 We have heard this morning so far about several crossroads. Among them the crossroads we face in jobs, investment, and growth. We also face a crossroads in security and military spending. Let me say a few words about that before I introduce the panelists. U.S. military spending was virtually unconstrained during the first ten years of this century, as we all know, and as the U.S. went to war against Iraq and various terrorist groups. Despite the record war spending and our huge commitment of resources. The results were disappointing, to say the least. There has been a modest military downturn, as the economics advisor to the President just said, over the past couple of years. And if that trend continues, we might see an easing of our military budget and perhaps a peace dividend of sorts. The big question that we face has to do with sequestration. If that does go forward into the defense area, there will be further cutbacks. This could be the occasion for fundamental reforms and a smaller, more efficient force structure and a better sense of real future threats to our security. Military leaders and their followers, however, seem not to think so. Undeterred by their lack of success in our recent wars, it is apparently business as usual for many in the Pentagon. And for those planning, for example, a new long-range fleet of manned bombers, a new series of aircraft carriers, and a new series of nuclear submarines, all of which cost, of course, in the multiple billions of dollars. As well as force levels in general about current sizes. And of course, there are those who advocate greater U.S. involvement in overseas conflicts, especially in the Middle East. Defense Secretary Hagel, to his credit, and unlike his predecessor, acknowledges the need for additional defense reductions and for greater military efficiencies. At this point, I could say only that the military fat is in the fire. Our panel of experts will discuss these and other issues likely to rise in the very near future. We'll lead off with Heather Helbert, who's the executive director of the National Security Network, a private nonprofit group. Previously was a member of the Clinton administration White House and a speechwriter for Secretaries of State Madeline Albright and Warren Christopher, and a member of the State Department policy planning staff. Winston Wheeler was an analyst at GAO for a number of years, that is the government accountability office, and worked in the U.S. Senate for senators of both parties, is presently the director of the Center for Defense Information of Pogo, the program of government oversight. Peter Galbraith, brother of James, and all three of us actually worked in the U.S. Senate about the same time. Peter is now a senator in the Vermont State Senate, a former ambassador to Croatia, former director of programs at the United Nations. Carl Canetta is the co-director of the Project of Defense Alternatives. Previously was at the Institute for Defense and Disarmament Studies and served as editor of that group's journal. And all the people I've mentioned, by the way, have been prolific authors of books and articles and commentaries and contributors to many conferences such as this in their respective fields of expertise. So let me then proceed, as I indicated, with Heather Holbert. Thank you. And thank you so much for having me back at this event for a second year. The good news is, Richard, actually, even since you invited me to speak, I actually kicked myself upstairs, and I'm no longer the executive director of the National Security Network. That person is a wonderful guy named John Bradshaw, who's actually doing real work this morning while I get to have the fun of sparring with this distinguished panel. I want to use my brief time this morning to make three points to frame our discussion and set things up for my colleagues to disagree with. Point one will be sequestration is our peace dividend, and that's either a great thing or a terrible thing, depending on your view. Point number two will be very much as Jason Furman talked about, the threat of Pentagon spending crowding out infrastructure development here at home. Pentagon spending is also crowding out the infrastructure the US needs to have a non-military presence in the world. Which leads me to my point number three, that the Syria fight, the question of use of military in Syria is not over, nor is the question of whether you will see more US military adventurism overseas in the future. I suspect I disagree with my fellow panelists on this, and I'll just say, to my mind, the question is whether this is 1973 or 1979, in terms of how many years we have before the pendulum swings back, which then leads to the policy and advocacy question of what do you most want to get done in that period. So to take those points at some length, the politics of defense are realigning and nobody knows how they're realigning, which makes this a really fun period to be an analyst and a really bad period to have to get up and make presentations and sound smart. People on the Hill were stunned by what happened when President Obama went to the Hill and asked for support in launching a, what did John Kerry call it, a very small, a breathtakingly small missile strike into Syria. I don't think that the president imagined for a second, and frankly neither did the Hill leadership at the beginning, that it would be as difficult as it was. Senator Galbraith's constituents, one percent of