gentleman said. he made the statement that they wanted to make sure nothing gets done because they want obama out of office. i have heard the statement made several times before, and it really disappoints mehat this is, i think, the main objective going on right now. jobs is the issue right now. so many people are out of work. the country is hurting. all i hear is, you know, that we have got to take more from them. they did not want any of the rich to pay any more, and they do not want any of the entitlements to go away. i myself am on social security disability. not by choice. i worked all my life, and it is real upsetting. they denigrate the president from day one, and if it was a republican president, i did not think the key party or the republican side would be doing what they are doing right now, holding this economy hostage

just to get what they want, and they are not willing to compromise. it is just upsetting. host: thank you, rosa. guest: i really agree. it is incredibly upsetting. again, the hostage taking that is happening right now, threatening to throw the whole american economy over a cliff if they do not get these vicious cuts to vital programs, but absolute protection an extension of tax breaks for millionaires andeo's. you have to wonder what makes them so willing to do tha given the it is even of concern to the business base that runs their party. one reasonab explanation is they think that even if they do this that ultimately, the president will get the blame for the bad economy because most

people still do not know what a debt ceiling is or follow politics in a way that i think people who watch this program probably do. if you are just trying to understand how a republicans are acting right now -- in some ways, the simplest explanation is that they do not care about the country. i am talking about republicans in congress, not all the republicans out in america. just that they did not care about the country, and al they care about is destroying the presidency, and that is an unbelievably dangerous development. i cannot say what is going on in their heads, but that is the best explanation i have seen for their behavior. host: if you look at the numbers and point out that we saw huge debt increases under republicans, what we have seen over the last three years with the projected deficit this year of $1 trillion every year under the obama administration -- is that kind of spending sustainable? that is with the t party is saying, that we cannot ctinue to spend that kind of money.

>> -- guest: no, it is not sustainable, and nobody thinks it is, but if you want to deal with it, you have to look at where it came from. it camerom two wars that we never paid for. it came from a huge batch of tax cuts that we never paid for. it came from a prescription drug benefit that was a sweetheart deal for the pharmaceutical companies. unlike every other country in the world, we are not allowed to bargain with pharmaceutical companies. we just have to pay whatever they choose to charge the government. it is unbelievable. the only reason you can explain it is you just want to make the pharmaceutical company's rich, which is what has happened. finally, we had this economic downturn that was caused by the deregulation of our financial sector, and then the financial sector drove the economy over a cliff. what follows from that is that to deal with the deficit, you have to do a couple of things. one, you have to wind down the

wars. we cannot afford to have a military -- i mean, just reducing our defense budget to what it was when president bush took office would make a huge dent in dealing with the deficit. two, you have to restructure how we pay for health care. it is totally unsustainable. but cutting benefits is not the way to do it and will not even help that much. ultimately, we have to stop paying twice as much for health care as every other industrialized country. 3, we have to make everybody pay their fair share, which is not happening now. if they do, it goes a long way towards solving the deficit. and finally, and this is crucial -- you have to get the econo moving again. if we keep the economy in the shins, which is what this debate is doing, what the last budget did, and what budget cuts in the middle of a crisis do, which is what we're doing by allowing our states and municipalities to la off cops and teachers and the folks who make our government run for us -- if we do all of

that, it just makes it harder to deal with the deficit because we end up with what japan had in the 1990's and a decade of slow growth, and we cannot afford that. host: our guest is the executive director of moveon.org. we're monitoring the situation in washington and news from cnn where senator mitch mcconnell is appearing live right now. he did say again that the u.s. will not default on its debt, and he said the chief negotiators, according to cnn, are very close to a deal between the president and congressional republicans and democrats. the senate i in at noon today. 1:00 expected for the first vote. last night's vote and this morning's vote at 1:00 a.m., which was put off because of the negotiations that continued into the night and today. expect at some point also to your from the president, depending on how things unfold, and we will have all of this during t course of the day here on c-span. back to your calls. maria joins us from wyoming.

republican line. good morning. caller: i have a few quick comments to make. i hope you will let me get throughhem before cutting me off. i would appreciate your first of all, i keep hearing about people taxing the oil companies. the government would get out of the way and these environmentalists d let the oil companies go o and do what they do best by producing something, think of the income e government could receive by recovering taxes from them. second of all, i am so tired of liberals talking about paying their fair share. how about this -- why don't we just let everybody earn a paycheck, send it right to the government, and let them spend an exactly how they want to and give us the pittance that they desire us to have? third, because they are talking about making to make the

government work and become fiscally sound again -- it is built into the system that every year the amount of money the government spends increases by 7.5%. the cuts they are talking about making are in that increase every year. $32 billion out of 7.5% on top of $1.20 trillion is ridiculous. finally, i have one question -- can somebody explain to me how it is that the government says that it cost them money not to take money out of my pocket? host: we will get a response. thanks for the call. did you want to respond? guest: well, thank you for

calling. i do not totally understand the last question, i'm sorry. but let me respond to some of the other pieces of what you said. with regard to oil companies, the interestinthing is right now, the oil companies are unbelievably profitable. they are making billions of dollars in profits every arter, but we actually subsidize them. so they are taking money out of your pocket and out of my pocket, and then they are handing over bp and exxon and other oil companies, which just pisses me off. second, it does not make any sense because we know that the economy of the future, ultimately, we need to move to

cleaner technology. in fact, that is a way we could actually grow our economy and make a world leader again, by investing in wind and solar and hydro and all kinds of renewable energy sources that do not hurt the planet and that create more jobs at home because the reality is as much drilling as we will ever do here, most of the oil comes from the middle east, and we are subsidizing dictatorships and making the world more unstable and undermining our security. ultimately, we need to move to a clean energy economy, yet at the same time, we are giving hundreds of millions -- billions of dollars to oil companies. it does not make any sense to me. beanbag host: our guest is just an rubin, executive director of moveon.org. lots of debate on the senate

floor yesterday, including the comments from senator from kentucky. >> americans do not like and the partisanship. democrats are standing up and beating their chests saying republicans will not let them have a vote. it is not true. you have seen the objection before your eyes. they wl not vote on this. l's dispense with and the partisanship here let's move rward and have a vote. they will let us have one amendment, an amendment that would gradually balance the budget over seven or eight years, i will vote for the proposal ensure enough votes that it will pass. host: your response to senator paul. guest: what is the amendment he is talking about? the balanced budget amendment? host: yes. guest: i think there's definitely a whole lot of and the partisanship going on in washington right now. on that, i definitely agree with senator paul. what is unbelievable about what

i see happening right now is that democrats have lerally put multiple republican proposals on the table. the president set out and said he would cut social security and medicare, two programs the, is the democratic party has been about anything, it has been about protecting social security and later, medicare, programs the middle class pays into an absolutely depend on. the president said he would cut that unilaterall make that offer. and then, leader reid puts a proposal on the table that someone on twitter or e-mail pointed out earlier it is jt cuts, cuts that meet the republican standard that we need to make a cut for every dollar we increase the debt ceiling. and, you know, cuts that frankly will have a significant impact on our community.

no revenue at all. cut important programs, not as corporations and millionaires to pay one single cent more, even if they -- even after they have got a huge tax cuts, and republicans basically will not even talk about that proposal. i do think there's a tremendous amount of and the partisanship happening. i think the balanced budget amendment is worth talking about for a second because it sounds great, right? like we should balance our budget, right? in the long run, absolutely, we need to control our deficit. the thing that is incredibly dangerous about the balanced budget amendment -- there are two things that everybody needs to know. this is a wolf in sheep's clothing. the first thing is that you can think of that as they turn recessions and depressions amendment. what it does is it says the

unless congress jumps through extraordinary hoops, when we have an economic downturn, which is exactly the moment that you need to -- the government needs to step in and help th economy along, and also things like unemployment claims go up, and food stamps go up -- that is the moment that the government has to cut back. tax receipts are going down. that deepens and prolongs economic downturns. if we have had a balanced budget amendment in 2008, wwould have seen -- things would be far worse than they are right now. dramatically worse. the second thing about the balanced budgeamendment that you need to know is that it no family could buy a house or very few families to buy a house because they could never borrow a cent, right? very few businesses would be able to get off the ground a few said they could never borrow a

single cent. investing in the future is a crucial thing that all american families that are lucky enough to have access to loans or capital or business lucky enough to have access to loans or capital that everybody does, but there are some things that are public investments that we have to pay for together. things like roads. things like the internet, that help our economy grow. that have done so over time. things like basic research and development, the apollo project created so many benefits for this country in terms of fostering a whole technology boom. those things would have been impossible with the balanced budget amendment. the economy grows and tax ceipts grow over time, and that is why we are able to pay at all. this is a very simple idea that sounds good but is really dangerous. the other thing is that they stop in is something else -- they sstucik in -- they stuck in it something else, the

government spending cannot be more than 7% gdp. that is nuts. that would force far deeper cuts than the right and budget, the republican budget that many of us have been incredibly critical appeared the only way to do that would be to eliminate all of medicare entirely or all of the -- just cut the entire department of defense. we do need to get deficits under control, but the balanced budget amendment is essentially -- think of it as a "turn america into a devastated third world country" amendment year that is basically what it would do. >> one dealer says the government our last call is david from ohio. host: good morning. i think it takes 3/4 of states

to do the constitutional amendment they are talking about. i want to say i think we are in a depression, and if we phrase it that way -- what did roosevelt did during the last depression? with republicans blame roosevelt for borrowing the country, what it seemedike, into debt? i wanted to speak of us some of the things he did like all the public works programs host: -- public works programs. host: thanks. guest: roosevelt is a really good historical example for us to look at. he was willing to take extraordinary measures to save the economy, and it seems like the president may need to do that soon. second, because, as you said, at a moment when unemployment was really, really high, the government stepped in and put people to work.

that is always an option, and it nes to be on the table right now. not in the long run, but in the short run, its a way to get the economy moving, and we should be looking at that. the third thing that is interesting about roosevelt, who did many wonderful things, including social security, financial regulations that were put in place that we are dismantling led to the downturn, to the crisis we just had in 2008. lots of really important things, but there is something that people did not talk about much -- when roosevelt came into office and the first iteration of the new deal happen, there was a moment sort of like this one with a was a lot of austerity hysteria. we need to cut government spending, all this stuff, so after that first round of the new deal in the mid-30's, -- the mid-1930's, they t back, and unemployment shot up again, and

the economy took another downtu, and the prolonged depression, and is that -- it is exactly the kind of thing we see happening now. but those who do not learn from history are doomed to repeat it. this is a piece of our >> tomorrow, we have the latest on the debt ceiling and the budget talks. he hosts a report. it avoids the faults. "washington journal" live at 7:00 a.m. on c-span.

>> he testified to a senate panel last week. he is nominated to be a chairman of the joint chiefs' staff. he told senators that the pentagon had been unable to prioritize spending and that cutting security spending would be risky. this hearing before the armed services committee is two hours and 45 minutes. >> good morning, everybody. the committee meets this morning to consider the nomination to be chairman of the joint chiefs of staff. it was not long ago that he came before s for his nomination hearing to become chief of staff. we welcome him back. he has a willingness to serve as .hairman pier

as we were reminded, he is also a proud husband, father, and grandfather. we remain grateful to the sacrifices that you and your family have made of the years. it is for the devotion of your beloved wife. for the devotion of your beloved wife and the military service of your daughters and your son. as is our tradition at the beginning of your testimony, we would welcome your introducing to us any family members and friends who may be with you this morning. general denvercy will replace admiral mike mullen as the chairman of the joint chiefs of staff the most senior military advisor in the department of defense. admiral mullen's service in the last four years, during the daunting challenges of the worse

in iraq and afghanistan have been truly remarkable and the nation owes him our deepest gratitude. it is appropriate at today's hearing also to note the passing last week of former chairman of the joint chiefs of staff, retired arm general john shalikashivili. his personal story is well known, rising from post-world war ii immigrant youth to chairman of the joint chiefs. his example of patriotism, leadership and selfless service to the nation and our armed forces inspired the generation that leads our military today. for those of us who knew him, we treasured his professionalism, his candor, and his deep love for america and our men and women in uniform. general denver mpsey's confirma will help the transition to president obama's new security team which have seen significant

changes in the last few months. the next chairman will face demanding challenges, operations in afghanistan and iraq continue to at the same time the fiscal realities that confront the nation will put tremendous pressures on the defense department's budget. those fiscal realities require us when considering defense planning and programs to take into consideration historic budgetary constraints. admiral mullen said our national debt is our biggest national security problem. most everyone agrees the defense department cannot be immune from efforts to bring our fiscal house in order. we have been told that the department is conducting a comprehensive program review and that the details are not yet known but it is likely that this review will include significant additional suggested reductions in the 2012 budget request. cuts that are even more than the $6 billion reduction to the

department's request that this committee recently reported in our fy-2012 authorization bill. the department will have to make tough funding choices and we will need our military's best advice on how to reduce spending that realistically manages risk in ways that adequately addresses our top national security challenges. we will be interested in hearing general dempsey's thoughts on defense spending and in particular whatever he could tell us about the comprehensive national security review that i referred to. the next chairman of the joint chiefs will also have to manage the transition of security responsibility and the draw down of u.s. forces in both iraq and afghanistan. in iraq the coming months will be crucial. leading up to the december 2011 deadline for the withdrawal of our remaining 49,000 u.s. troops. even though there are still concerns in iraq, over their security forces capacity, to

assume full responsibility for iraq's security, iraq's political leaders have yet to request that the united states consider retaining a u.s. troop presence there beyond the end the year deadline set by president bush for complete military withdrawal. we would be interested to hear what general dempsey's recommendations would be if the government of iraq makes a timely request for a continuing u.s. troop presence beyond 2011. in afghanistan, the president has set a course for transitioning increased security responsibility to the afghans and drawing down u.s. forces beginning with the withdrawal of 10,000 u.s. troops by the end of this year and bringing the balance of 33,000 u.s. surge forces home by next summer. i applaud the president for sticking to the july 2011 date that he set in his west point

speech one and a half years ago for the beginning of the draw down. doing so offers the best chance of success for the counter insurgency campaign in afghanistan. that is getting afghan security forces in the position to take principal charge of that nation's security. the scene of urgency that this timetable created at the highest levels of the afghan government contributed to a surge of some 100,000 additional afghan security forces in just the last year and a half. over the next 15 months the afghan security forces will be increasingly in the lead in operations, while another 70,000 afghan soldiers and police will be added to their ranks. at the same time, general john allen the commander of coalition forces in afghanistan stated that the campaign plan calls for more and more afghan security forces to be partnered in operations with fewer coalition

forces. the growth and the capabilities of the afghan security forces, both in quantity and professionalism has already made possible the first phase of transition to an afghan lead for security in a number provinces and areas in afghanistan. in achieving our goals in afghanistan remains pakistan's failure to act against militant extremists like the network in the north, the afghan taliban and other militant extremists. we will be interested in hearing general dempsey's thoughts on how to get the pakistan military to go after terrorist groups finding sanctuary in pakistan's tribal regions. al qaeda and the arabian peninsula in yemen and al qaeda elements in somalia continue to take advantage of failing and failed states to train their

operatives and to plan attacks against the united states and our interests. it is critical that we don't apply significant pressure to these terrorist organizations, and to work with governments and international organizations in the region to address the long term problems. iran remains probably the greatest risk to world peace and to regional stability. we share the concerns of many nations about iran's continued support of terrorist activities beyond its borders, development of its missile programs, and refusal to cooperate with the international atomic energy commission. while we've seen evidence that the international sanctions has put treasure on iran more remains to be done to pressure iran to give up its nuclear weapons ambitions. in libya our armed forces continue to provide unique enabling capabilities to our partners as they carry out the united nations mandate to

protect libyan civilian from a dictator bent on killing his own people and destroying a country. in the dynamic asian-pacific region we're committed to work with our allies and partners to maintain peace and stability and to align our forces in a way that's both strategically sound and fiscally responsible. this is not only true in northeast asia where the united states is realigning its forces in korea and japan but also true in south and southeast asia. general dempsey's leadership will be critical in determining how the defense department and, indeed, the nation addresses the many and growing threats to our cyber security. all of our military communications, weapon systems, support, intelligence and virtually everything else that the department of defense does relies on cyber networks making sure we that have policies,

practices and technologies to reliably support military operations is a matter of increasing urgency. a recent critical gao report emphasized the urgency of having a clear and coordinated cyber policy put in place. general dempsey no doubt will also be called upon to help develop national cyber security policies such as when does a cyber attack on activities or entities in the united states require or justify a u.s. offensive response cyber or otherwise. and we'll be interested in hearing general dempsey's views on that. repeated deployments of our military over the last decade has resulted in many of our service men and women being away from their families and homes for many tours. stressing our service members and their families. reducing the demand for deployed

force is essential to increasing time at home station, increasing unit readiness and reducing our strategic risk in the event of an unforeseen contingency. we look forward to hearing general dempsey's views on how best to manage both the demand for rotational forces and how we meet that demand while restoring our strategic be debt that is the readiness of our nondeployed forces. the nation could not be more proud of our troops and their families. we're grateful for general dempsey's leadership and his willingness to assume greater responsibility for the readiness, deployment and care of all of our forces and the families that support them. senator mccain. >> thank you, mr. chairman. i want to add my welcome to general dempsey and his family, his wife and congratulate him on this nomination.

