>> let me just close by saying, and i don't mean this one parties fall. president, house, senate, but all three pieces of the puzzle have got to come together and recognize that absent a clear long-term decision we are having a devastating impact on many aspects of the government but certainly on our national security which is supposed to be paramount. we cannot play in any strategy when we do not know how much money we're going to have month for month. i applaud the chairman for urging that same reconciliation to come together.

look forward to working with them to find a solution, and today, i look forward to hearing from our witnesses about how they're going to deal with those challenges. make no mistake, as challenging as that is, we will make the decisions, we will protect this country. we certainly have faced tougher times in the past. we came through it. it's a challenge but we will meet and i look forward to hearing from the witnesses today about the plans to do just that. thank you, mr. chairman. >> mr. secretary? >> chairman mckeon, ranking member smith, members of the committee, thank you for this opportunity to discuss the president's fiscal year 20 '14 budget request for the department of defense. allow me to express my appreciation also to this committee force continued support of our men and women in uniform and our entire civilian workforce. these people are doing

tremendous work. they're making great sacrifices along with their families as they have for more than 11 years. 11 years our nation has been at war. whether fighting in afghanistan, patrolling the world's sea lanes, standing vigil at on the korean peninsula, supplying our troops around the world or supporting civil authorities when natural disasters strike. they're advancing america's interests at home and abroad. their dedication and professionalism are the foundation of our military strength. as we discussed numbers, budgets and strategic priorities, we will not lose sight of these men and women serving across the globe. as you all know so very well, their well being depends on the decisions that we all make here in washington today, the department of defense faces a significant challenge of conducting long-term planning and budgeting at a time of considerable uncertainty. both in terms of the security

challenges we face around the world and the levels of defense spending. we can expect here at home. even as the military emerges and recovers for more than a decade of sustained conflict in iraq and afghanistan, it confronts an array of complex threats of varying vintage and degrees of risk to the united states. these include the persistence of violent extremism throughout the week states and ungoverned spaces in the middle east and north africa, proliferation of dangerous weapons and materials, the rise of new powers competing for influence, the risk of regional conflicts which could draw in the united states, faceless, nameless, silent and destructive cyberattacks, the debilitating and dangers curse of human despair and poverty as well as the uncertain implications of environmental degradation. meanwhile, the pace of technological change and the spread of advanced military

technology to state and nonstate actors pose an increasing challenge to america's military. this is the strategic environment facing the defense department as it enters a third year of flat or declining budgets. the onset of these resources constraints has already led to significant and ongoing don't tighten in the military. that's military modernization or force structure, personnel costs, and overhead expenditures. it has also given us an opportunity to reshape the military and reform defense institutions to better reflect 21st century realities, as i outlined in a speech last week at the national defense university. the process begin under the leadership of secretary gates who canceled or curtailed more than 30 modernization programs and trimmed overhead costs within the military services and across the defense enterprise. these efforts reduced the departments topline by $78 billion over a five year period, as detailed in the

departments fy 2012 budget plan. the realignment continued under secretary panetta who worked closely with the president and the joint chiefs of staff to craft new defense strategic guidance and in fy 2013 defense budget plan, which reduced the department's top line by 487 billion over the course of a decade. the president's request $526.6 billion for the department of defense is based budget for fy 2014 continue to implement the president's defense strategic guidance and enhances the departments efforts at institutional reform. most critically its sustained quality of the all-volunteer force, and care we provide our service members and their families which again, as you all know, underpins everything we do in this organization. before discussing the particulars of this budget request, however, allow me to address the profound budget

problems facing the department in fiscal year 2013 and beyond. as a result of sequester. these challenges have significantly disrupted operations with the current fiscal year and greatly complicated efforts to plan for the future. the congress and department of defense have a responsibility, an absolute obligation to work together to find these answers. because we have, all of us, a shared responsibility as the chairmen and ranking member member had noted to protect our national security. dod is going to need the help of this committee and congress to help manage through this uncertainty. the fy 2013 dod appropriations bill enacted by the congress last month addressed many of these urgent problems by allocating dod funding or closely in line with the president's budget request. giving the department authorities to start new programs and allowing us to

proceed with important military construction projects. nonetheless, the bill still left in place the deep and abrupt cuts associate with sequester. as much as $41 billion in spending reductions over the next six months. military pay and benefits are exempt from the sequester, and we made decision to shift the impact of sequester away from the serving in harm's way. that means cuts fall heavily on dod's operations, maintenance and modernization accounts that we used to train and equip those who will deploy in the future. furthermore the military is experiencing higher operating tempos and higher transportation costs than expected. as a result of all these factors, the department is now facing a shortfall in our operation and maintenance accounts for fy 2013, of at least $22 billion in are based budget for active forces.

in response, the department has reduced official travel, cut back sharply on facilities maintenance, impose hiring freezes, and halted other activities. however, we will have to do more. large, abrupt, and steven across the board reduction of this size will require that we continue to consider circling civilian personnel in the months ahead. the cuts will fall heavily on maintenance and training which further erode the readiness of the force and it will because he to regain in the future. and i know general dempsey will address some of this in particular. as a service chiefs have said, we are consuming our readiness. meanwhile, our investment account for the defense industrial base are not spared damage as we also take indiscriminate cuts across the areas of this budget. we will continue to need a strong partnership of this committee to help us address

these shortfalls. at the sequester related provisions of the budget control act of 2011 are not changed, fy 2014 funding for national defense programs will be subject to a steeply reduced cap which would further cut dod funding by roughly $52 billion. and if there's no action by the congress and the president, roughly $500 billion in reductions to defense spending would be required over the next nine years. as an alternative, the president's budget proposes some $150 billion in additional defense savings over the next decade. these cuts are part of a balanced package of deficit reduction but unlike sequester these cuts are largely backloaded, green men in the years beyond fy '20 team which gives the department time to plan and implement the reduction wisely and responsibly, anchored by the president's defense strategic guidance.

the presence $526.6 billion fy 2014 request continue to balance the compelling demands of supporting troops still very much at war in afghanistan, protecting readiness, modernizing the military's aging weapons inventory in keeping with the present strategic guidance, and sustaining the quality of the all-volunteer force. today's budget request also contains a placeholder request that overseas contingency operations, ocoa at the fy 2013 level which is $88.5 billion. this submission does not include a formal ocoa request because afghanistan force level and implement decisions for this year were delayed in or to provide commanders enough time to fully assess requirements. we will soon be cement and ocoa budget with a revised any level and account level detail. the following are the major

components of the fy 2014, $526.6 billion based budget request. military pay and benefits including tricare and retirement costs, $170.2 billion. that represents 32% of the total base budget. operating costs including 77.3 billion for civilian pay, total 180.1 billion, representing 34% of the total budget. acquisitions and other investments, procurement, research, develop, test, evaluation a new facility infrastructure which represents 33% of the budget at $176.3 billion. the budget presented today at its most basic level consists of a series of choices that reinforce each of the following complementary goals. making more disciplined use of

defense resources. this budget continues the departments approach of the last several years, the first target growing costs in areas of support, acquisition, pay and benefits. before cutting capabilities and force structure. in order to maintain balance in readiness, the department of defense must be able to eliminate excess infrastructure as it reduces force structure. dod has been shedding infrastructure in europe for several years, and we are undertaking a review of our european footprint this year. but we also need to look at our domestic footprint. therefore, the president's fy 2014 budget requests authorization for one round of base realignment closure frac in 2015. brac is a comprehensive and fair tool that allows communities a role in reduce decisions for the property and provides redevelopment systems. brac is imperfect.

it's an imperfect process and that are up front costs for brac. the future year defense program adds 2.4 billion to pay for those costs, but in the long-term there are significant savings, previous five rounds of brac are saving $12 billion annually. and those savings will continue. we are also taking other important steps to cut back on support costs are will institute a study of a military treatment facilities, including many hospitals and clinics that are currently underutilized. by the end of you will have a plan in place to suggest how to reduce that underutilization while still providing high quality medical care for all of our forces and their families. this restructure coupled with a brac round and other changes would permit us to plan a cut in the civilian workforce that will comply with congressional

direction. we are also continued our successful efforts to hold a military health costs. with the department's proposed tricare benefit changes, our projected cost for fy 2014 are about 4% lower than those costs in fy 2012. that's a significant turnaround compared to health care trends over the past decade. another important initiative is our effort to improve the department's financial management and achieve auditable financial statements. i strongly support this initiative and will do everything i can to fulfill this commitment the promises we've made to the congress and the american taxpayer. these and many other changes lead to total savings of about $34 billion in fy 2014-2018, including 5.5 billion in fy 2014. however, we are concerned that the savings are more disciplined use of resources could be eroded by sequester.

