companies because frankly, it is too expensive. could that program be cut back? could it be made more economical? absolutely. the idea of the affordable care act is to give the public something more comfortable -- comparable to what congress receives. host: the executive director of families usa polisand see scholar focusing on retirement issues for the americanthank yog with us. >> thank you. >> tomorrow, "washington journal" we look at the implications from a recent supreme court decision striking down a ban on political money in local elections. christopher wilson discusses the president of election in mexico and what it means for the u.s. alan fisher talks about how al jazeera's network covers

american news around the world. "washington journal" live at 7:00 a.m. eastern on c-span. leon panetta said the military plans to deploy units to strengthen security capabilities around the world. he delivered remarks on a new defense strategy that focuses on a more collaborative approach to meet security challenges in the future. he also spoke about the need for the department to invest in cyber security and space. this is a little under one hour. >> we welcome me care for a very special presentation. -- you here for a very special presentation. it is my pleasure to welcome the chairman of the board of the institute of peace, robert west. [applause]

>> thank you. ladies and gentlemen, i am chairman of the board of directors of the institute of peace. on behalf of the vice chairman and the members of the board, good evening. welcome. this is the fifth lecture in as many years. we are delighted to welcome you to the george shultz great hall. it is the headquarters of the institute of peace. this building symbolizes our belief that peace is the soaring hopes of humanity. it is located on the national mall by the monuments to our great presidents as well as a war memorial to those to sacrifice themselves to protect this nation. it is a statement of how we want to see ourselves in the world. and the world to see us. this building was achieved their a public-private partnership.

congress was supportive as the private sector. one of the most generous was lockheed martin which is help support thas well. private citizens have also contributed effort and funds appeared tonight speaker was a tireless leader to honor madeleine albright. we are deeply grateful for this assistance. this was established to recognize the great figure in the conduct of the world. he was present at the creation of a new national security structure to confront the rising threat of communism as well as one of the most imaginative and effective policies ever created in the u.s. or elsewhere, the marshall plan for the reconstruction era. in 2012 the old world is over.

we confront different challenges that we did in medina dean acheson's day. there is an expanded international community of significant new players. the institute of peace represents an idea of profound importance. this country must found non- violent ways to prevent and manage international conflict and develop capabilities to reconstruct nations after war. our job is to help find practical solutions for a dangerous world. this is exactly what we are doing with our partners in the military and diplomatic community as well as non- government organizations. on any given day, an average of 1/3 ip's are deployed around the world in challenging places as

afghanistan, pakistan, yemen, libya, sudan, and syria. make no mistake. peace is a tough business. the contributions of these people to u.s. international security should be acknowledged. in an era of lowered resources and battle fatigue, we are meeting our mandated mission of protecting american values and interests as we save money and lives on the ground. i want to salute the men and women of the united states institute of peace and their partners in the military's civilian services who go in harm's way for a safer world. the lecture is seeks to recognize not only those new solutions but also the men and women actually irresponsible for implementing the solutions -- responsible for implementing the solutions. the lectures come from both

sides of the aisle of pennsylvania avenue. they are weight bearing people. they have no choice but to decide and act. they bear a tremendous response ability. tonight speaker continue that tradition. i will turn the program over to dick sullivan who will introduce our speaker. [applause] >> it really is a special honor to have secretary panetta with us this evening. he is a unique and distinguished american who gives lesser to the lecture series. he is a supporter of the institute of peace and are secretary of defense.

the secretary is a private citizen who is also a supporter of our permanent headquarters project. this facility is a monument to a national commitment to build a more peaceful world. burdened as we have been this past decade by the wars in iraq and afghanistan, it is important to remember the promotion of peace is a national purpose of america's engagement with the world. peace building requires well- trained and committed professionals. it demands dedicated and risky work. it requires partnerships. it requires the work of the institute of peace. before introducing secretary panetta, let me say a few things about the institute origen's, our work, and our partnership with the defense community. the need for "a proper piece

establishment -- peace establishment" was envisioned as early as 1783. ultimately, it should two centuries and the vietnam war to the congress to a body washington's vision in the institute of peace which was legislated into life in 1984, one year over two centuries. one of the unanticipated aspect of the growth is the active contribution that we now may to our country's daschle security. our work today -- national security. our work today runs the full spectrum of what we do today and the skills of conflict management to collaboration between civilian ngo's and military professionals as they prepare for their deployment on

the ground and reconstruction programs in zones of conflicts around the world. the activities on the ground in iraq and afghanistan over the past decade have enabled us to build strong partnerships the route the military. among the ranks, the battalion in command staff and with leaders such as generous odierno. and rod they make special requests of the in situ, taking advantage of our unique standing as an organization, at the center of innovation in matters of conflict management. we are asked to undertake important policy assessment on issues such as reforming the united nations, preventing genocidal violence, and

reviewing the quadrennial defense review process. the iraq study group was another notable institute project. citizen panetta was a distinguished member of the group before he returned to public service. one of our most recent contributions has been collaboration with the u.s. army's peacekeeping instability institute. it compiled and published the first ever army field manual on stabilization and reconstruction work, which is a how-to guide for the military and civilian businesses who are rebuilding countries that have been ravaged by war. the world of the 21st century prevent dramatically new challenges to our national security. certainly we compare with the challenges we face in the

century now passed. that is why i believe the most important work of the institute of peace is yet to come. in the 28 years since the institute was created, our mission has expanded. the role of the united states as a world leader has been a dramatically transform. the contributions are ever more relevant as a partner with agencies with our government, other countries, a non- governmental organizations, and with the private sector in building the community efforts for conflict management. today we deal with a burden with the challenges of nuclear puller information, a terrorism, of failed states, ethnic and religious conflicts, and the instabilities of economic globalization. the lecture series provide a podium for the most important

national leaders. there are few officials today you have secretary panetta's exceptional range of experiences. 16 years in congress were followed by service in the executive branch as director of the office of management. president clinton's chief of staff and subsequently president obama's director of the cia and now secretary of defense. his public contributions extend well beyond the halls of government appeared before he arrived at the cia, he and his wife directed the panetta institute for public policy based at california state university. it seeks to instill the values

of public service. of all of his public service it is too much to say that the highlight of his career had been his contributions to the iraq said the group and his support for the construction of this permanent headquarters for the institute of peace. yet every day as i come to work and see from my office window, the halloa granted the national cemetery, i see the roof of the pentagon, enabling again who is watching us over there from his memorial. this dramatic buildings and a special location make us ever aware of the challenge and the opportunity and responsibility for us to better fulfil our congressional mandate of being

the united states the world leader in peacemaking. thank you for giving us your time and wisdom. please join me in welcoming the 23rd secretary of defense. [applause] >>thank you, dick, for that kind introduction, and thank you for the invitation to deliver the fifth dean acheson lecture. dick, let me start by commending you on your two decades of leadership here at the u.s. institute of peace. i also want to wish you the very best as you prepare to step down after a long and distinguished tenure here.

don't get too comfortable in retirement -- that comes from somebody who knows what the hell i'm talking about. i am proud to have served in the house of representatives when we passed the bill that established this institute back in 1984. under your leadership, this institute has transformed itself from a research center into an organization that provides invaluable expertise to prevent, to mitigate, and to manage conflict throughout the world, deploying staff to iraq, afghanistan, libya and other conflict zones.

and that is really what was envisioned when we were working on the legislation at the time -- not to just have a research facility, but to have a facility that would actively engage in the effort to preserve piece. i did have the honor of serving on the iraq study group which was indeed supported and staffed by the u.s. institute of peace. it was chaired by former secretary of state jim baker and former congressman lee hamilton. and i truly believe the report of the iraq study group made an important contribution to the debate and the strategy that ultimately brought that war to a responsible end. this institute's work has saved lives, and enhanced our national security. in doing so, it really has stayed true to the spirit of the man whose legacy we celebrate tonight, dean acheson.

the historian arthur schlesinger once observed that "in a city of gray and anonymous men, dean acheson stood out like a noble monument from another and more vivid era." indeed, sixty years after serving as secretary of state, and more than forty years after his death, acheson's unique blend of strategic brilliance and "personal bravura" are still well remembered in this town. having just enjoyed the hospitality of your cocktail reception, i'm reminded of the time when a newly elected

president kennedy paid a call on acheson at his georgetown home. acheson offered him a martini, but kennedy declined and asked for tea instead. that deeply offended acheson. after all, according to a friend, "he never trusted a man who wouldn't have a stiff drink with him." i know i would have been his very dear friend. in fact, i learned that acheson and i share more than a love of a stiff drink. we both rose to prominence in the executive branch when we were both relatively young. and we were both fired from our

jobs. acheson was fired from treasury by fdr in 1933, and i was fired from the office for civil rights by president nixon in 1970. in both our cases, we first heard about it from the press. acheson was eventually rehired by roosevelt at the beginning of his third term. i don't think i was ever in danger of being rehired by president nixon, and i made the wise decision to return to california. the nation was deeply fortunate to have the service of dean acheson.

there is perhaps no span of time in american history where the country faced more international turmoil, uncertainty and conflict than the decade during which dean acheson served in the state department. it began just months before pearl harbor in 1941 and extended through the truman administration. despite our victory in world war ii, when acheson became secretary of state in 1949, the global security landscape was ominous. stalin was at the height of his power, western europe lay in ruins, and we faced a crisis over the soviet blockade of berlin. within months, the soviet union would test its first atomic bomb and north korea would invade

the south. challenges of these and others, acheson helped guide the truman administration to take some bold actions -- from the marshall plan and the berlin airlift to the intervention in korea -- actions that asserted america's strength, countered the soviet union, and helped lay the groundwork for our ultimate victory in the cold war. dean acheson was a leading proponent for bolstering and asserting america's military might. but acheson also strongly believed that america should not seek to shoulder the burden and costs for global security alone.

instead, he understood that a key part of a strong defense was to build the security capacity of allies and partners. that legacy is deeply relevant to the argument i want to make tonight. in order to advance security and prosperity in the 21st century, we must maintain and even enhance our military strength. but i also believe that the united states must place even greater strategic emphasis on building the security capabilities of others. we must be bold enough to adopt a more collaborative approach to security both within the united states government and among allies, partners, and

multilateral organizations. from western europe and nato to south korea, from the truman doctrine to the nixon doctrine, working with key allies and regional partners to build their military and security forces became a major component of u.s. national security strategy after world war ii. this approach has endured long beyond the cold war, and for the united states military it has gained new -- and appropriate -- importance as a mission in the decade since 9/11. in 2006 -- the same year as the

iraq study group convened -- the department of defense's "quadrennial defense review" recognized the critical importance of having the authorities and resources to perform what it called "building partnership capacity." since then, as the united states helped turn the tide in iraq and afghanistan, confronted terrorism in the fata, in yemen, in the horn of africa and the philippines, and participated in the nato operation in libya that helped bring down qadhafi, the approach of working with and through others has only grown in importance to our mission of defending our country. in particular, the task of training, advising, and partnering with foreign military and security forces has moved

from the periphery to become a critical skill set across our armed forces. it is, in many ways, the approach that this institute has promoted for nearly three decades. standing up the iraqi security forces was central to our ability to bring the war to a responsible conclusion last december. achieving our goal in afghanistan similarly depends on building an afghanistan that can secure and govern itself -- a reality that is now guiding the strategy that general allen is implementing on the ground as commander of the nato effort. as the war in afghanistan begins to wind down, the united states has an opportunity to begin to focus on other challenges and opportunities of the future. but as we do so, the united

states is grappling with a deficit and a debt problem that has led congress to require us to achieve significant savings -- nearly half a trillion dollars in savings over the next decade. unlike past defense drawdowns, and we have experienced those throughout the past, often times the threats the country was facing appeared to diminish.

but today, we still confront many challenges and many threats, the continuing threat of violent extremism -- even though we have done significant damage to al qaeda in pakistan, we continue to have terrorism in yemen, in somalia, in north africa, we confront the threat of weapons proliferation, we confront the threat of cyber intrusions, we continue to experience cyber attacks every day -- it is, without question, a battlefield of the future, we continue to see the destabilizing behavior of nations like iran and north korea, the rise of new powers across asia, and the dramatic changes that we've seen unfold across the middle east and north africa. these challenges, coupled with

the new fiscal reality, led us to reshape our priorities with a new defense strategy for the 21st century. it is a strategy that places a greater emphasis on building the capabilities of others to help meet the security challenges of the future, and to sustain a peaceful and cooperative international order. this strategy is built on five key elements, first, we know we are going to be smaller and leaner -- that's a reality -- but we must remain agile, flexible, quickly deployable, and on the cutting edge of technology. second, we must remain strong enough to confront aggression and defeat more than one enemy at a time.

if we face the threat of a land war in korea, we have to be able to deal with that at the same time that we deal with the possibility of the closure of the strait of hormuz. and we feel we've maintained that capability. third, we will also continue to invest in the capabilities of the future. yes, we obviously have to meet our responsibility with regard to reducing the deficit burden. but at the same time we also need to invest -- invest in cyber, invest in unmanned systems, invest in space, invest in special operations forces, and invest in the ability to quickly mobilize and also the importance of maintaining our industrial base.

fourth, our new strategy prioritizes the asia-pacific region and the middle east. these are the areas with the most significant security challenges. in those regions, we will retain and even enhance our military presence, to ensure that we can project power and deter aggression. but we are also going to help more nations share the responsibilities and costs of providing security by investing in alliances and partnerships, as i explained at the shangri-la dialogue earlier this month. and lastly, we will maintain a presence elsewhere in the world, particularly in regions like europe, africa and latin

america. we must use our best skills and our assistance to build new alliances, new partnerships throughout the world by engaging in exercises, in training, in assistance and in innovative rotational deployments. the benefits of this emphasis on a partnered approach to security were apparent to me during a trip that i took to colombia in april. there, the united states has spent years training and equipping the military to take on the farc, a narco-trafficking terrorist organization.

