to rockaway inlet. if they have to review everything, it's going to slow things down too much. that gives me worry about another storm. could you tell us what's view,ing, what's your your candid view, of o.m.b.'s shall i say meddling here? and what we can do to speed things up. doing,thing that we're senator schumer, with both the limited reevaluation reports as the general reevaluation reports is we're having monthly with c.e.q. and o.m.b. with our division commander me, to give them a status report on a monthly basis ofwhere we are on each these -- of the 18 projects that you're referring to that were in thatnterim two report so we can all know what the status where we are so that that will help to speed that review. it will be ongoing before there's even a final product. -- i's my understanding

was probably the lead author of this legislation -- that we o.m.b. approval for were alreadyat authorized like fimp are they seeking such approval and is it the way? i don't mind your consulting with them. that's fine with me. senator,s stage, those -- a say -- we're going to be consulting with them and reviewing this. law as itl follow the was. tooo -- without being confrontational to your dear friends, you're agreeing with me that the law does not require their approval? >> that's correct. >> thank you. very good answer. [laughter] >> that was a perfect answer. not sure i feel comfortable about it. [laughter] >> yeah. perfect from this side of the table. >> let me just say if i can, senator schumer, your honesty forthrightness is greatly appreciated. >> right. ok.

to --t we're going >> i can feel it. secretary -- another -- i mean it. guyguys have done -- you and gals have done a very good job. rochester.rom so that explains a lot of it. two questions. when can we expect an announcement of the remaining f.t.a. emergency relief funds? and more importantly, federal behway relief money cannot used for mitigation, like on ocean parkway. that's why we turn to other help us with ocean parkway. but, are you considering using any of your authority to use f.t.a. money for resiliency on other transportation modes? do that should you wish, as i understand it. it wasn't used on ocean parkway

but it should be in other places on long island and in new york city. that.e a little about >> you're correct, senator. first, the authority exists under the act for the secretary to another money mode. first to answer your question on of transitanche money -- again, that's the single biggest need in the transportation network. well know. we have a notice of funding availability that's in internal review right now. we will have that completed very quickly. for $3 billion, specifically awarded on a merit resiliency projects. we will coordinate it with the taskforce by, for example, making sure that we have corps, reviewersand other looking at that from a systems perspective to make sure -- $3 billion is a fraction of the niedermayered out there. -- of the need, needed out there the transit network.

the thinking is also there are real projects that may fall into category. there are shared facilities of,h you're well aware substation 4 is it, an amtrak-owned but serves both new transit and inner city passenger rail. and either through the award directly or through the secretary's transfer authority, be real projects. we do not anticipate going and inner city passenger rail projects with that. >> right i have just hope you'll an open mind with the remaining $2 billion in terms of authority using your to transfer so we can build better to avoid the next storm. very important. >> resiliency will be our focus and we know given the vulnerability of the whole network.ation but in particular, the transit system -- and what we know about sea level rise, for example, we have a lot of work to do. >> you bet. could i ask one more question your indulgence?

>> almost time for a second round. this goes to first mr. holloway and then shaun donovan of as is news.s, it's not homeowners are complaining they're not getting the money .uickly enough there are all kinds of reasons for that. as i said, i think the second going to be much, much happier with the money's in ing.pipeline and flow the spigot is open. but what, in your opinion, i'm sureway -- and this would be true for your colleagues in long island and well -- is the biggest red tape problem getting in the way of aid to homeowners and projects at the federal level? >> i'll start by saying that there's been a lot of red tape that previously had existed up.'s been cleared so that has been tremendous. is a challenge, cdbg is essentially the

backstop, it is a challenge to get to the backstop. >> right. >> now, that is not to say that hud's issue,sarily but getting verification from insurance companies, getting everybody's financial conditions order is very challenging to do. to say what would relieve that issue, figuring out the right kind of way without up the specter of duplication of benefits and all of those things which have a lot of the creation of a lot of process to basically get enough data to say, ok, we're pretty sure we're good -- that -- you know, we can give you some portion of funding even if you're not at the end of the verification process. i know that would be difficult do. but that's the challenge. >> and, yes, a lot of that -- we to pay when insurance

has already paid. would you agree that, shaun? donovan? >> i think it is absolutely the center of many of the things that appear as red tape to homeowners whether they're necessary or just, frankly, unnecessary delays. one of the things that as we started to work through this my team began developing is call a program in a box. one of the problems that you state orhat each locality developing particularly smaller localities, new york city has as high capacity. i'm a little biased here. but as high capacity as any city the country. but for many of the smaller hitunities that have been to create a brand new program, to figure out how to do these other things is a major barrier. so what weaver' begun to work -- is a begun to working on program in a box where literally we could say here's the model, it and it will allow

you to move faster. i don't think that takes care of all the issues. but it certainly could remove some of the unnecessary red tape. and then i think it's worth thinking about on duplication of benefits are there things that we could do to simplify and streamline that while still not running afoul of basically subsidizing insurance companies. >> thank you, mr. chairman. thank you, senator booker. >> thank you very much. couple of quicks ones and then to senator booker. as -- dawned on me in your testimony you mentioned the impact of sequestration to some of the this next round we're about to hit, the cr and sequestrationtial if we can't get a budget, will that have an impact on the have?onal resources you i don't know -- >> generally speaking, senator, reductionne-time of -- so specifically for the a 5%illion, it was reduction down to 15.2. that's pretty much across the board.

>> that's -- ok. good. i can ask i can, if you a question, you had reporting process that aren't in place. someou going to prepare at point or you could prepare, i guess, for this committee, kind what those items would recommend to ensure that at transparency more in reporting of how the expenditures are being done so people like yourself and others can review them in a more accurate way? and if that is done by or legislation. that's the first question. second questio have you in whate looking at and uncovered any questions or hot that might say here's an area we better be looking at today in regards to some of expenditures. and if the answer is yes to that, is that occurring? last question make sense? >> yes. mr. chairman, we're happy to information on specific

recommendations that we would make. but just to sort of give you -- one thing we really learned from recovery is the public is very iserested in where money going, really specifically where it is going and what it's being for. a lot of our impetus, you know, ofon transparency information. easy fix to usn to do what the federal base alreadyata does, which is when a hurricane or a special event hits, they special code. and why can't we do that on usa spending so that we know what on website is being spent for hurricane sandy? us.ust seems easy to >> what's the response? >> it had to be something done right out of the box. doisn't something we can now. it isn't something -- >> let me pause you there.

>> please. >> we have four agencies here. >> yes. >> so your statement is a good statement. question ifere's my i can pause you for a second to the four agencies. system now or a into the knew tour -- future -- assume there's no disaster coming, would be a mistake. there will be one at some point. can you do this simple system here? >> senator, let me address because we have been working with the recovery accountability and transparency board on this. set up a system to collect data. website available monthly with information on spending. i think the issue is not that we can't do that. to get to the level of detail and information requires additional steps sox we do fact, it wasin parted of our sandy recovery taskforce report, that we ought

to have a legislative requirement for future appropriations like that we a project management officen that there are data requirements -- regulativeeed a requirement? why don't you just do it? answer is that because -- the extent of work get to that to reporting. it means inserting in hundreds the federalcross government particular lines or codes. is not something you can do overnight. to jump in.he wants can we go back? >> well, i don't know. to not knowing the mechanics of what happens on the federal procurement data system. every contract let by the thatnment, it's a system g.s.a. has set up in the federal procurement data system that you a box thatt fill in says, yes, this is a hurricane sandy. national interest

action code, i think it is called. i think we're really talking about something that i think usa spending itself could generate. know if it has to mean changes to thousands of agency's feeding data. i know that the hud taskforce and they doood job have a website that does discuss spending. very highit's at a level. and the secretary is right that what we're really talking about much more granular. now, usa spending has some of that. know, it that, you does not separately capture or you can't, you know, search by, what's a code for hurricane sandy. there's no reason why the major portal we have for federal that.ng can't do i don't think -- i'm not a person who can tell you what the having thate of done. but i think it can be done without actually legislation, i

think. there just has to be a decision made to do it. that. me hold you at i've run out of time. let me ask you that last -- .irst part of the question can you produce for the committee that shopping list? >> absolutely. >> ok. would you submit that? and if you can indicate if you think it's regulatory or legislative so that can help us do a little understanding of what we can do here or what we can press to have happen. will. >> fantastic. senator booker for your next round. take toll yays in the fact that this -- take solis in the fact that this committee as will have hearings in the future. obviously this is probably one two storms that had a has hit our country in the last century in terms of its impact, damage, and cost. especially in our region in the region, whichrsey -- this ishe most

obviously something of great concern. not just to our region but to the country as a whole. mark for the record my gratitude that everyone shook their heads up and down about to meet withness me and work with my office as we try to tackle these problems. bring up --g i'll and i know i'm looking forward gateeting with mr. few and -- fugate and discuss this issue. i guess i'm confused. the municipal level things don't make sense. but national level, i'm sure rational here in washington. has chilled my understanding of what's going to happen to my region when the insurance rates go so up, it's going to devastate, devastate areas of new jersey. not only it will affect homers on being but they won't even abible to sell their homes. who's going to buy their homes high insurance

