next on "this week in defense news," our expert round table discusses what is next for u.s. national security and the wake of to "this week in defense news." i'm vago muradian. i hope everyone had a great thanksgiving weekend. when congress failed to craft a deficit reduction deal last week, the clock began tick engine a high stakes political battle over how much and how fast defense spending will be cut. the budget control act of 2011 calls for an automatic cut of close to $600 billion.

but the cuts aren't required until ganch 2013. what happens between now and then portends major changes to force structure, strategy and future programs, whether or not the mandatory cuts come to fruition, all this as the pentagon works its 2013 budget request that is to be submit to congress in february. can dod afford to lose $600 billion on top of $450 billion in cuts, already ordered by the president? can deeper defense cuts be averted? if not, what tradeoffs must be made and what programs could be threaten? here to discuss these questions and more is rick maze, the congressional editor of the military times newspapers, david bettertoe of the center of international studies, todd harrison of the center for strategic and budgetary assesses. , and jim of the heritage foundation. gentlemen, welcome to the show. >> good to be but. >> let's start with you, rick. what does the failure of skymen and what happens between now and january 13? >> the failure isn't surprising but it does mean there's no

easy answer and no non- political way out of this any time in the future. the -- we'll return to bickering now and it will be bickering in congress between now and the november elections, about who is to blame for the fact that you don't have a deal, and they'll be -- each of the parties will come up with some plan of their own that won't be able to be passed and we'll just talk and talk about somebody really needs to do something about the deficit, nobody will do anything. >> todd, what exactly is the sequestration process? what gets cut? how fast does it happen? what will -- >> bottom line is nothing hams on sequestration. doesn't go into a enforcement until january 2013. so we've got until the lame duck session of congress before congress really will feel any pressure to do anything. what will happen, on january 2, if the level of funding that dod funded at that time probably going to continuing resolution, it's higher than

about $472 billion, which is the cap under sequestration. then a formed cut would be applied across every account within the budget to bring it under that cap. if the budget -- the in force at that time sund the cap, then you don't have any across the board cuts. but looks like we're on track to have something that is higher than that cap. >> and each line gets cut by the same amount of money. >> there's one exception. the president can exempt the military personnel account, and anno cuts have to be cut more to make up for that. >> let's go to the president. immediately after the co-chairs said that there was no deal last week, he said there's no weaseling out of these cuts, that you didn't sort it out so there will be automatic cuts coming. and yet his own office of management and budget appears to be saying that the defense cuts shouldn't be larger than $450 billion, the plan anyway. is there a gross in consistency. >> the white house is too faced on this ever since the budget control act was passed. both o and b and the pentagon have been saying we can't take

any further cuts, it would be devastating. the president is clear position stated over and over again is, these cuts are coming and we'll take them. it wouldn't surprise me to see him play the political card of in fact the military personnel and say, i intend to exercises that exempts. so instead of two face they're three faced. >> that is great. we'll keep scorecards to track which face we're talking about. jim. >> it's all a big game of political chicken. nobody knows where we're going. it's unchartered territory. nobody planned let's have a budget control act that. was something that was made up. nobody knew how the supercommittee was going to come out although a lot of us thought it would fail. nobody know what -- like that old -- incognito. they're guessing it with how will this affect my re-election campaign? what is happening in the world today? what are the other parties going to do here? and nobody really knows all those pieces. >> this is a very valid election issue, because no matter what kind of defense cuts you make, you're going to be putting people on in the

street, whether they're uniformed or the street or contractors. >> i can just say -- >> sure. >> this is really interesting, because to the president's base, as far as defense goes, that's fine. they'll cut defense anyway. they don't care. to the traditional peace through strength republicans who never vote for obama. this is just one more reason to vote way they were going to vote anyway. the real question is, how do the independents interpret that? here is where the guessing because i don't think the polls tell us. there's two other wild cards here that i think come into place, vago. one is what do the markets think about this? the initial indication are to the market sequestration is fine, as long as you stick with, it we're not going to -- >> they're more focused on the growing debt issue. >> absolutely. the real issue is the $5 trillion of increased debt not the 1.2 billion in sequestration. >> he cannot say that because it really means that there would be no deal at all whatsoever, that it would just be cuts and domestic or entitlement programs some he

