effect and not only would we cut the 18,000 people if the flat 10% was executed but we right now are only budgeted in fy '13 for 182 thousands marines. we're relying on overseas contingency funds to have a ramp to take from us the 200, 2,000 marines we're authorized in '12 down to the marines we'll be at in '16. if sequestration weren't into effect that would be an immediate reduction from 202,000 to something on the order of 168,000 and at that number there is absolutely no way he we would keep faith with people and we would be breaking contracts and sending people on their way who believe they had a commitment to keep on active duty and these are the very people we talked about earlier in afghanistan today forward deployed and forward engaged in harms way and the reward will be to dismiss them and shake their hand and i think that would be a mistake. >> thank you, general. >> senator, just to reiterate a couple of things.

my come patriots said, we think we would definitely not be able to execute the existing strategy if we have to go through sequestration. we echo your remark it would be devastating. we simply can't afford this. as we talked about several times, the air force is the oldest it has ever been in terms of its iron. we desperately need to re capitalize our flying fleet. if we see sequestration, we will not be able to maintain capacity and do recapitalization of those fleets, so we'll have to take very tough decisions to either come way down in the number of units or to give up the modernization of those units, and i want to echo something also said. on the industrial base there is some very key capabilities out there that are already very much at risk and in the aviation business the number of houses that can do stealth have reduced and another cut to the capability and the effort that we're putting into those stealth

capabilities could cause a severe problems in those -- in that industrial base. >> i thank all of you. i know my time is up. can you fwif me a quick yes, or no, yes, is there urgency we do this before december. general? >> yes. >> admiral? >> i affirm, yes. >> general. >> absolutely. >> general. >> thank you. senator begich. >> madam chair, thank you very much. i am -- i hold my other questions but first i am sorry that senator isn't here. we do a lot of stuff together especially around general aviation but as he called it the green test tube, let me ask a couple questions. i was in afghanistan. i was visiting a forward operating base where i sue marines utilizing new technology around solar energy so they tonight have to bring in a lot of equipment that they don't like to do and have a certain type offy request i want that saves their lives and what i saw was incredible technology

development from these huge trucks of energy that they would have to bring in, maybe fuel and otherwise, and now down to small compact impacts. isn't that a value to the marines to have that new technology when they're out in forward operating bases such as afghanistan and they don't have to have all the fuel being brought in and can spend three days in the field? is that a good thing? >> the focus of our energy initiatives are aexactly on long the lines of what you talked about, designed to make us more operationally effect it i have and reduce the load on the individual marines. we field to all of our battalions solar panels that you saw that replaces hundreds of pounds of battery that is marines would otherwise have to carry and we have conducted seven-day paroles without the extra weight of batteries because we've had the solar panels and all of our interaction is designed -- we're spending money in places where we can have an immediate impact. i was just down at camp lejeune, north carolina last week and we have an experimental forward operating base, an annual event.

we bring in partners from industry and articulate what we need and this year we happened to focus on things like potable water and how can we create potable water without the big reverse osmosis pure fiscal units that weigh a great deal and it is the focus of our energy efforts is enhancing operational effectiveness and increasing our ability to operate in ex we dishs and aus tear environments. >> and you move quicker with less of those, for example. i was amazed how much you have. >> we fielded that equipment to the first battalion. all the other marines saw it and there was a demand signal immediately raised and the other units wanted the equipment as well. the only critical piece is making sure we get it to our marines early enough in the predeployment cycle where they're proficient at using it before they deploy. the thing we sometimes relearned a lesson is when you field equipment when marines are deployed it is not going to be effective. we have really worked very hard

to make sure we get that equipment to marines before they deploy. when we do, we have found that to be extraordinarily use skpfl it goes beyond the batteries and to energy and tent liners and those kinds of things and things you have seen. >> from the air force and the fuel development and all the technologies making sure you're not just on certain aviation fuel but new technologies to become more self sufficient and less dependent from a national perspective from foreign oil from countries that hate us. is that a fair statement. >> our focus is to make sure our fleet is ready to accept those fuels such that when they become -- >> economical. >> economically viable, then our fleet will be ready to go and we're proceeding with that. >> also from the navy perspective, if i remember reading a report, one of your big concerns, that's why you have climate changes is if you have a change in water levels, sea levels, it has a direct impact on all of your ports.

