>> there is a movement to territorial gain. >> the house armed service chairman buck talks about house security and later a look at mortgage lenders proposals fanny mae and freddy mack. writing because any show of

tre strength is akin to starting a war. the house committee works on the 2015 defense program bill tomorrow and you can watch live coverage beginning at 10 a.m. eastern on c-span and cspan.org. >> first i welcome not just the heritage but our events this month. this is protect america and we emphasis defense related issue but we work on it all career around. we have a rare treat this morning. we have an opportunity in the midst of the ndaa markup and fight that has begive to have

shh the chairman of the house committee come speak to us. the chairman is an advocate for sensible reform. he is also anom enemy for irresponsible decisions that sometimes proliferate in this town. i decribe him as a true reagan-republican on defense issues and he comes by that honestly since he represents his district -- his district is where the reagan library s subsides. we will take questions after he is done speaking. i will give you admiration first and if we don't hear a question

mark at the end of the second system we will ask you to sit down. the idea is standoto have the cn speak and not to have speeches from the floor. if you would like to get a speech in here, see me after the event and i will see if i can book you. i would ask you join me in welco welco welcome howard mckeon. >> thank you for that warm introduction. i am sure we all feel much safer having a special forces guy in the room. thank you for the heritage foundation for >> host:ing me at your s-- for g me at your sixth annual protect

america month. i hope the heritage continues this month celebration for several years to come. here is the state of defense six years after the president took office. put plainly our foreign aid is a mess. i am not sure if we are pivoting to asia, the middle east or europe. polls have shown deep dissatisfaction with the president's sure stirring of the ship. i want to talk about the hole we are in and what it means for the united states and what it means for the larger international community. we need to start by asking what is our central foreign policy goal and what role was dethe united states military play in achieving it. should we be working to maintain

our special role in the world or should we limit that ambition to territorial defense? it is a fair question to ask. many in our party are working through that question as we speak. we answer it by trying to define what americans want from their military. most want to live their life in peace and security. they want the opportunity to advance and the freedom to make decision and they don't want to worry about their personal security or affairs of state in far away lands. how does the government fulfill that obligation? lincoln said and i quote the object of government is to do for the people whatever they need to have done but can't do

for themselves. an individual can get health care without the government. they can save for retirement without the government. but cannot resist foreign aggression without a strong standing military. i think that heritage cracked his code a long time ago. small government. strong military. a small government opens the door for a strong economy. a strong economy powers a strong military. and a strong military protects the government and the economy. america's strength alone for deca decades has encouraged good behavior from bad actors. there is an elegant wisdom in that simplicity. it is no accident that the expansion of russia and china has come at the moment we are

dismantling or military and retreating from the world. with russia invading ukraine, china provoking our pacific allies, al qaeda regrouping, and north korea beating the drum and ongoing fight in the middle east, i think the president has lost sight of his purpose. military power and diplomacy is a service the government provides the citizens and the point of the service is to allow us to lead free, secure and happy lives where we are not affected by troubles around the world and free to focus on communities and freedoms here at home. under president obama, government isn't holding up its end of the bargain. instead of using the military to deter terrorist and aggressors abroad, this administration uses regulations and bureaucrats to

deter entrepreneurs here. government is intrusive at home and weak overseas. that balance is out of whack. the result is an american that is weakened internally and externally. members of our own party have contributed to one element of this decline. president obama is wrong headed but he is not stupid. in 2011 the house forced him to cut spending. what did he do? out of the entire federal government, with countless burroea bureaus and agencies, what did he offer? half the cuts we had to make out of the huge federal jug came

from the huge single agency. the military. he has directed a trillion dollars in cuts for the military. the republicans ignored mand tory spending and entitlements and made massive cuts to the military reagan built. this hurt our country inside and outside and hurt republicans in a real way. it opened a rift in the party and it risks a signature conservative issue: strong national security and defense. i warned of that risk for three years now. but too many members of congress took my warnings as just numbers on paper that we could live with. now they are coming to me to

plead save may base. save my armory or my factory or my production line. the numbers have finally come home to roost. i would like to help them, but i can't. there just isn't enough money. i want to thank the heritage foundation for standing strong on national security. many good conservatives fell in the president obama's trap. but you were not among them. i am grateful to you for holding the line. now we made our choices. now bills are coming due and it is time to pay the piper. tomorrow i will introduce the chairman's mark for the national defense authorization act. through smart planning, moving resources and targeted cuts and reduction in bureaus we have

been able to save us prom the blow. this is the last year we can triage the pain. next year unless something happens it is really going to hurt. this year's defense bill is $45 billion less than the 2014 request. that is what the whitehouse asked for and the limit set by earlier budget deals. we are funding $215 bill frn the base defense budget and $79 billion for the war in afghanistan. that is a place holder because the president still hasn't decided on the final mission there. so now we have to start making some hardened choices. given the failing security situation abroad it is the height of stupidity we have to make them. we have done a lot of robbing

from peter to play paul. we had to nickel and dime some weapons that combat and commanders need. we looked for savings in programs like the literal combat ship and military construction programs. this freeze up coin for higher priorities. the savings allow us to refuel the us georgia washington d. ss. washington washington -- it let's us purchase more tomahawks. we will fund five of those in this year's mark. most importantly it let us buy gear that keeps the troops safe. more money going to body armor and eject seats in aircraft. some is going to operations that

just started flying. the choices were painful and i would like to see a defense budget that meets the realities of resurging russia, ballooning chinese military, iran, north korea and expansion of al qaeda. take the a-10 warthog ground attack aircraft this is the finest plane ever built and saved hundreds in combat. it is to be replaced by a plane, the f-35, which i am a strong supporter that is better to do other jobs and won't be mission-ready for another few years. for the sake of every american who has been in a fire fight i want to save this plane but i just can't do it. not at these budget levels.

the money simply isn't there. so i am directing that any a-10s retired in 2015 be placed into special storage. that is they maybe taken off line and kept in a recoverable fly away condition. it is my hope the 2014 elections will bring sanity back to security and we can bring the a-10 back into service. if we find ourselves with a budget that matches reality we will need to restore and modernize the a-10 warthog ground attack aircraft. russia for reasons known to putin wants to start the great game up again. my mark will stop the

cooperation with the russian military for the foreseeable future and bars us from transferring missile technology with russia. first, mr. putin must leave ukraine before we restore this. second he must comply with the nuclear force and the conventional armed forces in the europe treaty. we are restoring the russian military power report with an annual account forces and no termination date. and immediate nato memberships for georgia. i can go down the regions where we have similar challenges. china, iran, north korea, and africa. but we would be here all day. i will speak briefly to one.

in 2001, we understood we had to get afghanistan right. it is 2014 and we still need to get afghanistan right. i was recently on a visit there. i can tell you our troops have done amazing work there. they put the taliban on its back and they have done it without much encouragement from their commander in chief. it has been two years since the president visited the troops there. i c i think he is overdue to go back. the troops need to hear from them and he needs to hear from them. on the armed services committee, we have to basic obligations to afghanistan. we just give our forces everything they need to get the job in afghanistan done. and we also must be careful stewards of the tax money we spend out there. i receive some troubling reports

that the karzai government is unfairly taxing american companies that are doing reconstruction work in the country. that is not acceptable. while i will fully fund the forces there i am drawing a line. i am not allow president karzai to tax the hands that feeds him. for every dollar afghanistan taxes on reconstruction and aid work i will withhold $1.50 on american aid to afghanistan. spending money wisely is just as important as the money we spend. that touches on a key point. i will not bore you with long details of defense acquisition reform other than to say we have got to get smarting about the way the pentagon spends. the vice chair of our committee has started a program to

overhaul the way we buy things. i am grateful for his work. this is no small hill to climb. it has been attempted before. we have included some of his reforms in the re, marks and he will continue to look into this for years to come. we have to get smarter about the business we do. we can start by restricting military equipment to allies. this bolsters our friends and makes the weapons cheaper for friends at home. strategic reform, in my opinion, is long overdue. the office of secretary defense handed us a review that was a piece of junk.

