dempsey testified today on the 2013 budget request. this is three hours. s. >> good morning, ladies and gentlemen, thank you for being here for the 2012 budget request for the department of defense. to put this budget in context it's critical to examine the

strategy that's formed its mission. at the outset i want the witnesses to know i appreciate the hard work that went into the development of the strategy. it's no, no small effort to completely revise the strategy one year after the submission of the sentence review. and he is than three months after the submission of a budget request. however, i do have serious concerns about the trajectory that this new strategy puts us on. although the strategy is framed as making the military more nimble and flexible, it's not clear how slashing the armed forces by over 100,000 during a time of war shedding forestructure and postponing the modernization makes that so. the president must understand that the world has always had and will always have a leader. as america steps back, someone else will step forward. we've heard multiple times that the strategy drove the budget and not the other way around. i suppose this starts with the

president's call to slash at least $400 billion from defense last april in advance of any strategist review. an honest strategy can't be founded on the premise that we can do more with less or less with less. rather, proceed from a clear, articulation of the full scope of the threats you face and the commitments you have. you then resource the strategy required to defeat those threats decisively. one does not mask insufficient resources with a strategy founded on hope. furthermore, the president's new defense strategy and i quote -- supports the national security imperative of deficit reduction through a lower level of deficit spending, unquote. the administration appears commit tend to insuring the military is the only sector of the federal government to meaningfully contribute to deficit reduction. simultaneously, the budget proposes additional spending by diverting savings from declining

war funding to domestic infrastructure spending. how can you save by not spending money that wasn't in the budget to begin with? this is a cynical gimmick that ensures the military and only the military is held responsible for what little deficit reduction this budget represents. white house chief of staff, jack lew said, the time for austerity is not today. ask the 124,000 service members who will have to leave the military how they feel about that. the president's budget is a clear articulation of his priorities. the president's budget asks the men and women in uniform who have given so much already to give that much more so the president might fund more domestic programs. the president claims the budget would rise every year but ignores the fact that this request is it is 46 billion less than what he said he needed last

year. more than $5 billion less than who was appropriated for fiscal year 2012. furthermore, despite the new strategy's goal of pivoting to asia a theater where naval assets and airlift are decisive the budget calls for retiring nine ships, remove 16 more from the new construction plan and cuts our airlift fleet by hundreds. this isn't the only place where the president's public statements and missions seem to devirge. we can't negligent the war. inexplicably and not based on the advise of commanders announced our withdrawal date and to pull out the surge forces before the end of the next fighting season. mr. secretary and chairman dempsey, before the president makes another announcement about troop withdrawals, i implore you to heed our commanders advice. we're seeing success. let's not make a decision to

pull some of the remaining 68,000 troops before we see what happens this fighting season. let's wait to re-assess any more forced level decisions until the end of e questions but with that i'll conclude and thank you, again, for being here. i look forward to your testimony. i call now on ranking member smith for his opening statement. and mr. secretary and general dempsey for being here. and i applaud you for the effort that you've put in, of course, over the last year. this did start quite some time ago with a major strategic review of our military and national security needs, a very holistic transparent process where you brought in all military leaders and sat down and thought about what our national security needs are going to be for the next ten years, the strategy without question is where this who process started and i applaud you for that and you've laid out

a very clear and coherent strategy. when it comes to budget numbers it's important to take i step back and have a little perspective. the defense budget has doubled over the course of the last ten years. the budget that's put before us, as the chairman points out, will be increasing the defense budget. every year from this year forward. we hear about these cuts, these cuts are from what was projected to be needed to be spent, a year or two ago. they are not actual cuts. the sole exception of the year. after doubling the defense budget over the course of th e counting the overseas contingency operation's money this one year we go from $530 billion last year to $525 and it goes up every sipgle year for the next ten. it's part, i guess, of a washington thing that when you increase the budget you call it a cut.

it's a decrease in the increase, perhaps, but it is an increase, nonetheless so we have to keep this numbers in perspective. anybody who would argue that we can't go back and look at our acquisition and procurement process and do it much better, do it in a way that's actually going to deliver more capable pieces of equipment at less money. that's what these gentlemen have done. they'll like at the last ten years and figure out how to do it better. i won't be overly critical of the last ten years. 9/11 happened and we had to respond. we had to fund the military. when you have to act that fast, mistakes will be made. i know the people making those decisions back then did their level best at a very difficult time.

