despite some of the rhetoric which i think corresponds to the year on the calendar the budget proposal that you've submitted, if i understand it for every $100 we spent in the core defense budget last year we're going to spend 99 in fiscal '13. for every 100 people we had in uniform uniform, at least authorized to be in uniform we'll have 99. before we get excited about the one-year budget we have to share on that. i do share with mr. smith and i think you an understanding of the difficult realities of the brac process, the necessary decisions that must be made. i wonder if you could outline what some of the strategic tradeoffs would be if we don't do the brac process. you've been through it, i've been through it, i think

everybody on the committee has one way or the other. tell us what happens if we bend to the easy decision and not do brac, what do we give up in that tradeoff? >> look, you all know this, the defense only has so many parts. i've identified the areas that involve savings that we can focus on. we put everything on the table. those parts are efficiencies whatever we can do to eliminate waste and cut down on bureaucratic overhead. there's a lot of that. we've added about $60 billion in savings in that area. the second area obviously is force structure. obviously that means, that involves cutting personnel out of the force. and we've already targeted about 100,000 reduction in both the army and the marine corps.

thirdly, weapons procurement. obviously have to maintain the technology and weapons systems that are key but we put on hold some of the areas we think we can achieve some savings. we've gone after cost effectiveness, we've gone after affordability and tried to deal with some of those areas as well in terms of savings. and then the last area is compensation, which involves the pay in benefits for our military. okay. so if infrastructure is part of the force structure savings, and let's assume we don't do any infrastructure savings and yet we still have to come up with ad you going to go? >> right. >> i think it's fair to say if we don't do infrastructure, there's on look, the compensation for the troops and their families and the civilian employees tools and weapons that we need to defend the country, or other strategic priorities about what we can do around the world.

i was involved in a peace of litigation against brac that went to the united states supreme court. i've been through this one. but i also understand we won't cut that infrastructure without the brac. and as difficult as it is, i frankly would encourage you to ask for that new authorization and would like to work with you to support it. not because i like brac, because i even greater dislike the alternatives to it. i thank you for your time and testimony this morning. >> thank you. mr. jones. >> mr. chairman, thank you very much. mr. secretary, i might be the only republican on the committee to say thank you for your recent decision about bringing our troops out in 2013. this has been of great interest and concern to me at camp lejeune in my district. that's what my question will deal with. you being an elected official served in the house i think with my father a few years ago, walter jones sr.

you know better than any of us here or as good as any of us, politics is local. there's no question about it. i have cherry point and also the depot in my district. it brings the question mr. bartlet was asking you about, the f-35. and of course, at cherry point interest in the f-35 b, and a discussion i had a few months ago, there was a thought that maybe at some point in time this f-35 and becomes a reality that there might be eight squadrons going down to cherry pois very difficult budget year, none of us know what we would like to see today might not be a possibility tomorrow. so if you would expand a little bit more on how you feel that the progress has been made on

the f-35, and knowing that you believe we need a strong fighter system in the country if you would elaborate just a little bit more on that, i would appreciate it. >> thank you, congressman. the only way the united states remains the strongest military power in the world is to keep developing new generation fighters that have the technologies and capabilities that we're going to need in the future. i had the opportunity to go to pax river and see the development that is behind the f-35. and actually sit in there and look at the technology that's involved. i mean, we're talking about spectacular technology that would be part of this plane in terms of stealth capabilities, but also in terms of targeting capabilities. and it is the next generation fighter. it's what we're going to need. and very frankly, countries are all lined up, waiting for this plane.

they know how good it's going to be. that's what we've got to keep this on track. we've got three variants. i can't go into defending all the decisions made before i became secretary, but three variants is not an easy process. it means you have to look at a lot of different questions that arise depending on the capabilities you're trying to design in each area, but nevertheless, each of those is important. we need a navy plane, we need a marine plane that can lift as the stovall will, and obviously we need an air force plane. so those are the key ingredients. my view is based on what i -- because i came into this pretty skeptical about where this thing was.i lo at the testing that's gone on. i looked at the production rates that are out there i'm convinced we can deal with the final problems there largely software issues that we've got to face. we're producing these planes even as we speak. but they are continuing to be tested. my goal is working with the industry to make sure that any

