to think that we are going to be maintaining our contractors while we are cutting men and women in uniform. sense withit makes the declining budgets that you can use the guard more effectively. it seems like the military does not want to embrace that. maybe you can -- >> we do embrace the guard. institutionastic that this country has used for many hundreds of years, depending on which state you talk to, they will give you a different number. ours we are cycling out active going into our reserves and guard, you have all of this experience and expertise. >> we are in the process of our

budget deliberations, looking at the balance between the active and reserve component. i would guess there would be a difference in proportionality, but i don't want to get into details about how one would come down opposed to the other. the other thing you mentioned was contractors. we share your belief. we have got to make sure that we have our contractors. >> we have a fight on our hands just getting their salaries. we thought maybe they should be paid more than the vice president, but everyone has pushed back on that. paid more thane the vice president, but everyone has pushed back on that. reduction that0% we have offered up to do, the largest proportion of that is contractors. they are costly. >> most of them are military. x military. doing the same jobs. the guard is the most efficient

way to go in this country to have expertise and keep the expertise ready at all times. i don't see the pentagon embracing that. even though we have elevated that up to the full jeep joints chief joints position, but i hope we are getting close to that. >> thank you. senator mccain. >> thank you. fox, do you believe that the actions that were taken in context of a budget agreement was not the way the pentagon would like to see this issue addressed? is that correct? >> that is correct. is ant way to do this addressing of the issue through the commission that this

committee had written into law and signed by the president. >> that would be our preference. makingld we adhere to sure that we do not act in a way that would affect existing service members and retirees? it would be prospect of in nature -- perspective in nature and we can address the issue effectively if we do it rather than renege on our promises to those that have served. >> that is our position. be, definitely, you believe, a recommendation from this commission that whatever changes need to be made will be pro-spec of in nature rather

prospective in nature? >> i believe that is written in the establishment of the commission, that they be grandfathered. >> i know you respect the members of the budget committee, but they are not renowned for their expertise on military personnel issues. would you agree? you don't have to answer. i will say that. i think you already answer this question, but for the benefit of the record, the plan to reduce cost-of-livings was not conceived within the department of defense. >> correct. >> were you ever consulted? >> not to my knowledge. >> it was made by the budget committee without consulting the

budget of defense as to the impact on readiness, morale, keeping our promise, etc. >> to the best of my knowledge, we were not consulted. >> thank you for anticipating this issue, because it is an personnel costs. under your leadership, we now have a commission established and i think we can come up with a recommendation that would take into consideration the views of the military and civilian leadership in the pentagon and hopefully we can arrive at consensus. our next panel of witnesses will a -- anddamant in understandably so, about their concern about the effect this action taken by the budget committee on the morale and readiness and the ability of us

to keep our promise to the men and women who have served and are serving. i thank you mr. chairman for anticipating the fact that this issue has to be addressed, and i hope we will be able to convince all of the american people of the need to base what we do, based on the recommendations of the most highly qualified people we can find. i thank you, mr. chairman. mammoth thank you, senator mccain. -- >> thank you, senator mccain. senator mcconnell he. >> as we look at this challenge thatn light of our belief these should be grandfathered in and we look at this $6 billion , are there things you can

sit with other folks at the pentagon with the joint chiefs and say are there areas where over a year's period, we can try to find money? >> we have already accepted the need to do that with the piece of this that is already inside the dod budget where we pay into the accrual fund. passed, legislation was our can't -- our accounts were credited that $500 million in we started to plan to use it. we're going to have to backtrack on that if this proposal is repealed. we are prepared to make the difficult decisions. if we are asked to account for the money that is outside the dod budget, the $6 billion that spending, thaty is a difficult column 4 --

difficult problem for us. >> would you like to -- to find theepared 500 million dollars year. we think grandfather is the right thing to do for the people. we are prepared to address that challenge. , you we look at the future don't want to step in front of a commission or a decision that is going to be made, what are some of the areas you think that we can take a real close look at and make a difference while prospective to our service members, this is a great place to be and a great

opportunity to have your life? >> i think it is getting back to the inherent variables in retirement. one of the one that has been discussed most is the vesting time. yearsve to wait until 20 to receive any retirement benefits. that helps us a great deal and the profiling of our force, we want to have a young force that is going to stay to a certain point and then we need a number of them to move on so that we can bring fresh, new faces in. it would be difficult to design a system that would give vesting before that. it is not impossible. that is one of the things we ought to consider. >> secretary fox? would like to share some advice i got from secretary gates when i was trying to look at some of these issues. he warned me, i will share what

he said. he said the defense department is like a dinosaur. little teeny brain and very poor fine motor skills. if we fiddle with these retirement benefits, we have a chance of messing it up. this is why it is so important that the commission do this thoughtful work, looking at all of the analysis. important that we understand changes in vesting. what it does to the shaping of our force. the needs of our force are changing as we look into the future. technology changes, expertise changes, some of our people have important expertise to say -- to stay longer, and we need others to move through faster and bring in new ideas. it is a difficult challenge and we are working with the commission and we look forward to continuing to do so. look at the commission and as you indicated, the challenge you have of saying we want the mix to change at the end where some decide on other

--eer choices, is it an art you really have to dig deep to try to figure out -- had we this up so that we don't lose people that we want for 20 years at six or seven years? on the flipside of that, folks that who may choose to move on that they have that choice -- is it going to be a major consideration of the commission when you look at this as how to get the mix right for the future? >> i think it is. we have pretty good models under our current system. understand that fairly well. there is always unknown variables out there. the number of variables is dizzying. national employment, the propensity to serve on the part

of a population, whether you are at war not. , as to how income quickly a person graduating from high school needs to get into a job. number of her critters. the amount of pay -- the number of recruiters. the amount of pay we give. are a lot of variables in there. commission will have to consider that carefully. when you open up and introduce a allowamework that could people to retire earlier, those models are going to be upset and we will have to determine how to modify them so that we can understand the behavior. i think that is part of the challenge for the commission, understanding whether we have a model that can predict behavior so we can profile our force correctly. >> thank you. thank you, mr. chairman. a real important hearing. i appreciate you calling it.

not a single voice has been raised on either side of the dais today in support of what this congress enacted and what was signed into law. i appreciate this. i want us to appreciate the hit to the of this military retirees that are affected. it has not been mentioned yet today. if either witness wants to challenge me on this, now's the time to do it. whothe typical enlisted, retires below the age of 62, this is going to mean a lifetime $70,000omewhere between and $80,000 or more, lifetime,

to that military member. correct me if i am wrong. that has been substantiated over and over. it depends on when the enlisted whatn retires and exactly their rank was at the time. four officers, it is even more. it is over $100,000. out of their pockets, lifetime. this can appear to diminish the profound effect this has. let me ask you, and acknowledge, i understand the problems that you are facing. have a daunting task in making the numbers come out. we want to work with you on that. that is why we established the commission was certain parameters. are understand it, you sorry this was enacted. you are glad it was corrected

with regards to disabled military retirees. you want to fix it, but you want -- one is to wait 13 months to fix it for everyone else, is that correct? informedt this to be by the results of the commission. >> why was it a good idea to fix it? it wasn't going to go into effect until december 2015 for the disabled retirees. why was it a good idea to go for ahead -- to go ahead and fix it for them? >> their case is very clear. whether to do anything with retail -- disabled retirees is not part of any -- >> i think it was clear. i think it is clear on the rest of them to. it seems to be clear up and down the aisle. if it was clear for them and we are unanimous in this room in the witness table that this is a

wrong and should be fixed, it seems that ought to be made clear. you mentioned predictability. to doe an opportunity this. it seems like it does not make sense. if we are all in agreement on unless, you want to hold out the possibility that we may stick with this. if we want to send that signal, then waiting for a commission report or waiting 13 months might be a good idea. if we all agree that this is wrong and should not of been done, we can pay for it elsewhere, it seems to me, it to postponee sense this for 13 months than it did for the other clear case. of sequestration. witnessitness after

appear before this committee and other committees. we are not going to have sequestration of the united states of american. . we had witnesses tell committee that we are not aching plans for sequestration. it is so heinous that we know this is not going to happen. the president of the united states said that it is not going sequestration. we hope that was true, but it was not true. it did happen. say that we know this should be fixed, we know what is wrong, we know it was the wrong approach, we regret it, but let's wait, it holds out the potential that it will be late sequestration and go into effect protestationsne's

to the contrary. we said there was not going to be sequestration. there was sequestration. we were told that if you like your health when you get to keep it. turns out, that was not the case. members -- military we have told military members -- you do your duty, you place yourself in harms way and we're going to keep our promise to you . last month, we broke that promise. now we're are being told let's wait 13 months until we fix that. i can go along with that. promise -- i can not go along with that. this is about a promise that we need to keep. i fronted this came out of the budget committee. it did not.

