>> senator, we look at our structure every single year. we do a comprehensive review of our structure and how it fits and what the cost is and how it fits within our requirements, so we're constantly doing this. we also look at optimizing the great mralt within the structure. what are the right grades, the right leader to lead ratio. in the operational force versus generating force. we're constantly doing this assessment pvrp year we look at it anew to make sure we keep it in balance and have it right. that is part of this. but the army is in a -- we're all in different places. we're significantly reducing in strength and structure now so we're doing just about everything we can in that area and that's why for us it's important to take a look at some of these other areas as well. >>. >> we do a 30-year aircraft building plan, and so we roll into that the strategy of the

department and the requirements of the combat commanders. then we do a force structure assessment where we balance the predominantly ships but we look at all capabilities. our ability to make the combat and commander's presence requirements and the operational plans as well as scenarios of the department. we roll all those factors in. that is done every time we change the strategy or make a tweak to the strategy and annual defense review. >> briefly, jen amos. >> we've done three on the last three years. first one teem took over a year of force structure review effort going on right after i took this job. the last one was in the face of sequestration last year. that designed a force to come from 202 to 175. within that, though, we rooked at how we could afford that 175

force, we looked at pay grade. we're the youngest of all the services and so we have the -- we have probably -- we do, the lowest numbers of the top of six ranks. they're the most expensive in officer and enlisted side of the house. so, we looked at, can we make it even more, you know, less top-heavy. the answer is no because we are so lean right now at that level. so, we've got about 11 enlisted marines for every officer. that's a ratio, i think, that's the best. the answer is, yes, we've looked at it. sir, we're about where we are. >> senator king. >> we have just a few minutes left before this vote, so i'm going to try to be quick. these hearings must drive you guys crazy. i've been coming to these hearings for a year and a half. we've been talking about sequester and we do nothing about it.

we act like sequester came from mt. olympus. it's self-imposed. i call it the wlie e. coyote theo theory. you throw the anvil off the cliff, run to the bottom of the cliff, smile at the camera and then it hits you on the head. we created this problem and we can do something but it, but i just -- i mean, you guys must go and tear your hair out. perhaps not you, general odierno, but it's -- it's -- >> actually, he did have hair before sequestration. >> that's right. but it's entirely self-imposed. we act like -- everybody around this committee, both parties, talks about how terrible it is and yet we don't move to do anything about it. general dempsey, i assume you don't want to make these cuts you presented but you have to because it's a zero sum game. isn't that correct? >> well, it is certainly in our best interest to be best

steward's of america's resources. there are some things we would do, but as i said earlier to senator blumenthal, sequestration has made this almost a mind-numbing experience. >> the reality we're in this world -- it seems it's a new reality for the congress, it is a zero sum game. so, if we don't accept your recommendations, then that's $2.1 billion a year, $30 billion over five years, that has to come from somewhere else. >> absolutely. and that's why i mentioned to the chairman, if we wait, we're going to -- we'll have to -- if we wait two years, it's $18 billion. >> and your professional judgment unanimously, and i heard on the personnel committee from the enlisted chiefs unanimously, was that this is a sensible alternative, particularly when compared to the cuts to readiness that would otherwise have to take place. it's not a -- it's not a both/and. it's an either/or. is that correct? >> that is correct.

>> let me interrupt, if i could for one second. we have a vote. we're near the end of it. when you're done, senator king, if you could recess us, if there's nobody here for ten minutes, senator nelson is coming back. i know he's not had his first round, so if you all could stay during that recess, we would appreciate it. >> i'm prepared. i think we can recess now, mr. chairman. i'm set. >> thank you. >> we'll recess for -- until someone else comes back. give you folks a chance. >> it's the story of our life, chairman. reduction of over

16,000 -- >> thank you, mr. chairman. designee. you'd make a great chairman. thank you all for being here today. first, i just get my bias out of the way. we're having a commission that's supposed to report back to the congress here, i think, next year, and i would like to hear from the commission before we make any real substantial changes. i understand what you're telling the congress. you got some things that you need to do now because of budget cuts. senator mccain asked a good question. your big fear is sequestration. i want to turn it around a bit. even if you had all the money you could possibly ask for within reason, would you still want to make personnel changes? reform the personnel system?

>> yeah, absolutely, senator. we've actually testified to that in the past. you know, we got a new demographic, different things appeal to different kids, and we would want to take a look at all that. >> and i think you got whatever personnel footprints you have, you have to make it sustainable. so, we're having a dilemma here. we're trying to make sure pay and benefits are consistent with the sacrifices, as much as possible, is good for retention, is fair, the tie goes to sailor, soldier and marine. it has to be sustainable. general grass, we offered tricare to reservists and guard members, is that correct? >> yes, senator. >> how has that been received? >> 12% of our force has bought into it. >> i think more will buy into it. i think it's a good retention and readiness tool. when we deploy from guard and reserve, we find health care is the biggest impediment getting people in order.

if a member could sign their family up to tricare, it's an inducement to stay in. that's an example of expanding benefits. when it comes to taking care of our troops, we're doing more on the sex you'll abuse issues yes. >> i like the way you're headed. we're providing jags to every victim. i think what we're doing on the sexual assault fronts will pay dividends. we've got ptsd problems. we've got suicide prevention programs. all these programs cost money, is that right, general dempsey? >> they do, senator. and it's money well spent. >> a couldn't agree with you more. on one side you're increasing benefits based on reality of retention and problems associated with long-term service and a very dangerous world. on the other side we're trying to create sustainable pay and benefits. that takes us to the big -- from

the marine corps point of view, what percentage of your budget, general amos, is personnel cost? >> sir, it's 63%. >> navy? please, everybody, answer that question, if you could. >> it's about a third, sir. >> 48%. >> it's roughly 48% with military and civilian together. >> okay. general dempsey, one of the things we're looking at is prospectively maybe redesigning retirement. you're going to wait on the commission as far as that's concerned, is that correct? >> that is correct, senator. >> and count me in the camp of putting retirement on the table, making it more sustainable, more efficient but still generous. the real big issue, i think, is tricare, is that a fair statement? from all of your perspectives? >> i think the big three are actually pay, tricare and -- as well as bah. >> okay. so as we look at the big three, we're going to be looking at