it should not be a tool to endorse the obama administration's foreign policy or any administration's foreign policy. i will restrict the office of the secretary of defense's budget by 25% but will reform the qdr to make it easier for the dod to give congress the information we need. we are doing this because military power is the fundamental, irreplaceable component in diplomacy. next year we will have to dwindle down to a little stick and we will suffer and i think the world will suffer. i understand there is a

separation in the party where some want to withdraw. the idea we can leave the world alone and focus on our problems at home is attractive. we have lots we should be working on. and it is also a goal to create a freer america with more money in your pocket, but the execution they are doing has the opposite effect. we cannot assume a reduced pr forward presence and smaller military is better to our freedoms. military power and diplomacy gave us an evolution in diplomacy, economics, and

security. two of those diplomacy and security were made possible by the military that reagan built. they paved the way for the evolution in economic thought. as the uncontested super power, america has guided the world with a steady hand. sometimes viseable, sometimes n invisable. we reaped a windfall were the efforts. we have a strong military presence abroad because it is in our interest to do so. the military is unique in this regard. it is one of the few federal programs where we realize a return on our investment. we will always have the debate about what foreign policy should do and where our military should

be. that debate is welcome and healthy. this is my final defense bill and my final year in congress. if i can sum up all that i have worked for in the past four years as chairman it is this: i don't want america to be a product of the world. i want to world to be a product of america. thank you for having me. i am happy to take a few countries. >> we have microphones and ask you when the chairman recognizes you to identify ourself and speak in the mike because it is being recorded. >> saw your hand first. >> thank you, sir. mr. chairman. you talk about efficiency and reducing waste, overhead for example. and as i understand brack isn't

in the ndaa and they are referring to put it back in with conditions so they would not worry about are repeating the 2005 round. what are the odds of getting any form of brack back in the ndaa and when you are trying to find money why isn't that a priory? >> every time this comes up we ask the dod to give us information on savings from previo previous bracks. the information we are have received is stetchy at best. we haven't finished the last one and we are talking about another one as a money saving adventure and everybody knows first it cost money before you reach potential savings. so i understand, mr. smith's

concern, and i applaud him for his courage. but it isn't going to be in the defense bill this year for sure. what i have really tried to do is hold on to as much of our defense that we can in the event in the something in one of the countries i next -- mentioned -- exploded. like the a-10 warthog ground attack aircraft for example and we could get it back. if we found ourselves in a major situation, and it could happen in a moments notice, we would want everything we can bring to bear to bear and we would change our priorities would change. hopefully there would be some rational as i mentioned and

after the next election we can sit down and see what we can do about fixing sequestration and getting us back on a sound footing to defend the national interest. yes, sir? >> i wanted to -- you mentioned that the government is intrusive at home and overseas. it didn't sound like an attack that doesn't name itself. that is why first question. and the second question -- >> i am not hearing too well. what was the first question? >> when you spoke about -- you said the government is intrusive at home and weak overseas.

and i am asking you it didn't sound like an attack against the united states. it can't be viewed as an indicator of an attack against the united states. >> is the characterization of the president's policy an att k attack? >> no, the attitude of the government is working against the people. >> is the president intentionally weakening the united states? >> i can't get into somebody's mind to know what their intentions are. i am just looking at facts and results of what happens from policies. so i am not condemning someone

for their intentions. what i am saying is we have weakened ourselves militarily and our defense posture has been weakened. i get people in my office where is america? what is happening? we have made commitments to people around the world we would be there to help them. taiwan -- china is pushing us harder and harder away from our ability to carry out commitments we have made there. and i cannot other places around the world where i have seen that happening. >> i had a second question. >> let's just do one for now and try to get as many people as possible. >> hi, sir, megan with defense daily. on the topic of acquisition

reform, it looks like a lot of what you added was funded through service contract reduction. and i wonder with it being early on in the acquisition process are you confidant they can be reduced without causing harm and what happens if they can't be reduced? >> i have a written response to that because somebody asked that question. but the service contracts -- we saved $800 million. they make up 50% of our acquisition budget. but they have not received anything near the oversight. we have not had the time or ability to give them the proper pa oversight. the ndaa that i will introduce

tomorrow cuts service and facility contracts by 5%. if we cannot find 5% savings shame on us. i have given lots of speeches and the biggest concern i have had with the cuts is we are taking away from readiness and that means lives. we will do our best to make sure we get every get of readiness we can from this budget. but one of things i have looked at is you can make sure everybody is trained to the f l ful fulful ful fulfull est but if they are not prepared or trained that is a problem. it is a real tight rope to try to make sure every dollar is spent wisely and that is what we are attempting in this bill.

yes? >> voice of american persian television. how significant is the nuclear deal with iran to you and your colleagues, chairman? and does it affect the size of the budget you are forecasting for iran if you achieve what you would like by july? >> you are asking about iran and the -- >> iran. >> one thing i wish i could do when i leave congress is get something in my ears so i can hear better. but iran is one of the problems that i think we have been trying to negotiate and talk to and

work with them. in the meantime, they can continue moving forward on doing their -- whatever their long term plan is with nuclear energy or weapons or whatever they are doing. i think it is something we have to be individuaware of and watct they do. i know when i met with our commander when he first got the job, he came in and said three things keep me up at night and he said iran, iran, iran. and he went out and toured his area of responsibility and came back and said the same thing. when he retired he came and we had a meeting and he said the same thing. it is just something that we really need to be aware of and watch. as we cut back our ability to defend in all of these spots

around the world we weaken ourselves. that is what i meant about weakening ourselves internationally. since world world two we have kept the seas open. there is seven choke points arou around the world. if you shut one off, it would have an immediate impact on the economy and that is taken for granted. we are cutting our navy down. i was talking to the navy secretary and cno a few weeks before the hearing and i asked a question because the secretary was saying we are building the fleet and the question was how many do we have 283. how many next year? 273. i said how is that growing the fleet. we need to be constantly looking at this. we are cutting back the navy

smaller than it has been since world war 1. the ships are more powerful and could do a lot more than battle ship or a ship we had in world war i. but we have not figured out how to have them in two places at once so numbers count in that regard. yes? >> rose mary with light of the u.s. in light of the facts we are reducing our armed forces, do you think it would be appropriate for congress either as part of ndaa or a stand alone provision to tell illegal aliens they can apply to the military and get amnesty? >> you mean as a way to fill the numbers in the military? >> we clearly don't need that if we are risking americans

>> got it. i thought i knew what you were asking but i thought maybe i misinterpreted it. no, we are cutting our army. when the secretary and chief came in they laid out the budget and said this will take the army down to 450,000 unless sequestration comes back. and i said wait a minute. sequestration is the law. it comes back. if nothing happens it is the law coming back in '16 so we are going down to 420,000. marines not to 184,000 but down to 175,000. and i asked general amos, i said what is the plan call for if the north invades the south in korea? he said the $175,000 gives us 21

combat birgades and that would leave us one to take care of the rest of the world. it is absurd to be cutting our forces this much. smaller army than any time before world war i and we saw what happened. we would pearl harbor and hitler going through africa and europe. and when we got in the war a few years later we had an army of a few million. we had to activate the draft and we were taking everybody we could find. but your question, i think, was

about if we should put an amnesty for those that serve on the military. the answer is no. >> henry, retired government. i wondered about the general pricing of say an aircraft or ship compared to the jen -- general inflation -- do you think the prices are at inflation or are the profits too great? how to look into this and not ruffle too many feathers? >> i think there was a period when we went to war in iraq and afghanistan where we were really building up the defense budget. but it was more of a gradual build up. what we are seeing now is the most drastic short-term cutback

that we have had since world war ii. so i think we can get into a debate on should we have a certainly percentage of the gdp -- without regard to inflation, should we have that much spending on defense. what i would rather see us do is have a real qdr that looks out 20 years and says what are the threats. and then say what do we need to meet those threats instead of coming up with we have this much money and this is how we will spend it and hopefully we can defend against potential problems. i think it is a backwards way of coming to the problem. i don't know if that answers your question at all. yes?