as we are forced to make inefficient choices and drive up costs. today for example, we're being forced to engage in a shorter and less efficient contracts in units by sizes that will increase the unit costs of weapons. in this budget the department has achieved 8.2 billion in savings from weapon program terminations and restructure. for example, by revising the acquisition strategy of the army's ground combat vehicle, gcb, the department will save over 2 billion developing costs. the department is evolutionary approaches to develop new capabilities instead of relying on beats the heady gains in technology. of to lessen the potential impact to local committee some reductions of defense procurement, the department is requesting an additional $36 million in support of the defense industry adjustment program. the department is continue to

take steps to tighten the contract terms and reduce risks and our largest acquisition program, the f-35 joint strike fighter. the fy 2014 budget request includes 8.4 billion for the joint strike fighter program. the cost of military pay and benefits are another significant driver of spending growth that must be addressed in the current fiscal environment. in this budget the department is submitting a new package of military compensation proposals that take into consideration the congressional concerns associated with those from fy 2013. these changes saved about 124 billion in fy 2014, and a total of 12.8 billion in fy 2014-2018. this package includes a modest slowing of the growth of military pay i implementing a 1% pay raise to service members in 2014. the department is also seeking

additional changes to the tricare program in fy 2014 to bring the beneficiaries costs share closer to the levels envisioned when the program was implement. particularly we are what -- for working age retirees. today, military retirees contribute less than 11% of the total health care costs, compared an average of 27% when tricare was first fully implemented in 1996. survivors of military members who died on active duty or medically retired members would be excluded from all tricare increases. even after the proposed changes and fees, tricare will remain still a substantial benefit. these adjustments to pay and benefits were among the most carefully considered and difficult choices in this budget. they were made with the strong support of the joint chiefs of staff and senior enlisted leadership in recognition that

in order to sustain these important benefits over the long term without dramatically reducing the size or readiness of the force, these rising costs need to be brought under control. spending reductions on the scale of the current drawdown cannot be implemented through just improving efficiency and reducing overhead. costs and changes the capabilities, force structure, and modernization programs will also be required. the strategic guidance issued in january 2012 set the priorities and parameters that informed those choices. in the fy 2014 budget submission for the infamous and defense program outline it to the strategic guidance. the new strategy calls for a smaller and leaner force. last year we propose reductions of about 100,000 in military between fy 2012 and fy 2017. most of those reductions occur

in the ground forces, and arcont to size u.s. ground forces to accomplish prolonged operations while maintaining adequate capability should such activities again be required. by the end of fy 2014 will have completed almost two-thirds of the drawdown of our ground forces, and the drawdown should be fully completed i fy 2017. increased emphasis on the asia-pacific and middle east represents another key of the nuke strategic guidance. this budget continues to put a premium on rapidly deployable self-sustaining forces. such as submarines, long range bombers and carrier strike groups that can project power project power over great distances, and carry out a variety of missions. as part of the rebalanced to the asia-pacific, the department expanding the marine corps presence in the region including rotational deployments of marine units to australia.

we continue to develop guam as a strategic hub where we maintain a rotational bomber presence, among other capabilities. the department will -- in the region including an f-22 squadron at the air force base in japan. the navy has deployed a littural combat ship to singapore and is increasing and we are widely to shaving ports in the western pacific. this new strategy not only recognize the changing character of the complex in which the u.s. must prevail, but also leverages new concepts of operation enabled by advances to space, cyberspace, special operations, global mobility, precision strike, missile defense, and other capabilities. by making difficult trade-offs and lower priority areas, the fy 2014 budget protects for any pieces -- for increases, key

investments in these areas. the high quality of our all bullinger force continues to be the foundation of our military strength. and the fy 2014 budget request includes 137.1 billion, for military personnel as well as 49.4 billion for military medical care. together, these make up roughly one-third of our base budget. this budget seeks to assure that our troops receive the training and equipment they need for military readiness, and the world-class support programs they and their families have earned. however, as in other areas of the budget, the state and abrupt cuts of sequester would harm these programs. even with flat and declining defense budgets, this budget seeks to press ahead with a transition from a counterinsurgency focus force to enforce ready and capable and agile of operating across a whole range of operations across the globe. the service budgets all fund

initiatives that seek to return the full spectrum training and preparation for missions beyond current operations in afghanistan. the department continues its work to understand and quantify readiness activities as we seek to maximize our preparedness for real-world missions. we do not yet know the costs of fixing the readiness of the force following the six months of sequester cuts to training in this fiscal year. therefore, these costs are not included in the fy 2014 budget. the department's budget submission makes clear that people are central to everything we do. while sequester cuts would unfortunately counter many of these initiatives, especially for our civilian workforce, the initiatives remain an important statement of intent in this budget. the department continues to support programs and fy 2014 the support service members and the families, spending 8.5 going on initiatives that include transition assistance and

veterans employment insurance. behavioral health, family readiness, suicidal prevention, and sexual assault prevention and response. the fy 2014 budget is reflection of dod's best efforts to match ends, ways, and it means during a period of intense fiscal uncertainty. it is a balanced plan that would address some of the department structural costs and internal budget imbalances. while in the but in the president's defense strategic guidance and keeping faith with our men and women in uniform and their families. it is obvious that significant changes in the department's topline spending would require changes to this budget plan. the department must plan for any additional reduction to the defense budget that might result from congress and the administration a green on a deficit reduction plan. it must be prepared in the event of sequester level cuts process

for another year, or over the long term. as a result, i directed a strategic choice in management review and order to assess the potential impact of further reductions up to the level of full sequester. the purpose of this review is to reassess the basic assumptions that drive the department investment in structure decisions. the review will identify strategic choices and further institutional reforms that may be required come including those reforms which should be pursued regardless of fiscal pressures. it is designed to help understand the challenges, articulate the risks him and look for opportunities for reform, and efficiencies presented by resource in strange. everything will be on the table during this review. roles and missions, planning, business practices, force structure, personnel and compensation, acquisition and modernization investment, and

how it operates and how we measure and maintain readiness. we have no choice. this review is being conducted by deputy secretary carter, working with the general dempsey. the service secretaries and service chiefs, office of the sector a defense principles and combatant commanders are all serving as essential participants in this review. our aim is to include this review which is underway now by may 31. the results will inform our fy 2015 budget request and will be the foundation for the quadrennial defense review due to congress in february of next year to it is already close to me that achieving such significant an additional budget savings without unacceptable risks to national security will require not just tweeting or chipping away at existing structures of practices, but if necessary, fashioning entirely new ones that better reflect 21st century realities. that will require a partnership

of congress. the fy 2014 budget and the ones before have made hard choices. in many cases modest reforms to personnel and benefits, along with efforts to reduce infrastructure and restructure acquisition programs, met fierce political resistance. and were not implemented. we are now in a different fiscal environment dealing with new realities that will force us to more fully confront these tough, painful choices, and to make the reforms we need. to put this department on a path to sustained our military strength for the 21st century. but in order to do that we will need flexibility, time, and some budget certainty. we will also need to fund the military capabilities that are necessary to the complex security threats of the 21st century. i believe the president's budget does that, with a partnership of

congress, the defense department can continue to find new ways to operate more affordably, efficiently and effectively. however, multiple reviews and analysis show that additional major cuts especially those on a scale and timeline of sequestration would require dramatic reductions in court military capabilities or the scope of our activities around the world. as the executive and legislative branches of government, we have a shared responsibility to ensure that we protect our national security and america's strategic interest. doing so requires that we make every decision on the basis of enduring national interest, and make sure every policy is worthy of the service and sacrifice of our service members and their families. thank you, thank you. >> -- mr. chairman, thank you. >> chairman mckeon, ranking member smith, distant whispers of the committee, i welcome this opportunity to update you on united states armed forces, and to comment on the budget

proposal for fiscal year 2014. this hearing comes at a time of extraordinary uncertainty as resources decline, risks to our national security rise. it's in this context that offer my perspective on how we can work together to sustained a balanced and fearless joint force. one thing is certain, our men and women in uniform are steadfast in their courage and in their devotion to duty. i saw recently in their eyes in afghanistan, and woul one had te honor of reenlisting 10 of them this past sunday at bagram airfield. in afghanistan our forces are simultaneously fighting, transitioning, and redeploy. the afghan military will soon take operational late for security across the country. as they gain confidence, so to the afghan people. the coalition will remain in support beyond 2014. at every point along the way we

must make sure that our force levels match nation. our joint force has been vigilance elsewhere as well. we're deterring aggression and assuring our allies in the face of provocation by both north korea and iran. we're working with our interagency partners to defend against cyber attack. we are acting directly and with partners to defeat al qaeda. we're rebalancing for the asia-pacific and adapting our force posture to a new normal of combustible violence in north africa and the middle east. we are also worked with others to keep serious complex conflict from destabilizing the region. we are ready with options if military force is called for, and can come and if military force can be used effectively to secure our interests without making the situation worse. we must also be ready with options for sunset and -- uncertain and dangerous future. this budget was purpose built to keep our nation immune from coercion.

it aims to restore the versatility to a more affordable joint force in support of our defense strategy. however, let me be clear about what it does not do. this budget does not reflect full sequestration. it does oppose less reduction and it gives us more time. however, uncertainty persists about what the topline will be for this or any other future budget. nor does this budget includes funds to restore lost revenue. we don't know yet the full impact or the cost to recover from the readiness shortfalls that we are experiencing this year. as expected we've already curtailed or cancel training for many units across all of the services, for those not preparing to deploy. and we know that from experience it's more expensive to restore readiness than to keep it. and recovery costs will compete now with the costs of building the joint force in the future. this budget does, however, invest in our priorities.