the population of the state of Vermont called Senator Leahy's office to register their opposition. Opposition for a military solution. Yeah, Leahy's staff told us they got, they got one percent of the state, I mean, when has one percent of a state's population ever called a congressional office about anything? Syria, who even knows where Syria is? And Vermont we do. Having grown up there, I still remember the names of Iranian politicians assassinated in France thanks to my Vermont public middle school. So you had both, on both sides of the aisle, genuine shock that a president could go to Congress and say, hey, we're going to go do this thing, and it's going to be breathtakingly small and there aren't going to be any ground troops, which was the magical incantation that has worked for decades, and it didn't work this time. And there was a lot of head scratching, as I say, on both sides of the aisle about what this means. Frankly, there's still a lot of head scratching about what it means, and the shadow play that we're seeing play out around Iran right now is very much a bunch of different forces testing. How spooked was Congress by what happened with Syria? Are the American people really as anti-war, anti-intervention as that made them appear? And how many of the old levers still work? The old lever of if you're a Democrat, you never want to vote against a war. The old lever of if you're the party out of power, it never hurts you to vote against a war. The old lever of your constituents don't actually care about what happens overseas, and so you can do whatever is expedient inside the Beltway, and it doesn't matter. Do those levers work? Do they not work? Do they ply in Iran the same way they ply in Syria or not? Do they ply in North Korea, as we may be about to find out? So in all those ways, we are much too early to understand what has happened, but you're going to see a lot more skittishness, and in some ways that Syria debate may have made our president a lame duck on national security two and a half years before the end of his term. So that would be my first point to you to think about. Now second, how does that intersect with the politics of defense spending? And what Jason Furman said, it's very much my impression that neither side thought they were getting the level of cuts in defense spending that sequester is providing, yet you go to the Hill and say to people, is there going to be a solution to sequester? The answer I get is no. Everyone looks at you and says, no, we don't know how we can solve this. So something really dramatic has changed in our politics that it's no longer political suicide to say we're going to keep cutting the military and we don't care how hard the Joint Chiefs wail about it. This is a seminal shift in American politics, and again it's happening on both sides of the aisle. And very much in parallel to what you saw on Syria, you see on both sides of the aisle, the group of folks who assume that it's business as usual being continually unpleasantly surprised. And what's fascinating to me is particularly on the Republican side that you see, I think, you saw in the debate over the government shutdown how the domestic Republican elites were really quite surprised at what hit them, were really not prepared for their inability to control their own folks. They have a similar surprise lying in wait on the national security and budget side, also on the politics of surveillance, targeted killing, use of drones. It's going to be very interesting and very incoherent to watch that play out. Democrats, by the way, are only being saved from this because they're guys in the White House. This is a trend that's affecting both parties, and I would say over the next maybe decade, we're just going to have a massive fallout in where you sit ideologically on international issues. Now, that brings me to my last point. You have a lot of people in the American environment, everything from folks who would identify themselves traditionally as the liberal left, folks who served in the military and didn't really like the results of what they were doing, folks who want to see investment at home, folks who were queasy about the causes and effects of what the U.S. does in the world. What they don't have right now is any place else to go, that we don't have on the sort of political science, political culture side of the House, we don't have an alternative framework. We don't have, you know, what's the Tea Party's foreign policy, for example? What is the foreign policy of the left? What's the foreign policy of Chris Christie, for that matter? Anyone tell me what Chris Christie's views on national security are? Other than having fights with Rand Paul? So we are in a moment where at the simple level of the folks who are going to be maybe not the 2016 political candidates, but certainly the 2020 presidential candidates, what do they think about these issues? What schools do they attach to? And we still have, as was noted, the world's largest, most powerful military that takes up 50 percent of our discretionary defense spending. On the other hand, we have a diplomatic establishment that's dwindling, dwindling, dwindling. I was struck by what Jason said, that just reducing the rate of tax deductions for the most wealthy would fund the State Department for 10 years, which sounds like a pretty good deal to me, but I suspect I'm in the minority on that. So we are like someone trying to walk on two legs, one of