not only has colombia made significant gains over the past few years against the farc, it is stepping up to help combat illicit trafficking in central america. colombia is now one of fourteen countries working cooperatively to disrupt narco-traffickers in central america. i also visited brazil and chile, and saw impressive demonstrations of their growing military capabilities -- capabilities that are enabling them to contribute to security in central america, africa and across the globe. what i saw in these countries reinforced a new reality.

in the past, the united states often assumed the primary role of defending others. we built permanent bases. we deployed large forces across the globe to fixed positions. we often assumed that others were not willing or capable of defending themselves. our new strategy recognizes that this is not the world we live in anymore. but implementing this new strategy will demand adjustments across the entire national security apparatus. tonight, let me outline a department-wide initiative -- "building partnerships in the 21st century." its fundamental purpose is to improve our security cooperation across three broad areas, first, by taking a strategic

approach to security cooperation and making sure that we have comprehensive and integrated capabilities in key regions in order to confront critical security challenges, second, ensuring the defense department continues to enhance the skill sets and capabilities that are needed to build and sustain partnerships, third, streamlining the department's internal processes to speed up and improve security cooperation programs -- and working with the department of state and congress to do the same. let me talk about the first point, which is a comprehensive and strategic approach to security cooperation i have urged the department to develop innovative approaches to meeting future security

challenges, approaches that take better advantage of the opportunities for partnership and help us to more effectively advance a common security vision for the future. to that end, i've directed all of the geographic combatant commanders to think and plan strategically when it comes to security cooperation, including all their regional activities -- from joint exercises, exchanges, and operations to more traditional forms of security assistance. during the cold war, u.s. partnership efforts were principally directed at countering a single adversary, the soviet union.

in the 21st century, we must build partnerships that enable us to better meet a wider range of challenges. to that end, i see us building networks that leverage our unique capabilities -- and the unique strengths of our allies and partners that share common interests -- to confront the critical challenges of the future. that means continuing to work with nations in the horn of africa, the middle east and asia to counter violent extremism. it means working with partners in the persian gulf to strengthen their ability to counter iran's destabilizing activities, and it means advancing collaborative efforts with israel to deploy systems like iron dome, which protects israeli citizens against the threat of rockets. it means investing in new capabilities with allies in northeast asia, such as missile defense, to counter north korea.

we will also work to strengthen the maritime security and humanitarian assistance capabilities of key partners in the indian ocean and in southeast asia. we will work with partner nations in the western hemisphere to tackle the challenge of illicit trafficking and response to natural disasters. and we will strengthen nato's capabilities in missile defense, meet our article 5 commitments, and ensure that we can conduct expeditionary operations with our european allies. and we must ensure that they can assume a greater burden of the responsibility when we do engage. these networks will be supported by innovative, small-footprint

deployments of u.s. forces and capabilities to key strategic locations around the globe -- from northern australia to singapore, from djibouti to rota. combined with our traditional forward presence and other capabilities, these deployments will enhance our ability to train and to operate with partners, and to respond to future crises. to succeed in these efforts, we have to coordinate even more closely with the department of state. my goal is for the department of state to have a leading role in crafting and conducting u.s. foreign policy, so that we can reaffirm and strengthen our strategic approach to defense partnerships.

but it is also clear that building partnership capacity is a key military mission for the future. a second area is to enhance dod's capabilities in this area. building strong partnerships around the world will require us to sustain and enhance american military strength. but all of the military services, and the department as a whole, also must adapt as partnering with foreign militaries becomes even more of a mainstay of the u.s. defense strategy. we have got to develop a "partnering culture." to that end, those security cooperation capabilities and skill sets once considered the exclusive province of the special operations community will need to be built up and retained across the force and

among civilians. in particular, it is critical that we invest in language training and in cultural expertise throughout the department. building the capacity of defense ministries and other institutions, which have not been a main focus of efforts, must become more prominent. we need to work collaboratively with state, usaid and non- governmental organizations to help partner countries so that they can modernize and reform in a way that contributes to regional security. the u.s. army's plan to align a

brigade combat team with each regional combatant command -- which will be rolled out next year with africa command -- is one example of the kind of approach that will boost our partnership capabilities and regional expertise. and more broadly, i want to see the military retain the hard-won capability to train and advise foreign security forces in support of stability operations like in iraq and afghanistan. but i also want us to become better at working with more capable security partners on our shared security interests -- particularly rising powers like brazil and india [that] can make significant and positive

contributions to global security and prosperity. and lastly, streamlining processes. to better partner with our more capable friends and allies requires that we make our security cooperation processes more efficient and more agile. as part of this effort, we are working with the state department to ensure that our new and most flexible security cooperation tools -- particularly the new global security contingency fund -- are used to their maximum advantage. these "dual key" programs -- which require approval by me and by secretary clinton -- have been a big step forward to create incentives for collaboration. but our security cooperation programs still rely on a patchwork of different authorities, different funding, different rules governing defense exports depend on processes that are truly cumbersome and were built during the cold war.

i strongly support efforts to achieve comprehensive reform in these areas through legislation. but i have also directed the department of defense's senior leadership team to streamline and strengthen those security cooperation procedures that are under our control, and that maximize our use of the highest priority and most effective programs. we have also made substantial progress in facilitating defense trade with a broad range of allies and partners -- an area i believe of critical importance to both our national security and the global economy.

as one indication, annual u.s. government foreign military sales have grown from an average of about $12 billion at the beginning of the last decade to an average of roughly $38 billion over the last three years. there has also been a tremendous growth in cooperative acquisition efforts with allies and partners, including the joint strike fighter and the nato alliance ground surveillance programs, and in u.s. industry's direct commercial sales of defense equipment and services abroad. defense trade is a promising avenue for deepening security cooperation with our most capable partner nations. our on-going work in reforming our export control system is a

critical part of fostering that cooperation. each transaction creates new opportunities for training, for exercises, for relationship building. it also supports our industrial base, with roughly one third of defense industry output supported by defense exports. this is important for american jobs and for our ability to invest in new defense capabilities for the future. india is one such country that would benefit from changes to our system. while in new delhi earlier this month i announced that my deputy, ash carter, will work with indian counterparts to streamline our respective bureaucratic processes to better enable defense trade. it is clear to me that there is more that can be done to facilitate defense cooperation, with our traditional allies and our new partners alike. we are working to make u.s. government decision-making simpler, faster and more

predictable for our partners. this means better anticipating their needs ahead of time, fast- tracking priority sales, and incorporating u.s. exportability requirements up front in the development process. a new special defense acquisition fund is allowing us to begin procuring long-lead, high demand items in anticipation of our partner requests. and we've also built expeditionary requirements generation teams that send acquisitions experts abroad to help our allies better define and better streamline their requests. and a proposed defense coalition repair fund will allow us to repair equipment in anticipation of partner requests. all these efforts are a priority for me, and for the

department of state. and i firmly believe that judicious sales or transfers of capabilities to responsible governments are vital in maintaining peace and deterring would-be aggressors. the security challenges of the future require us to partner, and the plan of action i've outlined will allow us to do so prudently -- by protecting the "crown jewels" of u.s. technology while putting in place the programs and capabilities and processes to build partnership in the 21st century.

but only some of this is within the control of the executive branch. congress too must also take action -- and we will work with them to do so. speaking of congress, the strategy i have outlined cannot succeed without their stable and consistent support. one of the greatest dangers to national security today is the partisan gridlock that too often fails to address the problems facing this nation. i came to washington over 40 years ago and in part of a different generation. when i first went to the senate as a legislative assistant,

there were bold leaders like senators mansfield, aiken, russell, javits, jackson, fulbright, dirksen and others. republicans and democrats who were willing to work together to meet our domestic and foreign challenges. even when i was a member of congress, i saw speaker tip o'neill and congressman bob michel work with senators bob dole and george mitchell to address budget, social security and foreign crises together. too often today, the nation's problems are held hostage to the unwillingness to find consensus and compromise.

and in the face of that gridlock, artificial devices like sequester are resorted to in order to force action. but in the absence of action -- in the absence of action sequester could very well threaten the very programs critical to our national security -- both defense and domestic. any new defense strategy is dependent on new and innovative deployments, on diplomacy and on assistance, and it must rest on a reliable political system prepared to make decisions on behalf of our national security. that is a critical ingredient to the success of the partnership strategy i just outlined. it is clear that even as we turn the page on a decade of war,

the international security environment will remain complex and threatening. but as we look at each challenge we face, it is clear that wehave many allies and partners who share an interest in helping advance a common security vision, and that we are more secure when they are more capable of helping us. nearly fifty years ago, and more

than a decade after he left government, dean acheson wrote an article called, and i quote, "the practice of partnership." in the aftermath of the cuban missile crisis, acheson argued for a revitalized military strategy to counter soviet expansionism. a key part of acheson's vision was for european allies to build up their conventional military forces, complemented by a strong u.s. force posture and nuclear deterrent. he saw a strengthened network of alliances as the key to security and prosperity in his time. what i described tonight are some of the broad outlines for what i've called building partnership in the 21st century. we must continue to map out a new path to build up the strength of our allies and partners around the globe, using both old and new tools. we must, and we will, remain the strongest military power on the face of the earth, but more than ever -- more than ever --

our strength depends on our ability to govern and to lead, and it depends on capable allies and partners willing to help shoulder the burden of global security. that is the key to preserving and protecting not just our national security but our democracy. thank you again for having me. god bless you and god bless the united states of america.

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] semester's secretary, is also much freer vision and your support of what the -- mr. secretary, thank you for your vision and our support of what the institute is all about. join me here. we have another unexpected presentation debate. this is a special day for the

secretary of defense. we are extremely pleased to wish him a happy birthday and all of you as you leave will have a taste of this a very attractive way to stick with the. happy birthday to you happy birthday to you happy birthday dear mr. secretary happy birthday to you [applause] >> thanks a hell of a lot. >> a dimon put all the candles we could have. -- we didn't put all the candles we could have. >> what do we do?

>> this week we are joined by henry waxman. he talks about the supreme court decision and what is next as republican leaders plan to repeal the unpopular bill. sequestration is set to begin in january 2013 and to take place over 10 years. a group of budget analyst spoke

at the possible of that. of this is about one hour. >> i have got a great to appear discussing things. we will have a break and then peter will convene. to our left, ron haskins. many will know about his role in welfare reform when he worked in capitol hill. he's always been balancing for fiscal restraint in care with his concern for our nation's economic future. that continues to be the theme. to my right is david warren. he is one of the most dynamic defense companies today. he has been good enough to join us on previous events related to our ongoing working group on the future of the industrial

base. his perspective is informative. two works for a company that has been innovative in trying to protect our country with more economic things. he is a voice that is willing to consider various kinds of fiscal restraint. i will let him speak for himself. he will put it in perspective. finally to my right is steve bell. \ for those of you who are new, you know him either way. he is a man who is just one of those powerful inside washington people that we all read about. they really exist not just in tom clancy novels but in real life. the center has been one of the most effective american statesman in the future for many decades. we had some success of that endeavor backer when they were

in -- back when they were in charge. he is also been central in the new bipartisan report. i am going to begin with him and then just work this way. everyone will get a the opening thoughts. then we will closgo to some discussion. presentation talking about the broad challenges of how the defense department would be affected by possible sequestration scenarios. we all know that sequestration would be about $500 billion in additional cuts over the next decade, on top of additional reductions in spending, and nonetheless it is worth putting this in context. i want you to summarize the findings, if you could, and what

you were most concerned about in terms of sequestration. for better or for ill. not everyone here is as adamantly opposed to the scenario as anyone else. i will let steve speak for himself and highlight what the center report indicated about this potential scenario. >> it is always a pleasure to be here. in 1985, we had something called the [unintelligible] act. mr. hoglin was my deputy. they told us to write that language. that was the first time that sequester was, as far as i know,

a legal term in the budget lexicon. i do not think that congress needs this coming down because they cannot do their work. they have been in 11 campaigns, in addition to doing work on budgets. we elect them for a reason. we elect them to vote. we elect them to get things done. when someone is willing to say publicly that we cannot do this, we need something to force us to do this or do it for us, you know the something really important has gone wrong. our report is really simple. the white paper says three things. it is stupid fiscal policy.

no. 2, it is stupid defense policy. why? if it goes through on defense and non-defense, it will not change anything except for two years. with 100% of those cuts taken from the smallest part of the budget, about 35%. the largest growing part is unattached. economic policy, i had the misfortune of spending 10 years on wall street. i cannot imagine a more fragile time with more serious subjects.

the fact is that starting this august with the unions, they will start talking about notices. as someone who collaborated with us said, the sequester has already started. i think this is a silly thing. what possibly 1 million lost jobs and civilian and on civilian areas over two years, people have bigger numbers, but the fact is that starting this august, when the unions and the companies start talking about war notices, people are going to be scared. and the economy will continue to slow down. as someone who collaborated on a report said, a sequester has already started. that is why cbo reduced its

growth estimate for the second half of this year. it is why the fed board of governors came out with its unusual -- can you imagine anything dimer then taking all programs regardless of merit and just cutting across the board by 15% over the last three quarters? so you have a program seven years old and you are finding it out. another program is two years into its 10-year course, and you are going to cut both by 50%? that is not good defense policy and i think it was unanimous in our group, and we did have a variety of people, that there are lots of ways to cut defense. this is the worst. >> a very provocative and helpful opening. david, let me turn the question to you. i know you are not unafraid to consider defense budget changes, even reductions. how'd you situate sequestration

within the context of overall defense budget reduction? is it doable? can you just speak to the general subject of where we are in the defense budget reduction process and what is that seek -- what the sequestration policy means to you? >> first of all, thanks for having us back. we are always pleasantly surprised to get invited back to the party. i will beg your forgiveness in advance that if i say something crazy, it is because i am from california. it is difficult for me to begin to engage in this thinking about this because it just seems so crazy when you get into the details. i will try to parse out some of the craziness from some of the underlying issues that are involved in this conversation. first of all, on sequestration, we will add our voices to those same as currently proposed it will have a very bad impact across the board.