it keeps the force imbalance. it supports our forward deployed operations. it upholds funding for emerging capabilities such as cyber. it funds both conventional and nuclear capabilities that are so critical and have proven so essential to our defense. it also lowers manpower costs and reduces excess infrastructure, and it makes health care more sustainable. most importantly in our real decisive advantage in our people. it treats being the best trained and the best equipped force as a nonnegotiable imperative. never has our nation sustain such a lengthy war solely through the service of an all-volunteer force. we must honor our commitments to them and thei to their families. for many veterans returning home is a new frontline in the struggle with wounds seen and unseen. we must continue to invest in world-class treatment for mental health issues, traumatic brain injury, and combat stress. we also have a shared

responsibility to address the urgent issue of suicide with the same devotion we've shown to protecting our soldiers, sailors, airmen and marines in combat. the risk inherent to military service must not include sexual assault. sexual assault betrays the trust, the very trust on which our profession is found. we will pursue every option to drive this crime from our ranks. this is a defining moment for our military. our warriors will to win is undaunted, but the means to prepare to win are becoming uncertain. we have an opportunity actually an obligation with this in any future budget to restore confidence. we have it within us to stay strong as a global leader and as a reliable partner. the joint force is looking to us to lead through this period of historical fiscal correction, but we can't do it alone, as i

said before, and as thei. we need budget certainty, we need time and we need flexibility. and this means a predictable funding stream. it means the time to deliberately evaluate trade-offs and force structure, modernization, compensation and readiness to end it means the full flexibility keep the force imbalance. thank you for all you have done to support our men and women in uniform. i only ask that you continue to support our responsible investing in our nation nation's defense. and i look forward to your questions. >> thank you very much. i think we won't have any votes on the floor before 1:00. it's my intention to get in as many questions as we can, but to take a brief break at around noon. among the critical aspects of the transition in afghanistan, the negotiation of the bilateral

security agreement with the government of afghanistan, i'm concerned with the progress in peace negotiations, and a failure to reach an agreement will put at risk u.s. vital national security interests and afghanistan, and the region. by creating a vacuum that regional state and nonstate actors would exploit. clearly, we need a willing partner. president karzai's public statements have been erratic at best. a bad agreement is worse than no agreement at all yet unconvinced that not only is agreement imperative, but we need to secure it this spring to allow our nato allies time to negotiate similar agreements and to send the strongest single signal possible that we will not abandon afghanistan. i know when i was there, not too long ago, secretary, you do the same time, general dempsey, you've been there since,

everyone in afghanistan is asking, when are you leaving? because the taliban is telling them we are leaving. we need to counter the taliban narrative and reverse the crisis of confidence that i saw in our afghan partners resulting from our accelerated redeployment, and ambiguity about the residual force. to that end, i strongly believe that an announcement about our residual force or at least an announcement of a narrow range of u.s. troop level is a necessary prerequisite for securing a bsa. i think this is one of the problems we had with iraq. we didn't come up with a number sufficient that the iraqi leadership would expend the political capital to do what is necessary to make an agreement possible. by sitting on the announcement, all parties with a stake in the outcome of the bsa, afghanistan, its neighbors, our allies and members of congress will be reluctant to expend the

political capital necessary to secure a good agreement. the politics becomes significantly more complicated as this bsa gets caught up in afghan presidential election and campaigns for the midterm congressional elections. karzai will only become more challenging to deal with as his term comes to an end. silence and speculation will become self fulfilling prophecies just as we saw in iraq. repeating such an outcome is not acceptable, given the sacrifices that we have made. nevertheless, chairman dempsey, you stated this week that any done post 2014 troop levels is not a matter of urgency. why do you believe we can secure a bilateral security agreement in a timely manner without a decision on residual force levels? >> first, let me ally myself with your assessment that it's really the confidence of the afghan people, and i would say a

subset of that is the confidence of afghan security forces that really are the center of gravity now, that that which will allow this nation to succeed and endure. secondly, let me ally myself with your suggestion that the bilateral security agreement should be achieved as soon as possible. the reason i said it wasn't important to nail down the exact number is that we already have, you know, this is a nato mission in which we are the leading nation but we are part of the nato mission. and nato has declared that the range of trainers, advisors posted 14 will be between eight and 12,000 i find that to be a reasonable target toward which to aim, and so i think we can move ahead with the bilateral support agreement on that basis because that should inform the number of bases we might need to retain and what authorities we might need. there's also some physics

involved. were going to be at 34,000 in the middle of february, and to get from 34,000 to eight to 12,000, between then and the end of 2014, we can do the math. tidily i don't need exact number because i have a range of available to me. and i know what it takes director greg from 34 k. data something between eight and 12. >> i know what i spoke to general allen, and when i spoke to general dunford, they both had talked about the number 13,600, and then an additional 6000 nato troops, which would give about 20,000 which would allow down to i think the battalion level is the way they had it laid out. even if we could come out with that, that range that they could

feel comfortable with in the negotiations, i think it would be helpful. general, in february you testified before this committee, and i'm going to quote, what do you want your military to do? if you want it to be doing what it's doing today, then we can't give you another dollar out of -- i'm adding, out of our budget. a year ago you testified, if we have to absorb more cuts, we've got to go back to the drawing board and adjust our strategy. and that's what secretary as for ugly a couple weeks ago, comment we're going to have to adjust the strategy. what i'm saying to you today, after your quote, is that the strategy that we would've had to adjust it would come in my view, not meet the needs of the nation in 2020 because the world is not getting any more stable. nevertheless, in the budget request, the president has proposed taking an additional

120-150 billion from the military, dependent on how you measure to cut. he also offers no proposal to rectify the 53 billion shortfall in fiscal year '13. general, ma did the dod conduct any analysis that offers a strategic rationale for these cuts? if not, who proposed a number, and it only be or the white house asked for this analysis? in light of your previous estimate, what missions have the recommended that we eliminate and what changes to last year's strategy will you endorse? >> sir, the reality of budgets, and i think you know this as painful as anyone, is they take about a year to prepare. and so we've been working on the fy '14 budget for a year, sequestration kicked in on one march. the president's budget back loads in years beyond the five

year defense plan, back loads most of the reductions he proposes. so they don't have an affect, they don't have a significant effect on this five year defense plan we have submitted. now, that said, this is precisely why secretary of defense has taken us on the path toward a strategic review. because as we look at not only the president's budget proposal, but also full sequestration, we've got to understand what that will be doing to the force. the reason that i still stand by what i said, but it doesn't affect this fy '14 submission, is that most of those cuts are backloaded. i think 6 billion or so in fy '14, but that's the reason i can still say with confidence what i said before. >> mr. smith. >> thank you, mr. chairman. i want to drill down on the budget question a little bit because i think frequently react

like if you got one thing from defense, it's unsustainable, unworkable national city, falls completely apart. that's obviously ridiculous. anywhere in government, there's places to cut, this places to cut kind of depends on where you're cutting and what you're doing. the problem we have right now is sequestration. it's across the board, mindless, deep, done right in the middle of a fiscal year. so the problem that you describe in your testimony are being caused by sequestration and five at massive change have to take to an existing budget. so again i will emphasize to this committee, if we want to help you, the best thing we can do is stop sequestration as soon as possible. because it is a classic gift that keeps on giving. 2014, 2015, 2016. it's going to keep happening unless we stop it. that's first. second, when you look out, as you pointed out, the cuts that

are in the president's budget beyond that are 2017 and beyond of roughly $119 billion, depend on how you calculate. at the other problem that we have is that are places where we can cut in the defense budget that will not affect our national security. congress rather consistently stops you from doing it and i wanted to just explore two of those. base closure and personnel costs. on the tricare. secretary hagel mentioned in his opening remark, they are put in place, the average servicemembers bank 27%, it's now down to 11. there is plenty of room certainly over the course of the next 10 years in both of those areas to find savings. i guess my question is, if we find savings in those areas, isn't it true that that doesn't really affect the plan? general dempsey, you've been very good about saying if you going to give us less money, tell us what less you want us to do. here's the strategy you can map to a. with our cuts.

