confirmation. >> and thank you all for being >> coming up this morning on c-span2, supreme court justice clarence thomas talks about his life and career. then bloomberg hosts a discussion on corporate taxes and regulations. later fly from the heritage foundation a look at the future of the u.s. military. >> mrs. grant was also interesting. they had this extraordinary existence. for most of their lives you list as she called him as an abject

failure, unable to provide for his own family. then in almost no time at all suddenly he was the most popular man in the country, the man who would save the union on the battlefield and then president of the united states. >> julia loved her time in the white house. she says in her memoirs it was like a bright and beautiful dream. most wonderful time of my life. so i think that gives you some idea of how much he enjoyed being first lady and how she felt that her husband had finally achieved the recognition he deserves. >> be part of our conversation on julia grant with your questions and comments by phone, facebook and twitter live monday night on first ladies at nine eastern on c-span and c-span3. also on c-span radio and

c-span.org. >> james dubik discussed the future u.s. ground forces today. here's some of what he had to say. you can see the entire event anytime on our website, c-span.org. >> with the csis study and the national intelligence conference study, and cns study driving in the dark and a bunch of others, we have several data points to tell us that uncertainty is the norm in our strategic environment. the potential for conflict is increasing and the types of conflict are most likely the kinds they can't be resold with near destructive power. the global trend studies comes right out and say that potential for multiple forms of war comes at a time of rising uncertainty as the united states' willingness or ability to be the guarantor of security. and at a time of increased

ambiguity as to the stability of international assistance. in times of such uncertainty and ambiguity with increased likelihood of conflict, we need to tell ourselves the truth, not to hold on to our fiction. strategic leaders need more options, not less and the options associate with the kind of complex contingencies that are in the csis study or the kinds of irregular warfare, interstate warfare, whatever else you want to call these things, would require more ground force capacity, not less. and, of course, we prefer at least a relatively clear redefined semi-conventional state faced a threat that the u.s. military must deter and defeat, upon which we can size our forces. unfortunately, this is not the reality that we face. we do have some potential

threats like this and we have to have the military forces necessary to do with them, but these now have become unlike the past the lesser included contingencies. the real issue is having a large enough and balanced in a force to deal with the areas of increasing risk outlined in this study, the areas of likely archetypical mission sets in the study, and others similar to them. the problem is doing so doesn't get our story. because making these adjustments they require more ground forces, not less. changes, not stability. unfortunately, reality has a way of forcing itself on a nation with mobile responsibility and global interests. certainly the johnson administration didn't want to be bogged down in vietnam. the bush 41 administration didn't want to engage in panama, the clinton administration didn't want to do bosnia. the bush 43 administration did want to fight terrorists and

nation building. and some future administration may well find itself having to do just what it does not want to do. and when they find themselves in this position enter into the military for options, decision space and time wil are not be on their side. forces is being provided to previous administrations of options, forces in potentia count much less. so the csis studies we're talking about today us was others is very clear. the varieties of confrontation and conflict that seem part of our collective strategic future may not be resolved by destruction alone. or solely by light, lisa, fast and remote military action, or by small special forces operations. the real threat, my view anyway, the real threat that we face is ourselves and our ability to deny what we need and choose

instead what we prefer. >> today, the woodrow wilson center hosts a discussion on the future of the u.s. special forces with special operations commander admiral william mcraven live at 12:30 p.m. eastern on c-span. >> it was a small airport back in the 20s, and so this military came and established a training base during the second world war. and it was very active days and it was quite an attribute to yuma, until after the second world war ended and it closed and everybody left. and the little town of yuma had about 9000 population and that was dwindling because people, there was no construction going, tourism had not been established yet as an interesting thing for yuma, and the town had not a very bright future. the population of 9000

dwindling, the junior chamber of commerce said something has to be done. we have to attract attention to our good weather and tried to get the airbase reactivated. they came up with an endurance flight because every time the flight would be mentioned they would save yuma, arizona. and yet the military interest and reactivate the airbase. so the first attempt failed and then again in august they tried again and they stated several days and they had another major problem but it was really hot. we will go up two, 3000 feet. so took a few months to get it done for the airplane and get ready-it took off on the 24th of august and they never touched the ground until the 10th of october. >> in late 1949 the future of yuma, arizona, was resting on the wings of one airplane. this weekend the history and literary life of yuma, arizona, saturday at noon eastern on

booktv on c-span2, and sunday at 5 p.m. on american history tv on c-span3. >> supreme court justice clarence thomas sat down for a conversation about his life and career at duquesne university law school in pittsburgh. the justice discussed race in america, the inner workings of the supreme court, and also give advice to law students. this event is just over one ho hour. >> the story of your life growing up is really a remarkable one, justice thomas. do you know which part of west africa your family came from, how they ended up in point georgia? >> i think they lost the itinerary. [laughter] >> no, that was in the 1700s. so i don't think anyone quite

knows anything much for those who are from the deep south, much was unwritten. the people are into their genealogy now. i have no idea of much of my own genealogy. and some of my relatives told me you don't want to know much. but the answer is no, and it's unfortunate. that is one reason why in the last few years we have tried to focus on drawing to retain some of what is left of that culture. when you look across the country, you see the fine buildings, the sandstone buildings, the beautiful architecture that is as much an effort to preserve those things. but there's another part of culture of people who are not

preferred of people who, if you had a cast it would be the untouchables. their culture was just, it was just as rich. it was just as important and just as central. but the effort to retain that or to record that is not there. so we would spend more time on aristotle or socrates, more time on frank lloyd wright, for example, but none on the unlettered. so i don't think that much time has been spent on that. if you look at the barrier islands like hilton head, that's what my family is from. some people may have heard of the term dg. that's because those of us who

were from those islands, also bar ilan is bordered on the north by the river. the same language in south carolina is known as gola. but when i went, one of the wonderful sort of slurs that was hurled my way was that i was a dg. but the interesting thing is i was proud. i was never ashamed of where i'm from. i think it's a wonderful, wonderful culture. and the people are wonderful people. >> did your family speak the gullah dialect? is o there something your grandfather would have said in gullah? >> he would always say they were pretty that talking but he spoke the exact same language. but i'm more from pin point. he was from liberty, a

plantation, basically a rights plantation. that's where we went to live, where his grandmother lived. but it's hard to really do it. let me give you something on that. it would be similar to west indian dialect. so when i went north in the '60s people would ask me what i west indian. of course, i had no idea what they were talking about. not that i travel to the caribbean or anything. i was out of georgia. but maybe, my wife aqc recently on a trip back to savannah for christmas, i was around a lot of my relatives and she said, you're beginning to talk your language again. well, anyone who is from that part of the country or from ethnic groups will know that you don't come back into that group speaking the king's english.

otherwise people will say you think you're better than us now. but there's always this very delicate balance, and that's one thing when we went north during the '60s you had to move in and out of cultures. you moved into the white culture, then you move into an urban culture, he moved into northern culture, then you went back to your home culture. you talked to your buddies one way, you talk to your parents another way. so you might be speaking three or four different light which is every day. it's a version of english but it was different language. >> we have pittsburgh easier. >> i noticed that. [laughter] spent i wasn't going to say anything. but i'm willing to bet you that you just can't immediately start talking sort of your pittsburgh these, but if you're in a conversation with friends you grew up with, you kind of speed if my wife is nodding her head. spent what language are you

talking. you know, i've always been kind of just, just so respectful of those people who spoke that. i still, i love it. i love going over as soon as across the savanna river its, finally i'm home. and, in fact, when i stopped in washington, d.c. i was going to stay a couple of years and go home. i only went, i only went to law school to go home. so finally i was going home and i've been stuck in this place for 30 plus years. it was kind of odd when people would try to prevent me from going on -- what do i care? >> justice, we are fortunate to learn about your home life in georgia through your memoir, my grandfather's son, which is really a very, very touching book. tell the audience for your grandfather was and what he meant to you and why did you

write your memoirs? >> i think i just addressed the last. i think the film did a pretty good job of capturing that pakistan would like kind of embarrassembarrass ing the situation to watch all that stuff. but first of all i did not want to write a memoir. but people have a tendency to re-create us in public life. and i think i owed it to my grandparents to leave a record, and the people around me, all the people who made up this wonderful world that we somehow sweep over because we have to have a narrative of how terrible it was. these were good people who tried to lead you to live a good and decent life. i told my wife, iowa to them to leave a record.

my initial plan was just to record it and leave it. to leave it in my papers. i still have the entire manuscript. the book is only about 40% of the manuscript. my point, it was only to leave an accurate record. now, eventually i was told that it's probably good to put it in the form of a book. then i made the fatal mistake, i signed the book contract. that is sentencing your own self. i mean, it's like i sentence you to a book contract. that was really, talk about an eighth amendment violation. [laughter] and once i get started it was very, very hard because i fully believe you sit, and it was two pages a day, like everything you do. it's like a homer, you push yourself, you push yourself having to relive it, having to think about things you haven't thought about in years, having

to trudge up memories of pain and thing to put on a piece of paper. i didn't go around with all that about my life. you live your life. you give it your best shot. and there are things, we've all said, there's not a person in this room that hasn't said it, i just want to get it behind me. i'm through that, i'm going to put behind it. >> some judges say that about writing their opinion. >> but we will resurrect it for you. you just keep riding that. we will help you with that. [laughter] >> let me ask you, let me ask you specifically about the nun said saint benedict were you educated what did you learn from them? >> oh, my goodness, life. the first thing, sister mary was my second grade teacher. i've been blessed to know was it because i had a chance to go

back and thank all my teachers, as many who are living, and to have a totally separate life with some of those who had kind of terrorized me a little bit. but also the ones who are just so sweet to me like sister mary, my seventh grade teacher. but my second grade teacher, i never did make contact, i don't think she took her final vows. but sister mary said in 1955 when we arrived at saint benedict's, she said she made the whole question, 40 little black kids in and i don't know, those who are my age remember the little wood and cast iron desks that you lift up and little things inside. you sa said two by two, little y desks. and she made a stand and repeat in unison why did god make you. god made us to know better and serve him in this life and to be

happy with him in the next. and through all the philosophy, existential bliss, nietzsche come you come back in life to what sister mary said, why are you here to but what the nuns also taught, they made us believe that we are inherently equal, and that was a mainstay, something you see me repeat over and over. we were told under all circumstances, we were inherently equal. and that was in the face of segregation and theories that said or suggested we were in for your. but they held us to this day. those who are old enough and he went to parochial schools probably remember those twice the national catholic exams. they would these achievement tests that you took at the end of each commute took them in december and again in may.

and those, they measured where you stood with the other schools in the catholic schools in the nation. so the nuns held our feet to the fire. my favorite non, and i want to say this, i know you want to ask other questions, but sister mary, my eighth grade teacher is probably the toughest. she is still alive but not doing very well. she is in new jersey at the retirement home. when i was in 1962, i perform very well on the high school entrance exam. i've always done very well academically. that's a blessing. that's god's gift. and when she saw how well i've done, she looked me in the eye and said, you lazy thing you. and she was right. i was kind of sliding by on horsepower and no work. and i never forgot that, that she had called me out. but then fast forward to 10

years ago so, i was there actually visiting her with a dear friend of mine who is a graduate, undergraduate of duquesne, mark, who probably knows more about my confirmation and done more than anyone else and is a very, very dear friend. i met him through tom who graduated, again, again, a wonderful man who was ambassador to the vatican and was with me in private education. but we were there with sister mary, and she was, she's in her 90s at the time, she still lives, she is going through a little item in her room and she said, when i die this goes to the sisters, this goes to my relatives, this goes to this person. and then she took this photo of the two of us, and she did this to her chest, put it to her chest and said this goes in my

coffin with me. and you become very quickly the kid that they're pushing to grow, suddenly becomes their child. and she, to say that this photo that is just a buzz is that precious that it will go there where she is to lay. >> they made you take latin of their i understand. you were pretty good. you one a latin beat, correct? >> latin was a torment. spent my children might speak the only plan is to remember is -- always wear underwear. that the on thing i was able to retain. [laughter] spirit oh, boy. [laughter] spent i went to a catholic school. that's what i learned spent oh, my goodness. i can't believe you just said that. [laughter]

>> as i sit here i see virgil just spinning in his grave. [laughter] >> i was going to say -- spent but at any rate, i was required, in the old days -- i was in the seminary and you had to learn latin. so i repeated the 10th grade when i won the seminary to take latin. so it, it was very, very aggressive, quite difficult. but i took latin, three years in high school and one year in college. my only regret about that regiment is that i didn't take greek. i would not come if i had to go back to school, i would not, i do not think that i took enough steps. i would take greek. i would probably take more music. i would probably take more mathematics. i was very good at scientists, but i would probably take another couple of courses in physics or chemistry.

