policy, but in light of your earlier quotes about our security engagement and no margin for error, what should defense spending be as a percentage of gdp? long term? assuming that we're not trying to recapitalize a force that's been hollowed out, that we have long-run planning psyche wrel we can plan this over the long term. >> you know, i think the answer isn't a number. the answer is really what is our capability? do we have a strong capability to be able to respond to any adversary more than one adversary at a time and not only confront them but defeat them? that's the challenge. the budget we presented, we feel confident that we can take on any adversary and be able to not only confront them but to defeat them. i think that has to be the fundamental question. and we, i think we're comfortable, even though this has been a difficult process, we're comfortable that with this budget strategy that we've presented here, that we can

protect america. >> let's get into the weeds for just a second. let's talk about the joint strike fighter for instance. and we'll get into brac if i have time. i've actually said in the joint strike fighter and you are right. it does have amazing capabilities. but i'm worried about reprogramming it so that we defer, i mean purchases out five years. what's that going to -- when you do that, the unit cost goes up. what's going to happen to unit cost? what's going to happen to the foreign buyers that want to buy this. if we slow down, they're going to slow down. what are you going -- what happens, though, when -- >> time. >> quick? >> can i give a quick answer? i mean, we've got three variants on the jsf fighter and that just by virtue of having three variants, we have to make sure every one of them works. we've been testing each of them. i just took the marine version off of -- off of delay of

probation in order to -- because it had met the test. we want to do this right. it is a complicated effort, but the time we have to test it will guarantee that ultimately when we go to production, we'll have a better plane. >> ms. bonamici. >> thank you. mr. chairman, mr. secretary and general dempsey, thank you so much for your testimony and thank you for your service. i join many others, i'm sure in appreciating your recognition that the unacceptable level of debt is a threat to our national security. and i hear that back at home as well. and thank you for making proposals that will implement efficiencies while keeping our military strong and our nation safe. i wanted to ask you about overseas contingency operations. the budget includes $44.2

billion per year from 2014 through 2022 as place holders for future war costs. now, mr. secretary, and general dempsey, you've stated that the forces are on track to take the lead responsibility for afghanistan's security. and you talked about that today. by the end of 2014. so assuming that that timeline holds, is it possible that we could have significantly fewer deployed troops in 2015 and beyond and could our costs be dramatically less than the $44.2 billion in those upcoming years? >> well, there's no question. i mean, we're running almost how much a year now for the war? >> we asked for 88. >> it's about $88 billion that we're confronting in the war. as we transition down, there's no question that we're going to achieve additional savings as we

transition to the afghan force. we'll still, the president has made clear that we have an enduring presence. we'll have an enduring presence in afghanistan. but it will be at a level that i think will help support them. but will be far less than what we're doing at the present time. that's for sure. >> if i could add, congresswoman, the cost of this conflict are fully encumbered. what i mean is some of that cost is training to deploy. some of that is executed in country. but we also have this huge bubble of recapitalization and reconstitution coming our way. we've said for some time, even if the war ended today, the next two years will be resetting the force and we can't -- so i can't predict for you exactly what those costs will be out that far. and i think the place holder is important. >> thank you. i think i want to take this opportunity to make a suggestion for some of those cost savings and reiterate the importance that mr. bloomenaur raised about

cleaning up some of the superfund sites. i also wanted to talk about health care costs. the affordable care act adopted a number of measures to begin reducing the escalation of health care costs across the board. in fact, the cost containment measures reduced tricare for life costs $4.4 billion over ten years. thereby reducing military personnel accrual cost in the dod military personnel accounts. as some advocate for the cost savings of the affordable care act to be eliminated, so how would that impact the military personnel budget without those cost savings from the affordable care act? >> we're looking at that all the time. it's a complicated question. i think i'd like to take that for the record in terms of getting our experts to comment. just not a real simple answer. >> thank you. and i'll field back my time. >> thank you.