my friend is said this came out of the budget committee. it did not. presented as a package, take it or leave it. if we follow the process in this congress, if the budget conference had been allowed to vote on it, we may have adopted the offsets. we could've come up with the savings elsewhere. if we had an amendment process like the rules call for in the budget bill, we would have had opportunities on a bipartisan basis to pay for this. elsewheree savings and keep our promise. if we had had this in another bill, we need to get back to following the rules. this had seen the light of representatives

of the american people, the 100 senators, the 435 members of congress, they would never have stood for this broken promise. to be a lesson to us, let's keep promises. there is a reason we have rules around here. o get around them. but i to work with you, have to say, we need to go ahead and act. everyone acknowledges this was wrong. if it was wrong, we need to send a signal that we're going to make it right. >> senator kaine. >> i want to take a different tone than my friend from mississippi. i agree this is a provision many to be changed and i think we will change it. i agree that we should change it immediately. it seems like the thrust of your

testimony is why not return to 20 --atus quo, pending me pending the 2015 report. we need to return to the status quo so we do not send the wrong signal. biggerto take on the richer issue of instead of kicking ourselves around because we are not inake, the budget in four years. inhave not done a budget four years. a budget. the senate budget did not include this provision. this was not in the senate budget. ofcame up during the course the budget conference. i don't want to trash the chairs for coming up with a budget deal. budget has been hurting our

military and our veterans. sequester, which is what we did when there was no budget deal, has been running the military and hurting veterans. continuing resolutions instead of appropriations bills has been hurting the military and hurting veterans. we did coming in december, what legislative bodies do all the time. wase was a budget deal that a compromise. it had things in it that i loved, it had examined that i hated. it did not have things in it that i wish were in it. that is what doing a budget deal is. this is an example of something we did not put into the senate budget deal because we do not like it. we like to grandfathering notion. i think all of us embrace it. though the we cast on this, i know it is good to put this were breaking a

promise -- we were trying to do a budget for the united states of america and a congress that had not done a budget for four years. doing it with the knowledge that there were pieces that we did not lying -- did not like and felt like we could fix. there is a tendency to kick each other around or for the executive to kick the legislative around, talking each other down is no way out of any of the challenges that we have. i think the budget deal that we reached in december, are you glad we have a two-year budget? is that a good anchor the military? beene department has clear. we appreciate the stability. we got an glad omnibus bill instead of continuing resolutions? appropriation gives us a lot of opportunity to do what we need to do without the cr.

>> a standard feature of this budget deal, the best part about the deal is that there was a aal and a standard feature of budget compromise is there are some pieces that i don't like. ui extension have been part of the bill. we're trying to fix that. the fact that there are pieces of the deal that we don't like, i don't anxious security issued passen we -- that when we a budget deal, we did something and the veterans military. i live in a state that i am sure has the most direct military connection in terms of the number of veterans per capita, military, dod contractor, military installations, we are the most connected to the military. even though there are aspects that we do not like, the fact of the deal is something that i

think house, senate, democrats, republicans -- we should be glad that we can get it, not that we cannot make improvements. i share this with everyone around the table. we ought to fix this. i am confident we will. i think it is important and i would like to ask you guys to describe who it is that is around the table coming up with the recommendations that you're intending to make back to congress in february 2015. -- aremportant to know all viewpoints and listed, officer, active, veteran, are all viewpoints being represented? is it a good collection of stakeholders making these recommendations? are you asking about the

process we have used inside the department? to know within , --dod and then they come fro and then the composition. >> i don't have that memorize or with me, but i looked at it. it was a good representative commission that will have a good opportunity to look fairly and .horoughly at retirement we have confidence in this panel. we have good cooperation with them and they're working hard. i think they will come up with some good information for us. inside dod, we have had a number joint chiefs. the we have talked about the compensation pieces. we are working through it.

we have not made a budget submission yet. there has been a thorough vetting with our senior officer and enlisted leadership of the proposals we might present. >> on top of that, the senior officer enlisted has brought hasugh the joint cheese come to the department leadership, to the secretary, spent a lot of time with him. that is a process we have done every year that we have proposed any changes to the congress for our compensation. >> thank you. thank you, mr. chairman. thank you for this hearing. an important topic. it has been clear that not one

dod official was consulted on this cost of living increase cut , were they? to my knowledge, there were no dod officials consulted. we heard about it in the and the game. way this went down is that many of us sitting around the table serve on the budget committee and as a member of the budget committee and armed services committee, we were not consulted about the cut to the cost of living increase. chairman of the armed services committee was not consulted on this cut. the principlesd in our own law that we passed that said if they're going to be any changes, they would be grandfathered, isn't that right? >> that is correct. cans wonderful that we

reach a two-year budget agreement, but what was astounding to me is that once frombecame public, people both sides of the aisle said this is wrong, before we even voted on it. people from both sides of aisle had ideas to fix it, but we could not get it fixed before we inked this deal. we need to fix it now. not leave it hanging over our men and women's head. agree to get this fixed now, not to delay it. this is a lesson. to not include people who serve on the armed services committee, to make cuts to military retirees, only in washington -- i think we should commit ourselves around the table to

find a fix for this. we can pay for. many people have ideas on how to do it. not taking further from the military budget, so that we do not have a further impact on sequestration. the chairman use an example of -- you enlist at 18, april 20 years and, you retire at 38 -- enlist at 18, served 20 years and you retire at 38. -- >> if you are a soldier or a marine or someone in other services that serves on the ground, you have probably done more than one tour. tour, do youo a have a chance to put roots down

in the place so that when you do retire, that yorty have roots somewhere that you can establish a career -- is that easy? >> regardless of whether you are thatng around the world one of the facets of our life in the military that we accept is that we don't have the opportunity to necessarily set roots down. as the son of a naval officer, i don't know what roots are. there are a number of people that come into the service from states all around the country, but for 20 years, you're moving around. >> is in a different from your average individual in terms of establishing a career post 20 years in the military? >> it affects the spouses, employment. many of them face severe disruptions. it is still very hard for a spouse to move from one lace to another and jump into the same job.

