agree with that institution or mission and life and the one to affiliate with us we welcome their support. there are examples where we have lost six figure and donors and because we published something they did not like. they want us in advance. they said we will withdraw our funding. we double check our analysts and major this is what we wanted to say. we published it. they withdrew their funding. that is an important -- it speaks to the integrity of a research institution. >> this idea of donor control it is baloney. no donor has more than a 1.5% of the donations. we lose the owners all of the time. the two cases you mentioned were not cases when i was there. i never at aei or any other institute seen anybody hired

fired, a paper buried because a doner was upset. >>i would say we have a policy -- clear policy that no individuaoll support will support individual research. it becomes a challenge, you do not make that kind of commitment. we are very clear that no particular paper is written because of a contribution. our foundation is different, but the fund issues are brought in fund research. >> two quick points. i agree on the donor. . in the article, i mentioned the david frum incident i the dow

that the things he wrote in terms of democratic parliamentary procedures in the health-care bill were much more damaging to the republican cause than anything david said. i just do not see that as the cause. i was not in the room. >> we have about two and a half minutes. i am going to try to get in two more questions. >> i will be very quick. on the points on tenure, i always thought 10 year meant never having to say you're sorry. --tenure meant never having to say you are sorry.

what i would like to ask is, does the panel have any proposals on how you actually solve this? how do you move forward? i am not sure i have heard any solutions on how do you allow this bipartisan ship that is in the eye of the beholder -- you have any proposals on how to get past this? >> that is a very good question. people have asked me this. i do not support any government policy to address this. i think it is an outsider government issue. i think it is a great thing there is a lot of thing tanks. basically, the way you get to be a think tank is to -- their are tests that the irs applies. you call yourself a think tank here there are plenty of organizations that have status -- they do other things.

i am wondering if we will be reaching a point at some time when the self designation parts of it will come as an issue. some places where we've public think tank organizations and others will andactionm be action taknks or whatever they want to call themselves. >> one last question and that we will wind up. >> to some extent what you are we articulating is this debate about whether an institution can take the place of a virtuous individuals.

when i came to washington in 1986 i was working for the claremont institute. three series of serendipitous events, i was talking to clarence thomas. he sort of hired me as a think tank. subsequently we hired two other political people. we did some thinking. we read some serious books. it was not policy oriented or anything specific at all. he deepened his understanding of american political principles. he could go out and choose among the what the real thing tanks were actually doing. i guess i am asking -- who read your stuff, and what affect doesn't have? thomas acknowledged his debt to those of us who work with him in his autobiography and various

other forms. >> you ask a question that goes to the heart of any think-tank scholar or writer. who read your stuff, and is there any value to it? it is an existential and a difficult question challenging to all of us. he said, in that world you are only as good as the last piece you're right. >> we have come to the end of our discussion. i would say one piece of evidence for the value of one think tanks to have been these wonderful presentations we have had on the panel. thank you very much [applause] ] [captions copyright national cable satellite corp. 2012] [captioning performed by national captioning institute]

>> coming up on c-span, next the president delivers his weekly address. kathy morris is the recent -- republican response. a panel discussion on the constitutionality of the individual mandate in the health-care law. then, a breakdown of the major tax proposals in the budget request. >> he talks about t fiscal issues before congress. the keystone pipeline extension and the recent debate over the

administration's contraception policy. >> i had a hunch one of them might be an addictive drug. i will write down the road and ask each one a simple question. we will see what the responses. >> i believe nicotine is not addictive yet. >> cigarettes and nicotine do not meet the classic definition of addiction. >> will take that as a note. >> i do not believe nicotine is addictive. >> not addictive. >> they had a program where they wanted to remove nicotine from cigarettes and replace it with a drug that was equally addictive but it would not cause the heart problems and brain strokes. they had no way to test them. that was my job. it was to come in and find a

molecule that a rat's brain would say i like it and the heart would have no cardiovascular problem with it. >> a discussion with a subject of addiction inc.. victor denoble and charles evans at 8:00 p.m. eastern on sunday. >> president obama gives his weekly address from the boeing production plant in washington. he talks about removing tax breaks for companies that send jobs overseas and giving them to businesses that create jobs in the u.s.. then, cathy mcmorris rodgers delivers the republican address in which she criticizes the budget request. >> hello, everyone. i am speaking to you this week from the boeing plant in everett, washington.

what they're doing today as folks really excited. at this plant, they are building the plane of the future. the dreamliner. it is an impressive sight. to be honest, part of why i came was to see it up close. the last few decades have not been easy for manufacturing in this country. new technology has made businesses more proficient and productive, which is good, but it has also made a lot of jobs obsolete. the result has been painful for a lot of communities and families. jobs that provided decent livings have been shipped overseas. the hard truth is that a lot of those jobs are not coming back. it does not mean that we have to settle for lesser future.

i do not accept that idea. there's always something to do to create more manufacturing for the middle-class. in america, we do not give up, we get up. that is what we are doing. businesses have created 3.7 million new jobs. manufacturers are hiring again for the first time since the 1990's. companies like boeing are supposed to repair -- realizing that even though we cannot make things cheaper than china, we can make things better. right now here business is booming. last year orders for commercial aircraft rose. to me that rising demand, thousands of folks were put to work all over the country. we want to see more of this. we want to make it easy as we can for our companies no country should get a tax break

for outsourcing jobs. instead wishes -- the vaguest tax breaks should go to the high tech. it is time to stop rewarding businesses that ship jobs overseas and start rewarding businesses that create jobs here in america. another thing that we are doing is trying to make it easier for companies like boeing to sell their products all over the world. more exports mean more jobs. two years ago it is not only something that will help us to succeed today and we know what we need to do. skills for american workers. above all, we have to value the qualities that have made this country great.

hard work, fair play shared responsibility. right here is where the first one went off its original trip. as sharon saw the first airplane take flight, she got goose bumps. in her words, we said we would do it and we did it. we have seen challenging time with before, but we will emerge stronger. thank you.

have a great weekend. >>i have the honor of representing eastern washington. i'm also the mother of two young kids. like millions of mothers, i am concerned about the future of our children and the economy that they will inherit. during a fiscal responsibility summit at the white house president obama made a promise to the american people. he said he was pledging to cut the deficit by half by the end of his first term in office. in the budget that he submitted to congress, the president admitted that he would not keep the promise, not even close. because of his failure in each of his four years in office. on his watch, the size of our debt has surpassed the size of

our entire economy, making it hard for small businesses to create jobs and pushing it closer and of all the trillions in savings to rational republicans insisted that the president signed last year in response to his demand for an increase in the nation's debt limit. and another comes from what we call the war gimmick. money that was never requested

and will never rudy spent on wars i and -- the president's -- spent on wars in iraq and afghanistan. the president puts the budget is only about one-tenth%. it is not all the this uprising when you consider that a lot of what the president has promised about the economy has turned out to be not true. friday was the three-year anniversary of the infamous stimulus spending bill. the president's team said that unemployment would stay below 8% if the taxpayers gave the government a blank check for programs. but that did not work out either. unemployment has been over 8% for three years running. gas prices have doubled. the new health care law is making it harder for small businesses they believe that

they can grow the economy and create jobs by increasing taxes. but the american people know is by cutting government spending and keeping taxes low it continues along this long path. instead of leading the effort and of making tough choices, the president is urging that we spend more and more. all of his tax hikes would make it tougher to compete with china. keeping on gone like this, as we have learned the president's

budget is not a blueprint for america. it is a road map to greece. it did not have to be this way. and create a better environment for job creation. they have punted almost every time. the president's battle for the senate has not produced a budget in three years. that is like writing checks about ever balancing the checkbook. there would not even except spending cuts agreed to by republicans and democrats this week. spending cuts mostly came from

the president's own proposals. now, after breaking his promise to cut the deficit in half, the president cannot even offer a credible budget. that just is not leadership deserve much better. this budget is part of the a. jobgov.ogovj -- ob.gov.gov. -- jobs.gop.gov. thank you for listening. god bless america. >> they have put bars on their own windows and bars on their own doors because we have

abandoned their neighborhoods to crime. i cannot live with that. our neighborhoods should be saved. children should be able to play in the streets. we can fix that together. >> we look back at 14 men who ran for the office and lost. go to our web site cspan.org/thecontenders. >> i believe the destiny of america is safer in the hands of the people than a conference room of the elite. let us give our country the chance to elect a government that will see and speak the truth for this is a time for the truth and the life of this country. >> last year the two argued the

case before the 11th circuit court of appeals with the court ruling two-one that the requirement is an unconstitutional exercise -- and exercise an unconstitutional power. this hour and a half event is hosted by bloomberg lot. -- law. >> we are approaching the two year and diversity -- anniversary. this has been challenged numerous times culminating in a case now before the supreme court. this morning we hope to explore some of the arguments underpinning that case. i now have the distinct honor of

introducing lyle. he has been covering the supreme court for 54 of his 60 years in journalism. he has covered one quarter of all of the justices ever to sit on the court and has reported on the entire careers of on the bench of 10 of those justices. he is not an attorney. he is the author of "the reporter and the law." it is still available. i would like to welcome lyle. [applause] >> good morning. on behalf of bloomberg lock, we are glad you are here. contrary to perceptions of some of my colleagues in the press

room, i was not allowed when the case was decided beginning. i was not far behind when theodore roosevelt began exploring the possibility of a national health care lot in the early 1900's. i came along a little bit after that. my task is not to discuss the substance of the case but to give you some outlines of the logistics of what is going to be happening in the next six-eight weeks. first of all, i wanted to tell you what has been done -- what has been said about the logistics. he first thing i would tell you for sure that is settled is that justices kagan and thomas will

participate in the case. there have been repeated discussions about whether one or both of them should disqualify themselves. there is one case urging justice kagan to refuse. there have been opportunities for them to refuse and they have not done so. it is perfectly acceptable that they will continue to participate. there will not be in a live television coverage of the oral arguments in late march. there is a request. i do not believe there is any possibility that there will be live coverage. one other thing that is settled is the court has completed the briefing schedule but not all are in yet. i did a count last night in the press during -- pressroom.

there are 93 briefs. there are still more briefs to come including tomorrow i think it is due tomorrow on the server ability question. some issues that are almost settled are how much time there will be for the oral argument. they are committed to pipeline five hours but the parties have asked for another half hour. we presume we will see an order from the court asking for the competing allocation of time request. there probably will not be a safe date release of the audiotapes made. the current chief justice has a

policy that he prefers not to release any idea taste on the same day of the hearing. now the common practice is to release all of the audio tapes on the front of the argument. the daily press has lost interest by that time. there could be a change in policy for that case. it treats this case differently. the court has some of the filings in the case of the website. the court also has set aside 5.5 hours of argument for this case. i would urge you to not overlook the anti induction issue.

this is one of the issues for the main street press. it tends to fall over division. there is a mandate. i would like to take up a few issues. most importantly, the birth control mandate is not an issue before the court now. if you wish to see where that kurdistan's as the legal matter and they published the regulation region where that stands as a legal matter, at the published-- if you wish to

see where they stand on the legal matter, they publish the regulation where it stands as a legal matter. it will require insurance companies to provide care. i would also like to address one major issue. this is the equivalent. it has been suggested that perhaps i should offer a prediction as to how it should come out.

the following panel could be very informative. thank you very much. [applause] >> thank you so much. in the publisher of a blog. we are grateful for those who are watching streaming or three c-span. everybody understands the case that are about to hear on the act. there are incredibly well meaning people on both sides of the case. one small point of privilege is that i have a dog in this fight as a lawyer. i want to make clear that my job here has nothing to do with that. it is simply to facilitate the

folks who will do the talking. we have produced a media guide for the folks who are here. you can find links to the bias in the back. we can give you a little bit of backgrounds about each compliment. -- paul -- he is a former solicitor general. half the states have sued the constitutionality of the statute. he's arguing every case. eking compass at least 10 of the oral arguments. michael carbon is a partner at the bankrupt.

he is a partner at jones day. he is the former deputy head of the office of legal counsel. they have a principal lawyer for the plaintiffs. they have been formulating the legal strategy. they have been involved in the matter involving the business community and a lot of conservative issues. my last is the former acting -- to my left is the former acting general. he argued a most of the cases in the court of appeals as this was being litigated. he is now co-head of the super practice which is an

international law firm. he is regarded at the very least among the same generation as the leading democratic lawyer. keela is a professor at yale university. he regarded fairly as one of of the five ones in america today. a particular, my own view. rather than gravitating toward esoteric, action gravitating toward the importance and clear hear. we are here to talk about cases

as the whole. we will have a question appeared at the end. it goes on to ask about them, you are welcome to do so. you could talk about this for 5.5 hours. we have less than that. we're going to focus on the core of its. i have urged the panelists to engage other and not call back. -- not hold back. none are known as shrinking violets and that should not be a problem. they really should cut to the heart of the matter. and lots of folks know it had

bought the case. -- know a lot about the case. a lot of folks will not know as much about it. if i could just ask paul to set the table with a brief description of what the individual mandate is. >> i will give it a try. i think neal of have a different way of describing its. this has generated the most controversy. there is the individual mandates. it requires with one in two minor qualifications them to maintain health insurance. it is the act when you're putting together this. -- the looked at it kind of

critically. they have to do other insurance reforms including to make sure it is available to everybody and then you have not be denied insurance. they have run into problems. one state tried it with an individual mandate that was perceived as more successful. i do not think it was preceded by everybody. -- i do not think it was perceived by everybody that it was the only way to accomplish it. there were earlier versions of the act that more affirmatively embraced the taxing authority. it included an individual mandate. it gives rise to the individual issue. this is really completely unique depending on your perspective. there have been a lot of crises in the country where congress

might have thought that forcing individuals toward a particular good or service might be useful. the government never did it. it has resonated with me. it is compelled purchase would have even been more effective regulation. it has incentives for people by giving them the incentives. it would have been much more proficient to simply say that everybody over a certain income level had to buy a car. the government never seen fit to do that directs requirement. it gives rise to the basic issue to the governments.

i think they can see this. many suggest it is a fairly straightforward regulation. the challengers. to the nature of the imposition. there is the government's seeming inability to eliminate a principal such as can engage in this regulation. in a nutshell, i hope that this response of the setting the table. >> thank you for this wonderful

event. i'm glad to be here with all of you. it i am not here now representing the government. i agree with a large part of what paul said. let me fleshed out exactly what congress is doing. it did not understand why this existed until i started getting really into the argument. congress is reacting to a problem with it the people uninsured. a large part of that has to be conditions. if you're in one job, they have other employer were to do. this person has high risk and so on.

on. 50 million people are uninsured. conagra said we will eliminate the discrimination and insist that everyone be rated a certain level and the community. once insurance companies are told you have to do this at a fair cross-section then everyone could wait to buy them until they got sick. that way you economize on their costs. that will create a massive adverse selection problems. they tried to reform the insurance market. what congress did is they said they would have an individual mandates so everyone has to have a certain amount of insurance. right now congress found every

american family that pays health insurance pays $1,000 extra for those who are uninsured. that is really what congress was saying. it is approximately 18% of gdp. it is a comprehensive regulation. why did the government do this with respect to the automobile industry? that is not a situation in which she can show up at the car lot, a drive off with a car and stick the bill to your neighbor. that is what is going on in the health insurance market. the uninsured and uni and are paying for health insurance are paying for them. that is an economic effect you

and i are paying for the health insurance for them. that is an economic effect that israel. >> is called insurance different in a way that explains how they could impose a mandate here but not in some other contact? >> no. he is always wrong for three reasons. he missed described congress's purpose. this comes straight from this. what we're trying to do is prevent the insured from subsidizing the uninsured. it is the opposite. what you're trying to do is conscripts individuals to buy insurance before and makes any sense for them to do it. it requires insurance companies to give it to all of the sick

people. you counterbalanced by bringing in to people whose insurance simply makes money. how much subsidy coming in from the individual mandates. 28 to $39 billion a year. you are taking a bunch of how the third year olds except for a catastrophic insurance. the only time you what that is a 30 old. they say have to buy the contraceptive and wellness programs and things that'll do you a whole lot of good. why do we do that tax what your insurance money.

as for the adverse selection problem, there is an 11 month time period you have a certain opportunity to buy insurance. what kind of person will sit there and say i really need insurance but i'm going to become a casino gamblers. i will be able to buy insurance on the way to the emergency room. cbo did not score it appeared there was not a line of testimony trying to document what causes this election. we can disagree about the policies and economics. what difference does it make. the court is not want to second guess what is beneficial for congress. congress is the one that makes

the power. heat bacon come up with ever policy differences they think are important are what unique aspects. once congress has the ability compelling duty by the one is there. congress has the power. but congress has the power that is the proper role. of the government tries to build these economic reasons while allowing this case, it is not unique. they can require you to buy a car. we impose all kinds of restrictions on the car company that drive up the cost of cars. just like the nondiscrimination

provisions strive of the cost of provision. if congress is allowed to force tankers to the provision there is no reason in the world that they cannot do it just like they can do it and the health care context. as the justice department has been unable to show, congress has the power to serve the public welfare to improve congress, a game over. they can do it for banks and anyone else they want. >> among your reactions, both paul and michael have said that there is no limiting principle. is there no limit in principle or does it matter? >> the most important decision that the supreme court ever

issued is mccullough versus maryland. the take them seriously everything that they said is clearly wrong. clearly. here is what john marshall says. the argument is that this creates a corporation and it is special. marshall says wrong. he says of for reasons such a applicable. the corporation has already been created under other causes. why not here? george washington signed his name to individual mandates. the militia act of 1792. i will read the language before the end of today. here is what he says about the limiting principle. q government tax me? yes. can they take money and buy stuff with it? yes.

the only security and the abuse is against it itself. the act upon the constituents. this is sufficient security. if you do not like this, vote the bums out.

i personally did not much like any aspect of law as a matter of policy. i would prefer to see a lot of torts reform. my wife is a physician and we have been sued in malpractice. my brother has been sued. my mother is a physician. my dad is a physician. i do not like this as a matter of policy. if you do not, roll them out. -- vote them out. we voted for president obama and his party and they said they were going to do this. that is what they did. if he did not like it, we will have another presidential election contest. the limiting principle is that they are taxing us. they are making us pay. if they do a cash for clunkers, i do not think they will because there is no room for it. -- there is no need for it. we do not need constitutional lawyers and judges pulling principles out of thin air to

limit the ability of congress to pass a loss on cash for clunkers requiring you to buy a car. congress will not do it. there's not a need for its. if they do do it, i want to see why they do it. there maybe a reason for it. just as there was a reason to have an individual mandate. mike talked about conscription. militia duty is conscription. let me read you the language of a law that george washington find his name to. every citizen shall within six months provide themselves with a good must get -- it is this sufficient bayonet and bill. they had a knapsack and bill. does not less than 24 cartridges. if you're 30 years old, you do not need a health insurance

policies unless you're going to get hit by a truck. they're subsidizing older folks. welcome to social security. younger people might be paying a yen for younger peoplein denver people may be going in. there's nothing unconstitutional about that. to be will roll back 70 years of progressive legislation. on conscription, the next attack could very well be biological. the germ warfare. what we need to prevent that is "-- everyone will need vaccines. viruses do not respect state lines. today is social security means everyone needs to have vaccines. -- national security means everyone the to have vaccines. they are more likely to have it if they are required to have insurance. >> i wanted to make sure there

are too arguable constitutional --two arguable constitutional basis for the statutes that have been discussed. the three be taught about the commerce clause. he has put on the table that there is another power that can be used to justify the statutes. it has blown a little bit hot and cold. can you address the question of whether this is a tax so that even if it worked not within the power, it is within the taxing power? >> mike will probably supplement them. there is this arguments that even if this is not on the individual mandate under the power that congress expressed he said it was exercised. and nonetheless might be

supported by the exercise of congressional power that at least the president said was not being used here. that is the taxing power. in some respects, i think the simplest answer to that argument and to his point about mccullough, which i embrace. here is the thing. the simple reason why the mandate is not a tax is because it was not labeled as a tax. it does not operate the way a normal tax does. it is clearly something different. >> we have not described how the tax does that. >> there is no tax. >> what this does, the mandate is a requirement that every individual, say people that are incarcerated in people that are native americans have a separate plan.

everybody else has to get health insurance. there is a separate provision which is penalty that operates as a penalty against those who do not buy insurance. that penalty, which is a little bit closer than the mandate does not apply to everybody to him the mandate applies. there are a lot of people, virtually all the low income people that are subject to the mandate. they're not subject to penalty if they don't. it is not the principal focus. it is not the mandate that really has everybody else says. this is to the point from the call-up.

-- from mccullough. what the chief justice said is that the taxing power is brought power and that once you have the government exercising the taxing power there will not be a lot in court to limit the power and get the taxes too high for that it is some doubt impermissible. all that is fair. the limit on the taxing power has to be structural and has to be people who are the taxpayers. that is as likely what the people said. that is why in earlier versions congress contemplated something. -- doing something quite at similar by expressed use of taxing power. they backed away from it. the people did speak.

the massachusetts election. senator scott brown. the people who passed this law and congress knew full well there not the votes to do this. they use the mandate. it is a sneaky tax. it avoided the tax label, which the president made clear it was credible -- critical to get past. it is not on any group of people you'd otherwise rationally say to be subject to a tax, like people who are high income people are people who engage in certain transactions such are risky. all of that might make sense from a logical taxing policy. it taxes what your people you and not logically want to tax reasonable help the, recently -- reasonably healthy reasonably unpeople who do not have a lot

-- young people who do not have a lot of spare income. they are inclined to save their money. it has a lot of assets of the tax. it does not have the one thing that chief justice marshall said is critical, the kind of up front accountability that allows the structural process to work. he said we could start a serious conversation if we had an answer for why this is different from taxing people and taking things from some people in giving them to others. i think the short answer is that this is completely different. there's a lot of accountability in being very clear about to is getting the benefits of the tax. a group of insurance companies who otherwise would protest long and hard against a new impositions that are implicit in the insurance reforms were basically quiet it.

an effective subsidy was devised for they got all this money on the backs of relatively healthy individuals. it would not have passed. >> i absolutely agree with every word he said. anything that congress can tax and take and give to an individual, congress can require one individual to pay for another. since congress can pay for somebody's insurance premiums and can require you to pay for this person's insurance premium. we all agree there is no constitutional limits in principle want to give congress the ability to take it for me and give it to you. this is the honesty of the political process.

somebody ran for president and said hillary clinton, i am opposed to an individual mandates. bill not raise it on anyone with the west into a $50,000 a year. he could not endorse the individual mandate and impose taxes. the big difference is the tax system does apply to all americans or should. everyone to accomplish this, we need to do for the greater societal good. if you are forcing people to engage in a public good, at the public as a whole should pay for its. that is how we have done it if we require hospitals for people

with their normal charitable instincts. this is all we're asking for. if congress wants to force one private citizen to help other people for obvious charitable reasons, is terrific. what you do not do is then not pay for it. what you do not do is make that take the entire tax. if we think it is so important to get protections against insurance discriminations for pre-existing conditions, terrific. that is a policy choice. we have to pay for it. the cannot ask someone to pay for the other insurance premiums. >> i think you can read this until you are blue in your face.

you'll never find the principle. that is that congress has to somehow face it. but she is saying is that the great check is the political process generally. i do not think anyone was fooled that this was a tax and therefore constitutional. the way that you sign up for health insurance, you have to report it on your 1040 tax form and pay a penalty. you are reminded that this is a tax. the way that it is calculated is that it looks to a percentage of your gross incomes. it looks and smells like a tax. congress founded functions like

a tax that will raise money. the cbo found it will raise $19 billion and putting it in the federal coffers. it is in the heartland of the power. i do not think it is as much about the tax power as what is the real check against these worries that my friends have pointed to. i went to law school in the early '90s. i thought it was a great idea do we get this stuff done. i am struck by the change. it is now striking legislation down. they cannot get their victories through the political process.