>> certainly true. >> am i mistaken there? >> certainly true. >> we invested billions in these ports around the country and around the world and it is in our interest to make sure if there is -- we can argue over the science and all that far and i am not going to no disrespect to my folk that is do the weather on tv but i prefer to put all of that side. the fact is we're having changes and you from that administration are looking at those as infrastructure cost potentially. is that a fair statement? >> i think that's fair that some are looking at that and we're also looking in relation to the arctic about what are the future challenges up there as that opens up and as we focus similar to the air force, you know, we're operating and certifying alternative fuels for our ships and aircraft in order when they do become economically viable we're certified and ready to use them and again the focus on efficiency and our tempo and fuel bill as loan are consuming

the readiness account so we need to look at alternatives. >> from the army one of the highest incidence of fatalities and injuries is protecting those fuel sources coming into afghanistan, for example. so the more efficient they become, the less that far fuel you will have to haul or make sure is happening and getting to those fields. you probably will save lives. am i wrong about that? >> clearly, senator, this is becoming more efficient is all about saving lives from the army's perspective. three tours in iraq, one in afghanistan, and i can tell you that every time that i can do something to not put a soldier on the road, you know, whatever it is, i want to do it because it saves lives. it is also about as dunnford mentioned earlier, about maintaining our soldiers and soldier load and decreasing the burden on them and increasing their endurance if they can go

out with longer batteries with longer life and if it is easier to recharge them and if they can harvest energy that's left over in batteries and put that energy in other places, i think that's all good. that all contributes to saving lives and becoming more effective on the battlefield. >> the last comment and i will do one more last thing on that separate issue. that is the energy costs because of our dependency on deasel and other types of fuels are draining your accounts and over expending because the cost of fuel has gone up. you make choices because you have to have the fuel and those choices are not necessarily fun choices to make. the less we spend in that area, the less stress you will have in other budget elements within your own division. is that a fair statement? >> yes. >> let me end on this and i appreciate the senator ayotte's comments in her questioning to you, but i want to for the record, you know, automatic cuts, if i was sitting in front

of another group here and maybe my veterans committee, the va would say some similar things. if i was sitting in front of the infrastructure groups, road, water, sewer guys would say everyone is having a pinch here. the thing that congress is missing and more be it through you to the large e odd skpens you don't have to respond to this, is we always talk about in order to replace the cuts we have to have more cuts. the reality is you cannot cut your way out of this problem. there is no possible way. after two decades of poor management aren't this place, republican and democrat, presidents there and past, we have a deficit and a debt that is staggering. everyone is to blame. the question is are we going to do the right thing here? when i was mayor and we had the same problem, a three-prong attack. you cut budgets. you deal with revenues. you invest in the right infrastructure. whatever that might be. in my case i think it is education. i think it is energy. i think it is basic core infrastructure we have to invest in and we have to deal with

revenues and no one wants to talk about it. the fact is the only way and i am happy to say the city that i was mayor of survived this economic crash without a hiccup. as a matter of fact, we had up prices in our housing and a strong economy. it is moving and actually was rated by business week as one of the economy that is would move and recover quickly in this bad recession. because we did a three-prong attack on this issue. revenues, expenses, and investment. what this place has a habit of doing is because it makes good political sound bites is always about we have to cut or do revenue or we got to do infrastructure. never the three. all three are going to make this problem get resolved and until this congress gets real about it, it is not going to have -- no disrespect to senator ayotte. you cannot cut more to then save the cuts over here. it is going to be a combination of things. if you think we can cut our way out of this budget, you are dreaming. there is no way to do that.