i just think that rigorous education, and the people who required me or required me to educate myself, or prevented me from avoiding education, are just fabulous in what they helped me do. because they forced me to be educated. people don't run out and say oh, let me take latin. you say you are required to take latin. you are required to take philosophy or math. you are required to take metaphysics or your required to take ethics. that's what i got at all across. i just, i suppose i thank god for the people who knew better than i did and required me to do better than i would have without their advice. that is to meet the beginning of my education. and out of that they taught me, they gave me the tools to love, to further educate myself, to read more books, to think about things, to be willing to listen to people who are thinking about

things. and to continue that education process. so latin, latin to me was just like a spelling bee. you stand around the room. they throw things at you and the last person but back then there was just faith in this article of faith, if you're given a chance to go to a white school that we could do as well as whites. all we needed was the opportunity, and we could hold our own. to him, this was proof positive because i was the only black kid in high school for two or three years i was there. this was in the mid '60s. so his point was, this is exhibit a, proof, that we can hold our own any place, anywhere, or anywhere, anytime. and so it was important to it also was encouragement to the few people who are at those meetings that their efforts were worthwhile. >> and holy cross was a critical

aspect of your education, certainly making the difficult transition up to massachusetts. you talk about that and it was a difficult time in america. you describe yourself in the book at that time as an angry young man. what were you angry about? >> same thing that just what every other black in the country was angry about. we had a problem, a lot of problems, race allies. and the question was how do you respond? how deal with it? when you're done with that you deal with things by what? you lash out, you criticize, you say things to people, you do it the way with a lot of emotion. and a lot of passion. i think one of the values of being educated is that you figure out where do you channel the passion. one other ways of maturity, how do you deal with difficult things, in a way that is constructive as opposed to the

way we dealt with things? >> as all the judges in the room and the lawyers know, we are still suffering with a lot of angry young men who find themselves in the criminal justice system. do you have any theories as to what the chief contributors are to that, that national problem that we have? >> you know, i started my career in washington in the early 1980s, pointing out something that really bothered me. it was out of the 1980s and it was a breakdown of the black family. it's not because i do solution to i'm not one of these people who tries to stop a theory. i don't do that. i don't claim to be god or anything. but something said in those numbers that there was a fundamental change afoot in the structure of the black family. and the one thing that was

stable even on an extended basis in many neighborhoods was at least you had a family. a lot of other problems, your family. but one that was gone, what were you left with? another thing that really bothered me as i looked over the years, in the early years, was the penetration of drugs in our lives. of addictive drugs. virtually, when i read, and i've been reading about 9000 a year memo's, 9000 a year for 21 and a half years, and there is a steady, virtually every crime is drug related. virtually every crime, and from your work both as district judge an appellate judge you see these young people, no family, no

education. we pointed out those numbers back in the 1980s. we saw in the 1970s. but one of the things that's happened is that if you don't toe a particular ideological line or a particular uniform narrative, then you are not listen to you or your actually castigated for pointing out that the family members were not good. i was then castigated as blaming the victim. i have no idea what that means, but it was a way of dismissing the obvious. we have a problem. do i have a solution? know. i think with any solution you have to actually set up a problem. you have to be as willing to say what it is and then try to deal with it. we go to the doctor. the doctor you want to have an accurate diagnosis so that he can have a constructive and positive prognosis.

so anyway, i don't have any of those solutions. my heart is broken because i worked in the inner cities and we have been trying for my entire adult life to tell people just be honest with people about it. they came in our neighborhoods with urban renewal that was going to fix everything. look at our neighborhoods. they came in with this program and that solution, and this and that, all these theories, all these programs. i go back home to my neighborhood. as soon as i drive in, my heart is broken. because when i grow my neighborhood was safe, i could walk to school, i knew everybody. you walk down the street, good morning, miss gladys. how you doing? how you doing, mr. miller. everybody. as we just sit back then, we were poor but proud, you know? i would want to the 6:00 mass,

three quarters of a mile in the inner city. who would walk, let a little kid today, walked three quarters of a mile in the inner city to serve at the 6:00 mass? okay, if you can't do that how has it improved? i'm not getting into the very complicated, just ask a simple question. i could walk to serve the 6:00 mass, catholic i with my green u.s. bookbag gone and nobody ever bothered me. can you do it today? something different, something is happen. so i don't have a theory, but it do know that we should at least fess up and say something is wrong, and then deal with it and not turn it into some political fodder, but turn it into something else. >> let's talk for a second about your time at yale, because you've been open about talking with us, justice thomas. to this day i think he still have his 15 cents -- 15-cent

cigar sigir on your diploma but why did you put that sticker there? why was your experience at that time unsatisfactory? >> first let me just say that i probably should have been more respectful of my years at yale, because i took a lot of positive from yale pictographs and disappointments? yes. the sticker probably less to do with my experience and then what i thought yale would mean, and how people would perceive it. that there is, there are these assumptions that when you graduate you're at a certain level. and, of course, i think we should be realistic that they were discounted and we know why they were discounted. and that was, the 15 cents was put there because i couldn't get a job with it. but, you know, it's hard to be upset when -- my grandmother used to say god -- some doors

close and god opens other doors. how could i complain? yale is, with all these things, i know that my experience at yale were mixed and have a deeper appreciation for that now. and i probably should've expressed that early on. 15-cent sticker was put there out of frustration. i graduated from yale. i have been editing are supposed to do and i couldn't get a job. how would you feel? you know, i had a wife and kid and i student loans. i was very frustrated. and yale didn't make it better by being so political years later. >> one thing you wrote later in a case called jenkins come and apply to to comment on, you said you wrote quote it never ceases to amaze me that the courts are so willing to assume that anything that is predominantly black must be inferior, end quote. would you comment on that?

>> well, i think it speaks for itself. it's true. i went, schools were closed because people -- i didn't need any of that stuff. i went to all black schools. i lived in all black neighborhood. i had a wonderful life in those neighborhoods. you know, people think you're making it up, oh, you are trying to paint the south anyway it wasn't because they have a narrative. i was moving back home when i stop in d.c. so with all my confusion i still wanted to get back. my high school was not inferior. my neighborhood was not inferior. my church was not inferior. my family was not inferior. i have never believed it and i never will. you know, and i don't think you need to start from the premise that if something is

predominantly one group or another, that you can make these broad assumptions about whether or not it is inferior. if i were to ask you today what school, what university produces the largest number of black doctors or black going to medical school, which school would you say? is xavier. it is xavier. and xavier has come is predominantly black school. president norman francis there every year, people should ask them how do you do it to? >> were you thinking, when you left the seminary was it on your radar screen to go to a historically black college? holy cross is quite a far cry from that. >> yes, i was done with all white schools. i was angry. i mean, it was 1960.

dr. king had just been assassinated and i was done with it. i understand people's reaction when they're angry. i was angry. and i got home and my grandfather, being my grandfather, kicks me out of the house. so the only school i applied to by then was holy cross. holy cross, holy cross saved me. i was going to go to savannah state college student and that was fortuitous based upon your catholic school upbringing, or how did that holy cross connection -- >> it was based, again, mythmakers have come up with all these theories. it was because my chemistry teacher called a friend of mine who was already at holy cross and told him to send an application. and out of respect for the i took about an hour and filled it out and sent it in. and then i got accepted. the reason i got accepted is because i had almost a straight average. and then the mythmakers came up

with this think i was recruited. i was not recruited. >> and speaking of mythmaking, when you go to washington with the senator and your career takes off, did you set out to be politically active? did you say to yourself, hey, i may have an opportunity as a young conservative and get an appointment to move up the ladder? >> first of all, i never called myself conservative. that was another put down in the 1980s when they started naming as black conservatives to show that we are sort of like, you know, some bio thing that occurred. but we didn't call ourselves anything. we were just people trying to think about the very difficult things and offer a point of view. but suddenly there was a prescribed point of view.

i always found that fascinating that if people were told they could only go to one neighborhood, that's rough figure told the only go to the schools, that's wrong. but then it's okay to tell people to think certain things. it's bizarre. but at any rate, i was never politically involved. i don't like politics. that's another thing. i think about things. i think about philosophies or ideology or things that happen in society. i don't like politics. i don't know how you can tell somebody something is obviously wrong and you make them believe it. and i also don't like -- [laughter] [applause] >> and i certainly was not republican when i came to d.c. i became a republican to vote for ronald reagan. i was a registered independent, but that was about it. i voted in moscow. in college i voted at 18 because

i was george. i voted for humphrey in 1968, and mcgovern in 1972. and i thought they were too conservative. [laughter] >> it was again trying to think things through. i was more of a libertarian. i was trying to figure things out, but people were telling me that you're black, we already have the views, you're not supposed to read ayn rand. you're not supposed to think about things. that's bizarre. why did we go to school? does give us our list of what was supposed to think, save us a lot of time and we just read -- what i supposed to think today, you know? >> you went from humphrey to reagan. should we anticipate some future -- >> no. no. i know, i actually returned to the way i was raised. i went from, if you want to look at the transition, it was a

deviation from the way i was raised and a return to the way i was raised. because my grandfather said when i was involved in all sorts of radical things in college, boy, i didn't raise you to be like that. i didn't raise you to be disrespectful, to be uneducated, et cetera. and he would literally, when i would come home, talking as he called it nonsense, he would get up and leave the room because i was so far off the charts. in his mind. >> and before president bush was elected, had you ever envisioned yourself as a judge? >> all god, no. a judge is the last thing. i didn't envision myself living in washington. i think you are called, those of us who are former seminarians, and people were seminarians, former seminarians are priests or religious, they understand what i'm saying. you think you are called to do

certain things, and when you are called you're supposed to do it. and you just, so i would say to myself, just don't call me. [laughter] and then the president calls you, dick thornburgh, two of his aides calls me in 1989. i forget that you, they were his two top aides when he was attorney general, and asked me to have breakfast to talk about the administration. so i did. at the end of that breakfast is that some people are interested in you being a judge. that was the beginning of the process. i believe when you, when you are called, the president calls you to do a particular job and it's the right thing, you are to do it. and if i had to choose what i wanted to do, no, i would not do this.

>> do you have a dream job? >> i wanted to be a priest. >> well, after you left. >> no not really. my wife and i talked about it, prayed about it. you could make lots of money. i could've made a lot of money. i could've done lots of things, but i didn't want to do that. i didn't go to law school to make money. i didn't go to law school to be famous. i went to law school to go back to georgia and do what i wanted to do, be a priest but i just wanted to go to my neighborhood and be a leader. i'm one of those people, a young woman said yesterday that people said she's nice. i'm probably naïve. that's why i'm still, you call it idealistic, naïve, whatever. i'm naïve. i still believe that you do well in order to do good. and when you have a chance to make our decisions, if you're called to do it, you are bound to do it. you must do it.

you don't have that choice to wimp out spent and on that topic, justice thomas, obviously when the controversy erupted with the anita hill statement, that was a really difficult thing for you, for your family. did you ever consider just withdrawing to make it go away? >> i have never run from people i consider, circumstances i consider bullies. i don't believe in that. never, not on the basketball court, not playing sports, not in my neighborhood. you're supposed to stand your ground. it didn't make any sense to me. you're going to do all these things because you don't agree with me, and thank goodness the people in the country are better than the people who claim to be better than everybody else. [applause] >> soon after your swearing in at the white house you had the opportunity to visit with justice thurgood marshall.

can you share with us some the things you spoke with him about? >> you know, i think the dean captured that in the film, but justice marshall was a delight. you know, it is really interesting when people have these narratives about public people. and you actually get to meet that person. the man was a delight. and he sat, it was supposed to be a 10 minute meeting. it lasted for two and a half hours. and anyone, if you know him, he would regale you in stories. ..

>> when supreme court justices are nominated, the only people who never say anything about what justices are supposed to do? the only people who never say anything are people who have done the job. nobody who's done the job presumes to tell anyone how to do it. it is a humbling experience. i was looking at those pictures of me when i was nominated. look what this job has done to me. [laughter] it is, you crawl away from it. it is, you are, you do not presume to tell anyone else how to do it. and he told me exactly the right thing. i did what i had to do in my time, and you have to do what you have to do in your time. >> did he, did he tell you anything, though, about collegiality? one of the media narratives is

that when these justices come down with 5-4 decisions in some of the more hot button cases, that there's tremendous acrimony, etc. is the court a collegial place? has it always been the same in that regard during your tenure on the court? >> um, i can't -- i can only speak for my tenure. for those of you who have been to the court, well, actually for those of you who haven't, the walls in that building are masonry, and they're about that thick. unless they have an insight or -- that i don't have or an inroad that i don't have, i've nod seen all this acrimony. when you make hard decisions, of course, there's disappointment, there's probably, um, you're exasperated. but i have not seen all these fights. you know, at the end of last term i read someplace where

someone said that justice scalia was yelling or making noise or something, everything but banging the walls. well, he's my next door neighbor, and i saw him. he was doing fine. [laughter] you know? he's probably, he's a hunter. he's probably figuring out some way to go kill some unarmed animal. [laughter] but he's -- you know, yeah, you're disappointed. it's a hard job. but i have not seen all this. i mean, the worst that i have seen has been in the opinions. the edgy opinions. that's about it. but, no, i have not seen it. i mean, there are times when people get upset because i think people work hard, they feel strongly about their opinions on these things. but how many of you, put nine of you in a room with very differing views and pick any hot button issue. pick any of them. pick abortion. put you in a room, you have differing views. how long do you think you all can get along? yeah. well, throw in some more issues.

just keep throwing you more and more hot button issues. see how long you can survive together. and the thing about it, people can't sit in the room and talk about it, and they're not even making the decision. they just have an opinion. they storm away from the thanksgiving dinner table, storm out of the restaurant, stop speaking to each other, and they're not even making a decision. they just have an opinion. so the, but the people in my court in my time at least think that the constitution, the country, the process, the court much more important than they are. and that they somehow keep it together to decide cases appropriately. and to get along with one -- with each other in a civil way. >> are any of the justices particularly close friends? do you have any -- >> justice scalia and justice ginsburg are very, very close friends. i tend to be more of an introvert and stick to myself.

i come in early and probably leave in the afternoon, work at home. justice -- i'm close to justice scalia. he's a friend. not nearly as close to him as justice ginsburg is. they're very, very dear friends. i think justice o'connor and the old chief were very, very close. they went to stanford together. but, you know, i think people are very respectful there. they're very kind. but people have different schedules and different lives. you know, i like opera, but i like opera on the radio, so i don't have to go. [laughter] see, some people like to go to the kennedy center. i'm a nebraska cornhusker fan, so there are not a lot of those around. [laughter] i have to sort of fight for my rights up there. i like a lot of sports with by kids. i'm very close to my law clerks. i'm very, very close to my wife. so if it requires that i leave her to do something, that's a

nonstarter. >> and did you ever expect to see an african-american president during your lifetime? is that something you thought would happen? >> oh, yeah. i guess i've always thought there would be black coaches, black heads of universities, maybe again, as i said, i'm naive. but the thing that i always knew that it would have to be a black president who was approved by the elites and the media, because anybody they didn't agree with they would take apart. and that will happen with virtually -- you pick your person. any black person who says something that is not the prescribed things that they expect from a black person will be picked apart. you can pick -- don't pick me, pick anyone who's decided not to go along with it. there's a price to pay. so i always assumed it would be somebody the media had to agree with. >> have you met president obama? have you had a chance to speak with him personally or just in passing?