levels? for my understanding, just my into thisto dig personally, when bigger waters to do at required fema study about the insurance kwreu78ility and the pact on the region. it seems like a critical thing before you allow the phasing in high these incredibly insurance rates that we would know sort of what we're going to do to that legion. guess -- a matter of the record for now and something we could get into more when we you let me understand what's going on with that study and what it really devastatinghe this could have to regions like mine? >> yes. was to move towards an insurance sound program that would encourage private sector participation because we would no longer subsidize rates below value. there were many pieces to that. generally when you would see would tien that

specific action before further action would go, the language would have been written so that affordability study would have been requirement before you went to the next steps. the way the legislation was was all done con currently. so the phase-in was not tied to an affordability being done. it was affordability study to be but not hold up any of the other implementations. i think this is the area we've and worked. senator menendez asked for drafting assistance that the that we wereng given and time frames -- we wasn't to the we went to the national academy of science. they informed us they could not complete the study. that even seem rational to you to let the phasing in understanding how the study is completed? >> the ability to not phase in permitted in the legislation. there were certain time frames that we were required to implement those phase-ins to start moving towards actually ago we hadyear

already done secondary hoaxes, commercial-- homes, and repetitive loss. the next steps were for those subsidized,rrently phase them in over a period of time. and then the one that's causing the most immediate problem, there is a very limited phase in. of these changes were predicated upon when the legislation was passed, you had certain time frames to get that done. and the only delays was the regulatory process of implementing those rules for that. the affordability study, although still required, again, technical the drafting assistance that we need to be able to expend the funds, of national academy sciences, would be required and allow the time frames they stated it would be allowed. then postpone the increases for those areas until that study done. >> that sounds like a recommendation. it makes sense to do the study. the study right now is not being done, nor do we have the money the study yet we're still

moving forward with the phasing in in. it sounds like you're saying thing to do,able to do it right, to actually understand -- to do the study, allocate whatever resources are necessary so we understand and don't fly into this blind and hurt a lot of people. >> again, understand that as the legislation was signed into law, implementing the law. as it's been designed. whenis an area that senator mendez and the previous hearing that i testified on flood insurance, he specifically to supports technical drafting assistance. and that is exactly what we've on. working how do we make insurance o so we don't subsidize risks beyond which there's a return of taxpayer?it but the intended goal should not to be place people out of their homes because we make insurance so unaffordable. >> i understand that i guess what i'm missing is the link. i'll talk to the senator about this. i guess i'm missing a link. in other words, you've provided the technical assistance. not done.till

>> it still requires legislative this to behange signed into law. as we understand the law, we given any flexibility in implementing the time frames regulations done that the affordability study was were note increases dependent upon affordable study being done. it was written in such a way being done all concurrent. >> you're saying it's on the legislature to act in order for way it be done the should be done. time, weestified last have not found any way to delay those implementations without at of congress giving us of ability to suspend some those increases until such time as an affordability studsy is done. >> we're rushing forward with this not knowing the impact that's going to have, not knowing if we've struck the balance. that to me just seems a million damaging.ong and

would you agree? >> i would agree that i've don't addresse affordability, our risk is we're not going to be able to move this program to a sound basis. we'll subsidize risk being, encourage growth and development where we should be building that way. put people out of their homes. so there is a balance that has atbe struck between looking at ad forrability but -- at affordability but not risk at such a low rate we increase vulnerabilities. we have got to change how we're building. but it should not be at the expense of people in their homes, forcing them out. but understand that long-term we have got to look at how do we build in coastal communities in such eh way that people's homes are not threatened every time we face a storm. >> i agree with you. frustrating thing for me is, you've got to know before you go. thee acting without having knowledge base necessary to make sound decisions. ad we could end up with situation profoundly devastati devastating. could just -- two

points. this is an issue the administration raised when bigger waters was passed. in our statement of administration policy, we raise fact that there was not an affordability provision that would allow us to protect folks. raised in thewe sandy taskforce report. to echo craig's point that this is something to act on without undermining what is an important in making the program snag doesn't encourage development in places. i think it's important we strike that balance. we could get some authority to start doing this even before the affordability work is done if we could correctly with you to get the right legislation. >> i would agree. colleagues from new york as well as the chairman probably would agree with that as well. thank you. much.nk you very let me add to that and then close this hearing. we have a piece of legislation,

know, that's pending. i'm hopeful that you have reviewed that legislation that implementation based on the affordability study done. i would ask if you have not input on that, at least to have tomittee, you may individual members. i would greatly appreciate that. what you're experiencing, ofator booker is a piece legislation that was not crafted well. it was crafted with a good but there is piece of the equation that was discovered after the fact that now we're trying to fix. problem is, the administration is bound by the go through they must through. if we went back in time, i bet be a different discussion going on knowing the facts we know today. but we are in this quandary. we a bill pending. senator mendez. i'm a co-sponsor. is to partially unwrap this to get us to the anordability study, get to

affordability of rates, and then deal with the rate structure has to be reform. i think the administrators made it very clear. and everyone knows this. reform but wee have to get to the affordability and also the timetable. it's one of these pieces of you lookon that when at it today, you go, why didn't we fill in the blank. thewe're trying to fill in blank but clock is work much faster for them to administer versus us legislatively. there is a pending bill. we're anxious to try to find a to move it. senate has a version. house has no version as far as we know right now. me say for the record we'll stay open until november 21 for additional questions that and submit tove the committee. i do want to thank the panel. usually we break panels into two. because of all the uniqueness and experiences you all have, it was important table. you all at the thank you for being here. thank you for being part of this hearing. then, to senator booker and other folks from new jersey and new york that were here, we will efforts to follow

this and make sure we're on the right track with the expenditures and activity with it's aecause i think good learning opportunity to make sure we improve our system. thank you all for being here. committee isappreciate t. the adjourned.joern captioning performed

>> good morning, everybody. the committee meets this morning

to consider the kmalkt on our national security of sequestration required by the budget control act. we welcome today our nation's service chiefs. chief of staff of the army general raymond odiarno, chief of naval operations jonathan greener, general james amos, and the chief of staff of the air force general mark welsh. i'd like to thank our witnesses on behalf of the committee for their service to our nation and for the service provided by the men and women with whom they serve. many of whom, as we meet here, are in harm's way. we also appreciate the important grix made by our 800 dod zifd yans, a talented workforce that has been hard hit by sequestration and the government shutdown. sequestration is arbitrary and

irration irrational. while we'll learn more about its impacts on our national defense, with sequestration with continued resolutions, government shutdowns and the threat of a default on the nation's debt, we not only fail to sustain our national security but also fail to meet our shared obligation to protect and promote public safety, health, transportation, education and the environment. when we allow this to happen, we put at risk much of what we do and stand for as a nation and we undermine our position in the world. throughout the two years since the enactment of the budget control act, our military leaders have been warning us of its harmful consequences. if sequestration continues, the services will have to cut active and reserve components and strength, reduce force structure, defer repair of equipment, delay or cancel modernization programs and allow training levels to seriously

decline, which will reduce our ability to respond to global crises, thereby, increasing our nation's strategic risk. sequestration has raised questions among our allies about our ability to manage our affairs. it's introduced uncertainty into resources to support operations in afghanistan and around the world. has accelerated the decline of a nondeployed force whose readiness was seriously underfunded for more than a decade before sequestration. and has painfully furloughed civilian workforce. i know that our senior military leaders are deeply troubled by the impact of sequestration on moral on workforces. it makes little sense to tell members of our military that we'll pay their salaries but we can't afford to train them and we can't justify telling our

dedicated civilian workforce, many of whom are veterans and some are disabled veterans, that they aren't essential and they are going to be furloughed and are not going to be paid. another year of sequestration only compounds the damage that will be done to our forces and our national security. if sequestration is allowed to continue into fy '14 and beyond, we will be left with a less ready military that is significantly less capable of protecting our interests around the world. i look forward to the testimony of our witnesses and impact that sequestration is already having on department of defense and on our national security. we're all delighted to have jim inhofe back with us today in full force and looking terrific. senator inhofe. >> thank you, mr. chairman. i appreciate it very much. i made a request to have this hearing and another one before this after the house had their

hearing. it's my concern, mr. chairman, that everything you said is true but the general public is just not aware of it. over the last five years the significant cuts to our national security spending forced our men and women to endure steep and damaging drop in capables and readiness. we'll have a chance to talk about this during the questions. our naval fleet is at an historic lowest level. the army shrinks to a force we haven't seen since the turn of the 20th century. as our security is being threatened by terrorism, the rising china and roman nations like iran, north korea and men and women charged with protecting this nation are being undermined and forced to endure devastating cuts to the tools they need to keep america safe. we have been told that over the next three years as much as $150 billion of cuts will be taken from accounts used to make sure