>> mr. chairman, austin wright from politico. what are you doing to convince republican leaders they need to renegotiate budget gaps for 2016 and what compromises do you think they should? >> i will be leaving town at the end of town this year. i announced i am not rerunning. so as a consequence a lot of people are not listening to anything i have to say. we will have good leadership and they will work to solve the problem. my concern this year is getting the national defense authorization act done and we will move that process forward tomorrow with the markup of our

bill. and i am hopefully they will move it is the senate and we will get it down before we leave town in october. yes, i see two? both of you. one and then the other. >> david weldon with npr. the pentagon wants to retire you and your bill calls for restricting funds that would be put toward retiring it. you want to keep the tube flying. why and why not have an an unmann unmanned vehicle in place of a manned u2? >> there are capabilities the u2 has that the global hawk doesn't. we had a general in town for a posture hearing and he gave a

classified briefing to members and i will not get into anything else other than to say in my opinion it is very important we keep the u-2 flying. thank you, mr. chairman. ian smith, unaffiliated. regarding the potential for a military amnesty provision for the ndaa -- >> wait a minute. there is no -- i answered her question. the response was no, it isn't going to be in the bill. >> well there is the potential for it to come up for an amendment or senate, of course. >> okay. >> i am just wondering because illegals lack proper

documentation and how can we varify their identity? >> you want to have a debate on that? >> i trade to frame it as a question. >> it isn't going to be in our mark, it will not be in our mark, our committee doesn't have jurisdiction for that. that would fall under the judicial committee. if someone offers that on the floor, we would work the process. but it is out of my hands. pardon? that will come under -- we have checked with the parliamentarian and they said that would come under the judiciary so it will not be in our bill or mark tomorrow. yes?

>> i am with inside the pentagon. i know you have a place holder for oko funding and i am hearing if you are hearing what the final numbers for the funding and how the calculations workout? >> nothing. that is why we put it in as a placeholder. we think we know enough about what has been talked about for a mission in afghanistan and left enough in there hopefully to cover that but we have not heard anything. there has been no decision made. i know one of the things we are looking at -- when i was in afghanistan, i came back thinking the most important think we had to do was get the bilateral security agreement signed immediately. that didn't happen.

so when i was there talking to general dunford he indicated we still have time and can work it out. they held an election and had a good turnout and things seemed to be moving along well. they had two candidates that will be in a runoff in july probably. both of them have said they would sign the bilateral security agreement which gives our troops protection we would live behind for a continuing force to stablealize is train. we have turned the fighting over the team already but we will get them to handle things they are not yet able to do for themselves and this is nothing under logistics and medi vack and those things they are not able to do yet.

i am hopeful they will hold their election, sign an agreement, the president will make a decision on how many troops are to remain behind our nato al llies who have agreed t continue the mission of training and stabilization and that should all be done obviously before september-october. and at that point, i think, somewhere along in between there, they will come up with a number to submit for oko and we will put that number in. >> thank you, mr. chairman. >> is somebody watching the time? >> my question is about asia. could your tell us your idea about the role of japan as the

u.s. allies especially in terms of the right of defense. right now the japanese governor is trying to get hard. what do you think about that? >> japanese government is -- >> the right of the corrective defense that the japanese refineries are trying to have. the right of corrective self defense. >> they want to have a strong ability to have a stronger defense. >> collective self-defense, yes. >> there is a member of the japanese parliament that did hold the same job i hold. he was the chairman of their foreign affairs committee and he has come to america, we have had a meeting over the last year and a half, and we met four times over that time. he brought a member of an

opposing party with him last time. and i support them being able to increase, enhance their defense. each time he comes he has told me how the chinese have encroached closer and closer into the their air space and how they had to scramble their jets. before it was 18 times a reyear and now it is 400 and what it was at the height of the cold war. they want the ability to increase their defense capabilities and i fully support that. the same thing with sale of defense materials to allies. if they are willing to step up

and help provide stronger defense that helps us. it helps us in their ability to depend themselves and less need to depend on us and helping keep the workforce at work while we are cutting some of our dollars here at home. i am fully in support of that. and we are going to take a congressional trip this summer and we will be going to japan, china and taiwan and korea and looking at those situations over there. very important. yes, sir? >> thank you. dean from the american legion. the active component service members by law and regulations have a right to an end of

service physical examineation but the reserve component members don't have that. given the fact that the dod announced the army national guard and and national guard are not making their recruitment goals. why isn't that corrective less legislation in your bill? >> i am not sure -- >> there was a bill in your committee that is supported by 11 members to change the legislation to support mand tory examines for reserve component members to mirror what the active component gets. but it hasn't come up in the bill and i am wondering why it isn't in there. >> i cannot tell you why that isn't in there. i don't know. but i will know before tomorrow at 10:00. and there is plenty -- this is a

process. we will have a full markup on our bill tomorrow. there will be a chance for members who don't serve on all the different subcommittees to amend all of the subcommittee reports and we will get to the full committee and there is going to be opportunity for members to amend the full bill. even if it doesn't get in that bill, when we go to the floor, there is going to be opportunities to further amend the bill on the floor. and then a senate bill and then the senate will hopefully get a bill passed. if we follow the right order, we will have a consference and work out all of the differences and have a final bill that goes back to the house and senate for a final vote and for the president to sign and that is what i hope gets done before they leave in october. >> i am going to make the

moderators job and normally i do that by asking a final question, but instead of asking you if you will stay, i will give you another two minutes to wrap it up as you see fit and make the final comments you want to make. this is the final protect america month you will have as the chairman, but maybe you can come back as a private citizens. you get to make the closing remarks you like. >> thank you very much, colonel. i usually tell my wife i get the last word and it is usually, yes dear. we have been married now for 51 years, i guess, august is 52. we have been so blessed. i saw an advertisement for -- what is the senator that is

heading up heritage in >> dimint. senior moment there. he wrote a book "falling in love with america, again" and i thought that was a great thing. but i never fell out of love with america. and i think about this great country we live in and the opportunities it gives us. we have 30 grand children. and we have a new great grand child. her name is lyndan and she is residing at fort drum in new york and her dad is in the 10th mount division up there. and we have just been so blessed in so many different ways that could not have happened anywhere else. and i have been in congress 22 years now almost. it was something as a young boy going to school never would have thought about.