>> when your spouse is moving around all the time, here she cannot have a situation where they can establish their career also. you're losing income there as well. >> it is income and frustration and anxiety level of the next time we moved, and i going to be able to have a job. >> a really -- a military retirement is very different in terms of the sacrifices that are made than your average civilian retirement, do you agree? in terms of the sacrifices made by your family, the opportunities that you lose turn and come, in terms of the opportunity you lose to put roots down because of the sacrifices that you make. is that right? not maked to try to direct comparisons between civilian and military were retirement. -- and military retirement.

when you retire, you can be recalled, can't you? >> in the event of a national emergency, you can be recalled. 9/11, about 3400 retirees were recalled that to active duty. does that sound right? >> i don't have the numbers, but i would not be surprised if they were accurate. that is another huge difference. a disconnect with what happened in this budget agreement -- i an issuesk you about is brought to our attention that involves general officer retirement pay. as we look, i saw a report that legislation

-- extended the pay cap to pay out 40 years of service. according to one press report, using a 2011 number, this could result in a four star officer retiring with 38 years of experience. i understand why these changes were made. we were in a wartime. i assume the purpose was to encourage combat experience to continue serving during the war. -- combat experience generals to continue serving during the war. congress has make cuts -- these cuts are a penalty. 1% decrease in your cost of living.

it is a penalty. we have not looked at issues like do we need to continue the increases to the generals and ad mirals, now that we are winding down in iraq and afghanistan. think about a sergeant first class losing $80,000. >> the commission should look at all elements of retirement. we look forward to what the commission has to say on that and other issues. also seeing what is fair in terms of their compensation, because it seems to me that people that took the biggest hit under this are the officers. -- the people that took the biggest hit under this, the

officers took a big hit, but your basic military retirement is about $25,000 a year. with moving around, they have to try to find another job just to feed their family. would you agree with that? >> i do. we are looking at all of the proposals. >> i appreciate that. i hope we can fix this wrong and right now and not wait. i don't think we should wait. >> senator reed. there are two clear issues emerging with broad consensus. issuee to correct this and it has to be done very quickly. immediately.

of what the issue signal we are sending to the force in the field. we could move a bill for this .ommittee >> the one bill that has been referred to the committee is the hagan that does not have a pay for. if there is a pay for, and offset, i believe that would be referred to a different committee. this committee, i believe, will have the ability to act on a bill and i hope we will and not wait for the commission. there is a clear consensus that we should clear the air on this issue. >> thank you. i sense this is a consensus

across the whole spectrum of the committee. that does leave open the question of the role that -- of this commission, which is critical. , next year,ipate that there will be proposals to us and we can deliberate upon them thoughtfully and publicly that will deal with the spectrum of pensions, compensation, benefits, etc. that is necessary because you are reaching a situation where maintaining the operational readiness of the existing force squeezed because of the obligations of these costs that are building up and have been building up because of congressional action.

>> we will offer recommendations to congress and this committee on how pay and retirement should be structured. should wait until they -- i am not necessarily saying we should wait to repeal this. that is a different question. we need to look at what they come up with, the various variables on retirement. it is possible the commission could come up with some structural recommendations to compensation. any recommendation we would make for the fy 15 budget would not be structural. they would be fine tuning the andting system to recruit retain the best while getting the best value for the taxpayers. the presumption is that not only will the recommendations allow us to deliberate and make

thoughtful decisions based upon inputs from everywhere, but also in basic fairness, they will and lament on a basis that people will not be -- and they will implement on a basis that people will not be prejudiced. is that the presumption? >> i am almost certain that the law itself directs them to not consider anything other than something that is grandfathered. we support that. i brought that section with me. the law specifies that anything, any changes be grandfathered. that was a guidance to the commission. commission'se the results brought forward and debated. we look forward to that. this point about timing, i hear -- is notsus

grandfathered and that is not what we seek. we want any change to retirement, whatever it ends up being, grandfathered. untils not happen december 2015. we believe two things must happen. it needs to change before it is implemented and we need to give space of the commission to allow it to be effective. if that space is repeal and then do something, so be it. if it is wait and see with the commission has to say and then do a one-time, so be it. those are the parameters of our consideration. >> your point is that at present, because the effective date is not december 2015 -- not until december 2015, there is no one who is actually being denied the full benefits that were promised, etc. it is possible to commission could propose some retirement

, however, that would have to be debated by us, grandfathered to protect people, so that would provide a much better approach to dealing with the issue of retirement. is that fair? >> that is our position. the commission will report in february of 2015. >> it doesn't preclude us from taking action to correct it. one other point, what is driving need to not only keep our promises to the retired community, which should be considered invulnerable, in my view. commitment to's people in active service, that they have the best training, equipment, that their families

have the best opportunities while they serve. that is one of the fundamental tensions we are trying to deal with. is that accurate? >> yes sir. in only interest that i have deliberately doing this is to make sure that if it is repeal, it is repealed in a way that does not take it off the table. the commission ought to be able to look at all of the variables. if it is repealed in a manner that does not mess with that, the timing is completely up to congress, obviously. >> thank you. senator fisher. you, mr. chairman. thank you for being here today. us with a lotnted

of interesting information. managementng the review, chairman dempsey would lead and effort to find $50 billion in savings. today, you have said that retirement changes won't be part of the coming budget request. can you tell me what the status is of general dempsey's review on the compensation part? >> we were challenged as a stretch goal to try to find -- i but a decents 40, size number four compensation savings. other areas were challenged to find savings. we work hard to do that. we came up with a set of proposals that would be required to make that mark. severe. them too

we have been working on a set of less severe proposals that we will consider submitting as part of the president's budget request. we are not ready to talk about those because they are not final. or 50, not make the 40 or whatever it was. it was a good exercise for us to try to see where we can find savings. thank you. senator kaine raised an issue earlier and i want to follow up on it. , includingrtment outside groups, in its review of the compensation, have you reached out to veterans groups? >> we are still in the process of the liberating over these things and we are not ready to show whatever proposals might be submitted. we look forward to consulting with the veterans groups. it is important understand them. we would like to have their

support. that will be difficult. anytime you talk about slowing in growth rate of compensation, we understand that. that is what veterans groups are for. a do a very important service for our people -- they do a very important service for our people. we will consult with them. you are coming up with proposals inside the department and then you are presenting it to stakeholders groups, looking for input? are you including the groups,ders, veterans for example, in providing you with suggestions and input? >> we listen to the support organizations. they are vocal. we appreciate that. we understand what they're telling us. with have been discussions members of the veterans groups, but we have not presented any specific proposal to them, it is

we cannot get in front of the secretary or the president in submitting a budget. >> you are presenting your proposals to these groups. you are not asking them to present for bozos to you -- present proposals to you? >> no. to that, we listen to what they say, we read what they write. as wee that into account deliberate over these things. i don't know if they would come towith a proposal at all change the compensation. i would be interested in that if they did. >> secretary hegel does me with the veterans. there is a dialogue. we have not concluded anything about our compensation proposals. they have a general dialogue about far ranging issues.

i have not been privy to them, but i can take some are poor back on the kinds of topics they discussed. >> that would be helpful. they could offer major information is the department moves forward. i would think you would want to see cap. ofthere has been a lot back-and-forth with the commission sharing data, sharing analysis and so forth. there have been those kinds of discussions. thank you. i appreciate that. secretary hegel has also stated that the department would begin implementing the package in the budget. are you going to include any of those changes in the budget? >> we are looking at our budget

deliberations, but we are seriously considering posing -- proposing additional compensations, not to retirement. some modest proposals on other parts of compensations, following on a very large effort that the joint staff has been leaning over the past six to nine months. -- leading on over the past six to nine months. >> if you could tell me, have either of you seen any impact that these recent changes have had with regards to recruiting

and retention? has there been any impact on that? >> it is a little soon to directly measure impact. generally, we find retirement benefits lay a less than 1% accounting in a potential recruit possibility or a show and in whether they're going to list in the military. recruit'stial decision and whether they are going to list -- enlist in the military. if you are thinking of retiring 20, you may consider having to stay longer in the military

to accrue more the benefits. i think that is the calculus they are doing. i don't think anyone is going to quit the military because of it. >> you had mentioned that it may not have that big of an effect on recruitment, but i can see with retention. the sooner that we can provide certainty to the members of our military, the better. >> i agree. this is an issue, i would just throw win that one of the retention concerns we are starting to see is the concern about the quality of service. will they have the training, the equipment, the opportunity to serve in a way that is as rewarding as they expected when they join.