trying to make the pay benefit system more sustainable but yet still appropriate for the sacrifice. is that correct? >> yes, sir. >> and you're asking the congress to be a partner in this? >> yes, sir. >> i'm asking the congress to keep an open mind to our vsos. we will listen to you. we should. but we've got to get a handle on this because over time tricare grows very -- becomes a larger part of the budget, is that correct? >> that's correct, sir. >> very much like medicare. i mean, we're going to have to deal with the cost of health care in a responsible way. so, if we make these personnel changes and we adopt a reformed package like you just spoke, some kind of reform, how much money do you think it would save over time for the department of defense? >> the submission that we've currently proposed -- >> no, i'm talking about pay, benefits. what's your goal? >> i think the goal is to actually slow the growth so that

we -- as you noticed, each service has a different model. >> right. >> and each service would probably be better able to answer that question. >> so, what's your goal in the marine corps after all these reforms, general amos? >> senator, i'm -- i'm looking at -- well, right now in this i'm looking at $1.2 billion over the next ten years. excuse me. >> you don't have to answer this question today. pick a number that you think is a sustainable cost, a percentage of your budget, and let that be your goal. >> okay. >> so, the goal is going to be each service is going to pick a percentage of your budget. what do we have to do to get there and we'll all talk about whether or not that's -- that's running the place like a business. personnel costs have to be managed. let's pick a fair amount of the budget to go to personnel, understanding that's the heart and soul of the military. they have to be well taken care

of. their families have to be well taken care of but it has to be sustainable. now, i'll end with this. once you put these -- all these numbers together, can you please, for the 555th time, tell the congress that if no amount of personnel reform is going to save the military from being a hollow force if you don't fix sequestration. is that still a true statement? >> it's truer today than it was the last time we had this conversation. >> does everybody agree with the chairman's assessment? >> yes, senator. >> let the record reflect everybody nodded in the affirmative. thank you. >> senator graham. senator harono. >> i got back in the nick of time. i thank you for your service, of course. i join my colleagues in saying we need to get rid of sequestration because it's done so many damage to readiness and

other aspects of the military. i'm with my colleagues who are going to commit ourselves to getting rid of sequestration. i have a question for general amos. regarding the commissaries because the commissaries, that is a -- something that our service people understand. their families go to the commissaries. they know what the price differentials are. general amos, you said we should force deca to be more efficient rather than raising prices so the differential becomes so much less. i'm completely in agreement with you. does that mean that you know of examples or perhaps any of the other chiefs, do you have examples of where commissaries need to find efficiencies? what is inefficient that they're doing that they should just address right away in your view? >> senator, first of all, you've got -- you're absolutely correct on what our families are saying.

the commissary issue itself is radioactive. again, our efforts never, ever even suggested closing commissaries. that was never on the table and it's still not today for us. but we've already talked about some of the efficiencies. admiral winnefeld talked about that. my sense -- >> are you talking about the generic drug? >> yes. >> i completely agree with on you that. i do not understand why we don't allow generic drugs to be sold in the commissaries. >> it's not just drugs. it's generics across the board. i used drug example because i could compare it to the exchange which doesn't sell food but similar stories across -- >> thank you for that clarification. so that's a change that should occur. you're saying that you can't do it on your own. that it would require some change in the law? >> that's our understanding. and we'd like to see it happen. i can give you the example -- you know, i went out -- because my knees hurt. i use ibuprofen. i went out in town to a chain

store. >> yes. >> $8.99. commissary sells it for $7.98. pretty good deal. but the chain store sells a generic for $4.99 and the commissary sells it for $2.49. there are substantial savings we could put right back in our people's pockets that would offset a portion of any subsidy. >> i agree with you. that sounds like low hanging fruit we ought to pick immediately if not sooner. general amos, do you have any others where you can see efficiencies by our commissaries? >> senator, i don't have specific other areas but i will just say this across the board. years ago our exchanges, marine corps exchange, and i think it was that way in the other services as well, received what they called appropriated funds. in other words, they were subsidized so they weren't forced into making good business decisions. a little like senator graham

just talking about, being a good steward of your money. that's not the case here. this is a subsidized institution. and i think it's time to -- i think it's time to change that. i think it's time to force them to go back and do things economically. now, economically, in my mind, doesn't equal taking the 30% savings away from our families. that's not what i'm saying. i'm saying, figure it out. and we can't sit at a hearing and understand all the -- all that that means, but i'm confident that they can, the same way that our marine corps exchange did years ago. you can go to the marine corps exchange today and you still get a pretty good bargain. >> i agree with you. because in earlier hearings, the savings -- price differential would go down to 10% instead of 30%. that sounded like that was going to be the result but now you're saying, no, there should be some other avenues before they start

raising those prices. so, i completely agree with you. i hope we're all on the same page on that pap that. >> ma'am, one of the things i mentioned in my opening statement we exempted commissary from 20% staff cuts we're all taking. we did that to help with the first year's $200 million. i'm not even suggesting they can make 20%. they have to run their enterprise. distribution network and they have stores they have to man, but we think they ought to look there, certainly, as one of the efficiencies you talked about. >> general dempsey, you said that for you to come up with the kind of suggested savings and personnel costs, it was a one-year process. and it included most senior officers and enlisted leaders and select midgrade service members. that says to me that the vast majority of our service members are not aware of your

suggestions. maybe you are doing something to get the word out because i think it's really important to educate our service members, explain to them that the cuts that are being made are not mainly coming on their backs. because it begins to feel like that if their housing allowance is not what it is, or that the commissary prices are going up, or that their pay is slowing down. i think it's going to be very important going forward knowing these cuts represent just a smaller percentage of what personnel costs actually represents, 30%, versus these cuts, 10%. i think it's important to get the word out to the service members, because believe me f that doesn't happen successfully, i do think we're going to start hearing from our constituents. pretty soon it's going to be hard for us to support these cuts. so, can you tell me what you all are doing to get the word out so we know we're all in the same boat here? >> well, we've -- all of us and those behind us and those at