it is our hope that something rational will happen. as an engineer, my mind immediately jumps to the classic game of chicken problem where you are driving down the road and you find yourself in a game of chicken, and the correct strategy is for you to very visibly ripped your steering wheel of the column and be seen to throw it out the window. that is clearly the approach that a part of defense is taking when you are going around saying -- going around town saying we are not even going to think about this. you put yourself in a position where to rational parties are unable to avoid an inevitable crash. if it is, bad things are going to happen, certainly. we do think there are some interesting and more logical elements of this conversation to be discussed. implicit in a lot of people's

responses to the sequestration question is this underlying belief that lower defense budgets inevitably lead to less and capabilities and a diminished industrial base. i have spoken at this group before about our thoughts on both of these points, and in summary, we don't necessarily think that either -- in this environment it would be silly for us not to acknowledge that the government needs to figure out how to spend less money on these things. the events will inevitably suffer somehow, even if it is just the 10% on top of 8% that might already discussed. if we care about these outcomes, we should be talking about those questions as well, not just the insanity of the proposed approach to sequestration. the underlying meaning that is prevalent in the valley these days those one layer deeper to ask the question, is there something more fundamental that we are overlooking right now? absent economic growth, arguing about whether we spend 3% or 4%

of gdp misses the point. the pie is getting smaller and 1% does not matter. the rate of innovation in this country is that even more fundamental level. there is an opportunity here for some interesting discussion as well. >> if you could frame for us why people in this group are a defense specialist, first and foremost. we often talk about sequestration as the guillotine hanging over the head of the department of defense. i wondered if you could -- also as an economist who looks at macroeconomic issues. you could talk about sequestration from your vantage point. there has been discussion at the domestic side actually grew too much in the last 10 years. maybe this is the wrong way to

do it or the right way to do it. help us begin to frame that conversation. >> led the first observe that i have never been on a panel at brookings or anywhere else where steve bell was on the far right. >> from the audience perspective, he is on the far left, which i think might be even worse. [laughter] the biggest problem of sequestration is it is way too small. the problem with the comments the senator made is, we are going to have to do six, eight times as much as we have already done, and if we do it in bites like this, especially for a cut defense contractors, and if you start with the fence, to me, that is the worst thing to do because defense is very powerful -- if you start with defense. we ought to have across-the- board cuts.

we ought to go deep, as steve and his colleagues have been saying for years, so the whole approach is just flawed. the second thing is, across- the-board cuts are truly insane. that is really a crazy way to do things. i spent a lot of my time studying the obama administration's emphasis in the scholarly world that what we pay more attention -- as the president said several times, we ought to cut things that do not work and spend more money on things that do work. so across-the-board cuts is absolutely the opposite of that, so that is a crazy thing to do. we made a promise, and i would slightly disagree -- i do agree

that we ought to make decisions and we elect people to make wise decisions and so forth, but if we get sequestration, that will be a good down payment. so there is some progress, so let's give a little credit, even though they want someone else's fingerprints on a rather than the committee. it still is a move in the right direction. all things considered, it is a lousy way to do things, but we have to do it, and we have to do a lot more of it. there will be big political repercussions either way. if we continue to kick the can down the road, then there will be repercussions down the road. if we take big steps now, there will be repercussions now. the worst thing about the way we are doing it now is we are going to take a big hit on public dissatisfaction, defense contractors, and so forth. and we will have to come back and do it again and come back and do it again. we need a big agreement, and to

the extent that it takes any of the steam that of a big agreement is a mistake. >> in the interest of having a full discussion today, where there are obviously some people adamantly against sequestration, let me make sure i hurt your right. it sounds like you the big problem is we have not gone far enough. it does not sound like you are unduly worried about cuts in the discretionary budget, either defense or non-defense. it sounds like you are concerned about the budget deficit is so great that it from its whatever ugly issue might forecast in the way the sequestration ax is going to hit. >> i completely agree with that. i think we do need defense cuts. we need cut in domestic discretionary, and you were right, that have been increasing quite rapidly. we can find ways to do it that would be ok, but everybody knows we are not going to make serious progress until we do

something about revenues and entitlement. it relieves the pressure a little bit, but that is nothing compared to what we could get. so we need to reform entitlements. we need more revenues. republicans are going to have to come to the table. they cannot continue to avoid it. so yes, i am guilty as charged. >> we don't want to be preaching just a single message. so let me press the same point with david. you summarize the different types of cuts we are seeing, first of all in it were spending.

more than $100 billion a year. it is headed down to 50 in the next couple of years. that is more than 100 billion out of the annual defense budgets. then there is about a $50 billion chop coming from the first tranche of the budget control act. now there is this additional roughly $500 bill in cuts that would happen to the part of defense under sequestration. how much of that can you live with? is it not so much the numbers but the time sequencing andy blind weight they apply to all accounts? at what point, if you could rewrite sequestration, how would you do it? >> is that one question? >> yes. perhaps you could focus on the last part. >> implicit in that statement are those two points of started

with. there is an assumption that less money being spent on defense implies less capability and a diminished industrial base. certainly if we just do what we are doing right now and spend less money on it, i think it reasonably follows that we will have less capability and a less responsive industrial base. the point i have tried consistently to make is that there are perhaps opportunities now to look at less spending, to create a different pattern of spending, and i often get chided by my peers in the valley, but somehow we are living in this capitalism exclusion bubble, that somehow when there is less money to spend, it does not immediately mean that capitalism will respond to look for market-based

solutions to those new challenges. it does not follow to me that we have to pay more to get less, or pay less to get less, perhaps. i believe that more innovative spending within the government, more opportunities to look for ways to open of government programs of record as one possible example. just recently have seen that this works like in the area of space launch. the market will find a way. that is largely what this country is premised upon. what will the impact on the industrial base be? if you believe that the total depends spending is being allocated across the markets, then spending less will be less spending across that base. is not a contentious point to

make that there are inefficiencies in the allocation of the defense spending. if you can cut that without cutting into the muscle is perhaps where the debate is occurring. my experience shows it is possible to do more for less in the government and not the way the government is traditionally chided for doing less for more or the same for more. >> you made very punchy, eloquent statements earlier suggesting the dangers of sequestration. what we are looking for from our colleagues on the panel is a little stridency in their

objection to at least some aspects of sequestration. what bothers you most about sequestration? you already mentioned the way it would affect programs, but if you could rewrite sequestration, how would you do it? how much cutting is ok and how much do we need to mitigated to have a good bill? >> that think we all know from laron over here that the defense budget is suffering from the same thing several budget suffer from. payment for personnel, benefits for personnel, retirement, retiree health benefits consume larger and larger proportions of the budget. when someone says to you, you spent 4% of the budget as a percentage of gdp on defense, it is not relevant. in 1975, we did not have an all volunteer army. we did not have to give people 20 and out. i have a 100% disabled brother

from the war and a 100% disabled step father, so our family has always been in the military. i asked my stepfather would you be willing to pay $20 a month more for health care for life. he said sure, $20 a month. we have a federal budget that is being eaten up by medicare, medicaid, and retirement programs. we have a defense budget that is being eaten up. if you look at the lines across, this is what we spend for personnel and this is what we spend for everything else. we spend more for personnel and benefits than we do on all the rest of the stuff we do, including the stuff we spent overseas in war. that is the real problem that people do not want to wrestle

with. when we started this work, the general said you know the concern is building -- the concern in this building, the vfw. those are the people that are going to be upset. the people who get the benefits now and were promised to get benefits forever, and we propose a new benefit change. you really have to look at the budget in little discrete pieces and say what are you going to do about the hollowing out that is already occurring because of all the money we have to spend on benefit. i think it is a little more complicated subject, and not one that sequester is going to solve. it is going to take a couple of years to solve, when people stand up and say we are spending too much money on benefits. >> a quick point here, why are

we here and have sequestration? think of the logic of it. 30 or 40 years ago we spent something like to keep up% of our budget on programs we now appropriate. now we are down to something like 35%. so there has been a huge shift in federal spending to the entire month. and we are not willing to increase revenues are do anything about entitlements. so we screw defense and come up with some immediate thing like sequestration. to focus on this one area because politicians are reluctant to tackle the heart of the problem, it just does not make sense. meetings like this and comments like the senator made show that we are a wow -- we are where are that we could be jeopardized in our national security. americans are listening that. it is supposed to put so much pain on people that they will

do the right thing, because otherwise they will not do the right thing. we have to convince republicans and democrats that we need more revenues and we need to change entitlements. >> sve, if i understood you write, it sounded like you were saying that you might or might not be able to live with the additional $500 billion in tenure defense cuts as long as you could have some control over where they were applied and over what period of time they were phased in. is that a fair summary? >> it is. you go down one level and see where the money is really being spent. please, no one take this as a

call for reinstatement of the draft. you take a look at where the money is being spent. you look at someone who had been in for 20 years, gets out at 39, and he lives to 79. it's 40 years plus care for life. have to ask yourself, can we afford, even for policemen, firemen, those kind of important people, can we afford to do this while we are not getting in ambulances or new fire trucks or the most modern i.t. equipment. i really believe the money that needs to be found in defense, by and large, is money we are unwilling to touch because it benefits people to whom we have

made promises, and which promises we probably cannot keep in their entirety, and nobody is willing to say that. >> i will just make one comment myself. i am the token hawk on this panel. there have been a lot of very rich and provocative statements and we are going to be living with the need to do a lot of the things you have been talking about. my impression is there is not enough savings even any ideas you talked about to realistically get that additional $500 billion out of the department of the fence budget. i think it cuts into the muscle and make it unrealistic that could rebalance and stay strong in the asia-pacific region. the obama administration is hoping for efficiencies and reforms that may or may not generate the savings they are planning on. we would do very well to add another 100 billion over the

next 10 years. for me, the arithmetic does not add up. by this wanted to add that to the mix. the same ground rules that before. please identify yourself and pose a question. you can choose to whom you are directing the question. >> thanks to the panel because this is a very stimulating and provocative session. i think you guys are wildly optimistic. i think it will be a lot worse case. the world economic situation is dicey at best. if the euro collapses, the pressure on us will be huge. you have a political system that is broken. think there is very little chance of anyone -- anything rational being done.

worse than that, no matter who wins the election, you'll probably have a real change in the leadership so will be five or six months or more after the election until you have people in position to actually talk about reprogramming. you are absolutely right that we have to make far greater cuts to our overall spending and there probably will not be any agreement between the differences over taxation and spending. give me a couple of big ideas how you deal with the system that is broken. we have to accommodate by cutting trillions of dollars in a sensible way, and who do we get to lead the charge? mr. obama is not going to do that unless he is reelected, and maybe not then, and mr. romney is not going to do that unless he is elected, and maybe not then. tell me how we deal with this looming catastrophe that everybody recognizes is coming, but nobody wants to stand up and take the tough choices that we need.

>> in this room, five or six years ago, someone stood up and said during a debate like this that she was afraid we would not solve this crisis until the disaster occurred, until there was a crisis, and i think that is still a realistic possibility. we are going to have to have some kind of disaster even worse than the recent financial disaster, before politicians will face what they have to face. having said that, i think the revenue side is the easiest in many ways, because our tax code is so bad that everybody agrees that we ought to broaden the base and the lowest rates possible.

you can do that by getting rid of a lot of loopholes. you have to wound a lot of people. you cannot just do it for a lot of people. there has to be a lot of sacrifice, and then a lot of sacrifice on the spending side. republicans can say we fixed the tax code but we are not raising taxes. then put in a provision where if you don't get a certain amount of revenue, then you have to have some failsafe procedure where you regulate or do something to raise the revenue. eventually we will do something like that. on the spending side, i remain convinced there is lots of spending that would be safer for the country than defense spending. we spent a lot of federal dollars on education.

i cannot see that it has done a lot of good. wickets at $30 billion on education spending. you get a couple of places like that and i think it adds up. five years ago we propose all kinds of cuts like that. it added up to a very substantial amount of money on the spending side. i think it could be done in a way that would do the least damage to the country. the less government money is spent, it will have an affect on the economy and increase unemployment. it is inevitable. >> i am glad you asked that question. i am surprised to be characterized as an optimistic perspective. when i look at the data and it shows median household incomes stagnant for the last 30 years, my concern is that we have an economic growth problem here. everything becomes zero some and we are sitting around trying to figure out which paul to rob

to pay which peter. the prospective that has increasing resonance in the valley is that there is a technological innovation component of this that we really need to refocus on. we have perhaps all been blinded by the computer age and thought we are living through an age of technological innovation here. if you sat for a few moments and thought that other sectors, perhaps transportation, where we are moving slower today than we did 30 years ago, is that still the engine of growth in this country? this is a particularly relevant conversation for this group because the department of defense clearly has a history of helping this technological innovation in this country. there is no reason that necessarily has to be true. an article yesterday proposed any number of areas where it is ready to fire up technological innovation in this country.

asset growth, we are having 0 some conversations and everybody is unhappy. i do think there is a way out of this, but it will be hard. >> let me mention briefly about something that is extremely complicated but which i have been speaking about for the last two or three weeks. can we avoid as much damage as possible in the lame-duck session? i am not talking about huge things. i am talking about one thing.

had we pass a continuing resolution by october 31, get through the elections, and then minimize the damage a lame duck will do, while maximizing the opportunity in the 113th congress that we actually might be able to go towards the big deal that ron mentioned. there is a way to do that. as someone said to me, steve, that is great. that is rational and intelligent. but we are not rational up here. that is a way to compel behavior short of sequestration.

because we have so meeting with the congress who are new, it is going to be very difficult to tell them how to do this without them saying more washington, d.c. gobbledygook. using the powers the senate and house have, using something along the lines of enhanced reconciliation, i think there is a way to get us into next year with minimal damage and the best chance to get the big deal, which is taxes and entitlements. some senators and congressmen are thinking about it now. they don't dare say it out loud before the election, and i don't blame them, but there are some people thinking about it.