but to not learn from the experience ten years later and figure out how to spend the money, that would be a betrayal of our job as tornado the job of the people and of the pentagon. we had a budget that put the strategy first and puts us in the right direction. and i'll point out, this is the law. the budget numbers that we projected for the next ten years and secretary panetta and general dempsey had to live under were passed by this congress. some members voted for it and some didn't but it's the law of the land passed pi the house an reduction in the projected increases is the law. these people had to follow and that we passed and gave to them. so as we hear today about various different programs in areas where we thid that this budget is cutting too much, it would be most helpful and i doubt this will happen but i'll ask anyway, as people are making those criticisms, they point out where they'd like to find the money. either within the defense budget

you can say, your strategy is all right but you should have spent more money here and less money there. if you don't think that's possible within the defense budget, then by all means, let us know what taxes you want to raise to produce more money. if you don't want to do that, what other programs, preferably, with some specificity instead of generally saying we'd like to spend less money on government, that you're going to cut. otherwise, this is an exercise in imagining that we have more money than we actually do. these gentlemen didn't have 245 luxury. they had to put the budget together on the law we gave them. they put out a strategy that understands how the world is changing, main threats we're going to face are going to be asymmetric, nonstate, threats. iran, korea, missile technology, we need a different military to confront that than the one that fought two major land wars the last ten years. this strategy reflects those

changes. special operations command will keep going up because we know how critical they are to the fight we face. they'll increase that. isr capability, through unmanned aerial vehicles and other sources, also going up, to make sure that we meet the needs that are in front of us. there are a lot of other things tharnt going up but that's because things have changed. we need a new strategy to confront those threats and in a difficult budget environment you guys did that and put together a good strategy. i hope we have a realistic conversation. if more money needs to be spent, tell us where to balance it out. because never forget it's also in our national security interest to have a strong economy and a strong fiscal government. if we don't have those things the strongest military in the world can't protect us, so this is a very interesting debate. i look forward to comments from the members of this committee and from the secretary and the general. we have a lot of difficult work to do but i think we're off to a

good start and i look forward to working with everybody on the committee and at the pentagon to get the job done for the american people. >> we're fortunate to have with us today, our secretary of defense, honorable leon e. panetta from the u.s. department of defense. general martin e. dempsey, united states army, chairman, joint chiefs of staff. the honorable robert, if i heal, tunds secretary of defense, and controller of the department. thank you for being here. mr. secretary, the time is yours. >> thank you very much, members of this committee, always nice to be able to return to the house i'll ask that my statement

be made part of the record. >> no objection, so ordered. >> i appreciate the opportunity to appear before you to discuss the president's budget request for fiscal year 2013 for the department of defense. these brave men and women, and they are, for anybody that's gone to the battlefield and talked to those in uniform, they are without question, the next greatest generation of individuals. along with the department easy vilian professionals who support them, they've done everything that's been asked of them and more during more than a decade of war and, again, i thank you for the support you provided to them. if fy 13 budget request for the department of defense was, indeed, a product of a very intensive strategy review, that was conducted by the senior

military and civilian leaders of the department, all of the service chiefs, all of the combatant commanders and all participated in the effort and we had advice and guide yabs from the national security team and the president as well, the total request represents a $614 billion investment in national defense. it includes $525.4 billion requested for the department's base budget and $88.5 billion in spending and support of ocombat. the reasons for this review are clear. first, the united states is at a strategic turning point after a decade of war and a substantial growth in defense budgets. but second, with the nation confronting very large debts and a very large deficits, the congress passed the budget control act of 2011.

imposing by law, on us, by law, a reduction in the defense budget of $487 billion over the next decade. we, at the department, decided to step up to the plate to abide by the law and to use this crisis as an opportunity to try to establish a new strategy for the force of the future. and that strategy has guided us in making the budget choices that are contained in the president's budget. the fact is, we are at a turning point. it would probably have required us to make a strategic shift under any circumstances. the u.s. military's mission in iraq has ended but we still have a tough fight on our hands in afghanistan but 2011 marked significant progress in reducing violence and transitioning to afghan-led responsibility for security and we are on track to complete that transition by the end of 2014.