every echelon of command are engaging our population on this very subject. whenever i travel, and i travel quite extensively, i'll always hold a town hall meeting. this is always a topic of conversation. i offer the chiefs the opportunity to elaborate, if you'd like. >> senator, chief mass sergeant cody and i have been visiting air force bases all over the world. like the chairman, we hold large audiences and forums everywhere we go. we talk about this subject every time. we take questions about it. we answer concerns. we make sure they understand what the proposals are and what they are not. our force is actually aware of what's going on. i don't think you'll find any individual who says he likes the idea of anybody slowing cost growth if it benefits their family but they also would tell you they would like to have the best tools in the world. they would really like to be trained better than anybody else. they take great pride of being the best in the world at what they do. if they can't do that, they will

find other employment. >> that's reassuring. thank you. i believe my time is up. >> thank you, senator hirano. senator nelson. >> thank you, chairman. general dempsey, some have suggested instead of changes in military compensation that we should cut the civilian workforce. and some estimates are that you'd need to cut 100,000 in the civilian workforce. do you believe that cuts of those magnitude -- that magnitude of civilian workforce is a feasible alternative? >> no, i don't, senator. i do think -- in fact, it's been our advice in these conversations with the department that the reductions in the size of the in strength of the combat power of the nation should be matched by

commensurate reduction in the overhead of the department and includes out into what we call the fourth estate, you know, the defense agencies. and by the way, general secretary hagel has directed a 20% reduction across the board. so, but i think the kind of -- that would devalue the contribution of the civilians who are -- who are our wingmen and fox hole buddies and swim buddies in this enterprise. >> mr. putin continues to be very aggressive. and whether it's uniformed personnel on the border of ukraine or whether it is the nonuniform people that are proxies that are stirring up things inside, he's now moved on odessa.

can you share publicly what are the plans -- let me rephrase that. what can you share publicly are the plans of the united states armed forces as well as nato with regard to this aggressive action by russia? >> well, what i can say publicly, senator, is that the united states has three instruments of national power -- economic, diplomatic and military. they're all being applied to this they're all being applied to the challenge with respect to russia. the military instrument at this point with regard to the ukrainians is support in terms of nonlethal assistance, intelligence-sharing at some level, and the military

instrument is principally involved in reassuring our nature row allies by the deployment of additional resources the deployment of planners, the conduct of exercises to assure our nato allies that we will live up to our article 5 responsibilities under nato. >> increase in ship presence, deployme deployment. as it relates to poland. >> thank you very much, sir. >> thank you very much, senator nelson. senator sessions. >> thank you, and all of you for your service. you have been given a thankless task. you have led us magnificently in combat, all of you have, and i

know how many hours you work and when you think of how much you should pay a person in the military, often they forget there's no overtime. there are weekends and full deployments of months at a time often, and dangerous areas, and we're asking them to undergo, and i do believe there's a bond that the american people must have with those we send into dangerous places and we ask them to leave their families for an extended period of time. it can't be broke. i'll tell you, i think that's fundamental. i'm on the budget committee, and i had to leave to go to the budget committee where i'm a ranking member of the budget committee, so i'm seeing this from both sides. i know how much of a danger this nation faces from debt. >> last year we spent $221

billion on interest. he projects ten years from today we'll pay $875 billion in interest in one year. that's a $650 billion increase in the amount we pay for interest over this period of time. it's going to threaten your education budget. i guess, first of all, i think this department is taking this seriously, and i respect you for it. i believe that you're 1kd to do more than anybody else is being asked. you think the numbers will show that, but it is a huge

department. we agreed to a certain budget on spending. murray earlier this year, and i'm hopeful that would be sufficient. with the help from that act. maybe not. we'll just have to hear from you. that really worries me. it keeps me up at night. if i was the -- i would also say we increase any spending for the defense democratic, we have to increase non-defense spending in equal amounts. definitely that will crush the budget that he signed. he is the commander in chief. you think he would be here more forcefully advocating priorities

that need to be set. members of the defense department, and there's questions civilian personnel, i believe, senator nelson mentioned that earlier. one estimate i heard that i think is accurate is that after 9/11 we added about 100,000 of civilian personnel. that would presumably to support increase in acting duty forces, which was considerable, but as those active duty forces return to a level which i understand your plan accounts for -- returns to a level of what it was in 2011, why shouldn't we be able to reduce civilian personnel by 100,000? >> well, senator, there are three groups of individuals all of whom make up the total force.

this is, of course, the service men and women, civilian department employees and contractors, and contractors will take a first significant cut followed by the d.o.d. civilians and uniform military. this has to all be done -- >> on a percentage basis, the personnel, won't you be reducing military personnel in a bigger percentage than civilian, or is that -- >> that would probably vary slightly -- not slightly. it will probably vary service by service. you do know, senator, that 90% of the people we are talking about are not in washington d.c. they're out in shipyards and depots and training areas. i mean, they're doing important work. >> if you want to talk about that aspect the way they built -- >> let me just say, i completely respect the contribution. they'll deploy, and they go many of them from alabama were in

iraq and afghanistan as assisting the military in their mission. however, it may be a bit hard personnel-wise to reduce awe civilian employee as compared to a military employee. as for me, i don't think that should be. i think we should make sure that civilian personnel face the same evaluations that uniform people do. >> i agree with that, senator. i want to talk about the civilian aspect of this. >> we're reducing it as military, sl, contractors. military is much easier because the space has a face, and it's very ease where i to understand. we also have the budget on a contractor. cut the budget on our civilians. that's what controls civilians and the number of dollars

allocated. we've come down 20,000 civilians so far in the army, and that will be eyaul to what our military numbers will come down as we continue to look at out year budgets. we'll also look very hard at reducing our contract support to our sustained maintenance and try to do more with uniform personnel, and we're looking at that very carefully. we're also looking at contracts we have that were shvs related that can be done by others, but all of these things are -- if there's a contract and installation, then i have to use military manpower, and it's one or the other. if i cut the contracts from cutting grass and doing other things, then i have to have military cut the grass. i have to have them working in dining facilities and doing these other things that contractors have been doing. >> the army -- >> it's all things that have to get done.

