here are very low. which reflects our standing in the world. make no mistake, if we don't get our deficit issues under control and get on a sustainable path of deficit reduction and stabilize debt as a percent of gdp tas president does, the interest rates could go higher. in a situation where we get our house in order and do the deficit reduction that we are that talking about, i think that the a assumption that interest rates will grow as the gdp kicks into historic levels is a good sound conservative assumption. i cannot agree more about the need to get our house in order and decrease deficits and get on a sustainable path. we are live on capitol hill as army secretary and chief of staff are about to explain the 2013 budget request for the

army. it's down from 2012 and includes a 1.7% pay increase for soldiers and the total request is $525 billion, that is a decrease from 2010.

>> committee come to order. we just got notice that the rule voice voted. they were going to have a vote about 10:00 so they said final votes will be at about 10:45. so we will get started and try to get as far into it as we can and we will go vote and with your pairs we will be back as quickly as we can. good morning and thank you for joining us today as we consider the president's fiscal year 2013 budget request for the department of the army, second mchugh and general, thank you for being here. secretary mchugh, it's great to

see you again, thank you for your continued service. general, 38th chief of staff of the army, welcome to your first of many posture hearings. i'm sure you are glad to hear that. our nations fortunate to have the two of you leading our army during these challenging times. we clearly understand the challenges that the department of the army faced in crafting this budget request and we know you would not be here if you did not strongly support it. what is the ability of this budget to meet the needs of the national security of the nation, that is what we need your opinions on. the risks and t risks. the i would like to read three quotes from the army's testimony. we have the best men in the army today that we had in peaces

time and although we have a number of critical equipment problems yet to solve, i assure you that the troops with the equipment that they have would give a good account of themselves with the equipment they have. they can maintain effectiveness by maintaining a balance between personnel and equipment. we are supporting the budget that will provide only ten dwegzs because we realize the necessity to integrate army requirements with those of the other services within our national budget and we will of course do everything in our power to lessen the risk that such a reduction must by necessity entail. these statements were made in january, 1950. six months later a 500 man sized task force, under carl smith, was rushed eed to korea to bloe

advance. you know the rest of the story, they were out numbered ten to one and although they inflicted 127 casualties, they suffered 181 casualties, more soldiers were not sent because the air force did not have enough transport planes. it's worth noting that bazookas that were fired at the korean tanks bounced off and had no effect. the modernized 3.5 bazooka was developed at the end of world war ii but was terminated because of budget cuts. the point is that you can have a well-led, trained and equipped force and it can still be hollow if it's not properly modernized and if he cannot get it to the right place at the right time. please help the members of this committee understand how under the context of the budget before

us, the army is prepared to avoid the mistakes that led to task force smith. finally, and i really mean this, i cannot think of a better team than secretary mchugh and general to lead our army during these hchallenging times. again, thank you both for yourselfless service and look forward to your testimony. >> thank you, i too want to join you in your thanks and praise, i appreciate your hard work on behalf of our country and we particularly appreciate all the hard work that our soldiers have done over the course of the last two years. fighting two major sground wars and fighting them well. they performed at the expectations we all had for them, but still a very, very high level. we appreciate the sacrifices that all the soldiers made in

the last ten years and their family. i believe the chairman laid out correctly the challenge that we faced. we draw down in iraq and afghanistan and that means major changes for all the services certainlily but for the army in particular as the largest force that was and deployed in those two locations. how do we do that responsibly? how do you make sure that as we change the size of their force and where they are deployed that we meet our national security needs and that is most what this committee wants to hear from you and what we are most focused on working with you on, i suspect that it will come up a time or two whether this is coming up by budget or strategy. and as with any project that involves money, it's driven by both, you have your strategy and you have yobudget.

i have not seen a group that has an unlimited budget. but i do believe that the services did this the right way. they really started thinking bit six months to a year ago, putting together a comprehensive strategy in light of the facts that the chairman and i have talked about. and put together a strategy that makes a great deal of sense and fits the budget. now of course you would like to have more money. we would all like to have more money. but we don't. we ran a $1.3 trillion deficit last year and that is about 38% of the budget and that is an enormous challenge, not something that can be ignored. and it's a threat to our national security as you you go back through history, you can see many examples of nations that ultimately lost wars because they did not have the economic where with all to fight them. we want to be ready, yes, for anything that can happen.