we've seen dramatic improvements in some of our acquisition programs as a result of some of your initiatives. so i personally think that if you look at our budget and say not one more penny should come out of defense is dead wrong. just as a matter of efficiency. forgetting for the moment the fact that the deficit that is eating us alive come with a massive deficit to infrastructure in this country, that the applications for tax and on and on, clearly money can be cut out of defense budget over the course of the next 10 years that won't impact our national security and that will help our budget picture. so just talk a little bit about brac and some of the tricare fees and where we might be able to save money in a way that doesn't affect i shall security, for which are going to once to take a stab at it. >> well, thank you. i'll respond and then i'll ask general dempsey, and he

mentioned the comptroller, mr. hill, he may want to respond as well. let me address your larger question. if, in fact, we are facing the reality that we are facing, then we're going to plan, adjust, review, and take it pretty hard look at everything. and i think the chairman's comments in his testimony, matching the resources with the nation, is a particularly important comment. because we can't put our military, all those who support our military, in a position where they are underresourced. and then there's an expectation by people of this country that they are secure, and that we are guaranteeing their security. that is, as the chairman and

mr. smith, as you noted in your comments, the highest order. it is the highest responsibility of a government, the security of the nation. so it is going to require some tough choices across the board. and i generally get some of those choices in my testimony. brac is an area that we do have to look at, i believe. because there's not one answer to this. it's everything. it's every component of our budget, including tricare, including compensation, including benefits. i don't have to engage this body, this congress on the issue of social security. our current entitlement system. i doubt if there are many people in this country who don't understand that unless we do something, then actuarially it

is not sustainable, the current programs we have. the same as in the military. so we have to manage this, but we have to also project as well as we can with our strategic priorities and our national interests, how do we do this? how are we going to do this? and with, as you noted, the reality of sequestration, it's not some theory. it's law. congress passed and the president signed the budget act. spent as long as we're talking about the budget, i would be remiss if i didn't point out in the last 12 to 14 is where cut taxes by nearly $7 trillion right into the face of the baby boomer generation retiring and to worse. so revenue is part of this discussion as well, which i know we've thought about before but i want to put that out for the record. can you and your just a straightforward question, and money be cut from the defense budget over the course of the next 10 years that will not negatively impact our ability to

protect national security? >> well, my answer is it is going to be cut. >> right. i'm getting at the larger point here because when you make those cuts you hear mostly from outside, we had a strategy, you cut, there goes the strategy. but forgive me, that's the biggest. clearly when you cut money from the defense budget that does not jeopardize our national security. i'm just wondering if you gentlemen agree with that? >> i'll respond and ask general dempsey, but as you said in your opening comments, i don't know of an institution that can't find some deficiencies somewhere. i don't think the defense department is any different. but back to an important point that general dempsey may come you all deal with everyday as the authorizing committee, or the department of defense, what are our priorities? what do you expect? what the american people expect the defense department to do? what are those missions? how are we going to resource of those missions ask those

capabilities are going to be required to secure our nation. there's what you have to start. i think you can find savings. they have done a very good job over the last few years of fighting for savings in acquisition and other areas. so yes, it's possible but we don't have any choice spent and i'm sorry, i want to give other members of chance to ask questions. that more or less answers my question. if you have something quick, that would be great, if not only of the members a chance. >> we are still can't figure out where to find the 487 billion, so this is not, this process doesn't start from a stable platform, frankly. secondly, even with sequestration this wouldn't be the deepest cut the military has ever suffered, but is it is by far the steepest. and so the answer to question is, really has taken the context of what we're faced with now come and we really do need time to figure out what these cuts we do for the imposed.

>> i understand that sequestration the way it is done, like you said, that's ridiculous. but when you put together a 10 year plan, unicom you can find savings, i do believe and i think you guys have done an admirable job of that. i yield back. >> i think we can find savings all across government. the point is that we have taken 50% of the savings out of defense when the only account for 18% of the savings. i just think we need a more rational in the whole approach. mr. thornberry? >> thank you, mr. chairman. mr. secretary, in your speech at indy you last week, in talking about your strategic choices and management review, you said it is not the goal, is not to assume or tacitly accept that deep cuts such as those imposed by sequester will endure. and then in the next paragraph

though you said, this exercise is also about matching the missions with resources. which we've had a long-standing discussion on this committee about what comes first, do you have a dollar amount and then you forget what you can do with it, or do you figure out what it takes to defend the country and then talk about what resources are required to do that mission? and as you know there is a widespread view that you were brought into the pentagon to cut defense. and some of the people who are concerned about that are pointed to the fact that the cost assessment and program evaluation folks are playing a key role in this strategic review. they are more of the green eye shade people. so i guess kind of at a broader level, it seems to me that more than anyone else in the

government, the secretary of defense has got to be the one who says, this is what it takes to defend the country, and, and to fight for that, publicly but also internally within the administration. and i guess i was just interested in how you see your role. is it to manage the decline, or is it to be explicit about the dangers in the world and what it takes? and then the more political part of the government, congress and the president, have to accept the consequences of the decisions. >> [inaudible] >> congressman, thank you. first, i have been in this job six weeks. accounts that we are talking about occurred long before i ever got here. so i don't think i had a lot to do with any of the decisions to cut defense spending. as to my responsibilities, you have listed, accurately, some. and that is, i lead, preside

over the one institution in this country that is charged with only one mission, and that's the security of this country. i have no other job. i report to the commander-in-chief, the president of the united states. i work with the congress as an agent of the executive. yes, part of my job is to manage, j.c. that the department of defense is managed efficiently, effectively within the law that the congress passes, and the directives that congress gives us. yes, also my role is to be an advocate for our men and women in uniform, and the job we do. and i've done that. i intend to do that, and i don't think i take a backseat to anyone. look at my entire life, my career. i have not done as much as most

of you in the congress here, or certainly as general dempsey has done, but i had devoted my entire life to veterans and military. and i think by record is pretty clear on that. and so yes, i am an advocate for this department. i am an advocate in the national security council. my advice that he gave to the president of the united states, but i also have to be realistic, congressman, in that what we're dealing with in sequestration, as i noted in mr. smith, is the law. it is not debatable for me. this is what is on the books now. this is what the congress last month, the house and senate budget resolution, you passed a budget resolution for 2014 that essentially is pretty close to what the president's budget is in 2014. now, i had to deal with that reality. and i have to manage and lead with that reality. your last point about accepting

these kinds of things, as i said, as you noted in the ndu, whether i accept it or not is one thing. no, we don't want to accept it. no, we are up here explaining in our testimony and interviews, i think clearly, what sequestration and some specificity is doing and will continue to do to our capabilities and to our readiness and the hard choices we are going to make. i can't delete my institution into a swamp -- i can't leave my institution into a swamp of knife fighting over protesting what's already in place. we will respond honestly and directly. i think the general has made a t pretty clear in his testimony. i think i did. if you want to go indeed many programs with a comptroller, he will on how difficult this is going to be. i think it's a combination, congressman, of all the things

you said, as at least the way i see my job. i will also say the president did not instruct me when he asked me to consider doing this job, and when he asked me to do this job, to go over and cut the heart out of the pentagon. that wasn't his instruction to me, nor in any implication anyway. >> thank you. >> thank you. ms. sanchez spent thank you, mr. chairman, and thank you, gentlemen for being before us today. i think there were many of us in the roman secretary gates was the force when he spoke about how the u.s. debt and deficit was one of his biggest concerns with respect to national security. and so we are really trying to do what so many across america believe is correct to do, and that is to get our fiscal house in order. and i've been one of those people who said that everybody has to put something on the table.

entitlements, defense, and summit of the other discretionary programs that some people like to cut all the time. and also remind you that this congress, you know, because the city committee was not able to come up with a list of cuts, this is where we are. we actually voted on this. secretary hagel, i don't think you were brought in to cut defense. i think are brought in to follow the law and to try to best advise us if we need to change course of action, how to do that and why we need to do that. so my question to you today, and i might add that in the 70 years that i've been on this committee, when i first came to congress, our defense budget was about a little under $300 billion a year. and as we went into two wars, over a decade, our budget, when

you really looked at all the spending, rose to about $800 billion a year. i don't think there's been a single department that can say that it has seen that. so now we're getting out of the second war. we are coming back, and so i think that there are cuts to be made. but secretary, over the next five years when i look at this budget, there is a transfer of billions of dollars going to support nuclear weapons sustainment, to cover the costs of escalation of existing programs, and increased climate. and as you know, i sat as a ranking member on strategic forces subcommittee so we have looked at this quite a bit. the increase oversight the department of defense with respect to in essays costs, but i wonder why i only see the increases in the nuclear weapons program, and i see nothing with respect nuclear nonproliferation program.

so that would be my first question to you. and the second one is about the 14 add ground based interceptors at alaska. and as we move to do this, as the department of defense moved to do this, what is the department's commitment to ensure that the interceptors are successfully operational and realistically tested before we deploy them? since they have not been successfully flight tested since 2008. >> congresswoman, thank you. let me respond to the ground-based interceptors question. when i made the announcement regarding increasing our 30, present 30 gdi inventory of 44, and as you know, they are

located in -- will be located in fort greeley and vandenberg. i noted that we did have a problem in one of the last tests with the guidance system, and when i was asked a question, would you put those new interceptors in, still with some uncertainty, and tell the problem is resolved i said no. so we are testing, continue to test him and certainly not employing any new interceptors anywhere until we were completed satisfied that their operational and we have complete confidence in their ability. ..