we can cut contractors xshgs we will. if we do, the military is going to have to take over some of those responsibilities. so it's just stuff that has to be done. again, i would just throw out there right now we're not reducing any installations because there is no brack. we're reducing 150,000 men, and we have to sustain these installations, and it's costing us a lot of money, and so we have to hire contractors. we have to hire civilians. if we can't do that, we're going to have to use military manpower to do it. that's the bottom line. >> thank you. i'll submit some questions. my impression is that you have a larger percent of reduction of uniform personnel than we are in -- >> you give us that service by service for the record. >> thank you, mr. chairman. thank you all for your service. thank you for testifying today before -- i'm very grateful.

obviously these are very tough times, and we are all concerned about how we manage our operation to the best of our abilities, and as the chair of the personnel subcommittee, i'm very worried about trade-offs we're making in terms of military families. >> can you tell us mauer about the savings that -- >> you know, i would like to take that one for the record as well, but i will give you one example because it would cross all services. let me take one that's not at all with controversial, the

a-10. if we -- if we retire the a-10, it's $3.5 billion in savings to the defense plan. if we don't, we have to find $3.5 billion someplace else. but, i mean, each service has an example of something like that. >> thank you, and i look forward to your full response on record. the other thing i care deeply about, and general dempsey we've talked about it, and that's the men and women who serve in our military and their families, and the sacrifices they make to do that. one of the sacrifices i don't think they should have to make is not being able to afford treatment for their kids who have autism or other developmental disabilities. i think it's so unfair that just because you will sacrifice everything for our nation and serve for our nation that your kid, your child who needs these important therapies to learn, to grow, and to develop are denied it because dwoent want to make them a priority.

i think that's a mistake. i think it's morally wrong. we're finding all the programs specifically for autism. i haven't seen what that's going to look like yet, but i want to know are there going to be barriers to care for children with disabilities and particularly autism. i believe we're on track. if want, i want to know about it because this is something that's terribly important to us. sflu don't want federal employees' kids having better abbing stoes medical care than the military kids have. it's a painful thing to make sure your child gets the education they need, and a lot of the therapies are

developmental. it actually affects how their brains form and whether they can reach the level of capacity that they can. >> osd health affairs tackled that, and i want to make absolutely certain. >> thank you. similarly, as i meet with the troops around my state, both national guard, active duty, and reserve, the stress on mental health access is very high. access to mental health services to treat post traumatic stress disorder and traumatic brain swrr is still quite intense. my question is as we've had a number of families coming home under the current care requirements, there are co-pays for these services. do you believe that those co-pays will cause barriers to care specifically for the mental health of our troops and their families? and i have begun to -- i have a hearing to develop the increase

in suicide rates, 11 suicides a day in our military, but there's also an increase in suicide of family members because of multiple deployments, because of ptsd, of service members coming home. that raises serious concern to me. i would like to see if he see barriers to care here. >> if i could, i think we're doing a good job of increasing behavior health for active forces and try to get more access to -- my concern i think is where you're headed with this, and i agree with you is for family members because, frankly, it is even under tri-care, it is difficult to always get care covered for behavioral health under tri-care for our family members. sometimes it's accepted. sometimes it's not. the behavior health care needs to deal with that because of the affect the war has had on our

families and specifically our children. i know in specific cases where a lot of out of pocket expenses is being spent because it's not covered or there's a co-pay because they don't recognize certain treatments or they don't recognize, so in my mind this is something we have to absolutely get after. >> i would like your commitment on this. my last set of questions are for any who wants to take it, but what is the department's plan for the increased demands of the medical treatment facilities? does dod plan to hire more medical providers to help patients at the mts, and what will the active reserve who did not live near the medical treatment facilities? are they going to be penalized for not being able to use the mts? >> well, i will give you a general answer.

the defense health agency, dr. woodson. i will tell you that our recommendation on our support for forming a single tri-care system as opposed multiple systems that are not interoperatable with each other is to try to encourage use of ntf's and then in service care or in network care and then only out of network care as a last resort. that's our role here. we wanted to make sure that while we're doing that, while we're incentiveizing use of ntf's, there might be another process that's trying to reduce the level of care at an ntf, and we're deeply involved in that process right now. >> thank you all. >> thank you very much, sir. general, thank you. thank you for all you do for our nation, for our troops and their families, and we will now move to our second panel. thank you. >> okay.

>> what time do we have? >> a little short of members. it's 12:05. >> welcome. our so-called outside witnesses. strange word for folks who have been inside just about every important military operation or thinking that we've done in the last two decades. retired army general john jr. chairman of the board of the

military officers association of america. retired army general gordon sullivan, president and chief executive officer of the association of the united states army. retired vice admiral john, association of the united states navy. retired air force general craig mckinley, president of the air force association. gentlemen, we thank you for your past svrs. we thank you for your current service to our service members that are retired and their families. i believe that the order that we are calling on you is to first call on general tellelli. thank you for being here, and please give us your statement. >> chairman levin, ranking member. >> i'm sorry. i make -- i apologize for that. i should know better.

please carry on. >> members of the senate armed services committee thank you for the opportunity to discuss the 2015 year budget affecting the entire military community. on behalf the over 380,000 members and survivors and retirees of the retired officers association of america, i have the honor and privilege of being here today to represent them. at the heart of the pentagon's budget challenges is the devastating affect the sequestration that we've heard that several times today in the budget control act of 2011. while debt reduction is a national property, we believe that such a disproportionate share of this burden must not be imposed on the defense department and especially on the backs of the military members and their families.