but i don't think anybody in the history of the world has ever been 100% ready for anything that could possibly happen. but if we spend ourselves into a massive deficit and economically weak condition, we cannot responds when the crisises come. because the rest of the story s from korea is we did respond. we did not anticipate any of them. we have to be in a position to respond and build the equipment and grow the force to meet the challenge. we have to do both and i recognize that you are trying to balance the two needs. meet the strategy and make sure that we have a budget that will work economically in this country so we do not so weaken ourselves economically that we are not in a position to fight our wars and protect ourselves. it's a difficult challenge in this government but we could not ask for two better people to

help us meet this challenge. we look forward your testimony and answers to our questions. >> thank you, mr. chairman. >> thank you mr. secretary. first of all, i'm humbled by your kind comments and i'll try to work as hard a as i can to measure up to even half of them. but i'm deeply appreciate i hiv. and it's great to be back in this room. those chairs are more comfortable than these, but never the less, it's an honor for me. i want to add my words to yours, mr. chairman, of appreciation and welcome to our 38th chief of staff of the army. i hope i can keep this one longer than i kept the last one. but, even in the relatively short time that general ordierno has been with us, he has shown he is more than up to the task and it's a pleasure to work with him each and every day and i

think as you have said, both you and mr. smith that we are blessed to have such a great leader at such an important time. while i'm on the matter of thanks i would be remiss to not thank each and every one of you. i may be biassed but i think i have a great appreciation and i know i have a deeped eddeep adm for this committee and the role it plays for building the national defense and making sure that we have the rules, the laws and the money and the processes to do the right thing by these amazing men and woman 1.1 million strong. today, our demanding fiscal environment requires us to have an even stronger partnership

with this committee and this congress and i promise we will do everything that we can to see that it happens. we have a shared responsibility. one to make sure we have the right resources to defeat our enemies to supply and protect and support our alleys and make sure that our homeland remains safe, and we need to do it affordably. the budget you have before you supports these goals by laying the foundation of a gradual reduction of the military and civilian strength. and still builds the program necessary that, so that the army, though smaller, remains the strongest and most lethal land ford in the world. as we put in place what i feel can be described as a bold new security strategy, i want to be

clear, the army's reach will be more vital than before. over the last year the army has continued to be the hand of american foreign policy and the helping hand of america's facing the devastation of natural disasters. from iraq and its deserts to the afghan mountains to the philippine jungeles, our soldiers have continued to fight and defeat terrorists and stabilize governments and support our allies, in december, the army successfully concluded "operation new dawn" leaving behi behi behind demauk rasy in a country. they completed one of the largest missions in the history of warp fair, removing 3.4 million pieces of equipment and more over we continue to support

the state department as it works with the iraqi government to further support freedom, and stability in that nation. in afghanistan the army made steady progress in fighting al qaeda terrorists, and trained thousands of afghan security forces from conducting regular and extensive operations to provide medical communication support for the entire force. soldiers were at the front of u.s u.s. operations and success. over the last year your army did more. with soldiers deployed on six of seven continents and more than 150 nations around the world. in 20 11, we saw our citizens suffer some of the worst natural disasters in our history. our soldiers and civilians from all components were there to

help, protect, are rescue, and rebuild. simply put our soldiers and civilians and their families have proven why the united states army is the most capable and versatile and successful land force on earth and this ability to adapt to a variety of threats is what will allow us to move forward in this new security and fiscal environment. this year's budget embraces change by making hard decisions now to lay the right foundation for the future. first, we are putting in place a sweeping new defense strategy that emphasizes greater engagement in the asia pacific region development of smaller and more agile land forces. it was developed collaboratively, the army clearly remains the arm of u.s. combat power. our balanced and transformed

force will continue to be the most capable anywhere in the world. that is the standard and that is what the strategy requires and that is what this budget supports. second, we are -- in doing so, we made tough decisions and we are guided also by the following principals. one, we will fully support the current fight by providing the operational commanders in afghanistan and other theaters with the best trained and ready land forces in the world. this remains our top priority. two, we will not sacrifice readiness for force structure. we must responsibly reduce the end strength that fully supports the new strategy but also provides the sufficient time to properly balance our training, equipment, infrastructure and soldier and family support programs with our mission requirements. next, we will be able to build force structure and capabilities to handle unforeseen threats to

the global economy. it will have access to a strong operational reserved component. next, we will maintain and enhance the army's commitments in the pacific. finally, we will not let the budget control act cuts be taken on the back s of soldiers and families. as we have and will continue to examine the programs, we will continue to support wounded warrior, and behavioral health and sexual assault programs. we minimize reduction approximate in 13 to support the current fight. programs such as the network, ground combat vehicle and joint light tactile vehicle, and we eliminate those programs that are no longer needed and defers

certain military construction programs. the army at its core is not programs and systems. it's people. each ti each i come before you as a representative of our soldiers and their families. as everyone in this room knows so well, these brave men and women who have endured so much, they depend on a web of policies and programs to deal with war. we are aggressively pursuing multiple avenues to provide our personnel with the best medical and behavioral health support available. we must never forget that our success in both iraq and afghanistan has come at an incredibly high price to our army family. providing the means and resources for whatever challenges they now face is, in my opinion, the very least we

can, we must do. as a final note on regarding our army family i would be remiss if i failed to mention the devastating impact that sequestration would have on the readiness but also on the civilians and soldiers and families. they too would bare the cost of continued inaction. to use an axe to cut a half a trillion dollars from defense spending would be perilious enough but by not providing a way to manage the reductions would be beyond risky. to say this is unacceptable is an understatement in my opinion. in conclusion on behalf of the men and women of our army, let me thank you again for your thought oversight. today your arm has succeeded in iraq and making progress in