we will have significant cuts. we will have to do that. we will do things we have to get rid that far we can no longer do. that is clear. the gap is so large because of two decades of poor management around this place and go lucky days and those days are over. we have to be honest with the public. it is a three-prong attack. that's how we'll solve this. we should be realistic about it. what's going to happen so you know, the politics will be i hear it already, no disrespect, senator ayotte. we have to do it now to save the military. that's what's going to happen. we're going to be in this political battle on the senate floor yelling at each other and who will be more pro defense and who is not. i love the military. let me tell you that. based on everything we did when i was mayor and what my wife does every day to support the military, there is none of us are going to see the military degrade its capacity, but we are going to protect this country economically and do it the right way so all of us are successful

in the long-term. there is my rant. i get frustrated when i hear this. it is a three-prong attack. we have to be serious about this and honest with the public. >> okay. we'll end with a rant. i want you to know i would have a strong rebuttal, and i would say this, that what i am really worried about is our defense industrial base, too, because they have to make decisions up front, so we can wait until december but those decisions are being made as we speak here. >> i agree. we should have made this decision last year and honestly talked about all three pieces, but we don't. you know that. it is politics as usual around this place. >> first of all, i think that -- let me step in here and say that maybe now is the time i should do my rebuttal of senator inhoffe. i think this would be a perfect time for that. i think it is a perfect time to thank you all for your service

to your country and all the people in the room. i am going to resist the temptation to ask why there is so many of you in the room, but because it is one of as some of you who have been to these hearings before know it is one of my pet peeves that we have to be careful about how many people we have tasked to how many tasks and whether we need as many people sometimes in attendance at these hearings since they are televised, but i know everybody in the room cares very deeply about their country and is committed and i appreciate that. we are struggling with trying to correct mistakes made over the last 20 years as to the way we fund what we must fund as a federal government. there is no disagreement between democrats and republicans that the most important priority of the federal government is our national defense. there is absolutely no disagreement regardless of democrat or republican that we have the best military in the

world and that we must keep the best military in the world. how we get there, we're going to need help from you and input but we'll also have to realize we can't give you everything you ask for in the future because we have tried that, and take oco out and the base budget, the pentagon, taking out health care so you can't even use the health care increase has gone from 270 billion to north of 600 billion in ten years. we have doubled the amount of money going to the pentagon in ten years. that's not counting oco. you add oco on top of that, and that is a huge piece. can we keep the best military and do it smarter with a little less money? i am confident we can. i especially am confident we can because of the leadership we have in the military which is represented here today very, very well. thank you very much. there will be obviously more

questions for the record that some of us didn't get to and we look forward to a continuing dialog as we keep our military as ready as we possibly can and also figure out a way that we don't drown in debt about 15 or 20 years from now. thank you all very much. >> this afternoon we'll be live with the discussion on changes in nato and the impact of its new strategic concept. the panel is hosted by the british american society and george washington university's school of international affairs. in a look at emerging security

challenges and nato's response to terrorism, piracy and cyber attacks and the discussion starts at 1:30 eastern live here on c-span 3. >> we have a real demand for spectrum but we would be foolish if all we did was rely on things like incentive auctions and the auctioning of spectrum. >> i think it is important to have technological neutrality with respect to the commission's rules in order to ensure everyone is competing on a level playing field. >> learn more about the two newest fcc commissioner with the policy reporter cecilia kahn and amy shoths, telecommunications and reporter for the wall street journal on the communicators at 8 eastern on c-span 2. >> securities and exchange commission chairman mary schapiro says the agency continues to implement dodd-frank. she spoke at the annual investment company institute's general membership meeting in washington on friday. other topics including proposals

