members of the committee, as i said, this has not been an easy task. putting together this kind of balanced package has been a difficult to undertaking for everyone. but at the same time, we viewed it as a very important opportunity to try to shape the force we need for the future. i believe that automatic of us, the surface chiefs and combat and commanders have developed a complete package here, aligned to achieve our strategic aims and at the same time, meet our responsibilities to fiscal discipline. as you look at the individual parts of the plan and i urge you to do that, look at every element of the plan we submitted, i encourage you to bear in mind is strategic tradeoffs that are inherent in any particular budget decision. this is a zero-sum game. as far as i know, there's no free money around. the need to balance competing strategic objectives has to take

place in a resourced constrained environment. we need your support and partnership. we look forward to that. i understand these are will tough issues. i understand these are tough issues and i also understand that this is the beginning, not the end of this process. but this is what congressman dated. the majority of this committee voted for the budget control act. we're mandated under law to meet these requirements of almost a half a trillion dollars in savings over the next ten years. we have taken that responsibility seriously. we need your partnership to do this in a manner that preserves the strongest military in the world. this will be a test for all ous, whether reducing the defit is about talk or about action. and let me finally be very clear. when you take a half a trillion dollars out of the defense budget, it comes with risk.

we think there are risks. we're dealing with a smaller force. we'll have to depend on speedy mobilization. we'll have to depend on new technologies. we're going to have to dpd take care of troops coming home to make sure they have jobs. and have the support they need. there is very little margin for error in this budget. this is why congress must do everything possible to make certain that we avoid sequestration. that would subject the department to roughly another $500 billion additional cuts that would take place through a meat ax approach and we're convinced, would hollow out the force and inflict serious damage to the national defense. so the leadership of the department, both military and civilian, is united behind the strategy that we presented and the budget that we're presented. but we look closely to working with you.

and the months ahead, to do what the american people expect of their leaders. to follow the law, to do our mart in reducing the deficit, and to be fiscally responsible but, also, to develop a forcing that defend this country. a force that supports our men and women in uniform and a force that is and always will be, the strongest military in the world. thank you mr. chairman. >> thank you very much. general dempsey? >> chairman, congressman smith, distinguished members of the committee, that's correct you for the opportunity to discuss the president's defense proposed budget for fiscal year 2013. i'll begin by saying this budget represents a responsible investment in our nation's security. at its core itsds an investment in our people, the sons and daughters of america who serve this nation in unifm. oen with words about them and what they have accomplished.

the last ten years of war have been among the most challenging in our history. through it all the joint force has persevered and it has us.vai deployment after deployment after deployment. and so have you. we fulfilled our solemn vow to protect and defend america, her citizens and her interests. as i sit with you today, our service men and women remain globally engaged. they are deterring aggression, developing partner, delivering aid and defeating our enemies and they stand strong, swift and ready in every domain every day. i had what privilege to be with a few of them traveling to average and ejaipt earlier last week. i witnessed extraordinary courage and skill in the young soldiers just off patrol of the hindu kush. and the men and women, managing the development of the afghan national security forces. the brave and vigilantmenturn c

superb junior airmen that flew us to the right place at the right mptify a professional military with a remarkable and reliable record of performance. in just the past year, we further crippled al qaeda. we helped to protect the libya people from near-certain slaughter and affirming nato's important role beyond the borders of europe. we brought to a close more than 20 years of military operations in and over iraq. and like we did in iraq, we're steadily transitioning responsibility for security on to afghan's shoulders and we helped ja pab recover from a perfect storm of tragedy and destruction. and, of course, these were the most visual accomplishments. behind the scenes and beneath the surface we defended against cyberthreats. we sustained our national's nuclear deterrent position sure and worked with allies and partners to build capacity and to prevent conflict across the

globe. we continue to provide this nation with a wide range of optiontion toer dealing with the security challenges that confront us. and in an increasingly competitivunrtain security envi we must remain alert, responsive, adaptive and dominant. this budget helps us to do that. it's informed by a real strategy that makes real choices and maintains our military's decisive edge and maintains our global leadership. moreover it ensures we keep strength with the true source of our strengths and that's our people. with this in mind i wanto chent secretary. first, this budget should be considered holistically. it's a joints budget rather than individual service e formed pap rocky parochially.