>> thank you. i supported the recent budget after i heard about the urgent need to halt sequestration of our defense budget. we had a number of hearings in this committee about the negative effect of sequestration. agree that sequestration will reduce military readiness and jeopardizing national security of our country. we are still at war in afghanistan. servicesential that our members are fully paid, equipped, and received the support and training that they need. i have opposed the provision that what is included in the marie ryan -- the murray ryan agreement. a strong commitment

to our brave men and women, many multipleave deployed times to combat overseas. it is my belief that we have got to keep our promise to our servicemen and women after they have sacrificed so much for all of us in our country. we face difficult fiscal challenges, but we cannot balance the budget on the backs of those who have answered the call of duty. i know there is strong, bipartisan some sort -- support. i'm looking forward to bringing that up to the senate floor. unlike the private sector, where most companies can easily recruit mid-level employees, the armed forces is have -- the .rmed forces have no options

as service members reach their eight to 10 year service mark, many are making the critical decision, are they going to stay in or not? >> most of these officers are tle-hardened leaders. do you believe that the recent cola cuts will cause our officers and ncos to leave early and how do you believe they view these recent cola cuts? >> i think retirement as part of the calculus of anybody when they are considering a retention decision, reenlist in -- reenlistment decision. the younger one thing more and terms of pay -- more in terms of pay. the more senior ones think of

what is coming down the line in terms of retirement. i don't have a metric that we can measure that indicates a change in behavior because it is too soon. we do surveys, we can look at the numbers, but we do believe people who are approaching retirement are doing this calculation that says, if i retire at 20, i was going to get this. under cola minus one, i would have to retire at ask. -- at x. they are thinking about this. there is a lot of information banging around up there. it is a factor for sure. senior, how many years are you talking about? >> anywhere from 13 or 14 years on. for those whote are 16 years and beyond who are thinking about this.

there are factors at play. it is going to take me longer if it is cola minus one, maybe i should stay longer to get at that level. thing wehe kind of need to help with the commission. force shaping tools. we need expertise to stay longer. in other cases, we don't. people to incentivize stay. maybe they will say this not worth it and they want to leave in 10 years. those factors affect the expertise we have to do the things we have to do. sometimes you can, they would bonuses, sometimes special pay. that takes away from savings. it is a big stew of calculation and complexity that we need to sort through. that is what we need to -- that is the challenge.

what are the percentages of bonuses to salary? >> at mary's dramatically -- .hat varies dramatically it varies dramatically. >> the welding profession is one that is in high demand all over the country. nuclear welders even more so. that -- i feel strongly that the cola cuts need to be repealed. one element that concerns me the most is that current retirees and service members were not grandfathered. after careful consideration there are future changes, how important is it to exempt those that have or are currently serving, and what will be the impact of failing to do so? >> we have been very clear.

changes tothat any the structure of the retirement plan should be grandfathered. chairman dempsey said that in several different testimonies. all of the joint chiefs are unanimous. we all believe that any changes to the retirement system should be grandfathered. when secretary -- when secretary panetta was with us, he was very clear on grandfathering. i spoke with secretary hegel. he also supports grandfathering. there is unanimous consent between motility -- military and civilian leadership that grandfathering has to be part of what we do going forward. >> when will the report come forward? >> february of 2015. >> senator graham. >> thanks for having this hearing.

we have all recent consensus that we would like to undo what we consider to be an unfairness here. as far as timing, the sooner, the better. wicker widder -- senator thought no one would engage in sequestration, but here we are. the sooner we can go back to the status quo, the better. isould also like to say, it good to have a budget. you make mistakes in the budget process, but i am please with my colleagues. on, the wayis early the congress has responded to looking at this with an open

mind, trying to fix it in a bipartisan way, i think this is a good thing. everybody makes mistakes. you really judge people by their is about the willingness to right wrongs, and we are on a good path. $6 million hopefully to set aside what we have done with the %, but the idea of reforming compensation, count me in. i think the time has come respectively to look at the sustainability. there is a difference, admiral, between what you are saying about the overall cost of personnel within the military budget and what some of our associations are saying. what percent is personnel related? >> the military competition overall is about one third, and overall to include civilians about half of the budget, but i would hasten to add that the more i have dug into this, anymore the body delivered

emissive dug into it, the less sophisticated that metrics sounds because there are so many better -- so many variables that go into it. how many people do we have? what is the cost of health care? it is just a swishy number and you do not want to pin -- here is the goal, 32 point five percent, because if it changed, it would disrupt, so we really want to find out what it takes to recruit and retain the best. i skate with some of your veteran groups that have a different view of what the personnel costs are because remember, chairman density talked about 54%, 50% of the current budget is absorbed in personnel costs, and when you look at out years, the growth of tri-care, where are we headed in terms of personnel costs within the budget over a 15, 20-year period? >> when chairman density was referring to be 50%, he was including civilian. you also have to include indirect benefits as well as direct pay.

probably going to stay stable. there was some initial information, and the information is all over the place -- >> even if you don't do reforms, it will stay stable? >> if we do reforms, the percentage will probably stay stable. >> without reform -- >> without reform it will go up a little bit, with reforms it will go down a little bit, but the most sophisticated way to look at it is what is the best way to return -- to recruit and retain the best america has to offer, take the best possible care we can of them, and get the best value for the american taxpayer? it iss an isolated look, not a what is the right sure the budget. you can imagine if you picked a budget share in the budget went down, does that mean we reduce pay? i don't want to do that. >> i understand what you're saying. secretary fox, i guess the point i am trying to make is if about half the budget is going to be personnel costs, direct or

indirect, the other half will be spent on readiness, modernization, being able to actually go to the fight. the reason we are looking at reforming compensation is because over time it is unsustainable, am i right or wrong? yes, sir, you are correct. this budget share shows the number of people we have any amount they are compensated, so if consummate -- if compensation cost was allowed to grow and sustain, we would take it out of the people. we would have fewer and fewer people -- >> you would have fewer people and less equipment to fight with. wife yes, sir. >> the goals of a well-paid, well trained military that can win the war, right -- >> and to come home safely. >> we're not looking for a fair fight in the future, right? quickly asto end as possible with the least amount of casualties amounted we have to have the equipment and the training, is that right,

admiral? >> you are absolutely right, senator, we want to win 100-0. >> we do know what to go to war because those who go to war have to believe they will lose in those dumb enough to go to war will lose, it is just that simple. -- the storkfense lee and a time of peace, what has been the historical average since world war i gdp spent on defense? sir, i do not remember, i will have to take that for the record. >> i know you have very good command of those numbers, sir, i do not have those memories, but it has changed over time. >> doesn't 5% sound about right? ok. where will we be at the end of sequestration even with the relief that we have provided in terms of gdp's and on defense --- gdp spent on defense? >> i think you know the answer

to that, sir -- >> i'm not in the pentagon. i want someone from the tenet onto answer. the reason i want to find out is intelligentake an decision about sustainability of benefits, telling people in few sign up in the future, you may not real to retire at 38 and wait a few years. we are going to tell the retirement community we are not going to dump on you, we're going to do this respectively, but somebody has to have a decision, approval will be as a nation that 10 years from now in terms of budgeting, and that takes from not sequestration. it is my belief that we are going to be dramatically under 3% of gdp if we keep this path intact, and and 15 seconds, what are our allies doing in nato? are the people we fight with spending more or less in the next 10 years on defense? >> seven seconds less. less. allies are spending

if we leave sequestration intact, we could be well below what we spend in time of peace. what is the likelihood the war on terror will be over in the next decade, admiral? we're goingthat -- to have to continue to suppress, contain, defeat al qaeda until it collapses of its own internal contradictions, and that is going to tape some time. -- take some time. >> likely longer than 10 years? >> we would love for to happen in 10 years but we cannot count on that. so let's -- >> so let's count on the worst. you, senator graham. senator blumenthal. >> thank you for being here in thank you for your extraordinary service. i would agree with my good friend, senator graham, in his assessment that we are on a path to repeal the very unfortunate and unwise c.o.l.a. violence against women act -- very unfortunate and unwise c.o.l.a. cuts.