that our military men and women are better trained and equipped. we'll show that with these charts. i know some americans are wondering why this matters and these cuts may affect their everyday lives if they really do and the simple reality is that the world around us is not getting any safer. i've often said that recently i look back at the days of the cold war. we had things that were predictable. and that's not the case anymore. we have rogue nations have the ability and develop the ability to develop weapons of mass destruction and we know that's happening. hopefully this hearing will bring this to the attention of the american people. it's america's leadership, trust in american security partners and our ability to protect this country is receding. we have seen the effects. we're at a point where our allies don't trust us and our enemies don't fear us. as america retreats from its

role as a global leader, we'll have more failed states like syria and libya as breeding grounds for terrorism. we'll have more brutal dictators acquiring weapons of mass destruction and more aggressive adversaries like china attempting to bully our partners in the south china sea but we'll have fewer options of how to deal with them. this is why i'm so troubled with the disastrous path we're on in face of the mounting threats to america we're crippling our military and people that are vital to our security and our military leaders use the term hollow to define the forces of the future. the chairman of the joint chiefs warned us that continued national security cuts will severely limit our ability to inplemt our defense strategy and put the nation at greater risk of coercion and it will break face with the american people. i think another quote that i

carry with me is one that admiral, our number two person in the overall military that we have, he said there could be a time -- be for the first time in my career instances that we may be asked to respond to a crisis and we'll have to say that we cannot. this faith is sacred to me. our nation relies on our population to volunteer to risk their lives on our behalf. the faith is being threatened by a growing divide between security our nation expects and the resources being provided then to give us that security. our witnesses testified before the house in september about the potential of not having the readiness capabilities to succeed in one operation. that's something that all of us assume and most americans assume that we still could defend

against two ncos. that's just not true. if we have to go through sequestration, we may not be able to do either one. that's why it's so important that we hear from you folks that have the credibility to make sure that the american people understand this. i think about peace obtained through strength. we know that ronald reagan is probably rolling over in his grave seeing what's happened to the military sdrent of this country. that's what this hearing is about, mr. chairman. and i look forward to this being an opportunity for all of us at this table to use the information that comes from this hearing to make america aware of the problems that are facing us. thank you, mr. chairman. >> thank you, senator inhofe. general? >> chairman levin, ranking member inhofe and members of this committee, thank you for the invitation to speak today. if you'll just indulge me for a few seconds i'd like to begin by

recognizing the service of ike as the chairman of the house armed services committee he was an incredible leader, mentor and champion of our soldiers, civilians and their families. what was interesting though in his farewell address he made a comment that i think is appropriate for the conversation we're having today. when he remarked, i've always considered each young man and woman in uniform as a son or daughter. they are national treasures and their sacrifices cannot be taken for granted. they are not chess pieces to be moved upon a board. each and every one is irreplaceable. and i think those words are very important today as we talk about the readiness of our force and as we consider future budget cuts and their impact on our national defense. it is impairtive that ke keep foremost in our minds the impact that this has on the young men and women, our soldiers who we ask to go forward and protect

this nation. previous draw downs have taught us that the full burden of an unprepared and hollowed force will fall on the shoulders of our men and women in uniform. we have experienced this too many times in our nation's history to repeat this egregious error again. it it may be popular to proclaim that we are entering a new age where land wars are obsolete. yet history leaders never knew would be fought. in the summer of 1914 a british journal declared that the world is moving away from military ideals in a period of peace, industry and worldwide friendship is dawning. new technology such as airpla airplanes, machine guns, dynamite and radios were sent to ridiculous and impossible. and yet the next year we will mark -- but next year we will mark the 100th anniversary of the war to end all wars.

i can give you an example of that for every major conflict. there are many comments that said we would never fight wars again. we would never send our soldiers into harm waes east way, but we did. it was significant consequences to the men and women who wore the uniform. whether it it be in korea with task force smith or whether it be in vietnam in the initial days of vietnam. we cannot allow that to happen again. throughout our nation's history the united states has drawn down military forces at the close of every war. this time, however, we are drawing down our army not only before a war is over but at a time where unprecedented uncertainty remains in the international security environment. the total army, the active army, the army national guard and the u.s. army reserves remains heavily in operations overseas as well as at home. as we sit here today, more than 70,000 u.s. army soldiers are deployed to contingency

operations with nearly 50,000 soldiers in afghanistan alone. additionally there are more than 87,000 soldiers stationed across the globe in nearly 120 countries. during my more than 37 years of service, the u.s. army has deployed soldiers and fought more than 10 conflicts including afghanistan, the longest war in our nation's history. no one desires peace more than the soldier who has lived through war. but it is our duty as soldiers to prepare for it. as chief of staff, it's my responsibility to man, train and equip the force to provide america with the best army possible. as a member of the joint chiefs of staff, it's my responsibilit advice to ensure the army is capable of meeting our national security needs. if congress does not act to mitigate the speed and reductions of the budget control

act with sequestration, the army will be forced to make significant reductions in force, structure and end strength. such reductions will not allow us to execute the 2012 defense strategic guidance and will make it very difficult to conduct ooen one sustained major combat operation. from fiscal year '14 to fiscal year '17, as we draw down and restructure the army into a smaller force, the army will have a degraded readiness and extensive modernization program shortfalls. we'll be required to end, restructure or delay over 100 acquisition programs, putting at risk programs such as ground combat vehicle, armed aerial scout, production and modernization of our other aviation programs, system upgrades, manned vehicles and modernization of our command and control systems just to name a few. from fy '18 to fy '23 we'll begin to balance modernization.

this will only come at the expense of significant reductions in the end strength and force structure. the army will be forced to take additional end strength cuts from a wartime high of 570,000 in the active army, 358,000 in the army national guard and 205,000 in the u.s. army reserves to no more than 420,000 in the active army, 315,000 in the army national guard and 185,000 in the u.s. army res. this will represent a total army end strength reduction of more than 18% over seven years, a 26% reduction in the active component, a 12% reduction in the national guard and a 9% reduction in the u.s. army reserves this will also cause us to reduce our brigade combat teams by 45%. ultimately the size of our army will be determined by the guidance and funding provided by congress. it is imperative that congress take action to mitigate and ease

sequestration reductions. i do not consider myself an al armist. i consider myself a realist. today's international environment's emerging threats require a joint force with a ground xoet that has the capability and capacity to deter and compel adversaries who threaten our national security interests. the budget control act and sequestration severely threaten our ability to do this. in the end, our decisions today and in the near future will impact our nation's security posture for the next ten years. we've already accepted nearly $700 billion in cuts to the department of defense. today we have the premier army in the world. it is our shared responsibility to ensure we remain the premier army and the premier joint force in the world. thank you very much, chairman. i appreciate the opportunity to talk. >> thank you so much general

odierno. admiral greener. >> chairman levin, thank you very much for mentions our civilian personnel. those are our ship mates. we still have quite a few still hurting from the tragedy senator inhofe, thanks for being here. distinguished members of the committee, thank you for the opportunity to testify on the short and the long-term effects of sequestration and our perspective on the strategic choices and management review. this morning i'll address two moin points, our budget situation and our plan for fiscal year '14 and the near and the long-term impacts of sequestration. mr. chairman, presence, that remains our mandate, your navy's mandate. we have to operate forward where it matters and we've got to be ready when it matters and we have to be able to respond to contingencies with acceptable readiness. recent events this year alone have clearly demonstrated our ability to do that with deployed forces. navy assets were on station

within a few days where needed and offered options to the president whenever the situation dictated, north korea, egypt and syria as an example. this ability to be present reassures our allies and ensures that the u.s. interests around the world are properly served. in 2014 sequestration will further reduce our readiness and surely reduce our ship and aircraft investment. the budget control act revised discretionary caps will preclude our ability to execute the 2012 defense strategic guidance both in the near term and the long term. restrictions associated with a continuing resolution preclude transfers funds across programs, increasing needed program quantities and starting important new programs. the impacts of sequestration will be realized in two main categories, readiness and investment. there are several operational impacts, but the most concerning to me is that reduction in our

operations and maintenance will result in only one non-deployed carrier strike group and one amphibious ready group trained and ready for contingency response. our covenant with the combat commanders is to have at least two carrier strike groups and two amphibious groups deployed and have them ready to respond to a crisis on short notice. so, for example, right now we have one carrier strike group deployed in both the arabian gulf and the western pacific. and our one response carrier strike group, the nimitz is in the eastern mediterranean. because of fiscal limitations and the situation we're in we don't have another group trained and ready to respond on short notice in case of a contingency. we're tapped out. in 2014 we'll be forced to cancel aircraft and ship maintenance that will result in

reduced life in our ship and aircraft. we'll only conduct essential renovation of facilities further increasing the large backlog in that area. we'll be required to keep a hiring freeze in place that will further degrade the distribution of skill and balance in the civilian workforce which is so critical. we won't be able to use prior year funds to mitigate like we did in fiscal 2013. without congressional action we will required to cancel the plachbd procurement of a virginia class submarine a literal combat ship and an afloat forward staging ship and we will be forced to delay the delivery of the ford and delay the overhaul of "the george washington." mr. chairman, the key to a balanced portfolio is a spending bill, and secondarily top shun to propose to the congress the