mr. mulvaney. >> thank you, mr. chairman. thank you, mr. secretary. all you gentlemen, thank you for being here. i recognize we're in a difficult position. we're sitting here trying to perform a balancing act just like you are. we're trying to figure out how to pay for what it is we want to accomplish as a nation. 'd i need your help, please, to help me understand -- i need slide number 12, please. help me understand why we are where we are, or why it's difficult. if we don't have slide number 12, it's going to be difficult to do this. the -- we're looking at an -- in terms of constant 2005 dollars, we're looking at a national defense outlays that are roughly 25% above where they were in the late 1980s when the soviet union was still around. 70% above where they were as recently as the late 1990s. i hear what you're saying about this first $487 billion for the

cuts. there's no room for error. if i can go ahead -- let's try the second slide. >> this is 12. so are you looking for the -- >> that's slide number four. i'm looking for the constant dollars in 2000. >> that was a different power point presentation we did this morning. >> oh, that's right. >> what we're looking at even with the 487 you are looking at, which is the green line, you are looking at essentially flat spending. this is flat spending off of numbers that are dramatically increased over what they were just a decade ago. the sequester which mr. secretary you've described variously as a disaster, as a crazy doomsday mechanism as a meet ax approach only takes us to 2007 levels. it's a 9% cut but a 9% cut off a number that's increased 70% since the year 2000. why is it so hard? i want to agree with you. i am. i want to accomplish the same things you want to accomplish. why is it so hard to cut 9% from a budget that's up 75% from a decade ago?

>> well, i mean, i have to tell you, every budget summit or agreement i've been a part of, we have never cut the defense budget by $500 billion. so this is a very significant cut that the congress gave us to reduce the defense budget by. and to do it at a time when we're facing the threats we're facing in the world, i think that has to be taken into consideration. you can't -- if you continue to come back at defense and continue to cut it, the margin of error that i talked about is there because it will weaken us in our ability to address the number of threats there that are out there. if we were coming out of world war ii or coming out of a war where the threat that we were confronting totally receded, that would be one thing. that's not the case. you're asking us to do a half a trillion dollars in defense cuts at the same time we're facing a huge amount of threats out there that confront this country. that's the problem. >> and i recognize the fact it's

a half a trillion dollars. if i understand your testimony earlier, you are planning on the first 487, but is it my understa understanding -- am i understanding that you've not made plans for the sequestration? >> that's correct. >> and in all fairness, mr. secretary, that's just as much the law right now as the first $487 billion, isn't it? >> it's the law, but it doesn't take effect until january of 2013. >> which is nine months from now? >> january 2013. >> what am i supposed to tell my folks back home that the secretary of defense isn't making plans for a half a billion dollars in cuts that take place in nine months? >> yeah, because i think it's totally irresponsible for the congress to allow a sequester to take place that will weaken our defense system and devastate it with these across the board cuts. >> you're preaching to the choir. i voted against it for that reason. it's just as much a part of the law as what you are planning for. >> but it's -- it's a law that

frankly doesn't require a hell of a lot of planning because it's so blind minded in the way it approaches it. it basically makes it -- it provides a formula that cuts defense across the board. there isn't a hell of a lot of planning i can do to deal with that kind of approach to cutting the budget. >> mr. secretary, i don't want you to get the impression we're not all on the same team because i really do believe in this particular circumstance. and i share the same worries that you mentioned before. i share the worries about what's happened in the middle east. i share the worries about cyberattacks and domestic defense. i don't question what you are saying in terms of the role this country ought to perform. how the hell we are going to pay for it? do you remember those words, sir? >> yes, sir. >> they were yours in this same chamber 20 years ago. we're trying to do the same thing you accomplished in 1992. >> i'm with you on that. i think it has to be paid for. >> thank you. >> mr. honda. >> thank you, mr. chairman. and welcome.