i first want to express my condolences to the family of general john shalikashivili who passed away last saturday. general shalikashivili was born.land of georgian parents in 1936, fled from the advancing soviets near the end of world war ii. came to the united states as a teenager and rose from the ranks to become chairman of the joint chiefs of staff from 1993 to 1997. and he was great american patriot and army leader. general dempsey, just three months ago on april 11th you became chief of staff of the army. you're now poised to become joint chief of staff. you're prepared well to become the principal military advisor to the president and leader of the joint chiefs. without question your combat experience and career military leadership, your service as

acting commander of u.s. central command, and your thorough understanding of our transforming force stressed by a decade of combat will serve you well as strategic decisions regarding iraq and afghanistan must be made and we face hard calls about our priorities in the future. we're conducting this hearing at a time when americans are deeply frustrated. over the enormous debt we've accumulated in the effects of runaway entitlement spending on our economy and on our future. it's in this very difficult fiscal environment there's no doubt that the defense budget will be constrained in the years ahead as we seek to solve our debt crisis. clearly the department of defense cannot afford to waste taxpayers resources on pentagon programs that are over cost, behind schedule or fail to provide an increase in war fighting capability to our troops. however, i hope that the

president and secretary of defense with your assistance and advice and counsel, will realize that defense expenditures following attacks of september 11th, which were preceded by nearly a decade of drastic reductions in military personnel, equipment and readiness, are not the cause of the economic dilemma we find ourselves in today. congress and the president must address tissue of unsustainable deficit spending, and unprecedented debt and nondefense spending and on entitlements, which will impact the future much our military during your term. since this year began, the president has already asked the defense department to cut more than $178 billion by finding efficiencies in taking top line reductions in proposed defense spending over the next five years. but even the current direction by the president to cut an additional $400 billion in defense spending by 2023 have

been eclipsed by some debt reduction proposals that include 800 billion to a trillion dollars in cuts. i would be the first to suggest that the defense department budget could be responsibly reduced and reasonable people can disagree over how deep those cuts should be. but what concerns me most about our current debate is that the defense cuts being discussed have little or no strategic or military rationale to support them. numbers on a page. our national defense planning and spending must be considered by driven strategy not arbitrary arithmetic. the defense cuts propose minimal if any understanding of how they'll be applied or any impacts on our defense

capabilities. second net ta has made it clear that more reviews will further the cuts, the congress has no indication of how the proposals would impact the size of our military forces, what changes they would require to our compensation system, what equipment and weapons would have to be cancels as a result or what additional ris tok the readiness and modernization of our forces and their congresswomen we would have to accept. if congress is to make informed decisions about our national defense spending we need information like this. and i hope mr. chairman that we can begin holding hearings on this important subject. i hope that you'll carefully department monitoring contracting and expenditures. your frankness and candor on how money spent by the department will be much needed by the congress as we assess how to direct pentagon spending. general dempsey, obviously i'm

confident you'll be confirmed. i hope you and secretary panetta will avoid misguided reductions in defense spending that cut into the muscle of our military capable iitys. defense spending is not what is sinking this country into fiscal crisis. if the congress and president act on that flawed assumption, they will create a situation that is truly unaffordable. the hollowing out of u.s. military power and the loss of faith in our military members and their families. i trust that you will have the ability and confidence to advise the president and congress on your views regarding the health of our military and the ability of our forces to meet our cooperative security commitments with our alies around the world. we will need an honest and forthright military assessment of the impact on funding decisions. i look forward to your opinions today and on these matters and

again my congratulations, mr. chairman. >> thank you very much senator mccain. general dempsey. >> chairman levin, senator mccain, distinguished members of the senate armed services committee, i'm honored by the opportunity to appear before you today in support of my nomination as chairman of the joint chiefs of staff. i want to thank the president and both secretaries that is gates and panetta for their confidence in me. i want to compliment admiral mike mullen for his remarkable service over more than four decades as he nears the end of a distinguished career. i would as well like to add my condolences to the family of general john shalikashvili. she was an accomplished sol jerp and a great american. as always when something important is happening in my life i'm joined by my wife. i met her 41 years ago and she's been my wife for over 35 of those years. i've asked a lot of her and she's always given more than

i've asked. we have three wonderful children, three near perfect grandchildren and three for on the way. we're blessed to have several brigades of men and women in uniform with whom we've served and consider our extended family. it's on their shoulders that i've been lifted up today to be considered for this position. it won't surprise you to know that the glue that holds all of that together is my wife. i can't thank her enough for her love and support and for her dedication to our military, its families and our nation. i appear before this committee a few short months ago. as far as i can tell my tenure as 37th chief of staff of the army hasn't changed me very much. however, now that i'm nominated as chairman the images that drive me are beginning to change. i'm share just one of those images. in 2008 as the acting commander of u.s. central command i visited the aircraft carrier uss abraham lincoln. in the indian ocean and observed flight operations there that

were being conducted in support of ground operations in afghanistan. as i watched these brave young men and women departing on their missions i saw looming in the background on the superstructure of the aircraft airier the imposing profile of abraham lincoln. and enskriebd above that image were it be words, shall not perish. taken of course from lincoln's gettysburg address. it occurred to me then as it remind me now those who volunteer to seven our country in uniform understand what's at stake when we send them into harm's way. i relate this story simply to assure you that i know what this nomination means and i will do my best to live up to the responsibility. if confirmed i will work with the joint chiefs to ensure that this nation has the military it needs. it's clear we have work to finish in the current conflicts and it should be just as clear that we have work to do in preparing for an uncertain

future. our work must result in a joint force that is responsive, decisive, versatile, interdependent and affordable. we must keep faith with servicemen and women, their families and our veterans. we're all very proud of the military forces of the united states. and this committee has been instrumental in making it the finest force ever assembled anywhere at any time. we're also aware that a new fiscal reality confronts us. in 1973 as chief of staff of the army, general abrams led is out of the vietnam conflict, he said that it was the enduring role of the army to ensure that america remains immune from coercion. that benchmark remains as true today as it was 38 years ago. it applies of course not only to our army, but to all our services. i look forward to working with the joint chiefs with our civilian leaders and with the

members of this committee to adapt the united states military to a new fiscal reality while ensuring as my primary responsibility that america remains immune from coercion. should you confirm me as chairman, you have my solemn commitment to those tasks. thank you and i look forward to your questions. >> thank you, general dempsey. general, the committee has a series of standard questions that we ask all of our nominees. have you adhered to applicable laws and regulations governing conflicts of interests? >> i do. >> do you agree to give your personal views even if those views differ from the administration in power? >> i will. >> have you siemed any duties or undertaken any actions which would presume to assume the outcome of the confirmation process? >> i have not. >> will you ensure your staff

complies with requests for questions? >> i will. >> will you cooperate with providing witnesses and briefers in response to congressional requests? >> i will. >> will those witnesses be protected from repiezal for testimony or brief sngs. >> they will. >> do you agree to confirm to testify bmpb this committee? >> i do. >> do you agree to provide documents when requested or to consult with the committee regarding the basis for any good faith delay or denial in providing such documents? >> i do. >> let us have a seven-minute first round here. i understand there's a vote at around 12 .15. -- 12:15. general, first relative to afghanistan. on june 22nd, president obama announced his decision that the united states would draw down its forces in afghanistan by 10,000 by the end of this year and the remaining 23,000 u.s.

surge forces by the end of the sum every in 2012 for a total draw down of 33,000. do you agree with the president's decision on these reductions? >> i do, senator. i've been in contact with both general petraeus and now general allen. based on their military judgments and options they presented i do agree with the decision taken. >> how important is it to the success of the counterinsurgentsy campaign in afghanistan that we maintain the momentum for transition more and more responsibility to the afghan security forces for their country's security? >> well, as it was in iraq and is now in afghanistan, it is the transition at tend of the day that will determine our successful outcome. it does take a great deal of thought, a great deal of deliberation and collaboration to understand the capabilities as they are accrued by security forces of those nations where we

task ourselves to build those security forces. >>. >> a recent defense department report called the extremist network quote the most significant threat in eastern afghanistan. and yet they continue to find safe haven across the border in pakistan and the pakistan army has so far refused to conduct major operations to eliminate the sanctuary in the tribal area. will you press the government of pakistan to take the fight to the network in the north? >> i will, senator. as the acting commander -- in those days we talked about four particular networks that existed along the afghan-pak border. we encouraged our pakistani counterparts to press them. they have pressed some of those groups, but not all. it's not always been clear to us

exactly why they press some but not all. but i will continue to work with pakistan to reduce the safe haven on the pak border. >> in answers to your prehearing questions you state that in working with pakistan on security cooperation we should not push programs that pakistanis do not want because doing so dilutes the value of u.s. cooperation. and you call for a frank and respectful dialogue in order for security cooperation to be successful. can you give us your assessment on the dod programs of assistance to pakistan, in particular the coalition support funds and the pakistan counterinsurgency fund and to el us whether or not those are programs that the pakistanis want or whether or not we've been pushing them on pakistan, which is reduced pakistan's buy into those assistance programs?

>> i'd reflect back on my tour as the acting director in answering this question. i'm not current on the state of the coalition support funds and the programs you described as they have evolved. i will tell you it's always been a matter of discussion between us and our pakistan counterparts about what threats are most serious to them and to us. as you know, they persist in the idea that the india poses an exsister-in-law threat to their existence while terrorists that operate in the fattah are less threat to them and therefore they allocate their resources accordingly and they embrace different engagement activities with us differently. we have been over the course of time working to convince them that the terrorist threat, the

extremist threat and to their west is as great a threat and probably a greater threat to them than any threat that india might pose. but it's on that basis, it's on that select chal disagreement about what is most threatening to them that these programs are viewed. so we would tend to view programs to improve counterinsurgency capability and their general purpose forces, policing and security role for their frontier core. we would tend to view those as more important than the higher end processes and programs. it's just one of those things we have to continue to work through. >> thank you. there's been a great deal of discussion about standards of interrogation and detainee treatment in some of the language in our authorization bill relates to that subject. first, do you support the stand

address for interrogation and detainee treatment which are specified in the army field manual in interrogations? >> i do, senator. >> would you tell us why. >> well, i had a hand in preparing them. so i have a certain sense of ownership for them. i do think that they articulate the nexus of the importance of gaining intelligence with the importance of preserving our values as a in addition and as an army. >> would you agree that the standard for detainee treatment should be based on principal of reciprocity which in other words that the manner in which we treat detainees that are under our control may have a direct impact on how u.s. troops are treated should they be captured in future conflicts. >> i do believe that reciprocity should be one of the zblsh.

>> we are a victim of cyber attack is to how we should respond and of course, i guess the real question is whether or not we can identify the attacker as being a state actor. and whether or not an attack is intentional or not could be an act of espionage, which we engage in ourselves. we engage in espionage and those acts are not considered to be acts of war. on the other hand, if something intentionally damages or destroys a facility or another

entity in another country that would seem to be to be an act of war or an aggressive act which requires a response. can you give us your thinking about the whole growing, emerging issue of cyber attacks and should the defense department participate in determining what the response is through those attacks. >> i can senator, but i'll confess at the start that my thinking on this is nascent at best. it has been suggested to me that if cob firmed the issue of cyber and cyber warfare, the cyber domain will probably be one of a handful of issues that define my tenure as chairman. so i'm taking a greater interest in it. i have some thoughts on it right now as well. the decision about whether something is an act of war or whether we would respond to it is of course a political decision. it's the role of the department and if confirmed with my advice

on chairman on how to respond to it. at this point my greater interest is in determining what capabilities we must provide the nation to be prepared to respond should we be attacked and should the determination be made that it was a hostile act or an act of war. and you described the challenge very articulatity. it's very hard to trace fingerprints and threads through the cyber domain because of the ability to use servers at remote locations. it's a place, a domain will anonymity is more an issue than it might be in the domains of space, air, land or sea. that said, we have done a lot of work, you know, that the president published a policy in may of 2011. that was followed up just a week ago by department of defense declaration by -- at this point, i'm in the process of studying that. i've got a series of meetings scheduled if confirmed between

the time i'm confirmed and when i take the job with those who are delivering that capability today to better understand it. >> thank you very much. senator mccain? >> thank you, mr. chairman. again congratulations, general. just a follow up on what chairman levin said. want to assess the capabilities but you've got to develop a strategy and policy before -- that comes before capabilities in all due respect. this is a serious issue. congress has not done its job. but certainly dod has not done its job to just say we're going to assess our capabilities, we've got to develop a strategy. this is a serious, serious issue. it gets hardly -- when you pick up the newspaper every week or so that somebody hasn't been hacked into. not always military, but industrial, which obviously are key to our nation's economic and

military success. so i suggest you start working on a policy. i suggest we here in the congress start working on legislation which would implement that policy. i hate to keep going back to this issue of the withdrawal from afghanistan. now, the president announced a draw down as you know and you said you supported it. was it recommended by any military leader, the president's schedule for the draw down? >> well, senator, my understanding is that general petraeus proposed three options. i haven't talked to him about how he felt about those options, but no military man would propose an option he considered to be infeasible. and that the president chose one of those three options -- >> general petraeus did not give him this option of the withdrawal accelerate -- accelerated withdrawal so they didn't have two fighting seasons. i'm sure you know that?

>> i do not know that. >> you do not know that? >> i'll send you the testimony of general petraeus before this committee and i'm disappointed that you didn't know that because it was not recommended by a military leader nor would it be. in fact, general petraeus and others have testified that it increased the risk, do you share that view? >> i think it did increase the risk, yes. >> unnecessary risk in my view. i want to talk about budget cuts. you just left as chief of staff of the army. and you understand that -- i understand the president has called for $800 billion in budget cuts, is that correct? >> the current number we're targeting is $4 4u7b billion senator over 12 years. >> have you developed any plans as how to implement that? >> we are working on that even as we speak. we've got a task from the

department to look at what the impact of that budget cut would be. >> and when can we expect to have that assessment since the appropriations process moves on here? >> senator, we've got a task to try to keep -- back to your point about strategy, we've got a task to keep strategy running parallel with resource decisions. the comprehensive strategy that the chairman mentioned is due for completion some time in late september, early october. >> so, we have announced cuts without the strategy to go along with it? not as comforting. >> well, senator, what i would describe we've announced a target and trying to determine the impact to meet that target. >> wouldn't in most cases that i've seen strategy has been developed and then the budget for it is arrived at not the other way around. >> well, sir, because i can soundly speak as chief of staff

as the army because the cuts are articulated over ten or 12 years, it will affect four program operating memorandums. so decisions taken in 13, 17 would not be bindsing on the following three targets but would affect that program operating memorandum. >> we are talking about $80 billion developed for next year, is that correct is this. >> potentially. >> potentially? >> against -- >> isn't that what the president's called for? >> he has, sir. but we have not provided the analysis back to the secretary of defense on what the impact would be as yet. >> which brings me again full circle. we've announced cuts without a commensurate assessment of the impact of those cuts. in your view what would an $800 to $1 trillion cut in defense spending due to our readiness? >> senator, i haven't been asked to look at that number. i have looked and we are look at

$400. i would react in this way, based on the difficulty of achieving the $400 billion cut, i believe $800 would be extraordinarily difficult and very high risk. >> back to our -- forget to mention at the beginning of our conversation an article yesterday u.s. draw down internal crises fuel fears for afghanistan. the start of u.s. troop draw down in iraq of overlapping security political, economic crises are fuelling fears that afghanistan could sink into wholesale turmoil and even civil war as the u.s. led international combat mission winds up at the end of 2014. are you concerned about that? >> yes, sir, i am. >> on the supply ruts for afghanistan, as you know our relations with pakistan have hit in the vow of most observers an

all time low. have you assessed and looked at your previous role on the impact to our ability to supply the forces in afghanistan if the pakistanis cut off those supply routes across pakistan? >> yes, senator, we have. >> what's been your conclusion? >> the conclusion is that we would have to rely more on what we describe as the northern supply route, which does exist. and that it would be more expensive. >> would there be a period of time between the time that suppose tomorrow pakistan cut it off. what would be the period of time between 4 then and when you'd be able to maintain the same level of supply through the northern routes or air resupply? >> it would be a classified issue of how many days of supply we maintain inside the country. beyond that we believe if that southern supply route were cut off that we could react. >> could react? there could be a delay? >> yes, sir.