>> the challenge has been laid down by paul and michael. i want to make sure whether we agreed on it. they say that under the view of the defenders of the statute there is no nonpolitical limiting principle. there is nothing that you could go to a judge and say this mandate is unconstitutional. is that right? >> that is absolutely wrong. >> it is important to appreciate lawyers. the governor would not come in and say here are limiting principles and close the future congress from something they might decide is necessary on all sorts of situations that we cannot anticipate right now. the government job is often to

say here is what the heartland of our claim is. those cases are for down the road. if they wanted to, the principles are fairly easy to articulate. the bill of rights cuts in any structural power. it will reduce health-care costs. the privacy will preclude the government from acting in that way. the second principle is that they limit this. these are the courses and 1995 that would strange the government. -- strain the ability of the government. the government takes them seriously. the most important limiting principle is this. when congress is asking to solve a truly national problem

that is one in which the states are separately confident to fall that is one is at its effigy. congress found that when any individual state like massachusetts ties to reform the health insurance market and tries to reform the health insurance market, other states will come in and swat the markets. states often will not enact legislation to deal with the problem. they do not want to come back for the uninsured. the only way to solve this crisis is a truly national solution. >> i read you a passage from mccullough where he was talking about a tax power. there are two different bases for what is constitutional, taxation and interstate commerce. they have to be right about both. we just have to be right about

one or the other. there are at least three different clubs that argued the tax. the constitution does not use the magic word of tax. sometimes it is excises or revenue. the word "revenue" is in. it is titled 26. it is the internal revenue code enforced by the internal revenue service. cbo says it will raise 100 billion overall. it will lower the cost by $100 billion. it will be revenue positive. it is passed by the house and senate under specific internal rules but only apply to revenue measures. if you do not pay income taxes at all, the mandate does not apply for the tax form.

if you want to look at the word tax, if you think that is important, they understand it is a tax -- the word taxable taxation, a tax payer appeared 34 times in section 26 which is the relevant section. what are the limits that it really has to be a revenue measure. it is. they understand this. on commerce, it passed to actually regulates to act as a whole. -- it has to actually regulate the act as a whole. it has to really be trying to solve a problem of interstate commerce. it has to be an interstate spillover problem. one problem is the welfare magnet problem that neal

pointed out. the lock-in problem. you have a job now. you are worth more to the economy. they're willing to pay you more. we have to be paid by the system. they are not their highest. people are afraid to travel if they do not pay for you you're not going to want to travel. i do not know the answer. every monday, i am in new york. if i fall sick, and they will take me to a new york emergency room. i hope they will take care of me there. new york is paying for a connecticut person. that will not be fair and must actually have insurance.

you need to provide for emergency room care so people will be guilt free to travel interstate. the need to make sure that people have insurance so some states are not taking advantage of others. it does not all even out. this individual mandate itself need not actually regulate interstate commerce. it needs to be a part of a comprehensive thing as a whole. this is what's they explicitly said in the case. you look at if the law as a whole tries to solve the interstate problems. >> that really puts handcuffs on congress. we have been listening to 20 minutes of this. do you know what congress has to do? it has to rationally find there

is a problem. the regulation does not have to do anything with congress. as long as to attach it to a bill, that is ok. >> did it its due. did it its due. -- give it its due. it is not just attached to something. it is part of an integrated scheme. that does not make it constitutional. explain why it is right to say there is a spill that has five pieces that worked together. one of them is an individual mandate. what we do is assess the constitutionality rather than getting away with the statute as a whole. >> i am not sure i really heard one. i think akhil give a great

defense on why this might be in interstate commerce. in doing so, he laid out an argument that would apply to almost every commodity. >> but those are the limiting principles. >> when i asked for my limiting principle, i pointed to -- opez and morrison. that has nothing to do with this particular power. this power is unique, the power to compel people into commerce. that power is what does not have a limiting bridge. there is really no commerce that i cannot foresee to engage in on the theory that could then be easier for the federal government to regulate for the broader commerce. >> the basis for the regulation is not the individual mandate. there is an individual mandate. this is one way. >> maybe we should transition into the question tom asked

mike. your point is that you do not have to show really anything about the interstate commerce or individual mandate as long as it is a broader regulatory structure that regulates congress. we take issue with that. >> your initial statement of the fax, twice he said - -facts, you said "a critical part" of a comprehensive plan to deal with a genuine interstate problem that no individual state can handle. john marshall had no problem with that. >> every word you emphasized in that sentence are the kind of words that the supreme court will prefer to. -- defer to congress on. it is genuine. in the next context, it is all

caps, exclamation point "genuine." the courts are going to differ. interstate. let's start there. >> i'm sitting at home in my living room. i am not buying insurance. i am not taking part in commerce. how can they force me to enter into the stream of commerce? this is not like them growing wheat where he is producing a product that is an distinguishable from a product that is indistinguishable from the interstate product. how am i a problem when i make a choice not to buy insurance? they can still require insurance companies not to discriminate against people with pre-existing conditions. i am a solution to the problem

congress has created. every time congress rises up with a regulated company they can say it is solving an interstate commerce problem. i do not want to pay for it with tax dollars. this does not solve my problem. go buy a car from gm. go by broccoli. maybe i have a right not to eat broccoli. i can sure make you buy it. i am making two points. one is the limiting principle. this is unique in our prudence. every other person has been regulating an impediment to the congressional scheme at the interstate level. they have abandoned the distinguishing characteristics between interstate and intrastate.

they can get local bootleggers his liquor never crosses state lines. the question is can they get people who decided i do not want any part of the liquor business tax you will help it if you start making the buy wine -- and to not want any part of the liquor business? you will help it if the start making them by wine. >> when mike sits in his living room and does not buy insurance he is doing something that affects the national economy. that is what the government is saying. the failure to buy insurance is a different in this circumstance --

>> what does that give rise to a limiting printable? the problem is that people were sitting in their living room and they were not buying cars. that was a problem. >> what congress is saying is that health care is different than the buying of cars. everyone needs health care and those costs are externalize of people right now. maybe you can make that argument. i do not quite think so. you cannot predict when you will get struck by cancer or heart attack or get appendicitis. let me finish. this is something that is a product that everyone is going to buy. congress reaction is not the failure to buy but the failure to pay for it. health care is going to be consumed by everyone inevitably including mike as he sits on the couch in his living room. congress found those costs aggregated mean that each american family spends $1,000 per year extra.

that is across state lines. maybe he can tell the story with other markets. i do not quite think so. >> even if you are right and we can debate the tax that the health care -- the facts why does that limit any principal? if the the supreme court says you can regulate this into the power and is a decision not to purchase health care and has a profound market, why does it mean the next time congress tries to do this with the sec same theory that it is making it a pain to regulate that particular market so we will make you buy its? the next time it'll be cars. some people do not buy cars. they walk. why will that make one bit of difference under the structure

of the argument that the government is making? >> you are truly the best lawyer of a generation. it cannot win this case no one can. i do not think you can because the power congress is seeking -- congress is forcing someone to buy something they would not otherwise by. what congress is saying is that everyone is glad to buy health care. they're going to use health care in consume it. what they're doing is regulating the financing of its. they can easily right in opinion that say that health care is a market that is different than any other markets because of that and because of the demonstrate a cost that occur across state lines. >> healthcare is very distinct because everyone needs to have it and will have it at some point. that is not a direct the states.

it has to solve an interstate spillover problem. there are cases which the supreme court said congress went too far and established a limit. we are on the correct side of those cases. lopez and morrison are cases there were more interstate problems. people in one state were opposing cost of people in another. >> of me ask you to respond to this. what congress is doing is saying that you cannot pay for health care with your own money. you are going to have to pay for with insurance. what michael says you make a rational economic decision not to buy health care, he is talking about an economic choice that is being made by

individuals. fundamentally, the decision not to use insurance is being regulated by congress. is that a limiting principal? >> no. every time you decide not to buy a product, whether it is books or school curriculum or any kind of traditional thing -- i making a purely economic. if you want me to i will. cars are economic. you are going to buy health insurance is the premise of is that it. you are going to buy its. we will tell you how you are going to buy it.

you're going to pay their this with their insurance. it is different telling you how it is that you have to buy health care. it is a when you get health care, you'll pay for with insurance rather than -- how is that different? >> i have decided to self move or a scooter or a cap or an airplane. we are just telling you which way you decide to engage in transportation. it is not a limiting principle. this is the only market most americans will go into. the labor market, however, fell into the labor market. it is predictable than 95 simmel gone to the labor market. 95% are going to go to the labor market.

>> this was about as interested in market as you can get. this is not the theory. it is thought have anything to do with economic activity. growing wheat for your on props on your own land and having marijuana in your own basement for your own use affects the interstate market. do you know what facts they were probably right. i do not know how you distinguish between homegrown wheat and homegrown marijuana. we lost that battle in the 1930's.

>> this is why i think your example backfire. our point is that it demonstrates the precise limits that they were separately confidence to deal with guns. there is no spillover about one individual states deals with the gun problem. by contrast, health care is one in which one state does. if you can tell your story by which neighbors do not get stuck the same way with bills maybe congress can tell the story and it may be something that is constitutional down the road. >> we've it to a genius to come up with an interstate food market theory.

-- leave it to a genius to come up with an interstate food market theory. you came up with this by saying you're modeling after massachusetts. it is a thing that worked perfectly. by your own definition, it is not a problem at the state level and you are opening of a cathedral about the -- >> massachusetts supports the solution that did not work effectively because it was -- >> because you can't have your cake and eat it, too. [talking over each other] let's see if anyone agrees with this rationale. if insurance companies have to insure people after their houses are burned down, it raises rates. i am not saying it is a wrong charitable decision to make, but to say it won't drive premiums through the roof is crazy.

the patient protection was protecting six people against discrimination by insurance companies. what made it affordable was having healthy individuals offset the premiums that the companies suffered a. -- suffered. >> vote against it. >> it has to do with your false assertion that this is a unique factual scenario where congress is never going to be able to cobble together a nexus. every time somebody doesn't pay someone, costs are shifted. other customers and absorbed the costs. it is not a limit in principle. -- limiting principle. >> they want you to think that there is something distinctively dangerous and problematic about a mandate to

buy a private supplier. how do we test that idea? we don't see any particular concern about that. they have come up with that, but you won't find it in any supreme court case. it is not in the constitution that it is a special concern. it is exactly like -- the corporation is somehow very bad. john marshall says there is nothing particularly problematic about a corporation. like there is nothing particularly problematic about a mandate to buy -- hold on. >> they would say there is not a big concern about this because there has never been a statute that requires somebody to purchase something. >> every state requires you to get insurance before you go on the road, because otherwise,

you are exporting costs, it is a mandate to support costs. this is proof of the following point, that there is nothing particularly problematic about this. states do it all the time. they do it for cars. massachusetts doesn't, connecticut does it. you are imposing risk of cost of other drivers. car insurance, there is other insurance, too. >> their point as i take it is that this is something that the state should be doing. i don't think they will be persuaded by saying that states do things like this. is there a federal statute to give them their due? is there a federal statute that

requires you to purchase a product? >> is the act of 1792. >> you could have been given the guns. >> you can be given a health insurance policy. it is exactly the same all the way down. one, there is nothing wrong in principle with the government. government requires you to buy something. the government's view that all the time. now, the federal government can't do everything that state governments can do. it is limited in certain ways, and that is where the word that begins with enter and ends with state comes in. there is nothing wrong with a mandate. for insurance and cars, the only question is whether that very traditional governmental tool that has been in operation for a hundred years is a

sensible tool to deal with the distinctly federal problem where people in 1 states are imposing costs on people in other states. that is the interest a problem to be solved with this traditional regulatory tool. i am well, how are you? >> and you want me to respond to the militia act? >> on the question on whether there is a limit in principle you agree that congress could have done this if they were right about us being attacked. -- forthright about it being a tax. i also guess that you agree that congress could require that before you actually

consume health services, you require health insurance at the point of sale, you're going into the hospital, that sort of thing. does that cut into the concern of limited principle and if they can accomplish this through>> it suggests that there is a limit in principle that you can't do this through an individual mandate. it suggests that there are other ways that would be more politically accountable for congress to accomplish these objectives, which i think is important. there is a health care policy debate that i am happy to wade into to the extent necessary to argue this case. there are people talking about the health care market and have dedicated their lives to studying health care. and to the extent that they honestly believe that this series of requirements is necessary.

they should take great comfort in the fact that there is a way for congress to accomplish this. you can't have the shortcut of the individual mandate. that is a really important principle, and to make two points, it really is important to distinguish between the mandate and the penalty. because if you decide you're not going to buy health insurance he will pay a penalty if you are not exempt from the penalty and a lot of people are. that is something that you will have to do on april 15. you don't see the premium, which is really what congress wants. they want you to get compliant health care. and you're not going to write a check to the irs on april 15. he will write a check to an insurance company, and to the

extent that it is really a tax it is really pernicious. when we try to figure out this huge budget mess, we will start by looking at what the tax revenues are and government expenditures. to have something that is really a tax that will be completely off of that budget, people are taxed to whatever level they are at forced to buy a product that they don't want but if they are forced to buy it, they might as well have its. you'll have this whole thing kind of off-budget. i don't think that is what the framers had in mind. >> called a tax? it is unconstitutional because you end up buying the insurance? >> as michael suggests, it will be distributed in a different way more broadway. -- broad way. >> at least it would be on- budget and i think it would be

better. i can't resist saying something about the militia act of 1792, because i do think it is different. congress was given the power to raise a standing army and can certainly be argued that the militia act was pursuant to that power. it is important for two reasons. congress is given the power to raise armies and regulate. it was recognized that those were separate things. the power to raise an army was very controversial. the power to regulate and army wanted was raised was not controversial at all. by contrast, if you look at the commerce clause, which gives congress the power to regulate commerce.

it assumes that there was actual commerce ongoing that congress had the authority to regulate. that was the power, because it assumed congress to be regulated that was not controversial of all. if you go back to the minds of the framers and causing the idea that they really thought the congress hall clause was brought and if empowered compelling people and congress in order to regulate, the whole constitutional history would be different. we would have had he amendments at the framing in order to control this really brought, potentially dangerous powered to compel people to engage -- >> i want to make sure that we have time for questions. >> all the arguments against the act, there is a lack of political accountability, it is somehow stolen to the unsuspecting night and seems to be the weakest.

i think paul's concession i understand if they did it using the word tax a few more times it would be constitutional and really cuts the legs out from under them and comes to a point about unlimited government. they say as long as they do it with the word tax more than 32 times, somehow it makes it constitutional. and we are haggling over how many times they have to say it. >> i am saying you can accomplish the same objective by raising everyone's taxes and providing a direct subsidy to the health insurance industry and end up with the same public policy result, guaranteed issue, community rating, and everybody paying for it. >> i misunderstood you. >> there is no difference

between requiring people to do something directly and creating financial incentives to do so. their entire argument on medicaid as we are not forcing states, we're just giving them a strong financial incentives to do it. >> we have 20 minutes left, let me make sure that we have the opportunity to ask questions. i think we have microphones available. here we go. if you could just introduce yourself. >> i have two questions that have not been addressed by this rather lively debate. the first is, if this is a tax collected by the irs and can be

characterized as a tax, why is it not covered? a therefore putting the case of until 2015 or something like that? my second question, i would like you each, at least one of you to address the question of supper ability and why if you lose any part of this case, the rest of the statute should stand or should not stand. >> let me ask neal first. is that ok? >> i don't remember all the details, it could be close to those two. the first problem of the question is you refer to its as

yet. but it is important to distinguish between the mandate and the penalty that enforces the mandate. it looks a little like a tax and is what is collected by the irs. the challenge focuses on the mandates. most people, if they were rational, they are not going to stubbornly said that i am not going to buy health insurance anyways because the tax penalty is key to the amount of the premium you would otherwise pay. most people will make the rational choice that if i have to buy insurance for mss -- asses a penalty, people will pay. >> assume that the statute is of the -- upheld. does it run into the anti- injunction act. >> it is not a problem because the principal challenges the mandate. it creates an important

difference for understanding the anti-injunction act. it basically says if you are a taxpayer and you are upset about a tax that you think is unconstitutional, you have an option that most people don't. most of the time, you face an obligation from the government. you can comply or brain a pre- enforcement challenge. i can pay the taxes and get a refund and to litigate that way. once i pay my premiums to the insurance company, i can't get a refund from them. the anti and judgment act -- anti injunction act is still a non sequitur. one of them, i will give you too. how long line of supreme court cases that don't interpret it in a way that making it seem

jurisdictional. they make it seem like it is a defense that the government can raise and also waive the defense. i have created exceptions. the government and to the private parties and the states all agree that the anti- injunction act should not apply. they don't have to reach it if the court agrees it is not jurisdictional. we have arguments as to why the anti injunction act would apply to the states no matter what. >> if the individual mandate goes down, does the rest of the statute have to fall apart? got to the government has taken the position that if the individual mandate falls, only a few provisions would be apt to fall, the insurance market reforms and community ratings. the theory is what i outlined at the beginning of the hour together, that the reason why the individual mandate was put in was to deal with the adverse

selection problems from the community rating and guaranteed issue provisions in the act. some folks have said, there are 24 pages of the act have to fall including things like funding for abstinence education. i think people think is a tough argument to have the entire act fall to make sure that there is no clause in the legislation that is what gives that argument some teeth. alone, it is not this positive. >> is there a question of what falls apart if the mandate goes down? >> i don't think reasonable people can disagree that the

individual mandate is tied inextricably to the guaranteed issue and community ratings provisions. the two provisions that gave the patients the most protection or the guarantee issue and no ban on pre-existing conditions. the thing that made it affordable again was massive subsidy. once you have taken away both pillars of the act, once you have ripped the heart and lungs out of the body, it can't matter if the figures continue to move. it matters if they move in the way that congress intended. it is no way that you can possibly say that the rest of the act is ok. i suppose you can take the anti- competitive provisions out and still have an anti-trust division that can function. but it can function in a manner that congress intended. this is particularly true of this act because we know it was a series of compromises and if

pulling out any one part was going to do them, pulling out the biggest car will doom the whole thing. >> rather than killing the whole tamoxifen, it would be to say, if it is all about the fact that they use the word revenue rather than tax, it would be obviously ok. we write a the statute so that wherever it's as revenue it says tax and people have political accountability. that is what other cases have done. marshall, and the fact rewrites one clause of section 13 of the original judiciary act. if the whole point is that people need to understand that the supreme court can make that clear, one other very important fang, we talked about an individual mandate.

strictly speaking, you can simply pay instead. it is not a lawbreaker if you choose for philosophical or other reasons not to buy the insurance. >> of the statute is structured in such a way that paying the penalty is not in compliance with the mandate. the mandate continues. >> strike that part down read the statute so that it is clear that as long as you pay the penalty, you are in compliance. it is a very nice holding. >> i don't care if they call it a tax, penalty, or banana. it is a mandate to do something and if you don't do it, you are in violation of federal law. if a ban cigarettes in the

united states tomorrow and said that the enforcement mechanism is a for dollar penalty for every pact to sell everyone knows the difference of the impact of cigarettes. and the government conceded that if there is any distinction between a tax and something else, it is not a payment for an un-lawful act. if they had said the, you can have guns within 1,000 feet of the school in the penalty is a purely monetary penalty, that is not a tax because they have made the act of having a gun near a school of unlawful. it is not only from the citizens' perspective, it is from congress's perspective. congress doesn't want people to pay this penalty, i want them to solve the problems that you folks have articulated all

morning. that is why people mandated the purchase of insurance. it is not semantics, it is a fundamental distinction between being a lawbreaker and a person that complies with the law that besides the pay their taxes. >> anti-government's position is that to reach the goal of universal coverage, it is necessary to require people to buy private health insurance. earlier this week, 50 medical doctors filed a brief in this case saying that they believe that this mandate is unconstitutional because the government missed an alternative, the single payer that must industrialized countries have. >> i am a libertarian, but unfortunately, i don't think that the supreme court should

judge action by if it is adopted by western europe. is this regulating commerce? it is not remotely involved in commerce, much less commerce among the state to buy a particular product. the powers to congress are completely irrelevant to this decision. >> there are other options including single payer that might be scored differently by the american libertarian association. the fact that they are doable is not irrelevant. this is not an unsolvable problem that this is the only way to go. this is one way to deal with it and it happens to be a way to do it.

if the argument is that they could have called this a tax rather than congress, what is the big deal? who cares if we went on the commerce clause? you should grant us this power because it will not hand as the ability to achieve your policy objectives. really what you are saying is that this is just a two over for congress and this time they have to be honest with the american public during the legislative process and say this is attacks. what is the big deal? i don't happen to believe that but if that is their position, that seems to be a strong strike against their argument, not in favor of it. >> another question? >> barbara perkins, crs. what is the basis of the argument that the mandate is unconstitutional?

>> the court has made clear that you have to go back to first principles. federal government is inherently different from the states because the federal government is one of limited enumerated powers. if you enter the commerce power to essentially give them to brett of power that the state's -- breadth of power that the states have come out that in power is to say that the standing alone is wrong. much greater than the commerce power -- i start with the text saying that this is not regulating commerce. even if there is ambiguity with that, we know that is going to be wrong, because if anything is visibly truth from this month, is that there is no limit in principle. congress can treat citizens like they treat militias, which is not a whole lot of limiting principle, and bill of rights

would prevent states from doing this. that just means that the feds and states have precisely the same power. that is what the limit in principle conversation is so important. >> as the court has said, you should not get up to on on whether the limiting principle -- the court has said repeatedly it that as long as it is within the enumerated powers, the ends are legitimate, there is a means by which the court will defer to congress. why not have a $5,000 minimum wage and punished if you don't pay it by the death penalty? you could come up with a certain samples -- with absurd examples. every government power can be taken to the extreme. do you really want the federal court to be adjudicating these questions on the basis of observe hypotheticals? the court said from mcculloch on no, absolutely not. >> you can to the same thing with the income tax. they do not concede that there is a living principle.

mike said that, i emphatically disagree. he does not want me to keep repeating it. the limit in principle on the commerce clause is about whether commerce among the states -- congress has to be legitimately trying to address a genuine problem between the states where no single state can actually solve the problem on its sound because of spillover effects of one the state passed a policy on another state, positive or negative. you give insurance to one state with health care and you become a welfare magnet. we have one system to deal with the welfare magnet problem certain social security, other

state workers' compensation. the limit in principle under the commerce clause is that congress has to act to be tried to address the problem that individual states are not able to handle on their own. >> i just want to make a comment, because when i went to law school in the 1980's, i spent a lot of time talking about that, and i don't remember ever talking about no limiting principles other than interstate constraints and the bill of rights. how can the supreme court decided based on its president? >> there is an obvious distinction between regulating small producers of the product and the congress that passed the law in the 1930's, instead of telling mr. silver he could not grow wheat, if they told every american to buy wheat. that would have addressed the problem and not more directly than harassing poor mr. filburn.

the fact that congress has never done this before, even during as tall pointed out, at times of extreme national emergency, standing alone it is the indication that they never had the power, and the difference between filburn and my clients is the difference between a local bootlegger and teetotaler. it is far more to require somebody to purchase a product than it to limit their ability to produce the product among interstate. >> in wickard, these were situations where people are not doing anything at all. she was not engaged in interstate commerce when she was trying to grow marijuana in her backyard. as justice scalia said, as long as that regulation on marijuana was part of a comprehensive national solution, it would be constitutional. here the same structure of the argument applies, that there is

this one apart, the individual mandate, a overall reform to the health insurance market, and it is constitutional, and you cannot slice and dice and say that that little provision is unconstitutional. you have to look at the overall structure, figure out what congress is reacting to, and defer accordingly. that is what the supreme court has done and why they have an extremely hard case. >> you offered -- you have heard all this talk about the limits, lopez, morrison, we think we are on the correct side of these cases. they basically draw the line between congress and trying to solve a problem that really does spell over across the state's, an economic problem and congress can regulate that.

there really is an interstate market in drugs. situations where congress was intervening and there was no interstate problem to be soft, of violence against women and guns in schools. >> neal's commentary will capture the government's position. the administration like half of justice scalia's position. we have response to that there are other statutes, other cases, where the court has not hesitated to strike down one part of a broader statute that it did not question. i think i can support it to focus on at that part of justice scalia -- i think it is important to focus on that part of the justice scalia's opinion, that what government was doing in regulating conduct

involving marijuana was not regulating commerce at all, and that it was necessary and proper to the regulation of interstate commerce. his case rested on the necessary and proper clause, and that is the third clause you will hear about in these arguments. necessary and proper is going to be at issue. that way of analyzing, that half of justice scalia's opinion, i think is quite helpful to the challengers in this case because if you focus on the fact that when somebody is in their living room, they are not engaged in commerce. the question is is forcing them into cars to more efficiently regulate commerce -- forcing them into commerce to more efficient at regulate commerce part of the necessary and proper power? it may not be necessary, but in all events it is it not proper simply not a proper exercise of congress's limited and enumerated powers to force some

into commerce and regulate them. you recognize that the interstate fire arms market was something that congress could regulate, but it wasn't necessary and proper to force state regulatory -- state officials to be commandeered into the regulatory scheme. i think there is an analogy between that and what is at issue in this case. >> these are not commerce clause cases, and paul's is the problem is that when you are sitting in your living room, you are, congress found, affecting interstate commerce. creating infrastructure to deal with the problem that you cannot predict when you are going to get struck by cancer or heart attack. >> i really appreciate it, and thank you all for coming. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

>>kim dixon breaks down the

major tax proposals and the 2013 budget request. the president delivers his weekly address. later the house armed services committee holds a hearing to break down the $525 billion proposed for defense spending. witnesses include leon panetta and martin dempsey. sunday on "washington journal," guests include grover norquist. also, center for american progress president neera tanden about how they feel about the president as the priorities. we will look at campaign cold numbers with leo ribuffo.

