and decimated its leadership. despite what we have been able to achieve, unlike past drawdowns when threats have receded, the united states still faces a very complex array of security challenges across the globe. we are still a nation at war in afghanistan. we still face threats to our homeland from terrorism. there is a dangerous proliferation there is a dangerous poor for ration of materials. there is continuing turmoil and unrest in the middle east, from syria at to egypt, yemen, and beyond. rising powers in asia are testing international rules and relationships. there are growing concerns about cyber-intrusions and attacks.

our challenge is to meet these threats, to protect our nation and our people, at the same time meet our responsibilities for fiscal discipline. this is not an easy task. to build the force we need a for the future, we developed new strategic guidance that consists of five key elements. first, the military will be smaller and leaner. we want a military that is agile and flexible and ready and technologically advanced. second, we will rebalance our global posture and presence to emphasize the asia-pacific and the middle east, because those areas represents the thoughts of the future. third, for the rest of the world, we need to build innovative partnerships and strengthen key alliances and partnerships from europe to

latin america to africa. fourth, will he ensure that we have the capability to quickly confront and defeat aggression from any adversary, anytime anywhere. fifth, this cannot just be about cuts. it also cost to be about protecting and prioritizing key investments in technology and new capabilities. as well, our capacity to grow, damp, and mobilize as needed. we developed this new strategic guidance before any final budget decisions were made in order to ensure that the decisions that are here, the choices we made, reflect the new defense strategy. while shipping this strategy, we did not want to repeat the mistakes of the past. our goals are to maintain the strongest military in the world, to not follow up the force, to take a balanced approach to budget cuts by putting everything on the table, and not

break faith with our troops and their families. throughout this review, we wanted to make sure that this was an inclusive process. general dempsey and i worked closely with the leadership of the services and the combatant commanders and consulted regularly with the members of congress. as a result of these efforts, the department is strongly unified behind the recommendations that we are presenting today. consistent with the budget control act, this budget reflects in the next five years a savings of $259 billion. that is compared to the budget plan's key that was submitted to congress last year. we think this is a balanced and complete package that follows the key elements of the strategy and adheres to the guidelines that we established. the savings come from three broad areas. first, efficiencies. we have to redouble our efforts to discipline the use of

taxpayer dollars, and that has yielded, we hope, about 1/4 of the targeted savings that we have in this package. the second area is a force structure and procurement reforms and adjustments. we have a strategy-driven changes in force structure and procurement programs to achieve roughly half of the savings in this package. finally, on compensation, we have made modest but important adjustments in personnel costs to achieve some very necessary cost savings in this area. this represents about 1/3 of our budget. but here it counted for little more than 10% of the total reduction that we presented. let me walk through each of these areas. first, with regard to disciplining defense dollars, if we are going to tighten up the force, then i, like senator mccain, believe strongly that we have to begin by tightening up the operations of the department.

we have got to reduce excess overhead, eliminate waste, and improved business practices across the department. the fy12 budget, as you know, proposed more than $150 billion in efficiencies and we continue to a month those changes but we also identified $60 billion in additional savings in five years through measures that streamlining support functions, consolidating i.t. enterprise services, refacing military construction projects, consolidating inventory, reducing service from contractors. we also have a responsibility to provide the most cost-efficient support to the forest. for that reason, the president will request congress to authorize the base realignment and closure process for 2013 and 2015. as somebody who went through the

braque process in my own district, i recognize how controversial this is. for members and constituencies. and yet. -- and yet it is the only effective way to achieve needed infrastructure savings. to provide better financial information, we are increasing emphasis on all auto-readiness and accelerating key time lines. i directed the department to accelerate efforts to achieve fully auditable financial statements. we were mandated to do it by 2017. what i have ordered is that we move that up to 2014. efficiencies alone are not enough to achieve the required savings. budget reduction of this magnitude required that we make adjustments to force structure and procurement investments. at the choices we make cap to fit the five elements of the strategy that we developed for the future military force. first, we know that coming out

of these wars, as i said, the military would be smaller. our approach to accommodating these productions has been to take this as an opportunity to fashion an agile and flexible military that we need for the future. that highly-networked and capable joint force consists of an adaptable and battle tested army that remains our nation's force for decisive action, capable of defeating any adversary on land, and at the same time, being innovative about how it deploys its forces. a navy that maintains forward presence and is able to penetrate enemy defenses. a marine corps that remains a middleweight expeditionary force, with the reinvigorated amphibious capabilities. an air force that dominates air and space and provides rapid mobility, globaltech, assistant -- persistent isr.

and national guard and reserve the continue to be ready and prepared for operations when needed. we made a conscious choice not to maintain more force structure than we could afford to properly train and equip. we do it another way, we guarantee a hollow force. we wanted a force structure that we could effectively train and maintain. we are implementing force structure reductions consistent with the new strategic guidance for total savings of $50 billion over the next five years. the adjustments include, as was pointed out, are resizing of the active army from 562,000 to 490,000 soldiers by 2017. this will transition doubt in a responsible way. we will gradually resize the active marine corps to 182,000. warders -- we will reduce the

size of the air forces retire some aging c5a's and c130s but maintain a fleet of 275 strategic airlifters and 318 c130's, a fleet will be more than capable of meeting the airlift requirements of the new strategy. the navy will protect our highest priority and most flexible ships, but we also will retire seven at lower priority navy cruisers. the reason we're doing that is that these cruisers have not been upgraded with ballistic missile defense capability and would require significant repair. that is the reason the navy chose to do that. second, the strategic guidance a clear that we must protect our capabilities needed to project power in asia pacific and the middle east. at this end, the budget maintains the current bomber fleet, it maintains the aircraft carrier fleet, and a longer term

of 11 ships and 10 air wings, it maintains the amphibious fleet, and it restores the army and marine course of force structure in the pacific after the drawdown from iraq and as we drawdown in afghanistan, while continuing to maintain a strong presence in the middle east. our goal is to expand our rotational presence in both areas. the budget makes selective new investments to make sure we develop new capabilities to project power in the territories and a means. we will put $300 million into funding the next generation airforce bomber. we're putting 1.5 $8 billion into developing new air force tankers, $18.2 billion for the procurement of 10 new warships, including two virginia-class submarines, four flintall combat ships, one joint high-speed vessel, onecbn-20 class aircraft

carrier. we are investing $100 million and increase cruise missile capacity of future virginia class submarines. third, the strategy makes clear that even as asia-pacific and the middle east represent the areas of growing strategic priority, the united states will continue to work to strengthen its key alliances to build partnerships, develop innovative ways, such as rotational deployment, to sustain our presence elsewhere in the world. we make the investment in nato and other partnership programs, putting 200 million in fy13 and 900 million over the next five years in the ground surveillance system, one that was just approved by the nato ministerials in the last meeting. 91 $7 billion in fy13 to develop

missile defense capabilities that protect the u.s. homeland and strengthen regional defenses as well. the new strategy envisions a series of organizational changes to boost efforts to partner with other militaries. we are allocating a u.s. aid to the nato response force and will rotate to europe for training and exercises, increasing opportunities for special operations forces to advise and assist our partners in other regions. fourthly, the u.s. must have the capability to fight more than one conflict at that time. we are in the 21st century and we have to use 21st century capabilities. that is the reason this budget invests in space, cyberspace, long-range precision strikes, and the continued growth of special operations forces to ensure that we can still confront and defeat multiple

adversaries even with the force structure reductions that i outlined earlier. it sustains the nuclear triad of bombers, missiles, and submarines to continue to ensure that we have a safe, reliable, an effective nuclear deterrent. even with adjustments to force structure, the budget sustains the military that i believe is the strongest in the world. an army of more than 1 million active and reserve soldiers with 18 divisions, approximately 65 brigade combat teams, 21 combat aviation brigades. the naval force of 285 ships, the same size force that we have today that will remain the most powerful and flexible naval force on earth. a marine corps with a 31 infantry battalions, 10 artillery battalions, 20 tactical air squadrons.

an air force that will continue to enforce their dominance with 54 fighter squadrons of the current bomber fleet. lastly, we cannot just, as i said, cut. we have to invest and leap ahead of our adversaries by investments in the latest technologies. that is why this budget provides $11.9 billion for science and technology. it includes $10.1 billion for basic research. it provides $10.4 billion to sustain the continued growth in special operations forces. it provides $3.8 billion for a dunman air systems -- for unmanned air systems. at the same time, the strategic guidance recognizes the need to prioritize and distinguish urgent modernization needs from those that can be delayed. particularly in light of

schedule and cost problems. therefore, the budget has identified $75 billion in savings over five years, resulting from canceled or restructured programs. some examples, $15.1 billion in savings from restructuring the joint strike fighter by delaying aircraft purchases so that we can allow more time for development and testing. $1.3 billion in savings from delaying development of the army's ground combat vehicles due to contract in difficulties. $4.3 billion in savings from delaying the next generation of ballistic missile submarines by two years for affordability and management reasons. in addition, would terminate selected programs -- o'clock 30 vision of global talks, which has grown in cost to the point where it is no longer cost- effective. the weather satellite programs, because we can depend on existing satellites resulting in

savings of $2.3 billion. all of this requires that we have and maintain the ability to mobilize and regrow the force if we have to. that means we need to maintain a capable and ready national guard and reserve. one of the things we're doing is that the army is going to retain more mid-grade officers and nco's so that they can be there with the structure we need to restructure the four straight at the reserve component has demonstrated its readiness and importance over the past 10 years of war. we must ensure that it remains available to train and equip and served in an operational capacity when necessary. another key part of preserving our ability to quickly adapt and mobilize is maintaining a strong and flexible industrial base.

i am committed to making sure that our budget recognizes that industry is our partner in the defense acquisition enterprise. we have to maintain a pace if we are going to be able to mobilize and be prepared in a future. finally, with regards to our most important element of our strategy and our decision making process, our people, this budget recognizes that they, more than any weapons system our technology, are the great strength of the united states military. one of the guiding principles in our decision making process is that we must try to keep faith with our troops and their families. for that reason, we are determined to protect family assistance programs to sustain it is important investments in the budget that serve our troops and their families and continue to make efforts to ensure that these programs are responsive to their needs.

in order to build a force needed to defend the country under existing budget constraints, the growth in costs of military pay and benefits must be put on a sustainable course. this is an area of the budget has grown by nearly 90% since 2001. about 30% above inflation. in-strength has only grown by 3%. this budget contains a road map to try to invest those costs in military pay and health care and retirement in ways that we believe our fair, transparent, and consistent animal commitments to our people. -- consistent with a final commitments to our people. on military pay, there are no pay cuts. we have created sufficient room for payment -- pay raises in 2014. we will provide more limited pay raises in 2015, giving troops

and their families notice and lead time before the changes take effect. the budget devotes about $48 billion, almost $50 billion, to health care costs, a big part of our budget. the man has more than doubled over the last decade. in order to continue to control the costs of these we are developing a copays and deductibles that are to be phased in within four to five years. none of these proposals would apply to active-duty service members, and there will be no increases in health-care premiums for families of active- duty service members under this proposal. we also feel that it is important to address the military retirement costs as well. what we are urges the establishment of the commission with authority to conduct a comprehensive review of military retirement. we have made clear, and the president and at the department, that the retirement benefits of those who serve should be protected by grandfathering

benefits. members of the committee, putting this together, this kind of balanced package, has been difficult. at the same time, it has been an opportunity to try to think about what forced to we need now and what force and we need in the future. i believe we, the service chiefs, the combatant commanders, have developed a complete package to try to address our threats for the future and to try to ensure that we achieve our strategic aims. as a result, the fy13 request is balanced, it keeps america safe, and we think it sustains u.s. leadership abroad. please take a look at the individual parts of this plan. i encourage you to review this entire budget. this has to be a partnership, but i ask you also to bear in mind the strategic trade-offs that are inherent in any particular budget decision. this is a zero sum game.