mole believes that continued sequestration cuts for 2016 and beyond will place national security at risk when we strongly urge congress to eliminate sequestration and fund our military to levels that enable all components of the armed forces to adequately be manned, trained, equipped and compensated. and it's the sustainment of the top quality of our force. the past 12 years of unprecedented demands and sacrifices highlight how radically different conditions are from civilian life. these are the things that many budget analysts and think tanks

don't understand. the time the all -- it's been due to military cutbacks and compensation packages that gave insufficient weight to the extraordinary demands and sacrifices inherent in the service career. they state the personnel costs have risen above 40% more than growth in the private sector since 2000 and are squeezing out dollars for training and equipment. we believe that pitting pay and benefits against greatness is a false choice, and it is important to put the growth since 2000 in context. the all volunteer force is a key to readiness. have costs risen since 2000? yes, they certainly have. using 2000 as a base line without reflecting that

historical context is misleading as it implies that it was an appropriate benchmark for estimating what reasonable personnel and health care spending should be. nothing could be further from the truth. what caused personnel costs to grow higher than in the private sector? by the late 1990s retention was on the ropes because years of budget cutbacks had depressed military pay to where there was a 13.5% pay gap. we cut rye tirmt value by 25% for post-1986 entrants. we had military families paying 18% to 20% out-of-pocket for housing costs, and we moved beneficiaries over 65 out of military health care facilities. this committee worked diligently, and i thank them for that over the next decade there was pay comparability,

retirement cuts, zero out housing costs and restore promised health care coverage for older retirees. we thank you and all the members thank you. since 2010 congress has already implemented changes to slow the growth. in fact, the growth has slowed. these have included significant health care fee changes and stress reductions, pay raises that have either mirrored the private sector or in the case of this year have been capped below the private sector. the fact is that between 2000 and 2011 personnel and health care costs experience an average 7.8% rate of growth, but that cost was essential to keep the previous commitments and avoid retention and reenlistment issues. and from breaking the volunteer

force. however, between 2011 and 2014 personnel cost growth has not just slowed, but it has declined an average of 1.9% a year according to omb historical tables. the growth has slowed. in fact, it's negative at this point. when you look at the d.o.d. military personnel costs, which include military personnel and defense health programs, these costs average 30% of the overall d.o.d. budget. between 2014 and 2015 pay caps have promised housing reductions, the planned reductions in the comisary savings and a new health care consolidation and fees, an e-5 family of four. that's a sergeant with ten years of service looking at the pay

tables would lose $5,000 in purchasing power. in 2003 a captain ar army or marine corps captain, not -- a family of four would experience a loss of $6,000. that's a large percentage of their overall pay. contrary to when i came into the military, we have a married force today. it is not a single force. the budget proposals would be a major step backwards towards repeating some of the mistakes and measures that led the retention and now readiness problems in the past and it needed the improvement that is congress put in place since 2000. again set us up in the future for another parody issue that we'll have to be resolved. these piecemeal reducks are

doubly -- we will be offering even more proposals next year. america will remain the greatest power only if it continues to fill its reciprocal obligations, though the only weapon system that has never let our country down are extraordinary dedicated top quality volunteer men and women who served our ask the and the families who stand behind them. now that we are drawing down from afghanistan, we cannot place these volunteer members of our armed forces in our rearview mirror. they listen. they know what's going on. thu every they do not agree with these proposals. i look forward to your questions. i thank you for your service to our country, and i thank you for all ewe done for our men and women who serve. thank you, sir. >> thank you so much, general. general sullivan. >> mr. chairman, ranking member inhoff, honorable members of the

committee, before i begin my formal remarks, i want to thank each of you for your personal support. certainly the three of you that are in front of me right now who were here when i was battling times such as this back in the early 1990s. we appreciate your support now. i want to note during that time for some reason we seem to have more stability primarily due to the appropriations and authorization which reflected regular order, and i always felt as if you had an open ear for me when i came over to talk and give you a problem, and sometimes you at least believe me and gave me more money if you had it, and if you could get it,

but you committed us to navigate difficult terrain without a lot of constraints, such as the chiefs have now. you set limits on funding and manpower and let us strike the balance as we saw fit and gave us the latitude to act. for that i thank you. senator levin, i probably won't see you in this kind of a role again. i want to thank you publicly for everything that you have done for the services and everything you have done for our country. >> thank you so much, general. >> thanks for the opportunity. the association of the united states army. this committee has, as i said, provided extraordinary support on our active duty guard and reserve, veterans of the army and the other services, their families and survivors. and your efforts are very positive and have bakted the

life -- the lives of the entire uniform services community. we are keenly aware that the congress and the administration have had to make difficult choices while bolstering a weak economy and addressing budget deficits. while we recognize that debt reduction is -- ausa believes that a disproportionate share of this burden has fallen the department of defense requiring that 50% of mandatory budget cuts come from defense even though the defense budget is only 17% of the federal budget is in my view misguide and misdirected. how can such a system be permitted to continue the result is the defense officials, most of the uniform people uncertain

times are demanding agility and adaptability by these defense leaders here in washington as well as on the frontlines wherever they may be. on after all, look at what is happening now in eastern europe. yet, the funding policies in place that are guiding them are so constraining and damaging to our long-term national security that continuing this formula for the better part of the next decade defies logic. the usa has urged congress and our elected and appointed officials to eliminate sequestration or modify these unrealistic rigid budget control measures in ways which would enable responsible and

accountable leaders to exercise their responsibilities in a manner that is consistent with the challenges we all face. now, providing for the common defense in our government to tell you what i, but i need to say it for the record, i guess, is a shared responsibility among the american people. the congress, the president, those of us in uniform, and the citizens of the united states. sometimes i often get the feeling that shared responsibility is a concept which has disappeared somewhere. shared responsibility and accountability is what we're talking about here, and each one of these people who sat here is actable to the american people, and they are being asked to make tradeoffs. the usa believes that the primary source of the budget challenges that face the

department of defense is a devastating affect of sequestration and the provisions of the budget control act of 2011. the budget act of 2014 is one of the chiefs pointed out, i think it was chief 6 staff general -- when he said he cool would i back readiness because of think remain in effect and will exacerbate the situation that existed before the murray-ryan bill that you heard the general saying he would have to -- he would see readiness of some of the those brought back, and it is adding a profoundly adverse affect of the defense of this nation, and it will do so well into the next decade. over the last two years sequestration has set america to

reduce our national security. they're rapidly shrinking of military forces to unacceptable levels thereby creating unready forces. it's created unnecessary divisiveness within the armed forces as they struggle to meet budget goals and juggle requirements around, active guard and reserve. we must enable all components of the armed forces to equipped the focus on the mission and not fighting over an arbitrarily depressed defense budget.