he joined american history tv on monday for 24 hours of america first ladies, including an interview with eleanor roosevelt. >> i think like everything else that we started out expecting that the united nations would solve every difficulty just by being the united nations. >> tore the white house private quarters with laura bush at 5:00 and ladybird johnson at 8:00. anti reagan remark -- premonitions about her husband. -- nancy reagan reminisces about her husband.

had to our facebook page at facebook.com/cspan and tell us -- tell us who you think is the most influential first lady. guest: the message is definitely economic fairness. that has been a message of the president has had for the past couple of years. he really hammered it and his rhetoric when he released the budget, looking at raising taxes on the risk -- the rich and taxes on corporations. trying to drop distinctions between what ordinary americans

pay and wealthier americans pay. >> what qualifies as rich these days? guest: households making $250,000 or more individuals making $200,000 or more. host: what should you expect of this plan passes, what should you expect tax wise? guest: this is a wish list. nothing is immediate. it will force lawmakers to come to some kind of a decision. if the president got what he wanted, the top 2% of taxpayers would see their rates go up a bit to levels that were in the clinton era. i think he would go to a 36%

rate. if you are at the 36% rate you would go to close to a 40% rate. >> what does that mean dollarwise for those who fall into the categories? >> i do not have the dollar amounts of hand. i know collectively it raises a about more than $400 billion more than a decade. host: does the plan might out differences between those who work and make those kinds of figures and those who have investments and capital gains and make those amounts of money? guest: absolutely. he has wanted to raise the tax rates on capital gains and dividends from the current 15%

to 20% for high earners in the same income categories. this time he put in a little bit of a surprise. he wants to raise the rate from the current 15% to the ordinary income rates to top earners. that will be over 40% next year. host: describe how dividends work. guest: a company pays to investors who hold stock in the company. host: if he saw what he wanted there would be a greater tax rate. guest: right now there is a 15% tax rate on those dividends. again, and the idea the president is putting out there of economic fairness -- the vast majority of people that benefit from dividends are in higher economic income groups.

guest: host: 1 has been the reaction like? guest: the reaction has mostly come from companies to pay out dividends. certain sectors of the economy to pay out dividends. there has not been a wide -- there has been an outcry from republicans to say this is a tax on business. this will slow the economic recovery. i have not heard any warren buffett type folks from the other side saying this is a bad thing. host: if you want to give a call and ask questions about tax proposals, now is your chance to do so. we will give you three numbers to call. you can also e-mail us and tweet us. our e-mail address

journal@cspan.org. for those who earn higher incomes, what about the average american? how are they affected? guest: i think for the most part it stays the same period in the president was the budget was the payroll tax cut. a deal came together in congress yesterday. a those faults will get a continuation of a tax cut. he also wants to continue the tax cuts for those making under $250,000. that is about the majority of americans. he keeps the status quo for those in the lower and medium level incomes. host: the tax cuts apply to

higher income people would go away guest: under his proposal. host: we have been here before as far as those tax cuts being here and going away. what is the reality that there is an appetite to do that? guest: there is going to be a trigger at the end of the year. all of the tax cuts expired for the middle class, the lower class, and the wealthy. every single tax cut that was enacted in 2001 and some investment taxes in 2003 when president bush was president. there will be a frenzy at the end of this year. nobody thinks that congress is going to do anything about this until after the election. nobody wants taxes to go up. president obama does not want taxes to go up for everybody. he wants them to go up for the wealthy. there will be decision time and november and december. that is where the fight will take place. this time would year ago, he

also wanted to raise taxes on the wealthy. republicans out negotiated him. he was worried that taxes were going to go up for everybody. there were all going to expire if they could not come to a deal. they came to a deal to extend all tax cuts for all income categories. the president will have either lost or won reelection, he will not have that to worry about. some people say he will have a more of an upper hand this time. host: when it comes to the president's proposals for tax cuts over all, how it fits into his plan for the economy. guest: republicans have been criticizing him because there will be a deficit over one trillion dollars this year. there is new spending in the budget proposal. he does get the deficit by his projections down below one trillion dollars next year and

it slowly tries to decrease the deficit and part by raising new taxes on the wealthy also raising more than $300 billion in new taxes on corporations in a slew of the various proposals. his economic policy right now is, we are still trying to get out of the recession. we are not technically in a recession. we are going to do spending now. he has a plan. he will mostly raise taxes. there are some defense cuts too slowly drove down the deficit over time. guest:host: first call is from florida. it comes from bob on the republican line. caller: two quick comments. does the guest believe the unemployment rate is actually

8.2%? here is much talk about it being much higher than that. the numbers are not factored against people who have left the job force. to i do not understand how he can justify 47% of americans not paying any federal taxes. if that is fair, please justify it to us. guest: you are absolutely correct. 8.2% or 8.3% unemployment rate is just the official rate. it is much higher if you account for people that have stopped working. that is not my area of expertise. on the 47% that pay no federal income taxes, i guess that number is correct. host: who are those people guest: everybody always liked to point out, they may pay payroll taxes. payroll taxes hit the lower income as more of a percentage of their income because it is

capped at a certain level. the wealthier stop paying after 100 to thousand dollars. they first came out with that number is about one year ago and it costs -- it caused a lot of headlines. a lot of those people are the elderly. they are families that take the child tax credit that was doubled under president george w. bush. these are programs we have under place. we have a lot of tax credits in areas of the tax code that benefit the needy, working families, and the wealthy. i think about half of the 47% are not paying income taxes because they are working families and they do not earn enough money. looking at the other half i believe three-quarters of those

are either elderly getting tax breaks on their social security benefits and it just more tax credits because they are low income. host: dennis, democrats line. caller: i want to have a comment about -- ok. the in the quality gap in america is the main problem with all the things we are having with the economy. people do not have the money to pay these corporations. we cannot pay for their services or goods because we do not have the money. that is what it all boils down to. there is no money to put into corporations companies. host: give an example. corporation caller: are going bankrupt because not enough people are going out to eat. people cannot afford to go out to eat. they do not get paid enough. i make about $10,000 a year.

i married and i have a family. i live in subsidized housing. host: tell us a little bit about your tax obligations. how much do you get back as far as income tax returns? caller: i feel that i got back to much. i got back about $4,500. i felt that was too much because i did not pay anything at all. host: as far as you're in tom -- would you put on your income tax, what led to you getting $4,500 back? caller: married and two dependents, which was my wife and daughter. guest: he is one of those people in the 47% who makes a very low income. there is a debate out there whether somebody -- how much taxes should somebody who makes $10,000 a year pay? some democrats and republicans feel he should pay a little bit

and texas. income inequality, and again that is the theme of the president's budget. he wants to use tax policy to get ahead of that problem. we talked earlier about the difference between investment taxes and income taxes. that has been a big issue with mitt romney. he makes nearly all of his income from investments and is taxed at a 15% rate. where as a similar person working in a law firm would be taxed at the 35% top income rate. host: we heard a term called carried interest. what guest: does that:that is the share of profits -- guest: guest: also invest -- venture capital firm, they have been trying to carry interest with

capital interest gains. democrats got very close in 2010 when they had control in the senate. they could not get it done. obama called for it in the budget again. there are republican leading economists who say it is an unfair tax treatment. they are taking a risk. this is an investment activity. that is what it should be treated as a riskier activity. host: when it comes to things, have there been similar themes this proposal then in his similar ones? guest: it is almost a blueprint of his past couple of proposals. there are tweaks everytime. the dividend tax increase was a big change. he had not proposed hiking that

tax so much. the theme has been similar for the past couple of years. caller: thank you for taking my call. i was just like everyone in america -- i just want everyone in america to step back and take a deep breath. we all need to take a deep breath. i would like to see the president and congress work together to keep the middle class tax cuts and raise taxes on the in -- it upper income temporarily to help us get out of the miss we are in. maybe they can put something in place for the next two or three years and a look at the economy three years out. i do feel the upper income should help out with the country. they have the money. i would like everyone to come together. host: let me ask you this.

why temporarily and not permanently? caller: 2 ree looked at it further down. right now nobody can protect -- predict what the economy will be in four or five years. let's look at the situation again when we can dig ourselves out of the economy. host: she said temporarily versus permanently. guest: it is interesting. many americans do support higher taxes on the rich. that was the case two years ago when obama was trying to do this at the end of 2010 and was not able to do it. she said she wants people to work together. i think they got the message of this week when they came together on a payroll tax extension deal much earlier than they usually do these things. it is used the at the very last minute late at night the day it will expire. host: why do you think?

guest: 11% approval rating for congress. at the end of december, republicans were blocking on the extension of the payroll tax cut. they had their own way they wanted to do it. they wanted to pay for it with certain things. there were forced into an uncomfortable position. some of them were opposed to a tax cut which is pretty unusual for them. they were bruised a little bit from the battle. host: darrell from the independent line. you are on arekim dixon. \ caller: you mentioned some people say that it would screw investment. i would say the last 30 years the policy has screwed investments to finance from

manufacturing. we have created a lot of stock market jobs but not real jobs that last a long time. i think we should raise the capital gains tax to the same rates that obama is considering for the dividends. guest: well, many experts agree with you. i think the obama administration agrees with the to a certain extent focused on finance as opposed to manufacturing. one of the things and the president was the budget has been accepted at -- expanded tax breaks. that is one thing that he had not focused on in the prior years. he had really been hit the manufacturing hard. he wants to double eight tax credit for manufacturing for high-tech manufacturing.

but, yes obama is focused on manufacturing. there is a debate about whether these special tax code is the most special way to spur u.s. manufacturing. i do not think people think it is necessarily. finance jobs have been increasing over the past decade. manufacturing jobs have been leaving the united states. host: jeff, republican line. caller: on those taxes mr. mitt romney was already taxed 38% on

money he already made. he is getting taxed 15% on his investments. you did not say that. his money was already taxed at 38%. we have americans making up to $42,000 right now that are not getting federal tax -- they have $42,000 because of all the tax things they can put on for children and whatever. they can make up to $42,000. that is a lot of money. as far as congress reject congress will not vote on the president's budget. the democrats will not go there. they do not want it. guest: i am not quite sure what he is getting at romney is paying 38% tax rate.

i am not sure where to go there with that. with procured interest, the argument revolves around whether investors are managing their own money or whether they are managing somebody else's money. the critics of the lower tax rate says if an investor at a private equity firm is investing somebody else's money, they are providing a service. that should be taxed like other service providers like lawyers or journalists. host: staten island. good morning. democrats line. caller: good morning. i wanted to state a comment and ask a question about the gentleman who called earlier. he said in his $4,500 in tax credits was too much money -- i can understand him being modest like that.

when he does not realize that $4,500 allows him to do other things he could not ordinarily do if he did not have the $4,500. my question is, i make around the same amount but i have a child and i am married. it is about $43,000 a year. i also owe taxes. whatever the tax cuts go too i do not get any -- i do not receive any tax money to stimulate the economy. me and my wife are paying taxes for a variety of things -- maybe we had income in previous years. now i am paying taxes. we should get a tax amnesty that we can taken some of the tax situations. i will take my answer offline. guest: i am not sure about his particular pose a case. he might make a little too much money to qualify for a child tax

credits. host: if i am a corporation and i have a portion of businesses outside of the united states, what am i looking at tax was under the plan? guest: companies can take a business expense if they pull the plants in the u.s.. one of the reasons is they want to move the plants abroad, they are allowed to do that. obama wants to get rid of that deduction. businesses will say, you make investment decisions for many reasons. we want you expanding abroad. we might also be expanding in the united states. they contend is a complementary defect. right now, companies can defer taxes on products that are

earned abroad. there is a lot of talking about the $2 trillion companies are sitting on and not doing a lot with. a lot of that is abroad. president obama wants to do a couple of things. he wants to tighten rules on deductions taken. right now you can take some deductions for income that you have earned but not pay taxes on. he wants to tighten some of those rules. he has a forthcoming plan he has hinted at he wants to create an international profits minimum tax. if you have some profits in a low tax country, some might consider the cayman islands. you are a u.s. company, you should pay a minimum x percent. he has talked about that. it is the business equivalent of his buffet rule.

a minimum for corporations when they earn profits in these countries. host: you talked about a lowering of the corporate tax rate. i do not know if there was a specific never mentioned. has he telegraphed this idea before? guest: this time last year they were working on a white paper that was going to come out with some specific ideas for lowering the top corporate rate. the u.s. has nearly the highest statutory corporate rate among its peers. i think japan is the only country that has a higher rate. however, the tax code is so convoluted and there are so many loopholes. the obama administration, our top rate is too high. most economists agree. it makes us less competitive to a extent. he wants to cut the rate probably to somewhere within the the average of our trading partners. you can debate with the averages

are dependent on which countries to include. he is coming out with a plan. they will have a plan by the end of the month with a goal of lowering the corporate rate and with ideas for with the call expanding the base -- getting rid of some of these deductions and special provisions in the tax code that favors select industries over one another. host: you do not think a 25% rate -- you do not think it will guest: go that:i do not think the administration will let it go that low. caller: i and eight tax lawyer. i am a accountant. i have been practicing tax for 45 years. let me give you a little tax history. during the kennedy years ordinary income was 70%. sweat of the brow working income

was at 50%. you paid more on keep on clipping tax. during the ronald reagan administration, everything was a straight 28% whether you worked for you clipped coupons. then it reversed. i do not know what happened in our policy where that changed where mitt romney pays a lower rate than somebody else who practices law for example. that is the way it is. host: thank you. guest: the last time the tax code was overhauled was under president ronald reagan. he had a split congress. they were able to bring the rates on investment income and ordinary income closer together. individual rates were very high at that point.

since then over the years, the investment has been lowered. some of that happen when the economy was doing very well. now we are in a situation where tax rates between wage and salary income. host: good morning. caller: i was wondering about the social security tax cut coming out of social security money. i was wondering if they will have to put and i owe you in the box or what ever you want to call it. that the government will have to pay that back. guest: there is not an iou. the money -- the tax cut is given to wrkers.

to make up that tax break money is coming directly from the u.s. treasury. host: silver springs, florida. hello, luther. are you there? one more time for luther. next to tallahassee, florida. caller: hello. i have a comment from the person who said he paid -- he got too much of a refund back. he had about $4,500. i am guessing maybe he got our income credit which is a refundable credit he got back and he never put in. i feel refundable credits are grossly unfair. people should not get money back they did not put in. if he feels he got too much refund, he can always send it back

>> you can debate whether that is a good policy or not. i do not have an opinion on that. >> and donna in st. louis on the independent line. >> first of all because the rich are shipping most of the high paid jobs to china with their risky investments and getting all of these tax breaks and paying no income tax, they need to set pay it -- they need to pay the same percentage of tax on dividends as warren buffett's secretary and the rest of us. secondly obama went along with the republicans are doing the tax cuts for the rich for a short time because he did not want them to cut off the unemployment benefits. it was a compromise. he had to deal with the devil and he got the best thing he could get. host: there is an e-mail that

mentions warren buffett's secretary. qualify the distinction between qualified tax rates -- guest: the first thing is that if i am in the 28% tax bracket i do not pay 28% tax on all my income. i pay 28% tax on my income after a certain amount. when you say taxes will go up on the top 2%, it goes up on a certain margin above a certain level. affective pact rates are what people actually pay after their deductions. it is what the law currently is.

>> lancaster pa. -- host: lancaster, pennsylvania. caller: they are still going overseas. people are losing their jobs here. on employment is still going down. there is no way anyone can keep up especially if they only make $24,000 a year. i cannot see that. guest: i guess president obama is proposing some of these ideas to curb some of the provisions of the tax code some companies use when they turn and come abroad. host: with higher taxes for those who make more, is there an estimation about how much money

they can take in by putting new tax rates into affect? guest: the top two rates is $470 billion over 10 years. some people say we should let all of the tax cuts expire. democrats say that. that would go along towards helping our deficit situation i think it would be close to $4 trillion over 10 years. there is a lot more money in the middle class because there is a lot more people there. but then you get into equity. obama does not want to touch those in the lower income categories. host: md. -- you are on with kim dixon of reuters. caller: i think a gasoline tax would have stimulated the economy more.

on your investments, you are taxed at three times. what you're a corporation pays, your dividend, and if you sold the stock, you repay it back on those kinds of things. a lot of us are going to wait and see what the social security trustees report says. we could earn money on the investments. i will hang up and listen. thank you. guest: he makes the argument that many businesses are taxed at more than once -- the company level, the investor level -- that is the reason for the lower tax rates on investment. on the social security side, i do believe that the trust fund dollar for dollar is made up of tax cut. i am not an expert on social

security financing. host: grand rapids, mich. -- william on the independent line. caller: is there anything in this proposal to recover the money sitting outside the country by wealthy individuals? guest: no. the irs has been going after wealthy americans who have money in accounts on the enforcement side. i have not looked at the irs schedule but over the past several years obama has asked for an increase in enforcement. it is not illegal to have money in these countries brigid it is illegal not to report it and pay taxes on the interest. the administration actually started -- the bush administration and the irs commissioner appointed by president bush went after ubs a

swiss bank. i think the money it is asking for -- host: on news makers yesterday we had an interview with fred upton. he talked about the payroll tax cut, but also talk about what you mention -- at the end of this year when you talk about the payroll tax cuts -- he talked about that might serve as an impetus to talk about tax reform. here is what he had to say. i wanted to get your response. [video clip] >> if they expire the 31st -- our most americans, the impact does not yet until april 15, of 2014, because the tax hike kicks

in january of 2013, but you do not pay the tax until the end of the year. that allows you time to say, hey -- what is it we have to do? i would like to see the rates come down and be simplified. host: you can see the full program tomorrow at 10:00 and 6:00 in the evening. guest: tax writers in congress -- dave camp and the top republican in the finance committee -- have been holding talks on reform and opening up the tax code. there are things that need to be done in the next year. it is a complex process. the tax code is huge. it is something people want to get done in the next couple of years. i do not think the end of the year will be enough time to do anything beyond -- there could

be some provisions in an agreement to extend some deadlines like they did at the end of last year when they came to a deal on raising the debt ceiling. host: what was happening in 1986 that makes it possible to happen in our era? other administrations have tried, but have not been able to achieve that. guest: top individual rates were a lot higher than they are now. there was a real interest in congress -- it really started happening in the early 1980's. certain congressman came out with specific report vote -- came out with specific proposals. ronald reagan did not get it done until his second term.

some say obama could use his bully pulpit a little more to enforce action on revamping the tax code. the debate really distorted about a year ago. host: one more call on our democrat line from los angeles. caller: i just have a quick comment about the bush tax cuts. this morning, i believe they should expire. it would not be raising taxes on the rich. it would be restoring the tax base. i received my social security administration report every year. up until 2002, i was receiving !00% of what was -- 100% of what was allotted to me.

all of a sudden, i am receiving 78% of what i earned. 2003 was the year the bush tax cuts, the second large tax cut for the wealthy. i believe at this time -- i am already paying for their tax cut. also, i wanted to say that we should get rid of subsidies for the oil companies. i do believe that exxon mobile got a tax return in the year 2010 of $500,000 from our country. thank you. guest: i think many democrats agree with the caller that taxes need to help bring the deficit down and bring programs like social security back into insolvency. host: do all kinds of companies to get attention in this budget? guest: obama what to raise

about $40 billion over 10 years by closing a bunch of tax breaks they have a in the tax code. his ideas have been in his budget for the last couple of years. people do not want to cut the individual provisions. they want to put everything on the table. host: when do you see any significant activity breaking out as far as this year? guest: at the end of the year there will be a big fight over the bush tax cuts. next year, depending on how the election comes out some serious work will get started on a big tax code and revamp. host: kim dixon is the tax code correspondent for reuters. what are you looking at now as far as nexus when it comes to taxes? guest: we are putting together

this calendar. now that the payroll tax bill it done, there is a big empty period. it is an election year. as i said, the bush tax cuts are probably not going to get a rest until the end of the year. the continued debate in congress over overhauling the tax code -- at the end of the month, they are supposed to come out with a plan to cut the corporate tax rate and more specific proposals on which so-called loopholes, tax deductions for corporations should be scrapped. >>host: thank you for your time. >> here is a quick look to the budget numbers. it is up slightly from last year.

expected revenues from taxes are estimated to be about $2.90 trillion, leaving a deficit of about $900 billion. that is $400 billion last -- less than the expected 2012 deficit level. >> i had a hunch one of them may be an addictive at drug. >> we went down the road and asked each one a simple question under oath. "i believe nicotine is not addictive. >> cigarettes and nicotine clearly do not meet the classic definition of addiction. >> we will take that as a no. >> i do not believe nicotine is addictive. >> not addictive. >> the program began in the 1970's were awarded to boost nicotine from cigarettes and replace it with a drug that was equally addictive, but would not cost the health problems. they had at molecules they invented, but had no way to test

them. that was my job. i came in to buy the molecules with a brain would say i liked it and the heart would not have any problem with that. >> sunday night on ""q&a" the subject of "addiction inc. orporated." 8:00 p.m. eastern and pacific on c-span. >> president obama gave his weekly address from the boeing plant in everett washington. he talked about strengthening manufacturing and job creation by removing tax breaks for companies that moved jobs overseas and give them to businesses that create jobs in the united states. the republican addressed criticizes president obama's 2013 budget address -- budget request.

>>hello, everybody. i'm speaking to you this week from the boeing plant in everett, washington. boeing has been in this community for half a century. but it's what they're doing here today that has folks really excited -- because at this plant they're building the plane of the future -- the dreamliner. it's an impressive sight. and, to be honest, part of why i came was to see it up close. but i also came because this is a great example of how we can bring jobs and manufacturing back to america. you see, the last few decades haven't been easy for manufacturing in this country. new technology has made businesses more efficient and productive -- and that's good but it's also made a lot of jobs obsolete. the result has been painful for a lot of families and communities. factories where people thought they'd retire have left town. jobs that provided a decent living have been shipped overseas. and the hard truth is that a lot of those jobs aren't coming back. but that doesn't mean we have to settle for a lesser future. i don't accept that idea.

in america, there's always something we can do to create new jobs and new manufacturing and new security for the middle- class. in america, we don't give up we get up. right now, that's exactly what we're doing. over the past 23 months, businesses have created 3.7 million new jobs. and manufacturers are hiring for the first time since the 1990s. it's now getting more expensive to do business in places like china. meanwhile, america is more productive than ever. and companies like boeing are realizing that even when we can't make things cheaper than china, we can make things better. that's how we're going to compete globally. for boeing, business right now is booming. last year, orders for commercial aircraft rose by more than 50%. to meet that rising demand they've put thousands of folks to work all over the country. we want to see more of this. we need to make it as easy as we can for our companies to create more jobs in america, not overseas.

and that starts with our tax code. no company should get a tax break for outsourcing jobs. instead, tax breaks should go to manufacturers who set up shop here at home. bigger tax breaks should go to high-tech manufacturers who create the jobs of the future. and if you relocate your company to a struggling community, you should get help financing that new plant, that new equipment or training for new workers. it's time to stop rewarding businesses that ship jobs overseas, and start rewarding businesses that create jobs here in america. and congress should send me that kind of tax reform right away. another thing we're doing is to make it easier for companies like boeing to sell their products all over the world because more exports mean more jobs. two years ago, i set a goal of doubling u.s. exports over five years. and we're on track to meet that goal -- ahead of schedule. we have a big opportunity right now to build not only an economy that will help us succeed today, but an economy

that will help our kids and their kids succeed tomorrow. we know what we need to do. we need to strengthen american manufacturing. we need to invest in american- made energy and new skills for american workers. and above all, we need to renew the values that have always made this country great -- hard work. fair play. shared responsibility. we can do this. ask the folks in everett. right here, a few years ago, the first dreamliner took off on its maiden trip. thousands of employees came to watch. one was an executive office administrator named sharon o'hara. as sharon saw that first plane take flight -- a result of so much hard work -- she got goose bumps. in her words, she said, “we said we would do it and we did.” that's the story of america. we said we would do it, and we did. that's the can-do spirit that makes us who we are.

we've seen challenging times before. but we always emerge from them stronger. and that's what we're going to do again today. thanks, and have a great weekend. >> i am kathleen douglas rogers. i am the mother of two young kids. like millions of mothers, i am concerned about the future of our children and the economy that they will inherit. during a fiscal responsibility summit at the white house president obama made a promise to the american people. he said he was pledging to cut the deficit by half by the end of his first term in office. in the budget that he submitted to congress, the president admitted that he would not keep the promise, not even close. because of his failure in each of his four years in office.

the government will run trillion dollar deficits in each of his four years in office. president obama's broken promises has left our country broke. on his watch, the size of our debt has surpassed the size of our entire economy, making it hard for small businesses to create jobs and pushing it closer and of all the trillions in savings to rational republicans insisted that the president signed last year in response to his demand for an increase in the nation's debt limit. the president spent nearly six months last year at resisting those spending reductions until he finally listened to the people. and another comes from what we

call the war gimmick. money that was never requested and will never be spent on wars in iraq and afghanistan. those are not real savings. do the map and you will discover -- the president's budget the she's about 1/10%. -- the president of the budget only at assays a percentage of what he promised. it is not all the this uprising when you consider that a lot of what the president has promised about the economy has turned out to be not true. friday was the three-year anniversary of the infamous stimulus spending bill. the president's team said that unemployment would stay below 8% if the taxpayers gave the government a blank check for programs. but that did not work out either. unemployment has been over 8% for three years running. gas prices have doubled.