there is no free money here. the need to balance competing strategic objectives is taking place in a resource-constrained environment. we will need your support and partnership to implement this vision of the future military. i know that these are tough issues. this is the beginning. it is at the end of this process. make no mistake -- the savings we are proposing a significant and broadbased and will impact all 50 states. this is what congress mandated on a bipartisan basis, that we reduce the defense budget by almost half a trillion dollars and. we need a partnership to do this in a manner that preserves the strongest military in the world. this will be a test for all must -- for all of us, whether reducing the deficit is about talk or action.

let me be clear -- let me be clear -- you cannot take capitally dollars out of the defense budget and not incur additional risk -- you cannot take half a billion dollars out of the defense budget and not incur additional risk. we believe they are acceptable risks, but they are risks. we have got to depend on the ingenuity and in terms of new technologies for the future. very frankly, when you go through this, there is no margin for error. this is why congress must do everything possible to make sure that we avoid sequestration. we are more than prepared to work with congress to develop an approach for sequestration. this approach would submit the department to another $500 billion of additional cuts that would be required to take place in a meat ax approach.

we are convinced it would haul out the force and effect severe damage to our national defense. the leadership of this department, military and civilian, is unified behind the strategy we presented behind this budget and behind the need to avoid sequestration. i look forward to working closely with you in the months ahead. this is going to be a tough challenge, it is but the american people expect of its leaders, to be fiscally responsible in developing the force for the future, a force that can defend the country, a force that supports our men and women in uniform, and a force that is and always will be the strongest military in the world. thank you, mr. chairman. >> thank you, secretary panetta. general dempsey. >> thank you, chairman levin, senator mccain, members of the

committee, for the opportunity to discuss the budget proposal for fiscal year 2013. this budget represents an irresponsible investment in our nation's security. at its core is an investment in people, the sons and daughters of america who served the nation's military. allow me to open with a few words about them and what they have accomplished. the last 10 years of war have been among the most challenging in our nation's military history. through it all, the joint force has persevered and it has prevailed. our families have stood with us to climb after deployment after deployment -- start with us deployment after deployment after declining, and so have you. as i sit with you today, our service men and women remain globally engaged. we are deterring aggression, developing partners, delivering aid, and defeating our enemies. they stand ready and strong and swift every day.

i traveled with a few of them to afghanistan and egypt this week. i saw extraordinary courage and skill in officers and men and women of the nato training mission, managing the development of the afghan national security forces, in the brave and vigilant marine security detachments in our embassy in cairo, and in the super junior airmen who flew us to the right place at the right time. they exemplify a professional military with a reliable record of performance. in just the past year, for example, we further cripple al qaeda, we protected the libyan people from near certain slaughter, while affirming made a possible general beyond the borders of europe -- while affirming nato's important role beyond the borders of europe. like we did in iraq, we are steadily transitioning responsibility for security onto afghan shoulders. we ought to japan recover from a perfect storm of tragedy in the

-- sgt. -- we helped japan recover from a perfect storm of tragedy and destruction. we defended against cyber-bred, sustain our nuclear deterrent posture, work with allies and partners to build capacity and prevent conflict across the globe. we continue to provide this nation with a wide range of options for dealing with the security challenges that confront us. an increasingly competitive, dangerous, and certain security depenvironment demand that we be alert, responsive, adaptive, and dominant. this budget helps us do that. it is informed by a real strategy that makes real prices. it maintains our military posture decisive edge and our global leadership to -- it maintains our military's decisive edge and our global leadership. with this in mind, allow me to add a few additional comments to those of the secretary. first, this budget should be considered holistically. i cautioned against viewing its

programs in isolation, because it represents a comprehensive and carefully devised a set of decisions. it achieves a balance among force structure, modernization, pay and benefits. changes that are not informed by this context risk of ending the balance and compromising the force. second, this budget represents a waypoint, not an endpoint, in the joint force we will need in 2020 and beyond. specialized capabilities once on the margins become more central even while we retain convention overmatched. it builds a global network to a joint force that is ably led and always ready. third, this budget on his commitments made to our military families. it keeps faith with them. there are no freezes or reductions in pay, no lessening in the quality of health care received by active-duty service members and one of veterans. that said, we cannot ignore the increasing costs of pay and

benefits. to manage costs, we need pragmatic reforms. all of this can be done in a way that preserves our ability to ecruit and retain american's talented youths. finally, all strategies and budgets to resource them carry risk. in my judgment, at the risk lies not in what we can do, but how much we can do and how we can do it. this invests in our people on the joint capabilities they most need. to close, thank you, thank you for keeping our military strong, thank you for taking care of our military families, for supporting those who serve and who have served and who will serve. i know you share my pride in them and i look forward to your questions. thank you so much. >> all right, let's have it 7- minute round. i expect a good turnout.

we will try a very short second round. general dempsey, let me start with you. do you and each of the joint chiefs of staff, first of all, fully support the new strategic guidance? >> yes, senator, we do. >> do you and each of the joint chiefs of staff fully support the president's fiscal year 2013 budget request? >> yes, senator, we do. >> can you tell us why? >> because we addressed it in the order you just presented it. faced with the reality of a new fiscal environment, we looked at our strategy and made it what we thought were important adjustments to it, not just based on the new fiscal reality, but the lessons of 10 years of war, and where we thought the security and are meant to take us in the out years. as you know, i am an advocate of looking beyond this particular

budget commission out to 2020. we did that with not only the service chiefs but also with the combatant commanders. and that having decided on what adjustments to make to our strategy, we build a budget to support it. for that reason we support it. >> general, you made reference to the risks that are increased when there are budget reductions. would you expand on that as you did in your testimony as to whether those risks are acceptable, and why? >> as i said, senator, every strategy incurs rest because at least i have never in my 38 years' experience any strategy that was completely unconstrained. there is always a risk in every strategy in every budget to support it. one is a risk to our missions, can we accomplish the tasks given by the national command authority for freedom of access to defeat our enemies, to deter aggression? the other is a risk to force,

which gets at a phrase that would be familiar to you -- how much can we ask of the all- volunteer force and in terms of deployment, redeployment, we deployment? in both cases, we assessed the risk to mission and force. we have found that there are portions of our capabilities that are more stress. again, that is not anything new. what we have been doing now for the past month and will continue to do is look for ways to mitigate those risks, but we're very confident, because we worked this collaboratively, that we can mitigate risks by observing that lessons of 10 years of war, new capabilities, and integration of all of those and the interdependence of the joint force is what allows us to mitigate the risks to our plans and to do so at a sustainable rate. there are risks, because there is always uncertainty in the future. >> now to both of you, the

overseas contingency operations, or oco, funding level is based on the assumption that there will be 60,000 u.s. troops in the school year 2013. again, you'd be a trait that, secretary panetta, a -- in your openi -- again, you reiterate that, secretary panetta, in opening statements. that assumes that there will be no further drawdown of u.s. forces from afghanistan during the 12 months after the 33,000 u.s. surge forces are withdrawn by the summer of this year. that is what the budget assumes. but last june, when the president announced plans these for the drawdown of the u.s. surged forces, he also said that after the reduction of those in search of forces, "our troops

will continue to come home at a steady pace as afghan security forces moved into the lead." first, general vessey, are we on track to complete the withdrawal of the 33,000 u.s. surge forces by this summer? >> yes, sir, we are. general allan has already reduced the force by 10,000. i don't yet have his plan for the reduction of the additional 23,000, but he assured me he would have that to us by the first of april. >> do you support the president's plan to withdraw the surge forces by the end of the summer? >> i do. my own personal observation at this point is yes. >> secretary panetta, how do you square the fy13 oco funding assumption that the true level of the 68,000 more men and

withnistan through fy13 the president's statement that u.s. troops will continue to draw down after this summer "at a steady pace as afghan security forces assume the lead for security"? chairman, as the president stated, we will continue the process, at this point no decisions have been made as to how this will take place, because we are focusing on the drawdown of the surge. the number we had is a target number in order to support the oco funding that we need for the future. >> will the decision be made as to when reductions will be made for the 60,000 level, and that level again is going to be reached by the end of this summer -- when will that decision be made on for the reductions after the 68,000 level as a jeep? -- is achieved? >> the target right now is to focus on the reduction of the

surge. as a general them see pointed out, we've not yet received the plan from general allen as to how we will complete the reduction of 23,000. once we have done that and we learned the lessons of that, we will apply it to what deciding the next steps with regards to further reductions. >> that will be done by the end of summer as it is currently contemplated. what will the next decisions be made up for reductions beyondsurge reductions? >> i suspect by the latter part of this year. >> begin it or -- >> i assume begin it, but the first thing is to discuss the lessons we have learned, what we should apply, what level of force we will need for 2013. >> do you assume there will be further reductions beyond the 60,000 during fiscal year 2013? >> again, no decisions have been made -- >> you assume there will be --

>> i assume, in line with what president said, we will continue to make transitions. >> will there be savings from any additional reductions below 68,000? >> will there be savings? of course, whenever we decide to do will achieve some savings. >> senator mccain. >> thank you, witnesses. general dempsey, were you asked by the president to perform in his assessment to national security interests as a result of these cuts? >> i have, and it is also codify i performed the risk assessment and we. >> is that forthcoming? >> i have completed it. >> we have not received your risk assessment yet. >> you have not, sir. >> i want to returned for just a second -- secretary panetta, you

talk about the cataclysmic effects of the sequestration. we are in total agreement. i hope that in your meetings with the president that you other interested down with us and see if there are ways -- you alert him to sit down with us and see if there are ways to avoid the effects of the spirit by their plans to comply with the effects of sequestration in 2013? >> no, we haven't. >> in your view, secretary sustainabledireciraq a and self-reliant nation? >> iraq has the ability to govern itself. does it continue to face risks in the process, does it continue to face challenges in that process? it certainly does. >> do we still have u.s. military forces operating in iraq? >> we have a small number that

are assigned to thei -- there. approximately 600 military and civilians assigned to a security operation there. dempsey, i know you just returned from egypt. all americans are concerned about the events there concerning americans who have had to remove to a u.s. embassy to preserve their safety and security. we recognize the absolute criticality of our relationship with egypt and the role that egypt place in the middle east. what advice, what recommendations do you have as to how the united states should be handling -- our government should be handling this very, very tough situation? >> center, i -- senator, i

planned this trip to egypt before the non-governmental organization crisis, and it is a crisis, occurred. when i met with the key leaders with whom we interacted, and have interacted, as you know for decades, i explain that i was there to talk about our relationship, syria, lebanon, the sinai, but we cannot do that because there was this issue that was an impediment to that. i spent about a day and half in conversation with them, encouraging them in the strongest possible terms, to resolve this so that our relationship could continue. >> what resulted from those conversations? >> i am convinced that potentially they were underestimating the impact of this on our relationship. when i left, there was no doubt that they understood the serious concerns. i would like to add, senator, that i know of the amendment

that is being proposed to break our military relationship and cut off all aid, and i think my personal military judgment is that that would be a mistake. >> i want to assure you that we're discussing that and ways to certainly of for that action at this time. but i hope you explain -- and ways to surge in the avoid action at this time. but i hope you explain to the rulers, leftovers from the mubarak regime, that this is not acceptable to the american people, and our relationship with egypt is a vital. the fact is that the welfare of our citizens are even more vital. >> i completely agree, sir, i did make that clear. >> general, do you think i.t. is a good idea to trade five high- ranking taliban as a "confidence-building measure" to move the negotiations with the taliban forward?