and there are some very good members on both sides of the aisle who were briefed by mr. dudley and other people over the last two weeks to understand what is coming. and other people over the last two weeks to understand what is coming out, thinking actively about minimizing the damage, getting a big deal, even with this congress after the lame duck. i m still going to think about the happy outcome. >> will come back to this. i will take to questions. >> to talk about the clustering. -- you talked about sequestering. he made the point that we do not have to worry about the intent.

he says the other point is it the biggest supporter that he goes back to his district. they did not have interest to this. they are worried about what is happening to their retirement income. the issue she brought up about the garden everything else. the chief of staff and secretary of the airforce made a difference on the duty. you cannot use this. everything is going to have to be put on the table. have you convince the american people how serious this is? >> i am from the observatory group. agreementose that an

is not possible in the lame duck session. to what extent does the administration have discretion in terms of the timing of how soon it implements this? i read they may have some discretion. >> it maybe you could flush out a little bit of this idea that you have to avoid it. >> there are two things you have to have in mind. the anti-efficiency act and something called the impoundment control act. in between those things which says you cannot spend money you did not have appropriated to you in the cannot compel money except for certain specific crises. most agencies are going to have

to spend some money in the first quarter of this year. it sounds very arcane the very important. some people say there'll be no obligations. it seems highly improbable. how much will be spent by the agencies in the first quarter? are estimate is about 22%. how many games can be played by omb within that 22? in 2013, almost none. this is a program project activity level. very granule level. you are going to have to reach it if you're the department of treasury. you will make very hard decisions. you have 5% of contacting.

this week we're going to try over $150 billion of national debt. they are going to have to let some time lay off people. that is what it is going to come down to. they to lay off people permanently. there are not as many that can be played in fear. how come the stock these games that really there but to make the final calculations. they're going to go down to the lowest enumerated specifically. you know the categories better than anybody. >> do you want to comment? >> once people see what the cuts will be, all will break loose. congress will have an opportunity to mess around. i do not think they have the

opportunity to come to $1.20 tryon. this is more rational than across the board. they are speculating what is going to have them. they're going to be mad. they're going to do something. >> this is the military pace. i guarantee you, my brother used to live outside their. when they see what the impact is going to be on small businesses the service the personnel, to housing in all of that, at some point it is going to be in september. they will stop caring about something other than the 401ks. there are some people in this audience that have already started slowing down what they're doing. guys are going to go back to their banks where they have have lines of credit for 20 years. he is going to say i am going

to read up my line of credit. do you have that contract signed? why don't we wait? why don't we wait till you get the contracts signed that i cannot wait that long. that is not an exaggeration. a do not this is something they made up. if you go out to new mexico where defense spending is really important, you are starting to see the slowdown. it is not because we are laying off 400 people. it is a bit by bit by bit.

people are scared. there are not doing anything. you are going to worry when your wife or husband loses his or her job. >> we will have one final round for our panel before break. is this more right than wrong? a realize sequestration is very hard. is the following statement mostly right? the typical federal agency is going to have to find 15% reductions in its workforce expenditures. since he can only slow a certain amount, it means for the workers have two months of furlough. >> you cannot reduce people's pay in the federal government. that is against the law. this is where you stay.

at some point, you're the manager of an agency. you will have to say i do not know how long will be able to keep doing this. i am doing everything i can. we're not going to hire a replacement when she leaves. i need three more of you by the end of the year. in an economy that is weak, where people are slowing up their retirement plans anyway because of the last 3.5 years. this is not good tidings. >> let's have a final round of

responses. we will go over here. >> here is the aisle. >> she is coming. wait for the mike. >> i have not heard any discussion about a government shut down. what you think about the possibility that force people to act? >> over here if we could. my name is jordon. this is mostly for david. i know there has been a lot of talk.

they are supposed to help them survive watching cuts. the government with export control reform so that it is more broad. transitioning to from manufacturing to services and things. services do not get cut as hard when the hammer comes down. could you speak to how this is? >> do you want to start? >> i think the overarching theme is the debt to which you

have probed the insanity. this is something that i cannot come close to touching. the export reform is something that has benefited us tremendously. i know for larger companies that will hold true as well. i mayor a lot of the commercial industry and harboring deep skepticism because plus model inherent in a lot of these services that were given. i am not sure i am as bullish.

that may be great for the industry. i do not think that i'm as bullish as that one. >> i hope that everybody will -- they talk about contacting their congressman and senator. this decision will be made by about six or seven people. it will be made at the leadership level. it is going to be a very difficult thing. will we have a government shutdown? i was involved in the last one. i was told do not worry. clinton will get the blame. in 1997, january, i got to stand out in the frozen front.

i am not speaking for him. my sense is the house republican leadership more than anything in the world hopes they can avoid the hint of a government shutdown. they are not suicidal. i do not know if they have the votes to do a clean one. i do not think anyone does. when we get to the debt ceiling, which is not a government shutdown and is much more interesting, you could look and see as not pay our debt. this will become a moment of real truth. if we go through what we did last august acting like we were

children in not understanding we were dealing with the global infrastructure. friends that used to work with me in the bond market are going to run. when my best friends said do not worry. he said that the panic starts i will be the first one out the door. >> let me ask you one final question. i want to make sure with your expertise that that we give people a sense of what is the issue. we talked about furloughs as one of the necessary responses. it has to apply in all these different accounts. let me imagine a big ship being built. let's say it is a shift that takes four or five years to build. it is one or two years into

construction. congress has the right to look at that process and decide if they still need it. there are huge inefficiencies. what is going to happen in sequestration? they will have 80% of the funds they would have needed to do the construction at the pace it was intended. does that mean they fired 20% of their work force and drive this because of the inefficiency they introduced? >> i do not know if there are any contract officers. the governor will probably save the determination and they will go and say we told do a subject to appropriations.

we do not have it. the been the contractor will say we have a contract here. it's as if you do this to us it will be billion in damages. at some point you have to say how much will we save by cutting best? , is will we pay in damages because of the contract? we trying to do this now. define this. you're going to have to cut more than 500. you're going to pay substantial penalties for weapons systems that are half way through. because this kind of silly. >> if you could sum up anything that is on your mind. >> i agree that the government will shut down.

if i did not agree, i will not say so out loud. we went through the two government shutdowns. they did blame clinton for it. the other thing they said is that no one cares. they're not even going to notice. i would say with in about eight nanoseconds the washington post fisher stories about these employees but worked so hard all year long and now they will not get their check. they cannot buy presents for their kids. this is what is going to happen. they're not going to let this happen. they will dare they can to keep it from happening. in my be a good thing. we need an outraged public. we have to do something. the final thing i would say is

that sequester is a horrible idea. i completely agree. >> i am constantly reminded of the philosopher quote the ec change only in necessity. i've a full bad if i did not say we were the [inaudible] this is an opportunity to think about the bigger items. real missing a opportunity. this is the solution. >> i just have to add one thing. i agree.

for assad agree you are right. in order to see these you need leadership. that is the main of greeting we lack. we do not have leaders in the administration or on the hill. >> we will take about a 10 minute break and then reconvene. please join me in thanking the panel. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> this week, david cameron talks about changes to a proposed fuel tax increase and proposals to cut the numbers of the house of lords and have elections take place every five years.

questions,"ter's tonight, 9:00 p.m. eastern, on c-span. >> the house oversight committee held a hearing on the house oversight committee on -- in iraq. the last combat troops left in 2011. witnesses include the acting state inspector general, as well as steward boeing, the congressionally appointed inspector general. this is 40 minutes. >> the committee will come to order. i would like to begin this hearing by stating the mission statement exists for two principles. americans have the right to know and they deserve efficient and effective government that works for them. our duty is to protect these rights.

our solemn responsibility is to hold government accountable to taxpayers, as they have a right to know about what they get from their government. we have worked with citizen watchdogs to have brought the fax to the american people. this is the mission of the government oversight reform committee. i appreciate you all being here. the country has invested a lot of time, money, blood, resources, to the mission in iraq. this has been an interesting day on capitol hill, the supreme court, their decisions, everything happening on the floor. you will see a limited number of members participating today. we do believe that it is vital to get all the testimony here today. these questions will be somewhat limited, as we understand everything happening on capitol hill, your decision is whether or not to delay this hearing,

possibly into the later part of july. we would like to be close to a later update hearing, so we appreciate your testimony and hope the you have an understanding of the complexity. assessmentring is an of the transition from military to the civilian mission in iraq. i want to thank you all for participating. we are born to focus to our efforts on december 2011. and whether this strategy should be used as a model for afghanistan. we cannot emphasize this enough, we need to learn from the experiences that we have so that as we go through this in another situation, we can make the most of it. the government, in 2008, agreed

to withdraw troops by december 2011. keeping with that, all but 275 uniformed personnel have been removed. the remaining troops work under the chief authority of the office secure authority authorization. the state department has approximately 2000 direct hired personnel and support contractors at a seven-one ratio, including 7000 private security contractors. leading up to the withdrawal, the state department mission was clear. the diplomatic mission was designed on the influence of key locations and they said the state would continue the development programs moving beyond police skills to uphold the rule of law. there would help close gaps in the security force capabilities.

an unprecedented mission for the state department. they have functioned without the protections of a typical post nation or troops that many believed they would have. as a result, the embassy spends 93% of its budget on security alone. without a doubt, this is an enormously complex mission. while the state department has made progress, there have been difficult challenges in a number of areas. based on their testimony today, including the government accountability office having a safe office with capabilities that have not been finalized. thousands of projects completed by the united states have been transferred and will not be

sustained. the defense it has impacted land-use agreements, visa requirements, troop movement, and program requirements. according to that usaid mission, the security situation has hampered the ability to monitor programs personnel are only occasionally able to travel to the field for site visits. embassy personnel have told staff they have difficulty registering vehicles with the iraqi government. iraqis have set up checkpoints along supply lines. the embassy must dispatch a liaison to figure out how to get the trucks through. these are some of the challenges the state department is facing in iraq today. perhaps as a result of these conditions, the mission appears to be evolving. in an effort to be more efficient, the state department

is evaluating the footprint and identifying possible reductions. this raises questions. are we on the right track? are we redefining the mission? what do we expect in the coming months? was this a well-managed with troll? the purpose of the hearing is to gain clarity about our efforts in iraq. we need to examine whether such transitioned is possible and how we execute in afghanistan. the downdraft is only to of years ago and will likely present a greater challenge than iraq. we need to have answers before we commit taxpayer dollars. we continue to look at these issues in the coming months and look forward to hearing testimony from the panel. i would now like to recognize the distinguished ranking member, mr. tyranny for his opening statement. -- mr. tierney for his opening statement. >> this was ill-conceived from

the beginning. the withdrawal concept is difficult. i will ask unanimous consent that my remarks be placed on the record to expedite the hearing and move forward with the witnesses. >> so ordered. thank you. i appreciate it. members may have seven days to submit opening statements for the record. ambassador patrick kennedy is the undersecretary for management at the department of state. mr. peter verga is the chief of staff of the undersecretary for policy in the department of defense. the honorable mara rudman is the assistant administrator at the u.s. agency for international development. all witnesses will be sworn before they testify. please rise and raise your right hand. do you swear or affirm the testimony you are about to give

will be the whole truth and nothing but the truth? thank you. you may be seated. let the record reflect the witnesses all answered in the affirmative. to allow time for discussion, please limit your verbal testimony to 5 minutes. your entire written statement will be part of the record. we would now like to recognize ambassador kennedy for five minutes. make sure the microphone is close. thank you. >> thank you for inviting me to discuss the state department's operations in iraq after the transition. u.s. forces completed their withdrawal from iraq in december of 2011 marked a significant milestone in our bilateral relationship. our goal continues to beat a united, democratic and stable iraq.

security has improved. the situation on the ground remains challenging. the diplomatic engagements are robust. our embassy meets regularly the president, prime minister, cabinet members, and civil society leaders. the state department has plan to align our presence in iraq with other comparable u.s. missions, but transition plan calls for a robust structure that can handle multiple situation. we are methodically streamlining operations on the glide path. this recognizes security did not deteriorated when u.s. forces departed and the iraqi government also recognizes the value of streamlined mission. we have been reducing personnel and programs. we expect to reduce direct higher staffing up to 30% by the end of 2013. this is not arbitrary.

we examined operations and determined how they could be made more efficient. we have hired more iraqis with 400 direct hires on board. we have emphasized to contractors the need to hire iraqis as well. over the next 18 months we will consolidate on to the embassy compound and relinquished three facilities in baghdad. we will continue to make adjustments to support a robust and secure yet appropriately sized platform. i like to provide an update touching on key elements of the platform. our planning began in late 2009 and involved the interdisciplinary team in the department working closely with our dod and aid colleagues. our predicate was that we had to be self-sufficient.

on october 1 of 2011, the embassy and consulates were fully operational and mission capable. the term mission capable comes from the of the lexicon. we were fully engaged in all diplomatic and support activities even though some facilities were not fully complete. we have continued to complete our facilities. despite a challenging environment, we will continue to carry out our diplomatic mission. orders for movement and security were awarded under the world wide protective services contract for all state department sites. the bureau of diplomatic security is performing increased oversight to ensure professionalism of contractor personnel. state of progress that deity continue to provide life support services through 2013 under the competitively awarded contract and via the logistics agency.