transfer of money between accounts. this at least would enable us to pursue innovative acquisition approaches, start new projects, increase production quantities and complete the ships we have under construction. just to meet minimum, that readiness needs, we need to transfer or reprogram about $1 billion into the o and m account and about $1 billion into our procurement accounts, mostly for ship building. we need to do this by january. after the strategic choices and management review was completed, our focus has been on crafting a balanced portfolio of programs within the fiscal guidance that we were provided. further details of our approach into what we call the alternative palm are outlined in detail in my written statement which i request be entered for the record. in summary, we will maintain a credible and modern sea-based strategic deterrent, maximize foreign presence to the extent we can using ready deployed forces and continue investing in

ace met tick capabilities while with this committee's help we'll do our best to sustain a relevant industrial base. however, there are several missions and needed capabilities specified in the defense strategic guidance that we cannot perform or keep apace with potential adversaries. these will preclude us from meeting the operational requirements as currently written and defined by our combat commanders with acceptable risk. these are also detailed in my written statement. applying one fiscal and prom attic scenario we would end with a fleet of about 255 ships in 2020. that's about 30 less than we have today. it's about 40 less than was planned in our program -- our president's budget '14 system and 51 less than our assessment we validated and submitted of 306 ships. mr. chairman i understand the pressing need for our nation to get its fiscal house in order.

it's imperative that we sustained the appropriate war fighting capability, the appropriate forward presence and we be ready. those republican the attributes we depend on from our navy. i look forward to working with the congress to find the solutions that will ensure our navy retains the ability to organize, to train and to equip our great sailors and our civilians and their families in the defense of our nation. thank you. >> thank you so much, admiral. now general amos. >> chairman levin, ranking member inhofe, welcome back. committee members thank you for your consistently strong support for your military forces and for your obvious love of our country and justified concern for its defense. all of us sitting before you this morning, my colleagues are mindful of your collective and individual sacrifices and are grateful for your unflagging fidelity. the sequester defense budget falls short in meeting the

marine corps's requirements and those of the joint force. your marine corps is ready today. in order to maintain readiness within the current fiscal environment, we are mortgages the readiness of tomorrow's marine corps to do so. we are ready today because your marines are resilient and determined to defend the united states of america. despite year after year continuing resolutions, the budget control act, furloughs and the government shutdown, the monday and women who wear my cloth are patriots first. the defense of our fellow americans and our way of life is our number one priority, even over the comforts of self. last month's furlough of more than 14,000 of our civilian marines was a grave disservice to an honorable and dedicated workforce who wants nothing more than to advance the security of the american people. our civilian marines are a vital part of our team. they are the technicians, the experts, the teachers, the clerks in our commissaries and our exchanges.

they are our corporate memory. they are our surge capacity or depots who provide unique skills in support of the active and reserve force. they deserve better, quite frankly. i'm ashamed of the way they've been treated through the furloughs and the uncertainty. during the first year of sequestration i have realigned fund within my authority to maintain unit readiness to the highest extent possible. my priorities have remained consistent. first and foremost, the near term readiness of our foreign deployed forces. followed thereafter by those that are next to deploy. this readiness comes at the expense of infrastructure sustainment and modernization. we are funding today's readiness by curtailing future voemt in equipment and in our facilities. this year we are spending approximately 68% of what is required bare minimum to maintain our barracks, our facilities, our bases and stations and our training ranges. this is unsustainable and it

can't continue over the long term. if we are to succeed in future conflicts, we must modernize our equipment and maintain the infrastructure that enables our training. we must also invest in our people. to meet the requirements of the defense strategic guidance, we need a marine corps of 186,800 active duty. a force of 186.8 allows us to meet our steady state operations and fight a sij major war. it preserves a one to 312 for our marines and families. under the 2011 budget control act, the $487 billion reduction cut our strength further to 182,000. with sequestration, ki no longer afford a force of 182. in february we initiated a parallel study to the department of defense's strategic choices management review. our internal review determined the foresize i could afford under a fully sequestered budget, this was not a

strategy-driven effort, it was a budget-driven effort, pure and similar. our exhaustive research backed by independent analysis determined a force of 174,000 marines quite simply is the largest force that we can afford. assuming that the requirements for marines remain the same over the foreseeable future, a force of 174,000 will drive the marine corps to a one to 212. it will be that way for virtually all my operational units. six months deployed, 12 months home recuperating, resetting and training and six months deployed once again. this is dangerously close to the same tempo we had in iraq and afghanistan while fighting in nullity theaters and maintaining steady state amphibious operations around the world. the 174,000 force accepts great risk when our nation commits itself to the next major theater war. as there are significant reductions in my service in

ground combat and aviation units available for the fight. under sequestration we will effectively lose a marine division's worth of combat power. this is a marine corps that could deploy to a major contingency, fight and not return until the war is over. we will empty the entire bench. there will be no rotational relief like we had in iraq and afghanistan. marines who joined the corps during that law will likely go straight from the drill field to the battlefield without the benefit of pre combat training. we will have fewer forces arriving less trained, arriving late tore the fight. this would delay the buildup of combat power, allow the enemy more time to build its defenses and would likely prolong combat operations altogether. this is a formula for more american casualties. we only need to look to 1950 and the onset of the korean war to see the hazard and the fallacy in this approach. thank you again for this opportunity to appear before

you. i'll continue to work with the members of this committee to fix the problems we're faced with. >> thank you very much, general amos. general welsh. >> thank you, chairman. ranking member inhofe, welcome back, into hope you have your landing currency reset. it's an honor to be here. thank you for everything you do. the real and i'm projected impacts of sequestration are sobering. if it remains in place for fy '14 our air force will be forced to cut flying hours to the extent that within three to four months many of our flying units won't be able to maintain full misread dins. we'll cancel or significantly curtail major exercises again and we'll reduce our initial pilot production targets which we will unable to avoid in fy '13 because prior year unobligated funds helped of set about 25% of our sequestration bill last year. those funds are no longer available. while we hope to build a viable plan to slow the growth of personnel costs over time and to reduce infrastructure costs when

able, the only way to pay the full sequestration bill is by reducing force structure, readiness and modernization. over the next five years, the air force could be forced to cut up to 25,000 airmen and up to 550 aircraft which is about 9% of our inventory. to achieve the necessary cost savings in aircraft force structure we'll be forced to divest entire fleets of aircraft. we can't do it by cutting a few aircraft from each fleet. we'll prioritize global, long range capabilities and multirole platforms required to operate in a highly contested environment. we plan to protect readiness as much as possible. we also plan to prioritize full spectrum training. if we're not ready for all scenarios we're accepting the notion that it's okay to get in the fight late. we're accepting the notion that the joint team may take longer to win and that our war fighters will be placed at greater risk. we should never accept those notions.

if sequestration continues, our modernization and recapitalization forecasts are bleak. it will impact every one of our programs and other time these disruptions will cost more money to rectify contract breaches, raise united costs and delay delivery of critical equipment. we're looking at cutting 50% of our modernization programs. we'll favor recapitalization over modernization whenever that decision is required. that's why our top three acquisition programs remain the f-35, the kc 46 and the long range strike bomber. your air force is the best in the world, and it's a vital piece of the world's best military team. that won't change even if sequester persists. but what and how much we'll be capable of doing will absolutely change. thank you for your efforts to pass a bill that gives us stability and predictability over time. those two things are essential as we try to move forward. my personal thanks for your continued support of airmen and their families. i look forward to your

questions. >> thank you all of your testimony and through, also, for -- by the way, we're going to have a fairly short first round because we have votes at 11:45, two of them. and we also have a large number of senators here. we're going to have to start with a six-minute first round. thank you for mentioning congressman skeleton. most of us have worked with ike skelton for a long time. our memories of him are extraordinarily fond and warm. he was a unique and wonderful human being. we really appreciate what he did for this nation in war and in peace. we're grateful that you made reference to him. it's something, frankly, i should have done and have already done in a different way, but should have done here. thank you for that reference.

the successful conclusion of the budget conference between the senate and the house is essential if we're going to address the problem of sequestrati sequestration. they are hopefully looking at various alternatives forgetting rid of a mindless, a rational way of budgeting for 2014 the way it was for 2013. but much is going to ride on their success in finding a different approach to deficit reduction. many of us have made suggestions to them as to how to come up with a balanced approach to deficit reduction which can substitute a sensible approach for an irrational approach called sequestration. we're not going to ask you to get into that kind of detail in terms of the work of the budget

committee because the conference, because number one, i doubt you are privy to it, but secondly it's a little bit off the subject here today which are the impacts of sequestration the clearer those impacts are laid out -- and you have laid them out very clearly -- the more likely it is, i believe, that that budget conference will find a path replace the sequestration in '14 with something that makes sense in terms of fiscal responsibility, but something that makes sense in terms of the security of this nation. as you have very powerfully pointed out in both your oral testimony, your written testimony and your prior testimonies, sequestration is damaging to the national security of this country. in fiscal year '13, the

department was able to minimize impacts in part by using unobligated funds that were carried over from previous years, in part by deferring program costs into future years, in part by utilizing short-term cost reduction measures such as civilian furloughs and reductions in training and maintenance rather than making program decisions that would be more difficult to reverse. so my question of each of you is, if sequestration continues into fiscal year 2014 and bey d beyond, will the department be able to continue to rely on those types of temporary measures or, as i think you've clearedly testified, would you have to start reducing force structure and canceling or curtailing major acquisition programs? i think you've given us the answer to the second half, but can you go into the first half of that question?