>> i have some issues with the reconciliations, but generally speaking, i am in support of reconciliation. i am concerned about our ability to maintain vigilance and control those individuals. i am supportive of reconciliation. >> i don't know of any living person who isn't. >> i joined that group. >> does that mean that you at this particular moment in time would support the trade, or release, to qatar, understanding that under various security conditions, it would be advisable at this time? >> as you know, the secretary has certification requirements by law, and i am supportive of the secretary of defense's approach to that end of his efforts to ensure that we have certification.

>> i ask your opinion as to whether i.t. has a good idea or not -- it is a good idea or not. >> yes. >> do you agree that it is a good idea, secretary panetta? >> absolutely no decisions have been made along this line. i can tell you this, that based on the law passed by the congress, i have to certify that anybody who leaves guantanamo cannot wind up going back to the enemy. i have got to be convinced that those kinds of protections are in place before i certify that anything like that happens. >> go ahead, sorry. >> no, i have made very clear that unless i am convinced that in this kind of situation, those steps are taken to ensure that these individuals do not wind up going to the battlefield, i am

not going to certify that kind of transfer. >> even though approximately 1/4 of those who have been released in the past have gone back into the fight? what is the progress of our negotiations with the afghan government, president karzai come on a long-term security agreement, which we failed to reach in iraq? what are the prospects of that, and what are you expecting, and can you give us the time frame? >> we are continuing to work with president karzai and our counterparts in afghanistan to try to develop and agree on the strategic agreement. as you know, there are two areas that we still have difficulties with, one of which involves a transfer of detention facilities, the other involves our nighttime raids. we continue to try to see if we

can work out some kind of compromise on these issues. as far as the basic agreement, i think most of those elements, frankly, are in place. i am confident that hopefully within the next few weeks we will be able to reach some kind of agreement. >> i thank you, thank the witnesses. i would just add a comment, that when the enemy thinks you are leaving, it is unlikely, in my study of history, that they are ready to make an agreement. we certainly have that impression throughout that part of the world. thank you, mr. chairman. >> thank you, senator mccain. senator lieberman. >> good morning. thank you for your service in your testimony. as i look at the budget that has been submitted, i hear your testimony today and it seems to me that in this budget, the u.s.

military and our national security are being asked to pay the price for the fiscal responsibility of our government over the last decade. the budget you have submitted to us is one that you were mandated to submit by the budget control act that congress adopted and the president signed last summer. but i must say, as one member of this committee, one member of the u.s. senate, that as i look at what you have had to do rtto meet the bottom line requirements of the budget control act, it is, in my opinion -- it represents an unacceptable risk to our national security, without a proportionate changes in the threats that we face around the world. this budget, for the coming fiscal year, would represent an 8% reduction in spending be neat

what was planned in the five- year defense plan for the coming year, and 9% reduction for the five years. discussed, would require a key protection of our army and marines by 125,000 -- required the reduction of our army and marines by 125,000 personnel. it would call for the termination or delay of several, in my opinion, critical defense equipment systems. it is hard for me to conclude that any reason he would make such a recommendation other than the fact that you are required by law to do it. what drives this presentation is the budgetary pressures -- the accumulated weight of the fiscal irresponsibility of our government in the past decade and the specific requirement of the budget control act, not a threat environment in the world.

mr. secretary, and as you said and i agreed this month, the united states faces a complex array of the security challenges across the globe. we are still a nation at war in afghanistan, we face threats of terrorism, there is dangerous proliferation materials, the behavior of iran and north korea threatens stability, there is turmoil and unrest in the middle east, rising powers in asia are testing our national relationships, and there are growing concerns about cyber- intrusions and attacks. i agree with all that, and i think that in that context, my conclusion, i state again, is that there is always risk, but the risks involved with this budget is unacceptable. therefore, i believe that we have to have the political courage both in facing the budget for fiscal year 2013 and the threat of sequestration to

work together across party lines and with the president and the administration to reduce the impact of these proposed cuts, and we have got to do it responsibly to make either got to find savings elsewhere or we have got to have the political guts to raise revenues to pay for an adequate defense to, in my opinion, fulfill our constitutional responsibility to provide for the common defense. you have complied with the budget control act in making this budget recommendation to us. in my opinion, if we accept it, we are not fulfilling our responsibility under the constitution to provide for the common defense. i hope that we can work together to essentially alter what we require you to do in the budget control act and to do it in a fiscally responsible way. there is risk here, and i appreciate, general dempsey,

that you said you would be preparing a risk assessment, a chairman's risk assessment, for a split the defense strategic guidance that the department did and issued in january is the equivalent of a follow-on to a quadrennial defense review. in the quadrennial defense review, we require a chairman's risk assessment. i hope, mr. chairman, senator mccain, that we don't act on this request, and that the appropriations committees don't act on the budget request from the department of defense before we get your risk assessment, because i think it is that important. for now, mr. secretary, he said quite directly, a directness that we have come to expect of you, that there is a risk here, inevitably. you cannot cut this much money out of the defense budget without risk. i wanted to ask you and general dempsey, in advance of the

formal report, what are the top two or three top risks that you are concerned about that this budget places on our military and national security? >> senator, first of all, i am abiding by the law, the law that was passed by congress the required reductions -- that required reductions that we propose. just your common we -- just to your comment, we have tried to step up to the plate and do our duty here. in addressing this issue, we have also got to take into consideration the national security threat that comes from the huge deficits and huge debt we are running. we are running a debt that is comparable to our gdp. at some point, congress and the president have to address that larger issue.

what i am doing here is doing my part as dictated by the congress. with regards to the threats, you cannot take half a trillion dollars out of the defense budget and not incur some risk. the main concerns that i see is that we are going to have a smaller force, and when you have a smaller force, the ability to move that was where you have to -- moves that force where you have to is not going to be as easy as it would be with the larger force. the ability to move quickly, to be agile, to be able to deploy that, i think we can do it under the plan presented, but there is an additional risk. the risk of mobilizing -- if we face a serious crisis and the ability to mobilize quickly to pull the force together, as we had to do, frankly, after 9/11 -- our ability to be able to do

that and respond quickly and to be able to deploy that force involves some risk. i think we designed a way to do that by keeping a strong guard and a strong reserve. but nevertheless, that is an additional risk. we depend an awful lot on technology here. i think technology is very important. our ability to develop that technology and make sure that it works, to make sure that we have that leap-ahead capability, involves some risk. lastly, as i said, when you shave the budget by half a trillion dollars, it leaves very little margin of error. that, i think, is the biggest risk of all. >> if i have time, senator, i would like to respond. i will preview my risk assessment. i did not assess unacceptable risk, i don't believe this budget incurs unacceptable risk. i am prepared to say that sequestration would pose an

unacceptable risk, and here is why. it is pretty clear, there is physics involved. in this budget, we have decided to off-ramp a certain number of servicemen and women. we have about max doubt our ability to do that with the proper dignity and respect to the force. 10,000 to 50,000 a year is about as many as you can ask to leave and still have an influence on how to do that. that is maxed out. it is pretty clear that we will have challenges to infrastructure and changes to it, whether this committee recommends -- whether this committee agrees to our recommendations for brac. i cannot ask soldiers, sailors, airmen and marines to leave quicker than they are going to leave and i cannot touch infrastructure. sequestration leads me three places to go to find additional money -- operations,

maintenance, and training. that is the definition of a hollow force. >> i thank you both for your answers. with all respect, i consider this budget to represent an unacceptable risk to our national security. i hope members of this committee across party lines will work to reduce that risk in a responsible way. >> thank you, senator lieberman. sen. inhofe. >> there are some at this table that would be opposing another brac round. i think we have reduced our ability to an unacceptable level, and bringing this to what i consider to be an unacceptable level is something i don't want to do. the problem we're facing is an immediate problem. everything is on fire and we're trying to put out the biggest

fires. i am going from memory now, but i've been here since the very first brac. you lose money in the first five years. there is going to be opposition. secretary panetta, i saw you on 60 minutes and i did not envy when you had to answer the question of how many combat operations there are and you start counting on your fingers. when you talk about the budget, i just want to get in here -- now we have the budget. we keep hearing about inheriting that this is an all of this -- iheritin -- inheriting deficits and all this. $3.20 trillion. this president with his budget he has proposed is $5.30

trillion in four years. huge amount of money. i saw in this morning's "washington post," the talk about everything growing anti- government except, -- everything growing in government accept, is your it is, military. this is supposed to be our number one concern up here. i would just like to ask the question, when you meet with the chairman and you come up with your risk assessment, when would you say that would be. >> i had to submit by the end of the month. >> after con was divided into three commands. it was the forgotten man and did not get the attention. it gets its resources from the u.s. special forces that are in

you -- europe. the pressure that is on in the middle east, the potential terrorism, djibouti, a corner of africa, the things that are spreading out there. special forces are turning -- after it -- training the africans, and one special forces guy or gal will be responsible for 100 forces. do you think there are impacts by moving the special forces and so far as africa is concerned? >> first of all, i agree with you on the benefits of having and africa command focus on the continent. we source our requirements into

africa and elsewhere through a global force management process. it tends to be that europeans have a particular eye bejewel relationship -- particular habitual relationship. we move to force around work it is is needed. i don't think the issue you described there will have any effect -- >> ok, i am glad to hear that. this is an issue that no one has talked about yet, and i don't know why. one of the good friends of mine was killed over there. i was supposed to be meeting with him in afghanistan, later. his wife has worked for me, and we have become very sensitive to the redacted investigation reports to families. i talked to general odierno about this and we've made progress, i hope you can help us

continue with that, because we -- all the way from may 2010, to just about a week ago, and i would like to have a special attention to that issue. this family -- the families of the specialists and the tenant were killed in 2011, and i hope that with all the problems you are dealing with, you are aware of and want to be some help in. >> can i just respond, senator? i am very aware of that. i was at the specialist's funeral with you. this is the first conflict in which we have done a collateral investigation on every death, first time in this tree of warfare -- in the history of warfare and it is important to

get it right. it is the same for active for guard and reserves. it is not that the active families get the investigation done faster than the guard reserves. it is the challenging >> i'm understand that. my question is meant to be a complement. >> then i withdraw my comments. >> in looking at the reset, we will be looking at a real problem after going to this for 12 years. this will come from the base budget. will this come from the oso? will have an effect on the base

budget, on the reset? >> that is why the bill tends to be as high as it is. we're not just looking at the current operating forces. is that a fair statement? >> i had occasion to go down to fort worth and see the progress with the f-35. rabin some delays -- there have been some delays. >> we need a fifth generation of fighter. the f-35 represents that fifth generation. we're committed to it. >> thank you. >> we have talked about the risk

of the national security of the united states. those risks are mitigated by what is done in the state department budget, the homeland security budgets, tsa, the fib, agenciesle host of that contribute to the national security of the united states. we have talked about the sequester. to shift those costs without additional revenue and do it by cutting more invariably catch the fbi, homeland security, tsa, contracts and other functions that might not be in purvey it up on defense but contribute to the risk that we run as a mason. is that an accurate statement --

that we run as a nation. >> national security is dependent upon all the things that you just cited. we're talking about sequester on defense. sequester also takes place on the domestic side of the budget. our national security is dependent on the quality of life that would provide for our citizens. all that could be impacted to sequester. >> one other aspect of this whole debate has been pointed out has been with respect to the platforms you have decided are not affordable at this juncture. i would presume that one of your calculations is not just the number of platforms but the capability of ploatf

orms. you've made calculations about increased capabilities with those remaining ships furze is what you have to do with -- and the airplanes. >> that is accurate. we've mapped the budget decisions to the strategies. talked for years, we are moving toward platforms that are more capable and multi-role. -- i'm a huge advocate of the warthog. we to be in a more multi role capability in that regard.