but in a way that would not jeopardize the mission. >> would not jeopardize the mission. a group chartered by the secretary of the army to look into how the army prokurs major weapon systems found that every year since 1996 the army has spent more than $1 billion annually on programs that were ultimately cancelled since 2004 $3.3 billion to $3.8 billion per year of army developmental testing and evaluation funding has been lost to cancelled programs including the now cancelled future combat system program. as we know the cost of the f-35 has lurched completely out of control. the few short months after the awarding of the contract to boeing for the new tankard is

now an additional billion dollars in cost and the list goes on and on. what's the level of your concern and what do you think we ought to be doing about it? >> well, senator as with r we discussed when i was here a few months ago, i would never sit here and try to justify -- it would be impossible to sit here and justify the current process given that it has not delivered the capabilities we've required at -- within the resources available to do so. and so i think that we're at a point where we absolutely have to seek acquisition reform. i know that the undersecretary of defense for acquisition is seeking that. i know about where were helped by the weapons system acquisition reform act. you know that the department based on that is seeking the

better buying power initiative. we're working toward it. as you know right now there's probably a reason to consider a different role for the service chiefs in acquisition. right now it's bifurcated. service chiefs do requirements, acquisition does materials solution. that hasn't worked i think it has to be revisited. so i completely agree with your assessment of our current state. nevertheless, we need capabilities. it will be my role if confirmed to argue for that fifth generation fighter. but a fifth generation fighter that the nation can afford. therefore the way to that is through acquisition reform. >> i thank you, mr. chairman. >> thank you, general. >> senator reid. >> thank you very much mr. chairman and thank you general dempsey for your service to the army and the nation. i have ever confidence you're going to be a superb chairman of

the joint chiefs of staff. i want to recognize you and your family. i think i properly pointed out to your chairman although you were high school sweethearts you married after west point. i want to make sure of that because that's problematic otherwise. i also want to salute admiral mullen for his extraordinary service and join my colleagues in recognizing the extraordinary service of general john shalikashvili. general shalikashvili proudly said he was a citizen of only one country, the yoits of america despite where he was born and where he traveled. he was the consummate citizen soldier. to his family, my deepest sympathies. the issue that is before us and eluded to and talked about in your previous hearing as chief of staff now is the budget. and with the sake of risking over simplification there's three major categories that you

have to deal with, force structure. including paying allowances in this context, the reserve forces and retired forces and the national guard, but particularly retirees. equipment, procurement, how much, it cost, what do you need, can you suspend acquisitions. and finally the issue of operations and trabing. where we're going to go in the operational sense and how we're going to train. with that as a very, very broad context, can you comment upon the approach you're going to take with respect to these issues and the budget you face? >> yes, senator. i think the important point to make in the question of how to absorb reductions or debt total obligating authority is really to re-enforce that it must touch each of the things you mentioned. we will not be able to change the size and the capability of the force and i'll speak for the

army because i'm immersed in it now unless we do so by touching each of those areas you talked about. for example, if we try to artificially preserve manpower we will suffer the consequences in modernization and operations maintenance and training. conversely if we go after just manpower it won't make any sense to have the kind of resources and operations in maintenance and training. this really requires us to maintain balance as we make any changes that become necessary by virtue of budget support. i'll also say that includes pay, compensation, retirement, and health care because it's important that we place everything on the table, assess the impact and then request the time to do it in a deliberate fashion so we can maintain balance at whatever level we end

up at. >> when you address the issue of compensation and health care, there are two factors. one is the relationship between funding those programs, do you propose to make that explicit. it's no longer the possibility of simply adding more money that there has to be trade offs between operations, training, troops in the field, their safety and some of the benefits for retirees? >> i think, yes. if i could just elaborate for a moment. >> yes, sir. >> i think it's very important that we maintain an open dialogue with all pars of this

total force active guard reserve, families, retirees, to help them understand the challenge. the challenge is simply this, again, i'm speaking just for the army. right now our manpower costs consume approximately 42% of our budget. left unabated that is to say, left unaddressed that will rise to approximately 47% or 48% by 2017. that is not sustainable. so the question then comes back what should we do about it, and how can we do so in a way that maintains the trust we've established with our force overtime in contact. i'll say one other thing, what makes this budget discussion different, i'm a student of history as you know, i've studied the post vietnam period. i've studied the post desert storm, desert shield period. what makes this period different is we're doing all this wile we're still actively engaged in conflict and we have young men

and women in harm's way. that adds a degree of complexity and a degree of uncertainty that i think we can't discount. >> final point with respect to this whole issue of how do you rebalance the personnel course, etsz. i presume your view would be to lead from the top, that senior officers and senior personnel would be the first ones to stand up and say if it's going to have to happen, it will happen with us, is that fair? >> did you have to ask me that question in front of my wife, senator? but the short answer is absolutely. i think it's leading from the top individually. i also think it's leading from the top and examining our structure which tends to be rather top heavy and in fact historically again if you look through conflicts headquarters grow in ways that have to be reconsidered and reformed after conflict. >> slightly change the subject, i think it relates to what we've been saying is that we are on

our way out of afghanistan as we are in iraq. going forward, you have to be prepared to successfully hand over a significant activities. so your success in transition is a function of the resources they must receive. my perception being here is when a defense budget is reduced, the state department budget is decimated. doe you one have those concerns? and two, consciously if we are going to maintain a credible security force beyond one or two years, we're going to have to internationally provide resources in afghani national forces. is that going to be one of your priority? my only historic hook here is the last soviet era leader survived two plus years after

the soviets withdrew, but when the resources and not just for military, but for everything dried up, his days were literally numbered. >> we certainly don't want to be guilty of refreezing the ep logue of charlie wilson's war. i take your point completely. my job will be given the strategic objectives in afghanistan to determine how best to meet them if and when u.s. force structure reduces what is it that compensates for that? is it afghan capacity, other agencies of government? as you know, the measure of national power is is aggregate of economic strength, diplomatic strength and military strength. all three of those have to participate in these outcomes and all three of these have to be considered as we look at these reductions to make sure we stay in balance in that way as well. >> thank you for your service

and thank you for your family service. >> thank you. >> thank you very much, senator reed. senator sessions. >> thank you mr. chairman. thank you, general dempsey for your leadership and your commitment. your willingness to serve in harm's way. i noticed just looking at your bio, i looked at it because i remember seeing you in iraq and coming back and you were still there. i noticed you were there the first tour 16 months. came home to germany and were deployed there for ten months and back for 21 months. that's the kind of deployment that a number of our military people have made serving their country in dangerous areas of the globe. i just want to personally thank you for your commitment, and i think it reflects the kind of commitment many other enlisted people, many of our leaders in

the military have exhibited. miss dempsey, good to see you and thank you for being the good partner in those difficult years. i just want to follow up on senator mccain's comments about the budget. we've had a lot of people believe that the deficit is caused by the war in afghanistan and iraq. it certainly was not inexpensive. it's been an expensive process. last year is one of our highest years $158 billion committed to that effort. but our deficit, i say last year, the year we're in we're projected to spend $158 billion. it looks like our deficit this year will be $1,500 billion. a little more than 10% only if you eliminate the war of our deficit would be eliminated. over a period of time that pert

percentage has been fairly accurate about the cost of the war. i'd also am a bit troubled that some of the projections for our spending go from -- well next year we're projected to drop from $158 to $118 billion for the overall -- con tin generalsy operations. is that your understanding? >> it is, senator. >> i think is it the next year, 2013 that is projected to go to just $50 billion? >> i've seen that number, but i'm more confident in the $118 billion than i am on the follow on years. >> it will be a dramatic drop to $15 that -- $50 that quickly. i don't think that is likely to be achieved and i'm concerned about it. the president's budget projects $50 wl for the next, the rest of

the decade. i don't know if this is accurate or not. i would say that we can't let numbers like that drive the agenda. the agenda has to be if we can draw down our forces good, let's do it in a strategic smart way that does not put our soldiers or the goals they've put their lives at risk for in jeopardy. just to meet that kind of goal. i hope and expect that you would advise us if you think that number is nonacceptable. >> i wonder senator if i could -- i mentioned earlier that i'm not a man of numbers necessarily ork charts and diagrams, but images. would i ask my staff to pass out an image to you by way of answering your question, if i could. while the staff is handing this

image out, one of the things we've said consistently by predecessor and his predecessor when this conflict ends, however we define ends, it will take two years for us to reset the force because of the stress and strain on equipment and people. it will take us two years to reset. that reset should be in my judgment funded by oco. therefore it will be my responsibility on behalf of all the services to define what will it take to reset the force once we have the opportunity to do so. if i could ask you to glance at the picture. i've done a lot of thinking about what is it that will get us through, has gotten us through this last ten years. if someone had suggested to me ten years ago that we would be able to fight a war for ten years with an all volunteer force, i honestly would have been skeptical about it.

we have gotten through that. not only have gotten through it, we've actually flourished. the force is extraordinarily healthy. so whatever we do it's important to remember we're doing it from a foundation of great strength. it is truly the finest military force we ever had. all components. the reason i like that picture, my sergeant major doesn't like it because the soldier's not wearing his eye protection and he's got his sleeves rolled up. i asked him to get beyond that for a moment that picture speaks to me that image speaks to me on the issue of trust. and so the ore thing that we have to remember about ourselves -- it's trust as you see there's a soldier protecting that soldier's flank. he's wearing a wedding band they trust we'll take care of his family now and in the future. here's the point, he's on the radio and he's calling for something. could be a medevac, cub

artillery. it's likely to be another service that delivers it. here's the profound point not to forget, what makes us unique is that that noncommissioned officer believe he's going to get what he asked for. we are the only army on the face of the earth that believes that when you ask for something because you need it to prevail in the environment we place you, you're actually going to get it. as we do whatever we have to do with this force based on the resources, the one thing we cannot lose is that relationship of trust that exists that what that soldier, airman, sailor, marine or coastman needs to do the things we ask them to do, they've got to have it. that carries us through. i don't know about budget numbers. i do know i will not allow that relationship of trust to be violated. >> thank you. i think this is a very critical point. we have the finest military the

world's ever assembled. they are courageous. they put their live tons line. they've lost their lives in significant numbers and been injured significantly. but they do have to be confident that the people of this country are behind them and sometimes that means money. dollars to get them the things ta they need -- that they need. i appreciate your comments on that. general dempsey on a specific matter, i notice in your answers to the written questions, you note that you supported the decision to retain three brigade combat teams in yierp and that it -- this is the answer i'm sure staff helped you put it together since i noticed you have a master's in english at duke, typical of our high quality and highly educated officer corp., but it says to me a wide array of engagement

building partner capacity and interoperablity objectives while being able to support a full range of military operations needed for plausible european and gullible contingencies. i'm not sure what that means. but i don't think we need three brigades to do it there. the plan was to bring it to two. i understand we're talking about a new hospital. which if we pray we're successful in drawing down, maybe that can be scaled down. but that's the kind of things i think we need to ask about when our allies are spending about 1.2% of gdp on defense. 1.3% -- only a few of our nato allies are meeting the goal or coming close to the goal of 2%. while we're at over 4% of gdp on defense. i think we've got to ask yourselves can we continue to maintain that kind of forward

deployment of brigades when we were supposed to be reducing to two? my time is up, mr. chairman. i would just ask you, i know you've given that answer that you support the three, but i'd like you to say that you'll at least reconsider that in the months to come. >> first of all, senator i apologize for the run on sentence, that one got past me, apparently. i will say i am an advocate of forward presence. i want to be clear about that. for all the things it does for us, not just for our allies. secondly, i am a strong advocate of maintaining a strong relationship with our current allies, they've been tried and true. i know that we sometimes look and compare an individual nato country to us, the reality is in the aggregate they commit about $300 billion a year too defense in the aggregate. and they are serving very bravely and courageously with us in and stan. notably today i was at a

ceremony at the french embassy last night where the french presented five -- their equivalent of silver stars to our soldiers who served alongside with them. the french were very proud to note that they have a french battalion under our command without caveat in afghanistan. i think we should not in the midst of our current budget challenges undervalue our relationships overseas. now that said, the comment about whether it's two or three brigades in europe was made when we were shooting for $178 billion in reductions not $400. ill restate my earlier plaej in discussion with senator reed. everything is back on the table. >> i would agree. secretary gates has noted that our allies with exasperation he's urged them to do better and shared better and been

disappointed that they have not. thank you, mr. chairman. >> thank you senator sessions. senator webb. >> thank you, mr. chairman. i apologize for having to step out for a few minutes. i missed your exchange with senator reed and the beginning of your exchange with senator sessions. i hope these questions aren't redundant to those. first of all, we are going to be entering obviously into a period of reformulation of our national strategy and our posturing around the world. in many cases with the wind downs in iraq and eventually in afghanistan. i am wondering -- i've not seen anything on your views with respect to sea power as an instrument of national strategy. not simply in terms of supporting ongoing ground operations which was one of your comments earlier about

visiting -- actually, as -- in its historical role as a direct instrument of deterrents on a larger scale. >> well, sir, i both because of my time in the joint world and now as the member of the joint chiefs i am enormously proud of our navy and cognizant of and respectful of its role. i think one of the questions we have to ask yourselves in this strategic review is where are the new power centers across the globe? the navy has a traditional role in protecting the global commons with respect to obviously the maritime domain as the air force does and the aviation domain. but in terms of my views on sea power, i would say that my views on sea power are about the same as they are on land power. that is that we we should never

get to the point where we have to choose between a particular domain and another. we should be increasingly interdependent. i am concerned, by the way, about the navy shipbuilding program and the fact that we're sitting at 280 ships with a 313 -- with a suppressed demand for 313. some of the acquisition problems we have had are making it more difficult to get there. so i'm a big fan of the navy with one important exception that is on that saturday in november when we play the army-navy football game. >> having gone from the naval academy into the marine corp., i don't watch that game very often. so -- but it does seem to me that we are at tend of another inevitable historical cycle here when we have extended ground combat deployments that expand the size of the active duty army into the marine corp. at the expense very often of what i

would call national strategic assets like our operational navy. i think i'm hearing from you that the same thing i heard from secretary panetta that the 313 ship goal for the navy is a reasonable goal. would that be correct? >> well, my ingaugements over the past three months suggest to me that it is. but again, i think we had a conversation a bit earlier about how do we keep strategy at pace with resource decisions. so that comprehensive strategy review that we're doing should it seems to me re-enforce that or cause it to think differently about it. one of the things i think will happen to the question of whether we could absorb $400 billion, i don't know the answer to that. i don't know for the army and i certainly don't know for the joint force. but as we look at it there, we will reach a point where we have

to make a determination. can we execute the strategy we have today? which is what the 313 shipbuilding program is built to. can we continue to execute that strategy or do we have to change our strategy? that's the kind of questions and the answers to those questions that we owe you as a member of that committee? >> i would hope the reexamination of the strategy is a realization that the model that we put in place in afghanistan is not going to be the model of the future. it's enormously costly in more ways that show up in the direct dod budget as you know. one of the concerns that i've had since i've been here in the senate is with what i can only call a deterioration of the management aspects of the pentagon. i hope you'll really take a look at items such as data collection that's necessary to have debates

on different issues. i could give you a whole string of someone who worked over there as a manpower person and was used to some pretty fast turn arounds when data was requested. it took us a year to get the attrition data from the services that were necessary to analyze what percentage of the military actually left the military on or before the end of their first enlistment which was vitally important in the way that i was trying to advance the g.i. bill as a readjustment benefit. i just held a hearing as chairman of the personnel subcommittee part of it asking for court-martial and discharged data. the army was not able to tell me within a week's notice other than honorable discharges it had issued over the past year. the other data fluctuated day-to-day. this is the kind of stuff when i was a committee council a few

years ago you could get in 24 hours. i hope you get on top of that. i don't think people are so buzzy that they can't keep that kind of data and certainly the size of the military and the retention rate, the size of the military is lore, retention rates are higher. this shouldn't be difficult data to keep. one of the pieces of data that jumped out at me goes to the number of general flagged officers service by service. i use this as a starting point where we were looking at an issue of whether the air force should be able to keep seven -- i believe it's seven -- six flagged officers as jacks. -- jags. i'll give these numbers. the army has 540,000 people as of active duty. the navy 202,000. the air force 332,000. does that -- do you find it

curious that the air force has more four star generals than any other services? >> i'm not sure how to answer that question, senator. that actually -- >> let me give you a couple more data points. >> that does surprise me. >> the air force has 323,000. this isn't a knock on the air force. i see your assistant's getting nervous over there. it's a question of, how you properly manage the force. the air force has more brigadier generals than any of the other services by far. they have the same number of three stars. they have almost the same number of two stars as the army and well more -- more than the navy and marine corp. combined. this is not a a hit on the air force. it's just a question of how do you come up with this? >> now, your point's a good one, senator. we do need to -- by the way, secretary gate did take a look at general officer strength and

required each service i think our number for the number was we had to eliminate nine go billets. that's not the last we'll see of that. not by way of justifying it. i'll tell you how some of this has group up. you talked about iraq and afghanistan. when we build up new headquarters they tend to be magnets for flag officers to run particular capabilities and functions within these headquarters. but if you're suggesting we should see ourselves and determine if we've got our ratios right, i take the point. >> i absolutely think you should. the other piece of it is when floor structure is reduced it's very hard to give up flag commands or billets. i hope you take a look at it. thank you, mr. chairman. >> thank you very much, senator webb. senator wicker. >> thank you very much. i appreciate your service general dempsey, and look forward to working with you. one of secretary gates' final

actions as secretary before his retirement was a very important speech before nato about nato's future back in june. i want to point out some of the most important facts that he mentioned. for one thing some members are willing to do the soft tasks and others the hard combat missions. he also said there is a very real possibility of collective military irrelevance in light of this member nations must examine new approaches to boosting combat cape i believities. -- capabilities. he went on to point out that two decades after the fall of the

berlin wall, the united states' share of nato defense spending has risen to more than 75%. and then he sort of concluded with this very key point, i will quote him directly, indeed if current trends in the decline of european defense capabilities are not halted or reversed, future u.s. political leaders those for whom the cold war was not the formative experience that it was for me may not consider the return on america's investment in nato worth the cost. now, it's often valuable for someone to be able to speak very frankly toward the end of a career. and i think secretary gates did just that. you're about to embark on a new ab aspect of your career.