>> well, in passing. i mean, he visited the court. it's not like i don't -- i don't do a lot of washington, so -- i'm not a -- i'm not into politics. there's not that many -- i shook hands with him. but, no, i've had no in-depth conversations. >> was that a courtesy he was -- >> all the justices president clinton did it. we were at yale together, so i kind of knew him a little bit better. but the, it is in recent years, yes, they stop by. the president-elect, and shake hands with the members of the court. and meet us as a group. >> do you see, obviously, you and president obama have a lot of different opinions on things. do you have any common ground on things with him that you could share with us, or -- >> i -- [laughter] >> do you want to take the fifth? that's okay.

>> we're in a different -- you know, that's hard to say. it's like what common ground did i have with president bush? 43? i mean, i'm not into politics. i don't like politics. and i try not to -- i do my job. i have common ground with some of the appointees, say with justice ginsburg or with justice kagan. because we're doing the same thing. but as politics, i just don't do politics. i don't like politics. so the -- >> do you eshoo it intentionally in terms of media and things like that? one thing i've found is a lot of judges just don't keep up with the news the way they did when they were practicing law. >> i just don't like politics. [laughter] i mean, i'm just done. i don't like politics. [laughter] i like history, i like things of substance. i don't understand politics. i don't understand scuba diving, you know? when i think of scuba diving, i

think of drowning. [laughter] so i'm not against it, i just -- that's not -- i'm not going underwater. [laughter] >> well, in a minute we're going to ask some questions that have been supplied by students. i do want to ask you this, though, justice thomas. all of the current justices on the court attended elite, ivy league law schools. do you think it would be healthy to have a little of that kind of diversity with some justices from smaller, less elite law schools like duquesne university or something like that? [applause] >> well, you know, i -- finally, you're on things i really like to talk about. [laughter] the, um, i agree with that. i think we should have people from other law schools. it's all harvard and yale. and justice ginsburg graduated from columbia but also attended around saturday. they are wonderful, wonderful

people. you couldn't ask, they're just really talented, good people. but i do think there are more -- i've been all over this country, and there are more people, there are smart people. the this school was started for immigrants. it's like holy cross college. there are people, there's something valuable about these people who are, they live in these little neighborhoods and work their way out. i tend to hire kids from modest backgrounds and from the smaller law schools. as i told you earlier today, my lead law clerk last year was from lsu. i've had clerks from rutgers, from george mason, from creighton, georgia. i like clerks from modest backgrounds. i'm from a modest background. i truly believe they're special. kids who for some reason keep at it every day in spite of the odds, get up every day. nobody gives them a break, but they keep going.

something special about that kid. this past weekend i'm very much involved with the organization, horatio alger association, one of your students was in that. these kids come from very bad circumstances, and yet their grade point average, as a group the 107 scholars we pick is like 3w.97 or something. some rarefied grade point average. and these kids live in homeless shelters, parents are drug addicts, some of them emancipate themselves. now, what kind of resolve does it take to keep going? so, yeah, it would be wonderful to have some of those kids eventually as members of the court. and i think they would have a different perspective and add manager to the court. >> speaking of duquesne, as you know, the school was founded and run by the priests. you mentioned in the book that you frequently prayed to the holy spirit when you were faced with difficult and challenging times. why was the holy spirit

important in your life? >> well, it's kind of hard for me when you say the priests, i always thought of them as the hole wily ghost fathers. [laughter] -- holy ghost fathers. i'm trying to be moderate. really, i'm not trying very hard, to be honest with you. [laughter] although i do have an ipad. that's only because it was foisted upon me. [laughter] but the -- i just think, i'm one of these people who still believes that it is through grace that you do lots of things. and that it is -- my grandmother, when i would go home and i was angry and upset and fighting with my grandfather, and she'd just pull me aside and say, son, say your prayers. or say i got this big problem, she'd say, son, turn it over to the lord. and that was it. it was always, it was always the same answer. and i really mean it, i wasn't being glib when i said to you i didn't have any political transformation. i just went back home.

the if you just read my book, you see that i add eshooed the legacy they were giving me, and i simply went back and embraced that legacy, and a part of that is what we do and the way we do thing and the faith we have. and a part of that is, of course, the trinity. so you say let the holy ghost speak through me. you know? we always think that we're infused with that. i was at mass, the feast of the assumption which was oddly celebrated on monday. i think it's usually march 25th. but it was -- anyway, i was there, and the theme of the homily was humility. that we have to be humble. to receive this. and i think it's very important. and so -- and the way that we do things. so the -- i can't, that's about as deep as i can explain it, but it's just all very important. >> and we have a few questions from some of the students, justice thomas.

so i want to read a couple of these. the first is from christy gamble who's one of our all-star third year day students, and the question is: did the court's recent decision upholding the affordable care act produce any hard feelings among the justices since there was such strong, differing views on the subject? >> no. [laughter] >> okay. we'll check that off the list, christy. [laughter] >> it was not. you know, it would be enormously prideful and presumptuous of me to assume that i have the right answer. i have an opinion. i do not have the gospel. i give it my best shot, and that's the way i approach the job. i tried to be candid with you and say, yes, you get exasperated. but was there hard feelings? no. i don't, i don't have hard feelings about a lot of things.

be i was going to have hard -- if i was going to have hard feelings, it'd be mostly on race issues, and then you wouldn't even let me in this room, okay? that's the reason why we offload these things. of i don't have enough, i don't think that it is appropriate for me to be angry with people who have a different opinion. if you read my dissents, i always say i respectfully dissent. i respect your right to have a different opinion. in this society, think about it, much of the things -- i just read whenever something's said about me, all these people, most of them white, assume that they know what i'm supposed to think because i'm black. isn't that odd to you? they're presumptuous enough to be upset with me because i don't think what they say i should think. isn't that the most bizarre thing you've ever heard? and i'm certainly not going to follow that and be presumptuous enough to say i disrespect

justice ginsburg or justice breyer or the chief justice or whomever, justice scalia, if they disagree with me. i respect their right to have a different opinion. >> and this question, this is from warren galey, a second year student i see right there and -- >> are you outing people? >> yes, i am. [laughter] they're in my common law class, so that's okay. but this one is always asked. the media has made a big production about your not speaking in court. recently, a two second comment you made during oral agent made national news. [laughter] what's your philosophy about the role of justices at oral argument? >> well, first of all, my philosophy about the news is never watch it. [laughter] so this is the first i've heard about that. so thank you. [laughter] i really don't follow much of this stuff. i think that we have become a cacophony. and it's okay for -- when i first went on the court, there would be a series of questions

by one member of the court. others would listen as that person asked a few questions in succession and had a series of mini conversations. that is helpful. and it also allowed people a different -- each to have a turn to talk. today it is just, my goodness, everybody's got a question. you know, i don't have questions about everything. there's some things you let go. but i just think there are too many questions. i think that we have capable advocates, and we should let the capable advocates talk. >> that's rather old-fashioned view, isn't it? i mean -- >> well, the 1990s. [laughter] >> it is true. for many years there were far less questions. >> oh, yeah. so, and did we somehow make it um possible to judgesome. >> i mean, has the whole tenor of oral argument changed? is it more of a show now? i remember being a student at georgetown in the late '80s, and you literally could walk to

the court with your scene jeans, a t-shirt and book bag and walk in and listen to a couple of arguments. now when you go down, there's a mass of humanity there, it's all very formal. is that a cultural shift in the court's argument? >> i've said enough. [laughter] i do not think what we're doing is necessary to decide cases. if you go to argentina, we were there visiting their supreme court a few years ago, and the members of the court said they decide -- i think, i'm just using the numbers that i remember, i could be wrong -- a couple of hundred cases a year. and they have, i think, two arguments a year. they have two oral arguments a year. so if you look at the courts of appeals, you're on the court of appeals, how many of -- what percentage of your cases are decided without argument? >> about 75%. >> okay. i rest my case. >> a very judicious argument. >> a second year student, matt

mcclelland asks, you mention in your book you often prayed to st. francis. whenwere you surprised when thew pope chose francis as his name? >> i'm more surprised by the latter than the former. [laughter] that's why i don't say anything. [laughter] sometimes i can be pretty much of a smart aleck. that's what got me on the national news. [laughter] anyway, no, i'm not -- i don't know. i don't keep up with these things. i'm just glad they seem to have a good man as pope. i don't know. i just, you know, i just go to church. [laughter] >> here's a question from bridget daley, a third year day student. without discussing the merits of the same-sex marriage case as just argued in the court, do you believe that this is the sort of issue that the supreme court should be tackling rather than the legislative branch or the

states? >> i'm not going to say anything about that. [laugher] >> a for effort anyway. [laughter] >> i shouldn't -- there's to way i can comment on that. [laughter] not be back in the national news. [laughter] >> well, okay, let me try this one. >> nice try though. [laughter] >> how about this one? you live in virginia and are married to your wife ginny, a white woman, and in loving, virginia, the supreme court struck down a law that prohibited interracial marriage. was the court correct in wading into that issue? >> if you read the court's opinion, it is clearly a racial classification case, and that's pretty much it. i mean, the -- if it's a racial classification, it's a racial classification. and i've tried to if you go back and you look at some of the things i've written, i've tried to talk about racial classification. we've got to be really careful, because some of the things that we're really comfortable classifying people by race, why?

because we like a particular classification. well, some people particularly like the racial classification of segregation. and this was yet one more racial classification. and if you go back and read the opinion, it's just -- and it just says, the opinion says this is right at the heart of the fourth amendment. i know this is leading, this is trying to lure me -- [laughter] >> that's what we're training them to do, justice thomas. >> oh, yeah. but, you know, i've been doing this a long time. [laughter] you know? you grow up in the inner city, you hear a lot of guys, you hear people try to sell you a lot of stuff. [laughter] >> justice thomas, as you mentioned and as those who read the supreme court's opinions know, you are an extremely polite dissenter, is certainly perhaps the most polite

dissenter. in a case called kilo involving property rights, you wrote the following: something has gone seriously wrong with this court's interpretation of the constitution. though citizens are safe from the government in their homes, the homes themselves are not. that struck me as more strident than the typical justice thomas dissent. was that a case that you felt particularly strongly about? >> i said "seriously awry." not seriously -- >> with -- awry. >> yeah. [laughter] i'm just nitpicking. no stronger than other cases. i just think that, you know, i took a lot of property case law in law school because property is for poor people, it was something you did have particularly in the south. so i tried to understand property and takings law.

who do you think would be most vulnerable in takings cases? a well-heeled real estate lawyer? a well-connected businessman? or a poor person? where do you think they would build a highway, through a poor neighborhood or a rich neighborhood? where do you think they would build, let people have an industrial development? i think that we should be very, very careful with words that change when use becomes purpose. what's a purpose versus a use? a park is a use. can a purpose be a bigger tax base? can it be beatification? can it be urban renewal? and you're taking people's property where the constitution uses the word "use" and not purpose. and what i was trying to say is something's wrong. something doesn't makeceps.

make sense. the, so i, you know, it wasn't meant to be, i wasn't angry. i didn't personalize it. i said the court. something's wrong with what we're doing. and it is, again, that lady, mrs. kilo, she didn't have anything. she live inside that house. you -- lived in that house. you say, and you were talking about croatian neighborhoods. this lady and that family live inside that house for 100 years or so. that's all she's got. so i think if it doesn't protect her, who does it protect? >> well, we'd like to end with another question from a student. this is from lindsay fause, a first-year day student. i think it's a great question to end our session with you on. she asks, what do you tell young men and women who are entering the legal profession today? >> oh, my goodness. [laughter] you know, the world's different from when i started out, and i didn't even have good advice for

myself. the, i try to give advice to my law clerks and to just try to tell them, look, there are going to be challenges out here. i certainly had my share, and i can't claim to have reacted in an appropriate way a lot of times. i was very negative and very cynical. i listened to a lot of the wrong people. and wound up being not constructive or positive. and i just encourage them that no matter what to try to remain positive and try to remain, remember why you went to law school. i can still remember my, sitting on my 30th and 31st birthday in st. louis cataloging why i went to law school and what i wanted to do and eshooing the things that weren't appropriate such as i'm in it for the money and looking at the dreams i'd have.

so i'd just say write down why you went and try to remember that. try to remain positive and pass the bar exam. [laughter] the -- anyway, i know they're going to give me the hook, but i know c-span p won't mind. they'll just cut you off. [laughter] i just wanted, first of all, i want to thank you all. and i want to say to the students that sometimes when you get a degree, you really don't know what you're going to accomplish. and i mentioned the young man, i mentioned tom malady. tom malady introduced me when i was at eeoc to a young man, another graduate who was a student here at the time, mark. mark would then go on to be absolutely the key and

instrumental in my confirmation. he is the person with whom i spent the most time during the most difficult times. he was a kid who was educated here. whoever educated him, whichever professors educated him, whichever professors dealt with tom malady, i want to congratulate you. the product of your work, the honesty, the energy, the integrity is all embody withed in this young man -- embodied in this young man named mark. and i want to thank you all for inviting me here today. i don't do as many speaking engagements as probably i should, but it is an opportunity to speak to people who understand why we do well in order to do good. and i really encourage you to continue thinking that way and doing things that way. so thank you more putting up with me this afternoon. [applause]