changes here now can be as cost efficient as possible. that's what i worry about. i don't want big changes in these planes because that will ramp up the cost real fast. so the real challenge right now is to keep these costs under control as we resolve the final issues involved in this plane. but i'm convinced we're going to be able to put that in place. >> mr. secretary, thank you for that answer. i have spent almost ten years to clear the names of two marine pilots who crashed the v-22 in arizona on april the 8th. nineteen marines were burned to death. i appreciate what you said when you said you wanted to make sure that the manufacturer of this plane have it ready and no hidden problems like they found with the vortex that brought that plane down. and i'm hopeful that the marine corps will give the two wives who have requested a paragraph

to make it clear that their husbands were not at fault. and i hope i won't have to come to you at some point in time and show you the evidence that we have accumulated over ten years that the pilots knew nothing about how to react to vortex ring state that night. so i do appreciate your answer and thank you again for your leadership to our country. general dempsey, thank you may god continue to bless our men and women in uniform. with that, mr. chairman i i had a little bit of extra time before the start of the clock. thank you. >> miss davis.ha you. thank you mr. secretary and general dempsey for going out of your way to talk about fundamental strategy which keeping faith with nes and their families particularly remains a top priority. mr. secretary, a forward, changing our force structure and producing personal end strength in the next few years, what are we doing to ensure we

retain a spectrum of experience knowledge across the services and specialties. and within that package, what is your greatest concern? >> let me yield to general dempsey on that. he's been very involved in how we approach the retention level. -- how we approach the retention of some of these mid level officers. >> i'll harken back to my time as chief staff of the army. that is the issue service secretary's guidance. but one of the things we did back in the '90s is when we separated soldiers, we did so -- when i said soldier, i meant servicemen in general. we were separating them too quickly. we actually had reduction in force boards that sat specifically to tell people to because we were passing them into a pretty good economy, one would maybe even argue a no longer in conflict. the big difference on what we're doing now is those other valid.

we're passing people into a struggling economy, we're still in conflict and likely what we're doing service cheeches chiefs how do we pace this. the question related to brac, many variables on physics variable infrastructure and we're kind of terms of literally, our physical dignified way, it doesn't it's operations, maintenance, training, equipment. so that's why we're concerned about brac and it's also why we're concerned about the pace at which we separate people. once we settle on the pace, and we have, then we go internal -- of personnel we have evaluation reports, board processes. but to the extent that we can use the existing processes to identify the highest performing pernell, keep them encourage them, continue to dshape. to the extent this is accelerated on us if it is accelerated, then we get into a position where we're forcing

people out. at that point, i won't be able to sit here and guarantee you we're going to be keeping the right people. >> is the discussion formalizing longer periods of time between eligibility of promotion and promotion? >> it's a great point. it's a rubik's cube. we twist it and turn you want to promotions. it's anorming personnel, they hav on the other hand, it has th i would use an overused word but it's a matter of finding a balance between talent management and then managing the personnel system to treat people with dignity and respect, but also reshape the force. >> i really appreciate that. there are concerns, there should be concerns that for many of the men and women who are serving, the fact that they would be

leaving the services faster perhaps than they had ever imagined. means we have to really assure they have the talents and skills necessary. are we looking at that in terms of a whole different kind of preparation as they leave? it's almost a preparation as they come in so that they are leaving in a different manner. >> you asked what worries me the most. frankly, that's one of the issues i worry about the most. as we draw down over the next five year, we're going to be putting another 12,000 or more out, bringing them back. and right now, the system is clogged. it doesn't work as efficiently, frankly, as it should. we've got to do a better job of being able to take these young men and women that come out and give them the counseling, give them the education benefits, give them the jobs, give them

absolutely have to have in order to be able to re-establish themselves in the communities. otherwise, we are going to be dumping them in these communities, no jobs, no support, and that's why we have high unemployment now among our veterans. that's exactly what's happening. we've got to change that. >> thank you. thank you. mr. forbes. >> thank you. mr. secretary, your schedule only allows me five minutes for questions. i'm going to try to be concise and help you be concise in your answers. you made a statement that this will be a test whether reducing the deficit is about talk or action. i just want to be clear, we welcome a conversation with you or the president about serious deficit reduction. we wish we could have had it before the president pushed through an $800 billion stimulus package many of us believe was ill-advised or a health care bill that's putting a lot of our employers out of business. we don't want to put it on the backs of the men and women fighting for the country.

i wouldn't have voted for that $800 billion stimulus package which contained twice what these cuts were and review the health care bill tomorrow. let's look at the approach here. wouldn't you agree if we had been more responsible handling our budget, the better approach would have been to develop a national strategy to defend the country, to be able to discuss exactly what we needed for that strategy, to determine what the resources would be in order to meet that strategy, and then come to congress and say, this is what we need to do to -- in order to do that job, to defend the country. wouldn't you have agreed that that would have been a better approach? >> congressman, the better approach, and i say this not so much as secretary of defense, but as a former omb director and chairman of the house budget committee, the better approach would have been for congress, both republicans and democrats and the president to sit down and develop a comprehensive deficit reduction package.