changes that aren't informed by that context. of the balance that i just described and potentially compromising the force. second, this budget represents a wait point, not an end point. in development of the join 2020 beyond. it puts us on a path to restores versatility at an affordable cost. specialized capabilities that were once on the margins become more central. even while we retain our conventional overmatch, it builds a global and networked joint force that's ably led and always ready. and third, this budget does honor our commitments made to our military family and keeps faith with them. there are no freezes or reductions in pay. there's no lessening in the quality of health care ereceived by our active duty service members and medically retired wounded warriors. that said we can't ignore the increasing costs of pay and benefits. to manage costs we need pragmatic reform.

all of this can be done in a way that preserves our ability to recruit and retain the best of america's talented youth. finally, all strategies and the budgets that support them carry risk. this is no different. in my judgment, the risk in this strategy and budget lies not in much we can do and how often we can do it. this budget helps us buy down this risk. byabilities they most need. to close, thank you. thank you for keeping our military strong. thank you for taking care of our military family. for supporting those who serve, who have served and importantly, who will serve. i know you share my pride in them and i look forward to your questions. >> thank you very much. thank you for your testimony. thank you for your service. thank you for doing a great job in a very difficult situation.

you've mentioned the deficit reduction act. and mr. smith mentioned it. and, again, many of us voted for it. some didn't. the deficit reduction act called for serious reductions in our spending. i understand the results of the last election and the people said -- you got to go to washington to get our financial spending in order. everything needs to be on the table, defense, included. and i don't think anybody would argue with a budget as large as we have in the defense department, that we can't find savings. and this is a huge, huge cut. defense accounts for 20% of our overall budget. and the firtranche we voted on,%

of the savings come out of the defense. so i would say we've given and given a lot out of defense. and then the sequestration, i mean, when we voted for the deficit reduction we were told the super committee, that the sequestration was so bad that it would force the super committee to do its work to find other savings in the entitlement programs which is where the real problem is anyway. because if we eliminated all defense spending. if we eliminated all education spending. if we eliminated all transportation spending. if we eliminated the total discretionary budget, we would still be running a deficit of over half a trillion dollars. so all of this talk. all of this agony of going

through all of these cuts which are very significant, don't really address the real deficit problem. it is not the defense department that is putting us into a very precarious situation in spending. having said that, you've stepped up to the plate. five years that are serioushe and you've devised a strategy the best way you can, to meet the threats that we can meet, given the cuts. just a couple of years ago, before you got here, mr. secretary and before you got here, mr. chairman, secretary gates in that same seat, was y saying that we had to, over the next five years, have a 2% growth over inflation or we would have to reduce the size of

the force. well, that's come to pass because we not only are not having a 2% growth overinflation, we're having a reduction when you consider inflation. and your report from the department points to the fact that we're going to have negative real growth over the next five years based on the budget. when you take into account inflation. so we understand that and we're going to work through that and you have stepped up and said that the military can live with this. but the sequestration we cannot live with. i think we're all in total agreement on that. so i have a question. the way we're moving forward right now, there's nothing in the budget to deal with sequestration accept a possible tax increase if that's needed at the end ft day. >> this budget that we'll be

dealing with kick information and starts with the new year october 1st. being realists, i think all of us understand that we're probably not going to have the budget. the senate says they they won't pass one. ours on the house sid. but being an election year, i think we probably understand we're have a normal year. we haven't had a normal year for years. so maybe we're going to have a normal year and we'll be with a cr from 1st, at least through the election, and, you know -- i don't know how we'll come back and deal with this in january but in john mccain the sequestratki i wanted to really work on my budget. to go through the strategy and budget and you've done exhaustive work to come wi