which is 10 times as big as the other. So which leg are we going to use going forward? We're going to keep using the military leg. Why are we in such a god-awful mess in Syria, which Peter will talk about in more detail? Because when there was the moment that diplomacy could have made a difference, we had good people out in the field doing good work, expeditionary ambassadors of a kind that Peter and others know well, and no support back here and no public imagination. The minute anyone starts talking about Syria, what are you talking about, the use of force? Unfortunately, it's my belief that we're now past the point that diplomacy is going to get us to a solution. You have al-Qaeda-linked forces in Syria sitting on both the border of our Turkish ally and our Israeli ally, so there is no universe in which the Syria discussion is over. It will come back and back and back. We will not have diplomatic tools to deal with it. If you started putting that extra $50 billion a year into the State Department today, you wouldn't have the tools to deal with it. You don't have the public discourse to deal with it. For the decade ahead, we're going to continue to circle back to our military because it's what we have. At the same time, sequester is a stupid way to cut the military, just like it's a stupid way to cut anything else. As Winslow and Charles will talk in more detail, we're very likely, if things continue on their present course, to end up with a military that does less well at everything rather than having had any kind of national conversation about what it is we want our military and our non-military international affairs establishment to be good at doing. That's where we are after Syria. Syria throws it into sharp relief. It also gives us opportunities because people are asking questions. I will now cede to my colleagues who are going to talk about each of those areas in somewhat more detail. Thank you for having me. I've got some visual aids. I'm going to talk briefly about strategy before, during, and after Syria. In these confusing times or uncertain times, it's always good to have the rockbed of the Pentagon and its strategy and the simplicity of its strategy. It's quite simply spend more. When the politicians want to do stupid things like spending less, tell them that they have to spend more. There's an important corollary to the Pentagon's decades-long strategy. More is never enough. People have heard me talk before for the last ten years or so, I've seen this graph a thousand times. Look at that little leg on the extreme right-hand side. That's your peace dividend. Notice that it's so 150 billion or so above the end of the Clinton era when he was increasing spending. Notice that that, quote, doomsday level of spending rivals the peak of the Ronald Reagan years. That's not my data. That's Pentagon appropriations adjusted for inflation according to OMB's GDP inflator index. That's all real dollars. According to OMB, they're all of the same value. That's not the so-called current dollars. That's it. Pentagon will show you a slightly different graph. It'll have all those humps, but the rate of increase is almost flat. They like to cook their inflation numbers. They don't use GDP inflators. They use their own specialized ones to make you think that the Korea, Vietnam, and Reagan peaks were about as high as the Bush-Obama peak. That's not the inflation measure that the federal government uses for other federal spending or for you and I. That sort of says it all. The doomsday level is that little tail there. Notice that it's also quite stable. The Pentagon says it must have stability in spending. Well, there you go, Tiger. What they do love is instability in spending as long as the incline is in the right direction. It's pretty simple. Note also, I don't have the chart doing it too many, but during that huge increase in the Bush-Obama spend up, note what happened to the forces. Combat squadrons for all active duty and reserve Air Force combat units is down. The number of ships in the so-called battle fleet is down. The number of combat brigades in the Army went up by two from a base of 46. Now it's back down. That huge increase in spending brought you a shrinkage in the force. That's not a smaller, newer force. That's a smaller, older force. The average age of combat aircraft and ships, for example, is significantly older than they were before the spend up started. It's not a better trained force. We spend less time and money training pilots, for example, than we did during the bad readiness years of the Clinton era. That's an amazing story of what's been going on in our armed forces during that spend up. Same thing during the entire post-World War II era. More money has meant, in each of those humps and in the trend lines, more money has meant smaller, older, less trained forces. I'll share this to what the rest of the world is doing. Here's some data from the Cypree Institute. This data is from their last year's publication. The new one and that for the IISS in London is going to show fundamentally the same thing. That big bar on the right, the U.S., is the doomsday level of spending. The second biggest bar is all to the left combined. We're about two and a half or so times that. It's not that others are spending all that smartly either. But we are spending at a prodigious rate that dwarfs everybody else. Finally, Pentagon is only part of the issue here. Note that if you include other forms of