>> the funding doesn't come from dod. thank you. >> thank you, mr. chairman. >> i wonder, congresswoman, if i could -- >> yen. >> i don't want to miss the opportunity to point out that although iraq and afghanistan are winding down, as you sea, the world -- as you say, the world we are inheriting here is far less stable than the one that existed when you entered the congress of the united states. i would just ask you to not make any direct correlation between the end of the conflict in afghanistan and where you think our budget should end up. >> and also to clarify the record so that that people don't

think that we've had a budget of over $800 billion for the last ten years, we have one budget other $700 billion -- over $700 billion. mr. jones. >> mr. chairman, thank you. mr. secretary, it's good to see you again. general dempsey. mr. secretary, you were saying in your comments what the american people want. what they want is a smart, efficient foreign policy. i do not think we've had a foreign policy that made a hell of a lot of sense, truthfully, going back to george bush. i'm not being critical of the president, but, general dempsey, i talked to john finish. [inaudible] recently who is inspector general for reconstruction, i spoke to stuart bowen two days ago, and yet we continue to spend money in those countries. today i had general gardener, jake gardener, was in my office for an hour and a half. he is of the firm belief in the next year to three years there will be a civil war if iraq, and

i don't know -- and i hope, mr. secretary, that you and general kevin si, for goodness sakes, how can america -- excuse me -- continue to police the world, keep all these bases overseas open? and then i hear you in your testimony and general dempsey, and i agree with you. we are in a financial collapse. and i saw an army corporal on tuesday of this week from my district. he's lost a leg, three fingers and brain injury. he's got a wife and four children. he lives in north carolina. and i don't know, somebody has got to wake up this country. yes, we've got of to have a strong military. we've got to have a strong defense. but they deserve better than what they get from an administration and a congress that wants to send them around the world and change the culture of countries that could care less about freedom. now, if they're a threat to us,

i will vote every time to make sure we defend the american people. but i hope, mr. secretary, that you will be a leader with this administration and say walk carefully. let's make sure it is justified. because we failed in iraq. it was never justified. and so i hope that you will bring as you work through these problems, and my friends on both sides have certainly articulated and have agreed. but it's just like how in the world can we continue to play the game? i gave this analogy recently in my hometown in north carolina. everybody in my neighborhood knows i'm broke. i still drive a fancy car. i call up my neighbors and say let me take you to dinner. and you know what they're saying? what a fool. he can't even pay his wills, and he wants -- his bills, and he wants to take me to dinner? somebody has got to bring some sanity to this program and

rebuild the military. and i will support you, sir, and your leadership to make it more efficient and streamlined. but, again, we need to change the way that we get involved in these foreign wars with no end to it. so if you want to comment on that, you don't really have to. but if you want to, i appreciate it. >> congressman, thank you. and good to see you again. you and i have had over the years many conversations about this issue, and i am grateful that you over many years in difficult situations have spoken up and made clear your thoughts on what you just talked about and other issues. i would respond this way very briefly, if you recall the last sentence of my testimony, the last sentence of my testimony was any decision we make should

always be worthy of the service and sacrifices of our men and women and their families. i believe that. and i will do that, as secretary of defense. the day i think that that's not being done, i will do everything i can to make sure it is done. but if that day would ever come, i would have to resign. because it is, it is the essence of who we are, first of all, as americans. to your bigger point, i think we are all in this country, certainly those responsible for foreign policy and our national security and all the connecting dynamics that flow into that, our economics and everything,

energy, are now defining as they analyze what we went through the last 12 years -- and i'm not here to debate that -- but it is important we review. what we did, why we did it, where we are. and we have some new opportunities here to restructure and take that review and, hopefully, put america maybe on a path here where we can do more, certainly, with allies, and it's central to everything we do. last point i'll make is the comment i made in my testimony, and general dempsey noted it, it isn't all bad sometimes to have these situations when each of us in our personal lives or government lives are confronted with the uncontrollables coming down on us, because it forces us to take inventory and stock; what are we doing? why are we doing it?

how are we doing it? there is an opportunity here. i wish it'd come in a different way, but it is what it is. we've got to be smart how we use this opportunity to restructure and rethink, and foreign policy guides everything because it is our national interest. and i know that's not the purview of this committee, but you're not disconnected from it. nor are we, by the way. i serve on the president's national security team. and there's no discussion that general dempsey has or i have with the president or secretary of state that does not include all of these parts. so i understand what you're saying, congressman, and i appreciate your comments. >> thank you, mr. secretary. >> thank you, mr. mcintyre. >> thank you, mr. chairman, and thank each of you for your service to our cup. secretary hagel, i have three questions. if you can answer them yes or no, and then if you need an

explanation. first of all, with possible delays in the f-35 procurement, do you believe the navy and the air force have budgeted sufficient funds to maintain the necessary strike fighter inventory to meet the national military requirement, the national military strategy requirements? >> we, i do. -- yes, i do. >> with regard to the national guard, in your opinion and given the current restrained budget atmosphere we know we're in, can we continue to adequately resource and equip the national guard and reserve component as an operational force, or do you feel like you're going to be in a position where you have to revert back to the strategic reserve model? >> well, the way i would answer it, i think the national guard and reserves are key components of our military force structure and will continue to be. and i think that, i think that has become quite obvious the last few years. and without going into a long

oration of this, marty dempsey can handle it better than i can, i don't think we can have the force structure we now have counting on the assets we have and adequately managing those assets without a strong national guard and reserves. if for no other reason than the professionalization that has occurred in our reserve and national guard components over the last 12 years. i think it's been probably historic. we now have a member of the joint chiefs of staff who sits there who's a national guard representative. i mean, i think that tells you something. so i'm a strong supporter of our national guard and reserves. >> and my third question is two-parking lot, but to the extent -- two-part, but to the expent you can clarify if you need to. do north korea and iran

currently possess the ability to reach the united states with long-range missiles, one in general perhaps a warhead, secondly with a wmd warhead? >> i want to be careful with this answer because it might imply some intelligence here. but i don't believe that neither of those countries has that capacity right now. now, does that mean that they won't have it or they can't have it or they're not working on it? no. and that's why this is a very dangerous situation. i would also add, and i'll ask general dempsey for his thoughts, that this country is capable of dealing with any threat and any action by any country including iran or north korea. general dempsey? >> i have nothing to add.

>> so your answer is no to both questions, they do not possess the capability even on a conventional warhead as well as a wmd warhead? >> yes. but, again, we have to always be mindful of uncertainty of anything, and you can't accept what you're never, ever, ever sure of. right now i don't think we believe they have that capacity, but i've qualified that answer as i did. >> in preparation, just in case. thank you. thank you, mr. chairman. >> thank you. mr. forbes. >> thank you, mr. chairman. mr. secretary, i'm going to duplicate the request of my good friend from north carolina and ask that you be as succinct as possible many your answers, because like him, i only have fife minutes. i believe the impact of this administration's fiscal cuts to our national security are unwise and will have long lasting

repercussions, but i also belief this administration's attacks on faith, religious freedom and religious liberty if our military are also unwise and will have long lasting weerer cushions. from the pentagon we had an order issued that you don't have a copy of but i'm sure you're probably familiar with that our commanders can no longer even inform those under his or her command of approved programs in the chaplain's office. in addition, we have from the pentagon an order from a patch from the air force had to be removed, and we were told from the liaison's office that it was because the legal department had said you couldn't use god even if it was in a nonreligious context. we have here, of course, approval that was given by the assistant secretary of defense to allow individuals to march in uniform in a san diego gay pride parade which was a political parade using their uniforms. and then we have an order by the

department of the navy prohibiting bibles from being used in walter reed hospital. and in addition to that, and these are just a few of the items because i only have five minutes. and as i'm sure you're familiar recently, we have had a training program which i have given you a copy of where we list evangelical christians, catholics and mormons in the same category of religious extremism as we do al-qaeda. now, because of those kinds of things and i don't expect you to know all of these things or keep your hands on all of them, but because of those, we had a provision that was put in the national defense authorization act last year that was section 533 for the protection of rights of conscience of members of the arm forces and kaplans -- chaplains. particularly it said our service people couldn't have their beliefs -- couldn't have any adverse personal action, discrimination or denial of promotion, schooling, training or assignment based on their

religious beliefs. and also it said that our chaplains, that no member of the armed forces could require a chaplain to perform any rite, ritual or ceremony that is contrary to the conscience, moral principles or religious beliefs of the chaplain or discriminate or take any adverse personnel action against the chaplain including denial of promotion, schooling, training or assignment on the basis of the refusal of the chaplain to comply with the requirement of paragraph 1. and my question to you, mr. secretary, because this is a big issue as we get statement after statement sent to us almost on a weekly basis about these issues, we had 75% of the members of the house, 85% of the senate who voted for that authorization bill with that provision in it because they thought it was necessary, that it was well advised. do you believe that those rights and the provisions of section 533 are necessary and well

advised? >> well, first, congressman, i don't know about all the specifics of the information that you presented. i will get it, and i will find out about it, and i get back to you -- i will get back to you on it. first -- second, obviously, we will comply with all the ndaa directives. protection of religious rights is pretty fundamental to this country -- >> mr. secretary, my time's running out. my only question is do you believe that provision is a necessary provision and well advised? just yes or no? >> well, it's in the ndaa, right? >> but i'm asking if you feel it was necessary and well advised. >> well, i haven't seen it, so if you can give me a sentence of it again -- >> i'll try to follow up. so then i take it, let me just ask you, also, to come back to me and let me know the status of the regulations that are