in which perhaps you have to be a little more diplomatic and careful. i would appreciate you responding to the points secretary gates made. and -- and, i wonder if you have any new ideas about reversing this continued trend, and if you have any suggestions to this committee or this congress as to what we might do to reverse this trend? >> i'll take your caution about trying to figure out whether i'm at the beginning of the next four years or the end of my career. >> i'm assuming you're about to embark on a very important part -- >> what you can count on senator, is that i'll answer and let the chips fall where they fall in that regard. i think that -- we have some competing narratives that we should acknowledge. on the one hand we have a narrative that says we have to based on the reality of a new fiscal environment we have to do less.

and therefore rely on allies to do more. that is one narrative. we have to acknowledge it. then we have the other narrative that you just described which is they're not doing enough to sustain what they're doing now. so the question is as we go forward in determining our whatever adaptations we make to or strategies we've got to do nit a way that be doesn't paper over potential problems. one of the problems we could paper over is what can our allies provide. in terms of new ideas, we've talked about ourselves as a joint force of being interdependent for years. how do we rely on each other and eliminate redundancies. this budget reality is going to cause us to look at that again. i think it should cause us to look again at that issue vis-a-vis our allies and it may be that we would enter into a discourse with our allies about capabilities that they provide that we may not provide and in

so doing we actually may have to become dependent on them for that. now, i'm not advocating that. i'm not even advancing it, yet, but it may be that if there's a new idea out there in a new fiscal environment it may be something to do with establishing an interdependent relationship with close allies. is there risk there? absolutely. is there potential opportunity there? i think so, but in answer to your question, i think that's where we find ourselves today. >> let's take leisure let's take that down then to a specific -- the specific instance and the frustration that many of us felt in coming to a consensus over there. do we risk our adversaries or our competitors finding ways to

end states that are acceptable and achievable to all members. that's the nature of an organization that size that's built on consensus. on the other hand, when you can achieve consensus with an organization like nato, it's pretty powerful and pretty compelling and pretty persuasive. i just think as we go forward, as i mentioned, we have to be clear-eyed about not making assumptions that could, from

their very inception, prove inaccurate. i think it's going to require a different kind of transparency. >> well, i wish you very much success in that regard, and i hope if you have further suggestions for this congress, you'll work with us on that. because i share secretary gates' concern, and i don't know when the tipping point might be. but we do have budget concerns in this country, and we're bumping up against within a week. and for the united states to expend 75% of the combat funds, it seems to me a situation that's got to change. let me ask you a very specific question about the culture that services nurture with young officers and ncos with regard to foreign language study and

programs that enhance global awareness. do you have any ideas about how we might do a better job of incentivizing across the services? my son happens to be in the united states air force with a language proficieficiencproffic. do wung -- you think we're using the universities and great resources of our country enough? is there a different way that we can be achieving a larger cultural awareness in language profficiency across the services? >> i absolutely do, senator, and i think to the extent we can develop our young leaders to have the kind of global awareness, even if it is manifested in particular regional expertise, whether it's asia or wherever, i think we

will do two things. one, we will make ourselves far better prepared for an uncertain future. we found ourselves short in cultural awareness and language capability in iraq and afghanistan for a very long time. so i think that as we now have the time to commit to the kind of things you're talking about, we should. that is absolutely -- i would describe it as one of the adaptations we need to make to our leader development programs. and another thing to do, in so doing, we'll keep these kids interested. they want to know what it is we need them to do, and it's not just about turning wrenches or providing lethal effects. they want to know that they are developing, that they are growing, and that that development and growth is valued inside the service. and the last point i'll make is, i don't think -- i think we're going to be able to do exactly what you say. the reason we haven't in the last ten years is we've been meeting ourselves coming and going.

we've been extraordinarily busy, and so we haven't taken the time necessary, and particular in expertise outside iraq and afghanistan. and secondly, our promotion boards, for example, in wartime always tend to value most the current fight. and so i can only speak for the army, but if you look at our promotion boards, they have tended to reward time in the saddle in iraq and afghanistan disproportionate to potentially what we need for the deeper future. and my commitment to you is that if confirmed, i will be not only the chairman, but i will believe myself to be the steward of our profession, that is, the profession of arms for all services and look duty fully and carefully at how we're developing our leaders for the future. >> thank you, sir. tell us what you need and we'll try to provide it for you. thank you. >> thank you very much, senator

wicker. senator udall? >> thank you, mr. chairman. good morning, general, good morning, dean. it's been a pleasure to get to know the two of you and realize your love of colorado, and i look forward to working with you when you are confirmed. i had a chance to ride in yesterday from the airport with former senator harp. he's well known for his strategic thinking along with a lot of other retired senators in both parties and, of course, retired military officers. what have you learned about the last ten years? what do you think are the most important lessons that stare us in the face and some that aren't so obvious? because it is easy to fight the last war, and yet the world is undergoing enormous change from

the middle east to the events we see in china and on and on. but if you'd share a couple thoughts. >> thank you, senator. again, these are very personal lessons not to be interpreted as criticism of predecessors or anything else, because, by the way, in some cases i was the one who fumbled a ball here and there. i think that one of the lessons of the last ten years of war ought to be that we can't look at issues through a soda straw. in isolation, they don't exist that way. so i would -- looking back on it, at least my own personal view about iraq in 2003 was that iraq had a particular problem, and it was a regime that was destabilizing the region and that we should take action. it was my recommendation that we should take action to change the dynamic inside of iraq, and that the region itself would become more stable.

i'm not sure it turned out that way. it is, but it didn't happen exactly as we intended it, and that's because i don't think we understood -- let me put it differently. i didn't understand the dynamic inside that country particularly with regard to the various sects of islam that fundamentally on occasion compete with each other for dominance in islam, so the suni sect of islam, when we took the lid off it, i think we learned some things -- i don't think we could learn it any other way, i don't know, i reflect on that, but i learned that issues don't exist in isolation. they're always complex, and i've been scarred by rereading a quote from einstein who said if you have an hour to save the world, spend 55 minutes of it understanding the problem and five minutes of it trying to solve it. and i think sometimes in

particular, as a military culture, we don't have that ratio rate. we tend to spend 55 minutes trying to learn how to solve the problem and five minutes understanding it. that's one of the big lessons for me in developing leaders for the future, not only in the army, but if confirmed, in the joint force. the other is to the degree in which military officers in particular, but probably all of them, have been decentralized. you'll hear it called various things. decentralized, distributing operations, em powering the edge. whatever we call it, we have pushed enormous capability, responsibility and authority to the edge, to captains and sergeants of all services. yet our leader development paradigms really haven't changed that much. they are beginning to change, but i think that second lesson on the enormous responsibility we put on our subordinate's shoulders has to be followed with a change in the way we

prepare them to accept that responsibility. i think those would be the biggest two lessons for me. >> thank you for sharing. i look forward to learning more of your insights. you're right, we expect the people on the front lines to be educators, to be diplomats, where civil affairs and cultural, historical trends and on and on and on and every single soldier, marine and sailor represent the face of america. i look forward to working with you in what i see as an opportunity. let me turn to a related, distributable con at the present time of energy. i think everybody is looking at how we use energy more efficiently. we know that a good quarter of our casualties have been tied to fuel convoy s and other kinds o convoys. how do we help you develop a

distraction? we have more flight with less fuel. share your thoughts on energy with the committee. >> first of all, i agree with you, senator, and we have -- and again, i'm at a bit of a disadvantage in this regard speaking just about the army now, but that's what i've been working. as you know, we've got some energy goals that both the department of defense have established but that we've established for ourselves as well in the two broad areas of kind of institutional energy. that's how we manage our post camps and stations. we've got six, maybe more, prototype installations that we want to achieve a net zero energy status. one of them happens to be in your state. so we're moving along to try to see how we can improve our standing vis-a-vis institutional energy. the other one is operational energy. that's really the one you're speaking to most clearly with how do we keep soldiers off the road and supply convoys, because

we've become more energy efficient. and every one of our recent acquisitions and certainly every one going forward for vehicles or other equipment that have an energy demand are always done with a key systems attribute is the term. so every ground vehicle has an energy target for its design. that's sort of the upper end of it. the lower end of it is batteries. i'll give you one vinette that might fas -- fascinate you. it could be a streaming video, a set of optics, a night device. we see the benefit of the soldier and it makes them more capable. but we often don't see what it

does in the aggregate to their ability to carry the batteries. so an infantry platoon today, for a 72-hour mission, has to carry 400 pounds of batteries. now, what they do, of course, they don't carry them. you can follow them in some cases like bread crumbs through the hindu kush. we've got to get better at that and figure out how do you carry them in a lighter load and a more efficient manner so the soldier becomes more capable and we don't overburden them. i can assure you we are actively pursuing this, and i think it has implications across the joint force as well. >> i agree, and when we find some of these breakthrough applications for batteries, there will also be utility in the civilian sector as well, and i predict the military will lead us more broadly to energy self-reliance. my time has expired.

i think you're aware of a few marine corps ex-fobs that are being utilized, and in the end they're actually creating an environment that's much more experimental, they're more secure, they have a smaller footprint, noisewise, lightwise, energywise, and therefore the mission is more easily performed. so i look forward to working with you on this. thank you. >> thank you, senator udall. senator brown? >> thank you, mr. chairman. sir, as you know, we've already met and discussed in private. ive a few follow-up questions. senator nato and i have actually planned a bill and are concerned about the evidence that taxpayers' money that was intended to be used for a transportation contract has ended up in the hands of the taliban. we want it to stop. not only are we trying to fund our own needs, i guess we're funding the taliban's needs, too. i was wondering if you could

comment on that and how -- what your thoughts are about lowering the risk involved with our reliance on contractor support and the money trail that goes along with it. >> yeah, thanks, senator. i saw the same report in the media. i haven't yet had time to get the gi report and see the details. i share that thought. having approximately $5 billion a year to build the iraqi security forces, it was among my gravest concerns. i had a concern about building them, i had a concern about enabling them, integrating them with our forces, but there wasn't a day went by that i didn't worry about where the money was going because it's a very opaque culture in which we deal in iraq and afghanistan. now, what we've done, we've

increased the number of contractors. we formed contract in demand. i'm speaking for the army but i know the other services are doing this as well. in the captain's career courses, they're taught contract oversight. i probably should have mentioned in response to the form of a question, what are one of the big lessons of last ten years of war? one of the big lessons of the last ten years of war is when we apply these kinds of resources, we have to have the right kind of contract oversight. i hope what i find in the gi report is that it's a lagging indicator. in other words, it might be a couple years ago before we took the measures i just mentioned, but i don't know. but i share your concern about it. >> thank you, sir. also, i want to just touch upon and follow up with senator mccain and others. 100 billion was the initial, i'm hearing $1 trillion.

someone who is still serving, as you know, i hear things we could do probably better and more efficiently, but i'm deeply concerned that hasty across-the-board cuts will dramatically affect the safety and security of the men and women serving. and then i would echo senator mccain's general premise in that whatever you're planning on doing or whatever recommendations you're considering making, i know we're trying to reach a number, but when it comes to the safety and security of our men and women, you know, i don't think i can put a number on that. i don't think -- if we're going to commit to these wars and we're going to commit our men and women to do it, we have to give them the assets to do just that. so not really a question, but my hope is that if you're running into road blocks here, you need to adjust and adapt, and please come back to the committee so we can work with you in trying to do it differently and shift maybe the burden to other areas

of the government before we start jeopardizing the safety and security of our men and women. that being said, as you know, i am in the guard, and i do know that the guard reserves perform a function at a fraction of the cost of the money used for active army and all other services. you know, we're somewhat leveraging the skills and experience of our citizen soldiers in aman. what's your plan? is there a plan to potentially save money to shift and expand garden reserve opportunities? is that in the bailiwick? >> senator, as you know, we are closer to our reserve component, that's both the national guard and army reserves. i'm speaking for the military, but i'm sure general schwartz would echo this. we're closer to the garden reserve, and as restraints

collapse around us, how do we maintain that relationship? how do we articulate what capabilities have to be available in the active component, which capability have to be available in the garden reserve. one of the things i mentioned in response to the hpq was that i think there is an opportunity here to reconsider and adapt our relationship with the garden reserve. so that as we become smaller, which seems to me to be in evide inevitable, just give them actio options, because that's our responsibility, to provide options to meet our security needs. so that issue of future relationship of active guard and reserve will be at the forefront

of any decisions we make in responding to these budget issues. >> i would also ask if the goalposts we use to measure our objectives change, which they apparently are, and if you need a new set of requirements based on those changes before the end of the summer, i'm hopeful you'll let us know so we can obviously help in that regard as senator wicker pointed out, too. let us know what the needs are. finally, i've noticed, being on the veterans committee as well, that many of the soldiers that are coming home, and it's dramatically higher. even though many of them have higher technical skills, leadership skills and military experience, they feel disqualified for the lack of civilian military certificates. i hear it over and over again, and i'm wonder fg there ing if

system or something you would be able to do to help members transfer the military-specific skills and vocational experience and expertise to the civilian sector. nothing for today, but just something to think about, if there is a way we can have someone reach out and work that through. because when you look at how the state of israel does it, the employers actually seek out those folks because they have a higher work ethic many times, they're more experienced, and yet here, especially because of the fear of redeployment, and there's an artificial wall, i really harbor this thought. i wish you well. >> thank you, senator, and others are concerned about your transfer of veterans, and some of the reason we're having this problem is we haven't paid enough attention to our army

career and alumni program. sgrz you c >> you can talk about the army any time you want. >> we are well challenged, as well as with this committee, to determine how we can do a better job. >> senator lieberman? >> thanks, guys. just to have the opportunity to sit and listen to you, you've been really impressive today. we're lucky to have you in the service of our country. i think students of history, you know the details of reality that the military face and yes, it's common enough to say that you don't. i'm very glad the president hasn't nominated you and i'd be happy to vote to confirm you. i suppose if you say something from here to the end of the hearing that i think is overthe edge. this is a very moving picture. you used it to tell a powerful

story of trust. the story of his family back home, the trust of his unit and the trust that he has when he calls that someone is going to be there. it's the certainty, a different kind of certainty that those who wish us ill rgs that if they cross lines that we will respond. that they won't get away with it. it's not trust but it's a certainty that is kred il. in that regard, i was really surprised at your response to a committee in which you spoke about the threat posed to the u.s. by iran. you said, and i quote, with its

nuclear activities and its surrogate activities in southern iraq, there is a high potential that iran will make a serious miscalculation of u.s. resolve, end of quote. i totally agree with you. i do think in the case of southern iraq the iranians have been training and equipping shiite extremists who then go back and are responsible for the deaths of a lot of americans. that they have been making a miscalculation. in some sense, it's been based unfortunately on the fact that they haven't paid a meaningful price up until now for doing the things that they've done that have been so harmful to so many americans in uniform. so i just wanted to ask you -- i wanted to say, one, i appreciate the statement.