the nato ministers, i sef, and we're biding by our libyan fll . and successful counterterrorism efforts have significantly weakened al qaeda and decimated its leadership. but despite what we've been able to achieve unlike past drawdowns where threats have receded, the united states still faces a complex array of security charge across the globe. we're still a nation afghanistan. we still face threats to our homeland from terrorism. there's a dangerous proliferation of lethal weapons and havior of iran and north korea continue to threaten global stability. there is a continuing turmoil

and unrest in the middle east from syria to egypt, toemen and elsewhere. rising powers in asia are testing international rules and international and there are gro threats, protect ions and our nation and our people, and at the same time, meet our responsibility to fiscal discipline. this is not antk. it's a toughto build the force the future, what we decided to do is to develop a new strategic guidance that consists of the following five key number one, the military will be smaller and it will be leaner. but it should be agile and it should be flexible, deploy quickly and technologically advanced.

second, we have to rebce presen emphasize asia middle east. these are the areas of concern in the future. third, for the rest of the world, we innovative partnerships and ally partnerships from europe tori. fourth, we'll ensure that we have the capability to quickly confront andef from any adversary any time anywhere. and fifth, this can't just be about cuts. it has to be about investments. what do we protect and prioritize in terms of investments, in technology and new capabilities? as well as our capacity to grow, adapt and mobilize as needed? while sharing this strategy and shaping this strategy, we didn't want to make this mistakes of the pas

the drawdowns there have been serious mistakes that have been made. our goal is strongest military in the world. to not hollow out the force, that's extremely force. to not hollow out the force which means to maintain a lors force structure and cut training and equipment and all the other things that are essential, to make that a first-rate force. thirdly, to take a balanced approach to budget cuts. put everything on the table and look at every area in the defense department budget. and lastly, to not break faith with the troops and their families. people that have been deployed time and time again to the battlefield. throughout the review, we also made sure that this was an inclusive process. general dempsey, and i work closely with the leadership of the services, and consulted regularly with members of congress, as well as the president andf the administration, as a result of these effortstr

behind the recommendations that we are presenting today, consistent with the budget control act, this budget reflects a $259 billion savings in the first five years. we project meeting our $487 billion number over ten years but in the budget we present to you it's the five-year cycle and that includes $259 billion in savings. it's a balanced and complete package. as i said, it follows the key elements we laid out in our strategy. the ce from three areas. first, second, force structure and procurement reforms and adjustments. and finally, compensation. that's grown by 90% and we felt that we had to achieve some cost controls in the future there as well. let me just quickly go through each of those areas. if we tighten up the force and i think we have a responsibility

to tighten up the operations of the department, by reducing access overhead and eliminating waste and improving business practices across the department. as you know, the fy '12 budget proposed about $150 billion in efficiencies in five years and we're in the process of implementing those changes but we felt we could do for so we identified another $65 billion additional savings over the next five years through measures such as streamlining support functions and consolidating i.t. enterprise services. rephrasing military construction projects. consolidating inventories and reducing service support contractors. as we reduce force structure we also have a responsibility to try to provide the most cost-efficient support for the force. that's the reason the president will request the congress to authorize the base realignment and closure process for 2013 and

2015. as somebody that's gone through brac and i went through it in my district and know what it means and the impact that it can have with it is a controversial process. it impacts our members and it impacts on their constituencies and i understand that. and yet, it's the on the effective way to try to achieve te needed infrastructure savings that we have to achieve in the long run. >> lastly, to provide better financial information, we're also increasing our emphasis on audit readiness and accelerating key timelines. in october of 2011, i directed the department to accelerate the efforts to aachieve fully audible financial statements originally under a mandate we were supposed to do that by 2017. i asked it to be done by 2014. efficiencies alone are not enough to achieve the required savings. and that's obviously, why we had to make significant adjustments to forgs structure and procurement investments. but we did it in line as, again,

with the strategies that we put in place. and let me quickly walk through those. we knew that coming out of the war as the military would be smaller. our approach to accommodating these reductions was to use this as an opportunity as tough as it is, to fashion an agile and flexible military that we'll need in the future. we've got to have an adaptable and battle-tested army that's there for decisive action and capable of defeating an adversary on land. and at the same time be innovative. we need a navy that maintains forward presence and is able to penetrate enemy defenses. a marine corps that's a middleweight with a re-invigorated am am fib use kanlts and the national garden reserve that continue to be ready and prepared for operations when needed. agile f.