afghvenufghanistan and poised t to a smaller more balanced force and ready to me needs of this n national defense. i want to be clear, very clear, these are extraordinarily challenging times, globely and fiscal fiscally, our strategy reflects hard decisions, we know that and we know it well. we will do anything we can to minimize the effects. but in the end, to properly balance the army, we must restructure, we must repriorityize, and we have begun the effort and with your leadership and help, we will succeed. thank you mr. chairman. >> thank you very much, mr. secretary general? >> thank you mr. chairman and members of the committee.

it's an honor to be infront of you today. i want to thank you for the support that you have continued to give our soldiers today and over the past ten years specifically as we fought in wars around the world, we could not have done it without your guidance and support that we have had. i appreciate is vote of confidence but i rely strongly on his wisdom and advice in going through the first hearing. mchugh deeply cares about our institution and i cannot ask for a better boss. together here today, both of us, it's a true honor to be here today representing our 1.1 million soldiers and our nearly 280,000 department of the army civilians and their 1.4 million family members.

i'm proud of the commitment, professionalism and dedication of our soldiers in their sacrifice and accomplishments. they continue to be in over 150 countries around the world, collectively they are a truly globally engaged army. with 95,000 soldiers deployed and another 96,000 conducting a broad range of missions. our army's primary purpose is stead fast and resolute. to fight and win the wars. as the army continues the transition, we will ensure that the president's priorities are implemented. by first meeting our current current commitments in afghanist afghanistan. now that operations this this iraq are complete and we continue surge recovery in afghanistan, we will help shape the regional environment as well as our strategic environment.

in the asia pacific, which is home to seven of the ten largest land army mies in the world. we will provide multi-lateral exercises and other engagements with our allies and new partners. we currently have 66,000 soldiers and 10,000 civilians in the region. in the middle east we continue strong commitment to sustaining and building partner capacity to ensure stability. and in europe as we decrease our footprint we will use tools that will include rotational forces to conduct training and readiness exercises with our allies that will serve as a model on how i see us doing things in the future. utilizing rotationed forces. we will ensure that our natural guards and army reserves will be

at an appropriate level to build to experiences that were gained over the past several years. we will adapt our progressive readiness model to do it. we will build to integration gain over the past ten years between our special operations forces. the army's investment in our special operations community and counter terrorism and other key operational matters is significant. growing onwards to 35,000 elite warriors that provide specialized and unique capabilities. as we look forward, there are several is -- several focus areas, we will remain committed to our fighters in afghanistan and provide train forces to win that fight. we will be responsible stewards

through reform and we will continue our equipped reset program to restore equipment to the desired level of capability. there have been over 1.8 million pieces of equipment reset to date, which equals 31 brigade equipment. we must never sacrifice our capability of meeting a wide range of security requirements. this require as balance of strength modernness readiness as we cannot afford to reduce too much too soon. we will reduce our end force d structure. from 358,000 to 353,000 in the

army national guard and from 206,000 in the army reserve. it's important for us to sustain a gradual ramp that will allow us to continue to provide forces for avenfghanafghanistan. this helps mitigate risks as we continue current operations and reset for the future. we will reduce our teams in the active component. this draw down will be done with consideration to the impacts on commander requirements as well as considerations on local communities and infrastructure. we are in the process of reviewing our combat team design. as we analyze lessons learned from the past ten years of combat and look to what capabilities we will need to be successful. while we are a few months away

from decision, initial analysis indicates we can eliminate some unnecessary overhead while sustaining morrmore, robust tea. this could result in reductions while sustaining combat capability. army unit readiness is measured by the level of manning, training and equipping. as components of readiness, we will continue to support our families and wounded wore wrors -- we are re enforcing the ethics around trust and respect. misconduct is inconsistent with the core values of our

profession, the secretary is relooking at the role of women in combat as they make up a good percent of our workforce. they will be able to serve in their designated field regardless of their unit. it's about managing talent and putting our best people in critical and developmental positions. as we continue to take a bottom up approach, we must achieve the priorities of the network which is critical to our ability to manage information, and command our forces at all levels both home and abroad. the ground combat vehicle, it can accommodate a squad and provide unmatched lethality. the survival vehicle, which both myself and general amus agree is

necessary given the last ten years of fighting in what future operati operation may, entail we must have advanced soelldier systems and weapons. the secretary and and i will continue to assess and make adjustments to our budget strategy while addressing any potential risk incurred as we adjust our force posture. i would like to leave you with a last thought. sequestration is not in the best interest in my opinion of our national security. it would be severe reductions of the active component and end strength. it would crease our readiness and adversely impact our programs. thank you again for the opportunity to speak here today. this committee affords our volunteer army to be the most powerful land force in the