one of the chiefs mentioned that there were a couple of them that developing three alternatives in a year is really destabilizing both within the pentagon and it ripples down to the field. the people at they know when the pentagon is coming up with different alternatives. >> when it comes to compensation and benefits provided to all service members and families who make up the all volunteer force. sequestration affects the industrial base, and whether thereby -- whether everybody understands that that the

industrial base today or the industrial base is much more sophisticated and diverse and some of the weapons cannot be made overnight. i believe the services are being forced into a posture or whether designed inadvertently, but if we become involved in any kind of a large scale operation we must turn inward to enhance ourselves. that's active guard and reserve and interestingly enough, it took the active army multiple years to create the fourth brigade of 101st and the fourth brigade of other divisions. this stuff that it does not happen overnight. there is a great american myth that you can just ring the bell in the village green and everybody shows up and off we go. the world doesn't work quite

like that anymore. we must rely on the force we have in being active guard reserve, and we need a balanced force. n now, i would note, interesting things were said this morning. general dempsey said if the budget control act kicks back in, it will cause unacceptable risk, unacceptable risk, he said. the chief of staff secretary cue and their testimony last week said risk a number of times, and it's more than the signed mission in the -- this is a huge

step, and i don't believe everybody is appreciating the implications when the chiefs of service and the chairman of the joint chiefs says unacceptable risk. we have to pay attention to these words. they mean something. they do not say these words lightly. not only a sequestration combined with being combined with a declining defense budget, having an adverse affect on military readiness, we're seeing an emergence of international doubt. you can see it on the covers of the economist this week. can you see it in all of the national papers on whether the united states is a reliable ally and partner. credibility in this context was

found in the perception of strength and national resolve to be responsive to not only commitmen commitments. adversaries are watching us a o also. >> we must maintain a viable all volunteer force. despite xeerd demands men and women in uniform still answer the call. thanks in no small measure with the strong and consistent report of this committee. this is only now at the cost of ever increasing personal sacrifices.

>> principal number one. we all know that. you know that and i know that. the most important element of national security is sustainment of the top quality career force backed by dedicated department event civilians. now, by the way, i serve with general tellelli for a number of years, and interestingly enough we did not collaborate on what i'm going to say now. i acknowledge that the power of high-tech equipment and new equipment, but i am convinced after being in or around the army for 60 years that it is not equipment that wins wars. it is high quality men and women, our most adaptive weapons

system, our most loyal and people who will never quit. it fulfills their training, their well being, and their education. our xeerdly dedicated top quality all volunteer force is critical, and you have consistently recognized the cost of sustaining this current military career in senate packages far more acceptable and affordable than any alternative. in a matter of compensation, i want you to just -- i would say in passing, that we do support the military ausa does support the retirement modernization

commitment. we do not want to see a return of recent era pay gaps. at this critical juncture, but it is imperative that it be available in some modernization. pay caps must not be pertinent. military pay comparability is important to the recruiting and retention of high quality soldiers and will become more important in the future. we're committed to military pay raises that match eci, but this year because of sequestration, funds freed up by a slightly smaller pay increase is the price that had to be paid for soldiers who are train and ready. i do believe that cuts to colas must be reflective of decisions made each year based on the dynamics of the economy and the dynamics of -- within the department. i want to end my testimony as i

began it. sequestration is patently unresponsive to the needs of this nation, which is part of the rapid changing world in which we can not predict the future. we never could predict the future. people a lot smarter than me have said that. not the least of whom was a former secretary of defense gates. i mean, countless people. we all know. it's a slow-moving -- it's irresponsible. no one seems to be accountable. sometimes it's like -- people don't listen. the chiefs are saying the chairman of the joint chiefs of staff said unacceptable risk.

b.a. and the department of energy, which are included in that particular budget line. the impact on our national security writ large must be considered. i urge you to pursue some kind of a modification of this budget, which is being used. if we can get back to full order so that we can have a dialogue like we are having here today, decisions can be made --

appropriate decisions can be made based on the needs of our nation for our security and our national defense. >> thank you very much for your patience. essential we at ausa appreciate anything you can do to get rid of the burdensome sequestration. there has to be a better way. >> thank you so much, chairman sullivan. admiral. >> we're going to have to leave here until about 15 minutes to go to -- what time is it now? about -- >> it's 25 minutes -- >> well, we all have to leave a few minutes before 1:00, so we want to leave some time for questions, so if you can adjust accordingly, that would be great. we don't want to cut you short. >> i'll endeavor to do that. thank you very much. ranking member inhoff, members of the committee, it's always a pleasure to be with you, and

thank you for your service to our country and the things you've done for our men and women in the military. i will cut through part of this just a big -- to highlight a few things, the first is that we lafkly heard a lot of people say today that cuts will not harm the quality of life for our navy families, but i would say that all aspects of compensation, not just pay, are part of what they look at as their pay, and it's going to definitely impact decisions they make when they're out there trying to live their lives. especially things like vah, that are reductions in what they take home each month to be able to pay their bills. we basically are the voice of sailors at ausn, and we did a recent study basically asking some people to tell us what they thought about these impending

kinds of changes that d.o.d. has, and 90% of them did not like what's being proposed. a little bit contrary to what i think the chiefs are hearing when they go throughout, and by the way, we don't envy the chiefs the position they're in to try to make this balance if they're trying to make today. it's just that we think there's a bigger impact to our force than they are seeing when they go out and hold their all hands calls. another one said i think that the d.o.d. is breaking faith with what we signed up for. things are going backwards. you may have seen today that military.com had a survey that said the same thing ours said. 90% of those surveyed -- they surveyed 8,400 service people -- do not like the proposed cuts.