has to at least for the short- term say defense is on the table, whether or not defense really ends up in the ending on the table. >> one thing to add, if you want sequestration to be a real deterrent, that causes congress to act and come up with some other equivalent -- >> which is the attention in when the idea was coming up. >> you've got to make it a credible deterrent. and as long as they're saying they're not even going to plan for sequestration level budget, it looks like it's not that credible of a deterrent. >> what i thought was interesting was that that republican base with had more in common with the obama administration on defense cuts than his own base in the party democrat. >> i think the reason is i think the president looked at this as a way to blackmail republicans into a way of accepting tax hikes. want to be the party that sent defense over the cliff? and it was because you wouldn't tax the rich. and i think he was hoping that that would drive them, but so far it hasn't. >> let's go to the question of what happens in february. in february a budget will hit congress, and it's likely going to be another budget that goes

nowhere just like the last one did, will continue on a resolution. where do you guys think the final defense number next year will lie? do we have any ideas on what that cut number will be? >> i think we'll be under continued resolution with spending for the year. i think there's a really big move in the house of representatives by probably around 100 people that would cut even defense further below, because what they see the failure of getting a $1.2 trillion agreement is excuse to get a $4 trillion agreement and you couldn't possibly cut 4 trillion out of the budget without cutting defense. but nobody will do that so it's just fahder for back and forth bickering, until the election. >> last year they said their projection for 2013 funding for the base defense budget, 571 billion. under the budget control action, the initial cuts they're currently planning for are 525 billion. under sequestration, 472 billion. i think what we'll see in february, what they'll come out with is the budget they're

planning right now basketball, 525 billion. >> what they're going to get out of congress ultimately, after the sequestration, in game, if you will, during the lame duck session is probably going to be closer to the 470 than the 525. >> jim? >> this is going to be -- a hard one to guess because i -- i really don't think these guys have any idea where they're going. and everything -- >> none of players. >> so who -- i'd remember guess when iran will get a nuclear weapon. >> more certitude that the israelis may do something about that! >> none of us would guess we wouldn't have seen a budget from this government, a defense authorization act that, we would see something like the budget control act and that somebody would put something like sequestration on the table some all the things that none of us thought would ever happen have happened some we can sit around and say the logical choice is probably slack spending. >> the one trend is that they always find some way to punt and never really answer -- [everyone talking at once] >> so if you wanted to bet on

the fact they won't resolve, it you'll probably have the right answer. >> should the pentagon cut military personnel and re tissue old equipment to invest in systems for the future? that's next for alright everybody, get your heads up. now when i was in the military, i learned that if you stand together, you can stand up to anything! no matter where i was deployed, i always knew that somebody had my back! you boys are your own band of brothers!

you have each other! just like i had navy federal credit union... 24/7... live customer support! let's go! let's go! 3 1/2 million members. 3 1/2 million stories. navy federal credit union. welcome back to our roundtable discussion on defense spending cuts mandated when the supercommittee failed to reach a deal last week. david, what are some lessons from past sequestration? >> three real big lessons. one is they don't usually

amount to much. they'll start the sequestration and the pain will be so great this after two or three months, congress will finds another way around them. that's what is what happened. but the real problem is the arbitrariness of them and the lack of flexibility, if you will. and while this is important across the government, it's particularly bad for defense because ultimately, we probably could cut most of this money out of defense, we just can't cut it in the timetable and with the dimensions a sequestration would drive you too. you need a better strategy. >> if you want to put in in comparison, we're talking about 472 billion in the base defense budget that. would take it back to the level we were in 2007. it's not the depth of the cuts, at the problem here. it's the abruptness with which they occur. >> i do think that president bush crime that office promising that we would skip a generation of weapons, that defense spending shouldn't have to increase, that we would make reforms and transform -- obviously, there's been a lot of change that's happened in the last 10 years. defense spending basically doubled, okay?