two, i wanted to ask you to elaborate on what you meant when you said there was a high potential that iran will make a serious miscalculation of u.s. resolve. >> thanks, senator. again, i've been out of iraq for about four years now. that doesn't mean i've lost touch with it or the leaders with whom i have remained engaged. it's their observation, in some cases supported by intelligence, but it's their observation that iran's activities in southern iraq are intend to do produce some beirut-like moment. and in so doing, send a message that they have expelled us from iraq. what i wanted to make clear in my advance policy question, my response, and as well today, is that while we've got soldiers in southern iraq, and as you know, my view is that when you put

united states military reserve, you place them someplace, it is the clearest sole verz of natural reserve. i want to make sure that's clear to everyone. >> i appreciate you, i hear you. it goes "best defense" what was said a couple weeks by ed mard mullen and edward pi naneta. the risk they're taking with the shiites, they're going back to southern iraq and killing our people. obviously, it's important once the people at the top of our military, like the three of you say iran takes it seriously or suffers consequences. and i just want to thank you for

that. i know you're a serious man, i know your word is credible. >> i want to spend a few minutes on the budget questions. important for all of us to think about. obviously we're facing a big budget crunch and everybody is asking to help get the country back into a balance. and so far as the military is concerned, this is not like the period at the end of the cold war. because we are actually still involved in combat in iraq and afghanistan where we're drawing down our troops. but the larger war with the islamist extremists who attacked us on 9/11 goes on on many different fronts in the world. i wanted to make sure i caught you right, that that's what you were intending to say, that this is a tough time to cut the military budget drastically

because we are at war. >> that is my professional judgment, senator, and if i could share my anxieties with you? >> sure. lay down on the couch. >> this is a three-legged stool. on the one hand, it is the responsibility of the military to provide capability options. in other words, we have to have a certain quality and a certain quantity because of the rotational requirement to sustain our effort. so that's one leg of the stool, if you'll permit me. the other leg of the stool, though, is if we don't demonstrate that we are sensitive to the challenges of the broader nation -- we're all citizens as well as soldiers. >> right. >> if we don't show that we recognize the nation has a significant economic problem and

then do our part, whatever that part may be to help stop it, we will be seen as simply putting up barriers and defending ourselves against what eisenhower famously called, you know, the military industrial complex. that's the second leg of the stool. the third leg of the stool is we've got an all-volunteer force with whom we must keep faith. it is that element of trust that i described earlier that will keep that all-volunteer force in the fight, inspired, serving our country over time. >> as we go forward, kind of the way i will assess how much of a budget reduction we can absorb will be on the basis of that. how many capability does it provide? are we contributing something so we remain connected to america and can we produce the all-volunteer force? on that basis, i think we'll be able to make a pretty clear determination. >> i appreciate that. that's a very balanced answer,

and i think you've got youfr anxieties well in control. and i would certify to your mental health. but thanks very much. good luck. >> thank you very much, senator lieberman. senator aya. >> thank you, mr. chairman. i very much want to thank you, general dempsey, and deany for your service, and appreciate you coming before the committee today. i wanted to echo on the question that senator brown had asked you about the garden reserve, your role in the forwarden reserve. we've all seen has been the case that, really, we haven't used the reserve as a true reserve. the contents we use as a real source. there was a need to do it but there's also a immediate to

cost-effectively use the guard. as we go forward in this difficult economic climate, how do you anticipate preserving that readiness that we have gotten as a result of having the garden reservuard and reserve, you intend to work with the guard and reserve going forward? >> we are working very closely with the guard and reserve. if there's something we're holding from them, it's not apparent to me. it goes back to the trust that has to exist in the army and the other services as well with their reserve components. i would like to just elaborate a bit on what you said about the cost effectiveness, because there is a certain cost effectiveness to the guard and reserve, but truthfully, that's not why we have them. why we have them is because -- i mean, we've had them for

centuries, but after vietnam, general crayton abrams said we would never allow ourselves to go to war without the reserves. he did that, because as he transitioned to an all-volunteer force, that was our way of staying in contact with america. so as we sit here today, the kbe is not will we have the participation of the guard and reserve, the reality is we cannot go -- cannot in place -- go without the guard and reserves. two-thirds of our sustainment capability is if the garden reserve and only a third of it, and we built it consciously that way so we would never again go to work. so as we go forward with these

budget issues, it's not about, are we going to make a stark position on one or another? >> that would include readiness in the duty as well as a military reserve? >> yes, ma'am. again, not to be completely transparent here, we have built some expectations on the back of oco, for example. on the level of readiness we can have in all components. we've really never had an army that was 100% ready to go all the time t. that was already considered a -- a training and every aspect for all components. all of that will be affected to some degree as we lose the ability to apply oko to our.

but it will be applied equally and fairly. >> thank you. i appreciate your comments about how important the guard and reserve is to our readiness and our country in national security. i also want to ask you, as chairman of the chiefs of staff, a very important role you have in providing the president and others with. one thing i'm concerned with is our detention policy, our interrogation policy, and during a june 28 hearing, i asked admiral mckraifen ten years into the rer ror and not had one. for group groups like al-qaeda and the arabian peninsula.

i wanted to find out from you it seems to me we've had to make some add hoch decisions and that puts our military in a difficult position. >> it could be, senator. i'm not being elusive, i'm understanding where i am about the issues. i think what we have in our detention of them rises more to the level of evidence simply in terms of intelligence, because there is a huge difference when you talk about the rule of law with what's based on intelligence, with what's based on evidence. i think we have to understand how agile we need to be and will personal issues. the other role i play is reas i

had vichl. when we have these individuals in custody, return them back to their fight. i haven't been involved with it, i haven't studied it to the extent i need to to engage you azh as articulately as i should, but i will. >> i wanted to highlight where al-qaeda and leader of al shabob was kept on a ship for three months. basically, we're making do, and i don't think making do is good enough, particularly when we're not going to be able to keep every single individual on a shift. so i would hope that you would look at this as a very important security issue.

as you mentioned, the reas i had vichl rate. you wanted to ask you, my time is almost up, but just about a particular case to ask you almost, who is someone that myself and eight senators, many serve on this question. he served in iraq and is also accused of collaborating with. we were going to. we got a letter saying that americans would release back to the iraqis. we're concerned that releasing thim is like releasing him back to the theatre. so this is another case i would ask you to be careful at, because it's one that demonstrates again why we need a detention facility that ensures

the security of these individuals so that they don't just go back to other countries that will just release them and then we'll be fighting them again. >> thank you, senator. >> thank you, general. >> thank you, senator ayotte. senator mansion? >> thank you, general, very much for your kind hospitality and we appreciated it very much yesterday, your stopping by unannounced and you're very kind. i would concur with senator lieberman that you're a sound person, and i think things will be very well. i'd like to ask two questions. one is on following up on senator ayotte. she had asked about the guard, and i know there's been discussions and concerns. would the guard ever have joint chiefs of staff or would it be equal footing on that? i know you've been reseptember acti

-- receptive in thinking about that and whether it's a possibility. >> i have been open on that, but also concern. one concern is i just finished, rather in elegantly, perhaps, describing how close we are -- i'm speaking again for the army, but -- >> with a need for the guard. >> and i don't know what that would do for the relationship if we have two or three stars over one force. one is more pragmatic. and that is, what gives me more authority for the chief, they would pay the budget. they would pay attention to me because i to use the resources that i'm given, so i'm held accountable for delivering it. i don't know what this means. they derive their ability from the title but also that they manage the city's budget.

if we had a national four-star on the joint chiefss. they have nothing to deliver capability, so i would have to sort that out. the other is concerning financial responsibility, and i think senator brown touched on the 10 million a day that was reported leaving kabul and the suitcases, which is about 3.6 billion a year, and not able to have a handle on that. i think you've been hearing about our debt discussions we've had. both democrats and republicans have anticipated another trillion dollars in savings. if it's not spent on the war, another billion dollars you'll spend in savings. someone anticipated we were going to spend that much and now

they're taking it as a savings. can you give me your thoughts on that? does it make sense to you at all that we would be saving something we shouldn't have been spend and spending and now they're all counting and booking it? >> senator, if you would allow me, i would take personal pleasure in telling you i'm not an economist nor a lawyer, so i can't go anywhere near that question. but i will say that we have done a great deal of work to try to figure out how to get on top of this issue of spending. the corruption that's going on as we go to afghanistan, and i think you know my personal feelings, that we should get out as quickly as we can, it's not going to fwet bettget better. they'll steal anything they can

as they already have. how we stop this blatant thievery. i sent the brigadier general over to stand up an anti-corruption task force and campaign. it's made some progress. in fact, i ought to have him come back and chat with you about what he's accomplished. i wouldn't suggest that anyone would drive corruption in that part to zero but we certainly can get closer to zero. >> you and i talked about contracting that goes along with the defense department and a lot of fraud abuse and waste there, and i think you showed a desire that you wanted to look into that in a much more critical way. also i would say also in the flight services, i know that we're contracting all of our flight services out to take our goods into that area, and with that, with nato also, has there been any types of decisions or

discussions on how we could best curtail that or use our own equipment, or are we just too strapped for that? >> i don't know the specifics, sir. i would simply say that i think we have to keep a contracting option open. we would, very quickly and very clearly, overwhelm our ability to transport the things that we need, ground or air, with our own organic resources. so i think the issue is really not walking away from contractor support, i think it's getting it under control. >> and i truly believe that on the draft what your opinions may be or if you have a position, but just your thoughts on the draft. of course, those of us sitting on this side thinking vietnam, the draft brought that skirmish to an end, and i'm assuming if

we had the draft today we would take a much more critical look at what we're doing there than we perceive now. so your thoughts on the draft. >> this comes up from time to time throughout my career, and that would very clearly be a political decision to go back to a system of universal suffrage. what i would offer you at this point in a discussion would be that i think the nation is better served by an all-volunteer source, and i could elaborate on why i bloelie that. but i think we would be better served by an all-volunteer source and would seek ways to conserve it rather than move this way to a draft. >> my reasoning for that question was because of all the deployments that the people or families are basically going through. it's a tremendous hardship, i know, to them and their families, especially in the guard back home to our small states that have a great

dependency on the guard. with that happening and the pressure that's put upon them and now with three wars going on, there comes a time when we spread ourselves so thin that the draft is the only option that i think we would have if that's the policy we continue down, unless we intervene and stop these senseless wars. >> without commenting on the wars, because sometimes i think, senator, wars choose you, you don't choose them. that's just a professional judgment, but i think that as we look at the lessons in the last ten years of war, i think we'll find the all-volunteer force actually perform better and more resiliently than its crafters thought it would back in the early '70s. but i think we need other options for the nation when we enter into conflict that can escalate and it can take longer than we thought. >> thank you, sir. >> thank you, senator. >> thank you very much, general. thank you for your willingness

to continue to serve us at this l level, and again, i look forward to approving you and look forward to your service. i want to say thank you. i'm going to actually do one quick thing on afghanistan to follow up on senator mansion. tell me from your perspective in regards to the security forces where we and our allies are working to train and ensure they have their own security force. the question i have, i know they are growing them, but what is their retention rate of those folks that once trained by us and doing the service for security at different levels. what's the retention rate they're able to maintain, and at the same time, are they increasing their literacy rate? because i know we were very successful in iraq because the literacy rate was also very high. here it's very low. so could you comment on both those elements, retention and

their literacy rate. >> i can, sir. retention has shifted over time for two reasons. one is in the early days, we were paying them at a rate that i think was probably too low to keep them. that was changed probably two years ago. and the other factor is seasonal. we have to remember these young men in afghanistan, and to a lesser extent in iraq, but in afghanistan, they're agrarian, so when the planting and harvesting seasons come and go, the attrition rates wax and wane accordingly. the general in charge of our iranian training monitors the situation. i don't have the number, but

it's in the number of 10,000 and growing in the literacy rate, the soldiers we've accrued learning english. you can develop it, and it's a little more challenging to develop the leaders to lead them. >> if you could get to my office maybe kind of what you see those trend lines look like over the last several years and where we're going in literacy atta attainment within our security force that afghanistan has, as well as the retention rate? can you do that? >> yes. the last time i touched them, the trend line on attrition was testing positive, which means we were gaining control of it. the trend line on literacy training was also training positive, but it's a very -- you know, that is a -- an enormous

slope to climb for all the reasons you suggested. but both trends are positive. >> if you could share that with me. i know the military does this, they always have a contingency plan about everything. plan, a, b, c, all the way to z. i'm assuming somewhere, and maybe it's not within d.o.d., but maybe it's a combo between d.o.d., state and other. assume the scenario we're out of afghanistan. there is a financial cost that we're going to be committed to at some point. i mean, for all the reasons, their economy can't sustain the security forces that we're training for and everyone else is training for. they don't have the money. so is there someone within d.o.d., state department or combo or one of the agencies that has looked at scenario acts that, out of afghanistan, here

is the u.s. commitment financially? >> yes, and i would add nato. it's very clear that as we reach 2014, as you suggested, there will be a challenge with afghanistan, and we will have to assist -- i say we meaning not just the united states -- >> but we'll have a commitment of some kind. >> i believe we will, yes, sir. >> do you know if that's something available to review with the costs, or is that something you can get to me to determine where i need to direct that question? >> let me contact the sen com commander that oversees that effort. i'll see if i can put him in touch with you or he can communicate through me. >> that would be great, thanks. obviously, we care greatly about

the expanse system, and they're working to finish up the missile defense system. can you tell me about the missile defense system in alaska and also north korea but has reached the east coast, very last second, last minute kind of iran issue. so, one, your thoughts on g.o.d. for alaska, but is there a need for a comprehensive system on the east coast? more robust in dealing with iran? if you could answer those two pieces of the question. >> yes, sir, the current strategy calls for republlicati what you would describe as air

missile on the coast. there is also some -- i'll describe them as very early nation discussions with russia about sharing early warning and things. it could be very, very positive. so i think this work is ongoing and important and i'll give it my first interest. >> and the situation in alaska -- you see where i'm going with this? >> yes. >> let me move to another subject, some members here last week from the d.o.d. was asking the same question. we're one of the few countries that haven't signed on to this treaty. we're hanging on with syria and iran and libya. those were people that were in company who haven't signed also, which is not the company i care to keep and i'm sure you don't care to keep, either. so can you tell me just your thoughts from a military

perspective on sovereignty? the complaint people have is this gives up our sovereignty if we sign this treaty? i disagree with that, i think it strengthens our sovereignty. can you give me your thoughts on that? >> yes, i support the other leaders who have testified that it will improve our sovereignty and security if we enter it. >> i have one more thing i'll enter for the record. in this very tight budget, it's a big challenge. we dealt with some cuts that had to be dealt with, but how we balance this with personnel and ensuring that we have a robust system and making sure the benefits are there, at the same time how do we balance with some of the infrastructure. i have a more detailed question that i'll submit for the record, but that's the gist of my question, how will you manage that to make sure we have the

fighting men and women that we need but at the same time deal with some severe budget constraints. so i'll just submit that for the record, if that's okay. >> okay, senator. thanks. >> thank you very much. good luck. >> senator graham? >> thank you, mr. chairman. congratulations on your nomination. i know you'll do a good job, and your family is proud, and this is a special time in your life. but iraq. there are increasing reports coming from iraq that iran is introducing weapons into iraq and to shiite hands, iups and more rockets. is that generally true? >> i've heard both general austin and others state that they have intelligence that suggests that is true, yes, senator. >> and the argument is that they're trying to claim they drove us out of iraq, the iranians. do you generally agree with that assessment? >> i obviously can't speak for their motivations, but i will say that my contact with my

colleag colleagues, many of them believe that's the case. >> what is your message to iran, general dempsey? >> it would be a gross miscalculation to believe we will simply allow that to occur without taking serious consideration or reacting to it. >> i think that is a very sound position, and i doubt it rain ya -- if the iranians are watching, but they should be listening because i think it would be a gross miscalculation on their part to believe you can kill americans and nothing comes their way. if iraq requested additional troops to remain in 2012 in iraq, do you think it would be wise for us to agree to that request? >> i do, senator. >> and i think there's plans in the works to try to come up with a formulation?