i would disagree with him only on his reference to glide path, andh implies an ease unimpeded track that is really found in the congress, and i think it will take some doing to have a path achieved, but i think the debate in a discussion here this morning in your testimony has been very helpful to reaching a path, which i think we have an obligation to do. i voted for the budget agreement , like so many of my colleagues. i did so with the understanding that tax law would be corrected and that it would be corrected as soon asnext ndaa, possible, right away, for all the reasons that you have outlined so well -- the effect , and, really, the dedication of our armed services , and the brave men and women who serve us -- they deserve

better than this kind of cut without any provision for grandfathering, but the cut itself in my view is offensive. but i want to deal with the broader issue that has been referenced here this morning as well, which is how we attract, retain not only new, best, and brightest of their generation, but also the mid- level officer and noncommissioned leadership that is battle hardened and perhaps battle weary, but one of our greatest assets in this country because at the end of the day, and i would hope that you agree, they are as important as any weapon system, any platform that we have. and i know that you have outlined well the impact that retirement and other benefits may have, but maybe you could

give me a broader assessment, give the committee a broader assessment, admiral winnefeld. if you could begin, and i would be interested, secretary fox. wet are the incentives offer, what we need to change, because we need to know before 2015 -- i think we need to do it now, right away. >> very good question, senator. address recruiting and retention separately. on recruiting, we take surveys of those who decide to raise their right hand and put on the cloth of their nation. why did you do this? why did you come in? it is interesting -- the number one reason is pride, self- esteem, honor. better my life. the number three reason is duty and obligation. the number 438 reasons are travel, future educational experience, and they want to be challenged. next comes pay, more discipline

in their life, adventure, and helping others. so that actually makes me feel pretty good that our young men and women are encouraged to be service for the right reasons. retention, particularly for those midgrade officers and nco's that you're talking about, there are two variables. the two most important variables are quality-of-life and quality of service. and retirement of course is something that the senior folks look forward to, but in terms of quality of life, as we adjust the compensation, we have to tune it very carefully, we have to be watchful of that. and there are so many other things that go into what quality of life really means. how often do you mean, and can your spouse good a job, that sort of thing. in terms of quality of service, we are hearing more and more from our people that they are sort of surprised by all this. what really matters to them more than keeping this height rate of

growth is they want to fight in a modern and ready force, they want to go to work everyday, and they want to have parts in the thewhere they can repair thing they are entrusted with. they want to be overdrive driving, fly it, or sale it, and they want to be confident that they are on a winning team. it is an -- it is intangible, but it makes a tremendous difference, and we have to look at that as well, the quality-of-life peace. that i thinkst add admiral winnefeld laid out beautifully. these intangibles are imported as we look at any changes for for example, going forward. i dug into the model of the broad economics, and i am pretty convinced that whatever we do, we can find ways to tweak it with pace and incentives and so forth. it is or he hard for those models to account for those intangibles and the individual's

view for what they are there to do and able to do given the way we support them in this broad term that is overused -- readiness --but that means the things that admiral winnefeld outlined about their ability to operate, their ability to have parts to fix it, the ability to show up for duty on a ship and have other people there, they're not trying to do three or four jobs. all of these things that are eroding the morale of our force right now. >> and another way of putting it might be the sense that the country appreciates what they are doing as well, that they are not only on a winning team, the best team, a gold team, but that the country appreciates the work that they're doing. >> he cannot even begin to understand how important it is to our young soldiers, sailors, airmen, marines, coast guardsmen , that as they walk through airports, train stations, you name it, when ordinary americans come up to them and thank them for their service. it is huge.

>> one other question in a limited time i have left, i know that you do survey -- that you try to apply some scientific method to assess the incentives and so forth that you just described, and of course we all have our personal experiences, senator kaine has a son who is serving, i have two. we know friends and so forth. i wonder how well you think , the scientific effort, are doing in measuring the kinds of incentives and so forth that are at play here. >> that is a good question. you always have to take any kind of survey or data with a grain of salt. if you're not listening to the germ beat that you are hearing from people anecdotally, what

senior leaders, who are terribly important it is process are saying to you, then you do not get it. so we have to temper everything we hear any service. i do not have a crisp answer for you whether there is a dichotomy there, but think in general it is what we are hearing -- they're both reflecting the same thing. >> and i do think we are very and i dorveys can lag, think that is what our service chiefs and secretaries and spent so much time out talking to before us, to the men and women in uniform. >> thank you. thank you for your excellent testimony, thank you, mr. chairman. >> thank you, mr. blumenthal. the senator vitter. >> thank you. i want to express from support for fixing this problem absolutely as well. i voted against the budget deal in december and this issue is est reason why. we need to get it fixed.

i want to express strong support for fixing it in a way that does not increase the deficit in any way. two would be doing for steps with the huge majority of us out absolutely not to do, and so that would be a failure as well. get am very hopeful we will this done. i just have one question for both of you. this provision essentially treated folks in uniform fundamentally differently and federal civilian employees, all other federal civilian employees. it sort of penalize them, if you will, retroactively on this issue while the changes made for all other barrel employees was prospectively only. do you think there is any justification for that different treatment? i think it was surprising. i don't think that the vast actuallyof our force

thought that through. they were not aware, i think. it was really just the c.o.l.a. -1 piece itself that registered with them. but there is definitely a difference. >> circum-i think again that is why we support grandfathering and believe that you have to look forward. maybe there's a change, whatever change that is, when new people come in. >> great. i'm glad most of them do not realize it, but my description, unfortunately, is accurate and is the fact of it. i want to underscore that i think that is finally wrong and inappropriate. thank you. >> thank you, senator vitter. senator king. ui, mr. chairman. in light of the fact that we have a second panel, i will submit my observation, in light comments, asine's in first budget out of a divided congress and 28 years was miraculous, but today we have established that this provision, provision.a. -1

confirms a because we cannot find parenthood. it was an immaculate conception, provision, immaculate misconception might be a better term for it. i appreciate your testimony and i will have questions for the other panel. i associate myself with everyone else here -- i do not think we should wait for the commission. i think we should fix this. it is not a huge item. it should be fixed, and i think our veterans and people receiving pensions for some odd reason may not fully trust us as we resolve this in 2015, so i think we should take care of it as soon as we can. thank you, mr. chairman. >> thank you very much. that will conclude the questions for our first panel. we will now call up our second panel. thank you so much, both of you, for your testimony. [captions copyright national cable satellite corp. 2014] [captioning performed by national captioning institute]

>> on the next "washington journal," the debate over executive powers will be the topic of discussion from simon lazarus from the constitutional ability center and roger pilon of the cato industry -- cato institute. after that, a look at what young voters thought of present obama's recent state of the unit and address any issues they consider most important in 2014. matthew segal of the nonprofit organization ourtime will join us. we will look for your calls and take your comments by imo,

twitter, and facebook beginning live at 7:00 a.m. eastern on c- span. >> he was someone, as i say, who grew in the office. the cubanly burned by bay pig experience. he had listened to the experts, cia, might chief of staff, and -- het to see the goal went to see de gaulle in france, and de gaulle said you should surround yourself with the smartest possible people to listen to what they have to say, but at the end of the day, you have to make up your own mind, and he, kennedy another said,at the buck stops here.

he wanted to hear what these experts had to say, way what they were telling him, but at the end of the day, he was going to make the judgment, and he was the responsible party, and you see that, that was abundantly clear when you listen to all those and read the transcripts thell those tapes during cuban missile crisis without he was a tall man, he was the man making his own mind. joint chief at arms length. they want to bomb, invade, and he did not want to do it. >> an inside look at the kennedy administration tonight at 8:00 on c-span "q&a." air force secretary deborah lee james spoke at the air force association just outside washington, d.c. her remarks came amid allegations of several missile at a base ands wyoming cheating on their

monthly proficiency as examples of 2000 but those allegations in the air force's overall priority. this is a little less than 40 minutes. good morning. i am president of the air force association. welcome to our first secretary of the air force breakfast in 2014. happy new year, everybody. thank you for being here. [applause] madam secretary, normally we have to go to a buffet line and it takes forever, but for some reason when you're here, we get elated, sitdown breakfast, so thank you for that. i hope you come to all of your

breakfast. we even got cody here. i said what is an army guy doing in a air force association. he said he would just want to make sure that we were taking care of his army air forces was . -- army airee him corps, that is right. with a wonderful group of senior corporate executives, industry leaders, attachés from around the world, and we have got a lot of patriotic americans in the audience today, and we cannot have a better keynote speaker today for the breakfast series than our neck -- our new sector of the air force. secretary deborah james is the 23rd secretary of the air force, and she came into the job -- i was talking to chuck -- probably the most uniquely qualified secretary we have ever had, with vast amounts of experience in inustry, independent on, -- the pentagon and in government.