it's good to see a local boy. mr. secretary and general dempsey, i just want to thank you for appearing before us today and for your tremendous service. in recent history, you've seen some tremendous successes which should be credited to you and many others. the end of our presence in iraq, the s.e.a.l. team six mission, the expedited schedule for a drawdown on afghanistan will go down in history as much as the celebrated events. if some of us, these milestones could not come soon enough. with this now behind us, we have to take a hard look at the money we've been spending and commend you for coming up to the challenge of drawing up a new guidance which finds approximately $480 billion in savings. and you've done this very smart and sophisticated way that doesn't endanger our country or citizens. and with this recent discussion, i suspect -- i understand -- i know the answer to the question sequester. the impact of it. the cuts up until now, and i

guess the question was going to be, is it good enough? and it sounds like the answer would be. i'm going to answer all my own questions. up to now, yeah. and we need not to go any further because of the complicated defense situation we face ourselves with in terms of cybersystems and everything else. but given that the spending -- defense spending that we've had that is calibrated by international standards, i understand that the international peace research institute found that our nation's current defense spending is bigger than the next 17 countries. and given the cuts that we just put in or that you are recommending, what will be our standing even with the cuts? will we still be greater than the 17 countries? >> yes. >> the answer is yes. thank you. and then i guess the issue about health care has been addressed for our veterans, but the 4.4%

reduction was a surprise to me because i was asked at a town hall meeting whether it's going to be sustained or not. i said to my knowledge yes and now i found out i was inaccurate. how will we supplant and how will we be able to augment the kinds of services that tricare is going to be -- >> what we've done in tricare is basically provided fee increases for those that are covered by tricare. we don't impact the quality of care they receive nor the kind of care they receive. but we do require that they will pay additional fees for those services. that's the proposal that we've presented. >> no change in benefits? >> no change in benefits. >> fee increase. will that be doable for our

veterans or -- >> we've tried to design it in a way that, you know, would have minimum impact on those least able to do it. so we are talking about people who retire at higher levels, number one. number two, this is still the, you know, the best health deal in town. in terms of the kind of coverage we provide. it's not bad. and what we felt was we have to at least -- right now health care costs at the defense department of $50 billion. i've got to do something to try and control those costs. and this was one of the ways we thought made sense. >> thank you. if i could switch fields now. in asia we've had the issue of okinawa and some of the redeployment of marines and some of our fixed wing and helicopters to different bases. i'd like to sit down with someone and get a full detail on that. >> sure. >> but on the -- i understand that webb, levin and mccain had

asked for a study of this security system or the -- what's the -- what is the current security system that they wanted a study of that area before they would move forward on their budget. is that still in play, and where are we with that study? >> i think they've always expressed concerns about, you know, some of the approaches that had been agreed to with regards to how we would relocate to guam and the amount of money that would be expended in that move. but we are in the process of working with japan to try to negotiate an approach that we think will make better sense. this has been something that's been bouncing around for 15 years. we think it's time that we try to resolve it and the japanese have been very cooperative in work with us on this effort. >> to the tune of three prime ministers. but i appreciate that. and the two landing strips they were looking at the one of the

air bases is that off the table? >> i think that's one of the things we're discussing. >> okay, great. thank you. >> mr. aquita. >> thank you, mr. chairman. mr. secretary, i'd like to get a ratio from you. when you think of the term war fighter, or combat troop, troops for every one of those brave men and women, how many others are behind them, whether they are contractors, whether they are civilian employees, uniformed, noncombat. what's the ratio? >> crudely, 1.4 million in european form. 750,000 civilians and although it's hard to measure the number, something on the order of 300,000 contractors. who is supporting who at one time is hard to say, but if you want to count them, 1.4 to 1? >> what is it?