i live in california. this was another world in washington. they got along fine. i got along fine and i didn't need them and i was hoping they would never need me other than the taxes i would send each year. but we really are blessed in this nation that we cannot take anything for granted. the freedoms that we enjoy are not free. and the people that have fought over the years for those freedoms, for us, and for our friends around the world, i am going to next month we are going to visit normandy for the 70th anniversary of d-day. when i think about the men and women that lost their lives for us so that we can sit here and

we can argue, fight, discuss, debate, and at the end of the day hopefully come out with something we don't all hate or love but something we can live with. and really enjoy and appreciate. i was thinking about -- when i was home last week, my next door neighbor -- great young man and women and they have three little kids and he was getting out to get in the car and taking the kid to little league and when he said we are done we go to another place and this boy plays and this girl is going -- i mean that is america. and they just hope they we get it right back here. because they have their hands full keeping food on the table and just seeing the things they need to do to keep their

children hopefully to have the same america that old people like me have seen. and i see at times i have real concerns we are getting away from these things and we need to pull back to some of the abilities. the way we pull together in world war ii. i am leading akinson's books about the world war ii and the fight in europe. i remember a little bit of it. i was a little boy. we didn't have nylon or rubber. everything was fake rubber because the rubber went to the war effort. we saved our cooking fat and you had a little jar on the stove and poured it into that and it

all went to the war effort. and reading this book i see that we -- with 20, old used toothpaste tubes they made out of metal they could wire a b-17 and we collected hundreds of thousands of these tubes. everybody sent it in once they finished. i can remember my mom sending be a dime to by a savings bond and when i got my stamps in the book i was able to turn it in and get the bond. it was more innocent but everybody was involved. my dad lost his bestfriend going across a bridge in europe. so when he came home, my next brother was named after david ward because everybody lost

somebody. and we all were in it together. and now we have our people in the military and their families are sacrificing and i say the rest of us are in the mob. we are not committed to the degree we should be for those that are willing to lay everything on the line for us. we need to be committed and make sure they have the things they need to carry out their missionimission. i am going to leave congress, but i'm not leaving the fight. it is too important. >> appreciate it. >> the house armed service committee meets tomorrow to work on the 2015 defense program bill. we will have live coverage of the committee members crafting the $521 billion military spending bill. you can watch it here at noon

eastern time. >> if you were accused of being ambitious or wild hearted that was a death sentence. it meant you put the group before -- or i am sorry, it meant you put yourself before there group and for chinese history that wasn't imagineable at all. when i got there, things were beginning to change in some deep way. i began to here around me people talking about themselves. not in a self glamourizing way but in a way that it says it matters what i want in the world and the world i want to determine for myself. even the term in chinese, i, was

transforming. we talk about the me generation in the united states be a period where we focused on ourselves too much. in china it was the conception of what it meant to be a person. people talked about woman -- us, the family, the clan, the village and the factory. and after 1979 when the country embarked on this economic transformation, people had no choice but to think about themselves and that was the dynamic that drove my sort of eight year fascination and investigation of china. >> evan osnos on the rising conflict between the individual and the chinese government. sunday night at 8:00 on c-spans q and a. >> the defense department has proposed changes to military payro payroll that would limit pay to save $2 billgion to redirect

toward training and modern equipment. this hearing is three hours and 15 minutes. >> good morning, everybody, the committee meets this morning to review the department of defense proposals relative to the growth of personal cost. ... review department of defense proposals relative to the growth of personnel costs. we welcome the joint chiefs of staff to testify on these proposals to explain why they support them, what their impact is on the force and their impact on other areas of the defense budget. our witnesses on the first panel are general martin dempsey,

chairman of the joint chiefs of staff, vice chairman of the joint chiefs of staff, general ray chiefs of staff of the army, admiral jonathan -- chief of naval operations, general mark welsh, chief of staff of the air force,en we'll have a second panel consisting of nongovernment witnesses which i will introduce later. it's not often that all the members of the joint chiefs of staff testify before us in a single hearing. so, it nose up a that we have the opportunity to thank them as one group. the contributions they and those that they lead make to the well-being of our nation. thank you, gentlemen. thank you for the service of you and yours. the distinguished nate our of this panel reflects the importance of the questions before our committee this year. when we mark up the national

defense authorization act for fiscal year 2015, later this month, the decisions we make on compensation, core struck, end strength, readiness and modernization, will have a far-reaching impact on the men and william of the armed forces and the country. the 2015 bug request comes at a time of tremendous challenge and great uncertainty for the nation and the military. the department of defense faces a highly constrained fiscal environment in 2015. the $496 billion top line for the department remains the same from the funding levels in fiscal years 2013 and '14. and remains more than $30 billion below to the -- the funding provided to the department in fiscal years 2010, '11, and '12.

sequestration has already taken its toll on training, readiness, and modernization. and sequestration threatens to return full blast next fiscal year unless hopefully we act to mitigate its impact before then. these fiscal constraintses have led the department to propose a number of painful measures to reduce future expenditures. the budget before us proposes significantly lower end strengths for the ground forces through 2019, including a reduction of 50,000 more than had been previously planned, in active duty, army end strength, with smaller percentage reductions in the that are guard and reserve, as well as a reduction of over 16,000 in active duty air force end strength this year alone. the budget calls for retiring the air force's a-10 and u2

aircraft, inactivating have the navy's cruiser fleet, reducing the size of the army's helicopter fleet by 25%, and terminating the ground combat vehicle program. those are among other cuts. if the budget caps in law remain in effect in fiscal year 2016 and beyond, the department has informed us that, among other cuts, it would request further reductions in end strength, the retirement of the entire kc10 tanker fleet and the global hawk block 40 fleet, reduced purchases of joint strike fighters and up manned air area vehicles. inactivation of additional ships and the elimination of an aircraft carrier and a careyear air wing. the legislative proposals we are considering this year include a number of measures relative to

military pay and benefits. and that's what we'll be discussing here this morning. these include setting a pay raise for service members below the rate of inflation, freezing pay for general and flag officers, limiting incracies in the housing allowance below the rate of inflation, reducing the subsidy to commissaries and making changes to tri-care that result in increased fees and cost shares for most nonactive duty beneficiaries in all, these pay and benefit proposals would result in savings to the department of over $2 billion in fiscal year 2015, and more than $31 billion over the future years of the defense program. general dempsey and his senior enlisted adviser, brian bat tag

leearch wrote to this emptyee that, quote, these difficult choices will reach large savings over time to address the growing impanel -- impanel in our doesn'ts, ahouse is to ford modernization and still enable to us recruit and retain america's best. the letter went on that laying adjustments to military compensation will cause disproportionate cuts to force structure, readiness, and modernization, close quote. now, we surely must do all we can to minimize the adverse effect of the personnel proposals. but as long as the statutory budget caps remain in place, we do not have the option of simply rejecting the compensation proposals under the statutory budget caps we would then have to make alternative cuts. i look forward, as we all do to

the testimony of our witnesses and we thank you all and those with who you serve for your great service to our country, senator inhofe. >> thank you, mr. chairman. for the last decade our nation depends on the sacrifice of our molter maybes and families for security. in turn re have steadily increased their pay and benefits, and rightly so, and we should be proud of this. it's exactly what we should do for those risk their lives to keep us safe. however, misguide edifice school priorities of the obama administration and the runaway entitlement spending have forced massive cuts to national security spending. such as we have never seen before. these cuts have driven ore military into a readiness cries. squadrons grounded, ships tied to piers, training rote indications for ground forces have been canceled, and much needed modernization programs have been delayed or canceled.

we all in the this. retired navy admiral john harvey said we're sending the wrong signal to the force that is serving today, the one that fought two wars in the last decade and the force we are dependent upon to re-enlist tomorrow. we are telling them they just cost too mach, they constitute a ticking time bomb, and that their sacrifice is eating us alive. we're telling them that we're looking for a way out of fulfilling our commitments to them. this is not the right signal to send those who volunteered to serve in time of war. i think the chairman did a good job of listing the systems we have that are no longer going to be able to keep. the effect of this cuts are undermining the military's able to protect the nation,, and because of misguide edifice school priorities, we're now being forced to make false choices between paying our troops and their families what

they deserve, and giving them the training and capablities required to accomplish the mission, and return home safely. this is an irresponsible and reckless choice. if we spent what i think is necessary on national security, we would about in the mess we're no today so i'm looking forward to hearing from our witnesses. thank you, mr. chairman. >> general dempsey, welcome. >> chairman, thank you, ranging member inhofe and other distinguished members of the panel. you're right, we don't often appear as a group and particularly with our senior enlisted leaders behind us, and what i'd like to do is at the beginning here is since it's unlikely we'll see you as a group in your role as chairman between now and the end of the year -- at least i hope not. we would like to thank you very much for your steadfast and passionate support of america's armed forces, the men and women who serve and their families.