what the chiefs are hearing when they go talk, maybe it's not what the real thing that's going on. i would tell you also that the sequestration as general sullivan says makes big impacts to our readiness, to our force structure, and to our training, but it also has an impact on navy families because as cno said, we are now forced in the longer cruises and we retain people, and we don't retain just that service person. we retain the family, and the families will vote with their feet. i believe that the committee doesn't need to be reminded of that fact. i will cut to the chase so that my colleague to my left has a couple of moments to spend, but i would tell you that for the last 30 years the cost of personnel in the military has remained constant at 30%, 35%,

33%. just the pb is 33 pefrz, and to say these numbers are -- you've got to be including some things that military compensation doesn't include, like the civilians or something else that's in those numbers that you heard today. so in summary, we think that there's -- that really the biggest factor today that's keeping people in the military is the poor jobs market on the outside. you couple these kinds of changes with that, we are actually going to see people walking with their feet despite what the chiefs are hearing. with that, thank you very much for your attention, and i look forward to -- >> thank you so much, admiral. general mckinley. >> thank you, chairman levin, and i agree with my colleagues to thank you for your great service to our nation. it's been nothing short of exceptional. thank you. >> thank you. >> ranking member and members of the committee, thank you for staying so late with us today. it's been a long day, but a very educational day.

i'll try to hit the wave tops because i know we have some questions from you, and we would like to hear those. on behalf of the air force association's 100,000 members and our chairman george mulner, i would like to thank you and the entire committee of support for our active duty, guard, civilian, retirees, and veterans of the ash force. their families and survivors and for the significant concern and effort you have put forth for our national security. afa is grateful for your unwavering commitment to the men and women who defend our nation and appreciate the priority congress has given personnel issues in the past decade. we also acknowledge the increasingly difficult choices before our nation. it's an honor to be here with you and my fellow colleagues. i know we are all committed to the defense have this nation, to those who serve and have serve and their supporting loved ones. our airmen and retirees dwefsh e deserve every dollar they earn. however, as you have heard

today, personnel compensation costs continue to climb at unsustainable rates and for the air force we have a much smaller force. if not addressed, they will consume much of our combat training and modernization spending over the next few decades. we along with the other associations believe that sequestration provision of the budget control act of 2011 is destroying military readiness and endangering national security. it has normalized a dangerously low level of defense spending constrained defense decision makers and the new normal has created an unhealthy competition for resources within d.o.d.'s base budget. i'll cut to the chase. i believe we can never pay a military member enough for his or her willingness to risk their life for this nation. however, we can insure military members are competitively compensated to enable us to retain the all volunteer force. thanks to increases in compensation and benefits since

2001, our military members are compensated equivalently with their civilian counterparts when all benefits are included. to conclude, with last we're's grounding of 13 combat squadrons, lost opportunities for real world training and numerous course cancellations, to include our premier red flag exercise, our air force is at a crossroads. sending airmen out to any contingency without the best training and equipment, we can give them could imperil the mission and jeopardize lives. this is unacceptable. our members, stake holders and indeed our airmen are committed to keeping faith with the american people by providing them with an air force that is capable, ready, and resourced appropriately for the future. thanks again for inviting us over here today. i look forward to your questions. >> thank you so much, general. let's just do five minutes here -- four minutes. okay. i take that suggestion. make sure we all have a chance to do this before 1:00. >> you all right?

we're back to five now. percentages of the numbers are not what you think are necessarily on target, and what you would do is welcome any or all of you on that subject or any other subject, but on that subject for the record just for the record that would be helpful. you have heard me and others say that it's an abominable way to budget, and it was never intended take effect. we're going to be offering alternatives to sequestration.

we will be talking about this new for a long time. working on alternatives for a long time. many tax loophole that is i believe and others believe should be closed. we also have to do something in the entitlement area as well. all of the burdens so far of reductions have fallen on discretionary accounts -- fallen and there's been nothing done on the revenue side. so we have to, i believe, address that, and i would hope that when we come up with this specific bill that we'll send it to you and your organizations and that you would then indicate to us whether you can support these kind of alternatives to sequestration.

i happen to agree with senator king who phrased it earlier today, it may have been senator cain, but one of the two of you have talked about the fact that we talk a lot about getting sequestration. whether or not you could right now, but indicate which of these proposed changes in these personnel accounts are the most problematic. if you are able to prioritize them. they all have consequences. to indicate if you are able to say which of the ones that are in the budget proposal are the worst or the most problematic from your perspective? why don't we start at the other end. we'll get to all four of you very briefly. i only have about a minute left.

general mckinley. >> thank you, mr. chairman. >> i think we need to look into the out years that we can't sustain that over a period of time. tri-care, comisary and others are a concern to our members, but none of them rose to the level of maintaining a strong and viable air force. i think if i could leave you with one point, members don't join the service. at least the air force for pay benefits and compensation. they join because of a patriotic duty to their nation, and over time we have seen adequate compensation provided to our military members.