>> if you count all the contractors and civilians it would be about a million, roughly, and you have about a million foreign uniform. >> so 1.4 to 1 is what you are saying. nothing like one combat troop, one war fighter to eight or ten or anything like that. >> depends on how you are defining support. >> i tried to be as clear as possible. all support. all support that -- >> military personnel are providing support. >> all support that would come out of this budget. this is the budget committee, so what would that ratio be? >> i think the ratio that he provided is probably pretty close. >> 1.4 to 1. >> okay. how long will it be before the defense department is audit ready? >> i've directed that we try to develop our audit capability on a faster track. i think right now the target was to hit 2017.

what i'm trying to do is at least begin to develop an audit capability by 2014. that's the effort that we're trying to make with a final effort. >> this is not where the military is able to pass an audit that would otherwise be given to other government agencies. it's just getting the defense department in a position to -- so an audit can be conducted to see how this money is being spent and how efficiently it's being spent. >> you're right. there's no way i can justify to the american taxpayer spending the kind of money we spend at defense and not having the ability to audit where those funds are going. there are individual audit. it's not like we don't know where all these funds are going. but, frankly, we as a department need to have audit ability as a department with the entire budget. >> so you understand the concern from members like my friend mr. mulvaney. we're all on the same team here, but, you know, we also have a

duty to make sure we're spending this money as wisely as possible. >> you bet. you bet. >> let me finish just by reading a letter from commander u.s. navy reserves, 21 years in the military, john pickerel from crawfordsville, indiana. met him just a few weeks ago for the first time. this is not a gotcha kind of letter but i want you to respond to it. i appreciate it, my democratic and republican colleagues would appreciate what he is saying. this is after he talks about the 12 service members who were needlessly electrocuted because of faulty wiring by defense contractors. while stationed in the green zone i was assigned a living trailer that adjoined a living trailer two of young contractors in their 20s. after being there for a while, i found out they had a job running network cable. when i asked how they liked it, they said it was so great to be working there. he was making over $300,000 per year, plus all living expenses and he bragged if he could stay there for three years, he would be able to put a million dollars in the bank and retire before he

turned 30. another -- as another example, one of the officers assigned beneathnymy rebe friended a contractor. she came to him in tears. an honest girl who couldn't understand why her boss was telling her to mark down eight hours when she only worked two hours per day. these are merely a few accounts. once i returned home i had a hard time putting this thought out of my mind. how much of all this spending was necessary for our national defense? was any of it necessary for our national defense? this was taxpayer money spent, not on national defense but instead on increasing the profits of defense contractors. and i offer this for the record. >> listen, i think the observation of that individual is of concern to all of us. i think when taxpayers give us the money to spend on defense, we owe them the responsible to make sure that every dollar is being spent in order to protect this country. and to be able to justify it.

and i'm not saying there aren't occasions like pointed out in the letter where there is -- those are examples of people who abuse the system. and what we have a responsibility to do is to make sure the system is not abused. and that's something i am intent on doing. >> thank you. i yield. >> thank you. ms. wasserman schultz. >> thank you, mr. chairman. mr. secretary. generals, it's great to have you here. mr. secretary, i know that my colleague mr. price asked you earlier about funding levels for israeli missile defense. could you -- i wasn't -- i apologize. i wasn't here when he asked that question. would you mind repeating and explaining what those numbers mean in terms of our overall security cooperation with israel and also explain those numbers as it relates to the numbers in comparison to previous administrations. >> yeah. what i said was and first of all, obviously our support to israel is unshakeable and we've

reflected that frankly in our budget request. the budget request, by the way is done in collaboration with very closely with the israeli government. since taking office, we have -- the administration has requested money for a number of missile systems that they have. the missile defense systems as well as the iron dome system which is a very effective system for defense against short-range rocket attacks, the total amount of assistance that we provide israel is $650 million, which is more than double what was provided in the last administration which was at a level of, i think, $320 million. so we are making a significant contribution to israeli defense. >> thank you. and since actions speak louder than words, which i think is a pretty universal truth and mr. price raised the issue of public

statements when he was here, could you describe the administration's actions to date to deter iran's nuclear ambition and their progress towards developing and deploying a nuclear weapon? >> the administration, the president has made clear that we will prevent iran from getting a nuclear weapon, period. this isn't about containment. this is about preventing them from gaining a nuclear weapon and nobody should make a mistake about our intent here. and what we have done is to work with the international community to make clear to iran that they have to -- they have to deter from the effort that they are making to develop their nuclear capability. they have to stop what they are doing in terms of promoting violence abroad.