the new health care law is making it harder for small businesses they believe that they can grow the economy and create jobs by increasing taxes. the president and his party have it all wrong. but the american people know is the way to grow the economy and create jobs by cutting government spending and keeping taxes low it continues along this long path. instead of leading the effort to bring down our debt and of making tough choices, the president is urging that we spend more and more. all of his tax hikes would make -- all of this wasteful spending makes it tougher to compete with china.

keeping on gone like this, as we -- the consequences will be devastating. as we learned from greece and the european union, no country can escape the cost for ever. the president of the budget is not a blueprint for america -- have learned the president's budget is not a blueprint for america. it is a road map to greece. it did not have to be this way. and create a better environment for job creation. they have punted almost every time. the president's battle for the senate has not produced a budget in three years. that is like writing checks about ever balancing the checkbook. there would not even except spending cuts agreed to by republicans and democrats this week. spending cuts mostly came from the president's own proposals. now, after breaking his promise to cut the deficit in half the

president cannot even offer a credible budget. that just is not leadership the american people deserve much better. my children and yours deserve much better. the spraying, considering the future of opportunity for us very, and learn more about the republican job plan by visiting gop.gov. the plan removes barriers to a private-sector job creation, a stark contrast to the president's failed stimulus approach. thank you for listening. god bless america. >> the president sent his 2013 budget request to congress earlier this week. coming up, we will take a look at pete money proposed for

defense spending. defense secretary leon panetta and joint chiefs of staff chairman will testify before the armed services committee. after that u.s. army secretary and chief of staff, before the same committee to talk about the $184 billion request to fund the u.s. army. sunday on washington journal our guests include grover norquist. he will give his thoughts on the president's budget and payroll tax cut extension, which passed the house and senate on friday. also, center for american progress president neera tanden on how democrats feel about the president's policies. we'll delve into an unemployment and campaign numbers with presidential historian leo ribuffo. washington journal, live sunday

at 7:00 a.m. eastern on c-span. >> president day on c-span, hear from a facebook page boost influence the egyptian resolute -- revolution. >> i know this sounds very -- it does not make sense to a lot of people but that is how i see things. working for google, working for a company that does large-scale projects online makes a difference. i remember in the interview, the typical "why do you want to work for google" question. the thing is, what i liked about google democracy of offering people information. people living here do not understand the value that we all have equal access to

information. most of the people would only get propaganda in some regimes flowing into their brains. this is how the regime could sustain it -- by making everyone scared. >> see his remarks as part of our presidents day lineup. it also includes former navy seal, chuck phqarrer. it all starts monday at 8:00 p.m. eastern on c-span. >> join american history tv on monday for 24 hours of america's first lady including an interview with eleanor roosevelt at 4:45 p.m. eastern. >> we started out thinking the united nations would solve every difficulty just by being at the

united nations. >> toward the white house private quarters with laura bush at 5:00 and ladybird johnson at 8:00. nancy reagan reminisces about her husband at 8:30. and the only first lady to run for president now secretary of state, hillary clinton at her final campaign rally in 2008. presidents day on c-span3. had to c-span's facebook page and tell us who you think was our nation's most influential first lady. >> defense secretary leon panetta and joint chiefs of staff chairman martin dempsey testified before the house armed services committee on the pentagon's 2013 budget request. it calls for $525.40 billion in discretionary spending, a 1% decrease in last year. the defense department faces an

additional $500 billion in mandatory cuts if congress cannot agree to a deficit reduction plan. this hearing runs just over three hours. s s. >> good morning, ladies and gentlemen, thank you for being here for the 2012 budget request for the department of defense. to put this budget in context it's critical to examine the strategy that's formed its mission. at the outset i want the witnesses to know i appreciate the hard work that went into the development of the strategy. it's no, no small effort to completely revise the strategy one year after the submission of the sentence review. and he is than three months after the submission of a budget request. however, i do have serious concerns about the trajectory that this new strategy puts us

on. although the strategy is framed as making the military more nimble and flexible, it's not clear how slashing the armed forces by over 100,000 during a time of war shedding forestructure and postponing the modernization makes that so. the president must understand that the world has always had and will always have a leader. as america steps back, someone else will step forward. we've heard multiple times that the strategy drove the budget and not the other way around. i suppose this starts with the president's call to slash at least $400 billion from defense last april in advance of any strategist review. an honest strategy can't be founded on the premise that we can do more with less or less with less. rather, proceed from a clear, articulation of the full scope of the threats you face and the commitments you have. you then resource the strategy

required to defeat those threats decisively. one does not mask insufficient resources with a strategy founded on hope. furthermore, the president's new defense strategy and i quote -- supports the national security imperative of deficit reduction through a lower level of deficit spending, unquote. the administration appears commit tend to insuring the military is the only sector of the federal government to meaningfully contribute to deficit reduction. simultaneously, the budget proposes additional spending by diverting savings from declining war funding to domestic infrastructure spending. how can you save by not spending money that wasn't in the budget to begin with? this is a cynical gimmick that ensures the military and only the military is held responsible for what little deficit reduction this budget represents.

white house chief of staff, jack lew said the time for austerity is not today. ask the 124,000 service members who will have to leave the military how they feel about that. the president's budget is a clear articulation of his priorities. the president's budget asks the men and women in uniform who have given so much already to give that much more so the president might fund more domestic programs. the president claims the budget would rise every year but ignores the fact that this request is it is 46 billion less than what he said he needed last year. more than $5 billion less than who was appropriated for fiscal year 2012. furthermore, despite the new strategy's goal of pivoting to asia a theater where naval assets and airlift are decisive the budget calls for retiring nine ships, remove 16 more from the new construction plan and cuts our airlift fleet by

hundreds. this isn't the only place where the president's public statements and missions seem to devirge. we can't negligent the war. inexplicably and not based on the advise of commanders announced our withdrawal date and to pull out the surge forces before the end of the next fighting season. mr. secretary and chairman dempsey, before the president makes another announcement about troop withdrawals i implore you to heed our commanders advice. we're seeing success. let's not make a decision to pull some of the remaining 68,000 troops before we see what happens this fighting season. let's wait to re-assess any more forced level decisions until the end of the year. i have more questions but with that i'll conclude and thank you, again for being here. i look forward to your testimony. i call now on ranking member smith for his opening statement.

>> thank you mr. chairman and mr. secretary and general dempsey for being here. and i applaud you for the effort that you've put in of course over the last year. this did start quite some time ago with a major strategic review of our military and national security needs, a very holistic transparent process where you brought in all military leaders and sat down and thought about what our national security needs are going to be for the next ten years, the strategy without question is where this who process started and i applaud you for that and you've laid out a very clear and coherent strategy. when it comes to budget numbers it's important to take i step back and have a little perspective. the defense budget has doubled over the course of the last ten years. the budget that's put before us as the chairman points out, will be increasing the defense budget. every year from this year forward. we hear about these cuts these

cuts are from what was projected to be needed to be spent, a year or two ago. they are not actual cuts. the sole exception of the year. after doubling the defense budget over the course of the last ten years not even counting the overseas contingency operation's money this one year we go from $530 billion last year to $525 and it goes up every sipgle year for the next ten. it's part i guess, of a washington thing that when you increase the budget you call it a cut. it's a decrease in the increase, perhaps, but it is an increase nonetheless so we have to keep this numbers in perspective. anybody who would argue that we can't go back and look at our acquisition and procurement

process and do it much better, do it in a way that's actually going to deliver more capable pieces of equipment at less money. that's what these gentlemen have done. they'll like at the last ten years and figure out how to do it better. i won't be overly critical of the last ten years. 9/11 happened and we had to respond. we had to fund the military. when you have to act that fast, mistakes will be made. i know the people making those decisions back then did their level best at a very difficult time. but to not learn from the experience ten years later and figure out how to spend the money, that would be a betrayal of our job as tornado the job of the people and of the pentagon. we had a budget that put the strategy first and puts us in the right direction. and i'll point out, this is the law. the budget numbers that we projected for the next ten years and secretary panetta and general dempsey had to live

under were passed by this congress. some members voted for it and some didn't but it's the law of the land passed pi the house and senate and the $487 billion reduction in the projected increases is the law. these people had to follow and that we passed and gave to them. so as we hear today about various different programs in areas where we thid that this budget is cutting too much it would be most helpful and i doubt this will happen but i'll ask anyway as people are making those criticisms they point out where they'd like to find the money. either within the defense budget you can say, your strategy is all right but you should have spent more money here and less money there. if you don't think that's possible within the defense budget, then by all means let us know what taxes you want to raise to produce more money. if you don't want to do that, what other programs preferably, with some specificity instead of generally saying we'd like to

spend less money on government, that you're going to cut. otherwise, this is an exercise in imagining that we have more money than we actually do. these gentlemen didn't have 245 luxury. they had to put the budget together on the law we gave them. they put out a strategy that understands how the world is changing, main threats we're going to face are going to be asymmetric, nonstate, threats. iran korea, missile technology we need a different military to confront that than the one that fought two major land wars the last ten years. this strategy reflects those changes. special operations command will keep going up because we know how critical they are to the fight we face. they'll increase that. isr capability, through unmanned aerial vehicles and other sources, also going up, to make sure that we meet the needs that are in front of us. there are a lot of other things tharnt going up but that's because things have changed. we need a new strategy to

confront those threats and in a difficult budget environment you guys did that and put together a good strategy. i hope we have a realistic conversation. if more money needs to be spent, tell us where to balance it out. because never forget it's also in our national security interest to have a strong economy and a strong fiscal government. if we don't have those things the strongest military in the world can't protect us so this is a very interesting debate. i look forward to comments from the members of this committee and from the secretary and the general. we have a lot of difficult work to do but i think we're off to a good start and i look forward to working with everybody on the committee and at the pentagon to get the job done for the american people. >> we're fortunate to have with us today our secretary of defense, honorable leon e. panetta from the u.s. department of defense. general martin e. dempsey, united states army, chairman, joint chiefs of staff.

the honorable robert, if i heal, tunds secretary of defense and controller of the department. thank you for being here. mr. secretary the time is yours. >> thank you very much, members of this committee always nice to be able to return to the house i'll ask that my statement be made part of the record. >> no objection so ordered. >> i appreciate the opportunity to appear before you to discuss the president's budget request for fiscal year 2013 for the department of defense.

these brave men and women, and they are for anybody that's gone to the battlefield and talked to those in uniform they are without question the next greatest generation of individuals. along with the department easy vilian professionals who support them, they've done everything that's been asked of them and more during more than a decade of war and, again, i thank you for the support you provided to them. if fy 13 budget request for the department of defense was indeed, a product of a very intensive strategy review, that was conducted by the senior military and civilian leaders of the department, all of the service chiefs, all of the combatant commanders and all participated in the effort and we had advice and guide yabs from the national security team and the president as well, the total request represents a $614 billion investment in national defense. it includes $525.4 billion

requested for the department's base budget and $88.5 billion in spending and support of our troops in combat. the reasons for this review are clear. first, the united states is at a strategic turning point after a decade of war and a substantial growth in defense budgets. but second with the nation confronting very large debts and a very large deficits, the congress passed the budget control act of 2011. imposing by law, on us, by law, a reduction in the defense budget of $487 billion over the next decade. we, at the department decided to step up to the plate to abide by the law and to use this crisis as an opportunity to try to establish a new strategy for the force of the future.

and that strategy has guided us in making the budget choices that are contained in the president's budget. the fact is we are at a turning point. it would probably have required us to make a strategic shift under any circumstances. the u.s. military's mission in iraq has ended but we still have a tough fight on our hands in afghanistan but 2011 marked significant progress in reducing violence and transitioning to afghan-led responsibility for security and we are on track to complete that transition by the end of 2014. the nato ministers, i sef, and we're biding by our libyan commitments. last year the fall of gadhafi. and successful counterterrorism efforts have significantly

weakened al qaeda and decimated its leadership. but despite what we've been able to achieve unlike past drawdowns where threats have receded, the united states still faces a complex array of security charge across the globe. we're still a nation at war in afghanistan. we still face threats to our homeland from terrorism. there's a dangerous proliferation of lethal weapons and materials. the behavior of iran and north korea continue to threaten global stability. there is a continuing turmoil and unrest in the middle east from syria to egypt, to yemen and elsewhere. rising powers in asia are testing international rules and international relationships. and there are growing concerns about cyberintrusions and

cyberattacks. to meet these threats protect our nation and our people and at the same time, meet our responsibility to fiscal discipline. this is not an easy task. it's a tough challenge. to build the force we need for the future what we decided to do is to develop a new strategic guidance that consists of the following five key elements. number one, the military will be smaller and it will be leaner. but it should be agile and it should be flexible ready to deploy quickly and technologically advanced. second, we have to rebalance our global posture and presence to emphasize asia pacific and the middle east. these are the areas of greatest concern in the future. third, for the rest of the world, we need to build innovative partnerships and strengthen key alliances and key partnerships from europe to latin america to africa.

fourth, we'll ensure that we have the capability to quickly confront and defeat aggression from any adversary any time anywhere. and fifth, this can't just be about cuts. it has to be about investments. what do we protect and prioritize in terms of investments, in technology and new capabilities? as well as our capacity to grow adapt and mobilize as needed? while sharing this strategy and shaping this strategy, we didn't want to make this mistakes of the past. every time we've gone through the drawdowns there have been serious mistakes that have been made. our goal is to maintain the strongest military in the world. to not hollow out the force that's extremely force. to not hollow out the force which means to maintain a lors force structure and cut training and equipment and all the other things that are essential to make that a first-rate force. thirdly, to take a balanced

approach to budget cuts. put everything on the table and look at every area in the defense department budget. and lastly to not break faith with the troops and their families. people that have been deployed time and time again to the battlefield. throughout the review we also made sure that this was an inclusive process. general dempsey as chairman and i work closely with the leadership of the services, and consulted regularly with members of congress, as well as the president and members of the administration as a result of these efforts strongly unified behind the recommendations that we are presenting today, consistent with the budget control act, this budget reflects a $259 billion savings in the first five years. we project meeting our $487 billion number over ten years but in the budget we present to you it's the five-year cycle and

that includes $259 billion in savings. it's a balanced and complete package. as i said, it follows the key elements we laid out in our strategy. the savings come from three areas. first, deficiencies. second, force structure and procurement reforms and adjustments. and finally, compensation. compensations that's an area that's grown by 90% and we felt that we had to achieve some cost controls in the future there as well. let me just quickly go through each of those areas. if we tighten up the force and i think we have a responsibility to tighten up the operations of the department, by reducing access overhead and eliminating waste and improving business practices across the department. as you know the fy '12 budget proposed about $150 billion in efficiencies in five years and we're in the process of implementing those changes but we felt we could do for so we

identified another $65 billion additional savings over the next five years through measures such as streamlining support functions and consolidating i.t. enterprise services. rephrasing military construction projects. consolidating inventories and reducing service support contractors. as we reduce force structure we also have a responsibility to try to provide the most cost-efficient support for the force. that's the reason the president will request the congress to authorize the base realignment and closure process for 2013 and 2015. as somebody that's gone through brac and i went through it in my district and know what it means and the impact that it can have with it is a controversial process. it impacts our members and it impacts on their constituencyies and i understand that. and yet it's the on the effective way to try to achieve te needed infrastructure savings that we have to achieve in the long run. >> lastly, to provide better

financial information, we're also increasing our emphasis on audit readiness and accelerating key timelines. in october of 2011, i directed the department to accelerate the efforts to aachieve fully audible financial statements originally under a mandate we were supposed to do that by 2017. i asked it to be done by 2014. efficiencies alone are not enough to achieve the required savings. and that's obviously, why we had to make significant adjustments to forgs structure and procurement investments. but we did it in line as, again with the strategies that we put in place. and let me quickly walk through those. we knew that coming out of the war as the military would be smaller. our approach to accommodating these reductions was to use this as an opportunity as tough as it is, to fashion an agile and flexible military that we'll need in the future. we've got to have an adaptable

and battle-tested army that's there for decisive action and capable of defeating an adversary on land. and at the same time be innovative. we need a navy that maintains forward presence and is able to penetrate enemy defenses. a marine corps that's a middleweight with a re-invigorated am am fib use kanlts and the national garden reserve that continue to be ready and prepared for operations when needed. to ensure an agile force. we made conscious choice to maintain more force structure than we could afford -- we decided not to maintain more for structure that we can afford to properly train and equip. that was the point i made about not doing something that hollows out the force. we're implements the reductions

consistent with the strategic guidance of a total savings of about $50 billion over the next five years and the biggest pieces are resuesing the active army. we're at $562,000 and we'll go down to $490,000 by 2017 and it will be gradual ain't will still be higher than pre 9/11. same thing is true for the marine corps. from 202,000 to 82000 marines. we'll reduce and streamline airlift fleet basically going after aging c-5 a, c-130 but will still maintain a fleet of 275 strategic airlifters and 218 krechlt-130s. the navy will protect a fleet of 285 ships and protect our highest priority and most flexible ships. but we will be retiring seven lower-priority navy cruisers that frankly, need to be

upgraded with upgraded with ballistic defense capability and that hadn't happened and it could require significant repairs in order to do that. second the strategic guidance made clear we have to protect our capabilities and project our power to asia pacific and the middle east and to this end we maintain the current bomber fleet and the aircraft carrier fleet. 11 ships and ten air wings. we maintain the big deck amphibious fleet and army and marine corps forces structure in the pacific after the drawdown from iraq and the drawdown in afghanistan. we're going to maintain entertain strong presence not only in the pacific but in the middle east as well. this budget also makes elected new investments to ensure is that we develop new capabilities. $300 million to fund the next generation air force bomber. $1.8 billion to develop the new air force tanker.

$18.2 billion for the procurement of ten new warships. third, this straej makes clear that even though asia pacific and the middle east are the areas of greatest concern and priority, the united states will work to strengthen our key alliances, build partnerships and develop innovative ways like rotational deployments to sustain u.s. presence elsewhere in the world. with regard to nato we'll be investing almost $200 million in the nato alliance ground surveillance system and $9.7 billion to develop and deploy missile defense capabilities that protect the u.s. homeland and strengthen regional missile defenses. fourthly, the united states must have the capability to fight more than one conflict at a time. this is essential. we are in the 21st century. 21st century combat is a lot different and we need to have the capabilities to deal with

threats in the 21st century. that means we need to invest in space, in cyberspace. in long-range precision strike and the continued growth of special operations forces. to ensure that we can still conto front and defeat multiple adversaries even with the force structure reductions that we outlined. even with some of the adjustments to force structure this budget sustains a military that we believe is the strongest and will remain the strongest in the world. we'll have an army of more than 1 million active and reserve soldiers. 18 divisions, 65 brigade combat teams. 21 combat aviation brigades. a navy battle force of 285 ships. that will remain the most powerful and flexible naval force on earth. a marine corps with 10 artillery battalions and 20 tactical air squadrons and an air force that

will continue to ensure air dominance with 54 combat coded fighter skraud squadrons in the current bomber fleet. lastly, we have to invest. if we're going to leap ahead of our adversaries technologically we've got to be able to have some key investments in new technologies. we provide 11.9 billion for science and technology research. 2.1 billion for basic research. 10.4 billion to maintain growth of special operation forces. 3.8 billion for unmanned air systems. 3.4 billion for cyberactivities. let me also mention a key element that we absolutely have to maintain which is a strong capable and ready national guard and reserve. to that end we'll retain -- we've asked the army to retain mid-level officers and ncos so that the structure and experience leaders will be

there. if we have to mobilize and regrow the force quickly. another important element is to preserve our ability to quickly adapt and mobilize a strong and flexible industrial base. we've got to have an industrial base for the future. this budget recognizes that industry is our partner in the defense acquisition enterprise. and to the most fundamental element of our strategy and decision-make process, our people. far more than any weapon technology the greatest strength of the united states is our military, the men and women in uniform. one of the guiding principals was to keep faith with them and their families so we're protecting family assistance programs and basic benefits. we're sustaining important investments in the budget to try to assist our troops with their needs and the needs of their families. yet, in order to build the forms needed to defend the country

under existing budget constraints, the growth in cost in military pay and benefits has to be on a sustainable course. as i said, this is an area of the budget that's grown by 90%. we've got to implement some efforts to try to control those costs in the future. the budget contains a road map to address the costs of military pay and health care and retirement in ways that we believe are fair transparent and consistent with our fundamental commitment to our people. let me conclude by saying this. members of the committee, as i said this has not been an easy task. putting together this kind of balanced package has been a difficult to undertaking for everyone. but at the same time we viewed it as a very important opportunity to try to shape the force we need for the future. i believe that automatic of us, the surface chiefs and combat

and commanders have developed a complete package here, aligned to achieve our strategic aims and at the same time, meet our responsibilities to fiscal discipline. as you look at the individual parts of the plan and i urge you to do that, look at every element of the plan we submitted, i encourage you to bear in mind is strategic tradeoffs that are inherent in any particular budget decision. this is a zero-sum game. as far as i know, there's no free money around. the need to balance competing strategic objectives has to take place in a resourced constrained environment. we need your support and partnership. we look forward to that. i understand these are will tough issues. i understand these are tough issues and i also understand that this is the beginning not the end of this process. but this is what congressman dated. the majority of this committee voted for the budget control act. we're mandated under law to meet

these requirements of almost a half a trillion dollars in savings over the next ten years. we have taken that responsibility seriously. we need your partnership to do this in a manner that preserves the strongest military in the world. this will be a test for all of us, whether reducing the deficit is about talk or about action. and let me finally be very clear. when you take a half a trillion dollars out of the defense budget, it comes with risk. we think there are risks. we're dealing with a smaller force. we'll have to depend on speedy mobilization. we'll have to depend on new technologies. we're going to have to dpd take care of troops coming home to make sure they have jobs. and have the support they need. there is very little margin for

error in this budget. this is why congress must do everything possible to make certain that we avoid sequestration. that would subject the department to roughly another $500 billion additional cuts that would take place through a meat ax approach and we're convinced, would hollow out the force and inflict serious damage to the national defense. so the leadership of the department, both military and civilian, is united behind the strategy that we presented and the budget that we're presented. but we look closely to working with you. and the months ahead to do what the american people expect of their leaders. to follow the law, to do our mart in reducing the deficit, and to be fiscally responsible but, also, to develop a forcing that defend this 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 very much. general dempsey? >> chairman, congressman smith distinguished members of the committee, that's correct you for the opportunity to discuss the president's defense proposed budget for fiscal year 2013. i'll begin by saying this budget represents a responsible investment in our nation's security. at its core itsds an investment in our people, the sons and daughters of america who serve this nation in uniform. allow me to open with a few words about them and what they have accomplished. the last ten years of war have been among the most challenging in our history. through it all the joint force has persevered and it has prevailed. our families have stood with us. deployment after deployment after deployment. and so have you. we fulfilled our solemn vow to protect and defend america, her citizens and her interests. as i sit with you today, our

service men and women remain globally engaged. they are deterring aggression, developing partner, delivering aid and defeating our enemies and they stand strong, swift and ready in every domain every day. i had what privilege to be with a few of them traveling to average and ejaipt earlier last week. i witnessed extraordinary courage and skill in the young soldiers just off patrol of the hindu kush. and the men and women managing the development of the afghan national security forces. the brave and vigilant security detachment in cairo and the superb junior airmen that flew us to the right place at the right time. they exemplify a professional military with a remarkable and reliable record of performance. in just the past year, we further crippled al qaeda. we helped to protect the libya people from near-certain slaughter and affirming nato's important role beyond the borders of europe.

we brought to a close more than 20 years of military operations in and over iraq. and like we did in iraq, we're steadily transitioning responsibility for security on to afghan's shoulders and we helped ja pab recover from a perfect storm of tragedy and destruction. and, of course, these were the most visual accomplishments. behind the scenes and beneath the surface we defended against cyberthreats. we sustained our national's nuclear deterrent position sure and worked with allies and partners to build capacity and to prevent conflict across the globe. we continue to provide this nation with a wide range of optiontion toer dealing with the security challenges that confront us. and in an increasingly competitive dangerous and uncertain security environment, we must remain alert responsive adaptive and dominant. this budget helps us to do that. it's informed by a real strategy that makes real choices and

maintains our military's decisive edge and maintains our global leadership. moreover it ensures we keep strength with the true source of our strengths and that's our people. with this in mind i want to add a few chents to those of the secretary. first, this budget should be considered holistically. it's a joints budget rather than individual service budgets formed pa rocky formed pap rocky parochially. changes that aren't informed by that context. the context of jointness. risk upending the balance that i just described and potentially compromising the force. second, this budget represents a wait point not an end point. in development of the joint force we need for 2020 and beyond. it puts us on a path to restores versatility at an affordable cost.