i cannot think of a better person to lead the world's greatest air force then secretary james. you all have read her bio, so i'd imagine to take up much time and you did not come to hear me speak, so without further do come i would like to bring secretary james to the podium, and thank you, madam secretary, for being with us is very cold and brisk morning. thank you. [applause] thank you so much, general mckinley. device could also add what pleasure for me to be back in this position where i can work so closely with you going forward. i also want to start out by saying thanks to the entire air force association team that i know work buried hard to put this breakfast together. i am told there is about 250 of us today, which apparently is a very high number, perhaps a record-breaking number for this first reckless there is near 2014, and of course that is extra pressure on me. i hope i am worth it. you will have to be the judge of

that after you hear what i have to say, but thank you to the whole team for putting this together and for all of the work that you do throughout the year. i am sure that in addition to braving the cold today we might have some sleepy heads in the audience. i know i am a little tired having stayed up late as i imagine many in the room did to listen to the state of the union address. i'm glad you made the effort to come in. i do not know about you all, but my favorite part of the address with the recognition for a member of our army, army ranger sergeant first class remsburg who after 10 deployment overseas with very seriously wounded by a roadside bomb. he has been through many surgeries and great struggles, but he is coming back, and he will come back, including comeback and serve actively in a very active way on active duty with the army. and his motto is -- never give up.

so that actually brought a tear to my eye. it was very inspiring and i'm sure there were many other americans who felt that way about sergeant first class cory remsburg. the air force association without doubt is at the very top of the list when it comes to our services and our airmen's strongest advocates, and this organization is truly a rallying point for innovative, air minded acres, so it is no wonder that we have such a long-standing, positive relationship between our air force and the air force association. when it is coming next to our dod military and our civilian workforce, which are so terribly important to us, the other part of the team that i want to recognize that is extremely important with our military capability, and that of course is our industry partners. i have enjoyed talking with some of you today for sub i look around and i see people that i've known from all walks of my life professionally from the

hill, from infinite on in my earlier days, from my days in industry, it is great to see so many of you again as well at some new colleagues, but i wanted to know that because i just finished walking in your shoes, meeting industry shoes, i understand how important it is to have that open communication line, and to make sure that people in government and people in industry are cross talking all of the time. i also get how difficult it has been not only in government but also in industry with all of the recent stops and starts and uncertainties with the budget that we have been through in recent years. so my point is -- i understand that, i walked in your shoes, and i'm going to work hard as the secretary of the air force to make sure that we keep the communication lines open because there's no question about it -- we cannot get our job done without your active support to make sure that we are fulfilling our national security requirements as quickly as

possible and at the best possible cost to the taxpayer. lastly, i would like to thank the members of our defense attaché corps, many of whom are here in the audience. i very much look forward to working with all of you as we go forward. visiting with some of you in your home countries but more in the immediate future, i am looking forward to an event i think we're going to have in the next few weeks, so thank you all very much for coming as well. with your indulgence, there is really three topics i would like to touch upon this morning. i would like to share with you number one some of what i have been up to in my first four or five weeks as the secretary of the air force. the second time i would -- the second thing i would like to talk about are the priorities i have laid out for the air force that we will be tracking on going forward. and third, i would like to offer up some comments about our nuclear forces in the air force. mckinley,aid, general

i am the 23rd secretary of the air force, and it is believe you me and a privilege of a lifetime. i was actually sworn in on december 20, but that only last friday i had to say a wonderful, ceremonial swearing-in, a reenactment by the secretary of defense, and some of you were there. and all of this came on the heels of the lightning quick senate confirmation process. [laughter] that i so enjoyed going through. but seriously, when you raise your right hand as i did last friday in the presence of the secretary of defense and the chief of staff and all of the bands and the honor guard and the flag -- boy, you really know that the deal has been sealed, and so i am so delighted to be here. what a wonderful event that was for my family and for me. as everybody in this audience knows, this is a very, very exciting time to be serving. to be serving in all of the capacities that we serve.

the strategic environment that we face is dynamic, and the threats to our national security, both overseas and here at home, they continue to evolve , and they come from state actors, and they come from nonstate actors. the physical environment that we environmentfiscal that we face is also challenging, and even when we are thankful and take into account the budget agreement, andh was recently fopassesd, that we will have some relief insurgency at least for the immediate future going forward, it nonetheless remains a challenging environment and will for the foreseeable future. so when i put all that together, it is clear to me that maintaining and in some ways shaping and growing a capable air force, not only for today's needs, but also for tomorrow's challenges, this is a paramount importance, and we have to keep in mind but the strategy element of what it is the nation might ask us to do, but we also have

to keep in mind the budget element because without consideration of both of those things, we may well come up with plans that are simply not realistic, and that is not helpful to anybody. we in the air as force look to the future, i feel quite certain that we will become a smaller air force, but it will be in air force that will remain highly capable and on the cutting edge of technology so that we can always step up to the plate and meet the country's needs. it will not be very long before general well; to capitol hill for the -- before general walsh and i go to capitol hill. i also got some similar practice at that just a few weeks ago when i testified before the national commission on the structure of the air force, which was just in early january i did that. and i made the point to the commission, and i would like to make a point here again today, that going forward, there is no doubt in my mind that our air force is going to rely more, not

less, on our national guard and reserve forces. not only does this make good sense from a mission standpoint, it also makes good sense from an economic standpoint. the commission is due to report in the next day or two, and i do not have all the details, but i think we're going to find that there is a great deal of symmetry between many of the recommendations of the commission, and i think this will be an excellent body of work to inform us in the future, and the way that the air force is proposing to go forward. i think there will be a lot that we can agree one and i certainly look forward to getting that's support -- getting that report and digging into the details. i have been working on the budget, encore structure, but beyond those issues, i am very pleased to tell you that i've had a chance to get beyond the beltway and see some of our airmen at work. in december, while i happen to be in california on vacation, i

dropped by to visit the airmen at the los angeles air force base, which is part of our space mission, and believe you me, it for the secretary of the air force to drop by or pop it on anybody, but i did my best to try to keep it low-key and had a wonderful visit with them, albeit way to short. i've also been to dover air force base returns in the last month. say, its, i'm sorry to was welcoming home fallen airmen. on occasion known as a dignified transfer, when i also had the opportunity to meet and try to write at least some small, small to grievingomfort spouses and family members, and this was extremely sobering and a humbling experience. the third similar to dover was to meet with our airmen who are of course involved with a number of things including the mobility mission. and then last week, i visited our intercontinental ballistic wyomingbases at fe1 in

and he airakota, force base in montana, and then finished out the chair but the -- out theke command trip at the global strike command. i also saw some bombers and missile teams, and i will have more to say about that. later this week, i'm going to be able to congratulate some of our newest airmen as they graduate from basic military training in san antonio, and then later on in the month, i'm headed to the air force academy in colorado springs, so my point is -- i am importantmind the work here in washington that needs to be done, getting ready for the budget, but also trying to get out and about because i am learning, as this audience are he knows in great detail, that our airmen, active, guard, reserve, and civilian, underpin everything -- everything -- that we do. we are extremely fortunate to have them. let me shift to the three

priorities that i have laid out for the air force. which is probably knows a price, it certainly has been a key part of my career, and that is people and taking care of people is going to be job one for me going forward. what does that mean to me? got tot means we have continue our focus. if anything, kick it up a notch when it comes to making sure that we recruit and retain the right people into the force, that we shape the force, reshape the force, you might say, as we go forward, not only for our immediate needs but again with the longer-term in mind. it also means compensating people fairly, and we probably -- in fact i'm quite certain that we will not see the types of compensation increases in the next decade as we saw in the last decade. but still we need to make sure that we keep pace and that we compensate people fairly. taking care of people also means growing leadership in developing what i call diversity of thought