somewhere around 10,000; is that correct? >> i don't know the number, senator, but it would be a number where we could provide the capability that they would request that we would be able to protect ourselves, and it would have to meet both of our nation's mutual interests. >> right. one, they would have to ask. one of the concerns, the forces we have along the kurdish-arab fault lines, there has been no fighting but there's been skirmishes. i guess you would you want to have some sort of referee along those lines; is that correct? >> i have heard discussion of that being one of the capabilities we could provide if asked. >> let's move to afghanistan. there is a lot of talk about 2014. my view is that the drawdown of all surge forces by september 2012 is rigged in the debate of

america leaving and the enemy is seizing upon that drawdown schedule. one thing we could do in my view to kind of set that debate is to enter into a relationship with the afghans if they request it post 2014. several months ago, i asked secretary gates about his view as to whether or not he believes it would be wise to have an enduring military economic and political relationship with iran if they requested such a relationship past 2014. and what he said regarding a security agreement, he said a security agreement with afghanistan that provided for a continuing relationship in some kind of joint facilities and so on for training and counterterrorism and so on beyond 2014 i think would be very much in our interest. i think it would serve as a barrier to iranian influence coming from the west, i think it would serve as a barrier to reconstitution of the taliban and others coming from the

border areas of pakistan, so i think it would be a stabilizing effect not just in afghanistan but in the region. do you agree with that? >> i do, senator. >> and as i understand, there is some ongoing negotiations between the afghans and our government to have a stabilizing, enduring joint relationship on the military side past 2014; is that correct? >> i read that in the open press, senator. i have not been brought into that dialogue, but i've read the same reports you have. >> but as a senior military adviser to the president, if you get this job, you would recommend we go down that road to send the right signal to the afghans and the region; is that correct? >> i would, senator, and that's without putting any assumptions about how long or how big, but i think that simply the thought that we would have an enduring relationship could send the right signal. >> let's look at this photo again, this photo of this non-commissioned officer basically calling for assista e

assistance. it's called "trust" and i think it's a great photo. one of the things i worry about is that allies of the united states, partners of the united states, need to trust us. do you agree with that? >> absolutely. >> so a lot of people in afghanistan and iraq have taken on radical islamic extremists, and they've paid a heavy price. is that true? >> they have, senator. >> the afghanistan and iraqi people have paid a very heavy price fighting for their freedom. so what i'm trying to impress on people back home, at noon i'm going to get asked about why would you invest money in the schoolhouse and afghanistan when we need improvements in our schools in south carolina? how would answer that question? >> i would probably say that it's important to remember that we went to afghanistan for our national interests, not theirs. and there is a residual requirement for that, for how long as we deem our ability to

do so, but this isn't about doing things just for them. in some way it's about doing things for us. >> one way to defeat radical islam is to providen -- provide an education to young women and men to stabilize. do you believe in that? >> i do believe in that. >> it may be more security in the united states than a brigade in afghanistan. >> it may very well be. >> killing and i congratulate t president and cia and all those who stayed on the case. but i have a theory that killing terrorists only takes you so far when it comes to security. the ultimate security is partnerships, partnerships in the region who if they had the capability to marry up with their will, they would fight back against with these radical elements. i know it's more labor

intensive, costs more money, but i believe the payoff is greater. what is your view of our nation's security being enhanced by having countries like iraq and afghanistan becoming stable representative in nature and generally aligned with us and rejecting radical islam? would that be a transformational event on the war on terror more than killing bin laden? >> i think it would have benefits beyond more than just the war on terror. i'm an advocate on building global relationships, both to promote our values, to have partners who can help us when we encounter an uncertain future. i just think that we are better and we're better army when we are out and about and interacting with our peers. >> thank you, senator graham. senator collins? >> thank you, mr. chairman.

general, first congratulations, and i thank you for your many years of service. and what was apparently one of the briefest tenures as the army chief of staff in history, i think. let me ask you a series of questions. the president's budget proposes that we move to a smaller army and marine corps. and in response to questions for the record, you indicated agreement with the reductions in end strength that are included in the president's long-range budget. my concern is that we have heard repeatedly from military officials and mental health experts that a dwell time of two years at home for every one year

deployed is the minimum time necessary to preserve the long-term mental and physical health of our forces. and certainly, the army and the marine corps have borne the brunt of the two wars in which we are now engaged. if we're not counting libya, as well. what will be the impact of your view of reducing the end strength on our ability to meet those dwell time goals? >> well, senator, that's actually my responsibility as a service chief with my fellow service chiefs and the current chairman is to take the budget charts we've been given and determine how we provide capabilities, how much modernization, training,

maintenance, and readiness at -- this is your point -- at a rate which we can sustain the all-volunteer force. and for the army, it is a one-year deployed to two-year home bog dwell ratio. some of it is art and some of it is science. the science of it is to apply the force you can afford and see if you can sustain it. and we're running those models and that analysis right now. >> i hope that you will keep a very close watch on this. i think it's absolutely critical. and i understand we're drawing down our troops in afghanistan and iraq. but i'm very concerned about the strain and pressure of repeated deployments. and this strikes me as the wrong time to be reducing the size of our force. and so i think we need to watch that very carefully. let me turn to an issue that

senator webb raised with you. and that is sea power. the fact is that our navy currently has the fewest numbers of ships since before world war i. now, our ships are clearly more capable than they used to be. but as an admiral once told me, quantity has a quality of its own. and you do need to have a sufficient number of ships. i'm concerned by what we see in china with an enormous build-up by the chinese of their fleet. i'm concerned by a february of this year report by the navy on surface ship readiness that found that 60% of the fleet is underway at any given time.

43% is forward deployed. those figures represent historic high percentages. our national security demands are growing. the ships are now going to be playing a very important role in ballistic missile defense. and the fact is, that we have a gap between the 285-ship navy that we currently have, and the 313 ship navy that the cno has described repeatedly as the floor, as the absolute minimum. so first question, do you support the navy's goal of increasing the number of ships that we have to 313? >> against the current strategy, senator, i do. i would only caveat it by saying that as we do this analysis of

resources, we may have to actually change our strategy. we may reach a point where we say as joint chiefs, we cannot achieve the strategy. here's the recommendations we make on changing our strategy. whether it's forward presence, whether it's allocating resources, or not to building partner capacity. in other words, your point hits exactly at the challenge i face, we face, which is we have a strategy, and we have the means to execute it today. the means will change. we'll make some adaptions on how we do things, but at some point we'll make a point where we have to recommend to the president that we have to adapt or revise our strategy. we're not there. so in answer to your question right now, i absolutely do agree with the navy's ship-building program. i'm aware how it supports their

air/sea/battle concept. i'm aware what it does with anti-access denial activities. it's the right strategy with the right resources for today. and if the strategy changes, then i'll change my opinion about it. >> my concern is that the budget is at risk of driving the security -- the strategy rather than the other way around. the way we should be doing this is determining our military requirements and have that dictate our resources, not the other way around. there's certainly a savings to be achieved. i'm going to submit a couple of questions for the record on overseas basis, military construction, overseas on some procurements that our homeland security committee has looked at that has to do with the enterprise resource programs,

which are now sole source contracts and have enormous cost overruns. but let me just use my remaining seconds to bring up a report that senator liberman and i produced through our homeland security committee. and it was on whether or not the ft. hood shootings could have been prevented. i want to make sure to bring that report to your attention because while we found that there was very poor communication between the fbi and the army, we also found that the army had sufficient evidence on its own of major hasan's increasing radicalization. we found that there was a flawed personnel evaluation process that was very troubling. because not only was his

radicalization evident, but the fact is, he wasn't a good doctor. and yet, many times he received outstanding ratings. one of his supervisors actually told the people at ft. hood, you're getting -- and yet that physician had an outstanding rating. so i would ask you to take a look at the rating process throughout the department of defense. i think that's absolutely critical. >> we actually are in the process of taking those lessons learned and adapting policies. but i will continue to work -- you have my commitment for that. >> thank you. thank you, mr. chairman. >> thank you very much, senator collins. senator hagan. >> thank you, mr. chairman, and

general demsy, i want to welcome you and looking forward to your confirmation and to mrs. dempsey, it's always a pleasure seeing you and i know this is definitely a team effort. >> i thank you for all your past service and sacrifice. >> recently i joined several of my colleagues in sending a letter to the secretary of defense, secretary gates regarding findings of the military leadership commission. issued a decision earlier this year. and this is

fields is the dod and service policies that prohibit women from serving in occupations involving direct. combat. the commission recommended dod and the services conduct a phased elimination exclusion policies. what do you think are the opportunities and risk for eliminating combat exclusion policies for women? >> yeah, thank you, senator. there is a dod task force, in fact, looking at what have we learned over ten years about the nature of current conflicts? and, of course, i don't have to explain this to you, you have visited. but the nature of current conflict is there's no front line and back line. so some of the rules we have in place on co-location, for example, are simply outdated and need to be revised. and we're prepared to do that as an army now. now, again tdod task force is

looking both at co-location issues, but also at the issue of changing access to particular military occupational specialties. that work should take place here in the fall. i fully support it. i think we will learn that there are additional opportunities to be made available. and my commitment to keep that on my agenda. >> thank you. and i think from the fairness standpoint, it certainly has to be on a level playing field so that we can have very talented people in the upper levels. i also wanted to ask the role of pakistan. pakistan is a key regional actor in central asia. right now our relationship with pakistan is complicated. pakistan is obviously an important player in terms of regional stability in central asia. can you describe the -- how the pressler amendment has affected

our relationship with pakistan? and how do you feel the united states needs to interact currently with pakistan and in the future? how do you feel we should use the aid as a weapon of influence based on the current relationship that we have now with pakistan? >> yeah, thank you, senator. i think pakistan is an enormously important country in the central command area of operations. in fact, when i was the acting commander, i considered it to be among probably the top one or two countries to be addressed. and we've had as you described it yourself, a very complex relationship with them. i think it's one we need to stick with. and to your point about the pressler amendment. that was a period in our history where we made a determination that we had such stark differences with pakistan, notably on the issue of nuclearization that we would cut off not only all aid, but all contact. and as a result, we have now a

generation among the pakistan military. we have a generation of officers. generally field grade majors and lieutenant colonels. who not only know nothing about us, but are somewhat antagonistic with us because they had no contact and remember a period of time when they were prohibited from having contact. i think that's a mistake. so the point would be i think as we go forward to pakistan, i think we should continue to find areas of common interest, and there are plenty of those. and i think we ought to acknowledge where we have differences, and there ought to be consequences for greater or lesser cooperation. but i think we got to stick with the relationship. >> thank you. >> i also wanted to ask a question. and about the military assistance for education. i know that the gao released a

report back in martha focused on the military transition assistance program. and my understanding is that oversight of the education programs receiving tuition assistance funds is really lacking. and the for profit schools in particular have used in some cases improper tactics to enroll troops. and i'm also told that just this week the pentagon has imposed new rules for online only schools in which our military are using the tuition assistance dollars. and this is a direct result from the findings in the gao report. and i think that's positive. but i also feel strongly that these rules need to go further. shouldn't these rules -- and we're talking about the online also apply to brick and mortar institutions so that all of the for profit institutions are held to the same standards whether they're online or not? and additionally, with all of

the fraud and abuse that we've seen, do you believe these rules should apply to all dod and va benefits and not just the tuition assistance programs? >> yeah, an interesting point you raise. we are focused at this time on online education, but it certainly seems logical we would be focused on making sure these soldiers get best value for the money whether they're in a brick and mortar schoolhouse or online. but as you know, this next generation is more likely to seek education opportunities online. that's probably why we've chosen to start the process there. i would support the idea that we should take a look at both. >> thank you. >> thank you, mr. chairman. >> thank you very much, senator hagan. >> thank you, mr. chairman and, general, congratulations on your nomination, well-deserved. i believe i'm the one person standing between you and a very well-deserved break. so i will to be brief.

you've had a very distinguished career and i look forward to working with you. let me ask you a few questions i could on the fiscal side. because we find ourselves in, unfortunately, very difficult, economic, and fiscal times. the current chair of the joint chiefs has talked about this. in january he said and i'll quote the pentagon budget has doubled over the last decade and my own experience is that in doubling we've lost our ability to prioritize, to do tough decisions, to make analysis, to make trades. he also issued this quote -- the single biggest threat to our security is our debt. ask a couple quick comments. one, do you agree with him on his famous quote about the debt being our biggest national security threat.

second, do you agree with the hard decisions? >> our economic condition is the greatest threat to national security. i don't agree exactly with that. i'm very -- >> fiscal he said, not economic. >> fiscal. >> the way i would prefer to describe it is the issue is national power. we derive our national power. our influence across the globe, that is all derived from the combination of three things. you can't pick or choose. you have to be strength -- you have to have strength in the military arm, the diplomatic arm and the economic arm. so to the extent that he says our economic arm has weakened, therefore we are lesser capable across the globe, i buy that entirely. but i don't want to find myself in a position of voting that one or the other of those is more

important than the other. on the issue of to the second part about whether the pentagon has lost the ability to prioritize. yes, i think i would probably say that you develop sort of cultures over time. when times are kind of flesh with resources, the culture becomes that you just aren't forced to make those kinds of decisions. and then when the cycle returns and resources are more constrained, it requires a change in culture. so, yeah, i agree with that. >> let me dig deeper on that with one issue, which is the acquisition side of your future role and your current role as a service chief. i just left the contracting subcommittee, the ranking member on the governmental affairs where we're talking about the tough fiscal conditions we face. now we need to have government

doing more with less. and my time here in this committee and witnessing some of the challenges we have in fielding capabilities for the services in a timely way, it seems to me there's a few common themes. surely there's a lot we can do in the acquisition process. the chairman and others have been involved in that over the years. but i hear also attributed to the way the department develops requirements. i'm involved on a broader scale and looking tat joint strike where we're looking at projected cost overrun of $150 billion roughly, unbelievable. you and admiral wynnefield are going to be in the middle of all this. it seems to me the attempts to look at data and analysis and get away from some of the litany of documents and lock step is a good thing. a lot of this early on in the programs is time consuming, it's a lot of paperwork, it's a need

to meet review requirements. and the intent is certainly the right one. we need to figure out what we need before we develop it. but something's not working here. and i wondered if you could talk about this. do you think some of these efforts are significant enough? and what would you do to ensure that real change occurs? >> now, i completely agree that the status quo is unacceptable and the system itself does require reform. and as you know, the undersecretary of defense for acquisition as carter is working diligently based on some of the guidance we've received from the congress of the united states. i think there are some answers, actually. i think the service chiefs need to have -- to have a greater role throughout the process. right now we tend to have a role, but then the process is handed over to find a material solution. i think we have to partner more closely throughout the process from start to finish with industry.

and i think we -- i think we need to take a shorter time horizon on acquisitions. the way requirements creep is when we have decade-long programs which allow it to remain open, and for guys like me to keep stuffing things through. i think the answer is greater collaboration between requirements, determination, materials, solution, greater collaboration with industry earlier, and shorter time horizons as a start, but there's probably other opportunities, as well. >> i think we're going to be forced to make some of those decisions. by the way, you said ask carter is looking at some of these issues. i can't help myself, mr. chairman, say that some of the guidance i think it's fair to say from congress on the second engine is not being adhered to. and that is, we want competition. >> i had more in mind. the weapons system reform act. >> i know. i just think we've got to go to

competition wherever possible, get the costs down, and be sure it's open and fair. financial management. i want to get your thoughts on this. we recently had a debate on this on the floor of the house because the senate chose not to have so many positions be confirmed through the normal process, which is a good thing, streamlining it. and i offered an amendment and support it by many in this committee saying there's some folks in the federal government who ought to continue to go through a process because we want to give them the stature that comes with that and that included the financial manager officials in the department, including the controller. and we were successful in getting that done. and the reason we did it again was to be sure that those folks are listened to by others who are confirmed. and those who are in the civilian leadership are usually who we talk about this issue to. i would think the auditing function to ensure you have financial officers in every service who are getting the attention from the leadership is

extremely important. and i would hope that the uniform leadership would continue to play a role. in fact, i would say even a more active role. some would view those as not important. i would say in these times, it's incredibly important. the marine corps recently showed this, i think, by focusing more on financial management. they claim a $3 rate of return for every dollar spent on financial management, for instance. as one member, i will tell you, i would hope that you personally will get engaged in this issue with increasing pressure on the pentagon's budget. we're freeing up funds for critical needs by focusing on financial management. can you give me your quick thoughts on that as a service chief now? and how you intend to approach this as chairman? >> as a service chief, i absolutely concur that -- we describe them as em deps.

the long tail -- actually it's 17% of the emdeps have about 15% of the challenges. that's where we tend to focus our sights. but there's another 50% out there that total $3 million, $4 million, $5 million and we're in one of those environments where we've got to be paying attention to all of it. as you know, we're on path to become auditable by 2015. >> thank you for your willingness to step forward. >>female speaker thank you very much. senator portman? i would recommend to you relative to the issue of contracting in afghanistan a report, which was a major report of this committee in october of 2010 entitled inquiry into the role and oversight of private

security contractors in afghanistan. it was a long investigation, a detailed investigation, a very disturbing investigation about the shortfalls of our private security contractors and the regulations and the policies needed to governor their operations. so the article we saw in the paper the other day about some of the funds ending up in the hands of our enemy. was based on that investigation made references, as a matter of fact, to the investigation. but in terms of trying to put an end to some of the ways it is going on relative to contractors in afghanistan, i would recommend that very detailed report that we all worked so hard on. and i was intrigued by your comment about how much personal pleasure you take from not being a lawyer, but i will not pursue

that, being a lawyer. and since i'm interested in your rapid confirmation -- and unless there are any additional questions from senator portman, we will with thanks to you and your bride stand adjourned. and thank you, and we will seek a very rapid vote of this committee and hope for confirmation. >> thank you, senator. the house and senate will turn their attention to the debt compromise. they will have speeches and then resell legislative business at noon eastern. the senate returns at 10:30 a.m. eastern. you can watch live coverage on

the house on c-span and the senate on c-span2. next, testimonies on the effects of health-care law on small businesses. we will hear testimony is of a house subcommittee regarding medicare and medicaid services. this is half an hour. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] --2011]

