where he is the leader, steward, advocate of our nation's strategic capabilities. u.s. strat com encompasses the u.s. control commission, and has responsibility for global strike, global missile defense space operations along with global command control communications, computers, surveillance, and reconnaissance. or as my two sons in the navy would say, c 4 isr. including u.s. cyber com and combatting weapons of mass destruction. since taking command of u.s. strat com in november 2013, the admiral's top priority is maintaining inging deterring and maintaining safety with the allies with the safe, secure effective nuclear force. in addition, he works on

partnerships to address a broad range of global challenges, building cyber space capability and confronting uncertainty with agility and innovation. this is a particularly difficult job today as we see a resurgent russia, and rising china, challenging us with nuclear capabilities, space and cyber space, as well as countries like north korea and iran, seeking greater roles in these domains, proliferation of technology, and information has increased risks, posed by non-state actors in many of these areas, as well. in short, strategic deterrence may be more challenging today than it has ever been. this is why we at the atlantic council have been tackling many of these issues head on, including our work in russia, particularly our trans-atlantic security work as we chart a path for a europe, whole and free. likewise we have been doing

extensive programming on cyber security and cyber state craft initiative. ranging from nato's cyber mission to the recent cyberattack on sony. our initiative and middle east peace and security initiative permit thinking about trans-atlantic security in a global context. and all of this work is done by the center for international security. in that light, we're very much looking forward to hearing from admiral haney today and to the discussion it will stimulate as we work to better understand the strategic challenges facing the nation. with that, i would like to invite our good friend, michael anderson, president, ceo of saab north america to the stage to introduce the admiral. michael, the stage is yours. >> thank you, chairman, good morning, ladies and gentlemen.

once again, i'm michael anderson, i'm president, ceo of saab, north america. saab has been a very active supporter of the atlantic council for many years and we have -- jointly been involved for years. the commander series has become an important platform for discussion of key issues in policies, and the close connection between the trans-atlantic relations. we're very pleased to see that so many of you could attend today. it is an honor for me to introduce our special guest today, admiral cecil d haney. over the course of his 35-year long service in uniform he has

built a distinguished and decorated career in the navy. he also served as liaison officer for the office of the secretary of defense. admiral haney comes at this with the depth of experience and previously served as the director. combined with the region experience and the legislative background he has a true appreciation for the strategic complexity we face as a nation, as well as the practical challenges. of matching resources and strategy. admiral, we're very proud and pleased to have you here today. please join me in welcoming admiral haney to the stage. [ applause ] >> thank you very much. well, good morning.

governor princemanhuntsman and also mike, thank you for the kind introduction. it is fantastic to be here today to interact with so many intellectuals, professionals who have been deeply involved in our nation's security and policy apparatus for decades. so thanks to the brent skullcroft center for hostingtnxu and the atlantic council at large for what you do. stood up to bring foreign policy actors together to ensure a better global future. and i salute the broad range of security and international corporation issues that council has addressed over the years. i am honored to be here, but i'm astonished to be at the podium, by sitting in the audience listening to many of you who engaged so brilliantly in my top mission to deter strategic attack. diminish to deter strategic while i thank tom schanker in advantage for moderating today he should know i appreciate his

critical analysis for what he termed the new deterrent in his book, counter strike, that he co-authored with erik schmidt. tom details how matt kroenig, who is also in the audience today, and barry grible, were instrumental in sparking the debate to understand that deterrence to stopping terrorism. it is that typical type of critical thinking and debate that i appreciate. so as i give you my thought, know that i value different opinions and perspectives and i look forward to my meaningful discussion. as we look at the world today it is important to stop and recognize just how far we've come since the end of the cold war. this month marks 22 years since former president george bush and

russian president yeltsin signed part two. although the treaty was never ratified it is a significant chapter in our history of establishing the glide slope of reducing the number of nuclear weapons. i can only imagine the rich number of exchanges that occurred in our history after that period. today after providing you a brief overview of my perspective of the complex security environment we face i will center my remarks on two things. first, my priorities and approach as the commander of the u.s. strategic command, and second, strategic deterrence with emphasis on the need for a nuclear deterrent force. today as you know this strategic security environment is dynamic and violatal.

the nature of strategic threats, weapons of mass destruction, we continue to see the capability to include but not limited to the nuclear capability. counter space, cyber space activity t. conventional and asymmetric threat s as well as the growing list of economic disasters and disturbing trends upsetting the strategic balance, giving rise for additional concern not only for me but for my fellow combatant commanders that are my teammates and that i work very closely with. perhaps most alarming is the trend of proliferation of the capabilities, challenging our ability to hold other forces that are a risk. and ultimating impacting the strategic stability. this environment is also flanked with numerous ungoverned or

ineffective ineffectively governs area ss for bad actors. we know we must continue to confront the violent extremists, as demonstrated by their barbaric actions that they lack the respect for the international norms as we've sadly seen and witnessed in recent months to include those atrocityies in france, canada, and recent suicide bombs in nigeria. clearly, in time provided here i will not be able to cover in these areas, but i will address the few that you think you will be interested in from my perspective. i'll start with russia. as most of you know, russia has had more than a decade of investments and modernization across their strategic nuclear forces. had more than ten years in now, this is not about a continuation of the cold war. the cold war is over. and we know how that all turned out. this is about emerging

capability at a time of significant concerns in russia's execution of their near and abroad strategy. for example, president putin continues to stress the importance of russia's strategic forces, seen with his active messaging in every conceivable way, through speech, press conferences and robust national and international media campaigns. you also may have seen news of russian strategic bombers penetrating the u.s. and allies, air defense identification zones on multiple occasions this year. or perhaps you saw president putin on youtube ordering his commanders into action during major strategic force exercises both in october of 2013 and during the ukraine crisis in may of 2014. russia also has significant cyber capability, we just need to look back at estonia, georgia and ukraine. russia has also publicly stated they are developing counterspace

capabilities, and as director clapper stated, russia leaders openly maintain they have anthony satellite weapons and conduct anti-satellite research. today, however, russia is not the only country that is in space. china is also modernizing their strategic forces. they're enhancing their >> silo based intercontinental based ballistic miss. and while open news source reports the first fleet tests of their new mobile missile, they already are making progress. on a successor that is expected to be another road mobile missile, icbm capable of carrying multiple war heads. they're also testing the integration of their new submarines. providing china with the first sea based nuclear deterrent.

they're also developing multiple -- multi dimensional space capabilities supporting their access in the campaign. but with more than 60 nations operating satellites in space, it is extremely problematic to see china conducting missile tests designed to destroy satellites as we saw back in july of this year and that event in 2007 when their anti-satellite weapon created thousands of pieces of debris, endangering the space systems of all nations. they have also made head lines associated with exploitation of computer networks. as you know, north korea continues work to advance their nuclear ambition. they have conducted multiple nuclear tests and claimed to have possession of miniaturized war head capability of delivery by ballistic missile. at the same time they continue

to move forward with both the development of a new road missile, the kno 8 icpb and a missile submarine. they, too, are developing offensive cyber capabilities, and there have been no shortage of headlines pointing to north korea. iran has made no secret of their desire to acquire nuclear weapons and preventing them from acquiring these capabilities is paramount to regional stability. i remain the p 5 plus one negotiations will have the desired effect. like north korea, there are also public examples of their cyber activities and capability. so as you can see we are fraught with an incredibly challenging geo-political environment, of which i have barely scratched the surface in describing. and with that picture i want to give you an understanding of my priorities.

and as commander of u.s. strategic amn i hope it makes sense that my top priority is to deter strategic attack and to provide our nation with a safe, secure and effective nuclear deterrent force. with a national debt that is more than $18 million i'm mindful some of our most pressing costs are with modernizing and capitalizing our strategic deterpt that. means getting the strategy right for the long-term because we have sustained many of our capabilities much longer than originally planned. to give you an example, our missiles have been fielded in the '70s and will be sustained through 2030. the ohio ssbn submarine has already been extended from 30 to 40 years of service. our newest b-52 models came off the assembly line more than 50 years ago and there is no plans to retire them before 2040.