this budget. a week or so ago we had dr. carter admiral winfield, the secretaries of the services and chiefs, and one of the members of the committee asked dr. carter what he had plan for sequestration. his answer, basically was, we don't have to do any planning for it. automatic we have to do is pull out the budget and take 8% off of every line item. and i think everybody in here probably understands the chaos that would create. i don't know how many contracts the department has. i know it's hundreds. those would have to go back and be renegotiated. pensions, retirement plans, health insurance,ll things that would have to be dealt with. further forcereduction, immediately. and then, sequestration kicking

in. i, mr. secretary, talked to you about this. i put in a bill and dealing with everything we're talking about here today, the sequestration takes it right over the top. and we're looking the reports we're hearing about the rattling going on over in iran. the new leadership inkorea. i think the world is in a very serious situation. i know, general, you told us in a meeting a couple weeks ago in your 37 years, this is the most serious you've ever seen it. so i think these are serious questions. my bill would pay for the first year of sequestration, which moves it back a year. it -- it does it with as little pain as possible through

attrition decreasing the size of the federal workforce. but i'm asking you, mr. secretary, you can support, trying to fix sequestration now, instead of having all of the people that will be laid off preparation for next january? if it wouldn't be better to move ahead and fix that now? deal with it now, not wait for the december 31st deadline. and that would still give us then, next year to work on next year's problems and sequestration. >> mr. chairman, as i've said time and time and time again, sequestration is a crazy process. that would do untold damage to our national defense. it's a mechanism that would do, you know, just kind of blind

sighted cuts across the board and would really hollow out the force. i'm prepared to work with you in every way possible to try to work on both sides to try to develop an approach that would detrigger the sequestration. my hope was, frankly, that the super committee would take that responsibility and do that. i think that's what everybody's hope was. that didn't happen. and that really concerned me. and so whatever we can do on both suds toe develop an approach that would detrigger sequester and avoid that kind of horrific result, i'm certainly prepared to work with you on that. >> thank you very much. mr. smith? >> thank you, mr. chairman. i'll point out the overall budget the 'president submitted contained $3 trillion in

ten-year save state of georgia if the budget were passed it more than meets the $1.2 that was required to avoid sequestration so there was a plan put on the table and i share the chairman's iraqis that the sooner we resolve that overall issue the better for all concerned, what ever that plan may wind up looking like. i wanted to get more comments from you about brac. you've seen since discussion started, it has not been greeted warmly on the hill, to put it mildly. except by me, i think i'm the only one that has a single positive to say about it. i looked at it logically and said, if we're shrinking the force to the size we are, we're ng of europe, we're making substantial changes in the strategy, regardless of the debate in the budget we're moving things no wn do that without some doing some closures and realignments. i don't see where it's possible. i certainly have a large number

of bases in my state and various degrees of vulnerability and i understand that, but it has to be done as far as i can see. a need to be more open into what in my m absolutely necessary step. >> as we make reductions that will take place in some of the drawdowns in the wars we're engaged in. we're going to have units coming back that will be drawn down. that means that the force that we maintain will needless infrastructure to support it. that's just a reality. how do you make a decision as to what parts of that infrastructure ought to be reduced or changed or at's been

been a challenge, as long as i've been in this town. to try to make those decisions. and ultimately, what happened was that have someone developed the brac process as a way to effectively do that by putting all of these decisions in one package and having a up or down vote. i was a part of going through three brac processes. i had installations in my district. and one of those bracs eliminated ft. ord in my district which represented 25% of the local economy. so i know the impact the brac process has. at the same time, we were able to establish a campus at the california of state university system and reuse that area and frankly came out on the better end of the deal. but nevertheless, it's a tough process to go through. and yet, you know, standing back, i can't see a better way