supposed to be passed and to insure that that's done. and i take it you are not aware of those today or that status. >> well, no. unless i had it in front of me, i don't know. i'm well aware of the ndaa directives and all the different -- >> and then the final thing i would ask in the last 20 weekends i have is i just can't understand why the department is issuing orders prohibiting people in the chain of command from talking about chaplains' programs supporting faith, but they're not prohibiting people in the chain of command from making anti-faith statements and doing anti-faith training. and i hope you'll just take that into consideration and get back to us, because this seems to be a growing problem, not one that's heading in the right curve direction. >> well, that should not be happening. and i can say that without seeing anything. and i will get back to you, and i'll find out about it. thank you. >> thank you. mr. andrews. >> thank you, mr. secretary, general, mr. hale, thank you for your service to our country, and

please convey to the men and women you represent how proud we are of them and the great job they do can more our country -- for our country every day. it's my understanding, mr. secretary, because of sequestration that nine fighter squadrons and three bomber squadrons have been grounded. is that correct? >> i think nine is the accurate number, but -- it is? it is the accurate number. >> and if the congress were able to reach an agreement where we could swap out these sequester cuts for some other cuts in various parts of the budget and perhaps have some revenue in there as well, if if the sequesr were not in effect today, would those planes be flying? >> i assume that they would be, yes. >> general, what are the consequences both in terms of readiness and in terms of our technical capability of those airplanes not flying? >> well, fundamentally, congressman, what we're doing is

we're meeting near-term requirements at the expense of downstream readiness. think -- this is march, it's april. basketball season just ended. you get 12 players on a team, you teach them individual skills, then you bring them together as a team, and you run team drills, and you scrimmage, and eventual you get into the season. what we're doing right now is we're not scrimmaging, and we're limiting the number of collective drills and focusing on individual skills because that's where the budget situation has taken us. >> if -- >> they won't be ready to deploy. >> thank you. if the congress doesn't reach the kind of agreement i just talked about and we year two, or the first full year of sequestration which it would be, what kind of other changes would you have to make in the defense posture of the country? >> well, we will have to continue to effectively cut into our readiness and the grounding

of wings is a good example of that. we're doing the same thing in the navy. not sailing. and some of our ships remain at dock. our training of our soldiers. so it's across the board. it isn't just one service. >> now, i notice that in the president's budget proposal that he does propose the replacement of sequestration. he also suggests that there still would be $150 billion in cuts in defense, not the $550 or so we'd have otherwise. what kinds of things would you do to hit the $150 billion target that's in the president's budget? >> well, first, that's why one of the reasons i directed the strategic prior tees and management -- priorities and management review, to ask those kinds of questions of our chiefs

and of our combatant commanders and other leaders in the defense department, what are those options? that's first. but if you just look at the numbers, 550 billion over ten years versus 150 billion over ten years, i mean, i know what side i'll take on that. if i'm looking for resources for our department. the other part of that is the president's 150 billion in savings through department of defense comes mostly at the back end of that ten years. >> so there'd be time to transition -- >> that's exactly right. it gives us time. as the general noted in his comments, time, flexibility and certainty. >> i do not mean in this as a rhetorical question, i mean it as a real question. my assumption is we will have significantly fewer troops in afghanistan on september 30th of

'14 than we will on september 30th of '13, is that right? >> yes. we're continuing to draw down. >> then why is the oco account, the overseas account, the request, 87.2 billion for for te present fiscal year and 38.5 -- 88.5 for the future year? >> well, first, it's a place holder. we have, as i said in my testimony, we have of not sent the oco budget up yet. we will be doing that shortly. so the 88 that you refer to is a place holder in the budget knowing that we'll be coming back with something probably in that range. i don't know, mr. hale may want to -- >> but why wouldn't out be lower if the number of troops is significantly lower? >> well, was we have to now bring them out in large numbers. that means equipment. we have got billions of dollars of equipment in afghanistan that we have to get out.

it's very dangerous. we've only got two ways out other than fly everything out. that's prohibitive. we are flying things out now. you know the southern route is down through pakistan, out through the karachi port. you know what's happening in pakistan. >> we do. >> up to the north, bad roads, variables, different countries. so that expense of just getting our troops out on a timely basis and the material that goes with it is costing us a lot of money. >> thank you. and thank you, mr. chairman. >> also we've been chewing up equipment for ten years. there's no reset which we're going to have to be facing. mr. wilson. >> thank you, mr. chairman. i thank you all for being here today. secretary hagel, i was happy to join with nearly 50 of my colleagues, bipartisan, a unique situation, a bipartisan concern, and that forward to the departmt of -- and that is forward to the

department creating a distinguished war medal which we appreciate to recognize extraordinary service of our personnel. but, unfortunately, there's an issue of precedence and that the dwm was placed bo the bronze star and purple heart in order of press department. have you made a determination of how to address this? this is a great concern to veterans and military families. >> congressman, thank you. it is a concern to me. it's a concern to any veteran, anybody in the military. but to just get straight to the answer of your question, you know i asked the chiefs and the secretaries to go back and take another look. i'll make a decision on this early next week, and i'll make that announcement on where i think we should go next on this. >> well, as a federal, as a fellow veteran, i appreciate you looking into that. it is important. additionally, in regard to the

military health care system, there's a proposal increased tricare fees again. in light of the fact that in the defense health programs there has been in the last two years a surplus of $500 million to $709 million, and so there's been a surplus. additionally, it's been claimed that the health care costs are eating the budget alive when, in fact, it's an increase of less than 1% in fy-13, fy-14. and then there's actually been a decrease of $650 million in private sector costs. and my concern is that we know this is a great program. tricare, people are very satisfied. military families appreciate this benefit. commitments have been made to our veterans and to military families. why would we be increasing the fees when, in fact, the program is working well? >> thank you.

the program is working well, and as i noted in my testimony and mr. hale is obviously quite conversant on this, but we've seen those costs go down, and i mentioned this in my testimony. but as more and more people come on to that system and more demand and the sustainability which we have to look at how are we going to continue to commit and pay for those and fulfill those commitments as we've analyzed this in some detail, we think it would be wise -- and these are not significant increases, by the way -- but be wise to propose these increases in fees. now, recognizing this is the beginning of debate, this is the beginning, as it should be, laid

out, and let's look at everything on it, on this issue. but these are not significant increases. we're looking at the long-term sustainability. it is a good program. it has worked. and that's not an issue. but it's the issue of the affordability of the program. i don't know, let me ask if you want the comptroller -- >> just briefly. mr. wilson, there's about a billion dollars of savingses associated with the tricare fees and co-pays in the fiscal '14 budget. if we don't do that, we will have to take that out of readiness. and i think it was a strong feeling that the balance -- >> mr. chairman, could he -- mr. chairman, could he speak more in the microphone, please? >> i'm sorry. we save about a billion dollars from the tricare fees and co-pays. if we don't do that, we will have to take that money out of readiness or modernization, and i think it is the strong feeling of the secretary and the chiefs and the chairman that the right thing to do is a balanced approach to meeting our defense

needs with some modest increases and fees. >> but the experience is very clear, that there are not increases of any significant amount, less than 1%. and, mr. secretary, the fee increases have been -- i'm not sure what the new ones -- an increase of 365%. and so it was significant to the persons who are in the program. and i hope we look at the experience because i know it was not projected that the health care costs would go down. that was a pleasant surprise. and so i would rather that we look at it, the pleasant surprise and be positive. and i just hope that y'all look at that. the fee increases do impact military families. thank you, and i appreciate your time. >> thank you. ms. davis. >> thank you, mr. chairman and, mr. secretary, i look forward to working with you and general dempsey and secretary hale, thank you for being with us as well. secretary hale, i understand that the department of defense has directed the services to restart tuition assistance to

service members as of april 9th, obviously, of this year. and i certainly support the tuition assistance very, very much support education for our troops, continuing education. and, um, yet i understand that this is really going to put some pressure on our services to try and go along with this, essentially, because it means in many cases they've spent some of those dollars, so they're going to have to look for other areas in which to backfill, essentially, those dollars as well. and so i wonder if you could comment on that, number one. is that correct? and also i think it's a lesson for all of us because we certainly, i think, go on record supporting a change when it comes about, certainly when we look at the budgets often the pentagon requests one thing, we come back and do something different. you understand that.