some of our war heads infrastructures have been around since world war ii and our stock pile is the oldest it has ever been, with the average age of over 27 years. our nation faces a substantial multi decade recapitalization challenge and we must continue the investment toward that effect. toward that effort. our planned investments are significant. but are commensurate with the magnitude of the national resource, that is our strategic deterrent deterrent. we must get this right. as we reduce the number of war heads,

the value becomes even more important, while at the same time facilitating the norm set by the non-proliferation treaty. we cannot do this alone, however. i work closely with my fellow combatant commanders and the interagency. but it is also working with our allies and partners and friends and enduring relationships, the think tanks and academia as well, to confront the broad range of challenges. we have been able to have meetings with a number of our allies, including the republic of korea, france, australia. korea, the former defense minister of japan. vice chief of defense of the united kingdom. and partners for space-sharing agreements. this past october we conducted a command of control exercises designed to train our department of defense forces and access -- assess our joint operational readiness across all the areas with a specific focus on nuclear readiness. and we did this not by ourselves. we did this in conjunction with

the u.s. northern command, norad, to include our canadian partners in exercises that were grouped together. balance shield, positive response and determined dragon. i share this with you as i want you to have an appreciation of just how i value partnerships and collaboration and how we at u.s. strategic command aim to work seamlessly across the interagency as well as with our allies and partners. as a nation we depend highly on space capabilities. more so than ever before. space is fully integrated in our joint operations as well as our commercial and civil infrastructure. space today, though, is contested, congested and competitive. and we in the international community at large require assured access.

while our space assets continue to face this growing threat from adversaries, adverse effects are also generated at the speed of cyber and cannot be ignored. in our lifetime we have benefitted immensely from computer capabilities. and i think it is fair so say as americans we rely on technology. but this also opened a threat axis regarding our critical infrastructure and information assurance. i think you can understand while addressing the challenges in space and building our cyber space capability is a top priority. my sixth and final priority is a ability to anticipate change and confront change and agility with innovation. we can't just look at military documents and

understand what an adverseary's next moves will be. we just have not always done well at predicting potential conflict. we were certainly surprised about the chemical attacks in syria, ukraine, crisis and more recently here the things in france and ottawa, canada. it's going to require us to stretch our imagination in the art of deterrence to get into what i call the cognitive space s to better understand and work with better solutions. i can't stress enough the vitality to bring together our national leaders and think through some of our nation's most challenging issues. last summer, we cut the ribbon at u.s. strategic commands war gaming center, in omaha. to help enable and challenge our thinking with the ability to look at alternative scenarios, some plausible today and some unthinkable tomorrow.

this is why the department of defense innovation initiative announced recently by the secretary of defense hagel is also very important to me. we need to grow innovative leaders. identify new operational concepts and develop and continue to develop cutting edge technology so that we can continue to evolve with ideas on how to deter our potential adversaries and of course, work with our allies. so now that i covered our priorities, let me shift to the number two topic i wanted to talk about this morning:strategic deterrence with emphasis on nuclear force. today as i stated there are multiple forces around the world who are capable of acquiring nuclear forces. president obama stated his goal regarding the nuclear weapons

and we continue to work towards that goal with the new star treaty. the president's nuclear employment strategy released in june of 2013 as well as multiple documents that include review, the 2010 nuclear posture we view and the 2014 nuclear defense review make it clear that as long as nuclear weapons exist, the united states must maintain a strong and credible safe secure and effective nuclear deterrent and that we must be prepared for the possibility that deterrents can fail. so 21st century reternts must be tailored to specific adversaries and threats and in an integrative manner so we can predict what deters and what prevents escalation. given the aspirations of some and the modernization of the nuclear capabilities in the world today there is clearly a need for the united states to maintain nuclear capability as

part of our strategic deterrent strategy. but it is also equally clear that while our strategy, while our strategic deterrence includes the triad of delivery platforms it is more than that. and all of it must remain credible for decades to come. our strategic deterrent includes the following. a robust and agile preparation. a synthesis that provides critical warning. assured national and nuclear command and control communications. the necessary infrastructure to sustain nuclear weapons without fully testing the war heads. a credible missile defense system that extends and defends against limited attacks from rogue nations. relevant cyber space and space capabilities.

trained and ready people to conduct strategic operation and planning. synchronized treaties and policies and strategies. and of course a campaign plan that orients the activities toward a common purpose. this is not just capability. but a whole of government approach that requires our attention and the necessary resources. this is why i believe the nuclear deterrent enterprise review group that secretary hagel established is so important to keeping the focus and balance the effort to support our nation's strategic deterrent. in closing, let me say this. the strategic context in the emerging threat environments are increasing in complexity. at the same time the speed of information and misinformation coupled with the proliferation

of capabilities continues the threaten our critical infrastructure and our democratic way of life. even in this era of significant resource constraint we must get 21st century deterrent right. we must make it clear to our adversaries or potential adversaries that restraint is always the better course. and that it will require us to work together as a team the government private sector, academia. as stated by former secretary george schultz deterrence is not synonymous with the assured nuclear destruction. it can and is exercised in many different ways through non-nuclear military forces. through economics. through alliances and coalition, end quote. of course, we could not have

this credible strategic deterrent today if it were not for the men and women, both in uniform and in civilian clothes who conduct and contribute to our strategic deterrent mission, day in and day out. across all areas from under the sea to geo-synchronized orbit, they are making concrete contributions to our national security, 24/7 365 dwasays a year. i couldn't be more proud of them and the work they are doing and i hope you have if same sentiments. thank you for this opportunity and i look forward to your questions. [ applause ] >> thank you. very interesting comments, thanks to chairman huntsman for the invitation to moderate today.

admiral, i will spend a few minutes unpacking his very thoughtful and thought-provoking questions. but i promise to reserve half the time for questions from audience. always an exciting and engaging thing to do. we have a hard stop at 10:45. one biographical note to mention, he is a son of washington, d.c., and a product of our public school system. which means there is hope for my kids. that wasn't outloud was it? is the mic on? admiral, because we're here at the atlantic council i wanted to sort of start our trip around the world thinking about deterrence, which one of the things mentioned is russia. as chairman huntsman said deterrence is one more challenging. not that we look back fondly on the horrors of the cold war, but it seems obvious that deterring a nuclear russia, just so obvious with the nuclear

capabilities, does present challenges indeed. what is your thinking about that, especially since it is a s claatory chain of capabilities that russia is using from little green men and information in ways that the soviet union simply didn't? >> well i think as you look at russia today, you have to look at it as russia today. understanding its history as well as what has been stated as their goals for the future. and as we work through deterrents with with them, first and foremost we have to have deep cranial understanding of where they are, their thinking, their leadership thinking and where they are trying to go with their objectives. and as you said in today's world, we need to look at it in an integrated fashion. and it really requires time, patience and capability in dealing with that.

so it is very important that russia remains on our radar scope in a big way. but as we work this that we work it in an integrative fashion across our whole of government capabilities. but with deep regard to our allies and partners that are also associated with this. >> what does that look like exactly? i mean, is it a capability for capability match? you mentioned whole of government, of course. but it seems, i think if most people were polled today they would say the initiative remains with mr. putin. so how can we deter a very aggressive chess player who seems to be winning so far? >> well, i think winning is always looked at better post facto in history. and there are a lot of parts and pieces in motion here across our various activities as a country at large. and i would not want anyone in this room to think that the

united states of america is not taking that very, very seriously. in a good way to see a nation state like ukraine having its sovereignty challenged as you describe here is obviously one piece of it. the similar over crimea. and the business of doing this at the same time while doing the flexing what i call their strategic capabilities and their nuclear capabilities. just the long-range strategic aircraft flight that i mentioned earlier in the remarks to some of the exercising of strategic capability at critical points. one, there is no doubt, i think in anyone's mind here that russia is very interested in president putin and ensuring that they're recognized as a nuclear-capable state. and we need to be thoughtful and

clever as we approach their endeavors here, particularly the as they exercise their endeavors and their broad strategy. and it is more than just ukraine, from my visual point. and as you watch the flexing and the discussion, quite frankly of nuclear, the number of times, president putin that has brought it up, one thing i want to exact emphasize here this is not about getting into some cold war race with russia. it is about dealing with it professionally and thoughtfully, using all of our mechanisms of deterrence. >> right, we certainly don't know what is in putin's mind right now, but lots of thoughtful analysts have expressed concern that the baltics could be next. they like the ukraines have a sizeable population. that could be part of the plan given the article 5 demands of putin-delayed challenge, in

to the united states and nato in attempt try to prove that nayto is a paper tiger. as commander of strategic command what is your role in assuring our allies and improving -- proving american resolve? >> well, my role, obviously, is to take all of those missions that i have in my job jar and make sure we're ready to execute those, first and foremost. but also with those priorities as i described here, yeah, the u.s. strategic command doesn't do this alone. we work very closely with our fellow combatant commands and obviously the interagency to ensure we are thoroughly looking at alternative futures and those kind of things. and obviously, ensuring that we are providing our national security apparatus, all the capability associated with it. while at the same time working in close partnership with nato. you just had phil breedlove here

not that long ago in terms of work that he is doing out there from his standpoint. so in the work that he is doing, we at u.s. strategic command also provide support in that regard and many dialogues between us, including the work we do in various forms together, to include exercises. >> you certainly own the strategic deterrence from the military standpoint. all the pieces although mentioned, including also missile defense, cyber space, as well as intelligence, do you feel they are knitted together? can you get your arms around them in one place or do you still see the stove piping in strategic deterrence? >> well, i look at quite frankly and as i look at that list, if you will, what i consider critical strategic deterrent tool bag, if you will. all of those are important and

they have to beñ' has i mentioned. part of that calculation as i mentioned, one of those ingredients, as i mentioned to make sure we get the right balance in an effective way and the improvement in to capability. >> i don't think anybody should use this in the same sentence but i'm going to anyway without asking for your review of them -- >> just remember, you said i was a d.c. public school graduate now. be careful with that.