we mapped the decisions to the strategy. >> this goes to my initial question about the broader scope of national security. the product of engagement is very helpful to us and we have been more engaged than other countries in the past decade. you talk about your meeting in egypt and your multiple meetings and pakistan. a lot of that is just as critical, one may argue, but not is not measured in terms of brigades or airlifts. it goes to the special forces. can you comment on how this budget will be encouraged

procter engagement at every level? >> we have accepted building partner capacity. when you have a chance to have ray in here, he will talk about his desire to meet our strategy. there will be less consumed now and implying that in that role. africana as a u.s. army brigade and a readiness cycle that can deploy -- african. they can reorganize themselves to engage nations in the particular combat and command where needed. i think this budget does that. >> you have suggested or said

that one of the fastest-growing areas of cost in your budget is personnel costs, particular health care costs. you are looking at a tight budget this year. the idea of defense budget growing at the rate a group of the past decade is not within anyone's per urview. if you do not take effective steps, it becomes so big, in my view, that -- it all comes out of operation, maintenance, and training. you have a force that is there but not capable. do you have a notion of how much time we have left before this goes on control? >> as i mentioned, this is an

area of the budget does grown by 90% and consumes close to half of the defense budget. about a third of the defense budget is in the compensation area. at that rate of growth that is going on, it is moving more and more into these other key areas of the defense budget and crowding them out. if compensation is not touched, if we don't control the cost of growth, we will have to take it out of force structure and training, and other systems and it will mean that ultimately we will not have a balanced approach to dealing with the defense savings that we need to deal with.

even in talking with members and with the generals and the cheese, they acknowledge that as tough as this is -- and the chiefs -- and this is tough. if we don't begin the process of developing some kind of cost control in the out years and limit the growth that is taking place, we will pay higher price within the next few years. >> is that your conclusion, general dempsey? >> it is. we talk about keeping faith. keeping faith is making sure they are the best trained, best equipped force on the planet. to do that, we have to balance the budget. >> thank you. >> thank you, mr. chairman. secretary panetta, i want to ask

you about the article from february 2. the images read the way it begins -- let me just read how would begins. "the biggest worry is the growing possibility that israel will talk iran over the next few months. there is a strong likelihood that israel will strike iran, before iran enters a zone of immunity to commence building a nuclear bomb." did mr. ignatius accurately characterize your view? >> i use the the not comment on ideas about what i'm thinking. that is a dangerous game you get into. then the express my thoughts.

iran is of great concern. we have a common cause with its zero and the international community with regards to the concerns about iran -- we have a common cause with israel. we have made it clear they're not to close the straits of hormuz and they are not to export terrorism and tried to undermine other governments. those are areas that concern us and it concerns the international community. the international community has taken strong steps on sanctions on economic and diplomatic areas to bring pressure on iran and so i -- and to isolate them. we should keep them together in applying the pressure.

>> do you think israel will strike iran in april, may, or june? >> we do not think israel will make that decision. >> did you have a conversation with mr. ignatius? >> the comments included in a column about what i'm thinking or were about is up to the columnist. >> did the interview you? -- did he interview? >> we talk about a number of things. >> where do trying to send a signal to iran? >> no. >> do you have a position about whether it is likely that israel will make such an attack? >> i do not. >> thank you for clearing that

up. there are no quotation marks in that column. it sounded like a quotation. in the budget, in compliance with the budget control act, there is a half a trillion dollars worth of cuts. if we have the sequestration, that would be another half a trillion. what was your conversation with the administration, with omb, within the dod about submitting a budget that does not comply with the statutes? sequestration is the law of the land right now, as i understand it. did you consider submitting a budget that outlines the catastrophic results if sequestration does go into

effect? what is your strategy to detrigger, to work with this congress? >> it is. obviously our approach was to deal with the budget control act and provided in terms of targeted savings in the defense budget. we frankly develop a strategy that we presented to you based on trying to lay out a strategy about where our force structure -- fore structure needed to be and to be able to respond to the threats that are out there. sequestration has it-formula. -- has a mindless formula.

it will happen the way it's supposed to happen, through this kind of mindless format that is there. our approach was not to pay any attention to it. i did nothing we should try to bring some kind of common sense to what is a crazy process. >> well, let me underscore what senator lieberman said. this budget makes us worry about risks. understand what general dempsey said. he believes there are risks. sequestration would prove unacceptable. thank you, mr. secretary, for mentioning the industrial base. we are at 8.3% unemployment

right now. and natalie the president will send a spending bill to the congress, which he believes and the administration believes will create more jobs. it makes no sense to me at a time when there is an ever to create more jobs with other spending to cut defense spending, which gives us the r of protecting the country and the industrial base and providing us with the infrastructure we need. it is a fact that this budget will have an adverse effect on our industrial base. is that not right? >> we have taken a lot of steps

to try to protect against that happening. we absolutely have to protect our industrial base and those industries that support the defense budget. we cannot afford to lose any more. we have designed an approach that will keep them in business with regard to the systems that we are trying to develop for the future. >> with york industrial manufacturing jobs. >> that does have some impact. >> thank you very much. >> i want to clarify this issue of the budget and sequestration. as i read the budget, there is additional $3 trillion in deficit reduction above the $1 trillion that has already been taken.

this would avoid sequestration totally. half of the additional $3 trillion is in revenue increases including tax reform including the expiration of tax cuts for single taxpayers making over $200,000 and married couples making over $250,000. the president is offering a detailed set of measures to broaden the tax base that together would be more than sufficient to hit the target. if this budget were adopted and the revenues were included, you avoid sequestration. is that your understanding? >> there is a plan to provide

for the additional deficit reduction that this country needs. if it were adopted, it would de- trigger sequestration. >> the budget that was submitted says it clearly. that was the strategy. the sequestration can be avoided and hopefully will be. the president has submitted his way to avoid it. >> thank you for clarifying that. >> thank you. i think the republican alternative will be brought to the senate floor. we look forward to seeing an alternative budget, as well. so much for that. >> thank you, mr. chairman.

secretary panetta, general dempsey, thank you so much for your leadership and all you do for our country. mr. secretary, i notice that the -- had you chosen a different path than you are on now, you could have been at home in carmel playing in the pro- am with your friends. you continue your dedication to serving our country and that puts you before us today. that says a lot about you and who you are. we have served together in the house. in all seriousness, i appreciate

your dedication and your hard work, mr. secretary. i add my appreciation to the brave men and women of the armed forces and their families for their service and sacrifice. secretary panetta, it is impossible to overstate the importance of our military engagement in the asia-pacific region. there are many challenges to this area, given a new focus on this vital region. if you look at continuing developments in the pacific, all conventional adversaries are advancing and it is critical we remain our superiority in the region. given the many demands on the defense budget, as you mentioned and the unique mission

and environment we have in the region, my question to you, how does dod fy 2013 budget impact our military readiness in the pacific region? >> that is obviously a primary concern for us. we do believe it is important to maintain a strong presence in the pacific. we maintain the 11 carriers in the navy in order to ensure that we have a sufficient presence. nothing like a carrier to be allowed for quick deployment in that area. that was a great capacity to be able to show our structure in the pacific.

we will maintain a military presence. we have one in korea. we will maintain an additional presence with our marines the route that area. -- the route that area -- throughout that area. we're working with the philippines. we have our air bases and the four deployed air assets -- the forward deployed. we feel very good about the force structure we have in this budget and our ability to maintain a real presence in the pacific. >> thank you. the u.s. has been attempting to engage china with exercises and other cooperative opportunities,

including humanitarian and disaster relief operations. you have done well. general, how you foresee these efforts proceeding as the u.s. focuses resources in the pacific? >> i think the strategy is quite sound. we never left the pacific. the idea of rebalancing our cells global it is just that -- rebalancing. this is not light switch on our offer. we are rebalancing our strategy and doing that base on the trends, demographic trends, economic trends, and military trends. we have the opportunity to increase our engage with the people's republic of china.

there are many things with which we have a common interest. we have had military to military engagement. we have a chance in the coming months to reemphasize that. that will assist us in implementing our strategy. this is an opportunity for us, senator. >> i am a true believer in our special forces. having visited the seals, i have seen firsthand the talent and dedication of our special forces personnel. special forces units are likely to do more in the future. i want to make sure that the end results and the strength numbers are reduced and that -- they

could be fields in communication and logistics -- would support and help the special forces to complete their missions are not reduced to a point where which could lead the overall readiness of special forces units. can you share your thoughts, at general, on this? >> i can , sir. one of the lessons of the last 10 years is that the special operating forces have demonstrated their versatility and the capabilities, not just in the counter terror realm but in the security forces systems. finding a new paradigm where we will partner differently with

special operating forces to give us greater capability the sum is greater than the individual parts. we're working on habitual relationships of the enablers you're talking about. i can assure you that there will be no degradation to our special operations community. we cannot put all our eggs in the basket. special operation forces are just that -- they are special. if we go too far, the conventional forces become special. we have to find the right balance and we are working on it. >> there is no question that special forces through their agility and their ability to deploy quickly represent an important force for the future.

they have been very effective in terms of terrorism. they have been effective in developing partnerships with other countries. working with them and providing advice. the kind of forced we're looking at is to maintain a strong army that can confront a land and meat and be able to defeat the enemy in a land war but also develop the capability using special forces, the marines, elements of the army to be able to have a presence elsewhere in the world. that would give us the best of all things. >> thank you very much. >> we are increasing our special operations. the number -- will increase them by 3000.