>> mr. secretary, i understand that. but i'm talking as far as the strategy, wouldn't it have been a better approach to do it in the manner i just delineated. >> that would have been nice, but we$480 billion. >> i understand. but wouldn't that have been the better approach? >> of course. >> the point of fact as you mentioned, that approach wasn't what you took. what we did was give you $470 billion of cuts. and you were forced to create a strategy that worked within the parameters of those cuts, is that correct? >> that's right. >> and then based on that, mr. secretary, isn't it true that it would be virtually impossible for you, or anyone else testifying on behalf of this budget, to delineate for us the portion of that strategy that was driven by those budget cuts versus the portion of the strategy that was driven by security changes around the world. >> i don't think you have to make a choice between fiscal discipline and national security. i really don't. >> no, no, no.

mr. secretary, because my five minutes, isn't it true, though, as you said, you were forced to have $487 billion of cuts. you worked a strategy that worked within those parameters. but isn't it virtually impossible for you or anyone else to tell us what portion of that strategy was driven by that $487 billion of cuts versus just security changes that took place around the world. >> as i said, we would have been required to look at a change in strategy under any circumstances because of the drawdowns that were taking place. >> i understand that. >> this is not just deficit reduction. >> we have two different components. security changes that would have had strategy constraints and budget cuts. but isn't it true, you can't delineate between those two?

>> well, they were both involved in determining our strategy. >> exactly. you also mentioned the fact that this was imposed on you by law. this figure isn't what you would have picked? $487 billion. >> that's for sure. >> you heard mr. thornberry say the president came out and said he wanted $400 billion in cuts before the strategic cut was taking place. if your discussions with the president and looking at the strategy, at anytime has the president ever voiced to you the fact that he thought this $487 billion of cuts was too much? >> i think the president understood that this was not going to be easy and that there would be risks involved in doing that. >> i understand that. that's not my question. did the president ever voice to you the fact that he felt this $487 billion in cuts was too much? >> he felt as i did, the congress and the president had gone forward with this budget control act when we were obligated to fulfill it. >> you disagree with that figure, i disagree with that figure. had the president disagreed with that figure could he not have put any of those cuts back into the budget that he has just presented to congress?

>> i think the president shared your concern, which is what do we do about reducing the deficit? >> did he put the cuts back in this budge. >> and that was the only thing that was worked out by the congress on a bipartisan basis. >> did he put any of those cuts back into this budget? any of the cuts made, did he roll them back and say that was too much and we'll put it back in the budget? my time was up. thank you. >> i don't think he could have done that without the support of the congress. >> thank you. mr. langerman? >> thank you, mr. chairman, mr. secretary, general, thank you for being here today. your time and testimony and your tylerless service to our nation, we're all grateful. i want to focus on two important areas in the budget and priorities for me. virginia class submarine and i also want to talk about cybersecurity. mr. secretary, as you know, the virginia class submarine is a model procurement program and we're only now beginning to reap the rewards of an aggressive cost management effort and a consistent two-boat per year funding level.

the proposed delay of one of these subs from fy-14 to outside could disrupt these gains and incur extra costs. how did the department come to this decision and how does the department propose to mitigate the military risks, the monetary costs and the work force challenges generated by the shift? obviously the virginia class submarine is a program that has because of the efficiencies that we gain from block buys and bringing stability to the supply chain. i'm concerned this delay is going to cost us in these areas. second, as you know, i've been a long and staunch supporter and advocate for increased investments in cyber security. that the continued escalation ofcurity and projected $1illion in frunding from fy 2013 to fy