so, thank you, thank you very much, general. >> yes, sir. i want to thank you all for the opportunity to discuss military and i compensation, but as you mentioned this is only one part of a much broader effort to bundle reforms in order to keep yourselves in balance. this particular issue, pay and compensation and health care, is an important and deeply permanent issue for our service members and their families. as i've testified in the past, we're working to make sure that the joint force is in the right balance to preserve military options for the nation in the face of a changing security environment and a declining budget. we have been tasked to reduce the defense budget by up to $1 trillion over ten years, while upholding our sacred obligation to properly train, equip, and prepare the force. this requires carefully allocating resources across the accounts, restoring the readiness we have already lost and continuing to make responsible investments in our nation's defense. as i've testified before, this

requires certainty, it requires time, and it requires flexibility. while we have a degree of certainty in our budget for the next two years, really, for this year, we still dope have a predictable funding stream nor the flexible and time we need reset the force for the challenges ahead. we can't do this alone. our recommendations have lacked congressional support. notably our request to reduce base flux and retire weapons system wes no longer need and cannot afford. in the meantime, we're continuing to hemorrhage readiness and cutting further into modernization, risks to the performance of our mission and risk to those who serve continues to grow. as one part of a broader institutional reform, the joint chiefs, century senior enlisted leaders and selected mid grade level leaders have been examining pay compensation options for more than a year. we support the three departmentwide prims guiding our proposal to rebalance military

compensation. first, we're not advocating direct cuts to troops' pays. rather this slows the growth of basic pay and housing allowance and reducing -- and modernizing the healthcare system. southbound we assure the compensation package allows to us continue to attract and maintain the quality people we need. if we step up on the path and if the force rackets -- reacts we'll be back with recommendations how to just. third, the savings will be re-invested into readiness and modernization in all cases we'll continue to prioritize our efforts that focus on wounded warriors and the mental health challenges facing our force. we have not requested any changes to military retirement, as you know. we are awaiting recommendations from the military compensation and retirement modernization commission expected in february of 2015.

but to be clear, and to restate it, we do sprouter grandfathering any future changes to the retirement program. we're seeking $31 billion of savings in pay compensation and health care. if we don't get it we have to take $31 billion out of ready is in, and force structure over the same period. delaying the decision until next year will cause a two-year delay in implementation which will force us to -- in short, we have submitted a balanced backam that enables to us fulfill the current defense strategy and allows to us recruit and retrain the exceptional talent we need. our people deserve the best support we can provide. as leaders we must also exercise proper stewardship over the resources entrusted to the department. we have enough information to

make these changes now. we rye main committed to partnering with congress to make these and other difficult choices facing us. the. >> thank you very much, gentlemen. ed a still in. >> chairman levin, ranking member inhofe, distinguished members members of the committee. thank you for the opportunity to appear today. i'd like to add some context. it's important to recall that in the 1990s military compensation had fall ton a deeply unsatisfactory level relative the working population in america. with the help of congress we took action to close the gap, which involved raising the reasonable to of our compensation well above inflation. those increases worked. in 2001, u.s. median annual household income equated to the direct pay of an average e-7. now it's the issue 5 and

trending toward the e4, also receives health care, family services, leave, educational benefits, that well surpass the civilian sector, along with the potential for a generous retirement. in the process the e-has moved from being in the 50th 50th percentile of civilians with the same education and experience in thank you to being around then 90th percentile today. i don't think any of us would say our people are overpaid and we'd love to maintain the level of compensation, but if our joint force is to be sized. modernized and kept read request to fight, we have to play compensation on a more sustainable trajectory. we don't want to return to the 1990s. we're only asking for gradual adjustments to ensure we can recruit and retaken the most our -- retain the quality healto

our troops and our retirees, and it will continue to be free to those on active duty. still others say a 1% pay raise isn't fair when the employment cost index is going up at about 1.8%. but i would point out that our dod civilians have just been through three years of no pay increase, and they just received 1% this year. finally, some are also suggesting that we want to close all statewide commissaries. we've never considered that in any meeting that i've ever attended. in fact we believe our commissaries are important part of the benefits we offer our families. but we want those stores to have to work as hard as our unsubsidized exchanges in providing a good deal for our people. when think deca can find at least the first year's savings through efficiencies, not price

increases, especially since we exempted them from the 20% staff cuts that everyone else is taking. congress should also repeal legislation apparently lobbied for by the food industry that prohibits the sale of generics at our commissaries which takes money right out of our people's pockets. it really does. i recently bought a generic bottle of ibuprofen at a post exchange, which is not prohibited from carrying generics at a 73% savings over the brand name that the commissary is required to carry. nextoor. efficienciness generics to offasset savings. savings that will enhance the combat red yaness of our warriors -- readiness of the warriors they count on us to provide. we weren't confirmed for these position mist senate only make easy chases. we have to make the hard ones, too choices that have only gotten harder with recent budget cuts and we need your support mitchell service colleague wells now describe what will happen if

we don't receive the support and we have to ask our young men and women to fight with smaller, less modern, less ready force. i look forward to hearing your views and your questions. thank you. >> at miller, thank you so much. general odierno. >> thank you, chairman levin and the committee members. it's a pleasure to be here and discuss these important issues. i've had the privilege to lead our men and women of all services in both peace and war. i've witness first hand the selfless service, dedication, and sacrifice. the all-volunteer army has performed phenomenally in the longest conflicts in our nation's hit. it's imperative we discuss and under the appropriate level of compensation. not only to recognize the sacrifice of our soldiers and their families, but to ensure we sustain the premiere all-volunteer force. pay and compensation benefits must remain competitive in order

for us to recruit and retain the very best for our army ask the join force. however, pay and compensation must be balanced along with end strength, readiness, and modernization of our force. but it's necessary that we take a comprehensive look at every aspect of our budget. i fuelly endorse these department of defense proposals that do not directly cut our soldiers' pay but slows the rate of growth from allowances that are unsustainable. additionally it's essential we gain more efficiencies in our commissaries and health care, specifically tri-care. eye believe that proposals recognize incredible service and sacrifice of our soldiers and their families while allowing to us better balance future investments and in readiness, modernization and compensation. these are difficult but necessary decisions. taking care of soldiers is not just about providing them competitive pay and compensation

benefits. it's also about having the right capacity in order to sustain reasonable personnel tempo, invest in the most modern equipment and maintain the highest levels of training readiness. if the army does not get the 12 billion in compensation savings over the pom we'll have to look at a furor reduction in enstrength, lower our overall readiness posture, and slow even further our current modernization programs. it is my opinion that if congress does not approve our compensation recommendations, then you must end sequestration now and increase our top line. we must keep in mind that it's not a matter of if, but when we'll deploy our joint force to defend this great nation. we have done in every decade since world war ii. at it inculp pent on us to make sure our soldiers are highly trained, equipped, and organized.