>> thank you, senator. >> you brought the budget. i am looking for to voting on the present cost budget -- on the president's budget. i have seven minutes and other questions and i'll submit some for the record. one will be discussing the program and i'll be asking about the cost comparison between the u2 and the global hawk. u2 meet that? i live in massachusetts. we have an innovative base in dealing with the cyber security

threat. before we talk about any brac closures, help will concede to work on the cyber security emphasis because i think that is the next real area we need to focus on. the air force has proposed restructuring the civilian workforce to about 16,000 civilian contractor employees. these efforts as it affects small businesses as was referenced in your comments, in a fax west over another bases throughout the country. we are concerned about that. one of the observations i made this summer was that the drawdown -- we can transfer of authority and control to the afghans.

if we do it too quickly, we will lose the benefits that we had. i met with the generals -- we have so many audits going on right now resting in any particular directorate. one general had said the five audits going on at once -- had 75 audits. how can we keep the soldiers safe and secure and complete the audits. we cannot. we have to look at that. we need to address these audit issues. there's so much duplication right now. some agencies are justifying their existence. >> i will not comment on them

justifying their existence because they will audit me. i share your concern. table.s a need to be audib it has gone out of control. we are working to squeeze those audits and to make sure they are not redundant. >> there are duplicates. if you read them, you see the same exact thing. there has to be a central effort to do that. the troops cannot do their jobs and work 23/7 on audits. is it accurate that we now have over 100,000 civilian

contractors do the job there? is the cost two to three times that we paid our soldiers? if so, where's that money coming from? >> i don't have that exact number. >> substantial. >> it is substantial. >> we are paying two to three times more than we were paying our soldiers. >> we have that information. >> i would like to know where that money is coming from. in terms of the understanding of the term reverse ability --

reversability -- how does that work in? i would think that you would get more valuable dollars and more bang for the buck. is there an effort to push the training and responsibility to the guard reserves? >> this effort has caused each service to relook at how they balance across across components. senator mccain cited we were reducing 20% of the brigade combat teams in the army. that is true for the active component of the brigades. this will be 68 -- that is

really an 11% decline in the combat teams. we have to look at the total force and the joint force, and not strictly what we're doing it to anyone of them, and we're doing that. >> i would ask that you look at the air guard. you do get a better bang for the buck. we have approximately 1 million service members expected to join the veterans ranks in the next five years and unemployment is very high and high in the guard and reserves. is there a five-year plan, and howard working to address these issues -- and how are we working to address these issues? >> we have to make sure that a

support system is out there as our men and women come back from service. we are working with the veterans department in a number of areas to try to provide job schools so is veterans can have an opportunity to get jobs in the private sector. thee trying to improve seamless approach so when it comes to health care and benefits, people can move without long delays and bureaucracy from coverage under the defense budget to coverage under the veterans budget. we're providing counseling and support systems to make sure that these families are supported once they come out so they can readjust. if they want to get a job, jobs are provided. we provide small-business loans

to support them. there's a pretty solid package. we are concerned that we have that support system for these troops when they get out. >> this is something we have been working on in massachusetts for a long time and have some knowledge about that issue. i am presuming there will be an opportunity to add questions for the record. >> yes, there will be questions asked for the record. >> thank you. >> thank you, senator brown. >> thank you. thank you for your service. progress is being made for the new headquarters in nebraska, a new command and control complex for u.s.s. strategic command.

the entire project has been authorized. the defense department will have to request phased in or incremental funding as we move along over a multiyear construction project. much has been said about cyber today. could you explain the basis for the need for a new headquarters dealing with almost every aspect of our military, defense and offense. mr. secretary. >> we think it is extremely important. strat-com is extremely important to defending the homeland. you have to develop the capability is that we're facing right now and cyber is one of those areas.

we want to develop the latest abilities to defend ourselves and to understand what that threat is about. we have to develop the kind of communications systems that are state of the art so they can do a quick communications. any time we face a threat, there is an immediate response that has to take place. we need good systems in order for that to happen. it is important that we develop the kind of capability. >> the internal components are within the structure would be equally important as the structure itself. it will take high-tech complex to deal with the modern challenges we have. >> without talking about the structure itself, we have

begun a series of seminars to look at ways to better integrate and to learn lessons and to make sure we can deliver our strategy with the force that this budget will provide. we're looking at how we can mitigate change. in the regional conflict in the future -- in 2017, this will affect the homeland. coleman is the longer sanctuary in 2017. commands like cyber-com and strat-com become more important. >> i have concerns about our presence in iraq.

questions about contractors. in state department's is now a lead role trying to decide what the mission is in iraq. we had the largest and busy in the world and it is growing, but we don't have established a mission. part of this will be the state department. i assume the department of defense will have a vital role in establishing that mission. might you fill us in on what progress is being made? t seems we have the cart before the horse. >> dod has a pretty good plan that we're implementing. we have about eight sites. we're providing training and support. it is both dod and contract

individuals that are working at those sites. this is helpful to the rockies in terms of developing a security for the future. to continuing discuss other opportunities with other operations, going after al the we think arec. important -- that we think are important. >> this was built based on the capital is that the iraqi government wanted us to support them. the program for record and an institution building. we have our resources mapped to those functions. i am confident that we have the size about right for now. if they choose to expand the

relationship, we could do so. >> there seems to be room to expand because of the size of the structure. it seems like the structure is going to be more than adequate to take care of our needs. i emphasize more than adequate. continuing to expand without a stated mission. i hope we can get to where we feel like we can state with that mission ultimately is. i like to turn to iran for just a minute. it seems which check the news, iran is involved in it. questions about iran engaging in

terrorist activities in two locations around the world. the plot to take up the saudi ambassador to the united states. i wonder -- you said it is redline for rest and the redlined for the israelis if they have the ability to deliver a nuclear weapon with a missile. what are your opinions about that, if you might be able to enlighten us a bit more? >> as i said, we have a number of concerns here that we were about with regards to iran. those are concerns we share with the israelis and the entire international community. as the president has stated, we will not tolerate an iran that develops a nuclear weapon.

and yet they continued to try to improve their nuclear enrichment capabilities. that is something that concerns us a great deal. they threaten closing the straits of hormuz. we said that is a red line for us. it is important for the shipping lanes and free commerce and that would have a huge economic impact if that were to happen. that, too, is unacceptable for the united states. ande concerned about iran the spread of terrorism. they seek to undermine legitimate governments around the world. we think the approach of the international community to apply sanctions, and to apply diplomatic pressure is having an impact.

it has isolated iran and made clear they have to change their behavior. i think we need to keep the pressure on. the international community is unified in that effort. my hope would be that we can stick together in ensuring that we continue to isolate iran and make clear that they should choose to join the international community and the regulations of the international community and become part of that family. if they choose otherwise, that would have serious implications. >> our concern is more about their nuclear capacity. are the actions they are taking beyond being pesky in terms of what they are intending to do? >> it is far beyond being passed

esky. it is supply equipment and arms and to engage in terrorist activities and that concerns us very much. >> thank you very much. we'll take a five-minute break, strictly enforced. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

>> live from the dirksen senate office building on capitol hill. this is a five-minute break. president obama laid out the proposal yesterday. we'll be hearing how the budget affects their department in the coming weeks. we of testimony and c-span3 -- we have testimony and c-span 3, testimony from tim geithner. be sure to check our schedule. the house is about to get a win for the week at noon eastern.

there will return for three bills and dealing with naming post offices in new york and missouri. they might consider extending the payroll tax cut. the house gals and at noon eastern -- gavels in. we'll interrupt this briefing hearing and is taking place now and you'll be able to see the remainder of that on our website, c-span.org.

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[ambient room sounds] >> just a couple of minutes in this break as secretary panetta and the joint chiefs of staff are giving testimony on the defense department's budget for 2013. while we wait, the house lawmakers are considering a proposal by republican leaders to expand the expiring to percentage point cut in the payroll tax to the end of the year. it will add was a billion dollar cost to the dead -- it will add $100,000. a group will back legislation to overturn the president's eight for free contraceptive coverage.

was a change in the rule. it would shift the responsibility to insurance companies. questions remain about which institutions are exempt and what happens to those that are self insured. [ambient room sounds]

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>> we will come back to wateord. back put senator portman in order when he returns. >> i appreciate this very much. do you believe it is a viable strategy for the interstates to try to contain a nuclear-armed iran? >> yes, indeed. >> the idea of containment. >> doing everything we can to prevent them. >> should we -- if they get a nuclear weapon, do you think the idea of containment is the way to go?

>> i think we have to prevent them. >> so if they have a nuclear weapon, the damage is done. the idea of contain is not the way to go. -- the idea of containment is not the way to go. china. general dempsey, there is a lot of reports that the chinese routinely engages in cyber attacks of our business and national security infrastructure. do you believe that's a reality of the 21st century? >> i believe someone in china it is hacking into our system and stealing intellectual property. >> if we could find the people's liberation army was involved, would you consider that a

hostile act by the chinese? >> i would consider it to be a crime. there are other measures to could rise to a hostile act. >> what would they be/ >> attacking our critical infrastructure. >> i will have lunch with the vice president of china in about 20 minutes. what do you want me to tell him? >> happy valentine's day. [laughter] >> ok. i will do that. >> i'm a clear that the cyber as big notch from china has to stop and it is might serious stuff -- mighty. you can pass that on. >> would you consider that a hostile act? >>yes.

yes. >> there in the lead, is secontt correct? >> yes. >> there will be training missions. do support the concept of a force as part of a strategic partnership agreement that would have the military footprint post 2014 that would allow american after our -- american airpower to allow? is that and our national security interest? >> i believe we have to have an enduring presence in afghanistan. we need to discuss with those nations are. ct operations is one of those missions.

enablers is a position, and providing air support is one, as well. >> if we have a configuration of american forces with adequate air power to assist the afghan security forces plus the special forces component, the taliban days are over in terms of military conquest. >> that should be the goal. >> we will leave this hearing as the u.s. house is about to gavel in for the week. there will return for debate on suspension bills. the clerk: the speaker's rooms, washington, d.c. february 14, 2012. i hereby appoint the honorable andy harris to act as speaker pro tempore on this day. signed, john a. boehner, speaker

of the house of representatives. the speaker pro tempore: pursuant to the order of the house of january 17, 2012, the chair will now recognize members from lists submitted by the majority and minority leaders for morning hour debate. the chair will alternate recognition between the parties with each party limited to one hour and each member other than the majority and minority leaders and minority whip limited to five minutes each. but in no event shall debate continue beyond 1:50 p.m. the chair recognizes the gentleman from texas, mr. poe, for five minutes. mr. poe: request unanimous consent to address the house for five minutes, revise and extend my remarks. the speaker pro tempore: without objection, the gentleman is recognized for five minutes. mr. poe: mr. speaker, the country cannot afford the great ruler and his administration. he costs too much. he spends too much. he taxes too much. he regulates too much. he cuts defense too much. he grows the government too much.