to do this other than brac. because if you try to do this on a piecemeal basis, we know what's gong to happen. it's not going to go anywhere. to put nit this kind of package. brac costs a hell of a lot of money. >> let's be clear. this is not about a way we can save money. we know it's not from ore previous five experiences. in the long term it does save money. yes, for the five, ten-year number, but the long-term matters. it's more about making sure you have the fore structure and basing system you need to support your national security strategy. >> that's right. stu. thank you. i just want to make one editorial comment on guam. there are still some details to work out. what to do about oak gnkinawa a elsewhe elsewhere. are there's been a reduction from the number of marines going

to guam from the previous plan. could you consider perhaps more? and also not just rotational, but on a permanent basis? and believe me, i understand. will this plan out? i think six years ago, it was going to cost $10 billion, and then there were all kinds of demands and it wound up being $23 billion to move them to guam, which was completely unacceptable. and the people in guam are going to have to work with you to get those costs under control, but i just hope you will consider the fact that there is still more capability to move some of those marines to guam if we can perhaps get a more cooperative reception about how to make the finances work. so i hope you'll consider that as you go forward with specific plans. >> thank you very much for that. we are -- queue know, we very much view this as an opportunity to try to give you a chance to reposture our force in the pacific. guam is a very important part of that.

believe me, it's something we're seriously looking at. we're trying to work with the japanese to try to get this done. this thing has been around for and the time has come to try to get this resolved and that's what we're trying to do. >> thank you, mr. secretary. thank you, mr. chairman. >> thank you. and we haven't had a chance to talk about this. but my thinking is really evolving on this whole guam iss issue. we're talking about reducing the marines by 20,000. maybe one way to do that would be to bring the marines we take out of okinawa, bring them to camp pendleton or something, bring them home. and maybe leave some prepositioned equipment in place or something? i think when we're talking about the tremendous cuts we have to make, then we're going to have to really look at this seriously. because this is just escalating. and we may be able to solve two problems instead of one.

mr. bartlett? >> there's obviously no wild enthusiasm in the congress for additional brac grounds. those facilities are in somebody's district. it might be yours that gets gourd. and secondly, we don't b save any money in the short term because of the clean-up. we've been on some of that's bases for 100 years. our families have lied there, our kids have played there. and we're making the statement that these are second-class citizens because they can live and play in a place that really isn't even good enough to give away. i know the law may require us to do this environmental clean-up, but we think we make the laws here in the congress and we could change that law. if the local community doesn't want the facility, we'll plant some trees, loing the gate, come back and cut the trees and

whatever the environmental problem was it will undoubtedly be much less. clearly this impacts what you can do in personnel and modernization and in r&d. would you tell us for the record how much more you could do in personnel, modernization and res a dndd if we could close these facilities without the obligatory clean-up? i have a question, general dempsey. if you ask our combatant commanders what they would like more of, it's always isr. so it's appropriate that the new defense strategy crites intelligence, surveillance and reconnaissance of the one of the capabilities, and i quote, critickri critical to our future success. yet the d.o.d. budget request is approximately $1 billion, or 25% less than fiscal year '12 for isr programs. each of the services is terminating at major isr program in the fiscal '13 budget

request. the army reconnaissance and surveillance system. and the air force's block 30 global hawk unmanned aerial system. 18 aircraft aircrawill be place storage. nine of these are in support of combat operations. would you eplease explain what appears to be a real conflict between the new strategy and fiscal year 2013 budget investment decisions? >> i will, sir. thanks for asking. first of all, you're right that combatant commanders, and i was one, have an insatiable -- i mean literally, that word by that definition, insatiable appetite for isr. what we've learned over the course of the last ten years is that certain of those platforms -- i mean, once you procure them, you begin to recognize both the limit of their -- the expansiveness or

limitations of their capabilities. what you see reflected in our budget is a look across all of the various components of this thing called isr to determine which ones are actually delivering the best value, meaning the best possible intelligence, surveillan annaia the best value. at the best business case, if you will. and so for example, the block 30 global hawk has fundamentaty to afford it. when the u2 gives in some cases a better capability and in some cases just a slightly less capable platform. so what you're seeing is our ability to eliminatrendancy, continue to invest in the best value and to avoid at err