>> right. but i did want to talk about north korea and your thinking of new options of deterrence to that adversary. but i noticed, not in this latest go-around, but a year ago in north korea one of the signs of deterrence was the strategic command sent to south korea a multi-billion dollar bomber that was designed to fly at night and never be seen yet it deployed over south korea at night low and low so the images could be seen throughout the north. so clearly the demonstration effect of that strategic platform was used in a different way. i thought it was very clever and interesting. talk a little bit about how you're looking at the north korean threat today with both new ideas and perhaps even more platforms of new applications and new ways. >> well, you described one of

our mechanisms in terms of being able to provide our geographical kmat combatant commands around the world of activities such as bomber ashurntsurance and activities that we go out on. command and the deterrence missions we go out on. one, it keeps our operators fresh in terms of understanding the environments that they could be operating in. two, it provides us a mechanism to work with our allies and partners while also honing our skill set.fucm÷ but i won't sit here and give you everything in my list here quiet frankly. we want that capability to show up at the 250i78 andshow up at the time and place of our choosing. and quite frankly, there is strength in ambiguousness. where there is too much chest thumping or discussions about what we do before we do it in terms of things.

you should know as you look at the art of deterrence, the business of being able to have survivable capability matters. the business of being able to hatch tribute matters in a big way and being able to predict as well as follow the movements of north korea to deter that business is important. already they have had three nuclear tests associated with things. they are very vocal with where they're trying to head in terms of their nuclear capabilities. it is very important, not just in the republic of korea, japan, et cetera, very important we continue to work with those countries. with the combatant commander that is in charge of that region. we work at u.s. strategic

command through various mechanisms including that. the business of making sure we have a safe, secure and effective strategic deterrent, very important. when chief of defense from the republic of korea came through u.s. strategic command last year, he was very interested in understanding our capabilities. and we ahead some frank discussions in that regard to why capability we have in providing assurance for the republic of korea. >> when you talk about capabilities, i would like to get a comment on your confidence level today that you have what you need and to get really specific what you desire for the future. i know that secretary hagel and his value addictry troip visit your troops stopped at one of your commands and very clearly endorsed the future bomber, very expensive proposition but something i imagine that you need. what other sort of platforms, capabilities, b-61 -- a bunker buster, what things are on your list if you can deal the budgetary problems of sequester which of course is a matter for

the executive and legislative branch? >> well, what is on my list is that we have the capability to have an effect with the incredible strategic deterrence now and into the future. subsequently, it is about sustaining the plan we have but not to short-change the fact we do need to modernize our capabilities. and as you look at the list i gave here, all the way from sensing capability communications capability to the platforms which gives a lot of discussion there. and the one you mention the bomber, is one i think every american can be proud of the fact that when you think about how long ago the last b-52 hotel rolled off the assembly line and that we're continuing to use it both in an conventional and strategic capability. day in and day out we ought to be proud of the fact we made those as critical investments

and able to get the length and legs out of that credibility. no doubt we'll be able to do the same for the future bomber. and when you look at the expense of platforms and then look at over the numbers of years that things like that b-52 hotel i just gave an example of. it is very important to put into the calculus of the cost. because it is very important to build our capability so that it's endurable. so it's flexible and can be survivable in harms way and to do it not just for today but for many decades to come. so to your list of things i think i've already given that list in the earlier discussion. in terms of things but we can ill afford to take and neuter o you are strategic y ikic capabilities without ensuring that we have something el else to replace them h. >> right but i guess the art of strategy is doing more with

less. >> when you say less let's face it. it is a good thing. we don't have the number of war heads we had back in the '70s, etc. we have shrunk that down and on a vector to get the new star treaty limits here by february 2018. that is agood thing. when you look at the submarine fleet tssbns, the numbers we have had over the years versus still going down here. the number of 12. for future to be able to have that survivable for the strategic capability. so i would like to put that in perspective in terms of things, because i am a believer as a taxpayer that we have to guard our resources thoughtfully and carefully and have the requisite debates. to make sure we have the right balance of things in this very complex environment. >> other things that might keep you up at night. you mentioned non-state actors and terrorists, even paris and elsewhere.

also in your role after coordinating the effort to combat weapons of mass destruction, describe your thinking under way now about strategic deterrence about tactical terrorist actions that have strategic impact and threaten our nation. >> well, the whole business here of the various threats to our nation always require a full approach, if you will, to the problem. and you can't just look at it in splintered fashion. it is very important that this critical time as we look at countering terrorists, terrorists capability, that we keep our new thinking, new approaches and continue to validate old approaches that are also working to keep this business going in the right direction for us. as has been stated by many, this is a long journey for us associated with addressing and

balancing the organization. and that requires the full thrust of cranial thinking all the way to tactical capability as we go forward to the 21st century. >> but are you concerned at all sort of that the 9/11 type of event, very well planned. obvious strategic impact to our nation is being replaced if not by self-radicalized but by sort of tactically less sophisticated attacks like an ak-47 attack in paris which as far as 9/11 was almost equal in impact to the shock and horror of a far more complex attack. how does this government try to deter and prevent that? >> well, i think when there is a recognition as we go forward you will have problems. and i think the business that has occurred has not been something that our nations have not been working towards and thinking about, et cetera. but preparing ourselves and engaging as we have been from

afar, while at the same time working with our various countries itself, and people that are in it, to ensure the bar of understanding of this particular threat, being able to do that is important from 9/11 to what we have had in france. i'm not going to go into a comparison here, one to the other, but we've seen what the effects of each one of these over time has done to the economies in terms of 9/11 and what have you and the approaches that we have to do. and we have to deal with them. that's what we get paid to do get your teams together, critically thinking, critical approaches and thoughtful pragmatic and prepare ourselves for a long journey and not an instantaneous effect. >> it is a marathon, not a sprint. before i invite audience questions i have one last for you, admiral, my colleague and friend has done some terrific

work examining some -- i'm sure you would agree, the gaps in their performance of your personnel. as the commander of what are truly the president's own weapons, what would you say to this audience with the american people to give them assurances that the safety and security and professionalism of your force will be sustained in years ahead? >> well, i would say as we've gone through my tenure here as commander of u.s. strategic command, it's been a good journey in terms of the forums and discussions we have had associated with the support for this critical capability for our country, to include its people. and as we've gone through this journey, the first piece required is we expect throughout our entire military, our military folks, to operate with integrity and with great character. and when we find these kind of problems no matter where it is, we pluck it out of our system.

while at the same time get through some root cause analysis to figure out what are all the things we should be doing associated with that particular problem. i would say our checks and balances associated with our capability, and when you look at the team that comes to work every day, passion, et cetera, in any organization you have to continue to work on that other percentage of folks who may not come with the same kind of background, etc. and in this case, i'm very happy that we found the problem. eradicated the problem from our system and went to work with this nuclear enterprise review business to work on those problems that we needed to do in support of this mission. so through 2014 as announced by secretary hagel and deputy sec-def work not that long ago,

this has culminated in a variety of different actions. some requiring resource some requiring better leadership. and all of those things are in motion right now. but as we continue to go through this journey, we need to remember all of those folks that are out there doing the mission day in and day out, even as we work other missions throughout -- that we talk even more about, that this is a critical capability for our country. and that we have great americans. i have spent 2014 traveling throughout meeting with all of these warriors that are doing our strategic deterrent mission.

