rivals and while there are disagreements in the review process, the people involved, civilian and military alike, found the process clollegial an the strategic trumped the parochial time again. and the shared buy-in only intensified as the process went forward. this is a remarkable thing to witness and i have seen many reviews in the pentagon before and it gives me a lot of faith in the civilian and military leadership to give sound decisions as the choices have to be head in the months and the years ahead. no doubt those choices will involve their sacrifice. for example, as part of the total force the reserve components will experience some

strength reductions commiserate with the counter departments. and so we have to seek basing infrastructure to be rationalized to meet the needs of a smaller and more flexible force and to ensure that we have the resource s s to invest in readiness and modernization. critical initiatives like this will require us to look beyond the narrow interests, and the narrow interests of any particular office or department, state, region, party, or branch the armed forces. the forces. there are those who believe that we have lost the ability to do this, and the process that generated the strategic guidance gives me hope otherwise. i think that we are better than our skeptics argue. the truth is that we must transcend the partisan and the parochial, and our national security depends on it in a time of austerity. ti. so as i step down from my

current position, i feel a great sense of honor to have worked with so many outstanding men and women, military and civilian. and many of them i see in the room today and again, i thank you for your service to this country, and i wish you all of the best. god bless and i look forward to your questions. thank you. [ applause ] >> in retrospect, as you leave office next week, what looking back on when you took office was the greatest surprise? >> you know, i think -- >> other than the -- >> well, there are many surprises, but i think that right before i came into this office i had actually written a report called "the inheritance" was really documenting how

daunting the set of challenges that the new president at the time we didn't know who it was go ing to be, but how daunting the inheritance of challenges was going to be for this american president. i think that what surprised me is how much more challenging things got, and i mean, at the time we wrote that report, we documented the fiscal crisis, and the rise of the new powers and the proliferation of wmd and new domains like cyber space and space and so forth, but we didn't anticipate the arab spring. we didn't anticipate some of the other developments that have happened, and so, i think that what's been the biggest surprise is that just when we thought we had it bad, it gotten worse. but truly, what is remarkable has been how the current civil military team has really pulled together to grapple with the changes, and to try to do it in a very integrated way that more

often than not takes a whole government approach. >> could you comment for those of us who really don't have the experience in it, how is policy developed in the department of defense? and then beyond the department of defense? >> well, it is a great question. first of all, i'd say that policies developed, policies initiatives may come from within the department of defense, but if they are significant for the national security, they almost always get brought into a broader interagency discussion and process. and so, i think that it works a couple of ways. there may be a bright idea that comes from the bottom-up perhaps from the field or perhaps from somewhere in the department, and typically in my role, i will bring that into the deputy process so that you have the p deputy national security adviser and members of the intelligence community, state department, usaid and the treasury and sometimes the department of homelandappropriate, and we

exercise the options for the initiative and ultimately decision for the president to consider. and other times a top-down decision where the president sees an opportunity and wants to go in a particular direction and that process wants to be harnessed from the top down. pu the good news, ample opportunity, and there is always to be sort of, to lead from wherever you set by putting good intellectual capital well thought out ideas on the table. >> some have suggested that it is not as nimble as it might be. >> yes. >> and that when policy is formed at the department level and beyond the department and the intraagency, it becomes br.that? >> i spent a lot of my time in between stints in government writing about how the

intraagency process needs to be improved, because when you think about the challenges that we face, it is hard to think of one where only one instrument of national power gets you to a solution. it almost all involves the combined efforts of multiple different agencies and perspectives and resource streams. and so, it is very important that we have a process that integrates. we all love to complain about this process, but i will tell you that i think that because of the tremendous challenges that we face, and because we are in the country still at war where you have to be responsive, i think that we have developed a process that tries to be responsive to the need. it is not always successful, but it is more successful now than i have ever seen it before. that means that i have spent a lot of my time over, you know, with my colleagues from other

departments working together several hours per day to try to hammer out the intraagency solutions to the challenges that we face. >> you touched on changing roles for the reserve component. and included in those would be variable readiness for mobilization for different missions. so we are if i am interpreting this correct, we are looking for expand use of the reserve force, and we have come out of a period where the reservists, and the director petraeus had folks raise their hand and we have people in the audience who have been mobilized three times in the last ten years and unprecedented service, but at the same time, there is discussion that you said that everything is on the table. what is the current policy

thinking about the incentives for service particularly reserve service and health care and retirement benefits, et cetera? >> well, first of all, let me clarify. i think that if you look at at the height of the demand for reserve utilization, which is when we were at the peak of both iraq and afghanistan, i think that if you take that as the peak, the demabd nd is going to come down gradually, and we have completed the mission in iraq, and we are still working very hard in afghanistan, and we are making progress towards our 2014 transition goals. but you can expect that gradually over time, and over the coming years that commitment is going to come down. so overall, i think that demand is going to be coming down, and the question is that we have organized the reserve components in the guard to be in a fully operational reserve in the last several years to support that very high demand, and as that