2017. mr. secretary, in general, how does the proposed budge in general address these threats and vulnerabilities we face in the cyber arena? about that today but i'd like you to expound on that. scale cyberattack, how resilient are power grids and military bases? obviously our military bases in many ways are dependent on the critical infrastructure, our electric grid owned and operated by the private sector. military bases and their ability to function are vulnerable. make them resilient and have some of their power supply back if necessary? >> i'll talk cyber and then i'llines. is that right? we're very concerned about cyber. we talk about what's new in the capabilities. it's special operating forces. it's cyberand it's isr.e available to our adversaries. and in the case of cyber in particular, we've been acting to

prepare ourselves in terms of our vigilance on our systems and our defensive mechanisms. and we've got, as you know, we've got cyber com we've got a cyberstrategy, but we remain vu well as on the senate side now notably, we're trying to determine the next steps. and there is a -- there is legislation pending, sponsored rockefeller and then feinstein amendment to that that is a very good providing the kind of information sharing and first step in expanding protections beyond the dot-mil domain for all the reasons you but make no mistake about it, there's controversy and plenty of the department of -- we're the department of defense. there's the department of homeland security, fbi.

so there's authorities to be considered. we're working through all that. what i'm suggesting to you is the current legislation pending is a good first step. >> in terms of what you're referring to, we're planning to buy nine in this fit up. a year ago we were planning to buy ten. we were planning on two, this year we'll by one. it's affordability issue. submarine fits into the strategy and we'll continue to buy. we were looking for ways to comply with the budget control act. >> i was asked this question yesterday. if there are cost efficiencies that can be achieved here and allow us to do this with savings, in a more cost effective way, we're prepared to look at that. >> i have additional question, i would just reiterate the

importance obviously, the virginia class submarine program. i am concerned about the delay. it might cost our work force if we're not careful. with that, i yield back. >> gentlemen, time has expired. >> mr. wilson? >> thank you, mr. chairman. thank you for being here today. i share the concern. the american people need to know this, that what's being proposed is a reduction of 80,000 personnel in the army, 20,000 marines, 10,000 personnel of the air force. i am truly concerned at a time of war that we would have these reductions, which i think is going to put american families at risk. those serving in the military and the american public at large. it's inconceivable.

every day we read about another threat to our country of instability around the world. additionally, mr. secretary, i know you're having to make tough choices. and in particular, though, i identify with veterans. i served 31 years in the army, and i'm just grateful for my service and the commitment and dedication and commitments to veterans, too, commitments from and to. but i'm very concerned that the administration is proposing cost increases on health care for military retirees. and these are extraordinary. for tricare prime, that a proposal for fy-13 increases enrollment fees from 30% to 78%. over five years, the enrollment fees would increase between 94 to 345%. how can we justify such increases when really commitments we who have made such a difference in protecting our freedoms?

>> can i take that? >> sure. >> let me answer that, if i could, congressman. tha order to rebalance this military of ours -- and by the way, you know, i don't want to let it pass entirely that i don't share your concern, but i will tell you, i'm responsible to this nation to do a risk assessment on the size of the force against the strategy. my assessment is that the budget we proposed and the force structure we're building toward is adequate to meet the needs of the nation. if i didn't, i would tell you. in terms of compensation, the tri-care enrollment fees of which you speak haven't been the mid 1990s. there are an anachronism in terms of any other health care program. and i don't accept, by the way, the comparison of military benefits and civilian because of what we ask our uniformed military to do. on the other hand, we cannot any longer allow our paid d as you know, we're going to look at retirement at some p

we simply can't allow that to keep growing. as the c s i knew that if my manpower costs exceeded 45%, i would break the army, because i wouldn't have the money to invest in the other things that i have to invest in. we're close. and now is the time to act, and that's why we've taken this action. >> and my concern would be that we should be providing more so that this is not the burden. additionally, mr. secretary, last year, the former governor of maine, john baldacci was hired to review military health care. i understand he's completed his report. could you provide the committee a copy? >> i would be happy to. >> and has his report in any way budget reforms >> i'm sure -- i believe it has, but frankly, i have not reviewed it myself. but let me get back to you on that and provide you a copy of that.

>> and additionally, i would like to know the salary paid and then the supporting costs for his services. >> sure. >> and in conclusion, i want to thank both of you. you've raised a great concern about sequestration, the rest of the american people. what do you think we should do? and i'm hopeful that you would support the progressive and very positive legislation of chairman buck mckeon. >> i've indicated my concerns about sequestration. i would urge you to work on a bipartisan basis to develop an approach that can pass the congress thatdetrigger sequestration. >> and the consequences of it. >> you take another $500 billion out of this defense budget. throw out the wi