the mission is under the water, or in an icbm launch control center, or whether that mission is associated with a bomber, or space access, and what have you, or some of our early-warning radar teammates. and i can say unequivocally, those folks are fired up and charged about the mission. i think the rest of us need to support them in how we talk about it, and associate it with plans we have now in support of resources, the things we need to resource in that regard. i'm proud of working with those great americans. >> i look forward to hearing questions. if you would wait for a microphone. please identify yourself. there's a limited time and lots of people. please keep your questions concise. sir? >> thank you. >> i'm a recovered sovietologist from many years ago. in full disclosure i've been on the sack board and remain on it seems since ike was at sync. my question relates to russia's new military doctrine that was announced in late december. i wonder what your reaction was to it, and anything that may have been different that struck you? and second, in the context of russia, it seems to me the one area that they have a very, very large numeric advantage over us

is in short range and nuclear weapons. it's dominant we only have a handful of weapons in europe, as you well know. what is your reaction to that, and how do you deal, if not with the deterrence, but coping with that imbalance at the theater, and short-range level? >> first of all, thank you for your remarkable service, and your work you've done over time. i sometimes worry in today's environment we don't have enough folks that really have deep roots into working the russian part of our business, and that we continue to work to inspire young folks, to continue to become knowledgeable as you are. >> [inaudible]. >> but the first piece here associated with president putin putting out his doctrine, i would rather see him be vocal and understand what he's thinking out in front versus guessing. or trying to integrate the jigsaw puzzle parts of the

business. so to me, while we were watching very closely trends, and predicting and what have you. and as he came out with his doctrine from my standpoint, it wasn't a bit of a surprise. because he had demonstrated a lot of these things associated with his dl6

ambitions to maintaining strategic capabilities in multiple dimensions, not just nuclear. capabilities in multiple dimensions, not just nuclear and making sure we're prepared in thinking ahead and working in conjunction, as i've said before, with our allies and partners in looking at this globally. >> in the back on the aisle the gentleman here, yes? >> thank you very much admiral. i'm with the chinese news agency of hong kong. it was recently reported that china conducted a test of a new long-range missile, the f-41 which can reach any city in the

united states. do you have any comments on that? and secondly how is the u.s./china nuclear dialogue going on right now, and do you have any exchange program for this year between the u.s. strategic command and the second artillery of p.o.a.? thank you. >> thank you for your question. obviously we look at strategic capabilities of every country that's out there developing and modernizing their associated capability. you mentioned the f-41 but as i mentioned in my speech, there's a plethora of strategic capabilities that china is also growing associated with things. as far as us having a dialogue from the strategic command to e

equivalent organizations in china, there is no u.s. strategic command that i can directly go to. most of my work in that regard is working through the civic command which is the combatant command for that part of the region. there's a variety of different areas there as well as other forms that we associate with. to date i do not have a forum that i work with a corresponding individual or team from china. whether that comes out in the future, time will tell. we're doing a lot of things right now with china. i know not that long ago there was a pacific exercise that was conducted out there with chinese participation, and those kind of things are good in that regard. from a strategic picture though, as you pointed out, the piece that concerns us and that we

work hard at being that china is not transparent in terms of its intentions and in terms of its development programs and what have you, that that is an area that we have to work towards and continue to be mindful of as we go into the future. when we look at countries like our relationship with russia, being able to have this transparency through the star treaty, very important to both of our nations. that's why it's important i think, that we continue that kind of business. even through ukraine and crimea, we have continued to inspect each other per plan associated with that treaty for example. but when we look at china, we haven't been invited to explore what they have associated with things in their nation. >> thank you. question here, front row?

>> thanks. with defense news. sir, as the stewart of the nuclear arsenal and all the personnel that basically go with it to make sure that the force has proficiency, at what point does the pausety of investment of the entire nuclear infrastructure, whether it's at the labs at what point does that gap in capability begin to affect the operational abilities of the force? it's been two years since we developed a nuclear program. it's had some financial challenges obviously. at what point do we need some form of national investment to recapitalize the nuclear enter enterprise enterprise? do we need to have a different fundamental strategic approach to how we recap tallize the capabilities and problems associated with it? >> very good, good question, as

i would expect from your experience. good having you here. the whole business of infrastructure is a very key component that i mentioned earlier that i consider part of our strategic deterrent. i visited all the laboratories here over the last year that do that work for us and worked very closely with the nnsa organization under the department of energy. we have a nuclear weapons coin, dod to doe associated with that piece so we are in regular conversations in that regard. the piece that we worked as a team to really evaluate very critically is not just let's go out and build something new. quite frankly i think we've been very thoughtful as a nation in our approach of doing life extension programs and those kind of things modernizing

electronics and those pieces that we must to ensure we have safety and security associated with each of our nuclear weapons. with this, having visited and seeing the professionals that worked there you're right they have to work hard to keep the inflow of professionals that come in to work that super duper nuclear physics chemistry metal earnicly, all those things, a vibrant work force that goes through and really does a lot, not just in those life extension programs, but in the surveillance programs associated with our nuclear warheads. so, i don't want to say though that there's not work that those organizations have to do to keep their work force in place and the fact that we are working because there are some infrastructure things in terms of facilities that require

improving in order to sustain this for decades to come. those are things that we as a nation have to continue to work on our programs associated with that so that we don't dilute that part because that's a key part of our deterrent apparatus. your second question -- i talked so long i think i've forgotten what the second one was. oh about budgeting mechanism. right now from my perspective, my big ticket item is that those items need to be in the budget and funded. i will let the professionals here from the office of the secretary of the defense and congress really work on the noodle on how we need to work that perhaps more holistically

in terms of what you just said, that piece of being able to follow the money, as you know is very important. so whether it's one bin or a bin that we pay -- bins that we pay close attention to associated with things because when you look at that ssbn or that icbm as one mission associated with things and then you have to have that dialogue, how do you do those things that have dual capabilities and then what's in that bin as i talked about before, from outer space to under the water. >> sir? >> peter sharkman. are traditional deterrents distinguished between intelligence gathering which we tried to prevent but not deter

an outright attack which we visibly and vocally deterred. in the realm of cyber, how should we think about drawing the line between intelligence gathering and actual attack? >> thank you, peter for that question. very thoughtful. in terms of where do you draw this line because you have so many things going on in the cyber arena of exploitation to destruction of property in terms of things and this piece goes even higher than that i think in terms of where do we have the international rules of the road if you would say that really help define that piece for us in a clear and concise and

verifiable way. while there's some work going on in that in terms of policies and what have you, i think we have a way to go in a national associated agreement in that regard. i think as you look at cyber -- you call it intelligence, the piece that i would say we have to be very careful with as we have seen i would call, there is exploitation that occurs here that end up not just gathering intelligence but putting advantage in the commercial sense of things that are also very problematic in terms of things. you say, well that doesn't cross the threshold in terms of paying to the extent to where you're in an attack but it can, in fact, have very harming effects over

the long run associated with our technology and r and d and research and development and things that we have worked hard on and invested in associated with things. so as we look at this, we have to address this across the full spectrum of things not just a fried network or what have you or fried critical infrastructure, but this whole spectrum as you can just see here in the website defacing associated most recently with central command in terms of vandalism associated with those websites. we have to be careful that we don't overblow some of these events to where they're attacked when they aren't in that attack place. with each one i think they require very careful consideration and analysis in terms of what has occurred, where is the at bugs associated with what has occurred and appropriate measures associated

with those particular events. then it's not just limited in cyber as we take approaches associated with the particular problem. it's using all of our instruments as a nation. from diplomacy, information, military, economics, et cetera. >> yes in the back sir? >> thank you, admiral. i'm from the george washington university. one of your predecessors, general shelton observed that we had allowed awe generation to skip class with regard to deterrents deterrents. many of us in higher education understood that as a challenge to us as well. i was wondering what higher education could do to be more supportive and useful to you in your mission and personnel. thank you. >> thank you doug.

coming from an institution like george washington, as i look at am deem ya i really count on us having a lot of dialogues associated with deterrents at large across that spectrum that i talked about from the various big areas nuclear space, cyber space, but this business also of following extremist organizations who would love to have in their hands weapons of mass destruction for example, and then talking about the art of deterrence and what new things can we have, should say new things in tool bag. i like to say new approaches associated with things that should be perhaps some are not so new but to make sure that they're being thought about as we go forward. i think also the nation as a whole, the business of upping the education spectrum particularly in cyber space for

example, everybody uses it in a big way and i understand the vulnerabilityies associated with things. i go around to our military folks and forums and ask everybody to raise their hand that is a cyber warrior today. sometimes i might get three people to raise their hand. i'll ask them what are the rest of you doing. all of us are cyber warriors. there's just degree of cyber warrior associated with business business. so from an educational standpoint, raising a bar and understanding these threat factors are very important to the united states of america as a whole not just how us military folks do our operations and how we fight, but it's critical in terms of raising the bar of understanding in this social media and world that we're in to ensure we understand those vulnerabilities all the way down to a personal level.