national security spending, the Pentagon is about three-fifths of it. Add the 050 international affairs budget function, the cost of past wars, Veterans Affairs, Department of Homeland Security. Here's some Pentagon spending buried in the Treasury Department for DOD health care and military retirement. A lot of people either miss or miscount that, but it's a significant amount of money. Add it all together, you get about a trillion dollars. The plan is to stay about there even in the so-called peace dividend that we're going to have. Note that doesn't include the additional spending for the wars in Iraq and Afghanistan and wherever else they want to go. That's the so-called base level of spending after the sequestration. So we'll be well put to maintain spending at about that level. It's a huge amount of spending, but the most important point to take away from that is not that it's just big, it's that it's buying you a decaying force, smaller, older and less trained, and that's the plan for the future. Thank you very much. Well, on that happy note, when I actually worked together, when I first came to Washington in 1979, we both were working for the Senate Foreign Relations Committee. You've gone on to do some excellent work. And I'd like to also thank my brother Jamie for this little bit of nepotism that brings me to this podium. I don't want you to think, though, that it's strictly the view from Montpelier because over the last few years I've been working with the minorities in Syria, not the opposition, but the minorities, Kurds and Christians and lesser degree some of the Alawites and I've just come from the region. And I'm going to start by taking up a point that Heather made which is, and contradicting it, which is there was never a point when the United States could have solved Syria, either diplomatically or militarily. And I'll come back to this at the end. It is at the root of our problem to think that in every situation there is something that we can do about it. I remember at the height of the Arab Spring, a colleague in the State Department called to ask my advice of what we should be doing about Egypt. This was before Mubarak had fallen. And I said, well, what is it that we could do about Egypt? Ultimately, Egypt is going to be decided by the Egyptians. It's not that we are totally unable to do things and in some circumstances, such as the Bosnia and Kosovo, Croatia, we were absolutely decisive. But in large parts of the world, we flatter ourselves by believing that we can control the fate of nations and we can't. Now, just a point about what is the situation in Syria. The first is that Assad is not going to be ousted or the Alawite regime in Syria is not going to be ousted. It's possible that Assad could be replaced when you're in that situation. You're obviously vulnerable even to assassination. And the reason is, and this was never going to happen, and the reason is that Syria was different from Egypt and Libya. Egypt and Libya was just a Mubarak and a handful of associates who were going to lose when the regime lost. Libya was a slightly larger group, essentially Gaddafi, family, Kronis and some tribesmen. In the case of Syria, the Alawites who are 12% of the population know that they face genocide if the regime tumbles. The Christians who are another 10% are very nervous about it. The Druze who are 5% are nervous again about a Sunni regime. And the Kurds who were about 15% of the population who were victims of Assad nonetheless refused to align themselves with the people who were trying to remove him. But the point is a regime that has say 20% support plus the military probably can hang on indefinitely and that's what we've seen. On the other hand, Assad can't win in Syria. He won't lose, but he's not going to regain control of all of Syria. Third, it's also wrong to think of this as a conflict in Syria. Again, we have a view in Washington that every state is, every country that exists, you know, somehow was created and ought to be there forever. In fact, Syria and Iraq, both of which are artificial creations, have become a single theater in the war. That is to say, the Maliki regime in Baghdad, the Shiite regime in Baghdad is supporting Assad and the Alawites who are deemed to be a branch of Shiites. The Sunnis in Iraq are supporting the Sunnis in Syria and the war in Iraq has, violence in Iraq has reignited, partly as a result of a flow of fighters from Syria and weapons. And then the Kurds in the north of Syria and the north of Iraq are doing their best to stay out of it, but the Kurds in Iraqi Kurdistan are supporting the Kurds in Syria. And that gets to the next point, which is that, in fact, both these countries have disintegrated. Kurdistan exists in northern Iraq. It is in all regards an independent state with its own government, its own military controlling its own borders. And the Kurds in Syria declared their own region. The Sunnis have an enclave in Iraq around Mosul and Tikrit. The Shiites dominate Baghdad and southern Iraq and the Alawites control central Damascus and the coast. And in east Syria and west Iraq, you basically have a land that's al-Qaeda land, dominated by al-Qaeda. And neither the regime in Damascus nor the regime in Baghdad are going to regain control of their country. Both Kurdist stands are out of reach. Neither Assad nor Maliki can defeat the Sunnis. And in the case of Syria, this kind of war is likely to continue for a very long period of time. I think