>> today on c-span2 the heritage foundation hosts a discussion on the defense budget and the future of military readiness and u.s. security. you can see it live starting at 11 a.m. eastern. at 1:30 p.m. eastern, goldman sachs' ceo lloyd blankfein is the speaker at the investment company institute. we'll bring you his remarks on the global economic outlook live here on c-span2. at wednesday's white house briefing, spokesman jay carney was asked if the administration would go back to gun legislation. here's what he had to say. you can see wednesday's briefing and other white house events on our web site, c-span.org. >> senator kelly ayotte had a confrontation at a town hall

meeting with a relative of a santorum of the sandy hook massacre. jeff flake, senator from arizona, posted on his facebook page because of his gun control vote that his popularity is roughly the same level of that as pond scum. do these statements give the white house any confidence that you may be able to go back and pass some kind of gun control legislation in the coming days, weeks, months? >> i think what we have seen is that americans out there who, you know, engage on an issue, who feel passionately about an issue and feel like it's the right, common sense thing to do don't appreciate it when their representatives disagree with them. and when i say "them," i mean 85% of the american people. and vast majorities of the constituents of arizona or new hampshire, virtually every state in the country. what the president made clear in

the rose garden after the background checks vote went down is that americans who are disappointed by that action, by that failure of the senate to listen to the people they represent need to speak up. because in the end, change comes from the bottom up. you know? congress acts when the people they represent insist on it. and, you know, when there are entrenched interests that oppose action, it's all the more important that average citizens make their voices heard, that they speak up, that they hold their leaders accountablement -- accountable. and, you know, i wouldn't want to predict at this point whether that means, you know, we'll get this done sooner rather than later, but we will get it done. because it is the right and sensible and common sense thing to do. and the american people overwhelmingly support it. >> this administration will get

it done. >> i think that is absolutely what we're going to try to do. you know, i -- you know, this president made clear that we are in round one, and we're going to push, and we're pushing now to get it done. somebody asked me the other day, well, won't you wait until after the next elections? and the answer's, no. we're going to keep pushing. and it will get done because the american people demand that it get done. but it requires the voices and the participation and the engagement of average americans, especially in a situation on an issue like this where we're dealing with entrenched interests that don't represent the majority but have, you know, powerful sway in congress. >> it was a small airport back in the '20s. the military came and established a training base during the second world war. and it was a very active base, and it was quite an attribute to yuma until after the second

world war ended, and it closed, and everybody left. and the little town of yuma had about 9,000 population, and that was dwindling because people were, there was no construction going. tourism had not been established yet as an interesting thing for yuma, and the town had not a very bright future. with a population of 9,000 and dwindling, the junior chamber of commerce said something has to be done. we have to attract attention to our good weather and try to get the air base reactivated. they came up with an endurance flight because every time the flight would be mentioned, they would say yuma, arizona, and get the military interested in reactivating the air base. so their first attempt failed, and then again in august they tried again, and they stayed up several days, and then they had another major problem. and it was hot, you know? it's really hot here. people said you're not going to try -- oh, yeah, we'll go up to 2 or 3,000 feet, we'll be where it's cool. so it took a few months to get

parts and repair the plane. they took off on the 24th of august and never touched the ground until the 10th of october. >> the future of yuma, arizona, was resting on the wings of one airplane. this weekend the history and literary life of yuma, arizona. saturday at noon eastern on booktv on c-span2 and sunday at 5 p.m. on american history tv on c-span3. >> now, a bloomberg forum on the federal deficit and the economy. this panel examines the effect of regulations and corporate taxes. speakers include former cbo director douglas holtz-eakin and former faa administrator marion blakey. this is 40 minutes. >> for the last session. we have a great panel here to wrap up the day, and i want to start where we left off in the

last panel, on sequestration. you can't talk about corporate tax reform without discussing its link to deficit reduction and the budget plan going forward. marion, can you connect this dot for us together with sequestration and the role of corporate tax reform? >> well, i think as the governor laid out pretty clearly with virginia as the specific, but taken to the national level no question about the fact that we are in a federal budget and a fiscal crisis that has to be addressed. but, boy, i'll tell you, talk about the worst possible way to do it, and that is the sequester. because if you take the kind of numbers that the governor used for virginia -- and, grant you, they are a big defense state, one of the top ten. but you take it across the country, and we're talking about the loss of 1.5 million jobs. knocking 25% off the growth in the gdp. i mean, this makes to seasons.

and one of the things that i think we have to understand is it's taking a while for the sequester to come into play. but the fact is the bigger companies are still resilient. we do see that on wall street right now. but the small companies are already taking it in the neck. and that we're seeing all around the country. and that's making an enormous difference. because 70%, for example, of aerospace and defense manufacturing is in small companies. >> and i want to stay here with you because you were the former administrator of the faa. did the compromise between the white house and the congress open a window here for how the defense industry could react to sequestration going down, going forward? will we see more compromises? >> oh, we may very well because what actually happened in this was the immediacy of the pain in terms of sequestration with flight delays and the controller furloughs was taken off.

but where did they go for the money? they went to the investment accounts. and that's a very dangerous thing to be eating the seed corn for what we need to do for our infrastructure. because all that money theoretically is coming out of the airport accounts right now. but, you know, you're just begging for an accumulation of problems. and we're also trying to convert to a satellite-based, digital air traffic control system. they're moving to everywhere else in the world. if we don't do that, where are we going to be in a few years? and, again, that's investment money that the public doesn't see the loss of that immediately. but, boy, i'll tell you, we're going to feel it and feel it soon. >> doug, i'd like to pull you into the, -- into the conversation at this point. the treasury just stated they were able to raise $35 billion in a combination of sequestration and more revenues, and they had expected to borrow $100 billion. that 35 billion can go to

deficit reduction. is the sequestration actually working from that point of view? >> 35 billion down, 17 trillion to go. [laughter] look, if we were running a budget of which we could be proud, um, there would be months when we have tax collections, you know, the marchs, junes, septembers, decembers where you put, you have estimated tax -- we'd run surplus, and we'd have months when there were big outflows, big payments to contractors and the like, and they'd balance. we're nowhere close to that. and the reality is that we cannot fix this problem on the tax side. there hasn't been any clear analyst who's ever looked at the future of the federal budget that has on autopilot $7 trillion new taxes over the next ten years and can see our way out of it. we've seen pretty clearly even if you like sequestration and you can take a poll and see if you can find that person,

there's no money there. this is not a solution to our problems. the big money is in the health and the retirement programs, and they need to be reformed for the 21st century. >> so it's pretty much agreed that sequestration is the wrong avenue to get to where we need to go. what's the solution? do we start with the corporate tax reform? do we start with the overall here? >> i think it'd be great to move to corporate tax reform. i think there's a clear and compelling need for the u.s. to move to a tax system of which it can be proud and generate growth. you know, the oecd, no one's idea of raving right-wingers have said the corporation income tax is the most anti-growth tax they can identify. we have the highest corporate tax rate in the developed world. we have a tax system that relies on methods of taxation that all our competitors have abandoned. and they have focused on activity within their borders, not worldwide systems. we've clung to a system that's outdated. and there's a lot of evidence as

a result that we can be more internationally competitive and grow more rapidly, and, you know, i think it's a matter of common sense to point out that if we don't grow more rapidly, all these budget problems get harder. be we have a recession, we're not going to solve them. if away don't grow more rapidly, it gets difficult. we should start with the low hanging fruit, and corporate tax reform is that. >> is it important that that rate, that overall rate be revenue neutral in terms of lowering the rate and closing the loopholes, or can we get some revenue from corporate perk to help with these problems that you so articulated? >> i'm a practical guy. you have to get to yes. you need the house, the senate and the president to find a piece of paper they can all sign. i think there can be a bipartisan agreement on a revenue-neutral corporate reform if it meets some guidelines. if it gets the rate down to 25% or something that looks to be closer to the norms, if it brings us to the 21st century on worldwide versus territorial systems and moves toward the

latter, if it's serious about the international gaming of the tax law and then there are ways to do that, and if it doesn't become revenue neutral by shifting a burden somewhere off in the small business community or to individuals. and i think you can get a bipartisan reform of that type. it's going to have to be bipartisan. all big reforms are. and so i think that's the place to aim, because that's the place where we could get to yes. >> okay. well, i'm going to ask our business leaders, we'll start with don. most americans saw a 2% increase in their payroll taxes. how important is it to you as a business owner that your tax rates stay the same or lower going forward in a big grand bargain? >> well, we do business to make a profit, so our focus isn't engineering, our tax rate's our focus. it's growing our business and how we do that. so the tax code, a lot of discussion about the corporate tax rate that no one ever pays, by the way, for 35%. we can talk about it being the highest on the planet, but in reality it isn't because most

corporations pay about half that. ge in 2010 made $14 billion in many profit and paid zero. so corporate tax reform is important in terms of simplifying the process. i think we've got to make it so that businesses understand what the rules are, we're all going to play it by the same set of rules, and it won't be so overly complicated. and what the government and what our government has done historically is use tax policy to incentivize growth and social change. and so if we want to you our economy -- grow our economy, our tax system should be geared towards job job-generating activities. and, also, we need to get our money back from all over the planet where our corporations like apple leave their money because they're going to be taxed on it when they leave it back here. we should encourage them to bring it back. >> so even though corporations are making record profits, the stock market is booming, you still think that it's really the tax code that is keeping businesses from hiring. >> well, i think that, and i

think it's also that we do need to do something on the spending side. the federal government's deficit is, you know, unsustainable. there is not enough discussion about how we, um, cut the spending side other than these typical areas. but no one wants to touch entitlement reform which has to be done. social security was never intended for a life expectancy of americans to be over 80 years old, a typical life expectancy of americans. it was created when the life expectancy of american men was under 70 years old. so we need reforms in that area. we need a reform in other entitlements. and i think what business needs is we need to be able to freely invest our capital in the economy understanding what the tax rules are going to be long term. not what they're going to be -- look how our government's running itself. it's making tax policies as it goes along. >> uh-huh. >> and we couldn't run our companies like that. we couldn't do business like that. so we need a little more certainty, a lot more certainty

and knowing what the rules are, and then we'll figure it out. >> uh-huh. dan, is it really a matter of certainty and clarification with the tax code, or do you want something more from an overhaul in. >> one, i'm just happy to be sitting with three people who i agree with. [laughter] but -- >> it's a great panel. >> yeah, i mean, i think one -- why do reforms need to occur? why do corporations reform themselves? why do institutions reform themselves? it's usually because the world -- things have changed. it's a dynamic world. to remain competitive, you have to almost be in a constant search for doing something better. when you look at corporate tax codes in the united states, it's a system of winners and losers, and it's also not transparent. so legions of people are hired as experts to try to figure out how to optimize as a corporation, you know, your tax position. so it creates all kinds of

dislocation. from my perspective, by company's effective tax rate globally is 30%. so we're one of the classified losers, because we're a service industry. >> right. >> so i start by questioning, you know, considering that the majority of the economy now is service based, why is all the incentivization outside of the service arena? i don't really think it matters all that much as to where a dollar comes from. what matters is, well, how much of that dollar is owed to the government for the government to spend on our behalf? you know, the indebtedness issue that was mentioned earlier is a significant issue. we, essentially -- it's one thing to borrow money to invest and to invest for the future of whether it's a company or whether it's a country, but largely the borrowing is to service debt. and that debt pile so large that that's only going to continue. and if you do the math around any kind of interest rate change

to where interest rates regress to any kind of mean over the last 25 years, there'd be a huge amount of uplift in terms of the service costs on the debt. and so, you know, usually one of the areas my company's involved in is actuarial work around pensions. you look very far out. this is a train wreck waiting to happen, and it's going to happen 20 years from now. and it's only earlier, and it's only a question of whether the will exists to tackle things like corporate tax reform as a way to get the country's house in order. >> right. but, doug, how do we get there? there was a bloomberg government study that showed that for every percentage point reduction in the tax rate we actually have to close $125 billion over ten years in loopholes and deductions. where do we start? what loopholes and deductions are the two of you willing to accept as a service industry and

a representative of the manufacturing industry? isn't this a conflict between the corporate sector? >> no. i think you start with, um, first of all, education and an honest conversation. i think it's important for people to understand that the corporation income tax is more than just the checks sent in by this company and this company. it's a factor in our economic performance. in the end, paid by real people. it's paid by customers, it's paid by shareholders, and it's increasingly paid by workers who are seeing the best american jobs, the ones that have the benefits, the ones that have the high wages become scarcer. and it's not going to other places on the globe. we can't afford that. we're also losing headquarters. and i think we need to be honest that our tax code is when an inbev and anheuser-busch merges, we lose things more than just dollars. we lose the contributions of some of those corporations to

the social infrastructure. the boy boy scouts, girl scouts, the operas. be honest about this. yes, a way to raise revenue, but, yes, do it intelligently. and, number two, let's be honest, it's really hard. the income tax turned 100 years old on february 3rd of this year. that was also my birthday, that's why it's my favorite statistic. >> such an economist. >> less than a handful of real comprehensive reforms. so it's hard. it's hard because we're going to ask every company on this panel and in america to recognize they don't get everything out of this. there will be pieces they lose. but collectively we can be made better off. b and to get that done comes the key ingredient. what kind of leadership do you have. and i think we've seen the house of representatives and the senate take serious stabs at studying tax reform. i think we should applaud the efforts on a bipartisan basis of a dave camp and a max baucus for trying to get this done. and the last piece will be in

the many things that the president has to consider priority, where will he put this? because without the white house saying this has to come to the finish line, it won't. and i think that's what we're waiting for. >> right. >> but there's things that we can do that sound more complicated than they really are in that we're the only country in the g8 that does not have a territorial tax system. so when you look at a u.s. multi-national's global competitiveness versus its global competitors, you have to start by the basis of, well, the global competitor will likely pay a lower rate. okay, fair enough, that's done. the rates are supposed to get you something. so at the end of the day, you know, that's, let's say, out of our control. but on the other hand, that foreign company also has a more free use of cash. they can move cash from their locations anywhere in the world back to their headquarters for reinvestment. in the u.s. you can't do that. you pay the stepped-up rate

between what the rate is and what you've paid locally. so what do most american multi-nationals do? they leave their money outside the united states. the last stat that i saw was $1.5 trillion of trapped cash. now, what does that mean in practice? because we're a company, we've got $2 billion of cash on our balance sheet, one billion in the united states and about one billion outside of the united states. we certainly scour the world to invest that billion dollars outside of the united states. and the there's very few scenarios where we'd be looking at we've got to pull that back to the united states, because we would immediately suffer a tax loss to our shareholders. so we're a global company, and we would make efforts to spend that money globally. so joining the rest of the world in some sort of territorial system is really apart from, well, washed the rate be. that's -- what should the rate be. that's a different conversation. what do you want to get from that rate. but it is hard to, hard to keep

outside the withdraw multi-nationals compete against each other because it does almost tie one hand behind our back. >> right. and i know that this global issue and earnings abroad is a huge factor in the corporate tax overhaul. but you started with the territorial. how about we start with ending the deferral, right? because that is also a benefit to the corporate sector. they can keep earning abroad, invest it globally without bringing it back to the united states, and maybe without that money being used to pay down the deficit or create jobs. >> yeah, but let's take that. because taxes have to be fair as well. so you say for a u.s. multi-national, 50 different countries. you pick a country, and you say, okay. well, yeah, maybe that u.s. multi-national started that operate 50 or 75 years ago. but, you know, now it's 100% staffed with local people, and 100% of their business is indigenous. is that really, is a tax owed to

the u.s. authorities on that business? or is that an unfair tax because the u.s. has nothing to do with the value creation in malaysia on that piece of business? >> or, and -- >> there's a fairness element. >> doug, i'll get to you in a moment here. you've said that territorial taxes come in all flavors. so is there -- i assume you would think there's a compromise here between ending the deferral and moving to a system where all earnings are taxed at the local rate regardless of that rate. >> so i think, um, the territorial system a practical reality to which the united states has to move, period. i mean, we simply cannot stay out of step with our competitors and expect to prosper in the 21st century. within that there are all sorts of details about how you allocate revenues and expenses into different bundles inside and outside the united states. those are so geeky and boring, i will not destroy this panel by going there.