i should also mention -- similarly, everybody who uses an atm machine touches space, and this whole thing again of understanding our vulnerabilities and so far out there, sometimes that's an area that doesn't get the crescendo of noise that i would like. i've spent a lot of time today talking about the business of the modernization and how other nations have aspirations to this nuclear business nuclear weapons business and we have to continue to work to keep that contained. >> we have time for one last question before i call on that person. i once again want to thank the atlantic council for hosting yet another important dialogue today and of course, admiral for your time and wisdom. the gentleman i called on, yes, please. >> thanks admiral. brian bradley, nuclear security

and deterrence monitor. as you mentioned secretary hagel recently created a nuclear deterrent enterprise review group. i was wondering if you could speak at all about what specific metrics this body established to evaluate the health of the nuclear enterprise, and since the establishment of those metrics, how the nuclear enterprise has been performing according to them. thank you. >> thank you for that question, brian. in terms of this nuclear enterprise review group that's been established as one having a battle rhythm to where we're meeting a good period so that we are, in fact, having the discussions, the frank discussions, about how our today's readiness is as well as how are we working toward investments that we critically need and modernization. as a result, one of these was

going through listing what are those things we need to be investing in. whether that's people, whether it's security whether it was technology, et cetera, and really getting through that series of reviews. as you know, secretary hagel ordered an internal and external review and also the air force instituted what i call a bottoms up kind of review, young folks being involved with looking hard at the problem and bringing what are those things that need to be in a force improvement program and looking at those things and prioritizing them and now tracking to make sure we are continuing to move forward in those areas associated with. some of these areas were management of people in terms of how we did a personal reliability program related to that. so there's a whole series and listing of these areas and now meaning to ensure that we're

still making progress on those while at the same time i have instituted a few things. one in particular called stake holder reviews where i meet with my commanders as well as those other stakeholders that support the program so that we can have an operational to a headquarters if you will kind of discussion, soup to nuts, on a particular area, whether that's submarines, intercontinental missions. we're going to have one in the near future over our sensing capability so that we'll do these in a battle rhythm kind of way so we're continuing to have that piece looked at. in addition to our visits to these places on a variety of different levels so we can really get the heartbeat of those warriors doing the mission day in and day out and make sure

we're not missing something. as we've done reviews it doesn't mean we shouldn't continue to look for process improvements and things to be sure that we can continue to have as we have today a safe, secure and effective strategic nuclear arsenal. >> admiral, thank you, thank all of you for your participation here today and again thanks to the atlantic coin. this saturday, live coverage of the iowa freedom summit from des moines begins at 10:00 a.m. eastern. speakers include potential 2016 presidential candidates, governors rick perry, scott walker and chris christie, mike huckabee, businessman donald trump and dr. ben carson as well as 2008 vice-presidential nominee sarah pailen, this

saturday on c-span, c-span radio and c-span.org. and president obama is giving the annual state of the union speech tonight on capitol hill to a joint session of congress. the speech is live at 9:00 but our coverage gets under way at 8:00, including a look at the history of the speech with former house historian ray smock. here's a look at president obama's state of the union speeches over the last six years. >> mr. speaker, the president of the united states! >> despite our hardships, our union is strong. we do not give up. we do not quit. it's because of our people that our future is hopeful, our journey goes forward, and the state of our union is strong. the state of our union is getting stronger. we've come too far to turn back

now. we have cleared away the rubble of crises, and we can say with renewed confidence that the state of our union is stronger. it is you, our citizens who make the state of our union strong. president obama's speech is at 9:00 eastern and will also have iowa senator joni ernst alive with the republican party's response to the state of the union. that's on c-span c-span.org and c-span radio. up next a discussion on federal spending caps and their impact on defense and domestic programs. panelists include former white house budget directorial lis

arrive lynn. this is about an hour and a half. >> good morning, i'm the director on fiscal and monetary policy here at brookings. i'm pleased to be here to discuss something today which is in the category of really important and hard to understand, which is the caps that congress and the president agreed to on domestic and defense spending. now, i'm going to give a little bit of an introduction and i'll introduce the panel and we'll take it from there. you should know that c-span is in the room so if you fall asleep, your mother will see it. and if your cell phone goes off, they'll put one of those hearts around you like they do at the ball games. it's especially true if you're on the panel.

so the history and the plumbing of all this is complicated and packed with amcronyms and jargon that only people in washington can invent, sequestration, chimps, authorization appropriation, but it doesn't need to be that complicated. when the next fiscal year begins on october 1st of this year lawmakers have to pass a new set of appropriation bills or extend existing appropriations through a continuing resolution in order to avoid a government shutdown. because of a budget control act passed in 2011 and the failure of a congressional super committee, there are now legal limits on spending annually proep rated spending that were signed into the law by the president. although they were altered for 2013 and 2014 by the ryan murray compromise, they are in place if congress tries to spend too much money there's a system of across the board spending cuts that will ratchet spending down. it's really important to remember that we're talking

about caps on annually appropriated spending. that's roughly $1 trillion a year roughly a third of the federal budget, the stuff that funds the salaries of the park rangers, the gasoline and the bullets for the army, the graptsnts to state and local government. it does not include social security and medicare and medicate. because nothing is simple in washington and we'll talk about this when we get to defense, the caps don't apply to the money we spend in afghanistan and now that we're back in iraq in iraq. our focus today is the ceilings aapply for the years going forward, for the 50fiscal year that starts october 1st through 2021. for this coming fiscal year the caps are only about $2 billion higher than the current fiscal year without any allowance for inflation. that's about -- it would take

about $17 billion more to keep up with inflation, $44 billion more to keep up with the growth of the economy, and some people most of them republicans think that's just fine that they want to shrink government, and other people, most but not all of them democrats, think this is nuts that we're squeezing that part of the federal budget that includes almost everything you can consider an investment in the future. and some people, including some of the panel here say it's a little hard to say whether we're spending too much or too little without asking what is the money going for and that's not something that the caps tell you. the caps are a level. congress punted the decisions on what to spend more on and less. i think it's important to remember that the caps have had an effect. people often think, oh, congress does this and then they evade it, but in this case it's not true. the caps have constrained federal spending perhaps not as much as they initially were intended to. they did play a role in the shrinking of the budget deficit which has come down quite a bit, and they in my opinion,

contributed to a premature tightening of fiscal policy when we were still suffering the after effects of the great recession. but that's the past. there is no question that the caps will be tougher and tougher for congress to live with over time although they'll increase by about 2.4% a year over the next five years, that's roughly enough to complicate for inflation, not enough to compensate for population growth or the growth of the economy or what i sense is public demand for various programs to help the middle class or whatever. if the caps hold and if current spending trends continue cbo projects that 85% of the increase in annual spending over the next decade will go for social security, major healthcare programs, and interest, which are not con trained by the cap, which are largely on auto pilot, and the pressure will come on that remaining slice of federal spending. as a result of that, measured against the size of the economy

that annually appropriated domestic spending to shrink to levels we haven't seen in 40 years, and the level of domestic public investment will shrink accordingly. now, with all that's going on in the world, the unrest overseas the security threats at home, the struggles of the middle class, the difficulty of maintaining our infrastructure, congress may decide that these caps sounded good but they're just too hard to live with. without getting too mierd, i hope in the details, i hope to look at why they matter, what the money goes for and what congress is likely to do about them. i'm fortunate to have a very experienced and excellent set of panelists here. at the far end is michael hanlon. co-director of the center on 21st century security and research. he's written several books, most recently one with jim stein burg

on u.s./china relation. he worked at the congressional budget office, so did bob hale who left the congressional budget office and went on to worry about even more bigger numbers. he was for five years the undersecretary of defense and the comptroller at the pentagon. that means he had a $600 billion checking account to worry about. he's been the assistant secretary of the air force for financial management. he spent time as executive director of an organization i never heard of before the american society of military comptrollers comptrollers. i bet that christmas is party is wild and crazy. he had a distinguished career in government. he left the pentagon in 2014 and is now at booz allen. ron haskins spent 14 years on the staff of the house ways and