specialized capabilities that were once on the margins become more central. even while we retain and must retain our conventional overmatch, it builds a global and networked joint force that's ably led and always ready. and third, this budget does honor our commitments made to our military family and keeps faith with them. there are no freezes or reductions in pay. there's no lessening in the quality of health care ereceived by our active duty service members and medically retired wounded warriors. that said we can't ignore the increasing costs of pay and benefits. to manage costs we need pragmatic reform. all of this can be done in a way that preserves our ability to recruit and retain the best of america's talented youth. finally, all strategies and the budgets that support them carry risk. this is no different. in my judgment, the risk in this strategy and budget lies not in what we can do and but in how much we can do and how often we can do it. this budget helps us buy down

this risk. by investing in our people and in 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 family. for supporting those who serve who have served and importantly who will serve. i know you share my pride in them and i look forward to your questions. >> thank you very much. thank you for your testimony. thank you for your service. thank you for doing a great job in a very difficult situation. you've mentioned the deficit reduction act. and mr. smith mentioned it. and, again many of us voted for it. some didn't. the deficit reduction act called for serious reductions in our spending.

i understand the results of the last election and the people said -- you got to go to washington to get our financial spending in order. everything needs to be on the table, defense, included. and i don't think anybody would argue with a budget as large as we have in the defense department, that we can't find savings. and this is a huge huge cut. defense accounts for 20% of our overall budget. and the firsttranche we voted on, 50% of the savings come out of the defense. so i would say we've given and given a lot out of defense. and then the sequestration, i mean, when we voted for the deficit reduction we were told the super committee, that the

sequestration was so bad that it would force the super committee to do its work to find other savings in the entitlement programs which is where the real problem is anyway. because if we eliminated all defense spending. if we eliminated all education spending. if we eliminated all transportation spending. if we eliminated the total discretionary budget we would still be running a deficit of over half a trillion dollars. so all of this talk. all of this agony of going through all of these cuts which are very significant don't really address the real deficit problem. it is not the defense department that is putting us into a very precarious situation in spending. having said that you've stepped up to the plate. you've found the cuts over the next five years that are serious

and you've devised a strategy the best way you can, to meet the threats that we can meet given the cuts. just a couple of years ago, before you got here, mr. secretary and before you got here, mr. chairman secretary gates in that same seat, was say saying that we had to over the next five years, have a 2% growth over inflation or we would have to reduce the size of the force. well, that's come to pass because we not only are not having a 2% growth overinflation, we're having a reduction when you consider inflation. and your report from the department points to the fact that we're going to have negative real growth over the next five years based on the

budget. when you take into account inflation. so we understand that and we're going to work through that and you have stepped up and said that the military can live with this. but the sequestration we cannot live with. i think we're all in total agreement on that. so i have a question. the way we're moving forward right now there's nothing in the budget to deal with sequestration accept a possible tax increase if that's needed at the end ft day. >> this budget that we'll be dealing with kick information and starts with the new fiscal year october 1st. being realists, i think all of us understand that we're probably not going to have the budget. the senate says they they won't pass one. we'll do ours on the house side. but being an election year, i think we probably understand we're not going have a normal

year. we haven't had a normal year for years. so maybe we're going to have a normal year and we'll be with a cr from october 1st, at least through the election, and, you know -- i don't know how we'll come back and deal with this in january but in john mccain the sequestration kicks in. i wanted to really work on my budget. to go through the strategy and budget and you've done exhaustive work to come up with this budget. a week or so ago we had dr. carter and admiral winfield, the secretaries of the services and chiefs, and one of the members of the committee asked dr. carter what he had done, what was being done to plan for sequestration. his answer basically was, we don't have to do any planning

for it. automatic we have to do is pull out the budget and take 8% off of every line item. and i think everybody in here probably understands the chaos that would create. i don't know how many contracts the department has. i know it's hundreds. those would have to go back and be renegotiated. pensions retirement plans, health insurance, all of the things that would have to be dealt with. further force reduction immediately. and then sequestration kicking in. i, mr. secretary talked to you about this. i put in a bill and dealing with everything we're talking about here today, the sequestration takes it right over the top. and we're looking the reports we're hearing about the rattling going on over in iran.

the new leadership in korea. i think the world is in a very serious situation. i know general, you told us in a meeting a couple weeks ago in your 37 years this is the most serious you've ever seen it. so i think these are serious questions. my bill would pay for the first year of sequestration, which moves it back a year. it -- it does it with as little pain as possible through attrition decreasing the size of the federal workforce. but i'm asking you mr. secretary, if this is something you can support trying to fix sequestration now, instead of having all of the people that will be laid off this year in preparation for next january? if it wouldn't be better to move ahead and fix that now?

deal with it now, not wait for the december 31st deadline. and that would still give us then next year to work on next year's problems and sequestration. >> mr. chairman as i've said time and time and time again, sequestration is a crazy process. that would do untold damage to our national defense. it's a mechanism that would do, you know just kind of blind sighted cuts across the board and would really hollow out the force. i'm prepared to work with you in every way possible to try to work on both sides to try to develop an approach that would detrigger the sequestration. my hope was frankly, that the super committee would take that responsibility and do that.

i think that's what everybody's hope was. that didn't happen. and that really concerned me. and so whatever we can do on both suds toe develop an approach that would detrigger sequester and avoid that kind of horrific result i'm certainly prepared to work with you on that. >> thank you very much. mr. smith? >> thank you mr. chairman. i'll point out the overall budget the 'president submitted contained $3 trillion in ten-year save state of georgia if the budget were passed it more than meets the $1.2 that was required to avoid sequestration so there was a plan put on the table and i share the chairman's iraqis that the sooner we resolve that overall issue the better for all concerned, what ever that plan may wind up looking like. i wanted to get more comments from you about brac.

you've seen since discussion started, it has not been greeted warmly on the hill, to put it mildly. except by me i think i'm the only one that has a single positive to say about it. i looked at it logically and said, if we're shrinking the force to the size we are, we're moving two brigades out of europe, we're making substantial changes in the strategy, regardless of the debate in the budget we're moving things no way we can do that without some doing some closures and realignments. i don't see where it's possible. i certainly have a large number of bases in my state and various degrees of vulnerability and i understand that, but it has to be done as far as i can see. i'll give you a minute or two to give you a pitch as to why we need to be more open into what in my mind is an absolutely

necessary step. >> as we make reductions that will take place in some of the drawdowns in the wars we're engaged in. we're going to have units coming back that will be drawn down. that means that the force that we maintain will needless infrastructure to support it. that's just a reality. how do you make a decision as to what parts of that infrastructure ought to be reduced or changed or eliminated. that's been -- frankly that's been a challenge, as long as i've been in this town. to try to make those decisions. and ultimately what happened was that have someone developed the brac process as a way to effectively do that by putting all of these decisions in one package and having a up or down vote. i was a part of going through

three brac processes. i had installations in my district. and one of those bracs eliminated ft. ord in my district which represented 25% of the local economy. so i know the impact the brac process has. at the same time, we were able to establish a campus at the california of state university system and reuse that area and frankly came out on the better end of the deal. but nevertheless it's a tough process to go through. and yet, you know, standing back, i can't see a better way to do this other than brac. because if you try to do this on a piecemeal basis, we know what's gong to happen. it's not going to go anywhere. the only effective way to do it is to put nit this kind of package. brac costs a hell of a lot of money. >> let's be clear. this is not about a way we can save money.

we know it's not from ore previous five experiences. in the long term it does save money. yes, for the five, ten-year number, but the long-term matters. it's more about making sure you have the fore structure and basing system you need to support your national security strategy. >> that's right. stu. i thank you. i just want to make one editorial comment on guam. there are still some details to work out. what to do about oak gnawkinawa and elsewhere elsewhere. are there's been a reduction from the number of marines going to guam from the previous plan. could you consider perhaps more marines going to guam? and also not just rotational, but on a permanent basis? and believe me, i understand. will this plan out? i think six years ago, it was going to cost $10 billion, and then there were all kinds of demands and it wound up being $23 billion to move them to guam, which was completely unacceptable. and the people in guam are going

to have to work with you to get those costs under control, but i just hope you will consider the fact that there is still more capability to move some of those marines to guam if we can perhaps get a more cooperative reception about how to make the finances work. so i hope you'll consider that as you go forward with specific plans. >> thank you very much for that. we are -- queue know, we very much view this as an opportunity to try to give you a chance to reposture our force in the pacific. guam is a very important part of that. believe me, it's something we're seriously looking at. we're trying to work with the japanese to try to get this done. this thing has been around for 15 years. and nothing has happened. and the time has come to try to get this resolved and that's what we're trying to do. >> thank you, mr. secretary. thank you, mr. chairman. >> thank you. and we haven't had a chance to talk about this. but my thinking is really

evolving on this whole guam issue issue. we're talking about reducing the marines by 20,000. maybe one way to do that would be to bring the marines we take out of okinawa, bring them to camp pendleton or something, bring them home. and maybe leave some prepositioned equipment in place or something? i think when we're talking about the tremendous cuts we have to make, then we're going to have to really look at this seriously. because this is just escalating. and we may be able to solve two problems instead of one. mr. bartlett? >> there's obviously no wild enthusiasm in the congress for additional brac grounds. those facilities are in somebody's district. it might be yours that gets gourd. and secondly, we don't b save

any money in the short term because of the clean-up. we've been on some of that's bases for 100 years. our families have lied there, our kids have played there. and we're making the statement that these are second-class citizens because they can live and play in a place that really isn't even good enough to give away. i know the law may require us to do this environmental clean-up, but we think we make the laws here in the congress and we could change that law. if the local community doesn't want the facility, we'll plant some trees, loing the gate come back and cut the trees and whatever the environmental problem was it will undoubtedly be much less. clearly this impacts what you can do in personnel and modernization and in r&d. would you tell us for the record how much more you could do in personnel, modernization and res a dndd if we could close these

facilities without the obligatory clean-up? i have a question, general dempsey. if you ask our combatant commanders what they would like more of it's always isr. so it's appropriate that the new defense strategy crites intelligence, surveillance and reconnaissance of the one of the capabilities, and i quote, criticalkrit critical to our future success. yet the d.o.d. budget request is approximately $1 billion or 25% less than fiscal year '12 for isr programs. each of the services is terminating at major isr program in the fiscal '13 budget request. the army reconnaissance and surveillance system. and the air force's block 30 global hawk unmanned aerial system. 18 aircraft aircraftwill be placed in storage. nine of these are in support of combat operations. would you eplease explain what appears to be a real conflict

between the new strategy and fiscal year 2013 budget investment decisions? >> i will, sir. thanks for asking. first of all, you're right that combatant commanders and i was one, have an insatiable -- i mean literally that word by that definition insatiable appetite for isr. what we've learned over the course of the last ten years is that certain of those platforms -- i mean once you procure them, you begin to recognize both the limit of their -- the expanseiveness or limitations of their capabilities. what you see reflected in our budget is a look across all of the various components of this thing called isr to determine which ones are actually delivering the best value, meaning the best possible intelligence, surveillance and reconnaissance capabilities at the best value. at the best business case if you will.

and so for example, the block 30 global hawk has fundamentally priced itself out of our ability to afford it. when the u2 gives in some cases a better capability and in some cases just a slightly less capable platform. so what you're seeing is our ability to eliminate redundancy continue to invest in the best value and to avoid at err

the continue to be tested. the tests are going pretty well. we need to do tests on all three models. i'd just of one of probation because it had five problems that secretary gates had identified that put it on probation. it has been able to do with all five problems. now we are looking at the software aspect. this plane is on-path to hopefully coming into full production in the next few years. >> thank you very much. >> thank you, mr. reagan's. >> thank you, mr. chairman. thank you for coming to el paso and covering a few of the issues that you have covered with the committee here this morning. i have two areas that i would like for both you and general dempsey to focus on.

the first one deals with the reaction to the request for another possible thing from our allies abroad. i know you have had a chance, since first asking for depth of 40, to go out and talk to at least some of our allies. the administration is fixing to launch another set of troops in the mexico and arizona. i am concerned that not only is that very expensive but it puts our troops in a questionable position because they are not trained for law enforcement. they are trained for combat. i would appreciate it if you

would comment on this latest effort to deploy troops in new mexico and arizona. as i understand it, from the information i have, it is against the ultralight vehicles that the cartels are losing, but there are certainly better ways to do that than a full-force presence in those two areas. if you would cover that, i would yield the rest of my time. >> let me address the first part of your question. i will have general bentsen -- general dempsey comment on the second part. on the second part, we are and we have been looking at infrastructure abroad very carefully. obviously, if we are going to look at infrastructure in this country, we are obligated to look at and the structure of

brawn. we are going to be taking down brigades in europe. that will impact on infrastructure there. we have closed 100 bases in europe in the last six or seven years. we are probably looking at 23 additional bases as well. we are as a result of drawing down our forces there looking at what savings of the infrastructure we can make in that arena. >> on the use of troops on the border we went down that path to meet an immediate need several years ago. we have seen it all along as an interim strategy, as a transition strategy and one that could ultimately be replaced by technical means whether in the military sense or other surveillance capabilities available on the commercial market. we understood when we began this

our role filling that immediate need. we are eager actually, to partner with, and are partnered with the department of homeland security with the fbi with state and local governments. we do exercises periodically. i am not eager to have that become a core competency of the uniformed military. >> this is very expensive especially when we have built up the border patrol. i was in dallas and tucson, arizona. speaking to the people there the comment that everywhere that they are we have border patrol agents. i am really at a loss to understand why we would want to

deploy troops at a time when we are trying to save money. that is a very expensive proposition. the border is a safe environment, in spite of all the rhetoric we hear politically. i would hope that we could rethink that if at all possible at a time we are trying to save money. >> thank you. mr. thornberry. >> let me add a few brief faxed to a conversation you have already had this morning. the president instructed the pentagon in the spring of 2011 to look for $400 million in savings in the defense budget. that is before your time. but any notion that the 487 sprang out of congress just because of the budget control act, spontaneously in some way it's obviously not true. there was under way long before

we got to that point. the second thing i would like to throw out is in little more specificity. the 2005 round will not even break even until 2018, according to gao. that means for 13 years it is corn to cost more money to have fort bragg then it would if you did not have it. having the pentagon suggest two more rounds when it will aggravate the budget situation for 13 years or at least a decade leaves me scratching my head a little bit. i think it is important to note it does not even break even for a decade, which is problematic. another thing that leads me scratching my head these days is the reports that the military and the administration are looking at substantial cuts to

our nuclear deterrence. under start, we will end up with about 1500 weapons. there is consideration of cutting that 80% down to 500 let us say for rounding. that is being generous. it seems to me we end up with 500 nuclear weapons and another country has a couple of hundred. all the incentive in the world is for them to catch us, because it is not that far and not that hard for them to do. i would appreciate your best military judgment on whether cuts of 80% in our nuclear stockpile really are good for the national security of the united states. >> i will not comment on the 80% figure. i will say that what has been reported is the cliff notes version -- if you would understand that from your personal education.

it is the cliff notes version of what is a very comprehensive set of discussions internal to the military with the national security staff on what is our next negotiating strategy, notably with russia. the status quo has always been in place. at this point i would encourage you not to become too concerned with media reports in what is a very comprehensive process. >> i do become concerned, partly because it does nothing but encourage other countries to advance their nuclear program. if they see that we are going to come down from 1500 to some number in the low to middle hundreds, it does nothing but encourage our enemies and discourage our friends. the result is more nuclear weapons programs across the world, which would seem to me to be something we would not want to have happen. i get very concerned if our military takes seriously any

notion that we can even begin to approach reductions on that scale. i am worried about where we are with the last round of start, much less something that goes to that level. would you leave a secure afghanistan without addressing their safe havens in pakistan? >> the television, as you know is our primary enemy in that part of the world is al qaeda.

the television elements, the terrorist elements that support al qaeda are also our enemies. there are some elements of the television support al qaeda. -- of the taliban that support al qaeda. those are the elements we have been targeting. >> can we leave a safe and secure afghanistan without dealing with those elements? >> our goal is to make sure they never again can establish a safe haven in afghanistan from which to conduct attacks on this country. that remains our primary goal. >> mr. andrews. >> i would like to hear mr. r eyes ask a further question, but i want to think the general and secretary for your service to our country and particularly

your accessibility to members of this committee and the congress. it is refreshing. you have been the most accessible leaders in the defense department i have ever encountered. i am very grateful for that. i also want to thank you for your comment on page 3 of your written testimony about your personal priority achieving audit readiness for the department. my friend mr. conway has taken the lead on this issue. he wrote it into law on an effort we worked on together. he diligently lead a panel to try to achieve that reality. all the discussions we are having this morning and are going to have in the next couple of months may be based on false data, if we do not have a good financial statements. i know this is a boring topic that does not make headlines but it is critical to an intelligent discussion of the hard financial chores as we have

in front of us. i thank you for your very personal investment in that issue. i want to get to the more controversial question now. despite some of the rhetoric which i think corresponds to the year on the calendar, the budget proposal you have submitted, if i understand it -- for every hundred dollars was spent in core defense budget last year, we will spend 99 in fiscal year 2013. for every 100 people we had in uniform, at least authorized to be in uniform, we're going to have 99. i think before we get too excited about the one-year budget we have to understand that. a share with mr. smith, and i think with you, and understanding of the difficult political realities of the process, and the necessary decisions that must be made. and wonder if you can outline some of speed -- some of the

strategic strait of. i think everybody in the committee has been through it, one way or the other. tell us what happens if you bend to the easy decision. what do you give up in that trade-off? >> you all know this. the defense department budget is made up of only so many parts. i have identified the areas that involve savings that we can focus on. we put everything on the table. those parts are efficiencies, whenever we can do to eliminate waste and cut down on your credit overhead. and there is a lot of that. we have added about $60 billion in savings in that area. the second area, obviously is force structure. that involves cutting personnel out of the force. we have already targeted about 100,000 reduction in the army

and the marine corps. thirdly, modernization weapons areas. we have gone after significant savings. we obviously have to maintain technology and weapons systems that are key. we have put on hold some of the areas that we think we can achieve some savings. we have gone after cost effectiveness. we have gone after affordability and tried to deal with some of those areas in terms of savings. the last area is compensation, which involves paying benefits for our military. if infrastructure is part of the force structure reduction savings, and let us assume we do not do any infrastructure savings, yet we still have to come up with additional savings where are you going to go? >> steve think it is fair to say that if we do not do infrastructure there are only three places to look -- the

compensation for troops, families and civilian employees, tools and weapons we need to defend the country, or other strategic priorities around the world? i was involved in litigation against brac that went to the united states supreme court. but i understand we will not cut that infrastructure without brac. i frankly would encourage you to ask for the new authorization and would like to work with you to support it. i even greater dislike alternatives to brac. i thank you for your time and testimony this morning. >> mr. jones? >> thank you very much. mr. secretary, i might be the only republican on the committee to say thank you for your recent decision about bringing our troops out in 2013. this has been of great interest and concern to me. i have a marine base in my

district. my question would do with that. you have been an elected official, serving in the house with my father a few years ago. you know better than any others here or as good as any of us, that politics is local. at cherry point marine air station in my district, we have a death toll. it brings the question that mr. bartlett was asking you about the f-35. at cherry point because of the depot, the interest in the f-35 and knowing that at one point in a discussion i had a few months ago, there was a thought that maybe at some point in time if this f-35 comes on line and becomes a reality there might be eight squadrons coming down to cherry point.

i realize this is a difficult budget year. none of us know what we would like to see today. it might not be a possibility tomorrow. if you would expand a little bit more on how you feel that the progress is being made on the f-35 and knowing that you believe we do need a strong fighter system in our country if you would elaborate on that, i would appreciate it. >> the only way the united states remains the strongest is by developing fighters with the technology we will need in the future. i had the opportunity to go see the development that is behind the f-35, sitting there and looking at the technology

involved. we are talking about spectacular technology that would be part of this plan in terms of stealth capabilities but also in terms of targeting capabilities. it is the next generation fighter. it is what we are going to need. frankly, countries are lined up, waiting for this plane because they know how good it is going to be. that is why we have to keep this on track. we have three variance. i cannot defend all the decisions that were made before i became secretary. but it is not an easy process. you have to look at a lot of questions that arise depending on the capabilities you design in each area. nevertheless, you need a navy plane. you need a marine plane that can lift. obviously, we need an air force plane. those of the key ingredients. my view is, because i came into

this pretty skeptical about where this thing was -- i looked at the facts and the testing and has gone on. i looked at the production rates of there. i am convinced we can deal with problems that are there largely software issues. we are producing these planes even as we speak. they are continuing to be tested. michael is working with the industry to make sure that any changes here can be as cost- efficient as possible. i do not want big changes in these planes. that will wrap up the cost real fast. the challenge is to keep costs under control as we resolve the final issues with this plan. i am convinced we will be able to put that in place. >> thank you for that answer. i have spent almost 10 years in the interest of two pilots who crashed april 8.

19 marines were burned to death. i appreciate what you said. you said you wanted to make sure that the manufacture of this plane has it ready with no hidden problems like they found with the board tax cut brought that plane down. -- with the vortex that brought that plane down. i hope the military will give the wives who have requested it an acknowledgement of their husbands were not at fault. i hope i will not have to show you the evidence we have shown you over 10 years that the pilots had no idea how to react in a vortex that night. thank you again for your leadership of this country. god continue to bless the men and women in uniform. you have a little bit of extra time. >> thank you.

mr. davis? -- ms. davis? >> thank you for going out of your way and really talking about the all-in-one element of this strategy, which i think is our people. i think keeping faith with our soldiers marines, and their families remains a top priority. as we think of this process and move forward reducing personnel strength over the next few years, what are we doing to make sure we retain a spectrum of experience and knowledge across services and specialties? within that package, what is your greatest concern? >> let me yield to general dempsey. he has been very involved in how we approach the retention of some of these mid-level officers. >> i will hearken back to my

time as chief staff of the army. that is the issue the service chiefs are grappling with, with the secretary's guidance. one of the things we did back in the 90's -- when we separated soldiers, we did so -- i said soldiers but servicemen in general. we were separating them too quickly. we had reduction in force boards that sat specifically to tell people to go. but we could do that because we were passing them to a good economy. one could argue a blooming economy. a big difference in what we are doing right now is that those other assumptions i just mentioned are no longer valid. we are passing people into a struggling economy. we are still in conflict and likely to remain in conflict. we are looking at how we, first

of all paste this. to the question related to brac if you fix too many variables on us -- there is some physics involved. if you fix the variable called infrastructure, if we are kind of maxed out in terms of our liberal physical ability to pass people out of the service in a dignified way, it does not give us many levers to pull in bases, training, or equipment. that is why we are concerned about brac and the pace at which we separate people. once we have settled on the pace, and we have, we looked internal to our systems. we have any number of personnel policies promotion rates accession rates evaluation reports, board processes -- to the extent that we can use existing processes to identify the highest-performing

personnel, keep them, encourage them and continue to develop them, we will be in good shape. if this is accelerated, we get into a position where we are forcing people out. at that point, i will not be able to guarantee we are keeping the right people. >> is part of that discussion of formalizing longer periods of time between the eligibility for promotion and the promotion among noncommissioned and commissioned officers? >> it is a great point. and it is a rescue. in some ways, you want to accelerate promotions, because it is an incentive for the highest-performing personnel to see the have a great deal of potential and that is being fulfilled. on the other hand, it has the effect you just described. i would use a somewhat overused word probably. i think it is a matter of

finding a balance between, let us call it, talent management and managing the personnel system to treat people with dignity and respect "reshape the force. >> i appreciate that. there should be concerned for many of the women and men serving. they would be leaving the service faster than they imagined. we have to think about the transition, ensuring they have the skills and talents necessary. are we looking at that in terms of different kinds operation? -- different kinds of transition? >> that is one of the issues a word about the most. as we draw down over these next five years, we are going to be putting another 12,000 or more

out, bringing them back. right now the system is flawed. it does not work as efficiently as it should. we have got to do a better job of being able to take these young men and women that come out, and given the counseling and the education benefits, give them the jobs, give them the support systems they have to have in order to be able to reestablish themselves in the communities. otherwise, we are going to be dumping them in these communities with no jobs, no support. that is why we have high unemployment now among our veterans. that is exactly what has happened. we have got to change that. >> your schedule only allows me five minutes for questions, so i am going to try to be concise and help you be concise in your answers. you made a statement that this will be a test of whether reducing the deficit is about talk or action. we welcome a conversation with

you or the president about serious deficit reduction. we wish we could have had it before the president pushed through an $800 million stimulus package that many of us believe was ill-advised, or the health care bill that is putting many employers out of business. we do not want to balance the budget on the backs of the men and women fighting for this country. in terms of the motive for that $800 billion stimulus, which was almost twice these cuts -- let us look of the approach of how we got here. wouldn't you agree that if we had been more responsible in handling our budget as a federal government that the better approach would have been for us to have developed a national strategy to defend the country to be able to discuss exactly what we needed for that strategy, to determine the resources to meet that strategy, and come to congress and say this is what we need to do in order to do that job to

defend the country? would you agree that would have been a better approach? >> congressman the better approach, and i say this up so much as secretary of defense but as a former omb director and chairman of the house budget committee -- the better approach would have been for congress to sit down and develop a comprehensive deficit reduction package. >> i understand that. but as far as the strategy, wouldn't it have been a better approach to have done it in the manner i just delineated? >> that would have been nice, but we were mandated to come up with -- >> but wouldn't that have been the better approach? >> of course. >> in point of fact, that is not the approach we took. what we did was give you $487 billion of cuts. you were forced to create a strategy that worked with and the parameters of those cuts. >> that is right.