but they're important. they'll come under the label base erosion rules. and for the integrity of the tax code, for people to believe that their corporation by playing by the rules is on a level playing field with others in the united states, those rules have to be serious. and they have to keep the territorial system from turning into a casino where you sort of pull out a lucky draw and instead have it be a real tax system that collects the revenue we want. that's a detail, obviously, but it's a very important one and one that i would expect if we get real momentum on topic will become the focus of a lot of what goes on on the hill. >> and, don, i'd like to hear your thoughts on this as well in terms of the territorial tax and how to invest earnings globally. this is something you do, of course. what are the obstacles of doing that under the present tax code? >> well, i think the point that forcing our companies to keep the money that they earn overseas because of the fear of, or the reality of it being taxed being brought back here, it's a

lose/lose situation. the fact of the matter is, none of that money is getting invested in the united states now, and the united states treasury is not getting a dime of tacks from it. so the best solution, of course, is to eliminate it altogether and allow the corporations to bring it back to this country so that they can invest that money and scour the united states to look to reinvest that capital and reinvest it in job-generating activities here. invest it in real estate. invest in other thicks like that -- things like that. when we talk about tax reform, we've got to look at domestically some of the burdens and the unfairness of the system. take my business, for example. a large amount of our capital for real estate development deals, we have a real estate development company, and we do large scale development. so we odder fairly get -- ordinarily get an investment from private equity. for example, if the fund manager, you know, negotiates a deal with us on we -- behalf of our investors invest in our development, and let's say the

development makes $200 million, and our company gets $100 million. the investor gets, um, another 100. and the manager gets what's called a carried interest. they get a 20% carried interest. so today get $20 million. that $20 million is taxed at the capital gains level. now, our company who's out here doing all the work taking the greatest financial risk, we get taxed at the highest tax rate as ordinary income, not capital gains treatment. that's an imbalance, and that's an example of why there needs to be a broader, comprehensive tax reform, because you have a jobs-generating business generating jobs, taking financial risk being penalized compared to someone who is simply allocating on behalf of capital investors, risking no money of their own and doing no work. and yet they're getting capital gains treatment. there's an example as to why

there needs to be greater balance in terms of full corporate tax reform we need to engage in across the board. and then, again, we've got to go back to how we spend our money. we can't keep spending that way either. >> private equity is the sector that you do business with a lot in your dealings. should we have a different tax code or different tax reform for the noncorporate sector, the sole probe pry to haveships, the partnerships, the private equity that provide capital or small business owners? or should we treat businesses the same? does it matter your size? a dollar's a dollar? whether you pay a lot of them or a little of them, we should still have the same code, what's the best way? do you want to start with that, dan, and -- >> i would, i am a nonexpert. [laughter] but i would say simplicity and transparency a is always the best way when you're tackling reforms. if this is the first level of corporate tax reform in the last

25 years, that means it's going to have to last another 25 years, so you might as well try to make it as clear and less opaque as possible. you know, so in my view, i mean, taking don's point about, you know, pe companies versus companies in the real economy creating value, it really doesn't make sense that they have different levels of tax. and those are the sorts of issues that have to be tackled in any kind of reform. >> doug? >> i think two things. i do want to emphasize what don just said about the spending side. i think one of the lessons of 1986, the last time we tried to do a big tax reform, it didn't last very long. why did it not last very long? well, back then we were worried about deficits, and we failed to control the spending side, and we got big deficits. and in the search for revenue and deficit reduction, the tax reform unwound. so if you believe in tax reform as i do, the way you keep it is actually be serious about the spending side. because without that it unwinds

pretty quickly. that's one point. the second point is this difference of the differential taxes, again, we already have very different tax codes. we just raise the top rate on the individual side which affects every past sole proprietorship, every partnership. they all now have higher marginal tax rates. a perfectly intellectually-clean tax reform, the ones on a blackboard, recognizes that we've got these small businesses, large businesses differences, and tries to get the same base, have the same rates. that's a comprehensive scheme. something dave camp in the house of representatives is very interested in. >> right. >> it runs right into the political reality of the moment that the president just went north when that reform requires going south. so you have to ask yourself what are the chances of getting that over the finish line. and so, you know, as a handicapper, i'd have to say corporate-only reform looks better at the moment simply because of those stats. >> and we're going to circle back to handicapping, but

there's so much agreement on this panel, i'm going to have to force some disagreement, and i'm going to start here at the end. [laughter] marion, you represent manufacturers in the aerospace industry. what are some of the deductions that you think that your industry could do without in order for the greater grand bargain of a corporate tax overhaul? >> end your career. [laughter] [inaudible conversations] >> no. i will say this, i mean, from a manufacturing standpoint we want to make sure that folks are looking at the right incentives out there and a system that is more transparent, one that is equitable. i mean, because the s corps, the small corporations, small companies make up a lot of our industry. and so it's not just the great big brand names that you think of. but i would also say that we do need to incentivize in a global system the right behavior. and that does go to one area

that we think there's almost universal agreement that we should make permanent and keep, and that is the tax credit for research and development. when you look around the globe, you see almost all of the major countries that are coming along are very much incentivizing research and development. right now we go lurching from year to year never knowing whether there's going to be a tax credit or there's not. the congress tells you retroactively. what kind of behavior does that incentivize? so from a manufacturing standpoint, that really is important because the u.s.' edge from a technology standpoint is really what is driving our competitiveness worldwide. and i would say this, we do need to think about it in terms of those kinds of global factors, because right now, for example, aerospace and defense contributed a positive contribution to our balance many trade of over $60 billion. now, if we keep up with a system that as everyone here is

pointing out really isn't competitive globally, that's not going to perpetuate itself. and, you know, that's crazy. >> would you like to jump in here? >> you know, one of the other areas, in fact, of corporate tax reform, and i don't like to get into specifics, but this is a good example. the big topic of the day is cutting the deductions for corporate jets. that's a big topic now. any kind of corporate tax reformer eliminates the corporate jet. now, the irony is who do we think makes these planes? who do do we think puts the gas in them? who works at the airports to service them? are we going to get to a place where we want the corporations and wealthy americans to keep their money and keep it in the bank and not share it, not put it back into the economy? sort of like by not repatriating our dollars for big corporations leaving your billion dollars out of this country so that you can invest it there in the research and development as well. and i think that's, again, about real reform. we have to look at what these deductions -- i don't, you know,

are we going to -- do we want to incentivize continuing to be on a positive trade side with the aerospace because we build some of the greatest, um, you know, airplanes and aviation products if president world, or -- in the world, or do we want to now give that to another country. that's what happens when you start making less of a demand for the product here. and so tax policy does create manufacturing jobs. and so if we start tinkering with corporate tax deductions too much to the extreme, who do we think is financing most of the major cherries in this country? large corporations. so if we eliminate the charitable deductions or cap it, what does that do to aids research? what does it do to cancer research and the like in this is all we're talking about dollars and cents, but every one of these decisions has a human consequence. and that's what we've got to remember. human beings make airplanes.

gulfstream manufactures corporate jets to sell to all over the world and to u.s. businesses and wealthy individuals. do we want to continue to have them lose jobs because we can't have a tax policy that compensates for investment in those products? >> i think you articulate the point perfectly. and yet we still have to make those hard decisions. and so let's take the manufacturing example. it's considered, it seems to be in the white house and it's been stated, that it's pretty much a protected industry. then should we have the same rate regardless of industry? should professional services pay for the subsidy, quote-unquote, that's given to the manufacturers? >> well, the governor in his discussion looked at the audience and said, we're broke, okay? so if you come into a corporation and you've got that same situation where for

something like 20 of the last 25 years your expenses exceed your revenue, you know, you basically say, well, we're busted, and we have to completely do this. and the way you would start is from zero, you know? you'd have a zero-based budget. there would be nothing that carries over. there is no sense of deduction from the past. it's all starting from scratch. and then it's building slowly as to what could we -- because you have several nice to haves and then you have need to haves. and so you have those debates of the nice to haves and need to haves x you build it from -- and you build it from zero-base budgeting. if we've got all of these things and we have to figure out how to whittle down, we'll be talking for the next 50 years. and i can't stress the indebtedness issue as push. i've got three daughters. my sense is i should just go and apologize, because no, no civilization that is in the process of passing on more burden to those who come after them than ours.

>> and, don, you've been very instrumental politically as part of obama's team for his re-election, and you've had, done some work with congressional leadership. what is the obstacle? it seems like there's a lot of consensus on this panel. there's consensus in corporate america. there's some actual growing consensus in washington that this should be done. what's the problem then? >> well, i think the big problem is that we have parties on both sides that don't want to give enough of things that are precious to them. the democrats are unwilling to make and look the country in the eye and make real, um, reform. real entitlement reform. and then the republicans, on the other hand, are unwilling to acknowledge that we are a society that does need to protect and preserve those who can't help themselves. and i think that -- so you have that process. and the president has shown a

willingness to make some tough decisions on the entitlement side. i think he can go further. i believe he's most likely waiting to see some greater progress on the other side. but, ultimately, the challenge is that there's not the will. and that's the one plus with the sequestration process, is that it is imposing this sort of damocles. and it's going to start beheading some of these politicians soon. >> right. >> and, ultimately, that's what's going to happen. we're going to have some unemployed poll constitutions, and they're going to suffer -- politicians, and maybe we'll get the rest of the surviving ones back to the table so they cannot be beheaded themselves. short of something like that, we're never going to see it. it reminds me of movie, "the distinguished gentleman," with eddie murphy. the congressman with the same name as he did died, so he ran a campaign with no picture but ran a campaign with just the same name. and then he was -- after in office, he was befriended by a

low byist, and they were -- lobbyist, and the lobbyist is questioning him, and he says, where do you stand on tort reform? and eddie murphy says, you know, where should i be? [laughter] and the lobbyist says, well, if you're for tort reform, i've got the doctors and the american medical association. and if you're against tort reform, i've got the trial lawyers. [laughter] and so eddie murphy looks at the guy and says, well, how does anything ever get done here? and the lobbyist says that's the beauty of the system, nothing ever does. [laughter] that's the reality here, we havy a system nothing gets done. >> and, doug, you're the perfect person to respond to that. [laughter] twenty years ago with the last grand bargain, treasury played a major role displsm of course. >> it took the lead not only in getting this conversation going with corporations and with congress and dialogue between the white house and different interest groups, it actually led academically providing footprints and data and research.

is the current treasury equipped to do the same rule? we know that some of these tax positions within the treasury haven't been filled or took a long time to fill, and they'veo yet to put out a significant tae draft in the last couple of. years. should they be playing that role now? and are they equipped to do so? >> i have little doubt thatuick they're equipped to do so. but i'd love to see them demonstrated. i do think they've been missing in action too long. i do think it's part of the education necessary to get tax reform done. if you look back at thaty t episode, the education began not one, not two, but probably ten years before we actually got to 1986. it started on both sides of the aisle and then got serious with the treasury in 1984, and they put out, um, a beautiful with, pristine -- beautiful, pristine, academically perfect, politically unsalable draft. >> it's all down to the

researchers. >> and it pointed out what were the political strengths and, weaknesses of that document, where could you get a deal? that'd be a good thing to see right now. and i think they have the capability, we just haven't had a chance to look at it. >> right. well, for this panel we are fortunate to have aook questioner-in-chief, john rogers. will you give us our first audience question? >> sure, be happy to. thank you. my question would be related to the capital structure of firms where the tax code, as you know, provides for the deductibility interest expenses and dividends, in effect, are paid -- taxes are paid twice by the corporation and by the receiver of the dividends. you know, what that does in terms of distortion of a company's balance sheet, the incentive to borrow rather than to raise equity, whether you have thoughts on that. >> who first. well, clearly, equity gets taxed three d ways because you're getting taxed when you die, too.