>> although the health-care law will not be implemented until 2014, businesses are already feeling the effect. they are worried that the loss could lead to higher taxes, more administrative burden, and a deficit, without lowering costs for making americans healthier. they will be required to offer coverage or pay penalty under this new law. the tax credit that has been savaged must offset the insurance and is a temporary and narrow one with the full credit applies only to the smallest of businesses. if your firm has more than 25 employees, you are one of the 23 million self-employed, and you qualify for no credit whatsoever. we hope small-business is are

concerned that regulatory requirements made trough -- draw some carriers out of market, resulting in fewer options in premium hikes. we are concerned that some may not offer coverage. and wonder what the cost will be to taxpayers. this is while our economy is very fragile. and there is still a high unemployment rate. it is not surprising that small business owners continue to be hesitant to create jobs. there are more regulations ahead. during the health-care debate, one of those was that if you like your current health care coverage, you would be able to keep it. for a number of reasons small

business may be driven out of its current plan. there is a prediction that half of all the employers and less than 80% of small firms may relinquish grandfather status by 2013. this means that small business owners and workers may be forced to go to a higher-priced plan where drop insurance altogether. the goal of the health care law may have been to make health care insurance more accessible, but it's causing many small businesses to postpone hiring and expanding. i think the witnesses that are here today participating. i look forward to hearing their input on how to reduce the impact on some of the health-

care losses and uncertainty and requirements for small businesses. i now yield to the ranking member. >> thanks. richman for his opening statement. >> thank you, madam chairwoman. thank you for yielding. today's hearing will focus on the health insurance landscape for small businesses since the passage ofhe health care bill. currently, employers are the principal source of health insurance in the united states providing benefits for more than 158 million people. given the role of business in providing insurance, two questions have been raised about the affordable care act. first, will small firms be able to keep existing health plans and equally important, how will the affordable care act affect small firms' decisions to offer coverage. these are the questions we will address today. small businesses face numerous challenges when choosing a health plan. this includes making tough choices about coverage benefits, which physicians should be part

of the insuror's network and what co-pays should apply to services. yet with all these challenges, costs remain the greatest barrier to coverage. according to one report, ove the last decade, health insurance premiums have increased 113%. the affordable care act was enacted to lower cost and create more quality health care choices. still, the legislation has not been without its critics. some have argued that small firms will not only lose their ability to keep their plan, but most will drop coverage all together. we will hear from the administration and witnesses on both of these issues. one on the matter of retaining current health plan, cms has issued regulations outlining how firms can maintain so-called grandfather status. the regulation provides latitude for firms to make changes because of rising prices. it also clarifies for firms what they need to do to keep their plan despite aca changes. while protecting small businesses' ability to retain

plans is important, the reality is many firms will make changes. historically, small firms change plans due to rising prices or different benefit needs. now small firms will be afforded better service and choice when choosing a new plan. the affordable care act not only creates new incentives but maintain laws that encourage employers to purchase insurance. most notably, the employer provided benefits remain tax-free and employees can still pay premiums on a pretax basis. since 2010, small firms have been eligible for a new health insurance tax credit. one of my constituents, miss williams, provides a great example of how firms are using this successfully. she owns a private health clinic in new orleans and was able to avail herself of the new tax credits. now all 12 of her employees have health care coverage and she said she was very pleased with the new health care legislation and its benefits for her

employees. in addition to the incentives, insurance reforms are already on the books that benefit small firms. no longer can insurance companies discriminate based on pre-existing conditions or raise premiums without adequate justification. again, starting in 2014, private health insurance exchanges will create a virtual market for buying insurance. exchanges will provide another option and enhanced competition. something lacking in the small group market. with all these changes, what will all these changes mean for small businesses. one study predicted that employer sponsored insurance could shrink by over 2. however, others such as those by the rand corporation and the robert wood johnson foundation found that small firms would increase coverage. this hearing will give members of the committee the opportunity to discuss the affordable care act and its implementation, insuring that small firms can keep their plan while making coverage more affordable is critical. i want thank director lawson

and the witnesses that have taken the time out of their busy schedules to be here today. i look forward to hearing from all of you and with that, i yield back. >> thank you. as you can see, some of our other committee members have not arrived yet, but i will state for the record that if they have any opening statements, they can submit thafor the record. would like to take a moment just to explain the timing lights. you will each have -- you will have five minutes to deliver your testimony. the lights will start out as green. when you he one minute remaining, the light will turn yellow. finally it will turn red at the end of your five minutes, and i ask you to try to adhere to your five-minute time limit and you have the button there to push to speak intohe microphone. our first witness is mr. steve larson, who is director of the centers for consumer information and insurance oversight. or the cchio, with the centers for medicare and medicaid

services. prior to his current position, mr. larson served as director of the division of insurance oversight at cchio. welcome, mr. larson. you will have five minutes to present your testimony. thank you. >> good morning, chairwoman, ranking member and members of the subcommittee. thank you for the opportunity to discuss how the affordable care act is improving the affordability, accessibility and quality of health insurance available to small businees and their emplees. providing and maintaining health insurance coverage for employees has been a challenge for small businesses for many years. states have struggled for decades really to improve their small group health insurance market and i know this from my many years of experience as insurance commissioner in the state of maryland. small businesses pay significantly more than large firms for the same health insurance policies. some estimates put that at about 18% more. there are a number of reasons for this.

small businessesack the purchasing power that large employers have. administrative costs for insurors in handling small businesses are much higher than for large businesses. small businesses usually don't have the human resources staff to navigate through the difficult process of choosing between health plans. prices for insurance for small businesses can be more volatile due to the smaller risk pool compared to large businesses, and employees in small businessesre subject to medical writing in -- medical underwriting in many states. this means that the rates that small businesses are charged can spike if just a single employee becomes very ill. the affordable care act addresses these challenges in the market and helps close the gap between sll and large businesses' ability to offer health insurance to their employees. first, starting in 2014, small businesses will be able to reduce administrative costs and pool their buying power by purchasing insurance through the exchanges. the exchanges are ste-based

competitive marketplaces fo buying private health insurance. small businesses will be able to buy health insurance through a part of the exchange called the shop. shops will give small businesses and their employees many of the advantages of large employers, that large employers have today such as more choice, more competition and more clout in the marketplace. these shop exchanges are a one-stop shop where small businesses and their employees will be able to easily compare health plans, get answers to questions and then enroll in high quality health plans that meet their needs. health plans that participate in the state exchanges will compete for business on the basis of pre and quality. in this type of market competition has the power to drive improvement in both plan quality and affordability. we recently issued draft regulations which will provide states the flexibility to provide small employers with a range of options on how the employers offer coverage to

their employees. for examp, a small business participating in the shop exchange may choose a level of coverage and a level of contribution toward that coverage and then employees will then choose among the health plans available on the exchae within that level of coverage offered by their employer. or employers may provide to their employees a broader range of options such as shopping for any level of coverage among competing health plans. under the proposed regulations, the employer would write a sing check to the shop, reducing administrative burdens. the shop is a premium aggregator would handle the administrative functions that can burden the small business owner. shops will simplify the employee decision-making process by providing side by side comparisons of health plans' benefits, premiums and cost sharing. not only will the affordable care act benefit small employers by enabling them to pool their buying power, it will also protect them from premium spikes

caused by an employee's illne. beginning in 2014, the aca prohibits new health plans from rating on the basis of health status or claims history. in addition, the law limits how much insurors can increase rates based on employees' ages. the new rating limitations will help make small businesses' health insurance rates fairer, more predictable, and easier to understand. in addition, limit on health plans medical loss ratios will also save small businesses money as insurors that fail to meet the mlr standa will provide rebates. finally, the law established a small business tax credit that's making health coverage more affordable for small businesses. the tax credit is designed to encourage both small businesses and tax-exempt organizations to offer health insurce coverage to their employees for the first time, or to maintain coverage that they already offer. small businesses are already benefiting from the affordable care act and those benefits will expand dramatically as the aca continues to take effect.

thank you for the opportunity to appear before you today to discuss the affordable care act's critical provisions to support small businesses' ability to offer health insurance to their employees. >> thank you, mr. larson. i'll begin the questioning. generally, grandfathering should allow you to keep the coverage you had when the health reform law was enacted, with some exceptions. the jun 17th, 2010 and november 17th, 2010 rules on grandfathering list several changes that disqualify a plan from being grandfathered. e rules seem to leave open whether other changes will be disqualified and leave open the possibility of additional administrative guidance. to explain how plans must comply to continue to be grandfathered, i'm wondering how can small businesses count on andfathering if the guidance

is vague and the rules may change as we go along. >> sure. well, as you point out, we put out the initial interim final rule back last summer which laid out kind of broad categories in which small businesses and health insurors have flexibility to alter some provisions of their health coverage but not so much that it really changes the fundamental nature of the coverage. we received and hav reviewed various comments on many aspects of that regulation. we did, in fact, amend the interim final rule to provide actually more flexibility to businesses and small businesses to maintain their existing coverage by allowing them to, for example, switch carriers if they wanted to switch carriers, if they thought they could get a better deal. so in fact, although we have amended the initial guidance that we put out last summer, we have done so in a way that really provides more flexibility

to small businesses and tohe health insurance issuers that provide that coverage. >> i have another question for you this time. small businesses are concerned about the possible mandates in the health care laws minimum essential benefits package. because many w services, treatments are likely to be required, the cost of premium is also likely to increase. what can you tell us about the institute of medicine's forthcoming recommendations on the essential benefits package? >> well, i can't tell you much about what they're going to say. we haven't received their recommendation, but if i can just summarize the process that we will follow and i would add that we're i think like you very aware and tuned in to the need to make sure that the package of essential health benefits is an affordable package. there's kind of a multi-step process that we're following at hhs. the first step was that the

department of labor performed a survey of employers to gauge what were the typical benefits at are offered in employer-sponsored coverage today, and we have got that survey. that's been published. the secretary also as you point out did ask the ititutes of medicine to recommend to us methodologies or ways to think about how we should define t package of essential health benefits, but i do want to be clear because i know there's been some confusion on this. the iom is not the body that will be charged with defining what that list is. that's left to the hhs and we will do that and i think we have announced previously that our objective is to have that guidance out sometime this fall. we know there's a lot of interest in that, both in the states and among businesses and insurors. so we're hoping to get that guidance out this fall. >> so basically, you do anticipate that there will be additional administrative guidance on the

grandfathering -- >> on the essential health benefits, yes. on the grandfathering, i can't speak to that at this point. i don't think we're anticipating anything. but we continue to review these and as they need to be tweaked and improved, if that need arose, then we would look at that as an opportunity. >> i now yield to congressman altmaier for his questions. >> director larson, ank you for being here. economists have predicted that the employer mandate will lead to dramatic declines in employer-sponsored coverage, as you well know. in your view, will most small firms drop their coverage or simply pay the penalty and what do you expect they will -- do you expect they will continue providing health care to their workers? what do you expect the outcome will be? >> we do expect small employers to continue to offer employer-based coverage. it's really a cornerstone of our economic system, of our

employer-based insurance system. if you look at a number, i know there are a number of different studies out there, but if you look at for example the rand analysis or the urban institute, there are those two, for example, i think predicted significant incrses in the offer rate, not decreases but increases. for example, rand predicted that you would see an increase for very small businesses, i think for example nine or less employees, from about 50% today to about 70% in the future under the aca. the numbers were similar for the urban institute. >> regarding the medical loss ratio in particular, as you know, the aca requires insurance companies to spend at least 80% of their premiums they collect on medical care. what will this change mean for small firms, how will it affect the cost of coverage, in your view? >> the mical loss ratio provision of the aca is a very

important and helpful provision to small businesses and individuals, because it applies to individual purchasers as well. it helps to provide value to small businesses when they are paying their insurance premiums by ensuring that issuers are not spending inordinate amounts on administrative expenses so it drives efficiency in the issuers for the insurance company and that creates value for the premium dollars that small businesses are paying. >> now, the companies would argue that it doesn't just drive efficiency, they might dispute that on its face, but they also would say that it's going to drive small insurors out of the health insurance market entirely. do you have a response for that? >> we don't think that's the case and we han't seen that. i guess iould also hasten to add that the affordable care act specifically provides states and the secretary with the exibility to address at least

in the individual mart the medical loss ratio provions. in the small group market, in fact, many states already had in plac medical loss ratio targets. i think there were around ten that already had an 80%, there were a handful that had less than that. so that was already present in the marketplace and many insurors were already used to pricing to an 80% level. >> do you envision cms playing a role in ensuring comtition in the market? were you given that authority under the law, and are you going to -- >> well, i mean, when we get to the exchanges in 2014, competition is kind of the cornerstone of what we're trying to accomplish in the exchanges. we will be working actively with the states as they set their state exchanges and to the extent that we're operating a federally facilitated exchange, we will do everything we can to make sure that there's competition among insurors. the exchanges are all about competition among private carriers to the benefit of small businesses and individuals.

>> last question, madam chair. since 2010, eligible small firms have had the ability to obtain a health care tax credit and according to the nfib information provided to this committee, 1.1 million small businesses are eligible for either a partial or full credit. while i realize the irs administers that credit, does cms have any estimates on employers taking advantage of the credit and how it's lowered their costs? >> yeah. i know that there are varying estimates about both the eligibility rate and the uptake rate and some of it's survey-based. we are currently working with our colleagues over at treasury and irs to get an estimate on what that is. i apologize, i don't have it for you here today. but we hope to get that so. >> great. thank you. >> thank you. i have aouple more questions for you, mr. larson. small business owners have told us the new law and its regulations are vaguand we mentioned that already, and they don't know what is required of

them. for example, many aren't sure of the employer mandate applies if they have employees who are working 30 hours a week orless. if they currently offer insurance to the individual employee, they aren't certain if the new law requires them to also cover the employee's family. how are the small business employers who have -- who don't have the benefit to large admistrative staffs orutside benefit counselors to advise them to be expected to comply with the complicated law and its numerous regulations? can you clarify some of that for us? >> yeah. that's a very important question. i think some of the surveys that have been done, althoughe don't necessarily agree with many of the points that came out in the nfib report or the mckenzie report, i think one thing that comes through clearly in those is that there still remain a lot of questions among small business owners. either they don't understand the law, they don't feel they have enough information.

i think that's an important point that we have to take note of, that between now and 2014, we have to continue our efforts to reach out to small businesses and ecate them. there are some tools that will be available, for example, in the exchanges. there's a role of these entities called navigators which are going to help people understand the health care law, understand how to access the exchanges. but there's mor work to be done there and i think there's been confusion. some misinformation. i think it's something that we definitely need to focus on between now and 2014. >> new regulations require insurors to spend 80% to 85% of premiums on direct care for patients rather than administrative costs. these requirements may be difficult for small insurors to meet, driving them out of the market, limiting consumer choice and raising the cost of insurance, which is of course as the market decreases, that's always the risk. how can small insurors compete when they don't have the resources or economy of scale to do so?

>> well, we're certainly sensitive to the need to maintain competition. ultimately, the affordable care act provides some flexibility in the individual market but less flexibility to mody the mlr standard in the small group market. however, again, i think as i mentioned earlier, there were already existing in many states a medical loss ratio standard at or about the standard set out in the aca and i think that provided a benchmark from which carriers, you know, could launch from. >> interestingly enough, very recently, in fact, last friday, last friday edition of "the hill" newspaper had a front page artie titled "health care law could leav families with higher costs." the article describes the debate over what the story terms a major provision of t health care reform law which provides

that if a worker has employer-based coveragthat's affordable for the employee only, the family is eected to take the employer coverage even if it is unaffordable. is this the correct interpretation and can you clarify some of that for us? >> we are actual looking at that very issue which is the interpretation of the application of the tax credit to the individual, to the family and who qualifies at what point, when an employer makes an offer, is that binding on the dependents of the family members of the employee. we are anticipating in future guidance to clarify this and a number of issues relating to the application of the tax credit and how it works. we put out a first kind of wa of guidance just a couple weeks ago on the exchanges and the next phase of that, which will

deal with eligibility and enrollment and the application of the tax credit hopefully will clarify some of those issues. >> then i have one last question. this also addresses one of the issues that was referred to. the tax credit, along the tax credit issue, may apply temporarily and narrowly if the business has fewer than 25 full-time or equivalent employees making an annual average wage of $50,000 or less but what aut every other small business? what advantages do they have as far as a tax credit? >> well, you are correct in that the tax credit was targeted toward the smallest of the small businesses with under nine, getting the maximum credit. you can get up to 25 depending on what the wages are that you pay your small business. one of the reasons why it was targeted, because those were the small businesses that had the

lowest offer rates. as you move up to say employers with 50 employees, you have offer rates of insurance coverage that can be in the 80% to 90% rate. so the tax credits were targeted towards that segment of the market that was most in need of help in terms of getting the offer. there are still many benefits as i mentioned in the affordable care act for businessethat are larger than 25, the rating restrictions are very important. small businesses, and i know this from my own experiee, in many states small businesseset rated if they have sicker members. so that practice is going to go away. that's going to create a lot of fairness. and much lower administrative costs, cbo found that as well, and that applies to all small businesses, not just those under 25 employees. >> so you do see some possible changes or flexibility -- >> well, there a benefits to small businesses but you are

right, thetax credit is targeted to the smaller small businesses because again, it was concluded those are the ones that have the lowest rates of insurance coverage for their employees. >> thank you, mr. larson i just would like to ask if there are any additial questions? okay. well, i thank you for ining us today to answer our questions and providing your insight on these issues. we will continue to closely follow them and want to work with you and help ensure that small businesses have flexibility and choices in their health care coverage decisions. i want to suggest that mr. larson ask a member of his staff to remain here during the testimony of the second panel and would you please identify, and i believe we have already spoken, so thank you, perfect, wonderful. thank you again, mr. larson, for your time. i truly appreciate it. now i would like for the second panel to come forward.