certainly, mr. secretary. how are we doing with that right now, and is this not a problem for the services? because they have to find the dollars in order to fund not just an unlimited amount of tuition assistance going forward from this point. >> congresswoman, thank you. let me respond, and i'm going to ask the chairman for a specific response because you noted in your question some of the services are struggling with this more than others, and that's right. first, we're going to follow, we are following the director of the ndaa and what the appropriations bill instructed us to do. you are correct that prior to that we had to make some tough choices to each of the services on where they were going to prioritize their funds. as i noted in my opening comments, readiness, protecting the war fighter, where our most

important assignments are. obviously, when you're at war many a nation, those are priorities and other priorities. so we had to balance those priorities with those resources. and so the services were in a tough spot on this. each service, as you know, has a little different standard -- >> right. >> -- on this. so we're going to fulfill that commitment, but let me now ask the chairman, because he'll talk now more directly -- >> i think it's important to know where those dollars are coming from for each of the services. >> yeah, thanks, congresswoman. it actually goes back to what congressman wilson talked about. you know, i find myself often in the difficult position of standing in front of soldiers, sailors, airmen, marines and their families and explaining why as we look to absorb cuts of whatever magnitude, we have to include all of the various factors of this giant enterprise in order to keep the force in balance.

so if some one individual might be on my blog complaining about the fact we've had to suspend tuition assistance or revise the program. but the answer is unless we look across the board at all the levers we have to pull whether it's infrastructure, health care, pay compensation, tuition assistance, we'll have an extraordinarily well-compensated force that will be sitting at fort hood texas or camp lejeune unable to train and, therefore, we'll be putting them at risk. i tell the young men and women, you know, if this this is an inconvenience to you, what would be dangerous is if we don't keep this thing in equilibrium. we've got to look at everything. >> yeah. i think my concern is not where we're actually cutting into that, by virtue of having an unlimited stream of money in order to do this, something we all would support but -- >> sure.

the answer's, yes, but it's not uniquely because of tuition assistance. frankly, tuition assistance was about $200 million for the rest of this fiscal year. which may sound like an inconsequential amount of money in the context of a $525 billion budget -- >> right. >> the problem is that's probably three or four brigade training exercises at fort irwin, california. >> okay. mr. hale, did you want to comment on that at all? because i'm -- >> no. i think the secretary and chairman said it rightful we are complying with the law, what we felt was the intent of the law on the appropriations bill. and it is causing some difficult decisions. >> all right. thank you. thank you, all. >> thank you. mr. bishop. >> thank you, mr. chairman. after congressman forbes' question as one of the extremists in this body, mr. secretary, i'd like to welcome you here, and it's good to have you finally on the correct side of capitol hill.

i have got about five questions, i'm going to get them all through come hell or high water. so the first one deals with the request that was in your budget. it appears that in the air force budget that roughly $1.4 million is put in there to conduct an environmental impact study regarding the icpm missile -- icbm missile wing. i understand this was inserted into the budget proposal by your office and not that by air force leadership. so i guess three questions. is that a correct statement? number two, what is the object of this eis effort? and, number three, be it is to eventually close down an icbm wing or squadron, which one is being studied for potential closure? >> well, i just asked the comptroller, first of all, congressman, if it's a correct statement, and what that was about. i'm going the ask him -- to ask him to answer the question, because it is correct. >> okay. >> and what he just reminded me

of is missile wing, it's a component of the larger context here. so let me ask mr. hale -- >> i honestly don't remember who put it in, i'll find out for you. we are studying all three wings, environmental impact statement on all three of them. >> and what is the purpose for that eis effort? >> it is part of the all missions and all acttivities are on the table. we need to understand what the environmental impacts would be of any decisions we make regarding icbms. >> and you're dealing with all wings and sad ons? >> correct. >> all right. let me ask the second phase of the questions, and it goes to the faa's actions recently. the faa closed the number of contract towers around the country far in excess of what they needed to meet their sequestration goal. a few of those contract towers, though, are very near to air force bases. i have one at ogden hipgly which is less than 3 miles away, so i guess the two questions i have is, number one, did paa contact

the defense department in any way to coordinate what they were doing when they made this decision to close these towers down. and since it also -- go ahead and answer that one, if you want to. >> it's a quick answer, i don't know. >> if you could find out -- >> we will find out and get back to you, so thank you. >> it's just 245 in past, for example, when nasa decided to change their program and constellation had a negative impact on what it cost the military to do missile defense and there had been no coordination between those two agencies. they had not talked. so i don't know if there's -- i would like to know if there's been any contact. but since these areas overlap as far as air space, potential of collision, potential of pilot safety, potential of impact on the mission readiness or training, testing activity, do you consider this to be a problem in these few situations, and if so, what are you doing about it? >> well, i understand exactly your point, and for the reasons

you mentioned. and i, as i said, will find out and get better acquainted with it. it seems to me based on what you said, it could be a potential problem. so beyond that i just would have to find out enough information starting with your question, did they contact us, what did we say, what are the vulnerabilities, and i'll get back to you. >> so not a whole lot of towers and bases are in common, but there are a couple of which i know, there may be a few others. that as well as for the eis statement, the purpose, i would appreciate that kind of return, and i'll give you back a minute. this is one of the first times i haven't used it all. >> may i just mention -- >> i have just used it all. [laughter] >> thank you for your comments welcoming me on the right side to have capitol. i actually started a career after vietnam on this side of the capitol in 1971 as chief of

staff to a congressman. >> so why did you go over to the dark side? [laughter] >> i'm still going to confession. [laughter] thank you. >> thank you. >> you have time, you could ask a question about why we don't do an environmental impact on the result of somebody hitting us with a missile. mr. langevin. >> thank you, mr. chairman. secretary hagel and chairman dempsey and secretary hale, i want to thank you all for appearing today and for your testimony. and in particular, secretary hale, i want -- secretary hagel, i want to congratulate you on your confirmation. i look forward to working with you as we navigate some challenging times. i'd like to get in two questions, one primarily on cyber and the other one on directed energy. relate me start, first of all, with secretary hagel. in your first foreign policy address on april 3rd, 2013, you

asserted that the cyber threat that our nation faces today is a security challenge with potential adversaries seeking the ability to strike at america's security, energy and economic and critical infrastructure. as you may know, i spend quite a bit of time on this, it's a particular interest of mine in dealing with cyberspace and how we better protect the nation in cyberspace. looking at the fy-14 budget, are we resourcing adequately in order to operate within the cyber domain and insure our national interests in cyberspace are protected? and does the department require additional authorities in order to educate, attract and retain the very best viber operators -- cyber operators? >> congressman, thank you, and i appreciate your comments. cyber is one to have the areas that we've -- is one of the areas that we've actually

proposed increases in the budget, so i think that begins with some understanding at least on our side of the threats and responsibilities we have many this domain. and i think they are going to continue to multiply. i do know of your longstanding involvement in this area, and i look forward to working with you. we continue to enhance our role in this effort, dod's. as you know, we're not the only agency that has some responsibility here. department of homeland security has a lot of authority, as you know, on this. we are working very closely on interagency groups as we connect better, and we need more of that connection on lines of authority, definitions of responsibility. as you know, our two primary resources, nsa and cyber command, are both critical

components of our security enterprise. we spend a lot of time on this, and we're going to continue to spend a lot of time on it. it's, i think, overall as big a threat to this country, cyber attacks, as any one threat. >> thank you. let me also turn to the issue of directed energy, and if we have time, maybe i'll come back to some other cyber. first of all, i want to congratulate the navy. just recently there was a very successful test of a shipboard hazer, shot down a drone -- laser, shot down a drone. i see this directed energy as a game-changing technology both for standoff as well as for ship defense, operating the toros if necessary. about a year and a half ago, the center for strategic assessment came out with a report that said directed energy is maturing at a

faster pace than what many had realized. ask can you tell me where the department stands right now on getting this stuff out of the labs and, where practical, deploying this type of technology? >> yes. as you have noted, we have a high priority on this, and you had just recited a couple of examples. we have a platform ship that is involved in some of this testing right now. so we'll continue to be very focused, very engaged, and we'll assure the prioritization of the resources we need to continue to carry it out. >> okay. and let me also maybe expand a little bit, touching on a couple of operational aspects of anti-access and aerial denial environments, such battle space limitations are likely to place a premium again on particular

assets, technologies and competencies, particularly the asia-pacific region where there's a significant proliferation of submarines, advanced tactical fighters as well as many electronic warfare challengings. challenges. general dempsey, perhaps, can you speak to how the department is resourcing, training and investing in research and development in order to meet those challenges particularly to directed energy, undersea warfare and advanced tactics techniques and procedures? >> yes -- >> gentleman? generalsome. >> question. >> gentleman's time has expired. i would ask if you could, please, handle that one for the record. mr. turner. >> secretary hagel, general dempsey, thank you for being here. i really appreciate your dedication, and we really appreciate this dialogue today. i want to start by thanking both of you for your dedication on the issue of sexual assault in the military. general dempsey, you have had, you know, exemplary dedication to this issue, and we appreciate your voice as we've looked to

both try to change the culture in the military and look at the rules and regulations that need changed. secretary hagel, thank you for your position on addressing article 60 after we had the incident of general franklin overturning a conviction of sexual assault. the, my co-chair of the sexual assault prevention caucus, nicky and myself, recently received a presentation from the air force, and we appreciate their dedication on this issue. we look forward to working with you on the language for that because there are a number of considerations which i know you reference in your letter. we have some additional issues that we think that should be addressed, so my co-chair and i will be working with both of you on that as we perceive the ndaa. on sequestration, i wanted to relate that the commander of wright patterson air force base related her concerns that so many times we miss the personal