[laughter] so in essence, though, itd yo discuss encourage reinvestment or -- does encourage reinvestment or borrowing as opposed to having it taxed to again. more often now if we look at our stock market today, me as an investor in it, we see that we're looking at growth in the stock itself, in the stock price. and that's how we're getting our compensation as opposed to the role that stocks and equities had in our economy dating back, say, 50 years where it was much moreda driven towards dividend. and so, look, gaming, for example, which is a very strong national gaming company sort along the lines of mgm, they became elite just so they cannot pay corporate taxes and distribute to their investorsth and their shareholders. and i think we're going to see more companies that have the ability to do that do that. but then a service of provider or a manufacturer has a much more difficult time to do that.

and, you know, again, the question is that double taxation. but thefa country could never afford to singly tax. >> and, dan, would you like to -- >> i think you have different types of investors, and certain types of investors are growth investors and would be more, ums supportive of borrowing money for further investment in the corporation. there's other, many, many incomo investors that are looking for not necessarily capitals th appreciation, but income on what they give to you as a fiduciary. and so i think you have to do both and figure out which investor, what group of investors are you serving. you know, there's been a fair amount of research that investors have done which show over long periods of timetors dividends are, essentially, the only thing they can bank on. you know, i've heard thatcan discussion several times with certain investors that, you know, growth comes and goes, and can it's not as easy -- and it's

not as easy as it looks. but what a company delivers back to its investors, you know, when they commit to a dividend yieldo that'srs sacrosanct. that creates a significant value over time. >> you know, we've got some questions from our audience submitted, and let me put this out to our panel here on corporate tax reform.ut t since it's probably impossible to pick and choose among tax preferences, as we've heard here, why not simply haircut aln preferences by a fixed percentage, say 20%, that growsa over time? marion blakey, is that something that might be palatable to the corporate community in. >>et sounds a lot like the sequester to me, you know? [laughter] just cut it across the top. i yield to those who have more experience with tax policy. >> don, would either of you like to -- >> look, i think this is -- here's a way to think about it. if the tax rate's zero, who cares what the preferences are? so what you ought to think about when you do corporate reform ist

trying to get it revenue neutral because that r puts some discipline on the process, and then see how low you can drive that rate. because every time you get it down, the fight over the preferences becomes smaller. and i, you know, i leave it tobo the masterminds in the house and the senate because, ultimately, you have to pass this bill. how they do that. but if you really think of it as an exercise in getting the rates down, that improves our competitiveness, it improves our growth, it softs thees distortions -- solves theompe distortions that comes with the capital structure. it is the rate that drives thea tax-based behaviors, so let's get that out of the system as much as we can. >> can you realistically get that rate so low that the companies that are paying an effective rate that is below that? [inaudible conversations] >> you betcha. and it's the last time i'll be able to sit with you guys. we'll be done. [laughter] no, i think you can. i don't see any reason why you can't get -- and, quite frankl', we've done this, you know, at my

think tank in a variety of different ways. we can get it to 25% in a lot of ways. and that doesn't mean we throw away the r can and d tax -- r&d tax credit which we do need and should be permanent. so that's a doable task. the problem i would just point out for the questioner is once you say there's a line like we're going to have tax preferences and they go away at 20% a year, then everyone wants to be defined as not a taxone precedence. so you never avoid that. >> i would say that, of course, the biggest challenge in tax wou reform is when you lower the rates, you're going to be lifting some people up, because they're going to be payingll b higher taxes. some companies are going toer t save, and many are going to start paying more. and what impact does that have on the economy as well? g more. what impact does that have on the economy as well? you have to look at that consequence as well. anything that is not the early brought out is a point of

exercise, there are too many minefields that would do damage to the economy. >> if the business community cannot agree on corporate tax reform and the framing of canorate tax reform, congress and the administration ever do it? >> if they can sit down and look at what the neck -- economic consequences are and have control over how the money is spent. when i run my business and we are looking at revenue, we are looking at spending and how much it is going to cost. and i get to control all of it. if business could sit down with all the same resources that are congress and our president have, we could make a deal and work it out a lot quicker than the gentleman down on the hill. >> i would like to end with one question.

, do youping the debate think that the corporate tax reform, the overhaul, will come in the next two years? is the probability of that above or below 50%, given the unique time we have in our history right now, given that we have some agreement in congress and we have chairmen in the house and senate urgently want to therm the corporate tax, is possibility of that occurring above or below 50%? cracks slightly above 50%. >>, slightly above 50%. >> slightly below. >> we have tremendous pressures right now and a lot of unanimity in the business community. >> mrs. grant was also interesting. you know, they had had this extraordinary roller coaster

existence. .. life. so i think that gives you some idea of how much she enjoyed being first lady, and how she felt that her husband had finally achieved the recognition he deserved. >> be part of our conversation on julia grant with your questions and comments by phone facebook and twitter live monday night on first ladies at nine

eastern on c-span and c-span3. also on c-span radio and c-span.org. >> we are live here at the heritage foundation for discussion on the defense budget and the future of military readiness and u.s. security. last month president obama's submitted his proposed defense department budget. it's $526.5 billion. a short time ago president obama announced he is nominating commerce secretary. she sits on the board of her family's hyatt hotel business. the president also named the next u.s. trade representative. he currently served as assistant to the president for international economics. the white house says he has helped to finalize trade deals with south korea, colombia and panama. you can see that announcement from the president at our website, c-span.org. president obama just left the white house for a three-day trip

to mexico and costa rica to highlight the immigration bill moving through congress. mr. obama is scheduled to arrive in mexico this afternoon for meetings with the mexican president. we will have a joint conference which we will try to bring later in our schedule. >> [inaudible conversations] >> we are expecting to hear from

your couple of retired army colonel's on the pentagon budget. and while we wait we'll hear about the president's trip to mexico. >> good morning, welcome to the heritage foundation and to our auditorium. we, of course, welcome those who join us on our heritage.org website on all of these. welcome those are joining us today on c-span as well. we would ask in house if you check that cell phones have been turned off. it will be appreciated by all who are recording the events. we will of course post our program within 24 hours on the heritage home page for those who would like to return for future reference. hosting our discussion today is steven bucci. dr. bucci is director of our douglas and sarah allison center for foreign policy studies. he previously served as heritage's senior research

fellow for defense and homeland security. he served for three decades as an army special forces officers and top pentagon official including military assistance to secretary of defense donald rumsfeld. later serving as assistant sec great -- deputy assistant secretary of defense, homeland defense and america security affairs. please join me in welcoming my colleague, steven bucci. steve? [applause] >> good morning, and welcome to everyone watching both on the heritage of streaming video and c-span. this is the first public event of this year's protect america month. this, for the next month we will have a combination of public events like this one, panels and keynotes. we're going to have several private meetings with members of congress and the administration, and business folks. we have a series of guest bloggers that will be featured

on the heritage website over the course of the month, mostly sitting congressmen and senators. and we will also have several education events over on the hill with staff members for our legislative branch. the first week we will focus on readiness. we will be looking at the hollow force, possibilities today. we already had a private event on nuclear modernization and missile defense. week to will be looking at the budget impasse we are facing and that is having so much affect on defense. week three will focus on veterans and the social psychological and economic issues that they face, as well as some private meetings on defense entitlement reform. and then finally week for we will end with the future of national security. we will look at threats, possible fast-forward and we will end the week with a special

event of the unveiling of the former secretary of defense donald h. rumsfeld's new book on leadership. mixed into that we will also have a series of events for our newly founded national security law center. they will have to events this week, both their initial rollout and then another one looking at detainee issues. and i would recommend that you all please check heritage.org, and for those who in the building -- for those of us here in the building with the swift liars outside the auditorium that have the details of the events that are occurring here in this building. i would like to take this time to intro our speakers. and this is the order they will speak and. the first is retired colonel kerry kachejian. he is a former army engineer. he served in iraq, afghanistan and at hurricane katrina

response. he is, like myself, a graduate of the united states military academy. he is also a distinguished graduate from the and dashiell college of the armed forces here in washington, d.c. he has written a really interesting book. i would highly recommend it. it's called suvs suck in combat. and the subtitle of it is a little better. it's the reconstruction of iraq during a raging insurgency. some really good insight into the difficulty of what we tried to do and a little bit of how we did it. he will be followed by a good spring for fm kirby research fellow for national security policy. baker is to put it bluntly, our numbers guy. baker is a recognized expert in

the how we take all of the policy and the theory that we do in the defense business and actually make it happen. and that's by getting the right budgetary support and spending the money that is allocated correctly and wisely. and he will be looking at this hollow force from that end. and then we will follow up with retired u.s. army colonel richard done. ridge had 29 years in the army and been 14 years in industry, working for northrop grumman and saic. he has some very interesting points. is final tour in the army was as a director of the chief of staff, the armies staff. for those not army folks, that's basically the idea guys for the chief of staff, the army. and i'm guessing that whatever they call the staff group today, they're pretty busy right now. so he will have an interesting perspective there.

and rich has also authored for heritage, a paper on readiness. i regret it's not ready today, but it will be ready and out by the end of this month as part of our protect america week, or protect america month. to keep your eye out for that. it will be available soon. all right, the hollow force. those are all admin announcements. the hollow force, this is not the same problem that rich and kerry and i faced lowe many years ago. i don't know if you quite tasty but what you did you graduate? >> [inaudible] >> he got the tail end of it. ridge and i were dead in the middle of it in the late '70s, post-vietnam. it's a little different problem now but what is the same is the uncertainty and the concern and the potential danger if we don't address it properly. and i have a concern about this because while i am now wearing a suit and working here at heritage, captain bucci, my

younger son is still out there in force and he is now dealing with it or he takes command of a company this week, and he is going to have to deal with the problems of the hollow force. what i'm going to ask our speakers to do, as soon as i sit down, is they will take about 10 or 12 minutes each, get some opening remarks, throws a need out there to the audience, and then we are going to use the bulk of the time for q&a. and hopefully we will get a little bit of a discussion going here because this is a problem that we all need to address. not just the technical experts, though we obviously are pretty blessed to have three of them here today. but something this whole nation has had a conversation over and address properly. when i do get to the q&a, and i will remind you of this, we have folks with microphones, raise your hand. i will acknowledge you. i would like you to identify yourself, and then ask a question.

and i always throw this in your because it makes john very happy. but if at the end of the second since i don't a question mark, then going to ask you to sit down. so if you want to come to be part of the panel, let us know afterwards and we will see what we can work out, that you are not on the dies today so we'll just get questions and we will let our experts. so right now we will start with kerry. >> steve, thanks for that kind introduction, and thank you for the opportunity to come here today. it's my honor to be here. so what does a hollow force mean to the u.s. national security? well, quite simply a means our nation can't defend itself properly. it has a greatly diminished capacity to generate the trained, equipped and ready forces that are needed to conduct current missions and provide replacement units, and to prepare for future threats.

our military is a national insurance policy. it's primary purpose is to deter war. and what you want -- fight it as a clinic in especially as you can. you measure that in lives and treasure. armed forces, their families and their equipment had been heavily worn over the past 10 years of the war. now is an excellent time to rebalance our forces, but not get them. we have an opportunity to reshape the force and acquisition system that supports it. our military is the finest, best trained and equipped fighting force in the world, but training, equipment, and personnel are highly perishable. and if they are not properly maintained. our military may soon have inadequate capacity to cover all of the global security commitments and omissions that it has been assigned. the military will likely not meet the expectations of the nation.

the force would be greatly stressed just to keep up with its current operations. it takes a decade or more to build a solid military force, but it only requires a couple of years to lose that benefit of that national investment. look at what happened to the soviet union after it suffered massive atrophy of its armed forces when communism collapsed in the early '90s. 20 years later it is still on a long path to recovery. i want to give a couple of personal examples that are relevant to this discussion. so i witness the tail end of the hollow army during my first tour in europe, and then going to fast forward and do you some examples from iraq, some things, some observations from the. so i arrived in germany as a young lieutenant o in the early '80s. the army's job was to stop the union from attacking western union. my post and wartime mission was to place my fields, to blow up bridges, and to slow down

thousands of soviet tanks and armored vehicles. but this was after vietnam. our government dramatically cut the defense budget. the impact was immediately obvious to me. i was responsible for five military vehicles and 40 men. due to budget cuts, none of my military vehicles were working. as a matter fact i had empty parking spaces. they were all sent to some higher level maintenance for months. there was no money for repair parts. our military vehicles were averaging 30 years old. the army could not afford to buy new ones. if war broke out we had no way to travel the 150 miles to the border to defend our sector. the defense obstacles that were supposed to in place would not have been in place and time. the soviets would've captured key bridges, airfields and major cities. that would've resulted in dramatically increase casualties among our fighting forces. now, the military will always

have unexpected missions. so you want those forces to be as flexible and as a battle and is well trained as possible because her in it will always go after what they perceived to be weakness. in iraq my army reserve team was sent on an unbelievable mission and that was to rebuild iraq while it was fighting a raging insurgent. and the progress of this nation was of national importance, reported daily and sometimes produce. but no military unit existed in peacetime that was prepared to go rebuild country. and so the army hastily created a special unit which recalled the gulf region division, and it only got a few weeks to be organized during the war. the staff quickly become to drink him to deploy and sent straight into combat to begin rebuilding thousands of projects while our other forces were fighting the insurgents. to make things even more complicated, 90% of this new force were civilians, and they

were experts, all volunteers. so they began this very quickly organized, large, complex and dangerous reconstruction project, one of the largest ever undertaken by our nation. we had critical equipment shortfalls. there were no spare military equipment for us, for our division. we went to war with what we had. we had to quickly acquire everything else. we improvised, adapted and outsourced. we had no military weapons. no military radios or military vehicles assigned to us and we are going into combat. my team borrowed weapons, m4 rifles, and we didn't have ammunition because we were a low priority unit. we went out and wrote our own personal checks, bought our own ammunition out of her own pocket to fire our weapons before going into combat. security, there was no extra forces available. no spare infantry to protect our

personnel, our convoys on our project size. we hired hundreds of security contractors that we had never trained with. our security contractor teams use russian weapons and ammo because they were much easier to acquire in that part of the world. vehicles, when we arrived in iraq there were no spare military vehicles available. so we leased 200 sport utility vehicles. but as a sport utility on the driver, a lot of to do. some of you do, right? were talking about land cruiser and those kind of things. 200 of the. and we drove around in combat in those. and only 12 of those because they were hastily acquired, of the 200, where factory armored. the rest were simply commercial vehicles. and so during combat we are going on the internet and urgently buying aftermarket armored kits that we could, flew these kids into baghdad, set up her own garage and started to install these add-on armor kits