he divides the people too much. he blames others too much. he controls our lives too much. he despises criticism too much. he says no to domestic energy too much. he obstructs drilling in the gulf of mexico too much. he says yes to opec too much. he subsidizes bankrupt green energy too much. he ignores the border too much. he sues states too much. he infringes on religious freedom too much. he tries to make americans dependent on the government too much. he likes giving away somebody else's money too much. he campaigns too much. he expands government too much. he borrows too much. he taxes people who die too much. he taxes people who live too much. he likes the word trillion too much. he increases unemployment too

much. he likes the phrase more deficit too much. he lets gasoline prices rise too much. he makes health care cost too much. he ignores the constitution too much. and he panders to radical interest groups too much. he berates capitalism too much. he refuses to compromise too much. and he really likes big government too much. mr. speaker, we cannot afford the great ruler and especially his administration. and that's just the way it is. the speaker pro tempore: the chair recognizes the gentleman from virginia, mr. connolly, for five minutes. mr. connolly: ask unanimous consent to address the house for five minutes, revise and extend. the speaker pro tempore: without objection. the gentleman is recognized for five minutes. mr. connolly: thank you, mr. speaker. of course, those watching on television and here in the house i assume my friend from texas was talking about president george w. bush. certainly he was not talking about the current president,

barack obama. but i want to talk today about transportation. the residents of my northern virginia district endure one of the worst commutes in the nation. each citizen spends an average of 74 hours stuck in traffic. costing the average commuter nearly $1,500 a year in lost productivity and consumption. they are understandably fed up with congestion and traffic and they want to see improvements being made. they want to be able to get to work without having to leave in the middle of the night to get there on time. they want to attend child school activities or doctor's appointment without having to take half a day off from work. the unmet needs in northern virginia alone top $600 million a year. across the commonwealth of virginia they exceed $100 billion over the next 25 years. my constituents and i are ready for a robust transportation bill that will repair our roads and bridges and expand or commuting options, especially transit.

sadly h.r. 7 is not that bill and it's laughable for the house republican majority to claim otherwise. their plan will cut investment in transportation and nation's crumbling infrastructure and will cut not create jobs. in highway funding alone virginia will lose $361 million under this proposal. compared to current funding. h.r. 7 completely eliminates bus and bus facility funding for the washington area metro system and the nation's other metropolitan transit authorities. just five states out of 50 will receive more highway dollars over the next five years. all the rest are losers. this bill eliminates all dedicated user funding for transit, counting even the conservative chamber of commerce, to urge congress to reject this proposal. nationally this bill will cut $16 billion and result in the loss of more than half a million jobs. which will serve as an abrupt speed bump for our economic

recovery. mr. speaker, that's unacceptable. we can and must do better. 26 business leaders in my community, including the prim and fairfax chambers of -- prince william and fairfax chambers of congress signed a resolution which they said quote new transportation infrastructure is an investment not a cost. and failure to invest will result in economic decline. they're right. they have witnessed firsthand the consequence of not making significant new dedicated and reliable investments in infrastructure. due to this lack of investment at the state level, federal revenues are now the single largest source of transportation funding in my state. that's why $500 million in state dollars are diverted annually from new construction to simply maintenance as more and more roadways deteriorate along with them our competitiveness for attracting new employers and their families. but it's not just roads.

my community supports a multimodal transportation system that includes bus and van pools, commuter and rail, and mass transit. we have the second highest transit usership in the nation, yet our success in getting people out of their cars and off the roads is now in jeopardy because of this bill. eliminating dedicated funding for transit. breaking up 0-year commitment that we have to -- 30-year commitment that we have to support multimodal options for commuters across america. under this proposal money that's been dedicated to transit will go to highways, a one-time general fund transfer of $40 billion is supposed to make up for it. and to further salt the wounds of my constituents, mr. speaker, house republicans are proposed to pay for that one-time general fund transfer by gutting the retirement benefits of federal employees. as a result of the two-year pay freeze, federal employees have already contributed $60 billion over the next 10 years to deficit reduction, that's not good enough. this new proposal would pile on by increasing out-of-pocket

retirement costs by at least three times while reducing overall benefits by 40%. once again the house republican majority is using dedicate the federal work force -- dedicated federal workers as a punching bag politically and discouraging young people from even considering a career in public service. let me get this straight, the republican bill will actually reduce spending in transportation, end the reliable user fee funding system that's been in place since 1956, shifting the burden on to the backs of federal employees. that's not progress by any stretch of the imagination. in fact, it will just make congestion worse. i urge my colleagues to defeat this bill and work together in a bipartisan alternative. with that i yield back. the speaker pro tempore: pursuant to clause 12-a of rule 1, the chair declares the house in recess until 2:00 p.m. today.

>> first, let me reiterate that i had serious concerns about the libyan operation and the nature in which the president exercised unilateral authority. but on the syrian situation, do you have any -- again, do you have any indication about the makeup of the on-ground opposition to the regime? how much of it is domestic and how much of it is in fact not? >> as i sit here today, the free syrian army, which is the generally speaking the centerpiece of the opposition, is for the most part domestic, although we also know that other regional actors are providing support. that complicates the situation. >> there were reports over the weekend that al qaeda has been

involved as a part of the opposition. do you have any confirmation of that? >> no confirmation. i saw the same report. >> have you discounted it? >> not at all. if you think about what's actually -- i know you have. syria is an issue of sunni majority rebelling against an oppressive shiia regime. and all -- this is what i mention add moment ago. all the players in the region it seems have a stake in this. so those who would like to foment a sunni-shiia standoff, you know who they are, are weighing in in syria. it is the last remaining piece in the puzzle of what you and i probably months ago would have described as the arab spring. this is a very important moment in the region. and all the players are weighing in. >> thank you, general. thank you, mr. secretary.

thank you. >> thank you, senator webb. senator portman. >> thank you, mr. chairman. secretary and general dempsey, thank you for being here this morning. i told secretary panetta that i was going back and forth between the budget committee and this committee and i -- it's an interesting -- been interesting because i'm seeing two different point of view and really world views. i commend both of you today and your comments about the need for us to deal with the unsustainable growth on the entitlement or mandatory side of the spending in response to your question from senator graham is a mandatory spending for the military sustainable? you gave a simple answer, no. i will tell you, to be honest, having just engaged in the budget committee about the president's budget, which was submitted yesterday, it not only adds another $11 trillion, $1 trillion to our debt, taking it up to over $25 trillion, it takes a pass on any of the tough decision that is have to be made

on the biggest part of the budget and fastest growing part of the budget, and that's the entitlement side. it actually grows under their own numbers from about 64% of our total budget now, this would be medicare, medicaid, sths, interest on the debt that grows from 64% now, the largest part of our budget, to 78% during the 10-year window of the president's budget. yet there is no mention of social security, no reforms. on medicare the only reform i can see on the beneficiary side happens after the next term of whoever's president, that's on some slight means testing changes. my concern is exactly what you have outlined today and i quote you from your overview document where you said, our growing national debt if not addressed will imperil our prosperity, hurt our credible, and influence around the world, and ultimately put our national security at risk. and general dempsey talked about that during a hearing last year and i again appreciate the

approach you have taken. i'm very concerned if we continue down the path that has been outlined, we will all be here, many more hearings like this one, talking not about how to improve our national security but instead talking about how budgets have been crowded out by unsustainable practices elsewhere in the government. with that if i could focus on two things in terms of the defense budget, because i do think there is room despite my concern with about the bigger budget, there is room within definance to find savings and two areas i want to touch on quickly are personnel and the area of procurement. on a personnel side, i appreciate the fact that you both, again, have focused on compensation, health care benefits. you proposed a retirement review, these are all tough issues. i think we all agree our men and women in uniform are the sickle greatest asset and we need to be very cautious on the personnel side. on the other hand, we need to be

sure that we are not crowding out even within the defense budgeted need for us to be sure we have adequate resources for operations and maintenance. i would ask you this, when you look at what you proposed in essence you have taken out one issue to a commission on the retirement issue, very dell kit -- delicate issue, and you have the military health system here, although i would suggest more would have to be done to meet your own criteria. is there a more holiesic approach here in this -- holistic approach here in this is for retention and protect the great force we have now. >> we thought about bundling these issues together into, as you described it, a holistic look pay, compensation, health care, and retirement. and the chiefs and i were of the

opinion that we wanted to address the issue we saw before us that we knew had to be changed. and that was pay compensation in health care. but take the time to study the impact of rimplete change, because one of the things we -- of retirement change, because one of the things we were concerned about, although it's counterintuitive, you know about 70% of the force retires -- not retires but separates before rirnlte. but 100% of the force when asked even at the five-year mark of their career, will tell you -- say to you, don't screw around with my retirement or i may not stick around, even though they know the chances of them actually retiring is only about 30%. so there is a psychological factor with retirement benefits here that we don't fully understand yet. we want to take some time to understand what the impact of retirement reform would be on both recruitment and retention. and that's why i really -- we all felt, the chiefs and i, felt

we should separate this. >> secretary panetta, your thoughts on this given your background on the budget issues? >> i think it's important as you know as a former o.m.b. director as i was, we have approach this budget based on the fact there is no holy ground here. you have to look at everything. you got to question everything. we approached it on that basis. we talked about allowances, we talked about pay. we talked about pay raises. we talked about all of the health care areas. we looked at a number of those areas. we just -- we felt we've got it, we've got to take a step to make sure that compensation is part of the answer. to what we have to achieve here in savings. and for that reason we selected the areas that we looked at. i think it's important that all

of this has to relate to what it means to -- the soldier, uniform guy, or woman who is there on the battlefield, how do we make sure that we provide the benefits that are necessary to attract the very best and frankly we have the very best operating on behalf of the united states today, how do we do that? how do we maintain that benefit base that's important, but at the same time understand that we've got to control these costs in the out years. that was the dilemma we had to confront. we think we approached it in the right way. is there more that can be done? probably. >> i know that members of the committee know this, but maybe for some watching this is an increasing part of your budget just as it is for the federal budget, as i mentioned. you look at your percent of spending on tricare as a percent

of your overall budget. i think i speak for a lot of other colleagues, we look forward to working with you on that and trying to be supportive. on procurement we don't have time to go into it. my time is up. to focus on competition. the need for us to spend more up front to be sure we have a competitive process that will save so much over time. i look forward to maybe follow-up question in writing in that regard. thank you, mr. chairman. >> thank you, senator portman. senator mccaskill. >> thank you, thank you for your service to our country. as some of you know i spent a lot of time working on contracting issues as a member of this committee and other committees, and i don't need to tell you what a huge piece of your budget contracting represents. the project on government oversight released a report last year that is the first in-depth analysis that's been done in a while about the cost of personal services contracts as compared to the costs of a federal employee.

that study showed that we are paying contractors 1.83 times more than the government pays federal employees. that's including taking into account the benefits package that goes along with the cost of -- personnel costs of hiring a federal employee. i think there's been an awful lot of talk around the senate about freezing federal employee salaries and cutting the number of federal employees, but there's been very little real difficult work of trying to hold down the cost of personal services contracts. secretary panetta, with the reductions of d.o.d. personnel contained in this budget, what are you doing to ensure that reducing what -- what's happened over the years is while we try to hold the line on federal employees, contracting has just ballooned. and nowhere you are by far number one in that.

nim two, is the department of homeland security. i would like you to address that if you could, either you or -- >> senator, you provided tremendous leadership on this issue. it is of great concern to me personally because it has -- it is an area that has expanded dramatically. and almost everywhere i go in my new capacity i see contract employees obviously providing a lot of services. some of them i think are very important and they perfect -- perform a very important role. some i question whether or not we could perform the same role and do it at a smaller price. we did look at this area as part of our efficiency approach to try to see if we could gain savings. i would like to ask our comptroller to speak to that. >> just briefly, i think you know, senator mccaskill, we had

anishive a couple years ago to insource jbs where it was cost-effective. we are still looking at where it's cost-effective. i think with these budget cutbacks we are looking at what the right mix is. probably both contractors and civil servants are going to come down over the next few years in our budget. we have to find the right mix. i don't claim we have an easy formula, but i think we are looking at if in that context which is the right one. what's the most cost-effective way we can get the work done. >> we are going to have a hearing on this in the subcommittee on contracting and oversight, what i would look forward to seeing is what kind of strict analysis is on the department of defense embracing to get a handle on contract employees versus full-time federal employees. it's surprising when i got here not only do we not know how many contractors there were in iraq, we didn't know how many there were sitting in government buildings within five miles of where we are sitting right now.