two questions. the first question is, how big a cut is this really at the end of the day? there are those who say that all told, even with sequestration, it's about a 15% cut or 16 or 18%, depending on what top line you started from. and then if spending doubled, you're still really alleled of game. >> yeah, i think you compare it where we are now, and defense budgets, it's only about 11% cut. but it happens abruptly. that's the issue. if you compare it to where dod planned to be, you're looking at an 18% cut. because they planned real growth over the next year. so it depends on which baseline you're using. that's why you see a little of different numbers. >> right. >> the pain that dod will feel in terms of adjusting their plans is the 18%. that's what they were planning to grow to. >> let me go to the question of whether or not skipping a generation -- looking at that cut figure. is this the time to make very, very deep manpower reductions to retire aging equipment in

large numbers, save the money and bank it on future systems? bank it on the future bomber, joint strike fighter, new ships, new armored vehicles, more forward look, and do what the brits did, which is look and say, look, we can take some mid-term risks given some. bigger threats are down the pike? >> well, the first problem is we put a lot of money in -- into the military in the last 10 years, but a lot of the money we put in has gone to operations if iraq and gunn. it hasn't gone to rebuilding military. so in a sense we have kind of skipped a generation of equipment because we pulled some of these procurement time lines. there are some areas -- uab and -- where we have done up grids. but lot of big systems we skipped a generation, and then a lot of these things it's really just kind of -- look, you want to skip a generation? change physics. lot of things you can't get to the next generation unless we have a new leap in technology capabilities. so for example, in ground vehicles, you're not going to get a next generation ground vehicles balks the physics are

the same, until you get to nanotechnology if brand-new materials. >> which is one of reasons ground combat was shelved because it looked too much like conventional existing -- >> and the answer is let's just cut people. well, that sounds great. personnel costs are going through the roof. and the other problem something, you're cutting your most valuable asset. it's like -- >> your people. >> yes. going to apple and saying, we're going to save money and stop manufacturing ipad. >> at the end of the cold war they cut the size of the force by about one-third. it was a really large cut. and you hadn't even finished the cult before people were realizing, oh, my gosh, they caught too far because we had bosnia coming on -- >> they also cut badly. the army and air force went about doing those cuts in a very bad way. mismanaged, where is the navy ended up cutting as much if not norman the other guys but did it in a slower ramp to figure out what do the skills set they needed for the future? >> the cost growth we've seen in personnel over the past decade, it's not because we increased the number of personnel. we only increase the number of

personnel at 4%. but personnel costs went up 59%, and real terms. it is costing much more per person, that's the problem now. those costs are hard to roll back. >> well, but that's a third rail political issue, which is military entitlement. any strategic person who looked at the budget and will tell you you've got to -- that part of it. the administration is doing some stuff in increasing, for example, tricare premiums but that's considered a drop in the bucket. at some point are you going to have to tackle really systemic entitlements and benefits? >> you clearly have to that. if this were any other entity other than the defense department, then you said we've got to cut 15% out of this entity, that's exactly what you would be looking at. it's not only a drop in the bucket, it's a drop that evaporates before it even hits the bucket it's so small. so ultimately, you've got attack this will from an inside perspective. i think that by and large, military and retired military, if they realize the importance of it for the nation, will go

along with this. who is going to make that case? who will do the analysis and do the selling? not in this political climate. >> and i don't think you can go into this with the attitude of we're just going to go in and cut pay and benefits in order to pay bills politically that goes nowhere. what you should be doing is saying, we've got to get better value for what we're spending on pay and benefits. if you look at some of the benefits added over the past decade, i like to ponte out tricare for life, it's a medicare supplemental insurance program. it's costing us $5580 per troop, per year. the vast majority of the troops, over 80%, will never qualify for this benefit. are we getting good value or could we spends less on a different -- >> congress is the one that pushed that through. >> it was exactly the wrong thing to do. a lot of these are deferred compensations that troops actually doesn't really value all that much in the service. they actually don't impact on recruiting and retention. so there are a lot of stakeholders that have a large

vested interesting in no not seeing this change because it's their way to say we're doing something for the troops. but it's not really doing something for the troops, the troops want. >> but the problem something, if you try to tackle them and not saying that you can't tackle them, you can't do it quickly, and you -- because if you don't grandfather people, at least close to retirement now, you'll never be able to politically pass it. and as soon as you start to grandfather people, you reduce the amount of money you saved so that might save money five, 10, 15 years from now, but it's not going to save a large amount of money in the first couple years here, when you face the declining budgets. >> which brings us to the topic we'll discuss in the last segment, win is looking at worst case stay tuned for mo [ speaking french ]