we must balance or resources effectively to do that. if we do not, our soldiers will bear the heavy burden of our miscalculations on the battlefield. i am proud to wear this uniform to represent all the soldiers of the united states army, their sacrifices have been unprecedented over the last 13 years. we must ensure we provide them with necessary resources for their success in the future. thank you very much. >> thank you very much, general odierno. >> thank you, charm live -- chairman levin. senator inhofe and distinguished members of the committee, i'm proud to represent 633,000 navy -- excuse me do sailors-navy civilians and their families and especially the 50,000 sailors deployed around the globe today, along with their fellow marines. their dedication and resilience continue continue spire me and our citizens can take great pride in the daily contributions

of their sons and daughters in places that really matter. when i appeared before you in march, testified that we were compelled to make some difficult choices in our submission. 90% of the reductions in our 15 submission focused on procurement, force structure and modernization, as well as overhead reduction. contract efficiencies and buying smarter. the area of last choice that we address in the bug was cost growth of our pay and compensation. now, for over a year, as the chairman mentioned, the master chief petty officer of the navy who is with me here today, and i, traveled around the fleet and bases and listened to sailors and families-especially those who would be most affected by these proposed changes, both the increases and the decreases. the vast majority of our sailors and families told us they believe their total compensation package matches well with and in some cases exceeds the civilian counterparts but i don't believe

ore sailors are overpaid, nor do they believe that. our sailors and families are not enthusiastic about a compensation reform. but they were clear to us that their quality of service, their work environment, needs to improve. they understand that in this fiscal situation we face hard choices. we can't have it all. the reality within this given budget is that -- the one we have been given well-can't sustain our current personal cost trajectory and we need to address this problem sooner rather than later. today our total force personnel costs are 40% of our given budget, and that's up from 32% in 2000. that share continues to rise. in fact, since 2001, we reduced navy's end strength to 60,000 sailors. but the growth in personnel costs alone consumed 60% of the savings. and in other words, although the navy manpower has shrunk significantly, at the same time

we russed 25 ships in our inverier to, our personnel costs have spiked and that's been a burden in our ability to balance investments. the department's compensation reform proposals would generate savings to the navy of $123 million in '15 and $3.1 billion over the -- we would attempt to re-inwest virginia savings into the quality of service enhancements and that includes increasing sea pay, and to assure retention, improving 30 baracks, training buildings, morale, recreation and fitness centers, constructing baracks, fitness centers and training centers, and purchasing tactical takennors and simulators, purchasing spare parts-improve tool and providing more maintenance opportunities. all of these would address the dissatisfiers i mentioned. our saves' quality of their service. they're designed to help sailors get their jobs done effectively

and safely while equipping our man, and equipment challenges. the congress denied authority for the compensation savings, navy will be forced to back out this $3 billion of sailor squall of life improvements and we would also face an additional $4 billion resulting from pay increase -- pay raises reverting to the employment cost index. that would compel to us reduce readiness, ship building and aircraft procurement even further. we cannot afford to the equivalent of another basically $7 billion bill. our navy would be less ready, less modern and less able to execute the mission's outline in our defense strategic dives in the defense review. mr. chairman, this is a tough decision and also an opportunity. not seizing the initiative now means bill billions of dollars of additional costs on other programs we can ill afford, and given our current situation it's necessary to better balance our sailors' needs to ensure our

navy remains forward, and more importantly, ready, where it matters, when it matters. i look forward to your questions. >> admiral, thank you so much. general welsh. >> thank you, mr. chairman. ranking member inhofe and members of the commit yeah. it's an honor to be here. mr. chairman, might i add from all the men and women of the air force, thank you for your distinguished service to this country. you're a statesman, sir and have the respect anded a mr. asia of everybody on this panel. >> thank you. >> for the past 23 years the united states marin hey maintained an extremely high tempo in the middle east. nonstop sense desert storm ended in 1991 and performed speck tackily well and you have been supportive of increasing their pay and benefits. today we're in a -- last year, our readiness levels reached an all-time low. ace we struggled to recover, we

don't have enough units ready to responsible immediately to a major contingency and we're not always able to provide fully mission ready ewans to meet rotational requirements. our modernization forecasts are bleak. roughly 20% of our aircraft were bill in the 1950s and 60s and half were built more than 25 areas ago and now due to sequestration we cut 50 part of our current plans and we can't ignore the fact that the law as currently written returns to us sequester level funding in ny16. this forcees it into difficult positions. pay and compensation reform is a very tough decision. no one takes this lightly. but we feel it's necessary to at least try and create some savings. if we're not willing to make some tough calls, our air force will be neither ready to fight today nor viable against the threats of tomorrow. my most sacred obligation as chief of staff of the air force

to my airmen, when we send them to do difficult jobs in dangerous plays, they're prepared to succeed and return home safely. although slowing the rate of pay increases gradually reducing baa rates of relative to the mark, reforming tri-care and reducing commissary subsidies will hurt. what my secretary and i othe nation and the join team and our airmen are the training and tools in toes fight and win and survive. if the proposed compensation reforms are rejected the air force will be forced to cut 8.1 bill from readiness, modernization and infrastructure accounts over the next five years. we'll take significant cuts to flier hours and weapon system sustainment accounts, reduce munition buys and lower fund aring for training ranges, doing the readiness hole deeper.

abandoning the tx program would mean future pilots will train in the 50-year-old t-38, and we'll also be forced to cut instruction to 5 billion. these cuts will be on top of the difficult recommendations we have already made. some of which the chairman mentioned this morning. lowering our end strength by nearly 17,000 air men-the-year, die vetting the a-10 and u2 fleets and if sequester funding returns, divesting the kc fleet as well. we're out of good options. it's time for courageous leadership, we simply can't continue to did he ever every tough decision in the near term at the expense of military readiness and capable over time. we need your help. >> thank you very much, general.

>> imbalanced across the marine corps' budget. i, nor my fellow service chiefs and, more importantly, the men and women who wear our services' cloth, those who have served or nation so faithfully, did not set the conditions for the fiscal calamity that we find ourselves in. as service chiefs we're obliged to live within the budget and the laws passed by congress. senators, none of us like where we fine ourselves. we spent time restructuring our servicesser in the reality of a sequestered budget. while the bipartisan bug act provided relife i'm advised to expect a return to full sequestration in '16 and beyond. we have made difficult choices, all of us have, as we have attempted to build a balanced and combat ready force women have restructured and downsized

our services to live win our means. we have done all of this knowing full well that the world that we live in is a dangerous one. and international landscape that is simply getting more challenging as each day goes by. chairman, we will not do less with less in the decade to come. we will do the same with less. from personnel perspective-our men and women have been compensated appropriately for their many sacrifices over the past decade of war. i make no apologies for that. they deserve every penny that congress has afforded them. they have faithfully fought our nation's battles, all while success any keeping the enemies of america far from our shores. because of my loyalty to them, there is much about today's discussion on compensation reform proposals that, frankly, do not like. but i'm stuck with them. i'm stuck with them because i

have raided every other pot of money available to me to pay for a ready marine corps. as a service chief i am first and foremost responsible for the defense of our nation. that task comes before all others. it is the sole reason why america has a marine corps. to accomplish this the marine corps must maintain a high state of readiness. that's accomplished by having combat units that are highly skilled and highly trained. it is done by having the right equipment in the hands of warriors who my be headed headeo arm harm's way. the most important way to keep faith with our men and women otherwise send them into combat we the best possible training and the freshes of equipment and to take care of them when they come home. my challenge lies in balancing readiness, manpower, and modernization, all under the umbrella of sequestration. our goal of coinly fielding a highly trained and combat ready

force is pressurize bid military personnel account that has grown to 63 cents of every appropriated dollar. balanced against readiness requirements and an eanymore mick military construction account, the marine corps' modernization are eight percent, eight criminals -- eight cents on the dollar. lowest in over a decade. i'm responsible for taking care of the marines, sailors and families, including enshoe are our people are well compensated for their service and also afford the best training and equipment available to fight our nation's battles from marines quality of service is as important as quality of life to understand they must be prepared for uncertainty and must be prepared for their next mission. thank you for the opportunity to represent your marine corps and its men and women. i think that the committee for

continued support and i stand prepared to answer your questions. >> it's an honor foe in and chief brush, my senior enlisted advisor to be here today representing the men and women of the national guard. the men and women of the guard serve with distinction as a primary combat reserve, and we're also the first responder -- first military responders on sight in times of domestic crisis. i echo the concerns of the chairman and my colleagues regarding the critical need to achieve fiscal balance across the joint force. future fiscal challenges will dramatically constrain decisionmaking about the size, shape, and roles of our military. this certainly will be the case when budget control act funding levels return in fiscal year 16. therefore it is important that we act now.