in leadership. for taking the most important family programs means balancing our talents across our guard, reserve, and active components so we make the most of each of those components will stop it means very importantly to ensure a climate where everyone is treated with dignity and respect, and we need to keep on sexual the issues of assault and sexual harassment very hard just as we have been doing. people close and taking care of people is certainly job one, and we need to keep on communicating what we are doing because people want to know what is going on. so as i travel around, i do town hall meetings everywhere i go and answer questions and do my best to keep people informed. i mention that we are going to become smaller, and this needs to be done correctly because we have overage is a certain skills in other skills

and waited to get to the right balance between voluntary and involuntarily means. andteri were recanted voluntary where it needs to be. taking care of people is priority one. second priority is finding the right balance between today's readiness and tomorrow's readiness. means i have to work very hard to make sure that we restore the air force readiness levels to higher levels because it has slipped in recent years. the readiness levels particularly flipped last year when we were facing touestration, and we have get those levels back up to a more acceptable level because we certainly owe it to our airmen to make sure that they have the right training and the right equipment and supplies to be able to successfully do what we asked them to do. with the relief that we will fy15 receiving in fy14 and , through the budget agreement

and the lifting of sequestration and the numbers going up a bit, certainly readiness will be the replacing those resources going forward. so that if the readiness of today. the readiness of tomorrow, what i mean by that is our modernization program, making sure that we are looking at where the threats are going, where are the key technologies that we need to be in front of because of course the objective is that we continue to control the skies that says we have for decades in the past, that we continue to be able to project power like no one else, extend our global reach for many years to come. so that is the point, and we need to make sure that we are modernizing as we are also protecting the readiness of today. so it'as everybody in this room knows that we have top programs, the f 35 joint fighter, the new tanker program, the long-range strike bombers, but there are others as well. so the readiness of today and the future it is tomorrow, the readiness of tomorrow. third priority, make every dollar count.

and make sure that everything we do add value to the taxpayer. i am really determined on this one that the air force needs to do little -- needs to deliver capability at the very best price tag i to the consumer, which is the taxpayer, and to our military members. as good stewards of this responsibility, we have to deliver this value to the taxpayer with programs that are on budget, on schedule, and of course coming out of industry as i do, i am hoping that those skills and the knowledge rocks the table of the air force will help us do even better on this -- brought to the table of the air force will help us do even better on this. we'll would to the american people to be able to audit our books, so it is striking to many people out in america that we are not able to deliver a clean audit. to stay on that path. it is actually our vice chief of staff, general larry spencer, who has led the every dollar

counts campaign, and i told him i want to throw in with him big time and work on this one hard. now, the precise details about how we will advance those times of course will be forthcoming when the president's budget rolls out in march, but please know as i said earlier despite the budget relief, which we are very grateful for, the budget still will remain tight, and this budget, you will see it when it rolled out, we have had to make some tough voices. there will be decisions in there, some of which you may like and some of which you will not lie, and i guarantee you there will be some in there that congress will like and others that congress will not like. we have that everything on the table. there has been talk about retirement of some fleets of floorft, obviously the shaping initiative. we will be reducing headquarters. there'll be a lot of detail in there and it is very -- and very hard decisions had to be made. i am hoping as we go or that we can cap on everyone in the air force association to help us

tell the story when the time it is a story of needing to make and achieve savings in certain areas of that we can reinvest in other areas. it is quite simple in that regard, but he becomes more difficult when you get down to the details. again, i certainly hope we can work together on that and i look forward to doing so. all right, let me turn to the nuclear world. while the air force is responsible for many incredible and important missions, early on i knew that certainly at the top of my list i wanted to visit our nuclear enterprise bases as soon as possible to meet with our airmen and learn more about it, so as i mentioned, i did visit barksdale. continuing to strengthen our nuclear enterprise is a top priority for me because no mission is more important than safeguarding the nation's nuclear capabilities and maintaining deterrence.

after all, our airmen are entrusted with the most powerful weapons on earth, and this mission is essential to our security and the security of our allies and partners. two weeks ago, general welch and i held a press conference, and we did not have very good news to report. it was at that time that we brought forward and -- and disclosed that an illegal drug investigation had uncovered a certain amount of cheating on the icbm monthly permission easy monthly proficiency test. general welch and i try to make clear that this behavior is legally unacceptable and is contrary to our number one core value, which is integrity. and i want to say again -- we will get to the bottom of this. it is an ongoing investigation, but i also want to say again and reassure everyone here that this was a failure of integrity on the part of certain airmen. it was not a failure of the

mission. the mission is strong. it remains safe, secure, and reliable. i am very confident of that. so we are continuing to investigate, and when this whole thing first into the light, the top immediate action that i took was to direct our office of special investigations to put resources on this to get to the bottom of it as soon as possible. we took some other immediate corrective actions as well, 100% ofg we retested the crew members across the 20th air force on the very test in which this cheating occurred post up that was completed quite -- cheating occurred. that was completed quite quickly. the 95.5%ty pass at rate. that is to save 95.5% of the people took that examine past it, so that is to me another indication of great confidence, pass rate is remote

to mind with our historical averages. we also took immediate corrective action to put in place tighter test of elements, control, and administration procedures, so basically better posturing procedures during the exam taking. are ongoinge there nuclear inspections of our missile crew proficiency with what is called nuclear surety so theions or nsi's, 91st missile wing just went through one and demonstrated a 100% pass rate, and the simulator environments. the other wings will be going through this and complete by the end of february. so the mission is strong. i want to say that again. but i also want to say again the chief and i will get to the bottom of this and we're going to do it with transparency, and those who do not meet our standards will be held appropriately accountable, and that means the people who were involved with this. it also means we are assessing leadership to try to understand

what went wrong. secretary hagel is also very committed. he issued a memo last week directing a review of u.s. strategic nuclear deterrent forces, which will involve key , theyolders within osd air force, we are bringing in the navy to see what we can learn from navy practices, and we will be sharing best practices and developing an action plan over the next 60 days. there is also going to be an independent panel that will focus on person -- on personnel issues related to our nuclear forces. so now what i like to do is i would like to share with all of you some of my impressions from the trips that i took last week. right away, on a trip at each location, i not only had command briefs, and i not only learned about the mission and talked to towneaders, i also did halls and i also did small focus groups, just me and airmen. i did it with enlisted,

officers, at a variety of levels, and i found the focus groups to be very enlightening. so i've come up with a list of seven -- i will call them observations. they're sort of focus areas, and all of these will be discussed at greater length and we will have a way forward in all of areas we develop this action plan that i talked about a little butter earlier. here is my list of seven observations. my first observation, my opinion really, is that we likely do problem in this. the need for perfection has created way too much stress and way too much fear about the future. i heard repeatedly, especially in the focus groups, that the system feels very punitive, it is not feel that you are into devised for good but rather punished severely if they think that should happen. i've also heard repeatedly that there is a level of

micromanagement within this force that should be transformed into empowerment, and i also heard repeatedly that the airmen here, that the mission is important, but we do not necessarily put our money or our attention where our mouth is, so it is the difference between what we say and what they feel that we do. so that is my first observation, that we probably do have something systemic going on here and we need to get on top of that. observed that we may have lost within this team a distinction, and i think it is an important decision, between training and testing. in the current environment, there is no room for error all of the time, and yet when you're talking about training, the idea of training is learning common mistakes happen, and you get better. that is what training is all about. but in this environment, it sounded to me like everything was a test and that perfect test scores have become an important

gauge. in some cases i heard the only allowing commanders to differentiate among airmen to promote them. so i think this is wrong. we need to address this. and i think rather than making a 100% test, eight or make it or break it for these young people and the future of their careers, i think wendy to look at a whole person concept, the totality of -- to validate what they're doing was also looking at training and testing is my second observation. third, we clearly have to have accountability at all levels. i already mentioned that. for those involved, some of whom actually treat -- cheated and some of whom knew about it but did not stop it. there needs to be accountability and there will be but we are also looking at the leadership as i mentioned earlier. that is the third element is accountability. the fourth is i think we need to look at professional and leadership development because