to these suvs. that made in 2000 overweight but it means the brakes were out early and they were top heavy so they could roll over, but we had to do it because we have no other alternative. our suvs were bullet magnets. we drove as fast as we could to avoid ids in ambushes and to get this up in experts to the project size. it was like living in a mad max movie. we would rip off the tailgates of the suvs, put a tail gunner in there with a russian machine gun because our enemy would drive up with the bmws of 110 miles per hour and shooters from behind. i'm going to show you a couple of pictures. we would hang the tape with your personal body armor, we would hang or duct tape personal body armor which you were on the outside of the vehicle. to try to stop some incoming rounds and absorb some blasts from ied. i think i have some charts. i want to show a couple quick pictures. so these were the thousands of

project size, all those dots. this is the stuff we're trying to do, all the projects we're trying to rebuild, during a war. and so this is the kind of thing we had because this didn't exist before and had to go hastily acquired things. [inaudible] you can see the suvs out. you can see the tailgunner. that's contractors agouti. your tires, probably nematic. they get shot out in combat, you are in your own coffin in the middle of the street. the radios, let me get into the rest of it. radius, we had no military radios that could communicate with other american forces. we went out and bought off the shelf radios because we could get them immediately so we could at least communicate within our own reconstruction forces. so they were not interoperable with other u.s. units. intelligence, many of our security contractors did not have security clearances. so providing an unclassified intelligence about threats was a continuous challenge. this did work to our advantage

one time. we accidentally rescued a hostage. our guys were lost. they couldn't find their way around the battlefield. they went into an iraqi village to get directions and accidentally stumbled into an american hostage who was being held, spooked of the guard and the guy was probably going to be sold off to al qaeda and beheaded. he is alive now because we have bad information system and bad intelligence. so murphy's law combat works both way but it is rare. you don't want to count on that. we lost scores of people during our mission. largely because they were not trained or equipped for this unexpected mission. things got better over time, but the first year or two of what we had to go through were particularly tough. so my summary is, we knew going forward flexible forces that were properly resourced, trained and equipped to be prepared for future conflicts. i have some ideas about how to prevent some of the hollow force

from occurring. and i will share them during the question and answer period. so that's all i have. i'm out of bullets. that's a minute, and i will yield the floor. thank you. >> thank you very much. i appreciate the opportunity to talk about what i think is going to clearly become a pressing issue, in essence i guess i am the colonel's worst nightmare. i'm the guy that listens to this fanatically from 10,000 others up as opposed to the people who have to deal with the practical realities of what's on the ground. but that is my perspective and so that's the one i'm going to focus on today because i think there's some important things to look at with regard to the hollow force we may be facing compared to past experiences. i can assure you it's only coincidental that my opening quote comes from my boss, james

carafano, as being a career move. but let me start there. about a year ago, vice president here, james carafano stated the following about hollow force and i quote, out -- noted that looks good on paper but can't adequately defend the country is the definition of the hollow force. a military force becomes hollow when it lacks field training and ready forces, conducted current missions and prepare for future threats. the military can't do all three well. it is hollow. it can't really deliver on the government promised to provide common sense, unquote. james' observation is exactly right. this means there is the possibility if not the likelihood that a hollow force that existed at one time will have different characteristics than a hollow force in another era. today, as we face the prospect of another hollow force, the temptation existed deny the problem because of the use of

the metric that is derived from a specific characteristics of the hollow force that existed in the 1970s following the vietnam war. it became increase included a hollow forces, it is becoming increasingly clear that the hollow forces that are all but certain to emerge will fundamentally different characteristics than that of the late 1970s. having said that, however, there is one common characteristic that would exist between the two. this is the inadequate overall funding for defense. specifically, the u.s. had its defense budget to deeply following the vietnam war, and seems to be heading in the same direction in anticipation at the conclusion of the operations both in iraq earlier and now with afghanistan. so let me do a birds eye view of how i would compare these to hollow forces and the one from the late '70s, mid-to-late '70s, and the one that i think we will be facing in the near

future. first of all let me deal with the issues of what was not the problem associated with the hollow force of the late 1970s. one, the problem at least by today's standards was not that the military was too small. let me give you some specifics on the. in the 1970s, specifically fy 1976 the u.s. military had an active and reserve component in the strength of over 2.9 million persons. much larger than today. strategic nuclear forces is somewhat silly to compare. in 1976 it had 2100 strategic nuclear delivery class points, icbms and nuclear capable bombers. and roughly 10,000 deployed warheads. we had 24 active and reserve divisions in the army. we had 110 fighter and attack squadrons in the air force, and while it's a little bit of a different accounting, we had 550

over all ships. that's almost like everything including cats and dogs. it's a little bit different but those were the records i could find. also the problem was not, believe it or not, completely insufficient modernization funding. it may have been resupplied but the scope of this bunny was relatively good. we had about 31% of our total defense budget. that includes dod and non-dod going to the modernization research and development and procurement. another problem, one thing that was not a proble problem also ie least the mid-to-late 1970s was we didn't have an extraordinary high operational tempo. obviously, vietnam war was over, and the united states was not at least at that point taking on new long duration our wide scope military operations. what were the problems in the '70s? first of all, pretty much at the head of the list was lower

quality personnel. personal. one of the things that show that was that the workshops and education levels and testing. we had low morale. some of this had to do with cultural circumstances that existed in the united states writ large at that particular point in time. and one of the things that was notable about that was the increases in bad discharges. insufficient tag, in the 1970s largely due to inflation as well as fiscal constraints, base pay declined by almost 20%, and inflation adjusted terms from 1972 levels by 1980. so insufficient pay was a significant problem. recruitment and retention problems extraordinarily bad. it resulted in one of the foremost reserves is failing to meet its recruitment goals each of fiscal years 1976-1980.

and the services were finding that there was significant shortfalls as it relates to retention and experienced personnel for at that time. inadequate training and maintenance. along with personnel issues this led to readiness problems. for example, in fy 1979, six of 10 army divisions based in the u.s. were assessed as not combat ready. now let's look at the emerging hollow force, at least as i see it. what are not the problems? but i don't think is a problem, at least at the moment, now could become worse but at the moment at least i think that recruitment and retention rates will be relatively good. the services seem to be able to meet their goals. now have to admit to some extent this has to do with a soft labor market and the fact that the military is shrinking. the second is that morale seems fairly high. particularly in the aftermath of

the stress, of a stress, coming in the aftermath of a long-term combat operations that were undertaken in iraq and afghanistan. now, there are some pockets of concern, the high suicide rate worries me quite a bit. compensation is not insufficient. and let me look at this in a little more detail. overall compensation for military personnel is relatively high today. for example, regular military compensation in 2011 for enlisted personnel exceeded $52,000, on average, and for officers over $100,000. while the us meet household income is about $50,000. further, the deferred and in kind benefit composed of overall no to compensation are generally more generous. than those found in the private sector. so that i believe that as it relates to compensation, we are in a far, far better position today than we were in the 1970s. affect the department of defense

is being forced by circumstances to look to actually try and restrain future growth in compensation. now, what are the problems i think that we associate with the emerging hollow force? one is size. a shrinking force. now let me do some comparisons year. in terms of personnel can we're basically at about 2.3 million persons in active and reserve component combined in the military. that's about 23% below what it was in 1976. strategic nuclear forces again is somewhat silly to compare. we have 806 nuclear develop -- there not being public about this, 2000 real as opposed to accountable warheads. and we are moving to decline further under the new strategic arms reduction treaty, new start. obviously, this is a small fraction of what we had in the 1970s. army force structure, combined active and reserve component

army brigade combat teams are scheduled to go to 65. and could be reduced by further increment under sequestration. air force tactical squadrons, the number is 63 combined active and reserve component, air force fighter and attack squadrons. that's compared to well over 100 in the 1970s. fleet size, currently were at about 285 navy ships acknowledging that that is a slightly different accounting rule than what was available for me to find with regard to the 70s. what's the second problem? ..

>> even if there are ongoing sequestration impacts. aging weapons and equipment, let me just give an example or a couple of examples. the air force has the c-5a cargo aircraft which are generally now between 35 and 40 years old. the average age of the b-52, if you're concerned about our nuclear deterrent, that fleet is about 60 years old. the average age of the navy's fleet is such that it's retiring ships faster than it's building them. and so that it's important to point out that this is not just a problem that's from the here and now, this is actually to a certain degree, a very large degree in my judgment, a holdover or an after effect of the procurement holiday budgets of the late 1990s.

another problem is the high hasn't neighbors costs -- maintenance costs that are going happened in hand with regard to the relatively aged weapons systems. let me take the c-5a example again. that aircraft has a mission capable rate now of approximately 50% maintained only at the cost of really intense maintenance efforts. if you don't have modern weapon withs equipment, you pay a readiness price for that because they are harder to haven tape. the final thing is a -- maintain. the final thing is a little bit more a question of uncertainty, and that is whether we will have higher operational tempo rates than we had in the 19 p -- 1970s. clearly, they're going to come down from the extraordinary levels that we had in the aftermath of 9/11. but the world is a more chaotic place today. and we've seen short-noticed operations in limited scope with regard to libya and maybe on the

cusp of one with syria. but nonetheless, this is coming in the context where the funding line for overseas contingency operations or oco is likely to come down dramatically in the next two years maybe even to zero. so that there's going to be a pillover effect from that -- spillover effect from that because i think, actually, those oco monies are doing things for resetting the force that some might describe as inherently oco but nonetheless have an incredible impact with regard to the overall readiness of force. so oco funding uncertainty is a real key issue here. so what's the bottom line message here? it is that we'll have a different kind of hollow force, if my assessment is correct, for the remainder of this decade. than what we had in the 1970s. basically, i think that in the peace of the 1970s -- in the

case of of the 1970s, it can be described as from a force of a reasonable size that suffered from serious personnel problems and a lack of commitment to keeping those forces in fighting trim. in the case of the one that's emerging, i think it's going to be a problem of a force that's too small and not -- and lacking truly modern weapons and equipment. both are two fundamentally different things. but let me say there is one common element. and that is the question of inadequate funding levels. and, basically, this comes down to how much you cut your defense budges in the aftermath of large scale military operations. by 975 the -- by 1975 the dod budget fell by 31% from 1986 in real dollar terms. inflation was a serious problem then. current projections of the dod budget based on obama administration requested levels show a reduction of 28% between

fy-2010 and fy-2014, again, in real dollar terms. however, this latter one does not assume the application of sequestration beyond the current fiscal year, and the other thing is the uncertainty with regard to oco funding. but i would not be surprised that we had the coincidence of exactly the same 31% reduction in the defense budget postvietnam being applied if terms of the emerging hollow force i think that we're going to face, and i look forward to your questions. thank you very much. >> always great to follow a speaker with such a cheerful point. [laughter] i'd like to thank, first, the audience for your interest in the preparedness of our armed forces. and, second, i'd like to thank

heritage foundation for the opportunity to share a couple thoughts with you on that subject which, as steve mentioned, is very near and dear to my heart. two different dimensions to military preparedness really, but on one hand you have the question of do we have an adequate number of the right sorts of forces, the number of air squadrons, aircraft carrier, battle groups, army brigades to meet the threats we've received, but the second issue is what is the condition of those forces. and that is really the readiness for for combat. and that's the question that i would like to share a couple thoughts with you on this morning. combat readiness is really defined as the ability of the u.s. forces to fight and meet the demands of the national military strategy. now, this is, as you can imagine, of utmost importance to our service members, but it's a rather complicated and difficult-to-understand subject.

it's very multidimensional, as i'm going to get into in a minute, and it's a very diffuse thing. so, therefore, it has few natural constituencies. you can get a constituency for building aircraft. they're manufactured in 45 different states. where's your constituency for training? and you don't find one. so that, it makes it very difficult to really build a political constituency that is going to support military readiness, combat readiness for our armed forces. and so as you have this increasingly fierce competition for resources at the national level, there's always the danger that we're going to do something very foolish in this regard, and we're going to put ourselves at risk. so the point i would make is that to be to fight effectively, forces have to be manned, they have to be equipped, and they have to be trained to operate under dangerous, complex, uncertain and austere conditions. sometimes with very little advance warning. that means you have to have the

right personnel operating the right equipment with the right training to win. so readiness when you try to think about it is kind of like a three-legged stool. you can have the most modern equipment out there, but if it's sitting around in a motor pool or at the end of the flight line and never gets flown because you don't have the highly trained personnel that you needed, it's useless. conversely, if you have really great personnel but their equipment is nonfunctional, you know, like five out of five of your pieces of equipment sitting in the motor pool won't work, it's not working. and you have to be able to train all this to put all these things together. so you need to think about how you maintain balance. if you have a three-legged stool and you need to reduce it and can you start cutting off one leg at a time, you really start to put the value of the whole thing at risk. to the point i would make is that maintaining an appropriate balance among these different dimensions is essential to maintaining overall combat effectiveness.

and if we're unable to do so during our current period of budgetary uncertainty, we could seriously degrade our ability to respond to unanticipated threats in our strategic interests worldwide. and i think if you look at the current era right now, this is really an era of strategic uncertainty. it's not like the cold war where you had a known threat and so forth. we don't know what's going to happen tomorrow in the middle east, on the korean peninsula, in boston. so we have to, we have a great amount of uncertainty that we need to be able to cover, and maintaining this balance between personnel, equipment and equipment and maintenance of that equipment and training is very, very important as we move forward. unfortunately, when you look at the historical experience, it repeatedly shows that unanticipated events often catch us by surprise. and as mentioned earlier, we end up paying a high price in blood and treasure for fixing that because we're not ready for either the scope of the conflict or the nature of the conflict

that we have to deal with. if you take a quick look at some of the, at the history lessons, and i'm not going to get into history in great depth right now, but world war ii we were tremendously unprepared for despite what had been going on in europe for a long time because we were not going to be engaged in the war. and finally when we were able to produce a lot of material, the tanks and aircraft and so forth, making us the arsenal of democracy, we were able to equip the force quite well. but the training took about three years of combat. people forget what happened with the debacle in the philippines. tremendously unprepared american forces were just suffered devastating setbacks by the enemy. kind of look at the end, but they took a while to get there. so after world war ii, the message, of course, was to more pearl harbors. and that was the, that was the theme that everybody who was sitting in this verse of a room back then was saying, no more pearl hard hour boars.

