>> schieffer: today on "face the nation," the campaign rightly hogged the headlines this week but back in washington there was real news that should not go unnoticed. the obama administration announced a new policy that shrinks the army and redefines what we expect from our military. and our top defense officials were here to lay it out. >> it will be leaner. it will be smaller. >> schieffer: if iran develops a nuclear capability? >> they're going to get stopped. >> schieffer: it's a discussion with the bark off what is it right now in the world? is it north korea? is it iraq? is it iran? what is it that worries you the most? >> you know, i think you've articulated.... >> all of the above. >> that's right. do i have to pick one of

those. >> schieffer: more of that conversation with defense secretary leon panetta and general martin dempsey, the new chairman of the joint chiefs of staff. plus the latest on the campaign as we hear from mitt romney's new best friend john mccain. whose relationship with the republican frontrunner has changed a lot since 2008. >> i just wanted to say that governor romney, we disagree on a lot of issues but i agree you are the candidate of change. >> schieffer: but by-gones are by-gones. now he's endorsed his one-time rival. >> most importantly we share the values. we share the priorities. we share the same fundamental philosophy. >> schieffer: yes, it's american politics. and this is "face the nation. " captioning sponsored by cbs >> from cbs news in washington, "face the nation" with bob schieffer.

>> schieffer: and good morning again. joining us for their first sunday morning interviews in the jobs they now hold, general martin dempsey, the chairman of the joint chief of staff on the job four months and the secretary of defense leon panetta. gentlemen, thank you both for coming. yesterday you outlined not only a rereduction in the size of our military forces but really a whole new strategic idea of what we want our military to do. this is obviously going to be one of the major issues of the campaign. it should be. but look at what mitt romney said just friday morning about it. >> yesterday he announced a major program to reduce the capacity of our military. inexcusable and unenthusiasmable. it must be reversed. we have to protect our military. >> schieffer: that's just the first in a series of statements that have been coming from the republicanes. what about that, mr. secretary? >> well, you know, i think

this country has to deal with the reality of the situation that we're confronting. we're coming out of a decade of war. we're facing a huge budget crisis in this country. the congress said to us that we have to reduce the defense budget by $487 billion. and i think the question isn't whether we're going to do this. the question is how. that's something that frankly everyone is going to have to face. >> schieffer: one of the critics said this is not a strategy with a budget. it's a budget looking for a strategy. is that overstating it? >> well, clearly we face the constriction of having to reduce the budget by almost a half a trillion dollars. the issue we had to face is, do we do this by simply cutting across the board as we've done in the past in this country and created a hollow force or do we develop a strategy as to exactly the kind of force we need for the future? we decided we have to develop a strategy. i work with the service chiefs,

with general dempsey. and we developed a strategy that said it is going to be leaner. it is going to be smaller. but it has to beage ill. it has to be adaptable. it has to be flexible. quickly deployable and it has to be technologically advanced. that's the kind of force we need for the future. >> schieffer: general, let me ask you this as a military man. you know, we've always said in the past we had to be ready to fight two ground wars at once. basically the strategy you outlined and that the secretary has outlined in this new policy envisions not happening again. are you concerned that... i mean, we all hope it doesn't happen again but there are no guarantees in this world. if it should happen again, what do we do? >> well, actually, i think it will happen again. i didn't... we didn't roll out a strategy that suggested that we wouldn't be able to do more than one thing at a time. in fact, we were pretty adamant that we must be able to do more than one thing at a time. by the way, not limit ourselves to two.

i mean, the threat and the environment in which we find ourselves in this decade of the 21st century suggests to us that it's likely to be more than two. so back to secretary panetta's point. this isn't about sizing ourselves against two particular scenarios. this is about building a force that is capable of doing more than one thing at a time, that has the leadership, the manning, the equipping, the personnel, the readiness to be able to provide options to the national command authority. one other point. i think it may not have gotten the emphasis that it needed to yesterday, but we've learned an enormous amount over the last ten years about how to wage war. it's not just in the traditional ways. it's other capables that have come into the force. it's capabilities of special operating forces. i.s.r.in a way that was unimaginable ten years ago. it's cyber. what we're looking to do here is not constrain ourselves to

a two-war construct but rather build a force that has the kind of agility the secretary mentioned that is a learning organization that will adapt itself to what it confronts it for the nation. >> schieffer: are you worried, mr. secretary, that our adversaries might misread this because basically what it is talking about is increasing our presence in the pacific. are we just going to leave the middle east to run itself? what will people in the middle east think when they see our new strategy? >> i think the primary message to the world is that the united states is going to remain the strongest military power in the world. this strategy is going to give us the flexibility to continue to remain the strongest military power in the world. yes, we have to prioritize. in terms of the pacific and the middle east. yes, we have to have a presence elsewhere in the world.