the best analogy is to the civil war in Lebanon, which went on for 15 years, and Iraq is likely to continue as a lower intensity conflict. And there is no possible, in my view, no possible outside intervention that is going to change this. In part, if you think of Lebanon, what ended the civil war in Lebanon? It was, in fact, Syrian intervention, and there is no Syria that can intervene in Syria. In terms of U.S. policy, a couple of prescriptions. First is to recognize the new reality, which is that the agreements that were drawn by Mark Sykes and Francois Pico nearly 100 years ago, Mark Sykes, a self-described amateur, that's gone. And we ought to deal with the reality of an emerging Kurdistan state, which my judgment will declare, at least in Iraq, declare itself independent in the next few years. They talk very openly about doing that. Deal with the reality that Syria is not going to be put back together. And frankly, that we may have no particular solution to deal with this problem of the no-man land that exists now in western Iraq and eastern Syria. And this then gets me to the next point, because I do think that this will be subject of debate. We ought to apply a very simple test when we consider intervention. And incidentally, I'm not personally against intervention. I was within the administration, one of the hawks to the great annoyance of your first boss, Secretary Christopher, on intervening in Bosnia. And I supported the intervention in Libya. But in the case of Syria, it frankly, it fails two tests. And if you can't pass the two tests, then you don't need to go beyond that. The first test is, will the situation after you have intervened be better? And if we intervene in the manner that's proposed by the hawks on Capitol Hill of aiding the Syrian opposition, it's not at all clear that the situation will be better. I think it's increasingly clear that the Jabhat al-Nusrah and the Islamic State in Iraq and Syria are an increasingly important part of the opposition and that even if we were somehow able to aid the so-called democratic opposition, it's not clear that they would be strong enough if they were to prevail to control or avoid being dominated by the Salafi extremists. But beyond that, we'll ask the question about the minorities in Syria. I mean, it's very striking that of the 40% of Syrians who are minorities, virtually none of them support the opposition. And that ought to be the canary in the mind. And the second issue, so the first is, will the situation be better? And the second is, is there a plausible path of intervention that will work? And I think the answer to that as well is no. And that then brings me to the last couple of points I'd like to make. First, that more broadly, we need to think about, as I said at the beginning, about what it is that we're capable of doing. We have engaged in two massive nation-building operations that have been incredibly expensive failures in Iraq and Afghanistan. A trillion dollars in Iraq, at least 600 billion in Afghanistan. And based on a lack of strategy, Afghanistan, where I served in my last assignment in 2009, the strategy was that it was one of counterinsurgency. And if you had General Petraeus standing here instead of me, he would say for counterinsurgency to work, you need to have a local partner. And it was evident, including to the architects of the surge, that in Karzai and in the whole Afghan establishment, we had no party, no partner. That is to say, the regime was corrupt, ineffective, and after the 2009 elections illegitimate. So the strategy on its face couldn't work. Then the other part of the problem is how we approach our foreign assistance programs. It is, in terms of foreign assistance, it isn't that we do the things that will be helpful. We do the things that we know how to do, and mostly we do them for the purpose of spending the money. I commend to you a book by Peter Van Buren about who was a Foreign Service Officer in Iraq in one of the provincial teams. It's called We Meant Well, How I Help Lose the Hearts and Minds of the Iraqi People. And his point is not that some of what we did was ineffective or wasteful, but that none of it, not one thing we did was useful. And I think there is a place for intervention. It worked in Bosnia and Kosovo and Libya, in part because we intervened on behalf of local parties, in Bosnia on behalf of the internationally recognized government that was subject to international attack from Serbia, in support of their agenda. And in Iraq and Afghanistan, we substituted our agenda for the local agenda. Incidentally, the costs of the successful interventions, about 10 billion in Bosnia, 10 billion in Kosovo, is just a couple of billion in Libya as compared to the trillions in Iraq and Afghanistan. And now my final point, speaking to the Democratic side of the House, it's about time that Democrats got away from the idea that, which has gone on from the time of the Cold War, that if we're going to be successful, we really have to be tougher than the Republicans. That was the Cold War, that was the missile gap. And frankly, that's what happened in Afghanistan. What I consider, in the context of what I find a very admirable foreign policy by President Obama, but the Afghanistan surge was a case where the three leading Democratic candidates who were the three leading figures in the first term of the Obama administration, say Obama, Clinton, and Biden, had all campaigned on the idea that Iraq