well, guess what happened? five years after the end of world war ii, we don't need back forces anymore. we have the a-bomb. north korea invades south korea, remember that? and we send a task force under the command of an officer named smith under the 25th infantry division into korea. they run into the north koreans, the north koreans just ran right through them. massive loss of life. and, again, at the end of the korean war, the pot toe was no more -- motto was no more task force. then we have vietnam. and in vietnam we had forces, but the forces were prepared for major combat forces against a mechanized soviet army in europe. they were not prepared for counterinsurgency operations in the jungles of vietnam. in desert storm and desert shield, fortunately, we were able to deploy forces mostly from europe, and we did a great job on that one. but later on we faced what had

happened, we had the faces of the iraq war where we did fine getting all the way to baghdad, but we were unprepared to deal with the counterinsurgency operations, and you just heard terry talk about some of the consequences like that. so while history's never going to repeat itself, we ought to at least learn some insights. as my dad always tells me, he says always learn from your past mistakes. you can make new and exciting ones in the future. [laughter] so first thing i would say is when you look at history, our ability to predict these emerging threats is very imperfect. even when we've had, essentially, the -- a case where we had the option to deploy force, we've had well less than a year in all these different cases to get ready for it. and the second point is that readiness degrades very quickly. in a matter of months, your training and so forth will rapidly decrease, and a force that did something six months ago is not the force that's prepared to do it tomorrow. and that's also very much

situational. you may be prepared to defeat the soviets in the plains of europe, but you're not prepared to deal with an insurgency. and the other part we really need to pay attention to today is that leaders who are trained and developed under one set of circumstances may not have the mental agility to prepare for the other. so leaving that the historical record, let's take a quick look at a couple things. number one, i want you to understand that military operations are extremely complex. i know we have a lot of veterans here in the audience, but unless you've been there on the ground and you try to orchestrate air, sea, land, armor, supply and so forth, it's an extremely complex operation. and so it's done by, essentially, a combined arms and some may say a joint team where everybody has to know their role. and if you don't have -- and you can very quickly a single point of failure. it's like having a football team that does a great job, gets within field goal range. someone says where's the kicking

team, and you haven't got a kicking team. so the point i would make there is it's a joint team that's only as strong as its weakest link, and we need to keep that as we look forward to it. so what are some of the different dimensions of readiness? the first thing you look at is personnel. you've got to bring in the right people with smarts. this is not, you know, the ability to do high school-level stuff. you're talking about graduate-level sorts of things that you're asking your armed forces to do today with some of the technologies that you're using. you need to bring these people in, people of highest quality. you need to be able to train them so they have the individual skills to do that. and then you need to be able to retain them. you can't just keeping training -- keep training new people as they come. you need to keep them in. you need to have leadership. of leadership is the catalyst that often pulls victory if from defeat, and that's tremendously important. all this contributes to morale. a great quote from napoleon who said that morale is to the

physical as three is to one absolutely applies today. if you have an ill-trained force not well equipped, to male is not -- morale is not likely to be high. so personnel, the first leg of the stool, if you will. the second is equipment. do they have the right stuff, the number of tanks, airplanes and stuff they're supposed to have. and the second part is does that stuff operate? is it broken down? is it stating in the motor pool because you can't get repair parts for it? both of those are important, and the maintenance and repair of all this stuff absolutely critical. >> also training. training is the easiest thing to cut because, you know, you don't buy training in big bunches, so there's no big constituency for it. but you have to be able to get people out there and do tough, realistic, demanding training. another favorite quote from army guys anyway is from irwin rommel who says the best form of welfare for troops is first class training, for this saves

unnecessary casualties. so how well the forces are trained is tremendously important, and it's also a tremendous confidence builder. some of the exercises that are going on in the korea these last couple weeks for 8th army and all the other elements of u.s. forces, korea and throughout the pacific have participated with our korean allies in combined operations. tremendous confidence builder in the ability of both of those forces to operate together. to that's a very important thing to look at. so why is all this at risk? why are we doing -- what is the concerns that baker has identified? well, one of it is that you're going to come up with imbalance. the personnel accounts, the operation maintenance accounts and the procurement accounts are all handled separately. so you have different people looking at all these different things. so they're saying his leg of the stool and not hers. and there's a risk here that you're not going to do that. in addition, some of the things like training. you can reduce the number of

spare parts, you can reduce the number of flight hours you give people, reduce the amount of fuel. you can't buy nine-tenths of an aircraft carrier. the other thing easy to produce is maintenance -- reduce, maintenance. not buying repair parts. then you have to open these huge backlogs of things that, you know, okay, if you throw money at it, you can't buy the stuff. there's no time to repair things before you have to send people off to combat. so the point i would leave you with is that it's very important as we downsize the military which i think we're going to, i mean, it's probably -- it's very difficult given the current budget and the levels we are right now. but we have to be smart about it. we have to maintain balance among personnel, the equipment that they have, the maintenance of that equipment and the training that's available to them so that you don't end up with an unbalanced and ineffective force. again, i thank you for your interest and look forward to

your questions. >> thanks. >> very bright and sunny after all that, ready to go? [laughter] our microphone folks get in place, and we'll take some questions. i'm going to ask the first one, then you'll go next. all right. this may actually be a good one for the end, but i'm going to ask at the beginning myway. i would like each of you to give we what is the first and be best single step we could take to mitigate the dangers that we're facing with a potential hollow force. and you can go in whatever order you want. >> want me to start? >> ed. >> you've got to have some sort of metric. you have to have some way of looking at the problem. we have a relatively sophisticated defense readiness reporting system, and it crunches all the numbers. but it's, number one, it's a backwards looking indicator, shows you what you have right

now in the motor pools as a consequence of things. but it doesn't look at things like the training, the individual training of your personnel, you know? you cut out contractors in some place and so forth who are training that radar technician who's absolutely keeping the whole fighting force available. those sorts of effects. so we need to have a holistic ability to look at all these different dimensions of readiness and what's happening to them as we pick some of these changes that may have much longer-term consequences than we anticipate. >> for me it's very simple, resolve budget impasse and set aside sequestration and don't cut the defense budget as much as would be likely to occur as we stand here today. >> terry? >> so i have some thoughts on the long term, midterm and short term. let me hit the long term one. we need to strengthen the economy. the source of our military strength derives from our economic strength. our political strength derives from our economic strength. and so it's all about the economy. and so the best thing we can do

is get our economy healthy again, provide the business environment that will lead to hiring people in skilled jobs, grow the revenue base and get more resources for investment so that we can maintain the readiness levels that we need. that's the big, strategic thing to do. it may not be the short-term thing to do. it's going to take a while. >> okay. all right. gentleman right here. please identify yourself and ask a question. >> thank you for the presentation. my name's doug brooks, and i really enjoyed particularly the presentation on the gulf regional -- [inaudible] and it seems the first thing to me that gets cut out is the operate about despite we've the past decades we've been involved concern. [inaudible] even though a fraction of the cost. >> great question. it's about priorities, right? you used to have ten bucks, now

you've got seven. you can rack 'em and stack 'em, you know? and you've got 50 missions, you can afford four of them. it's about priorities. and now that said, you know, the army has taken steps, they've stood up now in enduring organization out in winchester, virginia, called the transatlantic division that's supposed to at least provide the cadre and the structure. but as we speak, it's getting extremely lean. and a lot of the people that had the experience and the subject matter expertise, they eventually grow up and retire and move on to other things, and you lose all of that knowledge and understanding. so you've got to capture all that, institutionalize it and, guess what? you've got to train it. you can't learn how to conduct stability and reconstruction operations or other types of military operations many combat. in combat. and it's interagency. of it's not just the department of defense on the battlefield. state department, usaid. you go through the list, they're all out there on the battlefield, and we don't practice with 'em. and so if we want to do it bad

again, we can do it bad again. i'd like to do it better. >> let me just say that in this particular case i think that the problem starts at the head, and that's a policy problem. the strategic guidance is explicitly clear that maintaining long-term, sustained stability operations is not of vital interest to the united states. and so that the policy is going to, um -- it runs exactly counter to what was just recommended. >> so, ed, counterinsurgency, stability, all those kinds of things are all debate about about where today fit in the priority scheme. but if you don't want it to happen again, you've got to train it. but it's a question of funding. so you've got to mitigate risk, right? what's the minimum i can do, the minimum investment so if we have to do it again, you know? i mean, the last time we probably did it was vietnam.

but then after the after first gulf war, they rebuilt kuwait, that was peacetime. when we rebuilt germany, that was peacetime. you know, we need to seriously think about the policy issues here. is the something we want to do? how much is our responsibility? if korea breaks loose, okay? what's the u.s. going to do about it postconflict? so those are policy issues. i'm not saying we should or shouldn't do it. we should understand what it is, understand the risks and make prudent investments to mitigate those risks. >> if i could just add one point. you know, when you're prioritizing things over there in the pentagon, you have to look at, you know, how much time would be available to fix things. we don't have it right now, do i have, you know, two days or six months or years and so forth. so to echo one of the points that carey's making, you don't want to lose that expertise. i was, i was -- as you can tell from my gray hair, i was a

vietnam veteran. i served in -- i was in an advisory role out on the cambodian border. and we really knew how to do counterinsurgency. we had it down pat, and probably everybody in the army who was serving then did. fast forward when i'm seeing what happened in iraq, i said what is the matter with these people? what happened to all of these lessons learned? and they were gone. so all of those lessons learned from vietnam became lessons relearned at a very expensive cost. so, okay, you've got time to put that back together again with, but you have to have, you know, do that critical strategic investment mostly in the knowledge base so you're able to reconstitute that if necessary. and it's not a big cost. it's a function of giving a little bit of focus to it. >> and i'll tell you, the lessons that were the most painful to learn, generally institutions like the military and the u.s. government want to forget about because they were painful. [laughter] and, unfortunately, we can't by fiat decide we're not going to

be involved with them again. another question. all the way in the back. >> my name is joseph -- [inaudible] from sky news arabia. after the afghanistan war and the iraq war, do you think that the united states is weakened, and that's why we're not taking any decisions to what's happening right now in syria? and how the u.s. military is going to prepare itself in a mutant future -- [inaudible] >> um, are we getting weaker? i think absolutely we are, but we're doing that by choice, not by circumstance. in other words, i don't think that it was inherently the case that we would get weaker or necessarily the case we would get weaker just because of the stress that was placed on the force in the combined operations in afghanistan and iraq.

primarily in my judgment, what we're seeing here is we're getting weaker because the budget priorities, um, in washington are shifting. some of that is understandable because of the circumstances of the economy that were just explained here. others are not nearly so defensible. so that i think that at the end of the day, um, this is something that we're doing by choice, not by circumstance. >> let me follow up on that. it's not that the military capability is not there, a question of national will. and, obviously, i think the experience in both iraq and afghanistan will very much flavor the response to what's going on in syria and the potential expansion of that conflict. and, again, i apologize for using historical analog, but after vietnam you couldn't pay

people enough to get back into counterinsurgency operations, but the threat did not go away. particularly in central america. so you saw major communist-led insurgencies in nicaragua and el shafl door. the u.s. had to respond to those. the response used was very, very different than the response used in vietnam. so i think if you have someone from whomever think tank walks over the hill and says, you know, the solution to these sorts of problems is to put large u.s. ground formations on the ground and have them shoot at the countryside for a few years is probably going to get offered a short walk into the potomac. what you will see, i think, is something very different where it's much less boots on the ground, it's much more dependent on enabling the actors that you have in country, the syrian free army and so forth, in order to be able to do what they have the potential to do as opposed to the united states trying to do it itself. so i think that's what you're going to see as the ultimate --

[inaudible] >> okay. another questionment yes, sir. >> my name's lindsay nice. colonel, is it -- [inaudible] >> yeah. i have trouble with it, too, so don't worry about it. [laughter] >> in the remarks to what needs to be done, i appreciate your paul kennedy argument about it's the economy that's going to drive everything. colonel dunn, your point about we need to deal with facts, the metrics, i appreciate. baker, your point about we need to resolve the political differences which is the core of the issue with sequestration, great. are you all implies is sitly saying that you're -- ill police sitly saying that you're satisfied by the narrative provided by the joint chiefs? are they saying what needs to be said? >> well, let me look at that from the purely civilian perspective. um, and you understand this probably as best as anybody.

people that, um, are confined to the policy world, particularly on capitol hill and at the higher reaches of the executive branch, guard their prerogatives very jealously. military people are supposed to be helping inform policy and not acting politically. now, occasionally a military officer will put his stars on the table and say i can't stand this anymore. dashed be done very rarely -- that should be done very rarely. and so that i don't think it is fair for us in the policy community at the same time to jealously guard our prerogatives and then expect the professionals in the military or other elements of the bureaucracy, the foreign service, the intelligence community or whatever to bail us out.

so that i tend to think that with civilian control of the military in particular, that's important. and so that my tendency is not to put these problems on the shoulders of the military officers. that's not really their proper role. that's my opinion. now, people who have military experience on both sides of me may have a slightly different perspective on that. >> well, you know, the role of a service chief to be an advocate for his or her service. and they're going to do that. and ordained military people, they're never going to have enough. you're never going to be ready enough, never going to have enough ammunition, enough armor, enough training funds and so forth. what you expect them to do. and then you go over to the congress, and the congress has to help prioritize things. you need to sort through all that, you know? i only have a finite amount. how do i maintain the balance in this? what is enough? and you have to, you know, military preparedness is not like a bond where ye