we were able to scramble around -- you were, to a significant degree in 2013, are you going to be able to rely on those temporary ad hoc measures if sequestration continues into 2014? general odierno. >> thank you, chairman. as we -- as you put it very well, scrambled in 2013 to come up with with the dollars to meet our sequestration marks, there's things we do to mortgage our future. we had to take money out of two places, readiness because we could do that very quickly, so we stopped training. we stopped sending individuals to be prepared at the national training center, joint readiness training center. you can't ever recapture that. what that does, it delays the buildup of future readiness. we will have to pay that price somewhere down the road because we simply cannot ever get that

back. so although we were able to do for one year, it comes at risk, our risk to respond, our risk to -- if we have a contingency, will our forces be ready? that's incredible risk that i am definitely not comfortable with the second piece is we've had to furlough individuals who have worked for this government. frankly, they're beginning to lose faith in our that government, are they able, will they be able to continue to serve? those are temporary measures we do not want to revisit again and that we have to have more personal nentd solutions. >> admiral? >> mr. chairman, first of all we have a $2.3 billion carryover. '13, we deferred into '14. here we go. you can't defer it. these are contracts and things of that nature. that's one. two, in '13 we actually had a

quarter of maintenance and training, because we didn't start dealing with this until the new calendar year. we got a lot of maintenance done there that we won't be able to get done this year. so 34 out of 55 ship maintenance availabilities, that will be gone. training we were able to get training done there, we can't get that there. we will have air wings. of the nine air wings we'll have five of them in what we call minimum sustaining tactical. the one that will affect us the most will be vaemt. what concerns me the most is our ssbnx. that is our top nuclear stra teaming irk deterrent follow-on. the fact of nat ter, it's on continuing resolution. because we want to grow that program in '14, we're $500 million off in '14. so that comes to roost in the schedule of that and we're heel to toe. other ship building, we'll lose a virginia class submarine,

literal combat ship and float forward staging base and a lot of costs to continue. the forward carriers werks need about $500 million to finish that carrier and by spring we stop work on it which is not very smart because it's almost done. thank you. >> thank you. general amos, can we continue the kind of of temporary actions we took fy '13 into '14. >> there's no more money in carry over. we were 99.8% obligated at the end of '13. there's no money to bring over. we're going to live with what we have and 14 other continual resolutions. we've taken measures in the past. civilian hiring was frozen two years ago. we've already gone through our travel accounts. our reserves have been taken off active duty to reduce the t.a.d.

costs. there's no more fat on our owns. >> general welsh? >> i echo what you already heard. we paid about $1.5 billion against our sequestration bill last year. that was about 25%. that will not be available this year. we start on a cr for the beginning of 14 that is roughly just in our own account, $500 million less than we had programmed for '14. the program didn't include the funding required to recover the readiness we set aside last year. we are behind the power curve and dropping farther behind the power curve. >> thank you very much. senator inhofe. >> i appreciate you bringing up skelton. during the years i served in the house we sat next to each other every thursday morning at the house prayer brerk fast and got to know him quite well.

he's sorely missed. i asked to have this chart placed up here so you can see it. i think the four of you can see this. this chart was put together by both the minority and majority on the senate armed services staff to kind of put into perspective where we are and where we're going with this thing. i know a lot of improvements have to be made. we had a discussion yesterday on the republican side about some of the things that will have to be done with personnel, with tricar and some of those things. all of that you would find in the blue section down below. it's not going to really address the we have even though it is important. force structure, i think we individually have that same chart up here. you're talking about fiscal years '14, '15 on through fiscal year '23. so the force structure is a very

serious modernization program. the mod defrnization -- we all know when things get tight modernization is one of the things that goes. by far of greatest concern is the orange area. it shows clearly that that is where readiness is. that's where training takes place there. i would like to have each one of you respond to your concern about that particular part of this chart, the orange part. i've also said readiness equals risk. risk affects lives, lives lost. i'd like to have each one of you kind of tell what you think in terms of the people being at risk and lives lost might be affected by what you're going to have to do in this next fiscal year according to this chart. >> thank you, senator. this chart describes exactly the

problem that the aefrm has. we're taking down our end strength. we're looking at speeding um taking down our end strength. you can only speed up so fast when you start to lose the money that you game by taking end strength out. we have a huge readiness issue between '14 to '17 that we frankly will significantly impact our ability to respond in the way we expect to respond. the other pieces will have to stop some of our modernization programs which means we'll delay getting new equipment five to ten years. we'll have to stop programs and restart them later on when we get back into balance. for us it is significant readiness issues. we will not be able to train fem for the mission they're going to have to do, we veal to send them without the proper training and actually maybe proper equipment that they need in order to do this. it always relates to potentially higher casualties if we have to respond. >> admiral greenert?

>> for us it is force structure -- we man equipment, senator. and so what that means is to redu reduce to deal with a reduction, we'd have to reduce force structure. this chart indicates how much we'd have to give up in the near term in order to garner savings. that means what do you do now? for me it's forward presence. i make sure the forces forward are ready, but those that are there for crisis response, right now i'm sitting at two-thirds reduction in that alone. so you have to be there with confident and proficient people. if they're not confident and proficient, you're talking more casualties and you have to keep a pace with the capabilities of the future or you're unable to deal with a potential adversary. that's increasing casualties. we will be slipping behind in capability, reduced force structure and reduce contingency response. if we're not there, then

somebody is out there and they're going to have increased casualties. >> general amos, you covered this in a lot of detail. anything you want to add from your opening statement in terms of readiness sacrifice, how it relates to risk and lives? >> snt senator, as you know as i said in my opening statement, we moved moneys to maintain risk. each service has a different orange wedge. mine is smaller than that, but that's for the near term right now because i'm paying that price to maintain that readiness to be your crisis response force. but that will only last probably not later than 2017. i'll start seeing erosion in about a year and a half. we're paying that with other moneys, infrastructure training. >> that's what you referred to when you said in your opening statement, you used the phrase, a formula for more american casualties? >> absolutely, yes, sir, senator. we are headed towards a force in not too many years that will be hollow back home and not ready to deploy. if they do deploy, they will

enter harm's way, we'll end up with more casualties. >> in responding to the question, general welsh, i heard yesterday someone talking to you about an experience you had in alaska. can you share that with us. i remind people that the cost not necessarily for an f 22, but to get someone to a level of proficient see f 15, 16 is about $7 million. talking huge rents in personnel. would you like to repeat the statement you had made? >> senator, i've actually had this conversation multiple places in the air force. one of our bases recently i was talking to a group of young pilots who where eligible for our aviation career incentive bonus. of that group there were six to eight in the group. none of them accepted the bonus to that point. >> not one? >> not one.

that doesn't necessarily mean they're planning to leave the air forces but certainly means they're keeping their options open as a minimum. it's not just pilots. i was at another base where a couple of very young airmen told me they love the air force but they were bored. their particular squadrons were not flying. they were sitting on the ramp because of the reductions last year. they said at the end of their enlistment they planned to find work that was more exciting. i haven't heard anybody in the military say they were bored in quite some time. >> i appreciate that. i just want to read one of the most alarming concerns that we had, have raised, was the belief that your service may not be able to support even one major contingency. i'd like for the record -- when you stop and think about the collective service of four of you is 156 years. we're talking a lot of experience, a lot of history. i'd like to have you for the

record respond to that in terms of not being able to meet even one major contingency operation. >> thank you, senator. senator reid. >> thank you, chairman. thank you gentlemen for your service to the nation. i think one of the issues we have to ask because so much of our readiness is ready for what? that will be answered in some respects in the qdr which will be affected by the budget regardless of whether we're able to work our way through these obvious problems. so could you give us a sense, general odierno from from the army's perspective in terms of ready for what? >> thank you, senator. as we learn from the past and look to the future, it's about having the capability to do a multiphase combined arms joint campaign that operates in a very complex environment that includes conventional opponent,

irregular warfare, counterinsurgency. that's where future warfare is going. we have to train our forces to do that. right now the army is great in counterinsurgency. we want to continue to keep that expertise. we've got to build our combined arm joint capability to do a multiphase campaign for a major contingency operation. we were supposed to begin training for that in '13. we were not able to because of the cuts we had to make in our training dollars. we're now behind. that's the problem we have. right now we have limited number brigades that are capability of doing that right now and we're falling further behind as we move forward. >> one of the reasons that we are so well schooled in counterinsurgency is we invested over the last decade billions of dollars in counterintur genesee. looking forward, is that going to be is that going to be a primary mission or ancillary