and that is a huge problem. that the contractors just became task orders as opposed to kind of keeping a handle on how this monster got out of hand. we also are going to have legislation coming from the wartime contracting commission that finished its work. i will look forward to direct input from you about the legislation that we will be hopefully filing this week. and we will be working with this committee to try to get some of the provisions included in the defense. as i look at afghanistan, $16 billion g.d.p., $2 billion of that is not from us. that is a huge impact on that country. as you -- some of you are aware, i have also been looking at the way that the funds have been used over there in terms of infrastructure and how for the first time in the budget there was actually a infrastructure fund embedded in the budget coming from the military to do

the things that traditionally state had always done. that is large -- it's like it's on steroids what the infrastructure fund was. i'm going to quote what the c.a.t. team said, the counterinsurgency advisory and assistance team, which provided a report directly to general allen, found that the it was not achieving counter insurgency goals. current spending has funds without sufficient accountability. there is no system for determining what projects are likely to advance. no apparent desire to objectively evaluate whether coin objectives were achieved. commanders of various ends of the spectrum are judged by the amount of funds committed, obligated, or spent over actual measures of effectiveness. this situation is not only wasteful but allows for corruption, insurgen resource cap cap -- capture, we obtain

primary responsibility for project success or failure while the host government and population are spectators. i know that will surp has been something that's been held near and dear and now the afghan reconstruction fund is an outgrowth of that because we have gotten beyond 16 window fronts to large highway construction projects. without the kind of rigorous analysis in terms of sustainability. as we drop off a cliff in afghanistan in terms of what we are giving this country in g.d.p., aren't we creating a scenario that a lot of this money will go in the category it went into in iraq, that is a lot of wasted taxpayer dollars on afghanistan infrastructure? >> senator, i'll have the general comment on the actual use of those funds, but let me say this. i share the concern that you have indicated. as we do draw down and as we

turn over these responsibilities to the afghans, one of the issues that we have got to think long and hard about is the sustainability of these efforts. i mean if, for example, in the afghan force that takes over and provides the principal security for the country, what is the level that we need? is it sustainable? can this country provide the support system that it has to? what kind of economic base is that country going to have for the future? the issues that you have raced all relate to that question. what are we looking at in terms of the future of this country and can it sustain itself? that's going to be something we are going to have to give a lot of consideration to not only the united states but obviously all of our nato allies have to take a hard look at what we do to try to sustain this country in the future if we are going to be successful there. >> understand, senator, that the

way we -- i first hope we don't drop off a cliff. one of the things we have been discussing is the glide slope in every sense. it's our glide slope. it's our funding glide slope. if we do drop it off a cliff it will have the result you predicted. that's the reason i would suggest we can't fall off a cliff in afghanistan. we've got to transition this thing responsibly. as for whether they have the capacity and -- to deal with all of this, i mean that's been -- that has been -- i have done this in several countries around the world to including iraq most recently, and that is always the most difficult part of these missions is building the capacity, the capability, and then the capacity to -- it's really institution building. it's pretty easy to build infantry battalions, it's easy to partner with them. but the institution that sits above it all has to be

developed. i would suggest to you that we have made some pretty significant progress in that regard since about 2008. and it is part of our strategy going forward. but i share your concerns. i'm not sure that i share the understanding of the -- of all of the results of that study you just cited, because depending on when it was done and who did it and where they did it, it could have a very different outcome other places. i suggest to you we owe you some information on that going forward. >> i certainly hope -- i got to tell you i think that some of the stuff we built in afghanistan, we can go ahead and build the stuff. we can hire the people to build it. our no-how can provide the leadership to build it, but i don't think -- i think it's been wishful thinking that the institutional capacity of this country will catch up. i mean we got a power generation facility in afghanistan that's sitting there as an expensive

extra power generator because they can't use it. it was hundreds of millions of dollars of american taxpayer money. that kind of stuff. we just can't afford to do that. i've got an amendment to move some of this money back to the united states for infrastructure. and i think it's important that we do that because of the needs of this country. and the real problem that a lot of this money for security purposes is ending up in the bad guy's hands. we know that. there's been way too much instances that we found. i appreciate the more information you can give me about what kind of rigor you are bringing to the suns stainibility equation. i can't -- sustainability equation. i can't find it and i have looked for it. >> thank you, senator. >> thank you, mr. chairman. thank you for your leadership during very challenging times for the department of defense. i appreciate very much that we

need to find savings in defense in a way that does not undermine our national security. no question. but please count me out when it comes to brack -- [-- brac, and here's why. i want to echo concerns that secretary panetta himself, having gone through this process, raised before the house committee in october where secretary, you said, i want through brac, i know all the dollars people looked for, huge savings in brac, yet they dew point take into consideration the clean up. they didn't take into consideration the work 245 had to be done. they didn't take into consideration all the needs that had to be addressed. in many cases it wound up costing more. in fact, the recent g.a.o. report found that it cost us for the 2005 brac round, 67% more than we estimated and in fact we are not going to see any savings from the 2005 round until 2018, 13 or 14 years down the line. i have serious questions about

whether we save any mongri -- money from a brac process, particularly at a time when we are still making decision about our global posture and end strength of our forces i don't think it's the right time for a brac process where we may not save a dime. that's what concerns me at the end of the day. i want to ask you, secretary panetta, about our re-engagement rate at guantanamo. director clapper testified i believe it was last year in the spring that our re-engagement rate of those who had been released from guantanamo bay was 27%. do you know what the number is now? and has that percentage of 27% getting back into the fight gone up? >> i think 27% was over the long period stretching back into the last administration where most

of the individuals were transferred. i believe under the ones that have been transferred under this administration that it's less. i can't remember the exact percentage. >> but, overall it's been -- whatever administration released it, director clapper said the overall re-engagement -- >> that's true. i think that number's correct. i'll have to get back to you on the specific. >> that would be great. i want to know if the overall re-engagement rate, regardless of who released them, has increased at all. the reason i asked is in follow-up to senator mccain's question earlier about what we have heard could be the administration's potential release of five gtmo prisoners in exchange to the taliban. i just wanted to raise concerns about it on a couple of fronts. number one, as i see it according to the "wall street journal" and "the washington post" of these five people,

let's be clear, if these reports, public reports are accurate, we are talking about individuals who senior most taliban commander in the northern afghanistan, someone who is an alleged war criminal in his role for the mess kerr of shiite afghans, two are potentially involved in killing of a c.i.a. operative, american c.i.a. operative. the remaining three, one is alleged to helped smuggle weapons in to attack u.s. troops. another is directly associated with osama bin laden and omar, and then the final is -- may belong to al qaeda and his release has been called highly problematic. all five of these individuals were characterized by the administration in 2010, if these reports are accurate about who these individuals are, all five of them were deemed this

administration in 2010 too dangerous to transfer but not feasible for prosecution. i guess my question -- i know you have to certify, secretary panetta, two years later is there something changed about these individuals that we are unaware of? in my follow-up would be as i understand the administration's plan, this is an exchange for good will from the taliban. if we are going to release five -- if these reports are the case, these public reports of who these individuals are, dangerous individuals, who could get back and re-engage with our troops who aren't just soldiers, they appear to be leaders among the taliban other networks, if we were to release them for -- in exchange for a measure of good will, it seems to me why aren't we getting a cease-fire if we are going to put out people that are so dangerous? so two questions to you. has something changed from 2010,

the assessment of these five individuals in terms of being too dangerous to release? and second, do you think this is a good deal if we are only going to get a good will gesture from the taliban? >> let me re-emphasize absolutely no decisions have been made with regards to reconciliation. there have been some discussions. but the conditions for reconciliation have been made very clear. that the taliban has to lay down their arms. they have to renounce al qaeda. they have to recognize the constitution in afghanistan. as far as i know none of those conditions have been met at this point. and obviously would be part of the discussions. as to whether or not as part of whatever these discussions involved, that there were transfer as part of that under my obligations as secretary, i

have to certify that these individuals will not return to the battlefield. i've got to be convinced that steps are taken to ensure that that does not happen. and until i am assured that that's the case, i'm not going to certify it. >> i appreciate that, mr. secretary. i would hope these are very dangerous individuals if they are as they have been reported by "the washington post" and "wall street journal," and in particular to transfer them for a so-called good will gesture, i appreciate your list of conditions of a cease-fire laying down of arms. i obviously am very concerned to transfer these individuals at all given how dangerous they have been in the past. and frankly we haven't always been right about this as you know. we have been 27% wrong, zakeer was assessed as a medium risk. he was released and he's now leading the taliban forces citing the u.s. had a means in

the helmund province. we do our best in these situationings, but as a prior prosecutor the best predictor of future behavior is usually prior behavior, these guys aren't good. i appreciate your looking at this certification very, very carefully. thank you for being here today. >> thank you. senator udall. >> thank you, mr. chairman. good morning, gentlemen. i'm sure you can't imagine -- you would rather spend valentine's day with any group other than the armed services committee, thank you for being here. it's apparent that the fiscal challenges that d.o.d. faces are those that we face across the federal budget. we have had a respite given the end of the war in iraq, but unfortunately, more broadly, i'm not speaking of d.o.d. but more broadly, we have mismanaged our finances across the board and we have put ourselves in a pretty

tough, i would say even unacceptable financial position. if you look at our history, we have leveraged our economic and military strength to accomplish our goals. and we can't effectively project our power abroad if woor weak at home and we cut our goals by managing our finances so poorly. you both know in spades we have to carefully strike a balance between fiscal responsibility and strategic capability. we can't eat our seed corn. we have to get this right. fortunately i think we have a lot of history to guide us and we've got to make sure we incorporate the lessons learned from our successes. and our failures as a mountain climber i always learned when i was on the mountains i didn't climb i was successfully somebody. but general in that spirit i wanted to turn to the summary i have heard that the d.o.d. has affirmed its commitment to the

departmentwide research and development programs and the continued development of alternative energy technologies. d.o.d.'s always been an innovator in military research. has create add number of products we now consider essential to everyday civilian life. at the same time there are concerns that there are operational needs that need to be addressed now. can you discuss the thinking behind this focus on the future and how that decision affects current operations and those that might be just over the horizon? >> on the issue of energy, i can. what we -- >> even more broadly, too. medical advances. i know you have a long list. >> we do, sir. in terms of looking at joint force 20-20, it's exactly why we want to project ourselves out and look back and find our way forward. this budget is the first step in that. i will use oppration -- operation energy as an example. we lose soldiers, marines,

notably airmen and soldiers on the roads to afghanistan. in resupply missions. so to the extent we can create autonomous or semiautonomous in terms of energy consumption, power and energy,s ors, net zero in terms of their consumption of power and energy, we'll actually save lives and become more agile because we won't be as tied to some kind of traditional linear line of communication. we are all in. as you know the army has five installations where we have -- one is fort carson, colorado, where we are trying to receive a net zero energy situation. but that's kind of a garrison environment. operationally we are trying to do the same thing with our tactical units. every service, frankly, is working on this diligently. i think this budget reflects that. >> has there been some compelling stories about what