yes, we have to develop and invest in new technologies and new capabilities. but the bottom line is when we face an aggressor any place in this world, we're going to be able to respond and defeat them. that's the lesson everybody ought to take home with them. >> schieffer: general, some people would argue that we already have an army that's too small to do the missions that we've assigned to it. when we were in iraq and in afghanistan at the same time, people talked about we were just wearing the army out, that we were having to send people into battle without the proper amounts of rest and all that sort of thing. now, it is getting even smaller. are you concerned about that? >> well, you do know i was the army chief. >> schieffer: i do know that. >> and of course we're always concerned about the pace at which we utilize the force. on the other hand, the demand is going down for a long, protracted stability operation in iraq and afghanistan. i know that both while i was

the chief and i know that what general ray odierno is doing now is taking a look at how to adapt the force. this is the point. we're at a strategic inflection point where we find a different geopolitical challenge, different economic challenges, shifting of economic and military power. what we're trying to do is to challenge ourselves to respond to that shift and to react to that strategic inflection point and adapt ourselves. so i suppose i would say, of course i'm worried, but we do have a rather significant, capable guard and reserve component. we do have an active component that has learned a lot over the last ten years. so if i take the template of 2001 and apply it now, i might have to come to that conclusion. what we're trying to do is break that template and think about different ways of accomplishing the task to give more options to our nation's leaders. >> schieffer: mr. secretary,

let's talk a little bit about iran. that is getting a lot of attention out on the campaign trail. mitt romney says we cannot tolerate a nuclear iran. ron paul at the other end says that we just need to be nicer to them. we have put these big sanctions into place. and now the price of oil has shot up to over $100 a barrel again. it's pretty clear that we in west are going to pay a price ourselves for having to impose these sanctions. do you have any indication that that's beginning to work, that fast causing the iranians to back off this idea of producing a nuclear weapon if, in fact, do you think that's what they're trying to do? >> i think the international strategy here-- and this really has been an international strategy to apply sanctions, to apply diplomatic pressure on iran, to try to convince iran that if, you know, if they want to

do what's right, they need to join the international family of nations and act in a responsible way. i think that the pressure of the sanctions, i think the pressure of diplomatic pressures from everywhere-- europe, the united states, elsewhere-- is working. to put pressure on them, to make them understand that they cannot continue to do what they're doing. are they trying to develop a nuclear weapon? no. but we know that they're trying to develop a nuclear capability. that's what concerns us. and our red line to iran is, do not develop a nuclear weapon. that's a red line for us. >> schieffer: rick santorum said we should already be making it known to them and to the rest of the world that we're planning an attack to take out their nuclear facilities and that we should let them know about that right now. what about a military reaction right now? >> well, you don't take any option off the table. i think that's extremely important. don't take any option off the table. but the responsible thing to do right now is to keep

putting diplomatic and economic pressure on them to force them to do the right thing. and to make sure that they do not make the decision to proceed with the development of a nuclear weapon. >> schieffer: general, how hard would it be to take out their nuclear capability if, in fact, we decided to do that? this is not just going in there and dropping one bomb on one building. >> well, i would rather not discuss the degree of difficulty in any way encourage them to read anything into that. but i had say that my responsibility is to encourage the right degree of planning, to understand the risks associated with any kind of military option. and in some cases to position assets, to provide those options in a timely fashion. and all those activities are going on. >> schieffer: could we, if we had to, without using nuclear weapons ourselves take out their nuclear capability? >> well, i certainly want them to believe that that's the case. >> schieffer: is it?

