spending. having said that, you've stepped up to the plate. you've found the cuts over the next five years that are serious 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 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 fiscal 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. we'll do ours on the house side. but being an election year, i think we probably understand we're not going 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 october 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 sequestration kicks in. i wanted to really work on my budget. to go through the strategy and budget and you've done exhaustive work to come up with this budget. a week or so ago we had dr. carter and admiral winfield, the secretaries of the services and chiefs, and one of the members of the committee asked dr. carter what he had done, what was being done to 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, all of the things that would have to be dealt with. further force reduction, 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 in korea. 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, if this is something you can support, trying to fix sequestration now, instead of having all of the people that will be laid off this year in 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, 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 wa 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 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 i the sooner we resolve that ov 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. that has a single positive to say about it. i looked at it logically and te

force to the size we are, we're moving two brigades out of europe, we're making substantial changes in the strategy, regardless of the debate in the budget we're moving things around. lodgicly there's no way to do and realignments. i don't see where it's possible. sequestration. so there was a plan on the able and i share the chairman's remarks that the sooner we resofl that overall issue, the better if all concerned, whatever that plan may end up looks like. i wanted to talk to you about brac. the discussion has not been greeted warmly on the hillary to put it mildly. except by me. i think i'm the only one that had a single positive thing to

say about it. if we're shrinking the force by the side we are in reaction of the fact that iraq is dpoen, afghanistan sf winding down. we're moving two bring grades out of europe. we're going to be moving things around. logically, there's no way we can 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. i'll give you a minute or two to give you a pitch as to why we need to be more open into what in my mind is an 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 eliminated. that's been -- frankly, that's 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. the only effti is 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 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. thank you. i just want to make one edor there are still some details to work out. what to do about okinawa and elsewhere. are there's been a reduction from the number of marines going to guam from the previous plan. could you consider perhaps more marines going to guam? 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.nk 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 15 years. and nothing has happened. 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 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, 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 will be placed in storage. nine of these are in support of combat operations. would you 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, surveillance and reconnaissance capabilities at the best value. at the best business case, if you will. and so for example, the block 30 global hawk has fundamentally priced itself out of our ability 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 eliminate redundancy, continue to invest in the best value and to avoid at err possibility redundancy that fundamentally is too expensive. >> secretary panetta. with the deplay in the f-35 with program, what step have you directed the army, air force and marines to take to maintain the necessary fighter inventory until the f-35 can be procured in numbers to replace legacy fighter fleets? >> we have -- we have ensured obviously that we maintain our full fighter force in place. and obviously continues to require upgrades. we're prepared to make those upgrades as necessary. our goal is to develop the fifth generation fighter. we think that's absolutely essential. the tests are going pretty well. we've got to do some software

tests on all three models. i just took the stovall off of probation because it had five problems that secretary gates had identified that put it on probation. it's been able to deal with all five problems, and now we're looking at software aspect. so this plane is on path to hopfully coming into full production within the next few years. >> thank you very much. >> thank you, mr. reyes. >> thank you, mr. chairman. first and foremost, mr. secretary, thank you for coming to el paso and covering a few of the issues that you've covered with the committee here this morning. i've got two areas that i would like for both you and general dempsey to focus on. the first one deals with the reaction to the request for another possible brac from our

allies abroad. and i know you've had a chance since first asking for that thunderstorm to talk to some of our allies. a zo i'm curious if you could share that with the committee. and then the other issue is the administration is fixing to launch yet another effort of troops in new mexico and i'm concerned that not only is that very expensive, but it puts our troops in a questionable position, because they're not trained for law enforcement. they're trained for combat. and i would appreciate it if you would comment on this latest effort to deploy troops in new mexico and arizona. as i understand it, it's against the ultralight vehicles that the cartels are using. but there are better ways to do that in those two years. if you would cover that, i would yield the rest of my time to bowe of you. >> congressman, let me address the first part of your question

and then i'll have general dempsey comment on the second part. on the first part of the question, we are -- and we have been looking at infrastructure abroad. obviously if we're going to look force presence e in this in those two areas. if you would cover that, i would both of you. >> congressman, let me address and then i'll have general dempsey comment on the second part.on the first part of the question, we are -- and we have been looking at infrastructure abroad very carefully. obviously if we're going to look ure abroad.ucture in this we're going to take down two brigades in europe thawi impact infrastructure there. we've already closed in the period of the last six to seven years 100 bases in europe.