the marines are doing in theater on the frontlines at the f.o.b.s. as your predecessor put it, saving energy, savings lives. i commend you what you are doing. i look forward to working with you in this important area. mr. secretary, if i could turn to you, the congress, as i think you are aware, worked with the department to establish an operationally responsive space office within the air force to rapidly field small responsive satellites that are tactical in nature and tasked by the combat commanders in the field. that's in comparison to the large nationalcy thames national systems that take billions of dollars to field. as i understand in the fiscal year 2013 the department's proposal to abolish the operationally responsive base office, zero its budget, from $11 million last year and integrate whatever capability is left into the space initial system center. can you explain the department's thinking here when the first

satellite they launched was judged by centcom to be successful? or s one started sending images to them almost three years to the day after the program was started? one additional question, is there a possibility this decision puts the cart before the horse? i assume the budget was probably put together before centcom started using the system. can you explain the reasoning here? >> senator, let me have bob talk to that. >> senator, what we have done, as you said, is terminate the program office but not the commitment to operational responsive spacish tiffs. it will be put into spatial command where it can be looked at in a broader context. we think it's the right decision as opposed to focusing on one particular approach but look more productly. a lot of ways to do it need to find cost-effective ways. that's a proach. >> i look forward to working with you to make sure we continue to get this right. we talked about smaller agile

forces on the frontlines. this is in a way a form of doing that. but in space. let me turn to iraq. and afghanistan. we have ended our mission in iraq. we are drawing down our surge forces in afghanistan. we have proposed reducing end strength in all four service branches, substantially reducing the number of aircraft, ships, and army b.c.t.'s, brigade combat teams. after all that and more when adjusted for inflation, the d.o.d. budget for 2017 will still be almost exactly the same level it was in 1986. that's the height of the reagan area, buildup against the soviets. can you talk about the major reasons we are spending the same amount of money for a smaller force? >> well, senator, what we have here is that $487 billion was in

the planned d.o.d. budget over the next 10 years. and that included obviously a lot of what we have been asked to reduce in terms of the budget looking forward. so overall make no mistake about it, even though the defense budget shows a slight increase between now and 2017, the bottom line, when you add what we had propose the in our budget -- proposed in our budget plus the amount would be involved in terms of the work, we will be going down dramatically by about 20%. which is comparable to what we have seen in past drawdowns. so this budget -- at the same time by virtue of what we have done we have made it much tighter. obviously we have had to take down the force structure. we have had to make cuts in ships and planes and other areas in space as you said, but the

bottom line is we think we have a sustainable budget that will take us to the kind of force we are going to need in order to meet the threats that are out there in the world. >> thank you, mr. secretary. thank you, general dempsey, for your service. >> senator collins. >> thank you, mr. chairman. i'm sure at this point -- curious at this point to end the hearing, secretary panetta, that you are contemplating what danny akaka said to you and wondering about your career choice, but we do appreciate your service and indeed the service of all of you. general dempsey, i want to bring up with you an issue that really troubles me. since may of 2007, afghan security forces have killed 70 americans and allied troops and wounded many more.

over 100 more. in 45 separate attacks. and one of those killed was a maine soldier, private first class buddy mclean. i'm so disturbed by the frequency of these attacks. it raises questions about our vetting process. it raises concerns among our troops when they are risking their lives to train and assist these afghan troops only to have some of them turn on them and kill them. it's my understanding that a central command red team report concluded that there was a crisis of distrust that permeated both the afghan national security troops that we are training and our own troops as well. so here they are being sent out on joint missions.

they are training side by side. but they don't trust each other. unless steps are taken to stop these attacks on our troops by the afghan security personnel, that level of trust that is so necessary for a successful strategy is going to be extraordinarily difficult to achieve. after all, these are the very security forces that we are depending on to take over from us so that we can come back home. so i would ask you, what is being done to address this very serious and destructive problem? >> thanks, senator. i'm well aware of this issue. in fact, just recently briefed the president on who shares your concern. as you say it's actually 47

instances. about 11 of them were related to infiltration or self-radicalization. the remainder were issues of personal. it's stress, it's tribal. it's not related to taliban influence or ideological issues. that's an important point. doesn't make it any better but it makes it more understandable. the other thing i want to mention is, it's not just what we call -- it's not just them attacking us. they are attacking each other. probably at a rate of about three times. we are interested in this. we have an eight-step vetting process. that includes i don't have the entire thing memorized. it includes things like letters from tribal elders, biometrics, training, indoctrination, and the vetting of counterintelligence agents both u.s. and coalition, but also afghans themselves. recently the because of this

issue with the french, president karzai and the minister of interior agreed to embed some counterintelligence agents throughout the afghan national army in order to try to get after this. it is tragic and we are faking steps to improve it -- taking steps to improve it. we are not going to get it to zero. it's the nature of this conflict. >> you know, it's one thing to tell a family that's lost a loved one that they did so in support of the afghan people to help them have a secure country and to make our national security better. but it's so different to try to console a family that has lost a son or daughter as a result of afghan security force members killing them. and it's just -- i just think

it's a terrible problem. and the seeming frequency of it is disturbing. i realize we are never going to get to zero, but there are too many incidents. >> senator, if i could. i share your concern deeply. i just returned from the nato ministerial where obviously the french were very concerned having lost some of their troops to the situation. what we did at the nato ministerial was to task general allen to report back on the steps that are being taken. before this he had 250u8ly taken some of the steps that general dempsey recommended. they are moving aggressively to try to do a better review. they are going into the afghan army, better checks, better background checks in order to ensure these incidents are cut back. i would say that even though no killings, this way, or any way,

justifiable, but it still remains not something that is something that's endemic. it is sporadic, but nevertheless we have to address it. >> thank you. i would ask that your offices keep me informed as you do try to improve the process. secretary panetta, i share a lot of the concerns that my colleagues have expressed about some of the cuts in the budget, particularly those that affect shipbuilding and the size of our fleet. it seems inconsistent to say that we are going to focus on the asia pacific area and yet not seek to get to what for years has been the absolute minimum goal of 313 ships. i am pleased, however, that the budget request indicates that

the department intends to seek a multiyear procurement plan for the ddg-51 destroyers between now and 2017. first of all, do you support that plan? and do you see that it's helping to produce the kind of efficiencies that will lead to a lower cost per unit? >> absolutely. i think that's extremely important. two things are important. we want to maintain, we have we have 285 ships now. we want to be there in 2017 in the next five years. our hope is to gradually move up to 300 ships by 2020. we are clearly intent on having a navy that is fully capable to project that forward presence that we are interested in. secondly, i think we have to do it in order 20 pro-- to protect our economic base. we have to have a strong industrial base here that supports the defense department.

for that reason my instructions are to do everything possible not only to obviously get better competition and better savings, but to make sure that we keep our industrial base busy serving our needs. >> that is so important because once that industrial base is gone, you never get it back. once those trained workers go into other fields, you have lst them -- lost them forever and that would greatly weaken our capabilities. i agree. thank you for that response. thank you, mr. chairman. >> thank you, senator collins. >> thank you, mr. chairman. general dempsey, secretary panetta, mr. hail, thank you for your service. it is good afternoon now. thank you for your leadership, particularly during this time. i.e.d. proliferation is a key concern of mine. it certainly has been for quite a while. i support anything that we can do to counter i.e.d.'s and

obviously protect our troops. i also support anything we can do to improve the detection rates and interdict the flow of ammonium nitrate. last year in afghanistan i.e.d.'s caused over half of u.s. military deaths. i.e.d.'s will continue to pose an enduring threat to our military men and women. i believe we need an enduring capability to counter this threat. however, we have got to ensure that our counter measures effectively deal with the types of i.e.d.'s that we face now and in the future along with the environments that they'll likely be utilized in. and our efforts must be geared toward counter i.e.d.'s in any locale. my figures show that we have spent approximately $17 billion on various i.e.d. initiatives and equipment, not counting the $45 billion spent on mine resistant vehicles. i see these -- our young soldiers all the time with loss

of limbs. we host wounded warrior luncheons in my office. i see them at the airports. and i really want to do everything possible we can to counter dict the i.e.d.'s. at the same time we are spending billions of dollars to fight a technology that currently is costing the enemy tens of dollars. i'm wondering how do we figure out how to alter this investment ratio? and what investments will the department make in developing effective i.e.d. counter measures in order to protect our troops and at the same time avoid restricting their freedom of movement? >> senator, the i.e.d. challenge is the enemy's ais he metric tool. i think you are correct in stating it has been the biggest killer on the battlefield and is likely to remain so. that will be true, i think, wherever we are throid. i think we are so -- deployed.

i think we are so capable they'll find ways to attack us. typically that's through i.e.d.'s. the next will be precision rockets and missiles. we'll get to that. the point about i.e.d.'s, the way we are trying to address the cost ratio is by expanding -- we have been doing this. is by expanding the aperture. it's not about finding technological means to defeat the device. defeating the device is important. mraps, mine detection, deep penetration radars, ground penetrating gray radars. it's also training to identify signatures. i'll explain that briefly. and also attacking the network. so you have to do all three. you have to identify signatures. and that is to say the components, the chemicals, and then find ways to identify those components and attack the supply

chain. and then it's attacking the network that includes the financeers, includes those. finally it's defeating the device. we have gotten actually quite good at it. but, again, this is the enenemy's principal munition that he uses against us. it does continue to incur casualty. we have to stay with it. i don't have any better answer than that. >> what -- >> if i could, senator. follow up a little bit on that. probably one of the best things that was developed was the mrap. and it has saved a lot of lives and it was done on a expedited day bayhcies and was a good example of trying to produce something needed by our fighting men and women on a fast basis. and we are continuing to obviously do that kind of research to try to develop the best ways to try to protect our young men and women. i agree with you. it's -- anybody who has seen the results of an i.e.d. has to shudder at the devastating

wounds that result from that much the other piece of this, though, relates to the supply network for these i.e.d.'s. and in some ways that relates to the safe haven. in pakistan, that continues to supply a lot of this. and that is an area that we believe we have urged the pakistanis a dress it. we think that whole issue needs to be addressed if we are going to be effective at trying to cut back on these. >> that was my next question. and i know we discussed this before. what is the department doing to put pressure on pakistan's network of the distribution of ammonium nitrates? >> we have made very clear to them that where these threats emanate from we have identified locations. we directed them to specific sites. we have urged them to take steps. in some cases they have. some cases they wind up there too late. but we are continuing to impress upon them that they have got to be part of the answer to dealing with this issue. >> i think that would help

tremendously and hopefully lowering the number of the i.e.d.'s that are placed. secretary panetta, i also wanted to thank you for lifting the marine corps variant of the joint strike fighter off probation. the decision i believe is essential for the marines to operate and move seamlessly from the sea, shore, and air. it's also key to preserving the strategic value of our many fibous capabilities. vertical landing, a great example is when the f-15 fighter pilot crashed during -- in libya and these airplanes were able, i, within about 90 minutes take off from large deck amphibious ship, rescue the pilot, and have him back onboard. so i obviously there is a critical need. and i also understand that the original joint strike fighter