was the bad war and therefore we had to be in favor of a good war, and that was Afghanistan. And that was a very expensive mistake. I'm hoping to connect some of the ideas about the budget, the money questions, and ideas about the strategy questions, try to tie together some of the excellent points that my co-panelists have made. Before I start, just a few things on the money issue. I think it was just last week that we had Secretary Hagel and the Joint Chiefs speak to sequestration. My own feeling about sequestration is rather schizophrenic. I like half of it a lot, and the other half I don't like very much at all. And I think that reflects actually a national security concern. Which half don't I like? I don't like the half that undermines the revitalization of the American economy, which I think is one of our chief national security imperatives. What I do like is the part that begins to bring defense into a more reasonable level. What we had last week was Secretary Hagel and the Joint Chiefs essentially saying that they cannot defend this nation. They cannot reasonably provide security for this nation given $475 billion, which I think, as Winslow pointed out, is about 5% above the Cold War level. Now, if we think back to the Cold War, we at that time were in contention with a peer alliance that was spending as much as we were on defense, that was feeding as we were civil conflicts throughout the world, that was also feeding some major terrorist organizations throughout the world. And we were able to defeat that alliance, spending less than we do today, and spending less than what our current military leadership says they can't secure this nation with. Today, if you take a look at us and our allies, we spend four times as much as all of our competitors and potential competitors combined. Cold War, one-to-one. Today, four-to-one. Today, we can't afford sequestration according to our Defense Secretary and Joint Chiefs of Staff. Now, what that says to me is a couple of things. Either we've got the wrong leadership, we've got the wrong strategy, or maybe we've got both. Let's think a little bit about why military spending rose as much as it did during the period after 1998. Probably we all know these figures or approximately know them. Between 1998 and 2010, the budget went up 50% in real terms. That's the peacetime portion of the budget. On top of that, we layered another $1.5 trillion for wars, a dramatic increase in spending during that period. What we're talking about now is rolling it back by about 16% total from the high point, about 16%, which they say we can't do. So what happened along with that increase in spending? When I look at the world, what I don't see is the rise of a new threat, a threat that warrants such a vast increase in defense spending. What I do see is a shift in strategy beginning with the 1997 Quadrennial Defense Review continuing through several iterations, getting more and more busy as we go along, less and less realistic, was a change in our military strategy. We went from a strategy that emphasized defense in alliance with others to a strategy that says we have this wonderful instrument, this amazing instrument, and this remarkable superiority to the collapse of the Soviet bloc. We have this instrument, let us use it to transform the world. Here we have a decisive instrument. It's fast. The American people will support it. Unlike diplomacy, we don't have to think about following others, cooperating with others. This will enable a more unilateralist approach. Let's put that thing to work. So we really moved from having a sort of shield approach to defense, to one where we were thinking of it as a hammer and a chisel, and we were going to go about remaking the world. We also think about it today, not only as a hammer and a chisel, but also as a straight jacket. So that's part of the strategy as well. Let's put a straight jacket around China. Let's put a straight jacket around Russia, which is what we are doing by moving bases and increasing our alliances, strengthening our alliances in those areas. The theory is that those two countries will respond by essentially accommodating us. They will accept the straight jacket. That doesn't seem to be working out so well. Neither does the hammer and the chisel, as Peter pointed out. So what I think we have is a strategy that has delivered only one thing, a fabulous level of expense. That's all it has provided in terms of stability. I don't see the improvement in stability when we look at 1998 to today. So we need to really rethink the framework by which we approach national security policy. Five, is it five? Yeah. There are five major strategic challenges that we face in the world today. And I'm not going to go into them very much. I'm going to name them. I think they'll be familiar to you all. The first one I would say is a set of environmental and resource challenges, including climate change. The second is a series of demographic challenges. An aging population in our country is a great concern to us. There's rapid urbanization in the global south. There's also youth bulge in many developing countries. Third, strategic challenge. The destabilizing effects of globalization, especially the rise in inequality in country after country. I'm not talking about inequality between countries. I'm talking about inequality within countries, which creates or has created zones, large zones of deprivation, has weakened governance in many