means committee where he played a key role in healthcare reform and spent some time for reasons you can ask him about in the george w. bush white house. his book is called show me the evidence. it's about president obama's fight for rigger and results in social policy. and then alice rivlin is director of the healthcare reform here at brookings. she's the founding director of cbo, former director of omb for bill clinton, vice chair of the federal reserve and relevant to these conversation is a fixture on every commission that we create to do something about the deficit but fortunately, alice, we don't judge you by the results that you get, just the quality of the work. >> you should judge by the results right now. >> what we're going to do here is we're going to start -- i'm going to talk with each of the

people up here for a while and we'll have time for questions. because we want to do both defense and domestic we're going to alter a bit but i'm going to start with bob. i wonder if you could just for those of us who don't live and breathe the defense budget which is not the people in the american society of comptrollers but the other 99% of us. what's been happening to the defense budget over the last four or five years? what is the historical circumstance in which we find ourselves? >> just ford that job was probably the most fun one i ever had. >> that says something about our other ones. >> probably says a lot about me. >> unfortunate thing to say. >> so the defense budget peaked in fiscal year 10. since then it has been coming down. the total budget down by about 25% after adjustment for inflation. the base part of the budget excluding war time funds down about 15%. in fairness it went way up in the first decade of this century

after 9/11 and the cuts have not offset all of that growth. think of a sharp climb up the hill and the last five years we've come down maybe half of that distance. the numbers may be useful as context. i would argue strongly that they don't say a lot about what you want to do in the future. that should be a risk cost tradeoff that i hope we can talk more about later. >> explain for a minute though how it is that we have this big defense budget but then when we fight a war we have to locate on more money to fight the war. that's part of the increase, right? >> well, the increase is partly to fight the war, but there was a fair increase in the base budget as well. many argued that we weren't at the end of the clinton administration spending enough to maintain the size of the military, to modernize it to maintain infrastructure. so war costs certainly played a big role in that sharp walk up the hill, but there was substantial increases in the base budget as well. >> look ahead. where are we going? >> in two weeks a little more than two weeks we'll get the

president's budget for fiscal '16. i'm out of government so i don't know for sure what it will be but i anticipate that the president will propose funding above those cap levels that david discussed for both defense and nondefense, probably 30 or $40 billion in defense. if they do that i think there are three broad ways congress can respond. by far in my mind the least likely is they could appropriate at the higher level, not change the caps. that would trigger a formal sequestration next january and i might add we use that word loosely but that's the only thing that constitutes sequestration, the automatic cuts, if they appropriate above the caps. i think that's the least likely. two other scenarios in my mind are more likely. one, they could leave the caps because it would be tough to change them but bring the president's budget down to the cap levels. the agencies will end up with sequester level budgets but at

least we would have made considerate decisions about how to get down to that level. and the last and i hope it happens is that we see another budget deal probably a mini deal along the lines of the two that we saw. there was a 2012 and another one in 2013. the last one the murray ryan deal that david referred to that raises the caps at least to some extend and appropriates at that level. as we get into this more later, i at least believe that some modest increase in defense is appropriate given the state of threats that we face today. >> that's a brief outcome. three scenarios, sequestration the one least likely in my mind. >> isn't there an alternative to the third one where, since they have this overseas contingency operations that was intended for money for afghanistan and iraq, it's not covered by the cap, wouldn't it be possible for congress to put more of the base budget in there and pretend? >> well to some extent, yes,

but it is by law supposed to be for the added costs of war time activities. now, there's a gray area and congress has exploited it and so has the administration i might add, me included, in the past to put a little more money in there but there's only so much you can do, i think, and still live within that gray area. oko as it's called is a possible way out if we're going to stay with the current caps for defense. it won't do anything for nondefense and that's an important point. there are problems there too, at least i think. >> michael, can we live within the caps on defense spending and be safe? >> david i think the short answer is we can probably be safe here in the united states but the world will begin to fray abroad, and it will be harder to manage china's rise in a way that i think is most stabilizing to the region. i'm not against china's rise but i think if it happens too fast during a perception of

american retrenchment, it could be destabilizing for the western pacific. i think that the conflicts in the middle east, while no one is talking about putting american brigade combat teams in these zones, nonetheless the conflicts are far from over and we're going to need to be able to do substantial things in those zones, whether we like it or not. most of us don't like it for good reason, but it doesn't change the fact that what we just saw in france could happen here and we're implicated in what's going on in this broad region. i guess if i could just say one other thing by way of framing my way of looking at this and just to give a couple more reference points, right now we are planning to spend in 2015 in the course of this year something just under $600 billion on the military, and that includes somewhere in the range of 60 to $70 billion on the contingencies, not only iraq and

afghanistan but ebola, adding some capability and some rotations to forces going to estonia, latvia and lithuania to make sure vladimir putin takes our commitments seriously. anyway, we are just under $600 billion. the cold war average for the united states was about $500 billion. i'm adjusting for inflation. so we're a little above the cold war average. on the other hand, we're much below the cold war average in the size of the military so we've gotten a lot more expensive per person. meanwhile, while we still represent 40% of global military spending, there's an interesting thing going on. china and russia have very clearly moved into the number two and three positions behind us in a way that they were not in the 1990s. in the 1990s a lot of our big allies were in that number two and number three role as russia was essentially collapsing and

china was still beginning its rise. now we're at a point where our budget is just under $600 billion and that includes the war costs is still two to three times china's but on the trajectories, in the next decade you could start to see convergence. that raises more questions than answers about whether that's okay whether that's avoidable, at what pace we should allow that to happen. i'm just trying to give reference points. one last thing is that in the 1990s when alice was omb director and bob was at the air force -- >> the world was wonderful. >> the world was pretty good. but we were spending about $400 billion a year on the military if you adjust for inflation once we phased in the cuts from the cold war force. but that was able to sustain a slightly larger force than we've got today. and so one of the arguments people will make is well today's world looks certainly at least as dangerous as the world in the 1990s, and yet you're

trying to cope with that world with a smaller military and if you sequester or go to sequester level cuts you're going to be forced to cut even further. anyway, we can talk more about the specific service by service later on. these are just some reference point. $400 billion is where we were in the '90s. $500 billion in the cold war average. $600 billion is where we are now. >> we have a smaller military because we pay each one of the troops more or because we're more capital intensive? >> i'll say a quick word and let bob who managed this in detail add something. we certainly are paying more per troop. military compensation is pretty good. there's a lot of retired military as well as others and i think they're going to say we may have to be a little more judicious about how we use military compensation, not because the typical private first class is overpaid but you have certain categories of people for example, recent

retirees from the military who might be 48 years old, having a new job, getting a new salary, but they still get 50% of their maximum paycheck annually forever. that's part of the military pension system that was designed for understandable reasons. certainly if those people are hurt or wounded and need care in the veterans affairs budget they should get it and that's a totally separate part of the budget not covered by the numbers that we're discussing today. but you can ask questions about whether we're overcompensating in certain areas. i think we probably are so that's part of it but it's not really just the pay. it's the operating of the force. it's the cost per fighter per ship. then things like cleanup of military bases. there are all sorts of things. everything is driving up that per person cost well above the rate of inflation. >> alice before i want to ask you about domestic but i just want to ask you a political point, what bob has raised. if congress raises the caps on

defense spending, is it plausible that they won't raise the caps on domestic spending? >> yes, i think so. >> really? >> you're asking for speculation, but -- >> supposed to speculate. >> this is a republican-dominated congress and if they raise the caps on defense, it wouldn't surprise me that they kept the caps on domestic. >> do you think the president would sign that kind of a bill? >> well, i don't know. it depends what else -- it would be a part of a big negotiation in trading off this and that. but we're not in that world at the moment. >> wouldn't you say, alice that this would be a real indication of how republicans were going to handle the current situation. are they going to look for ways to cooperate with democrats, look for ways not to provoke democrats and so forth.