>> absolutely i want them to believe that that's the case. >> schieffer: mr. secretary, would you like to add anything to that? >> i think they need to know that if they take that step that they're going to get stopped. >> schieffer: what about if they decide to block us off at the straits of hor muz. >> we made very clear that the united states will not tolerate blocking of the straits of hor muz. that's another red line for us. we will respond to that. >> schieffer: could they actually... general, do they have the capability to actually block off that water way, which is, of course, where all the oil to get out it out of that part of the world comes through. >> they've invested in capabilities that could, in fact, for a period of time block the straits of hormuz. we've invested in capabilities to ensure if that happens, we can defeat that. the simple answer is yes they can block it.

of course that is, as well, a... we've described that as an intolerable act. it's not just intolerable for us. it's intolerable to the world. but we would take action and reopen the straits. >> schieffer: a lot of people, mr. secretary, say we ought to just tell the israelis quietly, look, if you need to take out that nuclear capability in iran, go ahead. that will be fine with us. what would happen if israel does decide to take this matter into its own hands? and what would be our reaction and response to that? >> i think, you know, our preference is that the international community, including israel, ought to work together on this issue. we have common cause here. we're not interested in them developing a nuclear weapon. we are not interested in them proliferating violence throughout that region. we are not interested in them trying to assist in terrorism. we are not interested in them trying to destabilize

governments in that region or any place else. we have common cause here. the better approach is for us to work together and not act.... >> schieffer: what if the israelis did that? >> if the israelis made that decision, we would have to be prepared to protect our forces in that situation. that's what we'd be concerned about. >> schieffer: let me ask you about iraq. we still have 15,000, 17,000 civilians there, as i understand it. are you confident that they're safe? >> we're confident that we have an iraqi government and an iraqi security force that is capable of dealing with the security threats that are there now. the level of violence has been down. it's been down for a long time. even though we've had these periodic acts of violence, that's something we've experienced there for a long time. but the bottom line is that the iraqis can provide good security and that our people

can be secure in what they're doing. >> schieffer: the fact of the matter is we've had over 100 people killed just this week there, have we not, as these various attacks have come about? >> bob, you're right. we're going to see those kinds of acts of violence take place. but when you look at the level of violence overall, it is down and it has been down mainly because the iraqis have been able effectively to develop good security. that's important. >> schieffer: let me ask you both this question. i'll start with you, general. what is is it right now in the world-- is it north korea, iraq, iran? -- what is it that worries you the most right now? >> you know, i think you've articulated.... >> all of the above. >> do i have to pick one of those? look, i think that what worries me is that because of the conversation that we're having this year about changing strategy and budget problems that there may be

some around the world who see us as a nation in decline and worse as a military in decline. nothing could be further from the truth. and that miscalculation could be troublesome particularly in the three areas you described but it could cause even our close partners to wonder what kind of partner are we? what i'd like to say right now is we're the same partner we've always been and intend to remain that way. >> schieffer: general? >> i think the main message that the world needs to understand is is that america is the strongest military power and we intend to remain the strongest military power and nobody ought to mess with us. >> schieffer: gentlemen, i want to thank you very much for being with us this morning. we'll be back in one minute with republican senator john mccain.

>> schieffer: back now with senator john mccain who today is kind of our one size fits all kind of guest.

he has just endorsed mitt romney. of course he is the republican of the most influence in the united states senate, i would say. on defense policy. i'll just ask you the general question: what's your reaction to what you just heard? >> there's no doubt that savings have to be made in defense. personnel costs, entitlements, kind of a microcosm of the overall problem we face in those areas. i obviously have been a strong advocate of these... of eliminating these terrible cost overruns. it's real a culture of corruption in the pentagon on cost overruns of these weapons systems but i'm very worried about ignoring the lessons of history. after world war ii, there was never going to be another land war. after vietnam, we ended up in a, quote, hollow army. but i understand these savings have to be made. but i am more worried about the perception in the world of what the united states is doing. secretary of defense panetta

mentioned iraq. in all due respect, iraq is unraveling. it's unraveling because we didn't keep residual force there because the president of the united states pledged to get out of iraq. we could have kept a residual force there and kept some stability. instead it's ununraveling and iran's influence is increasing. there's every possibility you could see a very chaotic situation in there. >> schieffer: do you think there's a civil war coming there? >> i think there's clearly an unraveling going on which could eventually lead basically into three different kinds of states in iraq. we needed to keep residual force there. that was what the bush administration envisioned. and that is what we should have done. we never gave them a number until, in the words of general dempsey, numbers cascaded down to 3,500. the iraqis were ready to deal on the issue. this administration did not give them a number.

what the perception is now particularly in that part of the world is that the united states is weak and withdrawing. that is also having its effect in other places including emboldening iran, leading from behind is not what this world needs. we still do have the best military in the world. they still do have the most efficient and capable ways of defending our nation. >> schieffer: let me just ask you. you second the secretary say that he's confident that there's an iraqi army in place that could protect those 15 to 17,000 americans who are still there. are you confident that those people are safe? >> of course not. >> schieffer: what would happen? do we have to go back? >> i think we would have to withdraw them. look, what secretary panetta may not understand-- and i have great admiration and respect for him-- is that the situation is unraveling. the vice president of iraq is now hiding out in urbile.