effects that this is having on the work force, both our men and women in uniform and our civilian work force. in my community 13,000 people are facing furloughs which, you know, those are people who get up every day to protect our national security. so i want you to, please, pass on that members of congress are very concerned about the personal effects of people who have kids in college, vacations that are going to be postponed, other expenses and real-life hardships that this is going to result in. i have a question for secretary hagel and a question for secretary -- excuse me, for general dempsey. my first to secretary hagel is about our ability to maintain responding to two conflicts, and my question to general dempsey will be about missile defense and our ability to -- [inaudible] as we look to iran. secretary hagel, secretary pa panetta just as he was about ready to leave was at the 2012 security conference and made

this statement: we will insure that we can quickly confront and defeat aggression from any adversary anytime, any place. it is essential we have the capability to deal with more than one adversary at a time, and i believe we have shaped a force that will give us that capability. we have coming up in nato a joint training exercise that's currently scheduled in poland. that's, obviously, very important to members of congress because we know how sensitive our relationship is with poland as the administration has walked away from its commitments to missile defense. we're going to be watching and certainly hope this has the full support of the department of defense that this joint exercise in nato and poland take place. but my concern is, obviously, as we look at defense cuts to give our allies the assurance that we can do two conflicts with the tilt to the pacific. nato is, obviously, nervous, and i would like, mr. secretary, your comments on that. ..

would give us that increase battle space on your thoughts on this issue, opportunity. secretary hagel. >> thank you, congressman. on nato, and those exercises, and our complete, full support of our continued alliance in relationships, absolutely we are committed and will stay committed to those exercises, to our allies, to the entire framework of the objective, the

purpose of nato. i don't know if you're aware, but last for years i've been chairman of the atlantic council, and i have given many speeches on this specific issue all over the country. all over the world. critical relationship that we have with nato, i don't believe, surely not a collective security arrangement in the world like it, but it's bigger than just a security arrangement. it is the one anchor that secures interests based on human rights, based on the same values of each of the 28 members. that's a pretty significant starting point. it can't fix every problem, and it shouldn't be expected to. but to maintain and to build and strengthen that alliances is absolutely critical to our interest, and it will be

certainly reflected and is reflected in current and forward relationships. your comment about walking away from a relationship with the poland missile defense issue. let me just comment on the. we talked to the polls and our nato allies about the decisions we made on ground-based initiative. and i think you know, it and we continue to stay committed, they know this. the president said this. to that relationship of the approach. one through three, we're looking at four. there's some of that phase for that we think is too expensive and probably doesn't do the job. we're looking at that. the poles are in compliance with that, with us. they agree. we're not taking anything out of there. we are continuing to fulfill the

commitments in poland with the poles as well as to nato. so i just wanted to give you my take on that, congressman. >> if you have anything further on that -- >> we can provide for the record, i is a century taken out phase four, that which was the only portion of which would protect -- >> the gentleman's time has expired. mr. larson. >> thank you, mr. chairman. first off, i want to thank the secretary and the department for putting in the budget request for the hanged and hanger modernization as we look at moving p8 a's there. to replace the p-3s. the second point i want to make is that as we are looking at the budget near-term and long-term, something that tends to be a feast or famine proposition is investigation -- investigation we made.

if history is a guide, [inaudible], and i hope that we can break that cycle in the near-term and long-term. but a few questions here for secretary. the president has made clear that security removing fissile material worldwide is a top 40. the dod in a memorandum of understanding with nnsa agreed to transfer dollars over the nnsa over several years to support nuclear weapons programs. and these funds are not available to support nonproliferation programs in securing and removing bull rule fissile material. why is that the case? we have one priority from the president and beauty and nnsa to do something in the opposite.

>> as i address part of the question, previously as you noted, our specific responsibility, dod's, with nuclear weapons, is deterrence year the nonproliferation peace, as you know, has always resided in other agencies specifically state. we are part of that. we cooperate with the. s.t.a.r.t. treaty issues and so on. we state in that but we don't have responsibility for the. as we are looking at all these relationships, and in particular the agency relation you're talking about, it's not in the budget because that's not our budget line responsibility. >> i guess i would just note, we we're looking a nonproliferation nuclear weapons that we not get into still biting, how we

approach these issues when it comes to nonproliferation writ large, which includes a nuclear weapons program but also includes investment and actual specific nonproliferation programs. i would just caution us not to refer to stovepipes as we had many years before i got here. >> thank you. the comptroller also want to add something. >> if you can be very quick spin this is a national program, we don't have primary funding responsibly. we do provide some funding, which would be about $500 billion. some of that goes for nuclear nonproliferation and support of other agency efforts. >> second question is, last year we had your predecessor, mr. panetta and general shinseki for the first time here to testify jointly. is, have you made a commitment yet that you will continue the efforts that mr. panetta put forward to continue that cooperation with the va?

especially comes to electronic health care records, transfer of those records and tracking these folks from the time they enter your service to the time they get to the va and will be on? >> yes. we are committed to continue to work with the va. i just spoke with secretary shinseki yesterday. we met a couple times since i've been at dod and we've talked many times on the phone, a number of meetings. we have the responsibility in dod. we produce the veterans. and we are not near where we should be, but yes, absolutely we will stay committed and we worked as a partner and do everything we can to fill a seamless network. >> we need a seamless network and i think the department really needs to be sure that the folks working underneath you are stepping up to the commitment as well. >> one of the first things i did

when i got over there was to get into this, i was deputy administrator of the veterans administration in 1981-1982. had a little something to do with getting their system on track spent i've got to launch one more question. >> go ahead. >> are you in favor of closing gitmo? to you to give any authority to transfer any detainee for any reason whether that is judicial, medical or military? >> well, i support the president's position on gitmo. the reality is we have responsibility for gitmo now, 166 prisoners there now. that's where we are. so as secretary of defense, i have to assure the security of that facility and all of the responsibilities that go with that detention facility, including the people that we

have down there. and so that's my response. >> if we get back an answer to the second question, if you would please have any authority to transfer any reason judicial medical or military here thank you, mr. chairman. >> mr. kline, we will turn to you, and then at the end of your question we will take a five minute recess. mr. kline. >> thank you, mr. chairman. thank you, gentlemen for being here. i've got a question that's a little bit off of the budget, and so don't want to be guilty of ambushing any of you with this but i just want to talk for just a minute, and then ask a question about the medical evaluation board backlog. i don't know if this is something you're on top of, and so of course i will be happy to take an answer for the record. but we just got an awful problem after that's affecting our soldiers. the minister national guard, for example, now has 168 of these

medical evaluation board cases pending. the national guard bureau surgeons office report 5269 album cases, and the average education time, the average adjudication time for minnesota cases is currently four and a half years from the date of entry. that's about the national average. it is an awful situation, and for the reserve component, for the card, these soldiers have to travel for a base with is an active duty searching, doctor, medical doctor that can make the determination. it is a blow to morale. it is incredible that we have a loud the system to deteriorate in this way. and so my question is what you doing about it and what can we do to help if you need legislation? and again i'll be happy take it for the record but i don't want to let this slip by something that we have to address.

i'm astonished it has gotten to the point where you have the soldiers who are being almost literally jerked around have to travel sometimes halfway across the country to go and be evaluated and then come back and after tournament and go back again and take years to get the question answer. this affects of course the ability to be retained and it's an important part of the process. on another subject, because with it an awful budget pinch which were talked about, and we've seen the president's budget and your comment about it, i wonder if you, the osd or the joint chiefs, so either one of you, have taken a series look at the possibility of consolidating any part or all of e-15 dod agencies, or look at the possibility of combining combatant commands like north, south, africom, these commands understand what important we

created africom at a time of a lot of money and a lot of troops. the bizarre position of not even having a headquarters in africa. these headquarters take not only four-star generals but then appropriate number of lesser generals and staff, then everybody has to have their own intelligence center. and it just seems to me that now is the time to look at the. i would be interested in any thoughts at the the the have about the possibility. >> congressman, thank you. on your first question, that's unacceptable. i was not aware of the specifics that you mention. i will become aware of them. we will get back to you. we'll give you a complete answer and what we're doing about it. so on the second question, i'm not aware of any serious consideration of consolidation of command or any of the structures. now, i'm going to ask general dempsey to respond, but i would

say that as we get deeper into the strategic priorities of management review, i don't know whether your specific question to be addressed exactly the way you address them. merging some of the combatant commands, the nine combatant commands we have now. but certainly pieces of those will be reviewed in this review. let me now not using more of your time with me on this because the chairman will have a better answer. thanks. >> we are looking at the forward state which is the defensive agencies and also look at the combatant commands. battle with them but the component commands that reside under the. we are looking at the architecture in its entirety. >> thank you, and we would of course appreciate you sharing how you're doing on that with the committee as a before. i just think now is the