mission in qdr? if that's the case we invested a lot of money in a capability that we're not going to be using. >> i would say it's capability that's going to be needed but will not be at the forefront as it has been in the past. >> admirable greenert, the same question. >> for us it's to ensure we have a sea-based strategic deterrent on track. subject to my comments in my opening statement, this issue we have with '14 to get the resolution -- we need to grow the program. i can't do that until we get a bill in '14. sequestration, we lose the ability -- $150 million. it sounds sort of nagging, but we have to get design engineers hired. even when we get the money, you can't click your fingers and hire 600 specialized assign engineers. we've got to keep this coherent. we're on a very tight schedule when the ohio phase is out to deliver on time. for us also it's the undersea

domain. we have to own it quite simply. it's my job as the navy, and to keep that on track. i'm concerned we fall behind in anti-submarine warfare keeping apace of our potential adversaries. that's a priority regardless of sequestration. we will invest in that. it's integrated air and missile defense. that gets into the electromagnetic spectrum, cyber, bringing those new capabilities in from jammers to cyber warriors, et cetera. it's also just flat out presence. quaunt has a quality of its own, and being sure we have the right ships with the right capability with my partner to my left, the navy-marine corps team, we can be where we need to take care of the little crises day in and day out so they don't fester and become bigger crises and we get in the situation of a major contingency. >> general amos and then general welsh? >> the requirements for the

marine corps is to respond to any crisis today, not a week from now, a month from now, but to day. as we move moneys around to maintain the level of readiness, we're trying to keep a balanced force. as we go forward into this sequestered force, qdr force, what we need to have in my service is a balance between modernization readiness and personnel, the right amount, not hollow, but high state of readiness forces. so to do that we are balancing this thing down, dialing all the dials trying to make sure we end up with something that is not a hollow force and that is a ready force. amphibious combat vehicle, the replacement for our 40-plus-year-old tractors is the number one priority for me, followed by the f-35b which is performing well. as we go forward, my focus, regardless of how big the marine corps ends up being as a result of how much money i get, will be a balanced high state of readiness force, ready to respond to today's crisis today.

>> general welsh please. >> the choice we face is readiness today verse as modern tomorrow. the air force is no different. that's the thin line we're trying to walk. for us we have a requirement for readiness to respond rapidly that's what what we bring to the joint force. we have read dins to be viable ten years from now. we are a high tech force. we are plat formed based much like the navy. we have to invest now to make sure we have the proper capability ten years from now. that's why modernization of is so critical to us. the other thing that is a major concern for me is getting back to full spectrum training, much like odierno is worried about. we walked away from that because of the demand on the war in afghanistan. last year we canceled our red flag which is high profile and even our weapons instructor

courses because we didn't have enough money to conduct them. that's where we train our phd level war fighters to lead and train the rest of the force. we have got to get back to that. >> thank you very much. a final brief comment, from the appropriations perspective, giving certainty in terms of a budget, not a cr -- because that would be very difficult in terms of no new starts, no anything, two years of certainty, total relief sequestration would probably put you in the best position. i see let the record show, nodding heads. >> thank you, senator reed. senator mccain. >> i want to thank the witnesses. i wish every member of congress and ef yes american were tuning in to your testimony today so we would have a sense of urgency that unfortunately is certainly not significant enough to bring us back into i think a rational approach to our nation's defense. i thank you for your service and

i'm very appreciative to be around americans who have respect and admiration of the american people. i share all of your views, but you've left out a couple of items one of them is the continued cost overruns of our weapons systems. admiral greenert, you just talked about you needed 500 additional for the gerald r. ford. is that correct? you just mentioned that? >> that's correct. >> you didn't mention we have a $2 billion cost overrun in the gerald r. ford. tell me, has anybody been fired from their job as a result of a $2 billion cost overrun of an aircraft carrier? >> i don't know, senator. >> you don't know. actually, you should know. you should know admirable when we have a $2 billion cost overrun on a single ship, now you're asking for $500 million more. i would ask the same question of

general welsh. has anybody been fired because of the cost overruns of the f-35? i don't think so. we've had hearing after hearing in this committee concerning the first trillion dollar defense acquisition in history. the numbers are astronomical as to the size, increase in size of your staffs. we have seen double and redoubling size of the staffs of the major commands and your own. that's never been brought under control. we now have 1.5 million civilian contractors and employees -- civilians and their contractors' employees and only $1.3 million -- excuse me -- 1.3 million uniform personnel. that's got to be cut back. the number of civilian

contractors and personnel have got -- they don't fight. they do great jobs, but they don't fight. you're going to have to -- this committee may have to impose cuts in the size of your staffs. they've grown astronomical, by the thousands. finally, i guess i would ask my -- the witnesses, despite what some may think, i agree with former secretary gates who said the, quote, entitlements are, quote, eating us alive. major one being health care costs consuming a larger and larger percentage of our budget. i'd ask if you would favorably be inclined to address, one, retirement as far as increasing gradually, prospectively the number of years before retirement. two, imposition of increase in fees for tri-care which there

hasn't been an increase since 1989 and also perhaps even looking at things like the contribution that used to be made for off-base housing and other costs that have grown so dramatically. maybe i could begin with you, general odierno. not only would i like the answer to that question, bide glad to hear you respond to my comments, particularly about cost overruns. >> first, on compensation, we have to grapple with compensation within the military. the joint chiefs are working very hard with this issue. the cost of a soldier has doubled since 2001. it's going to almost double again by 2025. we can't go on like this. so we have to come up with compensation packages, not taking money away, but reducing the rate of increase of pay increase. basic housing allowance you

brought up, look at the commissaries, look at health care. we have to have a total package that allows us to reduce the cost. >> could i interrupt one second. do you know of a sij soldier, airmen or marine that joined the military because of tri-care? >> it would be difficult to answer that question. what i would tell you, though, senator is they do come with very large families and health care is a big issue for them. that doesn't mean we can't work with them on that. in terms of cost overruns, i agree with you. we are tackling this problem. i would tell you we're holding people accountable, but not holding them accountable enough. we have to continue to work that, specifically with the issue that you brought up. >> senator, these attributes of changes to compensation i would look at favorably. you're speaking at least my language. i'm sure my colleagues feel the

same way. about 50% of every dollar d.o.d. goes to personnel predominantly as compensation. if we keep going this way, it will be at 60 and 70 in a decade plus. we can't do that. i think it's our responsibility to take a hard look at it. when i talk to my people, they say my quality of life is pretty good, that's the pay, the compensation that you mentioned. they say my quality of work, i need help. i got gaps. i want training. where is my chief? i want to go to the bin and get spare parts. >> it's been referred to, some of the best and the brightest are considering their options which is something that never shows up on a profit and loss basis. is that correct? >> yes, sir, you're absolutely right. if i could talk to headquarters staff just a second. we've been assigned a goal of 20% as we're working to build our budget. we're going beyond that. we got a goal of money, we're looking at four times that reduction. we were looking at -- we had a

goal of 400, for example, of civilian personnel. we're looking at five times that. we're taking a hard look at that. we're working our way down to the subhead quarters. as you look at this orange and you look at the blue efficiencies, our piece of that, to get at that, we're looking at about 25% of our reduction is in overhead and contractors. we're taking a pret stay robust look. we look forward to briefing your staff when that time comes. >> senator, you'll find i think a ready audience up here for benefits. it's more than just the try care. it's everything. it all fits underneath the personnel. i pay 62 cents on the dollar right now for manpower. that's not because marines are more expensive. it's just my portion of the budget is smaller. that's going to go well over 70% by the end of the fid dip if something is not done. you'll see the joint chiefs come to congress through the president talking about a

package of cuts and reductions, how we can cut that down. so that's en route. as you're aware, the folks are looking at the retirement. we're open to just about anything. it's in our best interest and our nation's best interest. we're reducing the marine corps if we stay on the sequestered budget by 28,000 marines. inside that, well over 20% of headquarter reductions. i'm eliminating entire marine expeditionary force. it goes away. reducing infantry battalions, regiments, air groups pretty significantly. we're pairing that down, senator. as it relates to somebody getting fired, i can't speak to that. i can talk pretty intimately about the maneuvering around among the f-35 program, both with the management at lockheed martin and my service. there have been cost overruns, but our vector is actually

heading in the right direction on the program. >> senator, the short answer is yes, absolutely need to get entitlements and benefit reform. there's no question about that. i hope we would roll the savings we could make from that back into the tools and training our people need to be fully ready. if we did that, they would understand the reason and they would see the result in a meaningful way. if we take the money and use it for something else, it will be a bigger problem for them. cost overruns and growth, i agree with everything you said. we're looking at every staff. we're in the process of internally reducing two four stars, 15 three-star positions and decreasing the number of people in headquarters. we have to take this seriously, senator. there's no other option. >> thank you, senator mccain. senator udahl? >> good morning, gentlemen. i'm frustrated this committee