[ speaking french ] movie buffs! this film is tres bien, but the interest rate on your checking account is le pew. interest on your checking? earn more with new high yield free checking at capital one bank. your interest rate will be five times the national average. five times the interest! and free atms at any bank. show's over folks. make your way to capital one bank. what's in your wallet? were you crying? yeah. we're back with rick maze. congressional editor of the times newspapers, todd harrison of the center for straw teenage you can and budgetary assessments, david betterbasketball, better and

jim of the heritage foundation. the pentagon has been spending the last many months working on what the new strategy is going to be for the united states, that are going to shape the cuts that are coming down the pike. what is that going to start? >> we've talked about the pivot, for example 72 it doesn't matter because the enemies can add and they can say any straight fee is robbing peter to pay paul, then just look okay for the weak spot. >> that's it? >> yes. >> there's really two elements to it. one is whether you actually do over the next year, as running up to the campaign that makes if look like you're thinking about strategic changes, east asia, abandoning europe, moving people back or threatening to move people back. the real question is, what is the longer term strategy to build a budget to, assume, get around to do that. >> that is one of things you specialize in? >> and i fully expect that we'll see the strategy that comes out in the comprehensive straw teenage, review is more of a tweak of the qdr, not a fundamental rewrite. >> which they've already indicated that's what they'll

do. but there are folks giving the administration high marks, even in the region when i talked to my sources there, that look, the united states is really starting to assert itself in asia, the basing of 2500 troops in australia, the combat ships going to singapore, and a bunch of other minor moves throughout the region. as one person said, the more angry china gets are the better off we know we're doing. is that something that you can economically do? >> absolutely. the real thing you should be looking anthony in asia is not more troops, but what you do with the ones that are there and not only how many you keep but where you move this. too and how you have them placed. it's really comp complex chessboard and there's a lot of opportunities. >> and the keywords are minor moves because you could get a lot of oomph from small things. >> well, and most allies in the region want to be reassured at the end of the day that we care enough about them and that we're going to abide by our security commit. >> and we aren't leaving. >> and we're not leaving, exactly, which was the sense that everybody had that we would -- >> a lot like reinforcing the philippines in the 1930s.

>> yes, but i this it matters. in the time when the chinese are unloading construction materials on a contested reef off the phillipines, it helps. >> against the 1930s. >> let me go to worst case scenarios. time is running short. what are sort of the worst case scenarios we see. >> as i look and it, it could get really bad. modernization is what ends up getting really hammered here, isn't it? >> i think worst case scenario, the department punts forth a budget that is dead on arrival. that doesn't fit within the sequestration budget cap. that's very likely in february. we go through all the way through the november elections, everyone is bickering, and the lame duck session they try to work out last-minute deal to stave off sequestration but it fails, maybe gets hit by a fill bust they're in the senate, and sequestration actually goes into effect. and it does implement across the boards cut, and then we're looking at an 18% cut or so in

action decision funding. >> and the real loser here in the long-term is the industrial base because in fact that is where the immediate consequences will be felt by any of the procurement reductions you're talking about here. and while there's a little nor data now that the pentagon is gathering, this sector by sector tier by tier analysis underway, this he have no mechanism for incorporate that data into any decision. >> for me is the worst case is groundhog day where you keep fighting the same fight again and again and the pentagon can't plan a strategy or budgeted because they never know what the number will be that they're building too. >> or word wash three. we build a security architecture and that takes to us a bad place. >> we have 30 seconds. at the end of the day, is the pentagon going to recognize that it has to take a much more proactive role so it doesn't end up on the receiving ends of a running change saw? >> for the first time ever, i think that the pentagon leadership doesn't see how dangerous a position it's in and therefore they're not really stepping up to act

accordingly. >> of all cop tinge sis it seems this should be planning for and they aren't right now. >> that's all the time we today. we'd love center to you all about. coming up in my notebook why it's time for the pentagon to think about a leaner future than it expects.

now that congress has failed to strike a deficit

from washington, "the mclaughlin group," the american original. for over two decades, the sharpest minds, best sources, hardest talk.