>> based on that, isn't it true that it would be virtually impossible for you or anyone else testifying on behalf of this budget to delineate for us the portion of that strategy that was driven by those budget cuts versus the proportion of the strategy given by security changes? >> i do not think you have to make a choice between fiscal discipline and national security. i really don't. >> i am trying, because i have five minutes. isn't it true you were forced to have $487 billion of cuts? you work within those parameters. but isn't it virtually impossible for you or anyone else to say what portion of that stretch she was driven by those cuts, versus security changes that took place around the world? >> we would have been required to load at a change in strategy under any circumstances because of the drawdowns that were

taking place. this is not just deficit reduction. >> we have security changes. that would of had strategy change. and we have budget cuts that would have caused it. but is it true that you cannot delineate between those two? >> there were both involved in determining our strategy. >> you also mentioned this was imposed on you by law. i have heard you state this would not be the figure you would have picked. is that true? i would have picked that, and i did not vote for this thing. but you said the president came out and said he wanted $400 billion of cuts before the strategic cut was taking place. looking at the strategy, at any time has the president voiced to you the fact that he thought this cuts were too much? >> the president understood this was not going to be easy and there would be risk involved. >> i understand. that is not my question.

did the president ever voiced you that he felt this was too much? >> he felt as i did that the congress and the president had gone forward with this budget control act, and we were obligated to fulfill it. >> you disagree with that figure. i disagree with that figure. had the president disagree with that figure, could he not have put any of those cuts back into the budget he just presented to congress? >> the president shared your concern, which is what we do about reducing the deficit. that is the only thing that was worked out by the congress on a bipartisan basis. >> did he put any of those cuts back into this budget? did he say that was too much? my time is up. >> i do not think he could have done that without the support of the congress. >> thank you for being here today.

your testimony your tireless service to our nation. we are all grateful. i want to focus on priorities to meet. i want to talk about submarines and about security. as you know, the virginia class submarine is a procurement program. we are only now beginning to reap the rewards of a consistent funding level. the proposed delay of one of these subs outside could, i believe, incur significant extra costs. how did the department come to this decision? how does the department propose to mitigate the military risks the monetary cost, and the workforce challenges to emigrate to by this shift? the submarine has come in on time and under budget. because of the efficiencies

that we gain from bloc spies and stability to the supply chain i am concerned this delay is going to cost us in these areas. as you know, i have been a long and staunch supporter and advocate for increased investment in security. i've been a staunch supporter in investments in cybersecurity, and i continue to see the escalation in cybersecurity and $18 billion in fy-2013 to fy-2017. mr. secretary, in general, how does the proposed budget address these threats and vulnerabilities we face in the cyberarena. can you expound upon that? and in the event of a large scale cyberattack, how resilient are power grids and military bases? obviously our military bases in

many ways are dependent on the political infrastructure, our electric grid owned and operated by the private sector. and if they go down our military bases and their ability to function are vul innerable. what efforts are we doing to make them resilient and have some of their power supply back if necessary? >> i'll talk cyberand and then i'll ask mr. hill to talk about submarines, is that right? we're very concerned about cyber. we talk about what's new in the world in terms of threats. for us, it's emerging capabilities. it's special operating forces. it's cyberand it's isr. those same capabilities are also -- have become available to our adversaries. and in the case of cyber in particular we've been acting to prepare ourselves in terms of our vigilance on our systems and

our defensive mechanisms. and we've got, as you know we've got a cyberstrategy but we remain vulnerable. and through a series of table top exercises, conversations as well as on the senate side now notably, we're trying to determine the next steps. and there is a -- there is legislation pending, sponsored by senators lieberman collins rockefeller and then feinstein amendment to that that is a very good and important first step in providing the kind of information sharing and expanding or potentially the first step in expanding protections beyond the dot-mil domain for all the reasons you suggest. but make no mistake about it there's controversy and plenty of it around this issue because of the department of -- we're the department of defense.

there's the department of homeland security, fbi. so there's authorities to be considered. we're working through all that. the current legislation pending is a good first step. >> in terms of the virginia class submarine, which i think is what you're referring to. we're planning to buy nine. a year ago, we were planning to buy ten we'll buy two a year except for fiscal '14 we'll buy one. it was an affordability decision, frankly. the submarine fits into our strategy and we'll certainly continue to buy. but we were looking frankly to comply and be consistent with the budget control act. >> i was asked this question yesterday and, you know, if there are cost efficiencies that can be achieved here that allow us to do this with savings and in a more cost effective way, we're prepared to look at that. >> i have additional question,

but my time is coming to an end. i would just reiterate the important of the virginia class submarine program. it might cost our work force if we're not careful. with that, i yield back. >> mr. wilson? >> thank you mr. chairman. thank you for being here today. i share the concern. the american people need to know this, that what's being proposed is a reduction of 80,000 personnel in the army, 20,000 marines, 10,000 personnel of the air force. i am truly concerned at a time of war that we would have these reductions, which i think is going to put american families at risk. those serving in the military and the american public as large.

it's inconceivable every day, we read of another threat to our country of instability around the world. additionally, mr. secretary i know you're having to make tough choices. and in particular though, i identify with veterans. i served 31 years in the army, and i'm just grateful for my service and the commitment and dedication and commitments to veterans, too, commitments from and to. but i'm very concerned that the administration is proposing cost increases on health care for military retirees. and these are extraordinary. for tricare prime that a proposal for fy-13 increases enrollment fees from 30% to 78%. over five years, the enrollment fees would increase between 94 to 345%. how can we justify such increases when really commitments were made to people

who have made such a difference in protecting our freedoms? >> can i take that? >> sure. >> let me answer that, if i could, congressman. you know, when we said that in order to rebalance this military of ours -- and by the way, you know, i don't want to let it pass entirely that i don't share your concern but i will tell you, i'm responsible to this nation to do a risk assessment on the size of the force against the strategy. the budget we proposed and the fore structure is adequate to meet the needs of the nation. if i didn't, i would tell you. in terms of compensation, the tricare enrollment fees haven't been adjusted since the mid '90s. there are an anachronism in terms of any other health care program. and i don't accept, by the way, the comparison of military

benefits and civilian because of what we ask our uniformed military to do. on the other hand, we cannot any longer allow our paid compensation health care, and as you know we're going to look at retirement at some point in the out years. we simply can't allow that to keep growing. as the chief staff of the army i knew that if my manpower costs exceeded 245%, i would break the army, because i wouldn't have the money to invest in the other things that i have to invest in. we're close. and now is the time to act, and that's why we've taken this action. >> and my concern would be that we should be providing more so that this is not the burden. additionally, mr. secretary, last year, the former governor of maine, john baldacci was hired to review military health care. i understand he's completed his report. could you provide the committee

a copy? >> i would be happy to. >> and has his report in any way influenced the defense program budget reforms? >> i'm sure -- i believe it has but frankly, i have not reviewed it myself. but let me get back to you on that and provide you a copy of that. >> and additionally, i would like to know the salary paid and then the supporting costs for his services. >> sure. >> and in conclusion, int to thank both of you. you've raised a great concern about sequestration, the rest of the american people. what do you think we should do? and i'm hopeful that you would support the progressive and very positive legislation of chairman buck mckeyonckeon. >> i'm expressed my concerns about sequestration. i would urge you to work on a bipartisan basis to develop an approach that would pass

congress that would trigger desequestration. you take another $500 billion out of this defense budget. this strategy, i would have to throw out the window. >> i've been positive about your service. i know you sincerely believe this we've got to get the word out. just the word sequestration puts people to sleep. so please, be the paul revere i know. thank you very much. >> congressman, i forgot to thank you for your 31 years of service. thank you. >> thank you. ms. bordello. >> thank you. i would like to welcome secretary panetta and general dempsey. i appreciate the administration's continued focus on the asia-pacific region and the dod intends to press forward with the build-up in guam. thank you, gentlemen. dod announced a changed realignment for guam. what's the rationale for changing the implementation plan with japan. what prompted these decisions?

what's the benefit of the proposed realignment? to what extent did the passage of the budget control act play in these changes? and can you also elaborate on the strategic importance of keeping that reens forward deployed? how is this necessary to keep our treaty agreement with japan? secretary? >> congresswoman first and foremost, let me indicate that no decisions have been made with regards to what exactly that relinement will be. we're in discussions with japan. >> i understand. >> we just think it's time to get it done and try to resolve it. and japan has been very helpful and cooperative in trying to work with us in that effort. we'll continue to keep you informed because obviously it affects your home area and we

want to make sure that you know what we're thinking about before we actually make any final decisions here. it is important to try to keep that presence forward. my view is we need a marine presence that is forward, that is -- that i do not want to draw that marine presence back to this country. i think it has to be forward in the pacific. >> thank you. >> we're trying to be innovative in the way we do that. the approach we're taking in australia is an example of the kind of rotational presence we think can make sense. we're talking to the philippines about doing the same thing. but the bottom line is we want to maintain the marine force forward presence in the pacific. that's an essential element of our strategy. >> thank you. >> another question i have is when the japanese see the updated plans from dod and identify the reduced number of marines coming. will they reduce the overall funding that they were going to supply for the build-up? will this lead to reduction in

support for civilian infrastructure that's needed to support the military population on guam? if the japanese do reduce their funding commitment, how will the department ensure the infrastructure needs continue to be addressed? >> that's also one of the things we're discussing. as you know one of the elements here is a discussing of a new air facility. a enit's -- and it's an expensive process. but at the same time they have beennd it's an expensive process. but at the same time, they have been very generous in saying whatever moves they have to make they'll be forward in the funds to do that. i'm very pleased with the attitude the japanese are taking. >> so you don't think there will be any reduction at this point? >> no. >> mr. secretary, deputy

secretary carter certified in writing, and i know this question has been asked before i arrived by congressman bartlett. he certified in writing to congress that the global hawk system was essential to national security. global hawk was $220 million cheaper per year to operate than the u2. the decision to pull 18 global hawk block 30 global hawk out is shortsighted in my opinion. your recommendation is a complete reversal of your position. can you explain how an asset can be critical to national security and then less than one year later be terminated? and can you answer how the air force will compensate for the loss of this capability? >> i'm going to have general dempsey speak to that. but it is -- i mean -- look, we are very committed to unmanned systems. we think that's the future. but at the same time we've got to make judgments about which ones are most cost effective. and i think that was behind the decision here.

>> this isn't about global hawk. it's about global hawk block 30. it's become too expenseive in relation to other capabilities we have. >> i have one final question, if i could. the f-512 requires that dod meet five requirements in order to spend government of japan funding that's currently sitting unobligated to the u.s. treasury. this is a matter of great concern in our community. what step is dod taking to meet these five requirements? >> it's part of the overall discussions -- >> mr. hale. >> we need to arrive at sdoosh. >> the gentlelady's time has expired. could you take that one for the record, please? >> thank you. >> secretary panetta, i want so thank you for meeting with congressman andrews where we

discussed the issue of a national standard for custody rights for our service members. we asked you to confirm secretary gate's and dod's policy supporting a national standard. unbelievably across the country, there are federal law court that will take custody away from service members. this committee members has been active on this issue, every committee having endorsed the national standard. we would appreciate your support and advocacy to assist us in making that law. >> second day, i appreciate your statement on the budget control act and the issues of sequestration. it's a thing. as we look to sequestration, i think the american public do not know the great risks that could be imperilling our military your statements on it are important. it's one of the reasons why i voted against the budget control act so we would not have this gambling with our military security. mr. secretary, as you know, i'm the chairman of the subcommittee

subcommittee, weapons fall under my cat toir. mr. secretary, as you know, your predecessor, secretary gates agreed to transfer some $5.7 billion to the national nuclear security administration for specific purposes that were articulated in this document, which i ask to be included in the record that was to govern the transfer of these billions to the national nuclear security administration. i would ask if you would characterize the department of defense level of comfort with how the initial $5 billion tranche has been spent. for example, where did dod's $1.2 billion go that it gave to nasa to begin construction on the plutonium facility and how about the funding of the warhead which is again delayed in the nasa budget this year seemingly without regard to the navy's need for this warhead. and secondly, mr. secretary, you kindly in a correspondence in november responded to the chairman and myself, requesting that we receive briefings on the

nuclear warhead -- excuse me the nuclear war plan and you had indicated that you would agree to reinstitute those briefings with our committee. they have not commenced and we a are afraid they may be stuck in the bureaucracy of of the dod. and with the proposed 80% cut to our nuclear arsenal, you know you indicated that these were just proposals or proposals or plans that were being reviewed, and it might be premature for discussing them. but i would like your input on the initiation of where these are coming from. because it's our understanding that the president has asked to consider an 80% cut going to a warhead inventory of somewhere around 300. if you can confirm that the administration is in fact the one that is initiating it it's not just coming from somewhere arbitrary within the bureaucracy, that would be helpful also. mr. secretary? >> if i could comment on your last question, this was -- this

was all part of a nuclear posture review that was mandated by law and that the michigan that process of going through the review. and the second step was basically how do we now implement the review that was taken place. so it kind of followed that procedure. and there are a number of options that are being discussed. and as the general has pointed out, one of those options has maintained the ed theed the status quo. this is part of a discussion within the national security team. and remains there at this point. as you know reductions that have been made, at least in this administration have only been made as part ofthe s.t.a.r.t. process, and not outside of that process. and i would expect that would be the same in the future. with regards to your question on the funding issue, let me ask

bob hale to respond to that. that's the 5.7. >> we're working closely with nnsa. i think there are concerns on our part there has been some cost growth that it sounds like you're aware of. but they are fully committed to meeting our needs. and we're trying to work with them. these are important programs and we need to carry forward with them. i think i'll try to provide you more detail pour the record. i can tell you we have a nuclear weapons council that meets regularly with nnsa representatives as well as ours. and they're deeply engaged in these issues. >> but you do have concerns, correct? >> yes. >> finally let me commend your leadership on the adoption issue. you know, we did have the chance to discuss it. i share the concern that you raised. i think it does need to be addressed. you've been successful at passing it on the house side. it doesn't seem to come out of the senate. and i think the one thing i indicated to you is i want to work with you to see if we can

actually work to try to get something done on the issue this year. >> thank you. mr. courtney? >> thank you, mr. chairman. and thank you to the witnesses. secretary panetta, again i want to thank you for visiting the groton shipyard back in november. you had a chance to climb on board the mississippi and the north dakota which is under construction, as well as really a pretty extraordinary town hall with the workers on the pier there. we very eloquently described the value of the industrial base to our national security. in light of that, just to follow up on mr. langevin's questions the mississippi, which was christened just a few weeks later had come in $64 million under budget, 12 months ahead of schedule. and there is no question that the momentum of two subs a year, which took 20 years to get us up to that pace is achieving savings. that contract shift, which by the way that's the third time it's been changed, not the second time, mr. hale there is no question that in terms of materials, management, in terms

of workforce management in terms of layoffs, which is inevitably going to flow from that shift is going to result in costs. i guess the question is did you include that in your fit-up in terms of the costs of that dip in production. which again, we're seeing real results now in terms of savings because of the higher production rate. >> so far as i know, the fit-up is fully funded. i hear your point. take $487 billion out of the budget, and we tried to do it in a way consistent with our strategy. but we had to do it. this is one of the issues raised with the navy, discussed with them. and they would have preferred not to do it. so would we. but it's where it is. it is a fiscal 14 decision. we'll get another chance to look at it in light of current fiscal realities. >> the strategy, of course, which was articulated at the outset today clearly focuses on asia-pacific. and you can't have an effective strategy without a strong undersea fleet.

thank you for saying you're willing to continue to working on this. the long-term effects in terms of the fleet size will be decades. >> i was very impressed with what i saw in groton. i don't want to lose those skills. i don't want to lose that ability. i want to maintain that kind of an industrial base. we'll continue to do whatever we can to continue to work with you to see what we can do to reduce those costs in the future. >> thank you, mr. secretary. i also want to go back to mr. thornberry's point about the 2005 brac, which, again i respect the fact that you have deep profound personal experience in terms of what you went through in your time in congress. but some of us have our own experience as well. i served on the readiness subcommittee for the last phi years. we've been following the 2005 brac like a box score in terms of its results. it costs about twice as much as was predicted, and as mr. thornberry said, the net savings is still years away. and, you know, obviously we all sort of get pinned as sort of

looking at our own backyard when this issue gets discussed. but i think there is a legitimate question here, particularly with the fact that we've got a deal with the budget control caps. how you do this, in terms of not costing money in the short-term the answers we've gotten so far from dr. carter and yourself is that it's zero in terms of projected savings for the plan that was submitted there. so zero minus zero equals zero. if we don't do it, it's annulty in terms of trying to achieve the budget control act targets. and frankly, i think that's a very threshold question which the department has to answer before i think there is going to be any willingness to look at this at all. >> you know, i hear what you're saying, and the 2005 costs are frankly unacceptable, the way that process ultimately worked out in terms of how much it cost

us. on the other hand, obviously in the long run, it will produce some savings. i guess what i would suggest to you is that we've been through three brac rounds. there are some lessons to be learned here. if we're going to do another brac round as we have recommended, perhaps we need to do it in a way that tries to acknowledge some of the lessons learned here to make sure we achieve the savings that we have to achieve as part of the brac process. maybe that's a better way to approach this issue. >> it's my understanding that we're going to see language some time in march in terms of the proposal. again, there is going to be a high degree of skepticism for those of us, who again have been tracking the overall results of the last round. and certainly i know you've gotten mixed comments here today. but i just want to at least share certainly for some of us. this is a real problem. i yield back. >> committee will take a five-minute break and reconvene

at five minutes after. and mr. conway will be next. excuse me. it will be mr. klein. >> come to order. chair recognizes mr. klein.

>> thank you mr. chairman. thank you, gentlemen, for being here for your testimony, for your extraordinary service to our country. i very much appreciated general dempsey, your testimony when you mentioned the families have stood with us, talking about our men and women in uniform, and stressing the importance of keeping faith with the true source of our strength. that's our people. and it's in that line, in that vein, mr. secretary, that i'm going to raise a subject that i've raised in the past in this committee. and that's the subject of the sort of -- what the sort of convoluted name of the post deployment mobilization respite absence program. pdmra. and although the name little convoluted, it's a little straight forward. dod enacted this program back in january of 2007 with the express

purpose of taking care of our troops recognizing that we have men and women deployed for extraordinarily long periods of time. and rewarding them with this program so that they can spend more time with those families, the families that have stood with us and so that we could keep faith with our men and women in uniform and their families. this program has been in effect and running, doing what it's supposed to do easing stress on our men and women in uniform, rewarding the families. and then on october 1st of 2011, the department came out with a new policy. and it came out with this policy of course. it affects soldiers who are deployed today to kuwait or afghanistan, changing the number of days that you can get as a reward for extended periods of service.

and you can have a negative impact of over three or four weeks in some cases because it's new policy. so i am -- i understand the department is perfectly allowed to make policy changes. but i'm very concerned it looks like there is no provision for grandfathering those that are overseas now. and we have a part of a brigade combat team of the famous red bulls out of minnesota and surrounding states that are over in kuwait right now. and there is a lot of confusion about what the policy's going to be. i think it's important that we keep faith, that we not change things around during the middle of a deployment. so we don't have our soldiers sitting over there wondering, and their families wondering what this policy is going to be. so i have a question for you, mr. secretary.

will you grandfather this new policy so that the soldiers are deployed now get what they thought they were going to get when they deployed. and this applies to all. i'm particularly talking about members of the garden reserve who are making decisions based on these sorts of policies. so if you know that answer, i'll take it now. if you don't i'll take for the record. i actually sent you a letter a month ago, january 18th to be exact, requesting the answer to this. and i understand from talking to your staff that that's inhe works. and i'm going to get an answer. but i just think it's really, really important that we keep that faith and we not change policy. we not have that kind of an impact on our men and women in uniform. that's my first question. >> congressman, if i could just respond to that. were looking at that program. it is an important program. and i'm looking at the implications of what happened with the policy change to determine whether or not we should make any adjustments. we're not going to make any promises to you. but i will assure you that i

will take a hard look at ts before we get you the answer. >> please do. and i would just reerate from in my inion, from where i'm sitting, looking at my own experience in talking to many of my constituents and many people in minnesota who haveeen really impacted by these deployment, the red bulls have the longest deployment of any unit of active national guard of any service. i think it's really important that we keep faith with those meand women. now i have another really quick question. i know you have answered this before. but i see we're talking. and general dempsey you mentioned that or the secretary both of you talked about modifying the retirement system for our men and women in uniform. i just want to underscore again that any such changes will not affect those already serving. is that correct? >> our position, strong position

here is that all those that are currently serving would be grandfathered in under the present system as the commission reviews future changes, they're not going to be affected. >> thank you. my time has expired mr. chairman. >> thank you. >> thank you mr. chair. before i say anything else, i do want to conquer with mr. klein. wans are in that red bull group as we, and we have many of the same concerns in iowa when it comes to the reserve. i want to thank all three of you for your service. i want to quote from the defense strategy. i quote the concept of reversability, including the vectors on which we place our industrial base, our people our active reserve component balance, our posture and our partnership emphasis is a key part of our decision calculus unquote. the strategic guidance also states that dod will, quote, make every effort to maintain an adequate industrial base, unquote.

i strongly believe that a critical part of our industrial base is in fact organic base, or arsenals. certainly our ammunition plants and our depos. they provide i believe a critical function or a readiness and our ability to supply our troops in the event that we have another conflict. we're drawing down now. but in the event we have future conflicts, we've got to maintain i think the capabilities of the organic base to respond to future contingencies. there is no doubt about it. and allow for reversability, highlighted in the strategy. and i strongly believe that the department must ensure that we -- that this organic manufacturing base be preserved, but that it be actively supported. secretary panetta, chairman demp circumstances has the department actively engaged the military services to develop a plan to sustain our organic industrial base including our organic manufacturing capabilities, and if so, what is that plan?