it remains highly effective. the working group meets twice a month to discuss life support. we're working on local sourcing of food and fuel. we look for -- we plan to award a contract to replace it by the end of 2013. under an existing contract, power aviation operations support -- our aviation operations support operations in iraq. missions include medical evacuation, movement of security support personnel, transportation of personnel within iraq, and movement of personnel into and out of iraq. we plan to downsize that program under the glidepath. in conclusion, the scope of the diplomatic activities remain larger than any of our past efforts. as secretary clinton said at the virginia military academy in april, in iraq we have completed the hardest transition from

military to civilian leadership since the marshall plan. civilians are leading our lasting partnership with a free and democratic iraq. mr. chairman, we are committed to assisting iraq in securing the gains it made with u.s. assistance towards becoming a secure, stable, and so from my country as effectively as possible. -- self-reliant country as effectively as possible. i welcome any questions you might have. >> we will now recognize mr. peter verga, the chief of staff of the under secretary for policy from the u.s. department of defense. you are recognized for five minutes. >> thank you. i do appreciate the opportunity to appear today with my department of state colleagues to provide an update on the transition from the military to civilian-led presence in iraq.

given iraq's importance in the middle east, it remains profoundly in the u.s. national interest that it emerged as a strategic partner with the united states, a self-ruling nation and a positive force in the region. in the time since we last appeared before the committee, the united states has upheld its commitments by withdrawing of forces by the end of december 2011. the department of defense has worked closely with the department of state to ensure a successful transition to a civilian-led presence in iraq. dod provided all possible support for success as u.s. forces withdrew from iraq. today the department of defense continues to work with the department of state to meet the needs for the assignment of personnel, the extension of currenequipment loans.

the goal now is a stable presents, building on years of working with the iraqis to create a lasting security relationship, including a robust foreign military sales program. our current program is the fourth largest in the region and the ninth largest in the world of the total value of approximately $11.6 billion. of all the fms cases in iraq, the f-16 stands out as the cornerstone of the strategic relationship. iraq's request to the sale of 36 f-16's and associated training and the value of approximately $6 billion. iraq has deposited approximately $2.5 billion tore the sale. deliveries of the aircraft are scheduled in september 2014. thee now at a point where results of the efforts are within reach. we worked to ensure a successful

transition to the civilian-led presence. that enables us to concentrate on building a long-term strategic partnership based on mutual interests and respect. iraq for its substantial fms program is demonstrating its desire for a long-term strategic partnership. its commitment to this program is a testimony to the future partnership. thank you for your attention. i look forward to your questions. >> thank you. we will now recognize the honorable mara rudman, the assistant administrator for the u.s. bureau for the agency for international development. you are recognized for five minutes. >> thank you for the property to discuss usaid's work in the transition in iraq. our goal is a stable, unified iraq. this is critical to u.s. interests in the middle east. the goal was made possible

through the enormous sacrifice but americans and iraqis. usaid is adjusting its footprint in line with programmatic needs. we're focused on sustainable development under the terms of the strategic framework agreement. over the past 10 years, it has progressed through three stages. immediately after the invasion, a u.s. charity work on restoring essential services and restoring democratic processes. as part of the counterinsurgency campaign, we concentrated on stabilizing communities and government institutions. with the completion of the transition, usaid's focuses on helping iraqis managed their development. our current efforts reflect lessons learned over these years, particularly on the need for greater oversight and

sustainability. today, u.s. aid provides technical assistance to iraqis to improve their ability to implement their own development projects. we're working with iraqis to increase participation from implement reforms that will encourage economic growth, support democratic institutions, support ethnic and religious minorities, and provides solutions for reintegration of persons. all efforts are designed sustainability in mind so that iraqis will manage every project without u.s. assistance as an end goal. in addition to the human capital of the iraqi people, iraq's great oil well. revenues from the oil industry supply nearly all of the iraqi government budget. the institutions and ability to liver -- to deliver services have been degraded by war and

other factors. rebuilding the resiliency and effectiveness of the state, private sector, and society still needs help. our current programs are focused on improving the capacity of government institutions. it requires iraqis to match usaid on a dollar for dollar basis. these efforts stand in stark contrast to the stabilization projects which were earlier engaged in. we work with the government of iraq to establish common in geriatrics -- common objectives. we then come to an agreement on payment and transition. we monitor and measure progress and cross-sharing contributions. the censure commitment to usaid activities that benefit their government. the focus on sustainability is good development practice and reflects congressional guidance.

in early 2009, the state department and usaid adopted a set of policy guidelines on iraqi matching of u.s. funds for most programs and projects that directly benefit or a bald iraqi central government. insuring the resources provided by taxpayers are used effectively in our contributions get sustainable results requires careful and consistent monitoring on our part in the engagement of iraqi government and other partners. that is in addition to standard usaid against waste, fraud, and abuse. we designed an extensive oversight system tailored for the unique operating environment in iraq. usaid contracts with a third- party implement conducts -- that conducts audits of

projects. these entities have conducted more than 300 financial and performance audits since 2003. our focus on sustainability extends to the staffing of our effort in iraq. we will reduce the number of foreign service officers and hire and train more iraqis. our programs in iraq are designed to help iraqis use their own resources. our continued commitment demonstrates the importance we place on the benefits of this long-term partnership. i appreciate the opportunity to appear today. i am happy to answer questions. thank you. >> i now recognize myself for five minutes. ambassador kennedy, hamas personal, contractors, and government employees are at the

various sites? -- how many personnel, contractors, and u.s. government employees are at the various sites? >> we are at all agencies including the department of defense. >> do you know how those are broken down with government employees versus contractors? >> yes, it is approximately 1900 employees american and iraqis who are government employees and approximately 14,000 contractors. relatively 2000 to 14,000. >> do you have a breakdown of u.s. personal versus iraqi nationals? >> yes, there 1640 american u.s. government employees. 240 iraqi employees and 14,000 contractors. >> do you have a breakdown of

the contractors on u.s. versus iraqi? >> most contractors are either americans were third country nationals. we are increasing every day the number of iraqi contact employees as part of our program. we have informed our contractors in certain categories they are acting on our instructions and replacing the third country national contractors with iraqi contractors. >> how safe are our operations in iraq now? at one point, you are seeing a reluctance of u.s. personnel to operate outside of the green zone. what is happening now? >> our personnel have been operating outside the green zone since i was in iraq in 2003 and

2004. we go outside the green zone every day. in the last quarter of 2011, there were 3000 missions, security missions our personnel executed outside the green zone. i believe the first quarter of this calendar year, the number is almost up to 4000. >> it is my understanding usaid has hired iraqis to oversee project because u.s. employees are reluctant to leave the embassy because of security concerns. is that accurate? >> the 25 field monitors hired as a rocky field -- as iraqi field monitors are added staff for evaluation work. it was augmenting our staff to be able to be in the field on a

regular basis to help with the monitoring and evaluation work. personnel beour out there? is it accurate they have security concerns? >> it is accurate. we would describe it that the security environment in iraq is improving. it is not a normal security environment at embassies elsewhere. to have the best monitoring and evaluation work for our projects, it is seen as a good thing to have iraqis doing that work. it is part of the sustainable development effort to have iraqis have the capacity to do that work so these projects could be handed over. >> what needs to be done to create a level of security and confidence where our personnel

can get out there? i am running out of time. the gao as reported iraq has accumulated a budget surplus of over $50 billion. $10 billion was available for future spending. why are we pouring a lot of money into iraq in their budget is in better shape than ours? >> we have been on the glide path to reducing the amount of program money we're putting into iraq on a consistent basis. that is something we are reviewing year to year, how much money we're putting into iraq for program assistance t. we have been working on the cost sharing arrangement with iraq. since 2009, iraq has contributed directly on a dollar for dollar basis, they have matched funds

for everything we do with them for any capacity building. we provide purely technical assistance to them. they match everything we do with the idea that any development assistance they are learning they will take over and do on their own. >> america has invested a lot of blood and treasure in a rock. but time has expired. i will recognize the ranking member for 5 minutes. >> ambassador kennedy, how are you? i have begun to think from time to time you are on this committee. please pull your microphone closer. >> you have 14,000 united states personnel in iraq. that was what you said? >> there are 16,000 total. of that, 1600 are u.s. government employees.

another 240 or 250 iraqi nationals. they are directly employed by the u.s. government. about 14,000 contractors, american, iraqi, and third country nationals. >> what are the 14,000 contractors doing? >> they do movement security, static security, operations and maintenance of our properties all over iraq. they do live support such as feeding personnel, medical, aviation, and a small number involved in other activities. >> 14,000 people to take care of 2000 people? >> that is correct. >> what does the embassy in egypt look-alike in terms of those same considerations? >> the embassy in egypt does not have the security concerns we face iraq -- we face in iraq.

approximately 6500 of the 14,000 our security personnel. that is the presence we have in iraq. it is a presence we have in afghanistan. we have nowhere else in the world. it is directly related to the security conditions, which are improving but not at the point where we cannot rely on our own inherent security personnel. >> how many sites are the responsible for? >> they are responsible for 13 or 14, depending on how you count one side, whether it is one or two. >> what is the nature of those sites? >> there is the embassy compound itself. there is a logistics an x across the street.

there is the other annex across the street from the embassy. this is the police training site. there is a support operation adjacent to the baghdad airport. there is our consulate and a support site at the airport in the north. there is our consulate in bosnia -- bashrah. there is a joint site in kirkuk. there are four day of these sites -- four dod sites where they carry out the foreign military sales my colleague referred to in his testimony. >> what lessons are we learning in iraq for the afghan

withdrawal situation? what should we be well-prepared for when we stop -- start withdrawing in afghanistan? >> i would say the way we approached our work with the government of iraq since 2009 has been informative. when we look at the sustainable development approach, we're working in partnership with them. the scope of our programs being ones we ensure we have thereby and four of the front end. the cautionary aspect has been very smart.

when you literally have their buy and, they have to pay for stuff. they have to make it work, there is much less waste involved. the scoping and design of the programs phelps. i think we have seen a shift in our programming since that time. i would say that is the single most important lesson for us. >> the most important lessons we're learning is the requirements for advanced planning and continuous cooperation and monitoring as we move through the transitional period. we cannot draw any balls. it was a good lesson in agency corporation and information sharing that made this transition successful. >> ambassador, it will be tough

for you to pick one. >> i would say there are three points -- plan, plan, plan. second, a change management is in. in football, you go to the line of scrimmage. you have a plan. sometimes you have to call an audible. you have to be prepared to call the audible. i think we have done that. third is we have a glide path. we anticipate there will be problems. we scope to make sure we are safe and secure and can carry out our mission. depending on the situation becoming more stable, we have a glide path in place to reduce our staffing as we're now doing in iraq. >> are you done? i have one more question. let's do a quick second round of questions.

ambassador kennedy, you mentioned the baghdad police college aniks facility. it is my understanding the u.s. taxpayers have invested more than $100 million in improvements on that side. it was intended to house the police department program, a multibillion-dollar effort currently being downsized. as a result of the state department's failure to secure land-use rights, the entire facility is being turned over to the rockies at no cost. the gao reports mission iraq has land use agreements or leases for only five out of all of the sites it operates. can you say with confidence those sites now operating without leases or agreements will not be turned over to iraq for free as in the case of the police develop a program? the cost be to the u.s. taxpayers if they were to lose those facilities without

compensation? >> the statement you were reading from about closing the baghdad police development site because of failure to have land- use rights is factually incorrect. we have a land use agreement for the site. as part of the program, there are periodic reviews underway. my colleagues do that. it is not part of my general responsibility on the operating side. indeed interviews on a six-month basis internally and with the government of iraq. it was always our plan to make adjustments. the statement we have wasted or had everything pulled out from under us because of a land-use agreement is false. other properties in iraq, we

have agreements for every single property we have in iraq except for one, which is our rah.rim facility in bash in that regard, we have a long- term agreement signed with the government of iraq by ambassador negroponte in 2005 where we swapped properties with the government of iraq. they are committed to provide us with a 10-acre facility in basrah of our mutual choosing. we are covered, sir. >> i am basing my information on their report. i think it is an import responsibility of this committee to be a watchdog over taxpayer dollars. as i questioned ms. rudman

about, we have spent a lot of money and blood in iraq. we need to be careful we are not wasting any more money or spending any more money would be more polite money than necessary and that we are carefully guarded the assets of the united states government. one of the chief roles of this committee is to be the watchdog over the purse strings. be aware of this is something we will continue to keep an eye on. this is a very busy legislative day. it is important we get your testimony and other information. i will yield back the remainder of my time and offer mr.

tierney five minutes if he has additional questions. >> i want to thank the witnesses for the written testimony and accessibility. i know we can follow up. i yelled back. .-- i yield back >> i would like to thank the panel for their cooperation with this committee. it is admirable you are here. we're committed to being open -- it is several billion -- it is admirable you are here and committed to being open. we will take a short recess. we will resume as soon as the next panel is seated, probably less than 10 minutes. we stand in recess.