places. Often you'll have areas like Afghanistan and the western provinces of Pakistan backed up against each other. So you have these vast areas. That's a great concern, but it's only one element, one type of destabilizing effect of globalization. A fourth, it's quite important, the shifting balance of global economic power. We are entering an era like none any of us have experienced. We're entering an era that America has not seen in some cases for 90 and in other cases for 150 years. It will be about 150 years when we lose our economic dominance in the world, we are no longer enjoying the world's largest GDP. The last time that will have been true will have been 150 years ago, basically in the late 1800s. What about our currency? We currently have the reserve currency of the world. We will probably lose that status in the next 30 to 40 years. The last time that we didn't have that status or effectively didn't have that status was before 1920. Well, about 1920, the dollar was de facto being used broadly as a reserve currency. This is an entirely new world. Another aspect of it is the top economic powers. We are going to be welcoming, whether we like it or not, welcoming a number of new and rising powers into that club. That also makes for a very different world. It will alter the balance not only of economic power, but of everything that economic power buys, including military power, if other nations feel that they need to invest in it. Today, you take a look at the amount of GDP that the United States spends on defense. Let's exclude the wars. Let's just talk about peacetime. 3.3%. The average for the rest of the world, if you just took it nation by nation, is under 2%. That gap is greater today than it was during the Cold War, which means that there's a lot of latent capacity in the world to buy military if other countries feel they have a reason to buy military. If that particular currency of power is seen as an important currency of power, then other nations will buy in as China is. What determines the importance of that particular currency of power? Well, it really depends on whether other powers are depending on it to shape the world as indeed we are. So we are inviting forward our future military competitors by continuing to emphasize military power, but actually finding that the exercise of that power is not as effective as we hope it to be. So if we're going to shift... Well, I didn't...the fifth one. The fifth challenge really follows from what I just said. It's the challenge of global repolarization and remilitarization. It is already underway. Defense spending worldwide has grown 70% since 1998. Half of it is due to us. The other half is spread among countries of Asia and the Middle East, especially. But what we see is a number of countries being invited into this type of process, this process which emphasizes the role of military power. How we manage ourselves in the world is going to help determine whether we are a stimulant to this process of repolarization and remilitarization, which can lead us back to a Cold War circumstance, which is a circumstance where vast amounts of human endeavor and resources are invested in military ends. It will mean arms races worldwide. It will mean a lot of intervention, not just by us, but also by our competitors. So far, we don't see too much of that. So that should be a great concern. To begin to address these challenges, we really need to shift resources. We need to shift resources away from the military instrument into the diplomatic instrument, but also, and even more importantly, into the revitalization of the American economy. If we want to hold a decent place in the world. One place to start, a goal that I would like to propose is to see a defense spending reduced to below 2.5% of the GDP. If it can be done from a security perspective, and I think it can, it would mean reducing our current level of expenditure to something like $420 billion, significantly below where sequestration would take us. Significantly below where the Obama administration or the Republican opposition to the administration would take us. But I think it better fits the strategic challenges that are really facing us in the world today. So I think if we want to set some mark in our minds for what is a sufficient level of change in the future, that should be about it. We need to bring the budget down from where it is today to about $440 billion, and that is about $35 billion below where sequestration will take us. Thanks. We have time for a few questions from the audience. Yes. Mark Harrison with the United Methodist Church Office. I have a question for, I think Peter and maybe Heather, if I'm right, yeah. And you'll view that the United States still treat Russia like it's an enemy, and if so, why? Part of the United States you're talking about. Congress definitely treats it as an enemy, and the administration vacillates. A couple reasons for that. One is there's, and in my view, the most important is there's a swath of voters for whom you can activate national security as a political issue by talking about Russia as the enemy. And so that's been an irresistible temptation. That'll go away with time. Second, actually Putin, for his own domestic reasons, derives a lot of support from pumping up the U.S. as an enemy, and from making Russia equal in stature with the United States as gloomy as we've been up here about the U.S. prospects. Russia's natural resources are dwindling. Their