if they raised defense and leave domestic discretionary where it is, that's a war cry. >> well maybe. >> a war crime? >> cry. >> oh, just checking. >> you know more about republican thinking than i do but i think there's another consideration here. when the sequestration was first being debated and you remember we thought it was something that would never happen because it would be so unacceptable to republicans to cut defense and so unacceptable to democrats to cut domestic that no way was it going to happen. we were wrong. >> so let's turn to the domestic caps, alice. is it okay to live within these dmis domestic caps, or do you think it would be a mistake? >> i think it would be a mistake for the long run. we can live with them for another year probably without devastating effect, but i think there are several things to

remember. one is that this crazy-sounding category, nondefense discretionary spending, is almost everything the government does except those big entitlement programs and defense interest. it covers the things we want our government to do and have wanted them to do for a long time. it's not very large. it runs under 4% of our gdp and has for decades, forever, actually. . >> something like 17% of all federal spending. >> something on that order. but if you think in relation to the size of the economy and all these different programs you mentioned, some of them that are in there that it's been historically less than 4% of gdp. it went above that in the '70s and came down rapidly. it went above it briefly with

the stimulus but has come down and it's headed down down, down in relation to anything, in relation to the population in relation to the size of the economy. so i think one thing to say, even if you think what we spend for this set of programs is about right now, you should worry about the future because the caps imply that this set of programs will not keep up with inflation or population or the growth of the economy. i personally think that they're too low now, that we should be investing in the future. that means i think, a big infrastructure program but i also think we should reform our tax system and pay for the investments in the future. >> brian what's your view on these domestic caps? >> i pretty much agree with alice. i would emphasize i think we're

spending too little now, especially on infrastructure. there are several good examples. it really comes down to specifically where should we be spending more money. the infrastructure is i think the most likely candidate. a lot of people disagree. i should have said first i'm glad we did it. i'm glad we have caps because it shows at least i'm going to call it one-third seriousness of congress to do something about the deficit. they ignore two-thirds of the budget. we used to spend almost 70% as recently as the early '60s on discretionary spending but because mandatory spending social security, medicare and so forth has exploded so much and yet that's the focus of our attention. it's got that we're reducing the deficit but i don't see how those caps are sustainable.

i mildly disagree with alice, a very bad idea to do that, but i do it anyway because i don't think the caps can be sustained. now, that doesn't mean that everything is going to fall apart. it means they're going to play games. that's what i think they'll do. just like you have overseas contingency, you can have merges emergencies. i'll bet you this year they'll have 25 $30 billion worth of -- they'll expand. under the budget act they can do that and i think they will. >> you could have said that three years ago and probably did and here we are with much lower spending. >> yes but we still took advantage of some of those and i think we'll do it even more now. >> you just wrote a book that says that a lot of what the government does may not do any good, and we should -- >> i omitted the word may. >> isn't there some point to

having a budget constraint here which says to the congress okay, look live within these things and let's spend more on the stuff that works and less on what doesn't. that's kind of the idea. a, isn't that a good idea and b, why does that never happen? >> i think it's just too hard. the government is gar gant wan. there's a book of government programs. if you dropped it on your toe you would have to immediately go to the hospital. it's thousands of pages. we can't even control the department of defense. we were in a meeting a couple of months ago that had an important senior official in the department of defense said they don't even know what the budget is. that's correct? >> no, that's not right. >> you can account for the whole -- i'm talking about a major general in the marine corps who said this. anyway -- >> bob will get the number.

>> i think it's very very difficult. but we could do a lot more. i told you before. peter said in this very room a couple of weeks ago that we know less than one percent of federal spending we really have any idea of what its impact is. you pooh-poohed that number but i think it gives you an idea of the scale of the thing. we have so many programs, health programs, education programs -- >> you still think the caps aren't a useful way of enforcing priorities? >> i think they could be but they're not. here's why. just quickly -- >> let alice get a word in here. >> the culture of congress is to cheat, figure out ways to -- around provisions that they impose on themselves and they don't work because the congress figures out ways around them. >> alice? >> i think that's rather unfair. but the point is that even if

you wanted to cut government spending because you thought it was too high and in the aggregate i don't on this set of domestic programs that we're talking about, but even if you thought that, putting caps on is just squeezing down everything. now, i'm not opposed to the caps but the way congress handles the caps is to say well we've only got this amount of money. we don't have time or we don't have the energy or we don't have the mandate to make decisions as to what we should fund and what we shouldn't, so what we'll do is just allocate these spending amounts among the subcommittees of the appropriations committee in what seems like a fair way roughly what they were doing last year, and let them figure

it out, and they have the same problem. they have a lot of constituencies leaning on them and they have a whole bunch of programs as ron has said and everybody is screaming don't cut us. so what do they do? what would you do? you would cut everybody a little bit and that's what we've been doing now for a very long time. now, could we do better? i think so but it would take a really dramatic change in the way both the administration and the congress operate. you would have to have a president who said let's change these priorities dramatically and let's have a serious debate about how to do it and/or you would have to have a congress that said we really want to take a chunk of the budget, go over it and see whether we could do these things more effectively or

whether we could do -- emphasize some priorities better. i don't think you can do the whole budget. you certainly couldn't do it every other year, but you could set up a mechanism for reviewing a major piece of the budget, say, every three years or five years to see if the money could be spent better and the priorities were what congress really wanted them to be. >> bob? >> could i add? >> can i just ask you a quick question? >> sure. >> is what alice describes on the domestic side, is the military really any different? isn't there an amount of air force, navy, marines, everybody gets their share of the cuts? >> broadly the budgets haven't changed a lot. that's a fair statement. first off, i think it's way too harsh to suggest that overall only one percent of government spending has any effect. i'll offer a couple examples. one obvious one, we haven't been attacked since 9/11. some other countries have

unfortunately. that's a tribute to both our intelligence and to our military capability. we got in and more or less almost out of two wars you may not like the results of them but they were accomplished in accordance with the will of the administration, the president and the congress. so we do a number of things right and i think it's unfortunate that we suggest otherwise. in terms of accountability we absolutely know where we're spending the money down to a great deal of detail. you may not like the results that you see. that's a fair point. and there are priorities set and i'll give you a current example. we have cut back much more on ground forces over the last few years than we have in the others. that was a painful decision, i can assure you, within the department of defense, but it was one consciously made based on a strategy that we felt in the after math of iraq and afghanistan we should afford

smaller ground forces and still cutting but not as much the naval and air forces. so i think alice is right we can do better but it is not as if we're just taking this money and sort of randomly spending it wherever we want and it's not the case that there's no effect. >> it's easy if you mischaracterize someone. that's not what i'm saying. let me give you some examples. if we resort to specifics -- i hate to do that but if we did, we could find many things in a budget that i think even alice would agree are ridiculous like farm subsidies. >> just to be fair to peter, he didn't say only one percent of the budget. he said talking about domestic programs, only one percent that we know actually works. >> that's correct. >> but you have to think about that a little bit. for example, one thing we do is air traffic control. i don't think we're investing enough in modernizing that system, but very few airplanes

fall out of the sky. another thing we do is interstate highways. we probably aren't maintaining those as well as we should, but you can drive from here to new york. we know what we're getting for that. so it's not -- i think it's sort of silly the to say we don't know what we're getting. >> there's a difference in knowing what you're getting and the effectiveness of it. you used the example of air traffic controllers. we have several using ray tubes, probably the only ones remaining in the world. >> that's why i said it should be modernized. >> so you need to spend more money on things like that and less on things like agriculture subsidies. >> michael, do you want to defend agriculture subsidies? >> bob gave us three scenarios for what could happen to defense spending. i'm interested in what odds you assign on those scenarios, what's going to happen this year. >> i think bob's right and i guess just to spell out one or

two of the options before crock, ron and i have done writing on this, too. this so-called overseas operations contingency fund that bob talked about and where there is some play in what you use it for but not complete liberty to use and abuse that term. you could have congress actually modify the law to allow a broader position. with putin doing what he's doing in ukraine. should we say that any military activity, even routine training is something we can fund through the oko account. until we have a new president in two years i doubt we're going to have a fundamental repeal of the budget control act. there's a very good chance we have to live with the caps and therefore oco becomes your maintain safety valve. it's already helping. you can find a way to let it help more. you can define anything that's going on in terms of operations in europe essentially as a deterrence-related cost. you could even do some of that with the asia pacific given the

fact that there's been a fair amount of turbulence. bob i'm sure can think of complications of doing this more easily than i and thinking about how i've been in a think tank too long and not in the real world, but there are ways to stretch the definition -- for example, if a carrier goes from the united states to the persian gulf or the asian sea and flies near afghanistan, as i understand it, the entire deployment could be countdown and funded out of the oco. i think that's reasonable because to get to the sea you had to do that long deployment, so it's not a complete abuse. it's not deceitful but it is a broad and somewhat lenient definition of what a war cost is. and you could find ways to expand that. that may be the most realistic thing. i think everyone's learned that sequestration per se is so painful and so ineffective that what bob said is hopefully true

that the idea of congress proep rating above the caps and necessitating this formal process of sequester which is as you know an across the board set of cuts and someone like bob hale have to implement this. it's crazy. it's just nuts. i hope for all our disagreements we can recognize that there are legitimate disagreements over what defense spending should be. there is no legitimate role for a sequester as a mechanism to go to lower funding. >> what's it like to be in the pentagon and have to deal with these across the board spending cuts? how much of a waste of time? >> in a per verse way technically interesting i have to say to a comptroller, but the price was way too high. several things went wrong in 2013. the sequester and as alice said, all government leaders including myself, thought we wouldn't do it.