despite the guard accounting for only 8.4% of the defense compensation and benefit budget, these proposals will significantly impact operational guard. the guard we have today is equipped, trained, and tested over the past 12 years of combat. modest investment keeps your army and air national guard ready. but if we do not act now to rebalance military compensation, we risk future training readiness and modernization cuts across the joint force. our success is unquestionably due to our most important resource, our people. every service member active guard and reserve, deserves the best we can provide within a fiscally sound solution. i believe the proposal before you provides the level of compensation and is consistent with the ready and modern force. mr. chairman, senators, the

national guard has been and will remain always ready, always there. thank you, and i look forward to your questions. >> thank you so much, general. we'll have a good turnout here. we also have a vote at 11:00. so let's -- one vote, i believe. let start with the six-minute first round. a number of you have mentioned the impacts of these budget caps and the impacts of sequestration. these are legislatively required, but we need to do something about them. i can assure you, and members, that we will have an opportunity to do something about the looming sequestration for the next fiscal year. i hope we take that opportunity.

in the meantime, as you all put out -- put it very well, very clearly, we have to live with the current years' budget caps and that's what you're trying to help us do with your recommendations. by the way, i believe, admiral, you mentioned something about generics in our commissaries. we'll check that one out. we don't think the law requires it. we think it's that the commissaries have to be competitive, and so we're going to try to find their origin of that -- the origin of that additional cost to our men and women in uniform. we have a budget in front of us which must meet the caps, in law. we have no choice. and again, if we don't adopt these particular reforms, or some of them, we have to make it four it with reductions

somewhere else and somewhere else has taken a big hit already, as you pointed out. we have the responsible of being law-abiding and the responsibility to the security of this country to do the very best we can to accomplish both goals. chairman dempsey, you have mentioned that -- we have allayed these kind of changes. can you be a little more specific? you said that it would be a two-year delay, for instance, if we waited the final report of military compensation and retirement modernization commission. why would that be a two-year impact and be a little more detailed as to why you believe, as you have testified, you have sufficient information now to make these recommendations even though when it comes to

retirement issues, you believe that we can delay any changes in that until that commission reports. >> we believe it will be a two-year delay because the commission won't report out until 20 -- february of 2015, and that's inside of our decision cycle for the submission of the budget. so, waiting until february seems to us to make it clear we would actually have to move along with two years at our current state and prevent us from making the changes we know we need to make right now -- >> terms of your preparation and recommendation it would be a two year delay but from the congressional perspective we would have time in the next fiscal year to take the recommendations into account. is that correct? >> it seems to me that is correct. i know less about your process than i do about our own, and preparing the budget, as you know, to justification book

level of detail is a pretty remarkable enterprise, and nor past few years we had to prepare budgets against alternative futures. so it i would be surprised if you could act that quickly on a recommend that came to you in february. but more importantly, to the second part of your question, we have spent the better part of a year analyzing direct and indirect compensation with the team that you see here represented here today and our programmers, and we believe that the recommendations we have made -- we can articulate what the impact would be at various grade levels. e5 and 05 and what it would do across the course of a career. we have all the information we need and we have actually provided it and we're ready to move on it because we need the $18 billion.

>> you have taken steps, you assured us, to consult with others in making these recommendations, including your senior enlisted personnel. >> we have. >> let me just say this. they're all sitting here behind you, i believe you have told us, and we have again have special thanks for their service as well. i just invite them, any of them, to personally contact me if in fact they do not agree with any or all of these cuts. it's very difficult for us to ask them here today or to put them on the spot generally, but it is important that we hear from them, and i would i a sure them that i would keep the privacy of their remarks and i would share them to the best of my ability, and guaranteeing that privacy and anonymity, share them with my colleagues to

the best i could. but i would welcome any personally delivered comments from those senior enlisted personnel to me. >> sir, if i could, they testified before the personnel committee. i also attest to the fact there's not a bashful one among them, and you don't have to ask for their views. they will provide them and they're free to do so. >> good. well, we would welcome that and i'm sure personnel subcommittee would also welcome any privately delivered commented that might differ from their testimony or from your testimony. thank you very much. senator inhoff. >> thank you, mr. chairman. not a bashful one among them. let's see how bashful they are here. first of all, a lot of us have seen this coming, now we don't talk about it very much but when we see money that otherwise should have gone to -- again

into our military and our defense and we see the construction of biofuel refine riz, 160 million, the navy purchasing the greenfield at $26 a gallon instead of purchased on the market for $3 a gallon. the climate change initiatives have gone up $120 billion since president obama's been in office. i commented the other day, general welsh, we could buy 1400 new f-35s. food stamps. $42 billion additional every year. so, i would like to ask you, in this climate -- and i'm going to submit for the record because there isn't time to read them all -- all the quotes from everyone, including -- up to and including secretary hagel about the dilemma we're in and the fiscal situation we're in right now. could each one of you briefly describe something in concrete

terms that this fiscal climate needs in terms 0 what your service will not be able to do to to adequately train men and women to deploy them and bring them safely home. if you can't do that -- i'd like to have some pacifics. if you can't do it now i'd like it for the record. would you, general odierno, any pick thing you want to do, you have too sacrifice doing? termsterms of training. >> senator, thank you. beginning in '15, we have to reduce home station training, which is the -- it all affects the collective level of training, which is most important of our force and the ability to synchronize and big grate air and ground and the many maneuvers we do in case we have to respond, where in korea, the middle east, europe, and so we have had to cut back on at the training that means we have less capability and readiness

levels that we would like to have in case we're asked to deploy. if we -- this will continue to exacerbate itself in '16 and '17 and '18 until we get our enstrength down. with dough again the these we now add another $12 million bill i have to fine so we might have to take more end strength out. i've already testified to the fact that i don't believe we have enough end strength now if we go to full sequestration in order to meet our national security needs. this will fer -- further exacerbate the problem. >> senator, last year was a pretty good example of what sequester level funding will do to their force. we grounded a third of our combat squadrons-canceled red flag exercises, both u.s. and coalition, which is the high-end part of training for the united states air force.

it separated us from other air forces where we integrate with other services and ground forces and our allies. we cut classes where we deal our ph.d fieger. all the thing that take us from doing low intense work to about -- >> i think we saw after that, after the grounding of the squadrons, that the cost of getting them back ready to a state of readiness, as well as the equipment grounded with them, exceeds the amount that would have been saved at that time. is that accurate? >> that is accurate. >> yes. anybody else? yes, sir? >> senator, when you and i discussed this at my hearing you were in norfolk and you talked tower people and they said these long deployments are killing us. the problem is if somebody is deployed and we not a another carrier to deploy due to a contingency, syria for the issues in europe, those that are out there now have to stand that

watch because we don't have the response force for a contingency that we would normally have. the folks aren't trained to do that. it takes longer to train them to delow. so we're deploying just on time. we need a better contingency force to deal with cop continue generals sis. >> i appreciate that. general, anything specific comes to you mind you cannot now in terms of preparing properly these -- >> senator, we have made decisions, as you know to move money and training and readiness of our units. so those units are at a fairly high state of readiness and will be so for in the next two yours. to that could we pulled money out of all our other accounts. that where we feel the pinch. we have $983 million total to reset the marine corps and buy -- modernize the marine corps for this year. that's less than four percent of our entire total budget.

so we're feeling it in the modernization, because we paid the bill for readiness and training out of that account. >> i bring this up because i know this is a hearing on compensation, but if you change that, that doesn't happen in a vacuum, and it can't be at the expense of our training and our modernization. in terms terms of combat readin, because we have already experienced some losses that in terms of our readiness capability, are any of you -- how are we doing now on those that were deploying, general odierno, in terms -- should be c1 when they're deployed. >> that's correct. so we made progress in '14 because of the bipartisan budget agreement so we're beginning to increase the readiness of our brigade combat team. see added four or five more combat -- >> are they all either c1 or c2.