>> earlier in the day, the senators talked about the debt in an exchange. objection. mr. mccain: mr. president, how much time is remaining? the presiding officer: the minority has 14 minutes. mr. mccain: 14 minutes. i'll tell you what, i'll be glad to engage in a short colloquy with the senator from illinois if he would like. the senator from illinois, i

believe that we are close to an agreement here? mr. durbin: i hope so. mr. mccain: does the senator from illinois agree that most likely that agreement will not have an increase in taxes associated with it, at least in the short term? mr. durbin: i hope is not. mr. mccain: you hope so. mr. durbin: i heard there is revenue included in the agreement. mr. mccain: everything i've heard, the agreement does not have tax increases in it. mr. durbin: i honestly am not a party to this, but as gang of six and fiscal commission, we believe everything should be under consideration to reduce our national debt. mr. mccain: i assume that would also mean that the senator from illinois would advocate another stimulus package? mr. durbin: i want to make sure we have some stimulus to the economy to create jobs and help those out of work find work with training and education. mr. mccain: wufr -- one would

have to assume that the senator from illinois believes the last package was successful, which counting interest, over $1 trillion, the senator from illinois and others who advocated the stimulus package said that if we pass this, unemployment will be a maximum of 8%. this will stimulate our economy and create jobs. and you know what the senator from illinois and others are saying now? it was not enough. it was not enough. that we didn't spend enough. that we didn't make the deficit larger because certainly nothing in the stimulus package was paid for. so i hope that the senator from illinois understands, the american people understand that just spending more money has failed, and failed miserably when you look at the latest news -- and it's on the front page of the "wall street journal" and "the washington post" and "the new york

times" -- that our economy is staggering back into a situation of stagnation. i'll be glad to let you respond. and the answer on the other side is, well, let's have some more spending and let's raise taxes. let's take some more money out of the taxpayers' pockets in the form of spending more money, their money. it's not the administration's money. it's not the senator from illinois' money. it's the people's money. take some more money of theirs. this is the nobel prize -- yway, take more money in taxes and more out of the taxpayers' pockets, and that will be the answer to our problems. i'll be glad to hear the senator from illinois' response. mr. durbin: first i want to thank my colleague from arizona. for those who are witnessing this this is almost a debate in the united states senate, and it rarely happens. and i thank you for coming to the floor. mr. mccain: rather than have you use all our time, i thought i would engage in a colloquy.

mr. durbin: i enjoy doing this. mr. mccain: go ahead, please. mr. durbin: first, during the course of your presidency campaign, mark zandi, your economist, helped you formulate some pitions. his opinion of president obama's stimulus is that it stopped a precipitous decline in our economy, that it a -- did it achieve all we hoped for? no. mr. mccai can i interrupt on that particular point. mr. zandi was one of many advisors to my campaign. the key advisor was douglas holtz-eakin, former head of the c.b.o., who had no brief atsoever for that proposal. please go ahead. mr. durbin: the second point i'd like to ask the senator from arizona, i think one of the real bedrock beliefs among republicans is that if you cut taxes particularly on the healthiest -- wealthiest people in america the economy will pros puss. didn't the debt of the united states double under the president d he left a shambles

behind him? 2.3 million jobs lost in the first three months of president obama administration because of this failed economic policy which you continue to espouse, that if we cut taxes on the rich, america is going to get wealthier. haven't we tried it? where are the jobs? mr. mccain: could i take a little trip down memory lane with my friend from illinois who i had great privilege many years ago -- i don't know if i should mention the 1982 election, he and i came to the house of representatives together. you might recall that one of his own, then a democrat congressman from texas, got together with president reagan and guess what we did? we cut taxes and guess what? we had one of the strongest roeufrs in reece -- recoveries in recent history of this country because -- could i just -- because we didn't start spending and add spending without paying for them. and i would say to the senator from illinois. he is correct. the spending that went on in the

previous administration was not acceptable and led to the deficit. let me just finish. but i would also say speaking for myself, i voted against the medicareart-d because it was not paid for. i voted against the earmark and pork barrel spending which were abundant, as every appropriations bill came to the floor and dramatically ireed spending in the worst way, wasteful and corrupt way, i will say. and i'm proud that at least some of us said if you don't stop this spending and get it under control, then you're going to face a serious problem. what i would also mention, and i've seen the chart, it's gotten a lot worse, gotten a lot worse since the last election. and you can't keep, biob, you can't keep up blame it on bush. mr. durbin: does he recall what happened with the reagan tax cuts? what happened was we tripled the national debt during that period

of time. and president reagan came to congress 18 times to extend the debt ceiling. he holds the record. so to argue the reagan tax cuts led to great long-term prosperity is, i think, seriously in doubt if you're going to use the deficit as measure. mr. mccain: if i could say we believe, and reagan believed, that cutting tax cuts would restore our economy, which was in the tank thanks to the practices of the previous administration before him, and we -- reagan presided over probably one of the greatest job-creation periods in the history of this country. and those are numbers that i would be glad to insert in the record. compare that with what has happened since this administration took office with the promise that if we passed obamacare, if we passed tarp, if we passed all of these others that the economy would then be restored and grow. and again, it's hard for my dear friend from illinois to refute

the fact thathe categorically sted that if we passed the -- quote -- "stimulus package" that unemployment would be at a maximum of 8%. unemployment food is 9.2%. and if you look at any indicator, whether it be housing starts, whether it behe deficit, whether it be unemployed, whatever it is, it' gotten worse since the stimulus package was passed rather than better. please go ahead. mr. durbin: would the senator yieldor a question? mr. mccain: i'd be glad to just hear your comment. mr. durbin: i'm going to give you a clans to speak again. -- a chance to speak again. does the senator believe defaulting on our national debt for the first time in our history, the threat looming over from the house republicans and others for a lon period, is good for america's economy? one of the senators on the floor here from the state of pennsylvania has come in and said defaulting on the debt is not that big a deal. it can be, quote in his words, easily managed.

does the senator from arizona agree with that thinking? mr. mccain: as the senator may kn, i came to the floor a couple of days ago and made that comment, and the senator from illinois and i are in agreement, point number one. you can prioritize -- i think the senator and every economist i know literally would agree. you can prioritize for awhile where you want what remaining money is left. but the message you send to the world, not just our markets b to the world, that the united states of america is going to default on its debts is a totally unaeptable scenario and beneath a great nation. we are in agreement, number one. mr. durbin: amen. mr. mccain: number two is that to insist, to insist that any agreement is based on the passage through the united states senate of a balanced budget amendment to the constitution of the united states, as i said before, is not fair to the american people

because, because the terrible obstructionists on this side of the aisle, the terrible people, their flawed philosophical views about the future of america is not going to allow to us get 20 additional votes from your side, suming that you get all 47 since it requires 67 votes to pass a balanced budget amendment to the constitution. so i think it was not only wrong assessment, continuing's not fair to the american people to -- i think it's not fair to the american people to say we can pass a balanced budget amendment to the constitution through the senate at this time. now maybe after the senator is defeated in the next election and we get rid of a lot of -- maybe that will happen. but certainly let's not tell the american people that that is a possibility today because i think it raises their expectations in a way that's not fair to them and, frankly, detracts from what i think is being done as we speak between the leaders, the president,

democrat leaders and republican leaders, which is in a very short time frame. mr. durbin: i would say it pains me to say that i agree with the senator from arizona, but i do. we both feel threatening the debt ceiling is not in the best interest of the united states. and both of us feel that holding out the threat that if you don't pass a constitutional amendment, you can't let the economy continue is really not a good faith bargain. i wish senator byrd were here to respond to that particular suggestion. as for my prospects in the next election, i thank the senator from arizona for campaigning against me last taoeufplt when he -- last time. when he did i almost got0% of the vote. i welcome you back to the land of lincoln any time. mr. mccain: i did so well in the presidential campaign in the land of lincoln, i'm not surprised i had such a dramatic impact on the the senator from illinois' election as well. this kind of discussion i think is important, number one. number two is we should have this national debate on other

forums besides just the sunday show and perhaps the floor of the senate is the best place to do that. and i want to continue to engage with the senator from illinois. but i hope that this agreement, i hope that this agreement will assure the american people that we will meet our obligations, that we'll meet our obligations not only physically but fiscally, but also meet our obligations to them to govern, to govern, because they did send us here to govern. i think the senator from illinois would agree with me. the last approval rating of congress i saw, both sides of the aisle was about 16%. and i'm yet to encounter anyone in that 16% category in my travels back to my state. by the way, i would like to note the presence of the budget committee chairma here, senator conrad, who i think has made

enormous good-faith efforts to reach an agreement on some of these issues. and i thank him for his work, and i want to assure him his reward will be in heaven, not here on earth. the senator from illinois? mr. durbin: i'd also like to thank the senator from arizona for the few minutes we shared on the floor. and i hope more members will do this rather than just taking turns and giving speeches. these exchanges even when we disagree are valuable. but i hope at the end of the day i agree completely with the senator from arizona, at the end of the day we cannot allow our economy to lapse into this default. it will be devastating to a lot ofnnocent families and businesses across america and will cost us dearly in terms of our national debt. so let us he that we can find this bipartisan agreement that people are working on even at this moment, and i hope that we can do that soon. incidentally, i want to say for the record former senator alan

simpson said -- and i quote -- "ronald reagan raised taxes 11 times in his administration. i was here. i was here. i knew him better than anybody in the room. he was a real friend and a total realist as to politics." i yield the floor. mr. mccain: in retrospect, the one thing president reagan said he regretted and he regretted was the agreement that was made with the democratic leadership that we would cut spending by $3 and increase taxes for $1 for every cut in spending. that was the ironclad agreement. and guess what happened? we increased spending, and we did -- excuse me. the presiding officer: the senator's time has expired. mr. mccain: and the fact is we raised taxes and did not cut spending, and that was a direct violation of the commitment he got from the democrac leadership. i yield the floor. the presiding officer: the clerk will report the

>> here are remarks concerning the debt ceiling talks. >> we have been carefully reviewing what the legislation is. we are all determined that we will not default. citizens will receive their social security and military will be compensated in a timely fashion. the united states will honor its debt obligation.

i have to meet with my caucus tomorrow to see how they wish to proceed. they voted yesterday so that we will meet our obligations. i know this is very much different from the banner biloel that came down. i congratulate the president. he has work very hard on this subject said that we can honor the full faith and credit of the united states of america. we want to get it in a timely fashion. >> how is this different from the erie read bill? -- reid bill? >> the details are important.

we have not seen them yet. i will have a discussion with my caucus on how to deal with this. >> the congressional black caucus and others are pressing the president to use the 14th amendment on this. there is strong language news about this. it is this enough to do this deal? >> i do not know all the particulars and what the final product is in writing. we have to avoid default. we must do it in a way that does not impede our economic recovery. we do not want people in doubt about whether they will receive

their social security check. there are agreement of -- ramifications beyond a decade. we all have to take a look. we all may not be able to support it or none of us. we are open to what comes down. the stakes are very high here. >> how would you characterize the talks today? >> [unintelligible] we are looking at the numbers and facts that are actually in the legislation. it was constructive. >> can you support a do -- >> this is about three minutes

regarding a new proposal. >> madame president, for the last few weeks, there has been a gridlock. our economy to reach a historic bipartisan compromise that ends this dangerous standoff. the compromise we have agreed to is a remarkable -- is remarkable for a number of reasons, not only because of what it does but because of what it prevents, a first-ever default on the full faith and credit of the united states. sometimes it seems our two sides disagree on almost everything, but in the end, reasonable people were able to agree on this. the united states could not take the chance of defaulting on our debt, risking united states financial collapse and worldwide depression. america and the world have been watching our democracy expectantly and my message to the world tonight is that this nation and this congress are moving forward and we're moving forward together. reaching a long-term accord that

would give our economy the certainty it needs was not easy but our work is not done. leaders from both parties and both chambers will present this agreement to our caucuses tomorrow. senate democrats will meet at 11:00 a.m. to pass this settlement, we'll need t support of democrats and republicans in both the house and the senate. there is no way either party in either chamber can do this alone. as president lyndonohnson said -- and i quote -- "there are no problems we cannot solve together and very few that we can solve by ourselves." democrats and republicans have rarely needed to come together more than today. i know this agreement won't make every republican happy. it certainly won't make every democrat happy either. but botharties gave more ground than they wanted to and neither side got as much as it had hoped. but that is the essence of compromise, of consensus building, and the american people demanded comomise this week and they got it. mr. mcconnell: madam president? the presiding officer: the republican leader.

mr. mcconnell: this is an important moment for our count country. i appreciate t mority leader's comments and want to say a few words to our colleagues who have been so patient over the past several days. and whose ideas and encouragement have been so helpful in getting us to this point. first of all, let me reiterate that before any agreement is reached, republicans will meet to discuss the framework that the white house and congressional leaders in both parties think would meet our stated efforts to cut spending more than the president's requested debt ceiling increase, prevent a national default, and protect the economy from tax increases. and to that end, i'd like to say to my republican colleagues that we'll be hold b holding a confee meeting in the morning to discuss the framework and to give everyone a chance to weigh in. but at this point, i think i can say with a high dree of confidence that there is now a framework to review that will ensure significant cuts in

washingtonpending. and we can assure the american people tonight that the united states of america will not for thfirst time in our history default on its obligationsnsnsns >> congressional leaders have announced a deal on the debt legislation. president obama gave remarks from the white house. >> both parties in both chambers have reached an agreement to reduce deficit and avoid default. default would have a devastating effect on our economy. the first part of the agreement will cut $1 trillion in spending

over the next 10 years. they are cuts that will parties agree to early on in the process. the result would be the lowest level of annual domestic spending since eisenhower was president. it will still allow us to make job-creating investments in research and education. we made sure these cuts would happen so abruptly that it would not be a drag on the economy. since the beginning, the ultimate solution to cover the deficit problem must be balanced. some republicans have argued in that we have to ask the wealthiest americans and big corporations to pay their fair share by giving up tax breaks and special reductions. i believe we need to make modest adjustments to programs like medicare, to make sure it is still around for future generations. that is what the second part of this agreement is so important. it establishes a bipartisan

committee in congress to report back with a proposal to further reduce the deficit, which will then be put before the entire congress for an up or down vote. in this state, everything will be on the table. it will be to hold as all accountable for making these reforms. tough cuts that both parties would find objectionable would go into effect if we do not have one. over the next few months, i will make a detailed case about why i believe a balanced approach is necessary to finish the job. is this the deal i would have preferred? nope. i believe that we could have made a tough choices required on entitlement reform and tax reform right now, rather than through a special congressional committee process. this compromise does make a serious down payment on the deficit reduction we need and gives each party strong

incentive to get a balanced plan done before the end of the year. most importantly, it will allow us to avoid default and focus on the rest of america by dealing with this debt crisis. we also want to make sure we do not have this same crisis in the next six months or 12 months. we can remove the cloud of debt and uncertainty that hangs over our economy. this has taken far too long. i have been concerned about the impact that it has on business confidence and consumer confidence and the economy as a whole over the last few months. alternatively, the leaders of both parties have found their way to a compromise. i want to thank the american people. your voices, letters, emails, phone calls, that have compelled

washington to act in the final days. the american people's voice is a very important one. we are not done yet. i urge members to do the right thing and support this deal with your votes over the next few days. it will allow us to avoid default, pay our bills, start reducing our deficit in a responsible way, and do everything we can to create jobs, boost wages, and grow this economy. that is what the american people sent us to do. that is what we should be devoting all of our time to accomplish in the months ahead. thanks very much. [unintelligible] >> today, the house and senate will turn their attention to e