to tighten regulations on money market funds and market volatility and financial literacy. this is about 45 minutes. >> good morning, everyone. warm welcome to you all. maybe like me you still have beatles tunes buzzing around 234 your head from a great night last night. we're heading into the final session of the 54th annual general membership meeting and especially privileged to have mary schapiro, the 29th chairman of the united states securities & exchange commission here to provide a regulatory update. our format this morning is a q&a, and i am pleased she is the hardest working person at the gmm, melody hopson, our gmm chair will serve as the questioner. we're eager to get to their

conversation but first permit me to say a few words about chairman shapiro. in short she's had a remarkable career as an effective regulator and extraordinarily strong advocate for investors. in 1988 president ronald reagan appointed her commission of the of the fcc. she was named acting sec chairman by president bill clinton in 1993. president clinton later appointed chairman shapiro chairman of the commodity futures trading commission where she served until 1996. from there chairman shapiro entered the leadership ranks of the financial industry's self regulatory organizations. in 2006 she was named chairman and ceo of the nasd. in that role she over saw nasd's merger with a member regulation operations of the new york stock exchange. she became ceo of the resulting organization, the financial industry regulatory authority.

in january 2009 president obama appointed chairman shapiro chairman of the sec and she was unanimously confirmed by the united states senate. during her tenure mary schapiro and the sec carried out their investor protection mission on an amazing number of fronts, implementation of the dodd-frank act, the 2010 reforms of money funds, changing the role of credit agencies and many, many other subjects. for her extraordinary dedication and her extraordinary accomplishments over long year as a regulator, chairman shapiro deserves and she has our deepest admiration and respect. now, there is plenty to discuss this morning so let's proceed. please join me in giving an especially warm welcome to chairman mary schapiro.

so mary, i have to say we have had a fantastic conference. we've had great people, but you are one of the most anticipated conversations -- >> oh, dear. >> of this 30 days. whoen people found out that this was a q and a, questions came flying. so i hope we have a really great discussion. i'm very excited about this. i want to start off talking about your in setting the stage for a conversation. you had a remarkable career as paul mentioned. clearly, obviously now chairman of the sec, you remember chairman of the commodities trading commission. you were also a commissioner in the '90s. the question that i have is how did those prior roles prepare

you for this job you have right now? >> you know, i think everything you do prepares you for whatever comes next. if you're willing to take the lessons and learn them. for me, being in government before was obviously helpful, although it's a little different today than it was 15 years ago. the opportunity to work at finra. and being that role that stadles the private sector and the private sector but still in a regulatory role was very instrumental and instructive. i obviously spent lots of time with brokerage firms and people in the business and got to learn the issues that they confronted every day. all of that helps to inform the things we're doing at the sec now in the rule makes space. running the cftc a tiny agency with a lot of responsibility was again helpful in understanding although much bigger agency how to approach the issues of the sec would have from a management and operational perspective.

so that was helpful. i really think generally everything you do prepares you hopefully if you're willing to be a sponge and absorb the lessons for whatever comes next. you have to change course and you have to modify your thinking and you have to learn from the new things, i think it helps you build a more and more solid foundation for whatever challenges are thrown at you. >> one of the things nubs that answer is that government today is different than it was then. how's it different? >> when i think about what the sec is like, i was there from 1988 to 1994 and then looking at today, first of all, the stakes are very much higher today because of the financial crisis. and i came in at a time when obviously people were reeling and continue to be, and i understand from you the howard schultz gave really a sort of remarkable talk about what people are going through today. and that clearly wasn't the case many the late 80s and early 90s.