we made conscious choice to maintain more force structure than we could afford -- we decided not to maintain more for structure that we can afford to properly train and equip. that was the point i made about not doing something that hollows out the force. we're implements the reductions consistent with the strategic guidance of a total savings of about $50 billion over the next five years and the biggest pieces are resuesing the active army. we're at $562,000 and we'll go down to $490,000 by 2017 and it will be gradual ain't will still be higher than pre 9/11. same thing is true for the marine corps. from 202,000 to 82,000 marines. we'll reduce and streamline, airlift fleet basically going after aging c-5 a, c-130 but

will still maintain a fleet of 275 strategic airlifters and 218 krechlt-130s. the navy will protect a fleet of 285 ships and protect our highest priority and most flexible ships. but we will be retiring seven lower-priority navy cruisers that frankly, need to be upgraded wi upgraded with ballistic defense capability and that hadn't happened and it could require significant repairs in order to do that. second, the strategic guidance made clear we have to protect our capabilities and project our power to asia pacific and the middle east and to this end we maintain the current bomber fleet and the aircraft carrier fleet. 11 ships and ten air wings. we maintain the big deck amphibious fleet and army and marine corps forces structure in the pacific after the drawdown

from iraq and the drawdown in afghanistan. we're going to maintain entertain strong presence not only in the pacific but in the middle east as well. this budget also makes elected new investments to ensure is that we develop new capabilities. $300 million to fund the next generation air force bomber. $1.8 billion to develop the new air force tanker. $18.2 billion for the procurement of ten new warships. third, this straej makes clear that even though middle east a areas of greatest concern and priority, the united states will work to strengthen our key alliances, build partnerships and develop innovative ways like rotational deployments to sustain u.s. presence elsewhere in the world. with regard to nato, we'll be investing almost $200 million in the nato alliance ground surveillance system and $9.7 billion to develop and deploy missile defense capabilities

that protect the u.s. homeland and strengthen regional missile defenses. fourthly, the united states must have the capability to fight more than one conflict at a time. this is essential. we are in the 21st century. 21st century combat is a lot different and we need to have the capabilities to deal with threats in the 21st century. that means we need to invest in space, in cyberspace. in long-range precision strike and the continued growth of special operations forces. to ensure that we can still conto front and defeat multiple adversaries even with the force structure reductions that we outlined. even with some of the adjustments to force structure this budget sustains a military that we believe is the strongest and will remain the strongest in the world. we'll have an army of more than 1 million active and reserve soldiers.

18 divisions, 65 brigade combat teams. 21 combat aviation brigades. a navy 285 ships. that will remain the most powerful and flexible naval force on earth. a marine corps with 10 artillery battalions and 20 tactical air squadrons and an air force that will continue to ensure air dominance with 54 combat coded fighter skraud squadrons in the current bomber fleet. lastly, we have to invest. if we're going to leap ahead of our adversaries technologically, we've got to be able to have some key investments in new technologies. we provide 11.9 billion for science and technology research. 2.1 billion for basic research. 10.4 billion to maintain growth of special operation forces. 3.8 billion for unmanned air

systems. 3.4 billion for cyberactivities. let me also mention a key element that we absolutely have to maintain which is a strong, capable and ready national guard and reserve. to that end we'll retain -- we've asked the army to retain mid-level officers and ncos so that the structure and experience leaders will be there. if we have to mobilize and regrow the force quickly. another important element is to preserve our ability to quickly adapt and mobilize a strong and flexible industrial base. we've got to have an industrial base for the future. this budget recognizes that industry is our partner in the defense acquisition enterprise. and to the most fundamental element of our strategy and decision-make process, our people. far more than any weapon

technology the greatest strength of the united states is our military, the men and women in uniform. one of the guiding principals was to keep faith with them and their families so we're protecting family assistance programs and basic benefits. we're sustaining important investments in the budget to try to assist our troops with their needs and the needs of their families. yet, in order to build the forms needed to defend the country under existing budget constraints, the growth in cost in military pay and benefits has to be on a sustainable course. as i said, this is an area of the budget that's grown by 90%. we've got to implement some efforts to try to control those costs in the future. the budget contains a road map to address the costs of military pay and health care and retirement in ways that we believe are fair, transparent and consistent with our fundamental commitment to our people. let me conclude