>> well, that's part and parcel of the wholetrategy here, which is to maintain that industrial base that you talked about. the industrial base i think does include the areas you just defined. we need to have that as part of our ability to be able to mobilize and to be able to reverse any steps we've taken in order to be prepared for the future. we are looking at a broad strategy here as to how best do we do this to make sure that as we fund the industrial base, we do it in ways that obviously are cost savings. but at the same time, maintain those areas in place. it's sometimesot an easy balanc but my goal is i do not want to put anybody out of business in that area. i think we need to have it. and we're going to do everything we can to ensure that they're around. >> thank you. geral dempsey? >> i can assure you

congressman, that as the service chiefs have briefed me on their plans, they've also briefed the secretary. and it's always part of the conversation. >> thank you. strategic guidance also states, quote, the challenges facing the united states today and the future will require that we continue to deploy national guard and reserve forces, unquote. i guess i have a couple of questions related to that. both secretary panetta and chairman dempsey. can you explain what role dod total force policy will be implementing policy across each of the services? and can you explain further how the total force policy will b implemented in light of the total reduction as i mong the services and within that how well the experience and readiness of the operational reserve will be maintained? that's a big question, i understand, kind of a series of questions. >> yes, sir, it is a very big question, and one that is a work in progress. what we're taking a loo at is -- it's fundamentally how do we balance active guard and reserve. >> right. >> and within that subset, as

you balance the force how much of it is operational? that is to say ready to go today. and how much is strategic ready to go in 30 days, six months or a year. as the serce chiefs comend appear before you, they are doing that work within their rotational schemes. every service has a rotational scheme. and they'll be able to articulate what portions of each of those components need to be available in those bins, now 30 days, 60 days, a year. may not be able to give you the details, but that's what we're working toward. >> right. >> mr. secretary? >> it's really -- it's really essential here. we've -- we have learned a great deal over the last few years in our ability to make e fullest use of the reserve and the guard. i mean if you go out to the battlefield, you can't tell the difference between national guard units and active duty. >> right. >> they're out there doing exactly the same thing. and they're getting tremendous experience, they're getting tremendous capabilities. i want to be able to continue that capability so that they're

ready to g and you know, the services are working on plans to make sure that we have that kind of rotational ability. >> i just want to echo that. fantastic, not just in iowa and minnesota, but throughout the country, and they've done a great job in the operational -- in their operational roles, not just strategic. thank you very much to all of you. thank you, mr. chairman. i yield back. >> i appreciate the gentleman's concern for the workforce and would encourage you to look at my bill because they're going to be making layoffs, you know, planning for next january's sequestration that could be avoided if we can fix that problem now. mr. rogers? >> thank you mr. chairman. i'm on your bill, by the way. and i share the gentman from iowa's concerns. i have spoken repeatedly in recent months with general stein and general dunwoody about this very issue. and i'm sad to say general dunwoody retired, by the way. she is a class act.

one of the things she has assured me is that y'all are determined to not get caught like we were caught offguard going into iraq and afghanistan when it came to our depot's capabilities. and i believe -- believe her and general stein when they say that then i look at thebudget just proposed, 82% of last year. last year the funding was in oco, this year, this year 93% of last year. all this funding last year and this year is oco. the numbers for depot maintenance for the army reserve is 57% of last year,for the national guard is 64% of last year. and my question is if we want to make sure we're ready -- by the way, obviously we're still in a war. and we have other theaters threatening. a wise depot maintenance has been cut so much and why is there no funding in the traditional accounts general

dempsey? >> the demand is going down. yes, we remain in conflict. but iraq we went from 50,000 a year ago down to roughly 300 uniform personnel now. and when that demand goes down, so too does the demand signal back into the depots. as you correctly point out, there will be a period of residual recapitalization retrofit and so forth. some of wt you see there, this wasn't done as a budget drill, it was based upon the demand signal and how we have to take action. but let me ask mr. hale to comment. >> some of what we're seeing as we shift to the base as the iraq war ended, some of those units, some went to afghanistan, but some are coming home. and we need to get their funding back into the base budget that's some of what is driving the trends. and then as general dempsey said, we're seeing lower requirements in me case because the tempo of operations will be lower when we're out of iraq. >> those are just much larger percentages of reduction this

quickly. we still have some real significant redemands that i understandn maybe '14 and '15 we may see larger reductions. but those are awfully sharp hl turkey, my knowledge, reset is a difficult issue. and it's hard to predict. and it's hard to know exactly when their equipment will be available. well are very mindful that we need to fix or repair this equipment that is coming out of iraq and that will come out of afghanistan. and we'll do everythg we can to work with you. i think we have 9.3 billion if my memory serves me right in a fiscal reset '13 budget. we're trying to do our best to make sure it works. >> it is your plan to do the reset in the depots, all of it? >> it's a combination. in some cases the equipment is so bad we have to replace it. but where it's fixable yes. >> all the reset will be done in our depots. >> yes. >> great. while the army is downsizing the decrease in depot maintenance may seem to be a

little severe given that we're still in afghanistan. do you envision a flattening off of this? i go back to when i was first here, right when we went into afghanistan and iraq. it was 18 months before we were really up and running like we should have been. i'm concerned that this downsizing, y'all plan to continue it, rather than reach a plateau and make sure that we're ady with this depot infrastructure. give me some reassurance that we're not going to keep declining. >> well, my whole point here is that we have to be ready to mobilize andurge quickly. and i want to be able to have the facilities i need in order to do that. that's one of the requirements i basically made to the service chiefs and all of them to make sure that we have the base on which if we have to go, we've got them and they're in place. closing those facilities is gog to hurt us. and so my point is let's try to

do what we can to maintain what we need in order to mobilize quickly. >> and that's what i'm looking for reassurance on. these numbers, you're confident with these cuts you're still going to be able to maintain that core capability. >> that's corrt that. >> we need in the event we're in north korea or iran six months from now. >>es, absolutely. >> and with these numbers i share the secretary's confidence and commitment he just made to. sequestration, i cannot make that commitment. >> i agree. have i more questions. my time is up and i'll submit those for the record. thank you, gentlemen, for your service. >> thank you very much, ms. tsongas? >> thank you mr. chairman. and thank you all for your testimony. it's quite an array of issues you have to deal with. so i give you great credit for being responsive to all our questions. i just wanted to note that past testimony before this committee has rightly noted that our nation's fiscal crisis represents a threat to our

national security. as secretary of state hillary clinton and former secretary of defense bob gates have both noted, our rising debt has implications for both our influence around the world and our ability to project strength. to that end, i commend the diligee with which you have prepared the department's strategic guidance, along with the fiscal year 2013 budget which was shaped by that guidance. and the initial round of cuts that has been required by the budget control act a ranking member noted ranking member smith rightly noted it's a decrease in the increase. and we actually had a witness last week. i'm sorry i can't remember his name, who said that strategy without fiscal constraint is not a strategy. so i think that forces have combined to create a strategy that acknowledges the constraints we deal with, but also the wor in which we live. you also noted that as you're doing this you noted the

fundamental importance of keeping faith with our military personnel. so i'm going to go to an issue that we have discussed before. in your last appearance before the committee secretary panetta, we talked about the fact that the military's rate of sexualssault among service members is much too high. in 2010 there were 2,670 reported sexual assaults in the military. by the pentagon's own estimate as few as 13% of sexual assaults are reported. and in your last testimony you committed, despite budget austerity measures to absolutely work to confront seal assault to encourage survivors to come forward, and to continue to fund programs that prevent it. as we restructure the force in the coming year, this is a problem we muscontinue to work to address. as we all know, a climate of trust is fundamentally important as to how our military operates. and failure to address it truly

does erode that climate. in january of this year you publicized policy some mandated by the miss school year 2010 ndaa, giving victims who report a sexual assault an option to quickly transfer from their in order to remove them from the products commitment of an allege perpetrator. you required that the dod would require the retention of records of sexual assault for a period of 50 years to make it easier for service member to claim veterans benefits. you also announced that $9.3 million would be spent on training to give rape investigations and prosecutions more teeth, to provide service members with the protections they deserve. i want to thank you for all your efforts and your commitment to sexual assault prevention and respse. and i am particularly encouraged by the nearoubling of the department's budget request for the sexual assault prevention and response office for fiscal year 2012. you have many tools now in your

tool chest that didn't exist in prior years. but these policies will only prove effective if we make sure that military commanders and leaders at every level are aware of these policies and are able to appropriately respond to it. we must make sure that every person that a rape survivor could turn to is ready to appropriately respond to protect at service member. and we've been learning as people have been coming to our office that some of these changes are not making themselves known on the ground. lower level leadership is the key to changing the culture and the military that has allowed this problem to exist for far too long. and that's why i'm encouraged to hear that you are conducting an asssment on how the military trains commanders and leaders. still, we have much work to do. so my question, secretary panetta, is going forward, how do you see this coming together to continue to creat a continued strategic approach

institutionalizing prevention of and response to sexual assault making sure at all level of the mill -- all levels of the military are aware of the tools in the tool box and guidance in their response. and i left you with very little time. if i have to take an answer for the record, he will. >> congresswoman, thank you for your leadership on this issue. this is ve important to me. i think we -- we have to take steps to make sure that we have a zero tolerance with regards to sexual assault. and you know the problems. all of the steps you outline that i presented, we are pushing on every one of those fronts to make sure that we do everything possible to try to limit sexual assault. so i've got the final thing is really what you mentioned, which is we have got to get our command structure to be a lot more sensitive about these issues to recognize sexual assault, when it takes place and to act on it, not to simply ignore it. that's one of the important keys.

>> thank you. and we'll follow up in future hearing. thank you. >> thank you. mr. franks? >> well, thank you mr. chairman. gentlemen, thank you for being here. general demp circumstances secretary panetta, mr. hale. secretary panetta, first of all i would like to echo the concerns of mr. thornberry regarding the administration's consideration or potential proposal of reducing our nuclear or strategic inventory by as much as 80%. i have to suggest to you i consider that reckless lunacy. and your response in all deference to you, sir, was really a nonresponse. and it did little to assuage my concerns. and i just have to tell you, for the record, given the need for a broad umbrella that america represents to the world in terms of our nuclear deterrent, given the tangs of being able to demonstrate in the mindf any

enemy, even those that are not all together sound of our overwhelming capability to respond and overwhelming aggression on the part of someone with nuclear capability. i just to go on record that there are many of us that are going to do everything that we possibly can to make sure that this preposterous notion does not gain any real traction. so with that said, let me shift gears and ask you a question related to missile defense. as you know homeland defense is listed as the first policy priority in the ballistic missile defense review. and furthermore the ground-based mid course defense system is currently the only proven missile defense system that protects the u.s. homeland from long-range ballistic missile attacks. and yet with that said, the fy-13 budget request is $250 million less than was enacted in 2012 whichis a followon t a

decrease of $180 million in fy '11. the budget cuts to these systems makes it very clear to me that the administration is willing to diminish our only system that protects our only proven system that protects our homeland from long-range ballistic missiles. and furthermore, the budget request increases funds for several of the european phased adaptive approach systems, which to the casual observer might indicate that the administration has actually subordinated protecting the continental u.s. from ballistic missiles to that of protecting europe. and now unls you or your department or this administration has assessed that the threat to our homeland from lo-range ballistic missiles has declined such that gmd is no longer the critical system we all thought it was, or unless

somehow the administration's commitment to protecting the homeland has in some way clined, i guess i'm in the middle of a conundrum hee, mr. secretary. so my question is this. would you explain in your mind, and the policy of the department whether gmd is indeed a critical system to protect our national security. and if so how does this rather specific and direct cut to these systems reflect that commitment? >> first and foremost congressman, i obviously share your concern that we have to do everything possible to protect our homeland. andor that reason we maintain the full nuclear deterrent here in the triad. every aspect of the triad is maintained because i believe that is extremely important to our ability to protect our

homeland. with regards to the specific decision on the funds there, even though it's less than what we've provided the fact is that it meets our needs in terms of upgrading the missile system that we have our missile system is in place. it is ready to go. it is effective. we're not going to reduce that effectiveness in any way here. the soul point here is to try to do what we can to obviously achieve some savings, but at the same time, make sure that it doesn't impact on our readiness. and i can assure you that nothing in this budget impacts on our ability to respond and protect this country under the nuclear deterrent. >> well, mr. secretary i don't doubt for a moment your commitment to this country, i would just suggest to you that the picies that we're heang here should alarm us all. and with that, mr. chairman, i yield back. >> thank you. >> thank you very much, chair.

thank you all for you time today,our testimony, and for your service to this country. secretary panetta, i truly appreciate hearing the steps of the dod has taken towards a sustainable defense budget and how it relates to the president's newguidance. with emphasis placed on the need to kee the agile and flexibility military force, i'll be interested to hear thou they serve the needs. specifically the navy already has built into its force which would help target operations. in addition to reevaluating our strategy after a ten years of war, i do belief we must continue to provide our service members and their families the support that they need. i'm pleased to hear you speaking than today. we truly need to keep our promise to the honorable men and women who have earned their benefits. i'm also pleased to hear tt it is a priority of yours and i was very pleased with the testimony of my colleague, ms.

tsongas, that it is a priority of yours and general dempsey to take caref our military as well as addressing military sexual trauma. and i agree with her that there is still a great deal that needs to be done in regards to that. i want to talk a little bit about afghanistan. after the deaths ofbin laden anwaral awlaki, our testament to the effectiveness of the small rapid missions instead of the nation-building of the past the emphasis based on a lilly pad strategy will continue to help us address our national security issues as well as draw down unnecessary troop levels in europe, for example. secretary panetta i'm here -- i was pleased to hear you announce a few weeks ago that the drawdown from afghanistan would begin as early as mid 2013. although i appreciate accelerating the drawdown slightly, i would like to hear more abouthe number of troops that will be withdrawn in 2013 as well as the schedule set for

the pace of withdrawal of the 68,000 troops who will remain. as a long-standing opponent of the war, i also have serious concerns that the lessons learned from iraq are not being implemented fully in afghanistan. as the dod attempts to rein in costs, i am puzzled why contracting in afghanistan has not been more closely scrutinized, especially since many of the contractors overlap in both iraq and afghanistan. the special inspector general for iraq reconstruction has highlighted over half billion $640 million to be exact, that could be used more effectively elsewhere, and almost a third, $217 million of which were payments to contractors for reimbursements that were not supported by any documentation. for example, inspector general stewart brown specified that an audit of lmmlc which has contracts in afghanistan and iraq totalling almost $4 billion

revealed that they overbilled dod by at least 4.4 million for spare parts including $900 for a switch valued at $7.05. now i know i have asked a lot here today and there is a limited amount of time available. but let me ask a skoum of questions, and if you're able to discuss it, that would be great. if not, i would take my answers for the record. my queions are what steps have already been taken to implement the lessons learned from iraq in the case of afghanistan. has it been successful? and what more can we do at this time of the important budget cutting that is currently going . >> congresswoman there is no question that a lot of lessons were learned in iraq and many of those lessons were being applied in afghanistan. i think the good news is that 2011 was really kind of a turning point. in 2011 the level of violence went down. we weakened the taliban significantly. more importantly, the afghan

army really came in to its own operationally. it started really being effective inerms of providing security. we've again thugh several tranches of areas where we're transitioning to afghan security and governance. the second tranche which we just have gone through and announced, when we complete that, over 50% of the population will be under afghan security and afghan control. we're going to continue those tranches through 2012 as well as into 2013. in 2013, our goal is that when the final tranche is completed that the afghans will ta the lead with regards to combat operations, and we will be in a support mode although we'll be combat ready, operating and support through the remainder of 2014. we're on track now, according to lisbon, to be able to draw down with our isaf forces by the end

of 2014, and then the discussion will be what kind of enduring presence we have there. but bott line is i think we are on the right track with regards to completing our mission in afghanistan. >> thank you. >> thank you, mr. secretary. mr. conaway? >> thank you, gentlemen. and thank you for your long service and demonstrated patience this morning with being here. leon, i want to add my comments to what rob andrews said. thank you for your forward lean on the audit issue and sustaining and audit and properly resourci that. bob hale and your team, the ripples that your comments have made and the efforts that have gone forward since october, i'm seeing them felt all down through the organization, which is where it's got to get done. so thank you for that. and i appreciate it. we still don't know yet from general allen, you said yesterday to the senate, how we're going to bring home the 23,000 that are scheduled this year. i'm just worried that your comments of the last few weeks were a little premature.

i don't think anybody says it's gotten a whole lot safer in the east of afghanistan. and i understand that the glowing comments you were just making about the afghan army. concern that the fighting season in 2013 is split by ramadan, and we would have our folks in a position to allow something to go on in the second half right off ramadan's, the last half of the fighting season in 2013 that is counterproductive to what we're trying to get done. can you help me understand? i'm in a position to have some information on intelligence as to what is going on, and it didn't -- i was a bit shocked with your commentsecause it's not maring up with the evidence i had at that point in time from things improving on the ground to that rapidly to and since then that questions of certain folks who should know and make sure maybe you were misquote order maybe overstated with respect to that. but i am concerned that we -- and then one final question. >> sure. >> rumors recently, more

recently, that even more accelerated drawdownare on. the question yesterday in the senate is that no decision was made. does that imply that those kinds of conversations are going on within the administration separate and art from what general allen is telling you and the commanders on the ground are telling you that would be great concern to us if these are political decisions driven in the white house for whatever reason, that they would start having those conversations. can you help m understand what is going on there? >> yeah. first and foremost, after 40 years, i'm never responsible for any headlines on any article and comments that you make. my comments were perfectly in line with our commitments under lisbon. to prove it, all of the defense ministers in the last meeting i attended, all of them concur in the same strategy which is we're in together and out together by 2014. and we are all following exactly the same process here. we're doing the tranches. we're doing the transition to

afghan authorities. obviously we are watching it closely to make sure that it's working. so far it is working. the afghan army is doing a great job. we've got to continue to put them in place. we've got to make sure that they're able to achieve security. everything is conditions-based when you're in war. that's a bottom line here. so we're going to be tracking this very closely as we go through that process. with regards to other decisions, obviously we are in the process of how do we draw down to 23000 the surge, and general allen will present a plan to general dempsey within a few months to be able to show how that be be accomplished. and then beyond that, frankly no decisions have been mad because we are looking at the situation on the ground, what we're going to need in order to achieve the mission that we're interested in achieving. >> so we're still set on what the mission is and no

instruction is to change the battle plan to reflect levels of american troops beyond the 68,000? none of that is in the works or pushing forward at all. okay. thank you for that. one minor -- one issue with respect to the budget. i think there is also a $600 million decrease in defense funding because of the switch or the adding $600 million for green energy or renewable energy efforts. that's a cut to defense spending. it's not your core mission. you know we're going to pay and mabis is bragging on the paying $15 a gallon foret fuel to fly fa-18s is a demonstration project, i guess. and it just makes no sense in these kind of budgetary constraints that we would pay $15 a gallon. and even if you ramp that industry up as good as it's going to get, you're going to be paying twice nor that blend of

algae and fossil fuels over what just straight fossil fuel. so i'm not real keen on spending that $600 million. i think you could find a better place to spend $600 in defendin this country as opposed to demonstration projects that might not yield the benefits that we want. so again, appreciate your long service to our country. i yield back. >> gentlemen, time expired. mr. critz? >> thank you mr. chairman, and secretary panetta general dempsey, secretary hale. thanks so much for being here. thank you for your service to this country. secretary panetta the air force recently announced four structure changes in light of the new national defense strategy. these chaes include major aircraft reductions to both combat and mobility forces. and announced the closing of an air reserve station in pittsburgh, pennsylvania, outside a brac process. the base serves 1400 active reserve and guard units of both navy and air force and has tens

of millions of dollars appropriated for improvements. can you tell me if thedecision to close the base was made in coordination with your office or with other akeholders and how many other bases are being identified for unilateral department of defense closure outside of the brac process? >> congressman i really recommend that you ask the chief of the air force that question, because the decision to make that decision was in his hands as part of the strategy that was being implemented to kind of fulfill the strategic goals th we were after. so on that specific decision, i would recommend you ask him that question. >> okay. thank you. and it plays actlly into a larger role. because as you know and are aware, that the air force's restructuring plan propose as reduction of 65 c-130 tactical airlifters getting us to a total fleet projection of 318 aircraft. part of that is because we're going to be lowering the army to

a structure of about 490,000 members. my concern is that pre- 9/11, the army was at about 480,000. so very similarly sides. we had 530 c-130 tactical airlifters. i'm just curious as to the air rce's new restructuri plan isn't realistic given previous demands for tactical airlift and future demands in this new strategy. can you elaborate any of this? or general dempsey? >> i cannot elaborate on that specific issue except to say the collaboration between the air force and the army on their lift requirements, that has been accomplished. and you will have both of them here at some point in the near future. this is about accounting rules. so if youave x number of airborne brigades, how much x number of ground brigade, how much lift do you need? and those accounting rules have been adjusted over time based on lessons learned. do you want to add anything? >> i do want to add the c-130

very important us to. but all studies show we have too many, frankly. so what you're seeing is adjusting in tough budget times to go down to what we believe are the minimum requirements that meet our war-time needs. >> and part of my concern is that we're actually adding i guess duties to the air force's c-130 because they're going to be doing the c-127j lift as well. i look at e c-127j. it was going to be sort of a pickup truck and the c-130 might be more like a tractor-trailer truck. i'm curious if the 130 is going to be able to get into the same airports as the c-27, and is it really a cost savings or are we going to start saying well, we can't get into these places so, we're going to up the tempo for the chinooks to do what the c-130s can't do. and i guess my question is long-term. this is a short-term savings.

is it also a long-term savings? have we looked at the 20, 30-year life cycle of these aircraft? >> i think -- i think they have looked at the long-term savings that we be achieved here. and part of the goal in developing our strategy was obviously to ensure that we had not only agility and ability to deploy quickly, but that what we were using was multimission and designed to accompsh a series of missions, not ju one. and the problem with that one aircraft was that it was kind of single mission-oriented. >> right. >> and that's why i think the air force recommended that we move towards the c-130s. >> okay. i'a littl suspicious of -- i've just heard from some of my army friends that they lke the greens, they like the same uniform and the aircraft above them. it makes them a little more comftable. >> that shocks me, congressman, for the record. >> my last question in a very short amount of time is that we have used the national guard at

a level in the last ten years in oif that oui never used in the past. the future defense plan, does it maintain that same tempo of use of the nationalguards or are we going to see -- i don't want to say diminishing but much less use of nationalguards in foreign operations? >> what we do, sir is we reond to the demand. so as the combatant commanders put a demand on the system, the chiefs meet it. the answer is we will have active component and notably guard and reserve in an r-4g en cycle. if demd goes down there will be fewer than demand. >> thank you, mr. chairman. i yield back. >> thank you. mr. whitman? >> thank you mr. chairman secretary panetta mr. hale, thank you very much for joining us today. i want to go back to some ofhe statements you made about this effort of budget reductions driven by strategy and ask you this. i kno that part of that strategy is an increased

operational capability and presence in both the middle east and the asia-pacific. within that context, we're looking now about an additional ssn ing moved outside the fit-up. and we know in that particular theater, especially the asia-pacific, the ssn is a very, very frequently utilized asset. also, we're going to be pushing thssbn next few years down the road. so it's not going to be operational or deployability until at least the 2020s, and we'll have a significant period of time where we have a reduced number of ballistic submarines in a time when we know it's a critical deterrent to ourtriad. looking where we are reemphasizing our efforts, that seems to be counter to that. and i would ask this. with that in mind,have we looked at and can you tell me from the perspective of china you tell me how many subs they are building per year and how many subs they will have in fy-'17 and beyond just to have a comparison as to where we're

going to be strategically? >> if i could, congressman, we should take that for the record and make it in a classified setting. >> okay.+++ you talk about the seven cruisers that are going to be brought out because of the cost of modernizing them to a

platform. but you're also looking too at a fleet that has been really pushed. we're talking maintenance that s been put off. many ships as far as their operational availability is really being pushed. if we're looking at that and a strategy that denotes more challenges there in the future, especially with our naval capability, and just having been to an exercise a bold alligator and lookingt our operational capability within the marine corps that is necessitated by ships and looking also at our amphibious ship decline in numbers, i would ask too, how are we going to reconcile that with operational availability, with ship availability based on backlog of maintenance and our l-class ships essentially going down, yet we're going to be emphasizing that capability as part of our strategy. how do we fix or how do we address that, what i see as a conflict? >> if i could take a shout at that one congressman. you're talking about a specific single service.