providing assistance to terrorists abroad. they have to stop any kind of effort that would close the straits of hormuz. we have made very clear what those red lines are. the international community has joined together to implement a series of very tough sanctions. diplomatic sanctions, economic sanctions. and i can tell you that those sanctions are biting. they are isolating iran. they are impacting on their economy. they are impacting on their ability to govern their own country. the whole point of those sanctions is to put pressure on them to make clear that they have to join the international community, live up to their international responsibilities. but if they don't, we have put every option on the table to make clear to them that there is nothing that we will hesitate to do to stop them from developing those kinds of weapons. >> thank you.

and would you say that we have applied the toughest sanctions iran has seen? >> these are the most sanctions we have ever applied against one country, and these sanctions still -- the sanctions we've just applied impact on their energy, impact on their banking system and those will continue to take effect. the complication of what we have done, i think, has sent a very clear signal that the behavior that they are engaged in is not to be tolerated. >> thank you, mr. secretary. and also thank you for your long time service to our country. >> thank you. >> yield back. >> mr. hueleskamp. >> a couple of questions. first, secretary panetta, you talked about the sequester and, of course, the president of the united states did sign the deal that included that, yet there's no provisions in your budget to

implement a sequester. did the president direct you to ignore that particular law? >> the position of omb was that we are not to plan for sequester at this time. and that's the direction we've been given and that's what we're doing. >> is that normal to simply ignore a law that could have pretty drastic consequences by refusing to plan for that law? >> as we pointed out, this is pretty unusual to have a sequester mechanism. i mean, the point of it from the very beginning was to be so drastic and so insane that it would force the congress to do what's right and come up with deficit reduction package. that's the whole purpose of sequester. i don't think the congress intended sequester to actually happen, to be truthful. was supposed to be a gun at your head. >> i asked the question, did the president direct you to ignore

the sequest ear theengets president -- the president didn't directly. we basically got directions from omb to basically not plan for sequester, particularly after coming up with $500 billion in deficit reduction. >> when would you plan to plan for the sequester indeed if the president and the president is involved here. it's not just congress, obviously. the president would have to sign a plan that would suspend that. you are just hoping that that will never happen? is that what we're doing here? >> well, i would hope that you would hope it would never happen. >> okay. i appreciate the -- there is no answer apparently. there is no plan for that. the law is very clear whether the president liked it or not, he signed it, and on recommendation, i presume it was advisers. same question i want to ask more is the issue of audit readiness. and my colleague had mentioned that. and you hope by 2014, maybe by 2017.

when exactly does that mean if you're not audit ready? >> it means that the defense budget is not auditable. and we are the only agency that is not auditable. and that's a shame. and so when i came secretary, first thing i did was to direct the comptroller that we have to move on a faster track to develop audible books. >> so does that mean -- i mean, what assurance do we have that you're spending hundreds of billions of dollars where you're telling us you're going to spend it today. your essentially saying we do not know that? >> i'm saying it's obviously -- i mean auditing is ensuring that what we say, how we say we're spending dollars is, in fact, audited to confirm that that is the case. we do have audit in the different agencies. it's not like we don't carry on auditing within the different services. but overall for the department as a whole, we do not have

auditability. and that's what needs to be corrected. >> and i had a constituent contact me today about a news item. did you know that apparently or federal taxpayers are paying for a $750,000 soccer field at gitmo? is that something that the department of defense knew about or is that -- >> i'm sorry, what was that? >> a $750,000 soccer field at gitmo that was just announced by the department of defense. is that something you were aware of? >> no, i wasn't. >> are you also aware that the armed forces also owns five separate luxurious resorts around the world that, obviously, service members can attend as well as perhaps a million civilians can attend as well? is that something you were aware of that the department of defense owned as well? >> no. >> is that something proper for the department of defense to own a resort that allows you to stroll bare foot on the waikiki beach, sightsee euroan