there are militias and death squads operating. there is a breakdown in the iraqi government. and there be increased tensions the... on the border between the kurdish areas and iraq. and all of these could have been avoided if we had led rather than followed. in libya, all we had to do was lead and we would have pretended thousands of casualties of brave young libyans who gave their lives because we didn't use all of our assets. syria syria, we need to lead. we need to encourage those peoplement finally the biggest mistake that has been made in recent history is when the iranians were demonstrating in the streets of tehran chanting obama, obama, are you with us? are you with them? his response was well i don't want to jeopardize my chances to negotiate with iran. we are paying a very heavy price. >> schieffer: let's talk a little bit about politics out on the trail. >> sure. >> schieffer: last week of all things you endorsed mitt romney.

i have to say i've always known you had a pretty tough hide, senator mccain. but after some of the things that you all said about each other in 2008, look here. >> everybody has looked at what he said has found it to be completely misleading and inaccurate, dishonest. he knows that. >> i heard governor romney describe his record. as i understand it, it record was that he raised taxes by $730 million. he called them fees. i'm sure the people that had to pay it, whether they called them bananas, they still had to pay $730 million extra. >> he's been talking about the fact quite honestly that he doesn't understand how the economy works. >> i'm not going to be any vice president to john mccain either. >> schieffer: who knows? he might ask you to be vice president. >> look, you can run clips of reagan and bush back in 1980. you would get the same thing. these are spirited discussions and debates. >> schieffer: why did you decide to endorse him? >> i think by far he's best

qualified to be and i admire him and his family. i admire his values. look, after the 2008 campaign was over, no one worked harder on behalf of my campaign than mitt romney did. you put these things aside just the way that reagan and bush did. and, of course, they're spirited. of course they should have sometimes heated discussions. but after it's over, we share the same principles, values, and the future of this country. >> schieffer: some of the other candidates have said unkind words about you recently. rick santorum said you didn't understand torture, you who spent a long time in a north vietnamese prison camp. could you find yourself endorsing him if he wound up with the nomination? >> i will endorse the nominee of the party. but i don't have any response to mr. santorum's allegations that i don't understand torture. we do have a difference, and i do with newt as well on this issue of earmarks which exploded during that period of time.

senator tom coburn's words earmarks are the gateway to corruption. >> schieffer: senator, thank you so much for being with us. >> thanks for having me on. >> schieffer: we really appreciate. we'll be back in a moment with some final thoughts. [ male announcer ] how can power consumption in china, impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u.s.? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing.

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good morning, innovation. good morning unequaled inspiration. [ male announcer ] the audi a8, chosen by car & driver as the best luxury sedan in a recent comparison test. >> schieffer: finally today, well, what have we learned in this campaign so far? mainly that money is still the most powerful force in american politics and that the internet has made negative ads more powerful than ever. take the case of newt gingrich. he zoomed to the top of the polls until mitt romney and ron paul dumped a load of negative ads on him. down he went. the romney people were saying newt's fall wasn't all their doing. the ads ran only in iowa and gingrich's popularity also went down in new hampshire and south carolina too. well that's not quite right. the ads were seen in those states and everywhere else. not once but over and over on cable shows and websites and

then hashed out on blogs and twitter and facebook and all the places people get their news today. when the berlin wall fell, i remember writing that in the television age, there were no secrets on the other side of the tracks. people in the east could see a better way of life in the west on television and they wanted it and the wall came down. in the age of the internet, we see not only just beyond the tracks but over the mountains behind the tracks. and behind the house. and under the bed. a television ad runs in iowa and in seconds it's being seen in bangor, maine and waco texas. this is probably better overall but not always. social media has redefined the idea of privacy. everything is out there now. and i can't get very excited about extending the reach of negative ads. but as a friend of mine who used to work here once said, "that's the way it is." that's it for us today. join us next week when jody

cantor, author of the explosive new book, "the obamas" will join us on "face the nation" and look for us on the web on wednesday for our new midweek face the nation extra, face to face at www.cbsnews.come slash face the nation. we'll see you tomorrow morning from new hampshire on cbs this morning. captioning sponsored by cbs captioned by media access group at wgbh access.wgbh.org