the stakes are higher. the job is so much more complex. the products are more complex. the markets move at lighting speed. the world is more interconnected. confidence in government and governmental institutions is not what it should be. investor confidence in our industries is at a low. so i think all of that presents a lot more challenges. of course another big difference is i was a commissioner then and chairman now and the job is very much more complex as the chairman just because of the responsibility for the administration and the management of the agency as well. >> i read or heard i should say from a friend that you played basketball in high school. >> i played field hockey and volleyball in hockey and field hockey and lacrosse in college. >> so did playing those sports

and some of the defensive efforts that you have to make back then help you in the role that you have now? >> i was recently, this may be my proudest media moment was featured in lacrosse magazine. ened i have to say i went to franklin marshal college, the women's lacrosse team there is unbelievable. they've been division three champs for several of the last five or so years. and they're extraordinary athletes. i couldn't carry their sticks for them -- >> we don't believe that. >> no, it's true. they're amazing athletes. what i think team sports does for you is actually teaches you teamwork. so it teaches you that there are times to be aggressive and times to hold back. there are times to get yourself out of the way and let your teammates do what they need to do. there are ways to signal each

other and anticipate what others on your team going to do in order to achieve the goal in that case the actual goal. and i think, i actually tell this to my daughters. i tell this to young people when i do commencement addresses that being on a team is one of those things that will serve you well for your entire life. it really isn't about you. it really is about the team and when i look at the team we built at the sec i'm so honored to serve with people that are so committed and so hard working and so creative and innovative and open minded. and it feels very much like being on the lacrosse field. and taking cues from each other and driving towards the same ultimate goal. >> i'm going to come back to the team thing in a bit. i want to ask you one other question as we talk about your career. where did you get this drive and interest in public service, you

could do anything -- >> thank you. >> yet, you have a very specific niche. >> yet, i don't know where it came from, i do know that i've always loved policy. i started my career right out of law school as for one short year a trial attorney and hated it. i didn't like the tension of it and i didn't like the narrowness of this is our issue and this is what we're litigating on and this is what we're doing. i love the breadth of public policy. i love the ideas that we can affect people's lives and we can make a difference. and we can build coalitions and collaborate and gather information and tackle problems and actually really make a difference. i never thought i would do it in the financial world, for sure, but it's -- it's wondserful to come into the sec every day and know that you can face anyone of a dozen issues because our scope is so broad. so we're talking about

accounting issues and international financial reporting standards from 10:00 to 11:00 and 11:00 to 12:00 we're talking about whether we have granular enough disclosure about foreign sovereign debt holdings from major banks. from 1:00 to 2:00 we'll be talking about pools and ta transparency of the trading markets. 3:00 to 4:00 we'll be talking about fiduciary duties for broker dealers. the scope is just extraordinary. that makes it interesting every single day. >> do you feel like you can keep up? >> no. i mean, i try. but we have an amazing staff as i said, and they're so expert and they help me be prepared as best i can be. there are lots of issues i would love to spend more time on, market structure, many of you heard me say this is just a deep

interest of mind. we have plenty to do under dodd frank and we have ons act to do now. we have other things on our plate. but we can't do everything. i personally can't do everything as -- to the extent i'd like to. but we -- we have great staff who can and that i have to rely on them. >> i want to go to dodd frank you mentioned clearly that's put ap enormous amount of work on the agency. >> yes. >> and you've had some backlog there in terms of get whag you need to be in terms of what you acquire. do you think the backlog is good or bad? >> it's a great question. we get lots of conflicting signals, hurry up, slow down. get this done, why isn't this done. you need to take your time because there's a lot of comment ark lot of thought. these are monumental rule makings in many cases. we're taking for example with the over-the-counter dreftives market a completely unregulated market that exists to the tune of $800 trillion and we're

trying to fit a regulatory regime around it. it's not as though we're writing on a clean slate. they're complex. we worry about unintended consequences. we worry and try to be humble about what we don't know and don't understand and need others to teach us and that takes a lot of time. on the other hand, we have a sense of urgency because these are financial crisis related rule makings. these are issues that the congress expects us to address and the public expects us to address. and we have our own sense of urgency because we don't want to see repeated the issues that put us in this terrible shape that we have been in. so it's -- so there's not a simple answer. it's not good that they're taking so long, but it's not bad necessarily that they're taking so long. it's become a cliche monoall the regulators to say we're taking the tio