overall our members want to see a veeable air force. thank you. >> we did a survey, as i said, and we got back again 90% of the respondents had a problem with something. the one that was the biggest impact was the coal actually for them. the least was bah. with respect to the comisary, the thing i kept hearing is there are efficiencies to be had, but i don't see a forcing function that's going to require deca and the commissaries to take efficiencies instead of doing the ease where i things and raising prices. unless we have something in place for are that. >> general sullivan, do you have a priority list? >> we did sign up for the coal up at 1% because we felt that

the general could, in fact, and secretary mccue could buy back the readiness. we were less enthusiastic about the others, you know, so our approach was to go with the cola. >> thank you. general. >> sir, in a real sense, these structural changes that we're talking about are a reduction in compensation. earned benefits. to prioritize prior to what we believe the congress's intent was, the commission who is going to look at all of this is preemptive, and we can continue to piecemeal year on year benefits, compensation for retirees, service members, survivors and pretty soon you've created a volunteer force that's no longer volunteer force that's no longer viable. i support the commission and a true vetting of their recommendations before we

prioritize anything, and in a real sense i believe waiting the year is very important to the men and women who serve to keep the faith with them. >> thank you. i take it from your nodding your heads that when i talked about sending you proposals to get rid of sequestration, you indicated that your organizations would be willing to take a look at them. >> yes, sir. >> thank you. >> yes. i want to make one point. i didn't sign up every year capping pay. >> i understand. >> it was one year. >> one year. we got that. >> and i reserve -- >> i think that came through very clearly. thank you. >> mr. chairman, one observation, two quick questions. i won't even take my full four minutes. first of all, we got in this mess because here we are 16% of the budget having to take 50% of the cuts. that's the problem that we've got. it's one that's a political problem. general sullivan a, you said it

back on january 28th, that given the choice between compensation and strong national defense, strong national defense, i assume the other two of you agree with that? here is the problem. i look at strong national defense, that's going to have to be modernization, training, and readiness, and that's where we're not keeping up. i'm going to ask you, the four of you, if you agree with the statement by christine fox when she said our men and women are the first to say they're well compensated but the department doesn't have money to maintain their equipment or supply them with the latest technology or send them to get the training that they need and then they are being done a disservice. do you agree with that? well, i do, too. and the last thing i'd mention, would you all agree since we have this military compensation retirement committee that's supposed to report back february

of '15 i think that it might be a little presumptuous to try to do something this year that could constrain the commission with the recommendations that they're studying. they might have to undo something that we have done in order to come up with their recommendation. do you agree with that? >> absolutely. >> i agree with that and i would hope that we have the opportunity to vet that along with the congress as we look at it for our service members. >> good. thank you, mr. chairman. >> thank you very much, senator. senator reid. >> well, first, let me thank you all for your great service to the nation and to the men and women you represent. one of the issues here is looking ahead, and regardless of sequestration, frankly, you are preaching to the choir. we've got to get rid of sequestration. looking at even if we eliminate sequestration, there's a lot of analysis to suggest that growing personnel costs will continually

erode training modernization, and we know that's critical also. and echoing the chairman, we have to get a handle on these numbers, and today we heard the admiral suggest that 50% of every dollar goes to personnel costs in the navy. it's going to go up to 60% and then 70% in about a decade. i know little enough about numbers to suggest that all depends what you're measuring. so admiral, you mentioned 33.3% constant figure. is that active service? is that the fully discounted cost of a service member? >> if you look at over the last 30 years and that's in my testimony for the record, over the last 30 years, if you look at toa as opposed to the cost of our men and women and that's total cost including the va, it's about 30%. it went up to about 33% but remember over the last ten years we've increased the size of the

force tremendously, so you obviously are going to have larger costs. the percentages have pretty much stayed the same. and as the general said, we actually have seen a downtick now in the actual costs for the department. >> well, let me just suggest, and we can't set it will in the next 2 1/2 minutes, but this issue of the right metric, of the right measure which we all agree upon is going to be absolutely critical going forward, so i thank you -- and we'll ask you again as we define what we're measuring, we're consistent, so we have a baseline, we can agree it's going up this percent, that i think will help us a lot. another sort of issue here which we've all touched upon in our questions and comments and the chiefs did also, i think we're of a vintage where we remember post support. i was shocked going up to the navy base at newport and having the commander, a relatively young captain, apologize to me

because the grass was a little longer because the contractors won't be here as often. i said contractors cut grass? what general odierno and others suggested, too, is that if we don't get a handle on some of these costs, you're going to see it's going to be sort of mundane initially. you're going to see the old issue of, you know, one month you don't even see your troops because they're cutting grass and painting rocks, and that is not the force we've trained today. these are superb professionals because every day we try to get every bit of training, every bit of -- and that's a cost that we have to look at going forward, and i don't have much time remaining, but i just want to put that one on the record, too. but i thank you again for your service, your excellent testimony, for what you do for the men and women who serve and continue to serve. thank you. >> thank you senator reed. senator sessions. >> thank you. i appreciate your contribution to this discussion. it's very important.

we need an outside view from some former insiders, and i think that helps us. the budget control act includes a sequester. it was passed in august of 2011. we're projecting to increase spending over the next ten years by $10 trillion. budget control act allowed it to increase by $8 trillion, not $10 trillion, but as jim inhofe said, half the cuts fell on defense, and i think it's particularly -- since it was so rapid, it becomes destabilizing, and i wish we could have done better. i one time proposed just increasing defense at 1% a year every year instead of going out another big cut and going up 2.5% a year which we will soon be in track to do. thank you all for sharing this. the debt threat to america is real, but we do not need to

break faith with the men and women who say, yes, sir, and go be deployed to the worst areas in the globe at great risk. thank you. >> thank you, senator sessions. senator king. >> very briefly, mr. chairman, i want to thank you gentlemen for joining us today and hoped that you can stay engaged in this issue. one question is are you being consulted, have you been consulted by this commission? have you had an opportunity to testify and provide your input. >> yes, sir, the afa has and we have also been consulted by the department of defense. very helpful. >> we certainly want that to continue and we want your good thoughts as we try to work through this. you understand the box that we're in. the chiefs presented it very well that if we don't make these changes, then we have to take the money from somewhere else. we don't have the luxury of saying, oh, well, we'll just add

to the budget unless we are able to do something about sequestration. and i appreciate the statesmanlike view that you took, for example, general, saying that, you know, you understand that, and it is a trade-off between readiness, training, and compensation. so with that, i just hope you will stay engaged with us and help guide us through this difficult set of decisions. i appreciate you joining us here. >> we have received statements from outside groups and individuals including the national military family association, the reserve officers association, the reserve enlisted association, and they and other statements which will be submitted to us will be made part of the record. we thank you for your service in and out of government, and we will stand adjourned.