has asked you to come up and testify about the harm in sequestration. we in the congress have created this monster. we keep dragging you up the hill to have you tell us how much damage it's done. i met recently with my constituents in the great the great community of colorado springs. they made it clear to me they're tired of congress's unwilli unwillingness to solve the problem. that view is echoed everywhere i travel. the bottom line is we all know we've done serious harm to critical programs and our people. it's very clear none of this is really going to save us any money. i think you all have made that case very powerfully. in fact, it's going to cost us more in the long run than if we just buckled down and put in place strategic budget architecture based, for example, on the similar simpson-bowles plan. you have been paying for our failure to lead and to act. i apologize for that. what we've been hearing from our

constituents and from you should make it clear that we need to reach a bipartisan agreement, pass a budget and get back on track. let me in that spirit, general welsh, turn to you. in your opening statement you said if you were given the flexibility to make prudent cuts over time, we could make the savings required under current law. could you be more specific about the kind of flexibility that you're asking for? i've been working with senator collins and others pushing for better budget flexibility when it comes to making cuts governmentwide. it's important to know how we can get this right and how it can be most helpful. >> senator, in my view and i think everyone in the room would agree, sequestration is a hornl business model. no successful business would try and down size its product line or its costs doing it this way. anybody would take a time period, determine what kind of savings you needed over the time period and what kind of

reductions you needed over the time period. you'd take the beginning of that time period to actually close product lines, reinvest the capital or manpower or forestructure saved into the lines you want to continue, restructure your organization and create savings at the back end of this. if we had nothing more than a ten-year period to say whatever the number is, we understand we have to be part of the solution for the nation, the financial solution for the nation. no one is resisting that. this mechanism that makes us take big chunks of money the first two years is what is putting us into this readiness verses modernization dilemma. the other all cost of sequestration reduces our capability and capacity over time, but it doesn't break us. the mechanism is what breaks us. i would just say that if we had the trust available to believe that the department would return $1.3 trillion over ten years and we could show you a plan of how to do that, eliminating this abrupt nature of the mechanism at the front end would be a much, much more sensible approach.

>> general, that's very helpful. i know this committee is going to listen as we move forward. let me turn to the economies of the military communities. if sequestration remains in place, i was thinking about general odierno, the situation you face, cutting down to 450,000, perhaps as low as 390,000. there could be real damage done to cities like colorado springs and many around the country. the same, general welsh, would apply to the air force, if you're forced to roll back more critical space in aviation missions. in colorado over the last couple years we've had some real challenges. we've had to battle floods and wildfires. without the incredible support from soldiers and airmen, i can't imagine how much worse the losses would have been if we didn't have assets like the aviation or the great airmen at peterson and sleever.

could you comment on that, on whether those studies have been done and what additional information we might need to be smart about how these cuts are made. >> what a lot of people don't understand in many cases fort carson, ford hood, for brag, fort campbell, they are probably the biggest generators of revenue for the states, period. they don't realize when the installations go away, you're just not losing just the soldiers and what they do. all the businesses around those installations for probably a 50-mile radius are impacted by the shutdown and loss of the impact of these installations losing people. the impact to the local and state governments is substantial. we have studies -- i don't have the numbers with me for every installation. we have numbers for every installation. when i go visit, they say this is the first, the leading employer in the state, second -- it's either first, second, third, but it's very close to

the top of leading employers in the state. people, many forget about this as we look at these reductions. that's in addition to what i'm concerned about of the national security impacts it has. >> general welsh, would you care to comment? >> $1.3 trillion reduction in d.o.d. in ten years will leave a bruise to a lot of places. we have to understand how much the pain is at each place before we make final decisions. it's going to affect a lot of people in a lot of places. i was just in colorado, by the way, visiting with a bunch of the firefighters from fort carson, from colorado springs. walking through the actions they took in battling the fires last year and this year, i was struck by the contribution they make to the community every day, not just when catastrophes occur. no one wants to reduce that contribution. we lost, in just the civilian furloughs as a corporate body 7.8 million man hours of work. double that for the government

shutdown, impact on civilian workforce. that's also 7.8 million hours of pay that doesn't go into the community where those people live. so you can start to see the effects when you have these short-term losses of income. long term it would be more dramatic, obviously. >> thank you, gentlemen. my time has expired. i want to make a couple of very quick comments. i want to thank the members of the national guard units who came to colorado from kansas, montana, utah, and of course our colorado guard for the incredible work they've done, not only immediately after our floods, but now to rebuild our highways, we're reopening the highways months ahead of schedule. it's a testament to the work ethic and teamwork those units brought to our state. secondly i want to again thank you all for coming. i'm sorry we're here under these circumstances. but i'm pleased to see senator inhofe here. he's too tough to let a few blocked arteries keep him from doing his work. finally want to associate myself

with the remarks of chairman skelton, a wonderful man, a mentor to me. he had a habit of saying i'm just an old country lawyer. but that was the moment at which i would really listen to what ike skelton had to say and i know everybody who served with him felt the say way. thank you for convening this important hearing. we've got to get this right. >> thank you, senator udall. senator chapel miss. >> thanks, mr. chairman. likewise, thanks to you for being here today. in my 20 years serving on the house armed services committee, we've never had in my opinion four finer leaders of our respective branches than the four of you. thanks for what you do every day. as we look at what we're going to do relative to defense spending, i'm one of those who thinks without question that we need to spend more money, that sequestration, as each of you has said, is going to become a bigger and bigger problem.

i also feel very strongly about the fact that whatever we are able to add to d.o.d. spending, that we've got to offset it somehow. we've simply got to get our fiscal house in order. i think if we're going to do that, the first place we've got to look for offsets is at the department of defense itself. we asked in a hearing that senator sheheen called on tuesday of this week, we asked of general dempsey, senator mansion did for a list of programs or expenditures that the department does not want to spend money on that had been mandated by congress. we thought we would have that list by today. i understand now we're not going to get it until next week. but i think for certain one item that's going to be on that list, general odierno, is the purchase of abram tanks that you have been somewhat focal on, that congress keeps demanding that

you buy that you don't need. my understanding is you were requesting a delay -- a halt in production until 2017, and at the cost of that, was going to be -- the savings was going to be between 436 and $3 billion over three years. i don't know what the exact number is. either one is pretty sig any kabtd. is that still the case, you'd prefer to spend that money somewhere else? >> it is. we have the most modernized tank fleet we've ever had right now. it's in great shape. yet we're purchasing more tanks that we don't need. so the savings would be -- could be used in many different areas of our modernization programs that we need, for example, aviation. >> as we go into the authorization the authorization bill, rest assured it's issues like that that are going to be addressed. when we talk about sequestration, a lot of these programs have taken years to develop and produce. these programs weren't necessarily created or

authorized on the watch of the four of you, but they are significant. general welch, i understand there are 12 brand-new c-27j spartans rolled off the assembly line and immediately mothballed. dod spent $560 million on one of these airplanes, but only 16 have been delivered. a majority are sitting in storage somewhere. also, there were 20 c-27as that cost the taxpayer $596 million. they are sitting unused in afghanistan and slated to be destroyed. there may be some movement to send those to another agency or entity. the maintenance contract on those airplanes, i understand, was canceled in march of this year, and therefore, they're unuseable.

the army spent $297 million for the multiuse intelligence vehicle which is a blimp-like aircraft that could hover over the battlefield and canceled after one test flight and back to the contractor for $301,000. the army and the marine corps are moving ahead, as i understand it to purchase 55,000 trucks known as the joint light tactical vehicle to replace your current fleet of humvees, which probably understandable, but also my understanding that the committed cost of these per vehicle was $250,000. now it's gone to something like $400,000 per vehicle, not unlike what senator mccain alluded to earlier. general welch, also a recent audit by the dod inspector general found a contractor overcharged dla for spare

aircraft parts. it was one part aluminum bearing sleeve that should have cost $10 that dla paid $2,286 per item. it resulted in a $10 million overcharge. again, as i say, those are items that weren't necessarily created on your watch, but you're in the process right now of looking forward with respect to weapon systems. i just hope you'll keep that in mind. there is one other area i want to mention as we look for savings. that's in the area of medical research. i'm a beneficiary of the research that's been done in this country on prostate cancer and i'm very thankful for that. they do a great job at nih on prostate cancer research and every other cancer research. i don't understand why the military is spending $80 million

a year on prostate cancer research. why we are spending $25 million a year on ovarian cancer research and $150 million on breast cancer research and doing lung cancer research. if there are particular needs the military has regarding military research, and there are some because of particularly the casualties we suffered recently, i can understand it, but these are types of research that simply have no place, in my opinion, at dod. they ought to be done at nih. i understand further that there is not real coordination between the research done, medical research done at nih and what is done at dod. mr. chairman, that's not an item these gentlemen have a lot of control over, but an item we need to look at. the money would be better spent as a replacement for sequestration.