>> c1 or c2. the problem is in '15 and '16 that goes down against because of the sequestration, and if we lose what we asked in the compensation savings that will bring the readiness down further and will impact readiness in the out years significantly. >> thank you, mr. chairman. >> thank you. senator reed. >> thank you very mitch, mr. chairman. thank you, gentlemen. general odierno, you are for the first time in decades actually involuntarily separating personnel this year. and that will continue if some of these savings aren't realized. is that fair? >> that's correct, senator. we're involuntarily separating captains, majors, lieutenant colonels, colonels, and also noncommissioned officers. also the first year that people who are eligible to re-enlist will not be able to re-enlist because of reduction in the size of the army. >> so, there are a lot of issues at play here but we're already

seeing the effects of this constrained bugs in terms of the opportunities of people who are competent, capable, their ability to serve to at least retirement and to retire. >> that's correct, senator. >> and some of these savings, if they're real a'sed, -- realized will help alleviate the pressure. >> won't end it but will help alleviate it. if we dope, it -- >> accelerates it. >> we talked about the savings. let assume for the moment you get some savings that -- how would you apply them? what specific programs could we see for general savings applications. >> the first year, it would be career sea pay and special pay and allowances, incentive pays and increase0s our base ops. our ports shut down. they run nine to five so why not keep them open so when ships complete

training they can come in and anchor instead of waiting until daylight hours. that's $123 million right there. and in '16 it's starting to repair 30 barracks by buy train years and simulators, to put money in and get people to training. that is travel money and trainers. and that's about 7500 sailors we just have backed up. the quality of their service, senator, as i was saying. this is what they're asking. spare parts joshes one of -- >> one of the points, it's more efficient use of resources, too, rather than keeping a ship just standing idle off port to bring the ship? , let the troops -- crews see their family and let the ship be -- >> yes, sir. obviously they'll be happier, they're back home and their families rather than just hanging out overnight wait fog

their port to open. >> this is a difficult issue. i don't have to tell anybody around this table or the witnesses. there's one reasonable view that there's no way you can pay these young men and women and their families -- nothing, but at some point we have to make very difficult judgments about pay allowances, et cetera. one of the other impressions i have had is really key to the morale and to the sense of service is training and having the best equipment. and ironically, we could be increasing compensation but with poor training, poor equipment, et cetera, the morale and the satisfaction and the sense of pride for the service would deteriorate. is that unreasonable, general dempsey? >> it's absolutely correct. i've said before and i believe it today, as well, that today's readiness problem is tomorrow's

retention problem. if you came into the military to be a man or woman of action and good to sea and fly and train, and you're sitting around watching your equipment or just simply maintaining it with no possible of training on it, you're not going to stick around very long. >> i -- my experience, limited, was that good training was one of the key factors in any ewan, and if you didn't have it, the other -- it was important but not as critical. let me ask a question, general dempsey, about the commissaries. there's a -- the sense of your testimony is that you would like to get some efficiency out of the system and that they can generate these efficiencies. if that's not the case, then they're going to have to curtail their operations. have you thought about a criteria for curtailment in terms of identifying or --

something other than just, well, get some efficiencies? >> we have, sir. i will tell crew that economy sears has been the -- commissaries has been the most difficult issue to wrap our arms around because it's very difficult to understand the functioning of the commissary and its -- the effect that a reduction in the subsidy will have until you make the decision to do it. that's why we're supportive of taking this first step this year, $200 million, and as the senior enlisted, when they talk to you, senator, will tell you, let's see what happens. see how much efficiency we can wring out of it in order to gain some savings. but left unaddressed, we'll be providing a $1.4 billion subsidy in perpetuity and that doesn't seem to be a reasonable course of action. >> your first step -- the number is $200 million -- would be to essentially charge the system coming one if efficiencies,

either through probation techniques, different purchasing approaches, different managerial approaches that would save the money, with no thought in this first year of closing any commissary. is that affect? >> i'd like the vice to comment. he has done the heavy lifting. >> i will be very quick. we have not directed in the commissaries to close. that's not part of the plan. what will happen, look for efficiency first. whatever they can't wring out of efficiency would be a price increase. so might go from the 30% claimed advantage right now, if all 200 million in the first year came out, it looks like that would good to 26%. we think we can do better than that. and then you look at the competitiveness of the commissary and the market in which it exists, and most of them at 26% savings will remain very competitive. if not therer situations where you might close ounce or two. but that's not we've specifics.

it's more gentle than it looks. >> senator mccain. >> thank you, mr. chairman. i thank the witnesses, general amos, with all of these proposals that we are examining today, it seems to me from be testimony that the biggest problem, really, is sequestration. would you you agree? >> yes, sir, i would. >> by far. >> by far. >> general odierno? >> i agree, senator. >> so, unless congress and the president act together, all of these savings will pale in comparison with the challenge that you will face as a resumption of sequestration. would you agree? >> i think we have said before that under sequestration we can't meet -- we have many concerns and also affects compensation and other things we want to accomplish within our budget. >> by the way, commissaries i have ha thought. my not have people compete to provide those services?

just open it up for competition. no subsidy. into who wants to provide the best services? might be a thought you might consider. gentlemen welch, should we be purchasing rockets for our eelv program from russia? including the fact that the person in charge of that aspect of russia's defense has been sanctioned by the united states of america? and a federal judge has ruled that is a process that should not be pursued? >> senator, as you know, we already have purchased some of the rockets. we have a backlog -- we certainly are not purchasing them currently as -- >> you have a backlog? >> i'm sorry we have an inventory that will cover the next you yours of languages if we are allowed to use them. >> do you think you should continue to -- >> it's clear we pay not

continue -- >> able asking you opinion whether you think we should continue to purchase them. >> i think the best answer for the united states of america is to have the option of an organic booster. >> thank you... >> thank you. general grass, do you believe that the movement of apaches out of the guard is a wise move? >> senator the general submitted a proposal to me that i submitted to the army about that, and we actually agree with two-thirds of the move of the trainer and also moving the high waters and we submitted a proposal to keep strategic debt of the apaches in the garden. >> so it's your view that the apaches should remain in the guard? >> a certain amount, sir. >> general odierno you mentioned a couple times in previous

testimony you thought the da-10 was the most superior close air support weapon that we have. >> senator what i said is our soldiers have the most confidence in the a-10, they're used to working with it. i also said that the air force has provided close air support with other platforms which has also been successful. >> does it give you comfort to know that the b-1 is one of the replacement ideas that the the air force has put forward presently in afghanistan? that would mean a six-hour flight from its base in a different country, as opposed to a minimum of one hour and those weapons are delivered from very high altitude.