[captions copyright national cable satellite corp. 2012] [captioning performed by national captioning institute] >> now the committee hears from -- state morto pay department, government accountability office, and others. >> the committee is called back to order as we in the our recess -- end our recess and recognize our second panel. we have ambassador harold geisel, the acting inspector general at the u.s. department of state. mr. mecham internet -- mr. miki

mcdermott is a special inspector general at the department of defense. mr. michael carroll is deputy inspector general of the agency for international development. the honorable stuart bowen is the specter of the is a special inspector general for reconstruction. all witnesses will be sworn before they testify. please rise and raise your right hands. do you solemnly swear or affirm the testimony you are about to give will be the truth and nothing but the truth? let the record reflect the witnesses answered in the affirmative. please be seated. as you know, we have a busy day on capitol hill today. to allow time for questions and discussions, i ask that you limit your testimony to 5 minutes. your entire reinstatement will be made part of the record --

your entire written statement will be made part of the record. please hit the high point of your remarks. we will start off with mr. courts. you are recognized for five minutes. >> i am pleased to be here to discuss the transition from the u.s. military presence to a civilian presence led by department of state. this is a continuation of the gao efforts to reduce the drawdown and build up of the civilian presence. the gao was asked to testify on the plans. the primary message of my testimony is that the state department and dod have planned for a large civilian presence in iraq. the iraqi commitment to the presence remains unclear. support and security capabilities have not been

finalized. most important, efforts to identify security vulnerabilities and progress toward mitigating them are not being fully tracked. my first point is that the plan for a robust presence in iraq. the allocated estimated $4 billion for the presence and plan to have over 16,000 personnel at 14 sites across the country. most personnel were to be contractors primarily responsible for security and logistical support. as of last month, state and dod were developing a plan to reduce the number of sites and personnel. the mission is still comprised by far as the largest diplomatic presence in the world. my first point -- my second point is they have been counting delays in establishing basic infrastructure and life-support like housing and water supply. construction projects are behind schedule.

mission iraq is still revising emergency evacuation plans. the mission and contractors have encountered challenges in dealing with iraqi bureaucracy. my final point is that state and dod have not finalized security capabilities and iraq. mission iraq personnel face numerous threats including retained rocket and mortar attacks, small arms fire, and kidnapping. as of last month, the state department conduct a security assessments of a site it manages and taken steps to address and abilities. however, dod has reported some efforts to address and vulnerabilities, but they have not fully tracked those efforts. state and dod plan for the largest diplomatic presence in the world, but iraqi commitment remains unclear. mission iraq support functions are work in progress.

while operational, the security capabilities are not yet fully mission capable. dod efforts to mitigate vulnerabilities are not being fully charged. it is unclear if and to what extent u.s. personnel and facilities may be at risk. this concludes my prepared remarks. i would be happy to address any questions. >> thank you. we will get to the questions after we have heard testimony from the entire panel. >> mr. geisel, you are recognized for five minutes. >> thank you for the opportunity to discuss our assessment of the transition to a civilian-led mission in iraq. since 2008, the office of inspector general has conducted 35 investigations and 27 audits in iraq. the department has been responsive to oig

recommendations. in 2011, oig reported the military was managing advisors. the department has assumed responsibility for the police development program and is consulting with iraqi officials to evaluate security needs and downsize efforts accordingly. pending audit reports from the special inspector general and final funding decisions, oig will audit oversight related civilian assistance programs in 2013. in response to recommendations to create an office of security cooperation sufficient to support iraqi security forces and manage relations, we found a net full operating capability in 2011. we will coordinate to monitor progress in coordination with dod-oig.

the department continued to face challenges in establishing provincial posts due to questions regarding land use agreements, staffing, construction, and life support operation. consulate's opened. locationsntinuing that serve as operation sites. oig remains concerned about the safety of u.s. government personnel and contractors in iraq. in may of 2011, oig reported security risks could be mitigated for a closer working relationships with the government of iraq and security forces. during an ongoing audit of private security workers in baghdad, oig found iraqi security forces are routinely detaining private security contractors at checkpoints. the government of iraq is

restricting air space jeopardize and potential evacuation routes. in april of 2013, oig will audit the effectiveness of private security contractors. they will establish in the sea air iraq -- embassy. iraq for roundtrip fares. round-trip fares were available for approximately $80. oig will audit the program in august of 2012 and consider the cost efficiency versus security concerns of commercial travel. oig reported the cost to provide medical care for personnel and contractors would be considerable. a contractor now operates nine

help units. oig will audit the management of medical operations in october 2012. in may 2011, oig reported in the see baghdad lacked plans for a mass casualty event. they had created emergency action plans in compliance with guidelines and conducted regular briefings and trills. in may of 2011, oig reported in the seat facilities were near capacity due to relocation of staff and contractors. oig will audit the implementation of the master plan in july of 2012 and consider the effects of the proposed 25% presence downsizing. we have scheduled a full inspection of the mission early in 2013 to an could further

evaluation of staffing and security needs. state-oig is uniquely qualified to provide oversight. we have 19 open investigations related to programs and operations in iraq. we intend to assign six additional personnel to monitor progress in iraq. we remain committed to providing the department and congress a comprehensive spectrum of audits, inspections, and investigations on the enduring u.s. presence in iraq. thank you for this opportunity. i am pleased to answer any questions you may have. >> thank you for your testimony. we now recognize mr. mcdermott for five minutes. >> good morning. thank you for this opportunity to appear today to discuss our assessment of the transition from military to civilian-led mission in iraq.

the office of security cooperation in iraq operates under the chief authority. osci is charged with managing the bilateral, security cooperation, security functions, and maintaining a long-term strategic partnership between the u.s. government and the government of iraq. recognizing the importance of the challenges and the fact of the security program is one of the largest in the world, we started a series of oversight efforts to focus on planning and the establishment of osci. 2010, we assessed the planning efforts for transitioning the mission. we determined the planning was progressing with a specific contribution made by a cadre a planner's operating within iraq. we identified shortcomings and recommended central command issued country-specific planning

details, steps, and procedures applied to the security corporation planning guidance and lessons learned regarding the experiences of organizing osci. in 2011, reassessed the establishment and efforts to provide for sustained and effective operations post-2011. we found it was on track. we identified shortfalls in planning efforts. we determined the shortfalls were due to incomplete iraqi- specific plans. we also reported the need for planning capabilities within the office of security operations.

>> the interim role regarding security cooperation and assistance programs. in response to our assessment, we made improvements in the flow of information to personal and with key senior iraqi officials. central command also responded by issuing a completed country plan with necessary security cooperation and details. on april 16, they did not finalize agreements necessary to enable the ability to become fully functional within the post-2011 operating environment. responding to our report of

march 2012, a senior officials indicated the absence of the post-2011 security agreement was affecting aspects of its operations. some of the challenges cited by officials included obtaining or extending land-use agreements, passport requirements, and air and ground movement. the precise impact of these command concerns with respect to achieving goals is unclear. however, having formal security and agreements was perceived to have value in clarifying and stabilizing iraqi government support for the day to day operations and would benefit long-term relationships. in closing, let me emphasize we remain committed to providing oversight and reporting on the progress and challenges of maintaining a long-term strategic partnership with the government of iraq.

we plan to return to iraq next fiscal year to continue our assessment on the operations of the osci. i look forward to answering any questions you may have. >> thank you. we will now recognize mr. carroll for 5 minutes. >> i appreciate the invitation and opportunity you have given me to brief the committee on activities in iraq currently and what we see as challenges for the future. aid was not part of the massive transition planning process, so i will restrict my remarks to our programs. we started our oversight in a rock in 2003 -- in iraq in 2003 and opened offices in 2004. we have a substantial body of

work. we have done over 60 performance audits. we have conducted 153 cost- incurred financial audits covering $5 billion usaid expenditures. we have opened over 100 investigations, 45 referrals for prosecution, 13 indictments and convictions. we have a substantial amount of work. as in the post-transition environment, funding has been coming down. in 2013, it is going to be to the $31 million. it is a substantial amount of money, but relative to previous years, it is on a downward trajectory. with state being in the cost- recovery mode, we're not getting supplemental funding for central funding. it has become prohibitively

expensive to be there. we're going to maintain an office with two auditors, one investigator. transfer the other staff to egypt. when you consider the amount of money being spent by aid in iraq, it ranks third in the region. we will continue to provide a robust oversight package. it just will not be to the extent it has been in the past. our plan would be to do three performance audits, two major program reviews. one of those being a retrospective look back using some of the work mr. bowen has done or will do on sustainability . we see two primary challenges going forward. one is monitoring and evaluation. it has been problematic for aid in iraq.

they have relied on the implement jurors to provide -- implementers to provide performance data. we have found it to the suspect at times. the ability to get legitimate performance data has been problematic. without the military and state department providing security, we will have to see how it goes. we will be on that substantially. the other challenge that mara talk about is sustainability. aid has transitioned from infrastructure and reconstruction to more of the traditional development assistance, technical assistance, democracy and governance, civil society, those sorts of things. retrospectively, on one of the audits we just issued, it was a

bleak story as far as the effectiveness of some programs. the lesson learned from that is iraqi buy-in. if they have money in it and it is in their best interests, it will be sustainable. if not, it is not going to be based on our previous experience. for us, the one challenge i see as we move forward that has been a disappointment has been the inability to get local prosecutions. we have had success in pakistan and afghanistan. we have not had success in iraq. we're working with our counterparts at the embassy to identify law enforcement in the

iraqi government. as aid implements locally with more iraqis involved, the fraud that is going to take place is going to be perpetrated primarily by iraqis. our ability to investigate is not a problem, but our ability to take the probable cause and find a willing partner in the government to do local prosecutions has been problematic. that is our one major challenge going forward. thank you. i look forward to taking any questions you might have. >> mr. bowen, you are recognized for five minutes. >> thank you for the opportunity to present assessment of the transition from the mid took -- from the military to civilian- led mission in iraq.

there are five issues. the police program, the security situation, the transfer and sustainment every construction assets, the increase in criminal investigative activity we have seen this year. i will briefly summarize each of my points in my oral statement. the police development program is the single largest program to transition from dod management two-state management -- to state management over the last eight months. it transitioned eight years ago. the initial contract was for the state department. challenges in iraq and the size of the mission require the formation of something called the multinational transition commander that operated the police training program for over six years. it expanded a significant amount

of money. the program was not well-planned or well-agreed to. sufficient agreement was not secured from iraqis as our audit of last october revealed. we have another review coming out in july that will follow up on that and look at progress made with regard to recommendations. the most significant event that has occurred since then is the reduction in the size of the program. a wise reduction, in recognition iraqis have not fully bought into it. the security challenges continue and have limited the capacity to execute the initial ambitious range of the program. bonds across baghdad killing 15, punctuating what has been a violent june. the year began violently in january.

march saw the least violent month since 2003. it is a very volatile situation. that is what these stats tell you in iraq. the requirements for personnel to move about the country are the same as they were in 2006- 2007. it is expensive. the largest single expense in iraq right now for the embassy is security, in excess of 6000 contractors are security contractors. most of the money is going to pay their salary. the office of cooperation is spending about $1.5 billion appropriated for training and equipping the iraqi army and police. we issued an audit in april about the progress in using that

money in the fms program. there were some concerns. we will have a follow-up report in july. that will give concrete points on the progress made regarding the use of that money. a continuing issue is the transfer and sustainment of projects we spent $51 billion producing. it is not a good story. the audits revealed there was no consensus on how to transfer of these projects. our audit program did stimulate development of a sustainment program and requirements in contracts, but it was too little, too late. the iraqis have not bought into investing significant sums because they are not sure what we provided. that is what i hear over and over again from iraqis.

that is understandable given the weakness in the database we developed. our audit found it captures the 70% of what we have provided. that is unacceptable. we have seen an uptick in criminal investigative activities. as the program has drawn down, people have been more willing to come forward and provide leaves -- leads. some of our technical examinations of what happened to the money have produced more cases. we have in excess of 100 investigations going on. we just conducted our 71st person this week. our prosecution initiative continues to produce good fruit. i will conclude my statement and look forward to your questions. >> thank you. i now recognize myself for five

minutes. ambassador kennedy and i got into a discussion about the absence or presence of land use agreements for the facilities in iraq. do you have the current status from your latest report as to what facilities we do and do not have land-use agreement for? >> wt ambassador kennedy may have been referring to is that for 13 of 14 facilities, iraqis acknowledged the presence through diplomatic reports. we have specific land-use agreement. >> what does that mean? we can use it until we change our minds? and there's some force of law to those notes? >> the notes are not the same thing as having an explicit agreement.

in one case, where they required us to reconfigure, downsize, that was that one of the sites where we did not have a land-use agreement. we are in a much more vulnerable agreement. >> i have a question about the use of the iraqi nationals overseeing some of our investigation. what is your opinion on that? does it strike you as a good idea, bad idea, or something we're stuck with because there is no alternative? it seems americans would be more concerned about how their tax dollars were spent then the iraqi nationals who are the recipients of those tax dollars. it is like the fox guarding the hen house. >> personally, i think it is an

additive step. we will contract with local cpa firms and two very comprehensive procedures documents that they will go out, take pictures, and do what we could do if we were there. i don't see it as a problem. i see it as an adjunct to. it is not a replacement for. use a contract in representatives and technical representatives actually get out and insure the work is getting done. that's not what they're doing. they're going out and doing some monitoring and evaluation but it does not replace the responsibilities to the americans.