within this career field, we may not be doing the best that we can do, and i call this kind of the human dimension, so we have to really take a look at the human dimension, and this is an area where i think the independent panel may be able to give us some thoughts and advice. i think we need to look at how we commission the officers and the different commissioning sources. we need to look at the training that goes on at the ben amberg air force base and ask ourselves -- are these airmen getting the right leadership training? are they being professionally mentor d wade young leaders and the rest of the air force are being meant toward? what about their career force opportunities? are they appropriately laid out. lai in short, we need -- laid out? in short, we need to make a something that they want to do and inspired to do. we need to reinvigorate our campaign on core values. there may need to understand that being a good wing man does

not mean protecting others who lack integrity. of course, airmen have a response ability not only to act with integrity in their own actions but also to report wrong doings that they see going on. somehow that got a bit lost here. so we need to go back to some basics, look at those core values, and remind people that there are ways to report things both directly and through anonymous sources. i heard over and over again airmen do not want to be perceived as reporting on their bodies. -- buddies. that is not good when it comes to matters of integrity. is back to the people part of the equation -- we need to examine the incentives, the accolades, the recognition that is available to the nuclear force. we need to ask ourselves -- should we take steps to make this career field more attractive? onthe way, that is not only the officer side. i am also talking about the enlisted ranks here as well.

this gets into the world of -- should we consider some sort of incentive pay? or scholarships for certain types of work. looking at those sorts of incentives and accolades. should we do a metal or ribbon? -- medal or ribbon? lastly, seven, we need to look at other types of investments, are they appropriate for our nuclear force? this is very important that 20 to put our money where our mouth is. this is everything from perhaps we should have a different -- we should have additional funding, perhaps high-priority military construction. i saw some leaking roofs, things of this nature. there might be some quality-of- life things. so should we redirect some of our investments toward this force? these are all of the areas that we will be looking at over the next 60 days, and we will have more to say in an action plan to address the entirety of the force. i want to now close by sort of

reminding you that although we certainly face lots of challenges due to a budget or people challenges, that out of every challenge comes also an opportunity, and that is certainly the way that i look at it. and to return for a moment, sergeant first class cory remsburg, nothing in life that is worth anything is easy or free, and again, i was inspired by those words, and i think he is very, very right. i am extremely proud of our air force and our military these days simply cannot operate without the air force because the air force is embedded in every operation that is important around the world, and the capabilities that we bring to the table, simply the military cannot get by without us. so that right off the bat tells us that our future is very bright. and whether our airmen are launching a satellite from our facilities in florida or guiding -- guarding a missile silo in the great north or refueling an

airlift her over the pacific or support inlose air afghanistan or facilitating personnel and budgets decisions right here at home and the pentagon, our security simply pends on our- de airmen. i know that, i believe that, and i will be working very hard to protect them throughout the next several years. i would like to thank the air force association one more time for being such a strong advocate. we will need you more than ever as we go forward. ease keep it up and see why all for your support of our airmen. [applause] -- and thank you all for your support of our airmen. [applause] well, they set up, that is a

good sign. >> we have a couple of questions. the secretary have a hard stop at 9:00, so we will try to get as many as we can. i will start over here with amy. you get first question. please identify yourself. >> hi, secretary, amy mccullough with air force magazine. you spent quite a bit of your speech on him at the nuclear shift in the air force. i was wondering if you could give us your insight into how some five years after the air force started, air force global strike command and brought new leadership to reinvigorate the nuclear airport -- enterprise come and how these issues are still so prominent. is thatke on a, amy, although the nuclear enterprise that,tainly -- my take on amy, is that although the nuclear enterprise has certainly focused, we tend to focus when something goes wrong and we tend to focus very heavily on that element where it went wrong.

perhaps what we have not done as well is resistant focus, meaning persistent and broad focus. that is to say even when there is nothing going wrong, are we still focusing, and when things do go wrong, are we taking a broad look or are we just taking a narrow look at the one element that went wrong? going forward, of course we have to deal with the immediate issue before us, and we have to look at what went wrong there, but i think and believe and hope that he seven observations or seven areas of focus that i outlined that this will be a broad view, that we can try to come up with a plan to go forward and look at the overall enterprise, not just what went wrong in this particular instance, and that out of that we will also come up with a way to provide more persistent focus, not only when there is something going wrong but constantly every single day. >> the side of the room.

marion the back -- mary in the back. then we will come back here to the center and that will probably be our last question. >> i am from reuters. now it is probably double the original 34 airmen under investigation for the can you give us an update eyes to how money are under investigation, and how many of those are for acts of cheating and how many those additional people are for not reporting the cheating that they knew was going on? lastly, do you have a sense that when it comes to accountability, people who knew about cheating but do not report it will also be removed from these wings? thanks. >> i don't have a specific update on the investigation and the numbers to be able to share with you today, but i do promise, i do commit we will have an update on that in the not-too-distant future because part of this, and you may

recall, we actually brought this to the american public. so i promised transparency then and i meant it. i just do not have that today. i can tell you the the numbers , the investigation is ongoing, and we will let they investigation take us wherever it takes us, and whatever the facts are, that is what we will share with you. as i mentioned, the secretary of defense is also very committed, so there is a number of us that will be -- actually later today, will be meeting, this joint group that i talked about where we will sit down with osb and the navy and the secretary and whatnot and we will be beginning of sessions later on today as a matter of fact, so please advise. we will not be too much longer before we do have an update on basis of his and the numbers. wife last question right in the middle of the room. >> welcome, secretary james. we heard your important message about every dollar counts. what are your thoughts in making

every dollar count for energy efficiency for both your facilities and your weapon systems? >> this gentleman even gave me a heads up that he was going to ask me that question, so i hope i do alright have i had a little time to think about it. my answer to that is obviously moneynd a lot of time and and energy. number one, it is in our best interest to spend less on energy and be energy efficient and do what we have to do but by spending less money. that is an obvious thing, we get that. the obligation we have to the planet and doing the best for the environment. that is another reason to do it. we are working on it, we are working on it hard, and everything from looking at how we purchase energy to alternative energy that maybe can give us help. i believe we are running pilot programs at military bases to see what we can learn.

so there is a variety of initiatives going on. i am committed to it. areaw it is an important where savings are parsable and i'm looking forward to delving into it a little more deeply as time goes by. >> ui, secretary james. -- thank you, secretary james. >> thank you. [applause] >> i know our air force is in great hands and we could not have a greater opening speaker then our very own secretary, and i know you and mark are going to do a great job for our air force, and we are very proud to be part of that as the air force association. george mulder wanted me to remind everybody that we cannot do it without the people who have attended today, but we very much appreciate the leadership you have. this coin was minted for our team of the year award this year. because you are now on our team, we wanted you to have one, and even though it is a very large some it is not as large as of our officers in this remote

made for themselves. [laughter] no names, no names, but we wanted you to have this for a great, great speech today. thank you. [applause] >> wow. thank you so much. >> coming up next, "washington journal," live with her, then the latest news. "fter that, "newsmakers with debbie stabenow. and later, the the president's state of the union address followed by the response from cathy mcmorris rodgers. coming up next on "washington journal," the debate over executive powers will be the topic of discussions with simon lazarus from the constitutional accountability center and roger pilon of the cato institute. they will talk about how president obama and past presidents have used those powers and how they factor into current policy debate. after that, a look at what young voters thought about president

obama's recent state of the union address and the issues they consider most important in the 14. matthew segal of the nonprofit organization ourtime will join us. ♪ ♪ host: a live view of the u.s. capitol. be meetingnt will separately with the house and senate democrats midweek. the president's national security team is back on capitol hill. last week they testified before the senate intelligence committee on tuesday. washere was also -- there also a hearing wednesday focused on the irs. .t is groundhog day we will begin with your calls and