demand comes down, the question of whether we keep that uniform level of readiness across the entire force or whether we look at different possibilities within the garden reserve where some on a volunteer basis want to deploy the offense raise their hands and volunteer to do so and have a higher tempo, if you will. others who really want to reset to more of a strategic reserve, and so forth, so that the truth is that we, and that is the -- those are questions that we need to work through with you in the coming years to figure out what is that model that is responsive to the needs of the future and what does that look like? i think that going forward in terms of the paying compensation, we are taking a total force look at this. let me be clear, no one is planning any pay cuts. i think that the secretary, and the chairman were very clear on this. what we are looking at is a

gradual slowing of the growth of inkre increase in compensation. i think that you have seen since 2011 something, 2001, sorry, something like a 40% increase in military compensation. just getting my figures right, and even though the number of personnel only increased by 8%. we absolutely want to protect funding for wounded warriors, for family programs and transitioning veterans and you will see us continuing to invest in those areas. but we have to look at areas like conversation like health care where we have perverse incentives in place, and many of you know that even though you are a working age retiree and you have access to tricare as a reservist or guardsman or active duty retired person, you may be able to -- even if you have the

able to get health care with the employer, your private sector employer, you can still stay on the tricare and not take the private sector coverage. that means that the department of defense is carrying a lot of health care costs that would be borne by private health care employers and while in principle you could make an argument for that, but in truth, the reality is that is money not spent on capabilities and equipment and training and readiness and other kinds of programs for our personnel. so we need to really look at this as a hole lis tick way, and similarly on retirement. nobody is going the change the contract on somebody who is already serving, but we have asked congress for authority of a commission to sit down to look at this holistically to ask the question of whether we can have a better system. the majority of the military members don't stay on 20 years and many of them spend many,

many years in the military and walk away with nothing in terms of retirement. is that the right model for us going forward? these are the kinds of questions and no easy answers and very politically charged difficult issues, but we owe it to ourselves and the country to sit down the wrestle with these to try to come up with a better approach. >> we in the reserves already epp joy the gray area between the retirement and 60 years old is similar being contemplated for the active component? >> we are looking forward to the establishment of this commission, and i don't have any particular proposals that have been put on the table as of yet. >> i was chatting with the junior officers this morning remembering back on my reserve service, and the 1970s after coming back from southeast asia, and there was a period where we were running through the woods yelling bang-bang because there was no training ammunition, and the funds had been cut out of

the carter year defense budgets, and it took 15 years to recover the capability of the reserve force for desert storm that evolved into the current operational reserve. what's being thought of as there's a defense drawdown to guarantee that we don't have as more missions go to the reserve and the guard. what is being contemplated to ensure that we have the resources, training and equipment to do those missions? >> well, it is a great question. and we do not want to go back to the days thatri. i think that is the reason that the secretary in his guidance up front emphasized ethat second injunction that we don't want to go to a hollow force andforestt

afford and make ready. when you look at that force, it goes to the guard and the reserve when we are relying on you all to be part of the notion of reversibility, being agile and able to adapt to unforeseen contingencies or circumstances in the future. so one thing management-wise, we are paying particular attention to how the services are resourcing readiness both active component and reserve and guard going forward. we will continue to do that. >> i heard a discussion yesterday at army senior leaders seminar here that suggested that in some units that vehicles are not being takenb out of the motor pool because of the shrunken dollars for fuel. down on that grass roots level, will these policies and shift ensure that doesn't happen? >> well, again, i think that the

h hon monitoring of that and tracking that and making sure that kind of example gets to the senior leader attention. i can tell you that the intention at the top is to ensure that we hold people accountable for keeping the force ready. i know that is certainly the secretary's intention and he and the chairman are working very hard towards that end. >> there has been a recent push for communications efforts and when we got home nashgs w, that of the table. are there any operations for reserves? >> well, there are operations reserves the nsf and in particular, that do maintain certain linguistics and regional

focus and very much play in the partner capacity-building mission and in that sort of thing. so, you know, whether what i don't know is whether socom plans to expand that over time, but given the cultural richness of this country and the linguistic richness of this country, it is a particularly good way to tap into that. in many ways. but, again, i am not sure about the particular plans of the that element will expand. >> this new strategy guidance, how will it influence the 2014 quadrennial defense process? a full qdr or a chance to make course corrections with potentially a new administration

or the current administration? >> well, what the next qdr looks like will depend on a couple of things. whether or not we are in an era of sequestration, god forbid or whether congress does the job to make the necessary hard choices to avoid going down that path. if we are in a more sustainable budgetary trajectory, then obviously, the changes, the fiscal environment will be less dramatic and frankly much better for the national security. in terms of the other key factor is who wins the election. if president obama is re-elected, typically the qdrs of the second-term presidents are less dramatic than the first term because they are adjusting off of their own baseline. if someone new comes into office typically they do a more full qdr that goes back soup to nuts