we're probably looking at 23 we. so that we are as a result there look at what changes we can make in infrastructure in that arena. >> congressman, hetroops on the down that path to meet an immediate need several years ago. and every year we review our posture in that regard. we've seen it all along as an intem strategy. and one that could ultimately be replaced by technical means. whether it's in lance capabilities available on the commercial market. so we understood when we began this role filling that immediate

need. we are eager, actually, partner and are partnered with the department of homeland security, fbi, state and local governments. but i am not eager to have that become a core competency of the uniform military. >> it's fortunate to note this is an expensive proposition. when you deploy troops. and especially when we built up the border patrol to over 21,000 agents.nogas, arizona, and the they comment on the fact that we have border patrol agents. everywhere they are. i am really at a loss to understand why we would want to deploy troops at a time when we're trying to save money. that's a very expensive proposition. the border is a safevinment

in spite of all the rhetoric we hear politically. so i would hope we could rethink possible, at a time when we're trying to save money. thank you, mr. chairman. >> thank you. mr. thornberry. >> thank you, mr. chairman. let me add brief facts to a conversation you've already had this morning. one is that the president instructed the pentagon in the spring of 2011 to look for money in the defense budget. that's before your time. but any notion it sprung out of congress because of the budget control act spontaneously in some way is not true. it was under way long before we ever got to that point. the second point i want to throw out, a little more specificity on brac. by the way, i have supported every round of brac since i've been in congress. but the 2005 round of brac will

not even break even until 2018, according to gao. that means for 13 years, it's going to cost more money to have more brac than it would if it didn't have brac. so the pentagon suggesting two more rounds when it will aggravate the budget situation for 13 years, or at least a decade, leaves me scratching my hports that the military and -- head a little bit. i think it's important to put a

little specificity. it doesn't even break even for a decade, which i think is problematic. but general dempsey, another thing that leaves me scratching my head these days is that the reports that the military and the administration are looking at substantial cuts to our nuclear deterrent. if the reports are right, there's consideration of cutting that 80% down to, say, 500, just for rounding. and that's being generous. if we end up with 500 nuclear weapons and country a has a couple hundred, all the incentive in the world is for nem that hard for them to do. i would appreciate your best professional military judgment on whether cuts of 80% in our nuclear stockpile really are good for the national security of the united states. >> i won't comment on the 80% figure, congressman, what i will say is that what's been reported is the cliff notes version, not that you would ever understand what cliff notes are from your personal education, but it's the cliff notes version of what is a very comprehensive set of discussions, internal to the military with the national security staff on what is our next negotiating strategy, notably with russia.

and the status quo, by the way, is always an option and one that is in play. at this point, sir, i would encourage you not to become too concerned with the media reports of what is a very comprehensive process. >> well, i do become very concerned, partly because it does nothing but encourage other countries to advance their nuclear program. if they see that we are going to come down from 1,500 to some number in the low to middle hundred, it does nothing but encourage our enemies and discourage our friends. the result of that is more nuclear weapons programs all across the world, which would seem to me to be something that we would not want to have happen. so i get very concerned if our mi seriously any notion that wein to approach reductions on that

scale. i'm worried about where we are with the last round but something that goes to that level concerns me very much. let me ask one more thing. the vice president has said the taliban is not our quote here that. do ygr is our enemy in afghanistan. and if they are not ou leave a e afghanistan without addressing the taliban and their safe paki? >> the taliban, as you know, is a very broad group. our primary enemy in that p. the taliba enemy. there are elements of taliban

that support al qaeda. those are the ones that we've been targeting. >> can we leaveaf and secure afghanistan without dealing with the elements of >> our goal is to make sure they never again can establhven in a to conduct attacks on this country. and and that remains our primary uch.. i would like to hear mr. reyes ask more woullike to thank the general and secretary hale for the service to your oncountry. particularly secretary panetta and mr. hale, your accessibility to members of the committee and congress. it is refreshing. you've been the most accessible leaders of the defense

department i've ever encountered and i'm very grateful for that. i also want to thank you, mr. secretary, for your comment on page 3 of your written testimony about the personal attention you put on audit readiness for the department. my friend and colleague mr. conway has taken the lead on this issue. he wrote it into law and has led a panel to try to achieve that reality. all the discussions we've had and in the next couple of mondays may be based on false data if we don't have good financial statements. this is a boring topic but critical to the hard financial choices we have in front of us. i thank you for your very personal investment in that issue. i did want to get to the more controversial question now.