so we didn't slow spending in the early part of fiscal year '13. we didn't -- the phrase we used in the important again to sequester ourselves. well, they did it. so suddenly we found ourselves with six months to go. in the case of department of defense, a $38 billion cut exacerbated for dod but that was the year we underestimated war time requirements in koco. it does get cut by the sequester. i never understood that but the lawyers insisted. we saw a cut in oco. it came together and had particularly devastating affects on the operating accounts. we saw services do things i never thought they would. the air force stopped flying 12 squadrons. the army stopped sending units through its national training center. the navy is saying we're not going to send a second strike

group even though the commander wanted it. there were significant affects and overall it was exceedingly discouraging, followed by the shutdown so it was a louisy year. >> ron, you suggested that even though there's no formal oco escape hatch, there's always emergencies or whatever, but let's say that the republicans want to stick with the caps. what are the consequences of that? what are the practical consequences? >> i think the thingsv"zh that i mentioned like we won't have our -- our air force will be the worst in the word. our infrastructure will continue to deteriorate. there's a recent report that shows that we're something like 17th in the world in the quality of our infrastructure, so those are very concrete impacts. a lot of people are very concerned about nih. nih, look at the budget of nih. it's shocking. it goes up -- it's astounding

how much it went up. somebody once told me that the president has it at a certain lef level and then the house gets it and adds onto that. now for the last five years, it's actually been reduced. it looks like a mountain and now we're coming back down t not as much as the mountain you talked about before on defense but we're coming back down. there will be many, many practical consequences. i don't think republicans will do that. i talked to two people that are involved, staffers who are involved in the budget process, and they both said the same thing, that there will be ways that they'll be able to get a buck here and a buck there. they'll say they live by the caps but they really didn't live by the level of the caps. >> i'm less prone to think that they'll find ways around it, but

i think ron's got some of the right things. what do you do when you have immediate needs that have to come out of your budget, whether you're a or an institution? you generally let the maintenance go. you don't put on the new roof if it's not actually leaking. we've been doing that for a long time in the federal government and i'm not just talking about roads and bridges i'm talking about national parks and as we said, air traffic control and a lot of prisons, and a lot of things that we think need to be there and should be maintained in a modern way but we haven't quite been able to do it. you look at the projections for the next ten years, it will get worse and worse. we will put off more of the routine maintenance. we'll just not do those things. at some point it will catch up with us. >> what about how this affects

federal employees. i know there's a charicature of federal employees they don't work very hard, they have too high pensions and stuff. is that really true, given the caps and the shut downs and the furloughs and all that? >> well, i think federal employees get a bad wrap. most of the work very hard. not everybody, but most of them work very hard and do a good job. it has not been a growing part of our labor force. if you look over a long period. the federal civilian workforce is declining as a percent of anything. a percent of total labor force. and that's important because we have gotten more efficient. computers do a lot of things that clerks used to do. and it's partly because they do work very hard. >> any defense guys have a

domestic question? and i'll turn the tables. >> i'd like to add on to what alice said. i would distinguish between the military and civilians we give a great deal of credit as we should, to the military public opinion poll shows it's the highest rated organization in the united states. the civilians on the side tend to be linked to the government as a whole. i think they do get a bad wrap. i think if you step back i supervise many of them, i watched many others -- they do a lot of things right. some of the overall things we haven't been attacked are certainly partially of their doing but more specifically 80% of the workforce in the financial management community department of defense of civilians, they manage through some of the budget times in the sequester period before and after, i might add, and it's still chaotic budget airily.

the largest position of the logistics folks are civilians in the department of defense, they conducted an exit from afghanistan, you may not like the results of the war. but they got us out of there in the landlock country where we had extreme problems logistically, i could go on with other examples i think federal employees do a lot right and as managers, as a former manager, one of my goals is to try to say that to them because they are -- we do see a degradation of moral, and i think it is of concern in terms of recruiting new employees into the federal government. >> i think that the public perception with people that don't work for the government, there are a lot of people who work hard, and the incompetent people never get fired. is that true? >> there are no improvements that should be made in the civil service. two things need to happen. you need to be able to hire people more quickly. they made some progress it's

still not where it needs to be. and for a small number of poor performers, we do need to be able to fire them more quickly. it is just having managed a group of civil servants there comes a point you know there are always a few underperformers, it is such -- so difficult to make changes or to actually fire them, it's not worth the effort and the time it takes. absolutely, you need to improve the civil service but we also need to tell the imagine oirt who do work hard and are getting things done that they are doing things right, so they'll stay with us and new people will come in. >> do you have any domestic questions you want to pose? >> let me just mention two categories of spending do you folks have ways of thinking about whether the spending is high enough too high too low? you mentioned mental and nih health issues? i'm curious about science at large. energy, research, other kinds of

physical sciences research. whether we spend enough, how do we set up a methodology to figure it out. secondly, environmental protection. and that, of course, partly overlaps with energy issues, with global warming kinds of considerations and trying to find alternative energy sources, but more generally speaking. how do you feel about the resources we have for environmental protection? >> i think they could be spent better but the effort too make sure that we don't have polluted air and polluted water and too many greenhouse gases going into the atmosphere, seems to be really important. now, as people complain about the environmental protection agency i don't think there's complaining much about the spending, they're complaining about regulations that could be simplified or about doing

something in a more market friendly way. i mean personally i think we ought to have a carbon tax. it would be a lot more efficient and effective to control carbon emissions through raising the price by attacks. than by putting the regulations on all of the coal fire plants. but we are doing that, and if we're not doing it we have to regulate it. >> i think the only thing to add to that is that -- you can count on that there will be constant criticism and attempts to reign in the epa. i would be surprised they may even try to cut their budget, there will be a constant stream of criticism of the epa and i don't see any sign of it stopping.

>> there's this ever present tax credits, doing the same thing through the tax code doesn't count against the spending caps? >> absolutely. if you want -- if you think something is a federal responsibility, and we ought to be doing more of it now it's very hard to say, well, there ought to be a spending program that does that, but sometimes you can accomplish the same thing by regulation, sometimes you can accomplish the same thing by adding one more provision to the tax code, and we've been doing that for decades, and the result is, that we have a tax code rid elled with special provisions, which are essentially spending programs. we decided we wanted to favor homeownership. we made more generous deductions for your mortgage interest, which benefit you more if you

have a larger mortgage and higher income. we have a spending program which goes differentially to richer people with bigger houses. what sense does that make? i don't think very much. it is part of the fallout of not having a spending program. >> you drive them an idea of the maintenance -- as high as a trillion dollars in losses in the tax code for exactly these kind of provisions. if we really have tax reform i think they will take a run on it, if they do, they will pass it in the house, i think. senate's another matter. one of the things, they'll get rid of some of those loopholes and it will be fun to watch. it will be very lively. >> one or two% at least. >> ask the defense guys a question. there must be something you wonder about the defense budget. >> wonder in the sense that --

>> i have a question. explain to me how -- i have seen numerous articles in facial reliable places. i've never been -- about the cost overruns on program after program after program after program, i think it's pretty much accepted if you see the original estimate of what it cost. and before you know it, it costs twice as much or even more than that. how does that constantly happen? >> i'm afraid it's human nature and you're roughly right. i mean, i used to say, take the price early on and double it in real terms and ask yourself, would you still want the weapons system? there's a reasonable chance that would happen. there tends to be under estimates, early in the process in order to get the program going, budgets are constrained, you want to get your program

going, and then unfortunately, what we tend to do with these programs when we finally get them near end of production, is reduce the rates to accommodate budget changes and that inevitably introduces inefficiencies. overruns are a problem. they're a little lower than they have been and i think they've gotten a fair amount of attention in this administration, but i wouldn't want to sit here and say this problem is solved. i think part of it is human nature nature. i think you see it in most infrastructure products. i can't quote them, i remember some that looked at major infrastructure problems of similar complexity. many of them have overruns as well. >> isn't part of it the representative government that -- >> democracy the root of all evil? >> we have a chance to pick up -- >> both