>> which ever you seem more anxious to answer. i have not been to iraq. it my experience is based on the things i have seen on television. a good many of our facilities are in metropolitan areas including the capital, baghdad. we're struggling getting food and water to these people in a safe manner. what is the procedure? it is the food delivered? how was that handled? why isn't a problem in a metropolitan area? there are hundreds of thousands of people that need to be fed. it's more complicated than just going down to the safeway, but how is this handled?

why is it such a problem? >> the state department, as ambassador kennedy indicated, continue the contract after the military withdrew in december. thus, the process for bringing food into the country continued as well. there have been challenges with checkpoints being closed. there have been other reasons why the shipments have been intermittent leading to an occasional shortage of certain at the embassy. p.m >> there's also concern about the amount of security and how much we're spending. could you take a moment to discuss a typical day in the life of an embassy employee?

do they sleep on the compound? do we have security where they are living? do we escort them home? it looks like the ratio of contractors to employees is almost 7 to 1. i don't know how many are security personnel. is like the president or everyone has a security detail traveling with them everywhere they go? how does it work? >> as i said in my statement, the process existed in 2007. the drop in the number of attacks has not led to a relaxation in security requirements. they are dictated by the embassy. in baghdad, the situation as a general matter has improved greatly. to make a movement outside the embassy grounds requires 48 hours' notice, three hardened vehicles and a couple shooters in each vehicle and limited time

on site. it is a resictive environment from a security perspective. it is still quite dangerous. while there have not been very ,any duck and cover's as we say that is not the case at the same facility. they have a much more security -- difficult security situation than those in baghdad. >> do they live on site? >> they live on the embassy, yes. >> so we're not sending them home with people. >> i think my time is way expired. i will recognize the gentleman from massachusetts and we will give him six minutes as well. >> you're very kind. thank you, chairman. or 14 times iraq 13

now. a couple of things in the testimony raised concerns for me. i understand the security situation there is very difficult, but it seems to me that it is probably the worst situation we could have where our inspectors cannot get out to the sites to review the projects that the american tax payers are paying for. that should stay very tough situation. i'm very uncomfortable with that. i not have been out many times with his inspectors on site in iraq. there is a certain value in having u.s. personnel go out there, engineers, if possible, to reduce some of these projects. we have had widespread corruption at various levels in iraq's, so there has been the

experience and their that should cause us to be very cautious about where our money is going and whether these projects are being billed to proper standards, number one, and whether they're being built by the more being diverted. is there any hope? is there any way we could enhance the cooperation we are getting from the iraqi government by withholding funds for these projects unless we get access to those sites and have the ability to get proper oversight? >> it's not the iraqi government that is -- i don't want is a creating the problem -- but it's not the iraqi government. during the transition, which was a very difficult time and we all agree, we were turned down on

three of our seven movement requests. that was a very difficult time. since then, we have been able to make site visits. you have been there, too. it takes a lot of planning. you cannot just drop in, which sometimes we like to do, particularly on the investigative side. everyone knows we're coming and that can create some problems for us, but so far, we have been able to do our work. as aid has moved from not the traditional kind of work, reconstruction as they were doing it quite a bit in the early days, now there's a lot of technical assistance, meat and potatoes, democracy and government, civil society, those kinds of things. most of that is located in and around baghdad. we are confident that if we're

smart about it and we work with teh rso that we can do our job. it is an extraordinary expense to be there, so we're going to change our footprint. going to provide substantial oversight. >> in terms of the deployments of 6000 private contractors there. is this all dyn corp? when is the makeup of that security force? >> there are not all dying court. it is under the world wide protective services contract at the state. the department manages. the guards themselves are a third country nationals, as i have observed.

then there are a variety of other companies that are working their. there are those that are running the convoys themselves better doing the driving or the shooters in the suburban. they are american contractors. it >> what is the security? we have several sites there. you mentioned the difficulty. give me the worst situations that we have their right now for our facilities. you're talking about this as well. what is the worst situation we have? is it basra? >> it would be close. it is subject to the indirect fire quite regularly. >> are we still getting rocket attacks out of sadr into

baghdad? >> a very infrequently. they have been minimal at the embassy in baghdad. contrary, it is weekly, if not daily. >> what about down at the port? do we have a bad situation down there? >> the size down there is limited in their capacity to move about. because of that, the police development program that was going to operate there has been withdrawn. >> was that our decision or the whenion of the iraqi's >> i was there a the end of april, i met with the acting minister and he said he needed may be 15 or 20 advisers in his youth from the program. as you know, it started at

about 200, now down to about 70- 80. then it will continue to evolve and to evolve, as it were. >> reducing the flashpoints in terms of our facilities? you had a list of sites you have identified in testimony. what are the bottom three? what do you worry about that night in terms of the facilities there? >> congressman, the state department and the dod agreed together than they would meet three overarching criteria in the areas of security before we were considering mission capable. they were secure and protected facilities, the ability to have security in their people and have an emergency and response capability in place.

the did not meet the criteria and in many cases they do not need them today. i cannot go into the details of the exact vulnerability is because of the sensitive information. they intended to have certain security features in place in october. some of them are still not in place today. some of them are not slated to be in place until 2013. in addition, the state department intended to have the use to achieve a secure movement of their people, the protected vehicles and the dod provided i think 60 of them. our understanding is that they would not allow their use and they are essentially sitting unused. thehat's important for committee to know. again, and tried to get you to tell me about site-specific concerns that you have. are there some areas that you think desperately need security

attention right now? >> again, i cannot get specific. >> ok. i will let you go on that. we can talk later. i yield back. >> i will now recognize the other gentleman from massachusetts for five minutes. >> which, if any, have been looking into the work being done on the embassy that was reported in "the post" this morning? what kind of work are you doing in terms of evaluating the expense there and the purpose? >> we started more than three years ago with an audit of the building of the embassy itself. as you know, we recommended to the department that there recover, i think, over $200

million from the contractor of for what was really a worse than slap shot construction. >> did they recovered? >> not to my knowledge. it would probably take courts. we believe the department should be trying to get it back. on a continuing basis, we all did the department and construction. for instance, let's take the $100 million and i don't know that it's an exact figure, but the department does have plans,

you have to remember they do not have that money yet. they are asking congress for money. what is the department going to get for that money? isn't a matter of security? or is it a matter of something nice to have? we cannot look too far. >> i would hope congress would find the answers to those questions before then, frankly. s $700 million slipshod. it has been $60-$80 million for

a utility power plants, underground fuel storage facilities, water distribution, storm water system. can you tell us whether or not this just did not address those issues? >> the $700 million was spent than that with in our report. are you throwing in good money after bad or is this something that is going to save us money? >> has anybody looked at evaluating the proposed purpose for using this facility? the number people who will occupy it and how this may be different than other indices of a different size and purpose? >> that will be done under the baghdad master plan audit which will begin literally in a matter

of days. what we're going to do is review whether the infrastructure that is already in place and the proposed new construction with the short-term and long-term diplomatic presence, we are looking. we will let you know. >> that would be a condition i would look for. you should look at classifying the embassy and >> extension as considerable work, maybe $25-$30 million on that. i you going to be able to see when you need to see to make an evaluation of that? or will be looking to make sure it's evaluated by another appropriate entity? >> we have all the clearances' we need to look back at work. we certainly will. >> having sat through the hearings on the original

construction and the failures, whenever, it's something that we want to do. how could they have left them out is sort of surprising on that. i'm also interested in taking a look at how many people they plan to have in that facility and how that purpose aligns to the democratic vision. are we doing diplomacy, something else? do we need is people for that particular mission? is it going to consolidate other parts of the country and putting them in their only to find out later it will be moving back out? >> i would love to have you be that. i think you're asking the very questions we will be asking. >> we look at that amount of

money you for -- we look at that amount of money for that project. they do not want to be moving around. they just want to work with that. that idea of having private security people getting paid what they're getting paid to tell that they are not allowed to move and to stay put this kind of crazy. thank you for your help. i yield back. >> the gentleman's time has expired. i would like to thank our witnesses for taking the time to be with us. i think the testimony today has made clear that this is an ongoing issue. i suspect we will be seeing many, if not all of you, in front of this committee again. the committee stands adjourned. c-sp [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

>> this week, we're joined by energy and commerce committee ranking member henry waxman. he talks about the supreme court's decision to uphold the affordable care act and what's next as the house prepares to repeal a law. he also talks about the keystone pipeline and republican plans for the epa budget. join us today at 6:00 p.m. eastern on c-span. marking the one-year anniversary of the deployment, defense secretary leon panetta held a briefing with leon dempsey. day -- with general dempsey. they talked about potential cuts to the military could mean for security. they also commented about the morale of troops in afghanistan,

increase the violence and allegations of sexual assault in the air force. this is about 35 minutes. >> that afternoon. as you know, it's now been one year since i was sworn in as secretary of defense. it truly has been an honor for me to lead the men and women of this department, and to do so during a very historic time for the united states military and for the country. and i've been very fortunate to have an outstanding partner in the chairman, the vice chairman, all of the chiefs, the service secretaries and the combatant commanders, and all of my civilian leadership. let me, if i can, recognize

some of the highlights from the past year. thanks to the leadership of the president, the commanders in the field, the iraq war ended with the safe return of united states troops. we began a responsible drawdown of the u.s. military forces in afghanistan, and we're making a transition to afghan security lead, which is ongoing. we concluded the nato mission in libya with the fall of gadhafi. relentlessained a focus on decimating al qaida's leadership. we developed a new defense strategy, which reshapes the force to meet the challenges of the 21st century, with a focus on investing in new capabilities and rebalancing towards asia-pacific and the

middle east. we've put forward a budget that implements the strategy and achieves mandated savings of $487 billion over the next 10 years. we continue to focus on saving taxpayer money here and improving business practices at the pentagon. we've eliminated another $60 billion in overhead spending over the next five years, and are accelerating by two years the time to obtain auditable statements of budgetary resources. we've affirmed our commitment to those who serve, maintained faith with them by protecting pay and benefits for active duty and reserve troops, and by improving employment opportunities for veterans and military spouses. and we implemented the repeal of don't ask, don't tell.

14,000lso opened up military positions to women, and we've put in place enhanced measures to prevent sexual assault. this has clearly been a historic year for the department and for the country. in the past two weeks in particular, i've been focusing on the overall health of our all-volunteer force. i visited wounded warriors at brooke army medical center in san antonio this week, sharpening our focus on the stresses that lead to suicide and ptsd. and we've been reaching out to those who work with our military families and have continued to work on ways to try to boost veterans hiring. there is a very strong commitment by military leaders, by community groups and by

families to ensure that service members have everything they need. after visiting these men and women who have come home, there's still a great deal that they need and will continue to need in the years to come. but let me be frank: the biggest risk to everything i've talked about -- to the health of our force, to the well-being of our service members and their families -- is the threat of this sequester. the biggest risk to everything i've talked about -- to the health of our force, to the well being of our service members and their families -- is the threat this sequester. the sequester will cut another $500 billion across the board

from our national security budget, and do it in a way that threatens to hollow out our national defense. i've seen extraordinary examples of courage and sacrifice over the past year in the men and women i've met in the war zones, in the wounded warriors that i've met here at home. they are willing to put their lives on the line in order to protect our country. they deserve better than the threat of sequestration. too often today the nation's problems are held hostage to the unwillingness to find consensus and compromise.

and in the face of that gridlock, artificial devices like sequester are resorted to in order to somehow force action. but in the absence of action, sequester could very well threaten the very programs critical to our national security, both defense and domestic. let's not forget that sequester would also involve drastic cuts in domestic programs, as much as 12 percent across the board on vital programs that americans rely on. congress can't keep kicking the can down the road or avoid dealing with the debt and deficit problems that we face. the men and women of this department and their families need to know with certainty that we will meet our commitments to them and to their families. our partners in the defense industry and their employees need to know that we are going to have the resources to

implement the strategy that we've put forward, and that they are not going to face the threat of layoff notices. ultimately, the success of all we do to try to protect america, the success of any defense strategy that we try to put in place, the success of any effort to try to support the men and women in uniform and their families depends on a political system prepared to make the decisions and the compromises necessary to govern the nation and protect our national security. this next week we celebrate the birth of our nation. it is a time for our leaders and for every american to recognize that the blessings of freedom are not free. they come from a legacy of sacrifice, of courage and of leadership. that legacy is now our responsibility to fulfill, so

that hopefully our children can enjoy a better life in the future. >> thanks, mr. secretary. good afternoon, everybody. i share the secretary's perspective on the remarkable achievements of our men and women in uniform over -- over this past year. i was with some of them this week. as some of you know, i just returned from a trip to offutt air force base visiting our strategic command, where my wife, deanie, and i participated in a town hall meeting -- although i prefer to call them family meetings -- with members of our joint military family at u.s. stratcom. and like the secretary, we also traveled to grapevine, texas, to chat with military kids and educators, and then we wrapped up our trip yesterday discussing leadership with soldiers and family members at

fort hood. and at every stop, it won't surprise you to know, i was struck by their tremendous sense of pride and commitment. they're courageous, they're selfless, they're smart, they're dedicated, they're irrepressible. they'll do anything to take care of this country. and i was also struck by the degree to which the budget concerns them. i find it encouraging on the one hand that our military family is informed and interested. it it's unfortunate that weighs so heavily on their minds. frankly, they have enough to worry about. they have faith in us. they expect us to figure that out. so as the secretary has made

clear, we simply have to come together to prevent this across-the-board, unbalanced cut that could jeopardize our ability to deal with the very real and serious threats that we face. the chiefs and i have no issue with military budgets being held accountable in these challenging times, or with the need to make tough program decisions as we move ahead. that's why our strategy and the budget that supports it constitute a carefully balanced set of choices. these choices make sure we have the right talent and the right tools to keep our country immune from coercion. a balanced approach is what the secretary and the joints chiefs and i seek, and a sensible way forward is what we expect. that's the only way we can honor our commitment to our military family and to the american people. we have to remember, too, that the force of the future -- that is, america's sons and daughters who may be out there contemplating a military career -- are also watching. i'm also pleased to announce the president obama has nominated lieutenant general

frank grass, army national guard, for appointment to general officer and chief of the national guard bureau. lieutenant general grass is currently the deputy commander of u.s. northern command. general craig mckinley, his predecessor, has done an outstanding job as the chief of the national guard bureau, helping to make sure our national guard is tightly integrated with active duty personnel, and he is the first guard chief, as you know, to have become a member of the joint chiefs of staff. so i'd like to congratulate both of them. thank you, and i look forward to your questions. >> we have a story out this afternoon that says the u.s. is considering transferring several taliban detainees from gitmo to afghanistan to be held in afghan control. could you comment on that? and also, may i ask you a question about jim miller's visit to israel this week? was it confirmed to him during the visit that the missile defense exercise that had been postponed earlier this year has been rescheduled and will now be held in october -- the u.s.israeli exercise? >> austere challenge. ok, i can take that one. >> why don't you take that. >> yeah, austere challenge, you're right, it was scheduled for the spring of the year and collaboratively with the israelis. we rescheduled it for october- november timeframe.