ability to attract foreign investment to update their infrastructure for those resources is dwindling. Life expectancy is dwindling. Aging population, we got no problems compared to the Russians. So Putin is well aware that his country is falling out of the tier it enjoyed during the Cold War much faster than we are. Picking fights with us helps him prop it back up, and we just can't resist. Neither political party can resist being egged on by him. So we do it. It's absolutely schizophrenic relationship that we have with Russia, and we have never worked out the way both to work with Russia on a pragmatic basis where we can and push where our interests are different from it. A few quick points. That's the is, the should. The answer is, of course not. Russia's not... In what place is Russia a threat? Is it expansionist? Is it going to attack our allies? No. Second, it is, in fact, a democracy. We may not like Putin. It may be imperfect, but in my view, is Putin that much more anti-democratic than, say, Richard Nixon was? So the third point is... Nixon never blew up any apartment buildings, Peter. I hate to say... He just blew up the Constitution. Let me finish. The third point is we have cooperated with the Russians. I was the mediator in the Croatia peace process. The Russians were terrific partners in making it happen. They also produced an infinitely better result in Syria than would have happened had we gone ahead and bombed. The bombing would not have eliminated the chemical weapons. And finally, hey, maybe they have something of a point in Syria. Why are they backing Assad? Well, it's because they're... The threat to Russia comes from Salafi jihadists, Chechens and others who go into Syria. And if they succeed, the Russians are afraid that they're going to bring it back to the Caucasus. And of course, since this population spread throughout the country into Moscow. And I'm not sure... These certainly are not people that we would like to see prevail either. I wouldn't ask, but I'm going to give you 10 seconds of my answer. A hostile, unfriendly Russia or the image of it is essential to defense budget inflation. Yes. The great analyst, Chalmers Johnson, analyzed that there are over 850 foreign military bases around the world, U.S. military bases on foreign soil, over 6,000 on American soil trust territories. Hedrick Smith in his book has over 1,000. What figure is the right figure and is this economically sustainable? I could say something brief about that. The 1,000 figure is actually close to it, but what they're really talking about are military bases and installations. Some of these are very, very large and some of them are really just buildings with an antenna on it. So if you take a look at what Chalmers Johnson and many others were talking about, basically derived from yearly annual reports on the base infrastructure and you add to it bases that have been built in Afghanistan and Iraq, you get closer to that 1,000 figure. But there's going to be a lot of disagreement simply because in some cases we're talking about, we're really just talking about a building with barbed wire around it. One more question. It'll be economically sustainable as long as it's politically sustainable. They'll find the money to do it as long as the politics argue that way and the politics are arguing less that way. But in what's happening in Asia with the Air Sea battle and the pivot, they want to increase the numbers rather than decrease them. The bases are a pivotal part of a strategy that is not sustainable. The strategy we have is a strategy essentially of achieving, sustaining and exercising global military predominance in every theater of interest to us which is turning out to be every theater that exists. And so you can't subtract one from the other. Most of the bases themselves is really not a huge part of the budget. That's not a huge part of the budget. But if you had a strategy that overall made more sense, was more realistic and was more sustainable, one of the things you would get rid of is a lot of those bases. Final question. Yes, Sam Perkerowski. Let me ask anyone if you know about any linkage between the strength of the military and the dollar as a world reserve currency. Because if there is such a linkage, then perhaps all the figures do not really reflect the reality. My opinion is that a lot of countries, I'm a foreigner, I know a lot of foreigners, they have used the dollar in their mind only because they feel that U.S. is absolutely the strongest country. Not more. Well, you know, this goes back to a point that I think all four of us made in different ways and maybe it's actually a really good way to wrap up the panel that the strategy that we have now is based on a bet that military superiority will continue to equal global superiority and thus enable the kind of economic role that you're talking about. And all four of us think that there's important reason to question whether the equation doesn't better run the other way round. And that in fact a more successful strategy would be one that says fiscal health at home and a healthy presence in the world that isn't, but doesn't presume that military power is the only aspect that matters will actually let you keep your reserve currency longer and let you be a more effective world power. I think shockingly you've just found something that all four of us agree on. Well, that concludes on a happy, agreeable voting panel. Let's give everybody a hand.