in this caseou're talking about the navy. i mentioned in my opening comment, we really need to think about this as a joint force. and what we're doing as service chiefs and as joint chiefs is looking at our war plans and determining how we meet the demands of the war plans innovatively differently creatively, and integrate those capabilities that we didn't have ten years ago. so while it might -- it might seem that the navy as part of this joint force has actually benefitted from this new strategy has it has shifted to the pacific, but it hasn't been without cost to them at all. and the entire joint force has to be appreciated to understand how we meet the needs of the nation in terms of the new strategy. >> sure. and i certainly appreciate that. i guess my concern is that with that reemphasis in these areas and looking at this new strategy while i understand the cross capability that is there,

it still appears to me though, where we're going to be calling on ou navy, in many instances the capacity and capability there is going to be pushed the absolute maximum. well look at the number of ma that can be deployed and the things we're asking them to do in a joint atmosphere, it seems toe that they're going to be pushed in a situation where it may not be the most challenging of situations where we say wow we can't do all the things that we need to do. so my concern is if this is indeed being driven by strategy. and mr. secretary, you spoke of increased risk. my question is are these scenarios, is it an acceptable risk? in your mind it an acceptable risk? >> i think it is an acceptable risk. we're going to be maintaining 285 ships. we've got 285 ships now. we'll have 285 ships in 2017. in that next five-year period our hope is increase the fleet to 300 ships. so our goal is to try to make

sure that we have flexible deployable and capable navy that is out there. >> thank you. mr. johnson? >> thank you, mr. chairman. and thank you, mr. secretary and general dempsey for being here today. i know that the development of a newtrategy and related changes in the budget request were very difficult undertakings. and some of the responses that i have heard from some on the committee to your work has been unfounded criticism. there is no way a 1% reduction of the pentagon's base budget from 2012 to 2013 could mean the difference bween the world's greatest milary and a hollowed out force. and under the administration's proposal, the dod base budget will remain essentially constant

between 2013 and 2017 after adjusting for inflation. i believe there is room for additional savings in the department's budget. and those may very well come when we can get some clean accounting statements. and i'm glad to know that that time period, mr. secretary, you have moved up to 2014 i believe right? and i share your concern about th -- and your opposition to across-the-board cuts that would be mandated by sequestration. but before i ask any questions, i'd like to ask you a couple of things. last october, there were records that i requested, and those

records were not submitted until last week. can you be more prompt after this hearing with supplying any records or answers that are requested? congressman, i was not aware of that. but in the future, if you make a request for documents and you don't get them in an expedited way, i wish you would call me and let me know. we'll make sure you get them. >> all right. thank you. and also in that regard mr. secretary, a dod report on rar earth elements was due in june of 2011 and it has not been completed as of yet. and we were also promised an interim report in december. but we've received no interim report. can this be gotten to us

quickly? >> that one is coordination. i know it's late. i'm told it will be very soon. >> thank you. any time frame? >> i don't have a specific time. let's get back to you with more specifics. >> all right. thank you. >> my legislative aide is saying a couple weeks. we hope that will be in that period. >> all right. thank you. that's great. mr. secretary, i'm concerned that the pivot to the asia-pacific increases the risk of an increasingly adversarial military competition with china, and that is not in either country's best interests. how do we execute this new strategy without beginning a new cold war? and i might add that i definitely see a need for us to

reposition our thinking in terms of the asia-pacific region. >> i just had this discussion with the vice president of china yesterday. we are you know we are a pacific power. they're a pacific power. and while we've had our differences, the fact is we've had some common concerns that we need to confront. one is nuclear proliferation in that area. anit's as much concern to china as it is to us. secondly it's the whole issue of ensuring that trade routes and commerce flows freely that area. that's another area that we have joint concern.concern. thirdly, we have humanitarian needs in that area that we need to respond to and they're as much concerned about that as we are. area after area there are some common areas that we have concerns that will help us improve the regional cooperation in that area. that's the kind of relationship

we would like to have with china and that's what we hope to develop, but in order to do that, we have to do that from a position of strength and that's why we have to maintain our presence in the pacific. >> thank you, mr. secretary. >> thank you. mr. hunter. >> thank you, mr. chairman. thank you all for your service and time. let me start with this, this is a quote from secretary perry and general shalikashvili under president clinton. a dramatic reduction in the threat allowed for a significant reduction in the size of our military force the most obvious benefit of rce structure was a reduction in the defense budget. this peace dividend, i'm quoting, amounted to about $100 billion a year has been a major contributor to the balance budget our country enjoys. did the nation pay too high a price for this benefit in particular, was the capability of the military forces reduced to the extent they cannot adequately protect american

national interests? our answer to that question is emphatic no. a year and a half later terrorist murdered 3,000 americans and off we went to war and as secretary rumsfeld went we went with the army we had not the one we wished for. how do you differentiate yourself from these two leaders in that time who were presiding over what they would not call but look back and see was a hollowing out of the military? >> well, i differentiate from them because i think we each face our own different circumstances. i mean, you know i mentioned earlier in response to another question that the fiscal reality of the '90s is different than the fiscal reality of this decade and it seems to me that as others have testified that we can only remain a global power if we've got that balance, the aggregate of diplomatic economic and military power and what you're seeing us do is try to reconcile a different set of

circumstances from any -- that -- from any of our predecessors and to ensure that we do form a strategy and map the budget to it as opposed to just reacting to budget cuts and i can only assure you we did that and that this will have to be seen as having been effective over time. >> thank you, general. >> okay. moving on then let me hit on a few other things in no particular order here. one of the main points of the budget is calling for more capability in the guard and reserve, yet the national reserve account is zeroed out. there is no request for it at all. the national guard reserve modernization account reduced by 44%. navy reserve over the next 5 years goes down by 9,000 sailor based on current capability even though we'll have lcs, more fire scouts which we'll need to get

them back for, shortsighted. air force is reducing it looks like two active and five reserve squadrons. it should be the other way around just from our point of view kind of common sense if you're there to save money you look at these reserve and national guard squadrons, they pulled a lot of weight in iraq and afghanistan and chairman klein had a statement on that matter. it don't make sense. when you can support a lot more reserve for the cost of one active. drones and technologies, we're going -- we're going to ask for half as many reapers en though we say the strategy is so that we can relyore on technology we're reducing reapers in half and reducing the number of global hawks and canceled the next uav because the fire scout can do the job. that's fine if your argument wasn't we're going to rely mre on this technology but you cut it at the same time. it doesn't makeense to me. third, asia-pacific we fund ship repair at 100% which we

know is 80% of what it needs. ships going out not close of being capable what they need to be doing. it looked like we cut seven cruisers. meaning you cut seven cruisers so that you can -- we don't want to have to fix the things that are expensive to fix so we just let them go. that's what's happening here. navy refuses to down lect on the lcs. that's congress' problem as well as dod's in my opinion. we should be able to at least down select on an lcs. i don't care which one it is. you can't train for the same class you're training different saors to work on two different ships, different logistical tale, different modules or same modules but different command decks inside, you're going to have sailors trained for two totally different things and lastly, something that i noticed, the joint light tactical vehicle you'll have contracts go out in june of this

year, ford came to us and said, hey, if you prolong this ayear, ford will get involved and save you hundreds of millions of dollars and we said no. there is a some major problems with the budget. my main point is this, the strategy and the budget contradict each other. they do not go hand in hand, they don't fit and it looks to me like the things we're trying to accomplish are not going to be paid for. anyway, that's my opinion and i'm sticking to it. gentlemen, thank you again for your service thanks for coming in here. >> thanks for reading the thing. obviously you studied it quite a bit. >> gentlemen, time is expired. will you please answer those questions for the record. >> we'll be more than happy. >> thank you, mr. chairman and thank you for joining us today and for your service to our country. certainly i echo some of these sentiments because we are concerned about the need to cut costs and that's the great challenge that faces you and we appreciate what the stress you're under to accomplish this however, it does seem the more

cost effective way to approach it is to continue standing reserve and guard units in a stronger capacity than has been announced thus far so we're asking for your consideration as a representative of the niagara falls air reserve station we are expected to if all goes according to as projected to lose 16% of the nation's guard. that's a big hit for an area like ours and as you were talking about and to to heart what you said about the need to have jobs when our veterans come home, my part of the country sends a lot of people to war and th come back to our area and the jobs are just not there. we treasure these jobs as well as the proximity we have to the border with canada and believe you certainly understand the need to ensure we have a continued mission if not the c130s that the guard has but another mission to fall in its place and very important for a variety of reasons but again what you said about our military serity being linked to our economic security and our industrial base and our manufacturing, do you envision a policy or do -- what are your

thoughts on a policy whereby using our limited department of defense procurement dollars that we actually give preferences to domestically produced materials? is that something under consideration? is that something you think could help our job situation back home to shore up our economy and industrial base, as well, sir? >> well let me begin by saying, you can't view the defense department budget as a jobs program. i know there are jobs that are dependent on it. i know we care an awful lot about the people that wo under our department. but e bottom line is what do we need in order to get the best defense for this country? and where can we get it? and, frankly we do look at the u.s. industrial base as supplying, frankly, the biggest part of that why? because i can't rely -- i don't want to rely on foreign suppliers for that. i've got to rely on u.s. suppliers in the event we have a crisis and we've got to respond. >> i agree with you 100%nd i'd

like your comments. >> yeah, thanks thank you, ma'am. just on this active guard and reserve issue, we really got to be clear that i mean the active is active because they're full time, 24/7, 365 and fund them to be full time so they can be the most responsive ford. the guard and reserve if they were full time if they were ready on the same time line would cost exactly the same thing. but yet, you know on occasion we'll be told the guard and reserve are cheaper. they are because we only employ them for x number of days a year. once you bring them in and you want them to serve for 365, the fully encumbered costs are identical. the question for the nation that we're trying to answer is, how much active because you need them right now how much guard and reserve and within that, how many of them do you need within 30 days, 180 days a year? so believe me, we want to do what's best for the nation but this is not a -- the you know the active guard/reserve -- it's

not a dichotomy. it's a trichotomy. >> i take that to heart. i want to get back to the secretary's comments. is there anything this congress can do to assist in your stated goal which i share that we can do more for our industrial base our local manufacturing and again our national security as opposed to relying on manufactured items from countries that may turn on us and may not end up being our friends? is that something we can work on together? i think that's important. >> absolutely. i would have no problem working with you on that on that aspect. i want to be able to turn to our base in this country when we have to respond and mobilize. >> all rig. thank you very much. mr. chairman i give you back the balance of my time. >> thank you. mr. scott. >> thank you mr. chairman. gentlemen, i appreciate you hanging around just for my question. and general you spoke about the

isr capabilities. we have the jsors there and it's not appropriate here but would like to get some information. there is an efficient way to crease capabilities of that unit and those planes that would i think be a significant cost savings so i'll provide that information for you and work my staff to your staff. i will tell you i did not vote for the sequestration. i represent robbins air force base. i'm from georgia. we have ft. benning, we have ft. gordon, we have ft. stewart. we have king's bay. i'll also as chairman would tell you, tell you i'm one of the ones that did not sign the letter saying no cuts to the military. i recognize that we are going to have to have some reductions. what i see happening, though through the communities that have such a large military industrial base is the fear between sequestration and talk

of brc. it's disrupting businesses whether it's a entrepreneur that wants to build a restaurant or city trying to determine what sewer capacity they need or water capacity or other types of farah they need. it's i think in the end causing us more unemployment because of that uncertainty. zell miller was one of georgia's governors and was a.s. senator and one of the things that he did and he received some criticism for it when he did it but in the end it worked he went through a process called redirection where he asked every agency to deliver the agency head was to deliver the 5% that they would cut. it wasn't up to any of the elected officials, the agency heads delivered the 5% that they would cut so your base commander could deliver the 5% that they would take out and then ty

were allowed to present back to command where they would put 2 1/2% of that. the net result of that was a 2 1/2% reduction in spending and quite honestly a more efficient agency. and so as somebody who's come from a state appropriations committee d secretary panetta and general and controller i know you have more experience than i do with these issues but that's something that we did see that work eded. i'd also like to say, mr. secretary, there were 89 of us that are freshmen republicans. we very much enjoy a discussion with the president. that's something that we're not allowed. i wish we could. i wish that what was said about us working together could happen and obviously that means have you those meetings but i would ask, as we talk about these

cuts, you know, there's no -- there's no discussion of cutting food stampse're talking about cutting veterans' benefits. you know, there's not -- not talk of cutting housing programs or other things. i mean the things that have been outlined to us are cs to the military, and we need your help. i mean when fox news and cnn were on and i watched fox, i'll tell you but cnn is a georgia company and i mean we need you out there talking about the damage that sequestration is going to do to national security, to our economy, the military industrial complex. those people work. my people at robbins want to get up and have a job and wantto builan airplane so i will just ask that you know, we're going to do everything we can to have your back and we need you out there outlining the damage that can be done for us.

>> congressman, thank you for those comments and obviously i'll continue to talk about the impact sequesttion would have and i agree just having the shadow of that out there is of tremendous concern to communities across the country and industries across the country and something that we really have to try to get rid of. look just to -- bottom line here is we were handed a number for defense reductions. we stepped up to the plate but we made our obligations to try to do this in a way that would still preserve for us an effective force to deal with the threats, but you can't balance the budget on the backs of defense either. you've got to look at every other area in the budget in order to deal with the deficits that we're confronting and i just hope that congress ultimately makes the decision along with the president to do that. >> and mr. secretary that's the statement that we need to hear over and over and over from those of you at the dod and our

military leaders. you can't balance the budgets on the back of the military. thank you so much. >> thank you for waiting to get your question out there. thank you very much, mr. secretary. general. >> thank you very much. >> mr. hale we appreciate you being here, the work you're doing. this heari is now at an end.

we continue to provide trained and ready equipped soldiers to win that fight. we will be responsible stewards through energy cost savings and reforms. we will continue our equipment reset program to restored equipment to the desired level of capabilities. there have been over 1.8 million pieces of equipment reset to date which equates to 31 brigade equipments annually. finally, we will become leaner. we will have to prioritize, yet

we must never sacrificed our security requirements. this requires a delicate balance of strength, modernization, and readiness. we cannot afford to reduce too much too soon. with the end of operation new dawn, new priorities will reduce our strength and structure from 570,000 to 490,000. from 368,000 in the army national guard and two wounded 6000 to 25,000 in the army reserve. it is imperative to sustain a gradual trample that will allow us to take care of our soldiers, continue to provide forces for afghanistan, and facilitate the versatility of the next five years. this helps mitigate strategic risks and simultaneously resets our future.

we will also reduce our strength by a minimum of eight brigade combat teams. this drawdown based on our national strategic objectives will be done with deliberate consideration to the impact on combatant commander's requirements as well as considerations on local communities and infrastructure. we are in the process of reviewing our combat team design. we look to what future capabilities we will need to be successful. while we are a few months away from a decision, initial analysis indicates we can eliminate unnecessary overhead. this could result in additional headquarters reductions while sustaining combat capability. army unit readiness is measured by the level of its manning training, and equipment. as a component of readiness, we will provide first rate support

for all our families, wounded warriors, and our veterans. we pledge our support to the proposed reforms in military compensation programs. we are reinforcing the professional ethics centered around trust and respect in order to establish the crime -- sexual assault and hazing will not be tolerated. it is inconsistent with the values of our profession. accountability will be of forced -- enforced at all levels. women comprise 15.6% of our active duty work force. women will have the opportunity to serve on a designated field regardless of the type of unit. it is about putting our best people in critical and developmental positions. as we continue to transform our modernization practices to a bottom up approach, we must

achieve our priorities of the network, which is critical to our ability to manage information and command all forces -- armed forces at all levels. the ground combat vehicle will accommodate an infantry squad and balance mobility and survivability. the more mobile survival network integrated technical vehicle which both myself and general amos believe is necessary given the last 10 years of fighting and what future operations may entail. finally, we will continue efforts to give our squad superiority on the battlefield. the secretary and i will continue to assess and make adjustments to our budget strategy while addressing any potential risks incurred. i would like to leave you with one last thought --

sequestration is not in the best interest, in my opinion, of our national security. the impact of severe reductions would significantly decrease our readiness and detrimentally impact our modernization programs. thank you for the opportunity to speak here today. this committee affords our army of the most fighting force in the world. we cannot do without the support you give us. it is an honor to serve this great nation and stand beside the dedicated professionals of our army. the strait of our nation is our army. the strength of our army is our soldiers. the strength of our soldiers are our families. this is what makes us army strong. thank you very much. >> general. >> last year we passed the deficit reduction act that took

a two-pronged approach to attack the huge deficit problem we have built over decades, making promises that would be difficult to keep, and spending money we had to borrow to spend the first prong -- to spend. the first prong was the money that came out of discretionary spending. there was a call after the last election that everything should be on the table. i understand that defense with a big target. i have repeatedly said if we cannot find some savings within a budget of $600 billion, shame on us. i think you have done a great job on that, beginning with $100

billion of efficiencies then the $78 billion and what we find out is $487 billion. the second part of that, we assigned the super committee to come up with savings, hopefully out of the entitlement programs because if we do not adjust the entitlement programs, if we eliminate the total discretionary budget, we still run a deficit of about $500 billion per year. it could wipe out the discretionary budget and not solve the problem, not really even attack the real problem. you have done a great job working for months on coming up with the strategies and using the money that you have remaining after these cuts to

get us through this problem. the second part -- the second prong of that attacked, when the super committee was unable to perform its work, is known as sequestration. that will be another $1.20 trillion that takes effect next jan. it burst. half of that comes out of defense. defense only accounts for 20% of our budget. 50% of the savings came out of defense. another 50% of the savings is expected to come out of defense. we can look out 10 years and be talking about $100 billion per year cuts on defense out of one -- out of what had been projected in previous budgets. to me, the most pressing need right now is we need to fix the

sequestration. if we allow that to move forward and hit us next january 1 the way it is currently drafted -- across the board cuts of 8% or 10% depending on if personnel are taken out of the equation -- thinking of all of the multiple contracts -- i do not know how many contracts you have out, but i am sure it is in the hundreds if not thousands that will have to be rewritten, renegotiated. i just see total chaos on january 1 of next year if this has not been fixed. i would like to ask you general, what you are doing what you are contemplating doing, what planning you may be doing to prepare for the problem

that may confront us if we do not address this issue before next january 1. what will you be doing? >> mr. chairman, first we will continue to wait for guidance from the secretary defense in order to move forward on any specific planning for sequestration. as we think to the potential that this could have, what i would tell you is it would result in us having batuquto fundamentally look at how we do business. the reductions that would be required on our active and reserve components would be significant. our readiness profiles would be affected. how we would be able to sustain readiness so we would avoid --

it would be critical as we move forward. finally, it would significantly delay any modernization efforts that could keep us from providing what we believe is necessary for a properly modernized force. >> mr. chairman we are not doing any hard planning. that would probably happen later in the summer. if the army receives an apportioned share among the services of that cut, it would be about 26%. i think that is a best case scenario for us. that is $134 billion. to take that additional cut, as the chief said, would leave virtually no activity the army undertakes untouched. you mentioned contracts.

the army has opened contracts totaling 96,000 in number at the moment. not all of those would be affected, but a number of them would. in some cases, we would have to pay close out cost of those contracts. what i worry about -- what do our industrial base interest do the further we get into the year? they have to plan. some have shareholders. the uncertainty, i think, is something that the sooner it can be cleared up, the better it will be. >> thank you very much. mr. smith. >> thank you, mr. chairman. i share your concerns about sequestration. i think it is imperative that we avoid it for many of the reasons that have been stated.

there are three basic pieces when trying to deal with the deficit. mandatory spending, discretionary spending, and all the money that comes in -- the revenue. in all these areas, we see spending go up significantly and we have seen revenue godown significantly. over 30%. in large part because of the sheer number of tax cuts we have passed in the last 10 years and the ups and downs of the economy. all three of those pieces have to be on the table. the budget control act only dealt with one. we hope the super committee will figure out the other two which did not happen. the overall problem is the depth of denial in this country, not just in this town, about where the deficit is at and what will be required to respond to it is unprecedented.

every person or elected officials has their area of the budget they care about. they will fight to the death to defend it. the deficit is a problem, but deal with it someplace else. that is why we need a comprehensive approach that looks at revenue, mandatory spending and discretionary spending. it really is not happening. all we are hearing is defend our portion of the budget. defense is our thing. we defend it. some people say here is what we ought to cut from mandatory spending. a few others say here is what we need to raise in taxes to make sure we do not need to do the cuts necessary. if we want to protect defense from sequestration or even from the size of the cuts it is basing, we have to put specific proposals on the table raise revenues or make cuts to spending. until we do that, we will be vulnerable.

we have a bill coming up in a half hour that will add more money to the problem. we are going in the wrong direction. i share the chairman's concern about the impact that will have. it is our responsibility to not just complain about the cuts that are happening to defense but to look at the other two pieces of the equation -- the revenue and mandatory spending -- to make sure the discretionary spending is productive. that is our problem, not yours. if we want to protect defense we better change that. i want to ask about some of the sexual assault language that has been in previous legislation and your efforts within the army to deal with what is a fairly sizable problem. many are concerned about how sexual assault charges are handled. we have pass some legislation to try to better address that

issue. there are some proposals that go further. the biggest proposal is the idea of taking sexual assault outside the normal chain of command in terms of charging a. there are deep concerns within the military about that. tell us about the progress that is being made with some of the changes we have done and explain your concerns about going outside the chain of command for sexual assault cases. to avoid the second one, we have to have confidence the first one is making a difference. >> we appreciate the leadership many members on this committee have brought to the issue. i want to assure you having worked on this matter as subcommittee chairman and ranking member, there are few things that are more in contrast to the basic army values and two things that happen within our ranks that we are more concerned about and we are not trying

every day to become better. our response is, as you know, mr. smith we've taken a holistic approach to this from both the counseling encouraging victims to come forward to report, to provide them assurance necessary that they will not be victimized again coming forward and talking about these things. it will not be a career-killer for them. beyond that, we are trying to bring sensitivity to our youngest soldiers and responsibility to our leaders. we have instituted constant training programs from the basic level training courses through the drill sergeant course to basic office and leader course. we have instituted training programs into the jag schools so army attorneys understand the special way in which these

matters need to be handled socially as well as legally. we have greatly increased the resources in necessary to provide lab examiners. we have put special investigators. we have hired six highly qualified experts on sexually -- on sexual assault to guide us in terms of program development but also to help our prosecutors and investigators make sure they are up on the latest developments. we have normal training teams that go to every unit in the army conducting specialized training for our investigators as well. if you look at the data they are still too high and unacceptable, but we do have some glimmer of progress. our rate is 33%.

that is abysmal. we referred some 60% of all cases of rape and assault brought to our officials before a court-martial. our conviction rates have gone as high as 78%. not everyone of those data points has a similar data. within the civilian sector, but we are doing better, in some cases better than the civilian sector. better is not good enough. we have to get this to where one is one too many. that is our objective. >> it is not just a problem in the military. i hope we all understand that. >> i would just like to add that as i mentioned in my opening statement there is institutional and operational capabilities we have to cover. the one thing i really want to focus on is the cultural and

institutional issues we have. we get soldiers from all different parts of society, all different parts of the country. it is important for us to ensure that we foster a climate of trust and respect that we expect within our own institution. that will start earlier on. we now have courses when you go through basic training, when you go to your first officer courses, when you are in officer development training -- it will be inculcated in everything we do. our female population plays an incredible role in our army. we have to ensure they have the embar but they can operate in properly. we take this very seriously. i would just make a short comment about the important -- uniform code of military justice. it provides us incredible flexibility to operate across a wide range of sexual assault

sexual harassment initiatives that we do not want to lose. it is important that we continue to have discussions about this. with hard work, we will ensure the chain of command is able to use the administrative and ucmj authorities they have to help us enforce this. >> thank you, mr. chairman. >> our chairman mentioned the lessons learned from the task force smith. one of the reasons the army could not get enough forces and equipment was because of the limited number of transport aircraft. we are retiring some c-130s. you have signed a memorandum of understanding with the air force, but when it comes -- are

you can bet the air force will be able to meet all of your needs? if they do not, will the army asked to increase its use rate for other assets such as the helicopter? the air force was never enthusiastic about c-27j. the pentagon assigned the plane to the air force and asked them to be at the beck and call of the army when the army needed that support. i did not think it was a description for a really affected military. -- effected military. because of limitations in air strips in afghanistan we do not have enough c-27js. some say you are flying the blades of the 47 to meet demand. if we are involved in conflicts like afghanistan, will the air force be able to meet your needs?

>> thank you, sir. you are touching on -- we are confident in c-17s that will help us to move our forces strategically around the globe. it is important that we have the capability to move in peter. we conducted the test for the c- 130. we found it to be a successful program where we control the loads. it enabled us to get what we needed on time. that is the basis of the memorandum of understanding that has been signed between us and the air force based on the test

we conducted in iraq. afghanistan has very difficult terrain, as you said. it is a very specific case. we have had to fly a specific amount of ch47 hours in order to provide support to our bases but we also have done other things like -- other things like air drops. we invested in our ability to more accurately airdrop supplies to remote locations which has helped us solve some of these issues. the c27 as served very well in afghanistan. they have provided a capability that has been helpful. i would just say that i think with choices that have to be made, one of the choice is the air force made was to reduce that capability. we are trying to increase the increase -- the use of seat c-

130f the c-130. >> another area of concern for me is lightening the load on the soldier. in your opinion, do we need to shift the balance in the operational requirements process and put more efficent -- if this is on soldier focused? how can we help you to speed up the at process of rate reduction for soldiers -- that is unacceptable, is it not? >> we have made great progress in this area, in my opinion. it is about what the squad can carry together in a load. we have made significant improvements in reducing the weight of what they were carrying we find we are carrying

more things. it gives them the capability to have more and provide more capability in the squad as it moves forward. we have to work through and understand what we think eight squad need for it to be successful. as we lighten the load, we have added more things to the squad. we have to invest in deciding what are the optimal loads we have and continue to work with the technology to reduce body armor. we have made good progress, but we want to continue to look at decreasing the wake of our body armor while increasing the amount of protection. >> thank you, very much. >> gentleman thank you for being here this morning. i know we talked about the impact on the industrial base. i am particularly concerned about the ground-combat vehicle. this is a basic staple of the

ability of the army to fight. the current plan, according to the budget submitted calls for a total shutdown of the production lines for three-four years, which starts in fy14. i just want to get it on the record -- how can the army be sure that the production line in particular, the skilled workers -- in a recent visit to my colleague's district that is a very real concern on behalf of industry that the skilled workers are not going to be there after such a when the shutdown. after going cold pork three-four years, -- membcold for 3-4

years, how will the capacity support itself? >> if it is something we are focused on. what we have attempted to do this morning is a two-pronged approach. first of all, the department of defense is leading a sector by sector, tear by tier announcement -- to try to assess the vulnerabilities and to figure a path forward for all of these services jointly as to how we might lessen that challenge and burden on the individual location. the army itself is doing an industrial base line. the folks in the acquisition committee are looking at those things. for example, you mentioned the abrams shutdown in ohio. what we are doing with the glvs

land systems the contractor on site is trying to ensure that their foreign military sales which they are beginning to line up and which the department is attempting to set assist them, provides a core ability for particularly a highly skilled engineer positions to retain employment until we begin our recapitalization program in 2017. this is something that is of great interest. it is something we are looking at very hard. there are no guarantees, but whether it is a public partner or other kind of approach, as far as we are concerned, we are willing to pursue any reasonable path to ensure those critical