to come back to make more changes based on that. so, it depends on some circumstances that we can't foresee at this point. what our job is in osc, but particularly in the joint staff is to really prepare for either case and to ensure that we have done the intellectual work to tee up the options for a future president whoever that may be. >> you have used the word irreversibility, and how does that apply for the supply base for the defense, and which has been pinched in recent year and foresees a greater constriction of resources for support of the defense acquisition and r&d? >> for the industrial base it means a couple of things. one is an effort to protect the

investment in science and technology and research and development as much as we can even under a tightening fiscal situation, and because that is the seed corner of the future, but it also means that in some particular areas, where if you lost a particular part of industrial base it would take you years and years and years to recapture it if ever. that fact has been factored into some of the program and budget decisions. so even though a particular program may have been weak or something that we thought about doing away with, if in doing away with that we completely lose a capability or the able to have that capability in the future in a timely or responsive bas basis, we influence the decision of what to do in that case. it is a complex calculus, but we are serious about the notion of

reversibility because of the experience that we have had in the beginning, but a it is very hard to predict the future in in current environment and it is too important to keep in institution's ability to be responsive to the unforeseen. >> okay. the secretary has an appointment at a white house on -- >> another deputy's committee meeting. >> 1600 pennsylvania avenue. >> yes, on the same topic. >> so the last question is an omnibus question. i have several cards that have ip qui inquired about what are position policy ought to be toward central and south america and israel. you comment on the globe and i would throw in iran and korea as well, and spanning the globe as they used to say in the "wide world of sports" and -- >> i will see how many i can cover. >> where are we going? >> i am trying to write all of the ones that you mentioned.

okay. central and south america -- very interesting. this is a region where we have very strong partners where we have common ideals and objectives in a number of countries who in an earlier era emerged as democracies sought to embrace economics and so forth, and so the military engagement is a very important part of the engagement strat jishgs egiestr of the things that we have seen is that we have a real focus on building part and capacity and take a case like colombia, where colombia, seven or ten years ago was under siege with a virulent insurgency, and we invested not just the department of defense, but also in colombia to help them fight off the insurgency, and help them to build the

capacity to help secure themselves. what has happened through the experience is that colombia is a net exporter of security in the region. they are now training our friends in mexico on flying held koerpts and they are now training militaries in central america on how to deal with counter narcotics missions and so forth, and so, you know, it is they have really given a lot of reality, and some great example, too, to this notion of building partner capacity, and the value not only for us, but for the security and stability in key regions where we may not have the forces available to do it by ourselves all of the time and particularly in the last decade when we were so occupied in south asia and the middle east. we are guard to israel, we remain a staunch ally of the state of israel. we have a vital national interest in ensuring their security and their existence

long-term. we have an extreme ly close relationship and dialogue with them. it is candid and we talk frankly about the peace process and we talk frankly about the dimensions of the security dimensions of the region and the trends and events and so forth. and we -- there's a lot that we agree on and where we disagree we have very frank dialogue with them. but the u.s. commitment to israel has been something that has been sustained across many administrations republican and democrat alike since the country's founding, and that is no different today. sorry, running out of the north korea was the next one? >> korea -- keep at it. iran. >> yeah. i mean, obviously, and in

regards to north korea, our prin principle concern has been the potential for -- has been the proliferation of nuclear weapons to that country, and the potential that they could spread the technology to others whether they be rogue states or terrorist organizations. we have sought working with others, china, russia, south korea, and so forth to engage the north koreans in six-party talks to try to get them back into compliance with their treaty obligations, to denuclearize and so forth, but in the absence of progress there, we have with u.n. sanction imposed along with the international community, some pretty severe sanctions on many of the activities. we have just witnessed a leadership transition or we are

witnessing a transition under way with the passing of power from the father to the son, and it remains to be seen how things will move forward. wf ve sought to let north korea know that we want to see them come back to the negotiating table and sanctions will remain in place until that happens, and we do not want to see any further provocations on the peninsula, and the commitment to the stability on the peninsula and the south korean allies is rock solid, and it really the ball is in their court. to see the fact that it is in their interests with the international community to try to resolve this situation. >> shall we conclude our world tour? >> yes. >> thank you very much.

>> thank you. by 2016, according to the imf, the world's leading economy will be a communist dictatorship. that is in five years' time, and think about that if the imf is right, the guy that you elect next november will be the last president of the united states to preside over to the world's leading economy. >> columnist and author mark stein has published nine books, and he also writes "the happy warrior" column for "the national review," and also guest hosts for rush limbaugh. now is your time to tweet your questions live on book tv on c-span 2. with talk of the possibility legislation to improve the nation's cyber defense, former cia director deals with national aware, of the cyber threats from

an aspen homeland security group discussion. >> in some ways, cyber mirrors a little bit the discussion that we used to have about terrorism in the '80s and the '90s and a great deal of difficulty coming to the national consensus about what to do about it, until we had 9/11 which crystallized everything, and then when the nation moved forward we haven't had that event in cyber yet. we image ine it, and in the attk of stratmore where i lost my credit card, the only good thing that comes out of it is that a few more of those, the public awareness that it is a serious vulnerability that will overcome some of the private sector reservations about working with the government on this. >> watch the rest of the discussion and more about homeland security