a good friend to a lot of us senator ted stevens who first asked for prostate cancer research go to dod. several years later, he announced on the floor of the senate he made a mistake. he should never have done that and that money ought to be spent on research, but it ought to be spent at nih and not the department of defense. as we go forward, gentlemen, with the defense authorization bill and the next couple of weeks, i look forward to seeing that list that general dempsey gets to us with respect to items that come out of each of your budgets that hopefully we can have the spine to stand up and say, irrespective of parochial interests, we've got to look after our men and women and they need this money to be spent in our areas rather than areas the military themselves say we don't need to spend it. thank you very much. >> thank you, senator chambliss.

senator now senator shaheen. >> thank you, chairman for holding this hearing today. thank you gentlemen for being here. i would hope as the sentiments expressed by some of our colleagues that this congress would deal with sequestration in a way that means you don't have to be here year after year after year talking about the challenges that our military faces because we haven't done our jobs here in congress. admiral greenert, i would like to begin with you because we believe that the portsmouth navalship yard is the premier ship yard for modernization and maintenance of our nuclear fleet. i have a letter here from paul o'connor who talks about the impact of sequestration on the workers. i want to read two phrases from this letter because i think it

epitomizes the challenges they are feeling from sequestration. he says, with 9 1/2 more years of sequestration hanging over our heads, 9 1/2 more years of furloughs and lay-offs, how will we attract the best and brightest young men and women to our most technologically sophisticated complex, precision-based industry? he goes on to say, the security, instability and volatility of sequestration on our ship yard and national work force cannot be understated. the personal impact, mission impact and national security impact are real and contrary to the best interests of america. mr. chairman, i would like to ask this letter be entered into the record. admiral greenert, i wonder if you could talk about what you're seeing with respect to the long-term impacts of sequestration. you mentioned some of those. if you could elaborate further? >> thank you, senator.

i'm glad we get to see that letter because it very clearly states the debilitating effect of doing this year after year. it's inefficient and you lose productivity. this fine gentleman described there, you can't hire people so you can't distribute your work force. you furlough them here and there, so they are going to go elsewhere. somebody has to write the contract, somebody has to get the logistics done. those are the people who regrettably we furloughed. you can stand here with a wrench in your hand and welding rod, but you need to pay for work. it's all a team and a long chain. we think we are saving costs. we are avoiding costs and we aren't doing that. we are deferring cost and it's a one-point fill in the blank factor later on that. there describes the maintenance conundrum we have. by the way, that's in a nuclear ship yard which is one of our

more stable enterprises out there we hire people longer term, long planning. it is a premier ship yard. we have lots of use for it in the future. i'm concerned about -- and i didn't mention earlier but the shore infrastructure. we have reduced dramatically the shore infrastructure. to keep forces forward. we went from 80%, if you will, of our motto which is nothing unnecessarily all excited about down to 55%. we are deferring work that is going to come to roost. fortunately in fiscal year '13 we are able to meet thanks to congress programming and getting that 6% requirement done to recapitalize it. in fiscal year '14, i'm very concerned. we have $1 million. we need to get to do that right. hopefully, we'll get reprogramming or a means or bill to do that. that infrastructure is very important us to. >> thank you. general welch, senator chambliss

talked about some of the areas where there is money being spent a that may not be most efficient. one of the things we looked at on the readiness subcommittee is the air force's proposal to spent $260 million for two hardened hangars in guam. they cost about twice as much as those that are not hardened. i wonder if you could prioritize the need for that versus the other needs that you and the other members of the panel have identified with respect to readiness and training and the other challenges that we are facing. >> thanks, senator. i don't think it's a matter of comparing them in every case. in this case, the hardened facilities on guam are responsible to provide more resilient capability on guam because of an increased threat

of surface-to-surface missile attack. he didn't request everything be hardened, just those key facilities you couldn't impro advise for if there was damage on an air field. that's what those facilities are based on. we are trying to support u.s.-specific demand in that effort to meet his war plan requirements. the readiness and modernization requirements are bigger than $260 million. i don't think that's the reason we can't be more ready today. every dollar will help. the readiness problem we face over time is significant. to fully restore our normal readiness levels would be almost $3 billion. so we are looking with sequestration at a long-range problem that is significant. it's going to take us ten plus years to get readiness back to the level we want. we'll only get there reducing the force enough to keep a smaller force ready, which means less capacity, less capability to respond globally, less options for national decision-making.

>> we certainly all appreciate that. as senator chambliss ticked off a number of projects that have significant costs to them, this one also has significant cost. when you add up those $250 million projects, pretty soon we are talking real money. i do hope this is one you will continue to look very carefully at. >> yes, ma'am. >> thank you, mr. chairman. >> thank you very much, senator shaheen. >> i want to thank all of you for your service and for your leadership during these challenging times. let me just echo what my colleague from new hampshire has just said about the portsmouth naval ship yard. where are we if as we go forward with sequester in terms of fleet size and the attack submarine fleet? i know you mentioned in your opening testimony that one less virginia class submarine would

be built during the period we would like to build it. can you give as picture what the overall fleet looks like? >> well, as i mentioned, the undersea domain critically important. we need 45 to 55, our goal is 55. we would be down to 48 submarines in 2020. yeah that as a benchmark year. unfortunately due to sequestration we lost the "uss miami" which was a project portsmouth had. the overruns, the furloughs and need to have to go to a commercial work force instead of using federal work force was just too much. we couldn't afford that submarine and continue to do the other. >> my understanding is we aren't meeting combatant commanders' needs with requests they make for the fleet now. what is the rough in terms of where we are now? >> the combatant commanders as they look at the world

distribution of submarines for intelligence surveillance and reconnaissance, they need about 19 submarines any time deployed. we can support about 10 to 11 and we broker how that works. we are about 50%. that is reflective of the overall fleet request versus what we can provide today. >> thank you, admiral. general welsh, when do you expect the f-35a to achieve full operational capability? >> we hope that happens in 2021, senator. >> okay. thank you. general odierno, we talked about it when we met. what is your assessment of the a-10 and its closer support capability? how important is the a-10 to the army? >> thank you, senator. as i know general welsh would say a-10 is the best support air force platform we have today. in afghanistan when they put the lightning pod on it it became

the most complete support system and rover capability and gun systems. it's performed incredibly well in iraq and afghanistan. our soldiers are very confident in the system as it goes forward. it's a great close air support aircraft. >> thank you. we talked about these savings issue. something i know this whole committee signed off on and i fought very hard to not get money appropriated for, but i think it highlights the issue you heard from senator chambliss and you heard as well from senator shaheen on some examples of we're all concerned about sequester but also making sure we use the money allocated in the best way possible for our men and women in uniform. one of them, at least to my end is the miad program where we spent $1 billion between fy-4 and 11. i just hope we are not going to

continue to spend any more money on programs like that. please tell me we aren't. >> we have to make tough choices. we have to spend money on programs that are best for us. i would make one comment and i'll make a general comment. you have to remember that as you look at cost per vehicle, things like that, the reason some are going up because we are purchasing less of them because we have less money and less force structure. that drives the cost up on some programs. we are looking very carefully. it's only the programs we need that we are going to invest in. we are not investing in programs we do need so it's important we don't use money for programs that aren't going to directly impact our soldiers. >> i want to ask about a topic particularly general odierno, afghanistan. how do you assess the situation in afghanistan right now? i'm worried that so many of our colleagues, frankly, aren't focusing on the fact we still

have men and women serving in afghanistan. what is it we need to do to secure our interests in afghanistan? can you tell us where are we on this decision on what the follow-on force structure will be? with that decision, can we get to a point wherever whatever that follow-on is is too small to make sure we need to achieve not only the isr issues we have to address in afghanistan, but ensuring that our own forces are protected. general, you and i talked about that. where are we on afghanistan? >> thank you, senator. first, until we get the bsa approved, that's when we'll start discussing what the end strength is post 2014. we are certainly hopeful we will get that agreement with the afghan government that allows our soldier, sailors and marines continue to operate in afghanistan. what i would say is, the other thing i would say is, i believe

we are making incredible progress in afghanistan. we don't talk about that a lot. the afghans have taken over. it's working. they have taken responsibility. we have to stay with them. it's important we stay with them and they continue to have the confidence with the multinational force behind them, both united states. that is key as we move forward. as we make decisions on residual forces, there comes a time if we get too small and our ability to protect our own forces is at risk. we have to make sure we communicate that to the president and joint chiefs had these discussions. we will communicate that as we move forward. >> i understand certainly the feeling that people have given the conflicts we've been involved in of wanting to withdraw. so what are our interests that are at stake in afghanistan in terms of getting the bsa right and getting the correct ratio of follow-on forces? i know my time is up.

i think this is an important question. >> first off, we need the bsa to protect our soldiers. soldiers, sailors and marines operating there. that allows them to do their job and continue supporting the afghan. in afghanistan, it has come so far. it is hard to describe to someone who has never been there how far that country has come. the progress made, the security that the people feel. the fact that the afghan security forces are stepping up in a big way to support their own people, but they're not ready to completely do that on their own so it's important that we have to provide new kinds of support, training, advising, building their institutions, making sure they continue to move forward because there are those that want to go back and take control and there are extremist organizations that will directly threaten the united states. we have come too far and invested too much for us to back away from that now. we are close on the cusp, i think, of being successful.