed statutory scheme." just so anyone listening in on us, when you say you will study how cuts take place, you're talking about the 9.4% within each program; is that correct? >> that's correct. >> would you say that as frustrating as it may be for us to try and figure out what's going to happen so when we get home and people ask how it's cut, from your vantage point, it's up to congress and the president to make everything right? >> well, we depend on congress, the president, and the administration to halt this. we hope that's true, but as i said before, if it happens on january 2nd, we'll take steps needed to make the department ready, and omb said they will do that across the federal government. >> mr. hale, many of the testimonies we've had all say that defense department has taken its share of cuts already. in the first part of the budget

control act. i believe secretary panetta says we have to have an additional series of cuts, throw everything out the window. would you agree with that? >> well, i don't know if the said it quite that way, but if we take substantial cuts, sequesteration, or in another way, we have to reconsider the security strategy put in place, and i know i can speak for secretary panetta believes that's the right strategy for current times. >> when you say the strategy, it's the 2014 budget? >> the strategy that was put in place last january, and the basis for the physical 2013 budget, he believes, is the right strategy, and he'd like to continue it. if there are significant budget cuts, we'll revisit that strategy. >> thank you. thank you, mr. chairman chair. i yield back. >> thank you. mr. schilling.

>> thank you, gentlemen, we appreciate what you do for our question. for mr. hale, a couple questions. we have the rock island arsenal in the district, dave and i from iowa share that. i believe sequesteration is here, now, and happening. just this morning, i got a message saying good morning, congressman shilling, we're told if we don't have 45 million worth of work by october 1 #st, we can't maintain current work force, contractors are on it, but significant job loss is a possibility. we're in a bad way, brother, any news on your end? this is from a small business perspective, you're constantly planning. you talk about the senate, inability to pass bills and so on and so forth, but what is crate call as a country that

both sides of the aisle need to do and the senate side is there's work called compromise, coming together to find commonground. what i've seen, this is my very first time ever holding public office. i was to the point where i just could not take it anymore and decided to run for congress and hence the reason why i'm here, but what i found with this senate is the fact that every time there's something they don't like, they pick up the toys, leave the toy box and go home like they did with the payroll tax back in the holiday back in december, but i guess there's a couple of things. we need to sit down and address this, but what i'd like to do, if you could, sir, when we talk about one of my concerns is contracts prior to sequesteration taking hold, what do we do? we have cost overruns out there. i guess how do we put an exact value on these to be anal to did

to be able to say these things are good? i'd like to have that clarified is how do we project? i mean, if you got a couple million or billion dollar cost overruns, how do we deal with that? >> [inaudible] you're not talking sequesteration now, but cost overruns that would occur in a regular budget, do understand that correctly? >> when sequesteration hits, and you guarantee contracts already in effect prior to sequesteration hitting, how are we going to deal with the overruns that are going to be there? we have no way to calculate those out. >> if we already obligated the prior year funds, they would not be affected by sequesteration so the contract, if already signed, would go forward with the amount of money we've obligated. now, if that contract needs funds and has to be modified, it

would be subject to additional funds subject to sequesteration, and we have to judge whether or not added funds were sufficiently important in a period of budgetary stringency, and that's made by guidance of senior leaders. i don't know if that's helpful, but i think that's the process we'd go through. >> right. another thing we look at when i talk to people out in the district, most americans are willing to pay more in taxes. some here call it revenues. i call it what it is, an increase on taxes on the hard working folks out there, and folks tell me, we're willing to pay more under one condition, stop waisting our money. no more tunnel for turtles, no more swamp mice in california, so on and so forth, but until then to raise taxes so the government can continue to waste our hard