and dr. miller's not back yet. so i -- i really don't know what the final decision was, but it is our expectation that that's when the -- the event will occur. >> and, you know, with regards to reconciliation, there continue to be discussions with regards to reconciliation. there -- there are no specific commitments that have been made with regards to prisoner exchanges at this point. one thing i will assure you is that any prisoner exchanges that i have to certify are going to abide by the law, and require that those individuals do not return back into the battle. >> can you say whether it's being considered at this point? >> i -- i think the discussions are going on generally, but i haven't seen any specific proposal. >> thank you, secretary. we -- we understand that the turkish military has moved some

armored units towards the border with syria in response to the shooting down of that turkish aircraft. what is your message now to turkey? are you concerned about an escalation? it's for both of you, if i could. >> well, you know, obviously, we continue to be concerned about developments in syria. and as you know, secretary clinton is -- is engaged in discussions with our allies to determine what the next steps should be. we -- we are in discussions. turkey is one of our allies in that region. we continue to be in close discussions with them with regards to how we best approach

the situation in syria. they have maintained troops, as i understand it, along the border. and i wouldn't read too much into the movements that have been in the press. >> yeah, i'd only add, i did have a conversation with general ozel, who's my counterpart. he's the turkish chod, chief of defense. and he's taking a very measured approach to the -- to the incident. he -- so he and i are staying in contact. secondly, to the issue of risk of escalation, i mean, any time a nation's -- a nation loses in this case two airmen to a hostile act, it will, of course, increase the risk of escalation. but as the secretary said, the movement, the internal movement of their ground forces i wouldn't suggest -- i wouldn't read that as provocative in any

way. but you'd probably have to ask -- ask the turks. i've asked them and they are not seeking to be provocative. >> mr. secretary, you spoke with the ceos of a number of major defense firms over the past week about the budget and sequestration. what did you take away from their comments and what was your message to them? >> i think -- i think it's fair to say that the ceos of the companies that i talked to all share the same concern we do with regards to a sequester. they're very concerned about the impact that it will have on their companies and on their employees. as you know, they face certain legal requirements with regard to when notifying their employees if -- if in fact a sequester should happen. but, more importantly, i think they're worried about the cloud that sequester has over -- over the defense department and over the future of our who modernization program.

and so one thing i -- i can assure you is that we are very mu a'exese henies as wl making very cleato capitol llha ia maer that t not be poned, that it ought to be dealt with soon sohat a sequester, awill ap b, we will have some degree of assurance that we can proceed with the budget as we've outlined as opposed to facing another -- the possibility of anotr drasc defense cut. >> sir, are you concerned about recent reports that russian bear bombers, the tupolevs, that were cold war-era planes that are capable of carrying nuclear weapons, had entered the air

defense zone near alaska? are you seeing any rise in this? i understand that the last time it did so it was while president obama was meeting president putin in mexico. are you concerned about this? and could you describe whether you believe the relationship with russia has been reset? >> well, you know, i think we -- we continue to -- to be able to work with the russians in s one area where we're continuing to work with oth es unusual siion. eir ome ha and i n't thinwe rerd it asnything that is provocative at this point. >> yeah, and i'd add we -- you

know relationsh witcanadan the north. and so from time to time, we assess whether we see this as in any way a change ofome rt and to this point, we haven't concluded that it would be any ss a ptilar kind. >> thank you. earlier this morning, the department made notification to japan about the ospreys. given there's so much accidents and a lot of concerns at this time, why weren't you able to wait another three or four weeks or maybe a month or so when this died down? >> well, we've had -- we've had very good discussions with our japanese allies on this issue. and we have -- we have assured them with regards to the safety of the ospreys. but the important thing, we felt, was to be able to deploy these planes there, and that we will continue to brief them with

regards to the operations of these -- of these planes. we -- we actually think we've reached a very good compromise here. they had expressed the concerns that you indicate. i think we've -- weve been able with what we've presented tos them, but we're going to continue to work with them. the good thing is that our ability to deploy these forces will certainly help us with regards to our whole rebalancing to the asia-pacific region. >> a question about iraq. the levels of violence in iraq in june have risen quite sharply. neither of you, i don't believe, have been back to iraq since the withdrawal last year, and there was discussion about a follow- on mission. what's happened to any of that? i mean, has there been any progress toward a follow-on mission? do either of you plan on visiting iraq anytime this year? >> there -- there are continuing discussions with the -- with the iraqisitregards to the threat comg from aqi. we've seen creased violee, as yo've pointed out. we share theonce the iraqis witregards to that increased violence.

and i think we're going to continue to work with them to do what we can to improve their ability to be able to deal with those kinds of threats. this is something we obviously worked in great cooperation on prior to our departure. we've continued to work with their security forces, but we think it's really important now that we try to bring that cooperion ev closer together to make sure that these kinds of threats are dealt with directly. >> yeah, and in terms of our engagement with them, the centcom [central command] commander had high-level consultative talks in the first part of the calendar year. i think it was late february, march. minister dulaimi, the acting minister of defense, was here to meet with the secretary last

month, i think. and what we're doing is charting a way ahead, actually, on, you know, the potential for exercises, the things we talked about at the -- at the closing ceremony, if you will. and i am going back to iraq. i'm scheduled to visit iraq in august. i've chosen august because it's the most miserable month of the year over there. and so i'll go back in august and do a trip into the aor [area of responsibility]. >> mr. secretary, you mentioned as one of your accomplishments over the past year implementing enhanced measures to -- in an effort to stop sexual assaults in the military. yet this week we heard from the air force, they had 31 cases of alleged sexual assault, even a rape, against young recruits when they're probably at their most vulnerable when they enter the service. first of all, what was your personal reaction to that? and -- and second, is it time that there be changes made in the way the military pursues and prosecutes sexual assault in the military, as some in congress have suggested? >> well, i -- i was very concerned by the reports that came out of the situation involving the air force and these allegations of sexual assault.

you know, this is a situation in which these young recruits are very vulnerable at that point. and i think it is -- it's absolutely essential that the leadership make sure that those who are responsible for these recruits don't take advantage of that situation. for that reason, i've asked that this matter be fully investigated. it is being investigated now, as the air force is following through on the allegations that are involved. i -- i take sexual assault allegations very seriously. we have no place in the military for sexual assault. he mary.ached out to brin i' proud of what we' beento do. i'm very proud of wh wom ve been ableo do in milita. but we have to maintain strict discipline here to ensure that sexual assault does not happen.

place a number of steps to try toake sure that wel with athat level buat a higher level, so that it doe't involve influence within a uni w've taken steps to develop special ctims units to try to directly deal with this. we've asked for legislation to try to also help us in this d ure, from the chairman on downha made very clear to the leadership in this department that this is intolerable, a it hato be dealt with; that we have -- we have absolutely no tolerance for any -- any fo ofexl assault. and this matter, i can assure you, is going to be fully investigated. >> and, mr. secretary, what do you tell the parents of these young women, the families who have turned over their children to the military and expect them toe protected or at least respected? >> you know, what i tell the

parents is that as a parent and as secretary of defense i am -- i am very proud of those men and women who volunteer for service in the military. and i want to make sure that we take every step possible to ensure that good discipline, and that laws are abided by and that we do not have any tolerance for any kind of criminal action. they have my assurance, they have the assurance of the military leadership that we are going to do everythingble to make sure that they have the oppounit to serve withouthat kind of aomis d about afghanistan, and i wanted to k you sms like nobo really talks about winning in

afghanistan. officials talk about responsible withdrawal, about meeting the national goal of withdrawing from afghanistan. for yo a, mr. chairman -- is that enough? what are your thoughts about what it does to troop morale that you have seen or how the troops view having to go into the war zone now still facing attacks, and for them it's not about winning, it's about achieving the goal of withdrawal? >> let me start, because i'd, you know, recently been to afghanistan. and i wouldn't characterize it that way. i mean, i think what you're seeing is a recognition, as we've learned the lessons of the las ynd othis kind of conflict, is that winning is defined as -- in -- theirms.

in other words, it is the afghans that have to win this fight. you've heard many of us say famously, you know, you can't way out of this kind of conflict. so this is auts empowering and enablingurn security partrs, providing the space necessary for governance and economics to catch up. and that is the definition of winning. it's just -- it's that kind of conflict. >> yeah, i mean, the mission in afghanistan is to establish an afghanistan that can govern and secure itself. that's what this mission is about. and the success of our effort there will be determined by an afghanistan that can truly secure and govern itself. and that -- that's the path we're on. that's the transition we're making. 50ve already got over percent of the population transitioned to afghan control and security. we're in the process of going to 75 percent of their

population in the third tranche that's been announced by president karzai. general allen, i think, makes very clear that we are on the right path toward achieving the goal that this mission is all about. and, most importantly, let me -- let me just say this. i had a chance -- i was at brooke hospital this week, and i saw a lot of wounded warriors. and i asked -- i asked them, i said, you know, "where were you wounded? what happened? how do you feel about the situation there? " because they're the ones that probably can speak with a helluva lot more authority about what's -- how things are going there than almost anybody else. and every one i talked to said, "we're doing better. i feel like security is much better, you know, even though i got wounded. i think our unit was doing a good job. and i see things getting better." and i said to them, "i think

your sacrifice is worthwhile because everything i see when i go there, everything the chairman sees when he goes there, every time we sit down with general allen and get the report, i think it's clear that we are -- you know, we are in the right direction here." this is -- this is tough. we've seen a spike in violence. we've seen an enemy that continues to be resilient. this is still a heavy fight, but we are on the right track. and that, i think, is what keeps me confident that we're going to be able to achieve the mission that afghanistan is all about. >> can i just follow up and ask you about brooke? >> sure. >> what is -- when you sit down and talk to the gravely -- the seriously wounded now, what are they asking you? what do they want to know from you? and what are you learning from them? >> well, i mean, first and foremost, when -- when you walk in these rooms and see these

wounded warriors, you -- you cannot help but be inspired by the spirit that they have to fight on. you know, they've got incredible wounds as a result of the ieds. and -- and yet, they -- they have a smile on their face and they're going to fight on. and i had a chance to not only go to brooke, but to go across the street to the intrepid center, where they are providing rehab to our wounded warriors. and they're together. they're all going through rehab together. there's tremendous spirit. tremendous things are being done. i mean, miracles are being produced every day with regards

to these kids. and so what i get from them is a tremendous amount of inspiration with regards to the incredible spirit they have to fight on. what -- what they say is that, you know, they're -- the other thing is that most of them want to go back. most of them want to go back. that they were there, they thought they were doinwell. they thought they re, y know, at the mison was bein performed. they felt very good about their unit; very good about, you know, the -- the quality of colleagues that they're fighting with. and they feel good about the mission that they were involved with. so, you know, i'm getting very good reports that -- that they

feel good about what they were being able to achieve. i think, you know, the one thing that -- that they want to see is that we don't walk away from this, but that we continue the effort to make sure that this mission is accomplished. i think that's the -- that's the message i get. >> could i add? so you asked whenever we visit these wounded warriors, what do you learn? you learn about the real meaning of courage. i mean, the real meaning of courage. and if -- and if i'm struck by anything it's the degree to which they trust us, the senior leadership of the armed forces, to take care of them. and that's -- that is both -- that's a great blessing that we have that kind of trust within the ranks, and it's the trust we have to live up to. >> quick question on the pakistan supply routes. two weeks ago you told congress that it's costing $100 million more to transport through the northern route, and the talks seem to have broken off. the u.s. team has left.

is there a stalemate? is it -- is it hanging on a question of the u.s. apology? you also told congress there were other issues besides apology. would you talk about what the other issues are? >> there -- there continue to be discussions in this area. we continue to have a line of communications with the pakistanis to try to see if we can take steps to reopen the gloc's. and, you know, the good news is that there continue to be those discussions. there still are some tough issues to try to resolve, but, you know, i think -- i think the important thing right now is that both sides in good faith keep working to see if we can resolve this. >> may i ask a quick follow-up. so in kabul you also said that you were running out of patience with pakistan in terms of their not being about to take action on the haqqani network. is that part of this discussion, as well?

>> it is. general allen met with general kayani, and they had discussions on the issues we've talked about. and i think, you know, he made clear that we have to -- both the united states and pakistan have to work together to deal with the threat from the haqqanis. and i think he -- he got -- you know, he got a receptivity from general kayani that he understood the concern. after all, they, too, have been the victim of terrorism. they lost 17 pakistanis on a patrol to the ttp [tehrik-e taliban pakistan]. and so every day they, too, are the victims of terrorism. so we -- we have a common enemy. it would make sense if we could work together to confront that common enemy. staff: one more? >> mr. secretary and mr. chairman, the joint staff recently put together a lengthy report on lessons from the last decade of war. i wonder if you had a chance to

review it, and if so what you thought of it. and also there are many recommendations in there, everything from the need to create a new isr strategy to reorganizing the interagency in the tional security arena. and i wonder if any -- any steps will be taken to implement those recommendations. >> yeah, i can take that. the secretary hasn't seen it yet, and i'm just beginning to -- to -- it's just beginning -- >> i was going to say that. i'm glad marty did. >> the -- you know, what -- what we've discovered is -- i asked when i first came to the joint staff to do a survey: what's out there? what studies have been done and what analysis? what findings and what recommendations? and there were approximately 47 significant studies done. and when you add up the findings, approximately 400. so i said, "well, that's a little overwhelming for me, you know, bayonne, new jersey and all." so i asked the j-7, who now since the disestablishment

of jfcom [joint forces command] is actually the proponent for joint lessons learned, to take this and to, within the staff -- not contracted out, not outsourced -- but within the staff to take a look, given the new strategy that the secretary approved and the president, my strategic guidance to the force, and map those recommendations to those documents so that we have a coherent way ahead and we can decide which of these recommendations are -- are most beneficial and should be pursued. and we're -- and we're working that and i think it's a very positive step, actually. >> do you have an initial gut reaction to what you're reading in those -- >> yeah, we -- we did too many studies. [laughter] that's my initial gut reaction, but that's what we do. so now we're going to try to nick it down a little bit. >> ok. happy fourth.

>> coming up, "newsmakers." witt henry waxman. that is followed by a hearing on preventing voter suppression. later, "q&a," with gretchen morgan sen. -- morgenson. >> sopa and pipa are dead. it's pretty clear the effort undertaken derrin into a lot of controversy and a lot of miscommunication. those bills are not coming back